mb0030 assingment set1 set2

8/9/2019 Mb0030 Assingment Set1 Set2

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MBA II SEMFinancial Management - MB0030

Set 1

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

Ans. Marketing Management is a business discipline which is focused on the practicalapplication of marketing techniques and the management of a firm's marketing resourcesand activities. Rapidly emerging forces of globalization have compelled firms to marketbeyond the borders of their home country making International marketing highly significantand an integral part of a firm's marketing strategy. Marketing managers are oftenresponsible for influencing the level, timing, and composition of customer demand accepteddefinition of the term. In part, this is because the role of a marketing manager can varysignificantly based on a business' size, corporate culture , and industry context. For example,in a large consumer products company, the marketing manager may act as the overallgeneral manager of his or her assigned product To create an effective, cost-efficient

Marketing management strategy , firms must possess a detailed, objective understanding of their own business and the market in which they operate. In analyzing these issues, thediscipline of marketing management often overlaps with the related discipline of strategic planning .

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

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

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

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

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

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

In Competitor analysis, marketers build detailed profiles of each competitor in the market,focusing especially on their relative competitive strengths and weaknesses using SWOT analysis . Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation ,
http://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/International_marketinghttp://en.wikipedia.org/wiki/Corporate_culturehttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/General_managerhttp://en.wikipedia.org/w/index.php?title=Marketing_management_strategy&action=edit&redlink=1http://en.wikipedia.org/wiki/Objectivehttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Strategic_planninghttp://en.wikipedia.org/wiki/Strategic_planninghttp://en.wikipedia.org/w/index.php?title=Customer_analysis&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Company_analysis&action=edit&redlink=1http://en.wikipedia.org/wiki/Competitor_analysishttp://en.wikipedia.org/wiki/Market_segmentationhttp://en.wikipedia.org/wiki/Perceptual_mappinghttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Resource-Based_Viewhttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Product_lininghttp://en.wikipedia.org/wiki/Product_lininghttp://en.wikipedia.org/w/index.php?title=Brand_audits&action=edit&redlink=1http://en.wikipedia.org/wiki/Brand_equityhttp://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Joint_venturehttp://en.wikipedia.org/wiki/Complement_goodhttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Competitive_strategyhttp://en.wikipedia.org/wiki/Porter_5_forces_analysishttp://en.wikipedia.org/wiki/Strategic_grouphttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/Positioning_(marketing)http://en.wikipedia.org/wiki/Product_differentiationhttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/International_marketinghttp://en.wikipedia.org/wiki/Corporate_culturehttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/General_managerhttp://en.wikipedia.org/w/index.php?title=Marketing_management_strategy&action=edit&redlink=1http://en.wikipedia.org/wiki/Objectivehttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Strategic_planninghttp://en.wikipedia.org/wiki/Strategic_planninghttp://en.wikipedia.org/w/index.php?title=Customer_analysis&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Company_analysis&action=edit&redlink=1http://en.wikipedia.org/wiki/Competitor_analysishttp://en.wikipedia.org/wiki/Market_segmentationhttp://en.wikipedia.org/wiki/Perceptual_mappinghttp://en.wikipedia.org/wiki/Core_competencehttp://en.wikipedia.org/wiki/Resource-Based_Viewhttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Product_lininghttp://en.wikipedia.org/wiki/Product_lininghttp://en.wikipedia.org/w/index.php?title=Brand_audits&action=edit&redlink=1http://en.wikipedia.org/wiki/Brand_equityhttp://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Joint_venturehttp://en.wikipedia.org/wiki/Complement_goodhttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Competitive_strategyhttp://en.wikipedia.org/wiki/Porter_5_forces_analysishttp://en.wikipedia.org/wiki/Strategic_grouphttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/Positioning_(marketing)http://en.wikipedia.org/wiki/Product_differentiationhttp://en.wikipedia.org/wiki/Marketing


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degree of vertical integration , historical responses to industry developments, and otherfactors.Marketing management often finds it necessary to invest in research to collect the datarequired to perform accurate marketing analysis. As such, they often conduct market research (alternately marketing research ) to obtain this information. Marketers employ avariety of techniques to conduct market research, but some of the more common include:

Qualitative marketing research , such as focus groups Quantitative marketing research , such as statistical surveys Experimental techniques such as test markets Observational techniques such as ethnographic (on-site) observation

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

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

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

However, the Boston Matrix is also a good tool for thinking about where to apply other finiteresources: people, time and equipment. Market share is the percentage of the total marketthat is being serviced by your company, measured either in revenue terms or unit volume

terms. The higher your market share, the higher proportion of the market you control. TheBoston Matrix assumes that if you enjoy a high market share you will normally be makingmoney (this assumption is based on the idea that you will have been in the market longenough to have learned how to be profitable, and will be enjoying scale economies that giveyou an advantage).

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

By contrast, competition in low growth markets is often bitter, and while you might have highmarket share now, what will the situation look like in a few months or a few years? Thismakes low growth markets less attractive
http://en.wikipedia.org/wiki/Vertical_integrationhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Marketing_researchhttp://en.wikipedia.org/wiki/Qualitative_marketing_researchhttp://en.wikipedia.org/wiki/Focus_groupshttp://en.wikipedia.org/wiki/Quantitative_marketing_researchhttp://en.wikipedia.org/wiki/Statistical_surveyhttp://en.wikipedia.org/wiki/Experimental_techniqueshttp://en.wikipedia.org/wiki/Test_markethttp://en.wikipedia.org/wiki/Observational_techniqueshttp://en.wikipedia.org/wiki/Ethnographyhttp://en.wikipedia.org/wiki/Environmental_scanninghttp://en.wikipedia.org/wiki/Competitive_intelligencehttp://en.wikipedia.org/wiki/Vertical_integrationhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Marketing_researchhttp://en.wikipedia.org/wiki/Qualitative_marketing_researchhttp://en.wikipedia.org/wiki/Focus_groupshttp://en.wikipedia.org/wiki/Quantitative_marketing_researchhttp://en.wikipedia.org/wiki/Statistical_surveyhttp://en.wikipedia.org/wiki/Experimental_techniqueshttp://en.wikipedia.org/wiki/Test_markethttp://en.wikipedia.org/wiki/Observational_techniqueshttp://en.wikipedia.org/wiki/Ethnographyhttp://en.wikipedia.org/wiki/Environmental_scanninghttp://en.wikipedia.org/wiki/Competitive_intelligence


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Axis components:

a. Market Growth rate: the rate at which market is growing.b. Relative Market Share: market share of the SBU dived by the market share of thelargest competitor.

Model Components:

These groups are explained below:

Dogs:

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

Cash Cows:

High Market Share / Low Market Growth Here, SBUs are well-established, so it's easy to getattention and exploitnew opportunities. However it's only worth expending a certain amount of effort, because themarket isn't growing and your opportunities are limited. here we can say cash cow can bemilked.

Stars:

High Market Share / High Market Growth Here SBUs are well-established, and growth isexciting! These arefantastic opportunities, and you should work hard to realize them.

Question Marks (Problem Child)

Low Market Share / High Market Growth These are the opportunities no one knows what todo with. They aren'tgenerating much revenue right now because you don't have a large market share. But, they

are in high growth markets so the potential to make money is there. Here there are twochoices, either to invest heavily to bring it to star position or divest or liquidate from thatposition. Question Marks might become Stars and eventual Cash Cows, but they


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could just as easily absorb effort with little return. These opportunities need serious thoughtas to whether increased investment is warranted.

Key Points

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

Limitations :

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

1. Only two dimensions market share and product or service growth rate, are employed.These are the first limitations.

2. How to define market and how to get data about market share are also problems.3. High market shares dont always necessarily lead to profit at all times. It is not the onlysuccess factor.4. Low share or niche businesses can be profitable too, which means in the real world someDogs can be more profitable than cash Cows.5. The model cannot reflect the growth rates of the general market and market growth is notthe only indicator for market attractiveness.6. The model also neglects the effects of synergy between different business units.

The GE screen matrix is essentially a derivation of the Boston Consulting Groups Bostongrowth matrix . It was developed by McKinsey and Co. for General Electric as it had beenrecognized that the Boston Consulting Group matrix was not flexible enough to take broader

issues into account The GE matrix cross-references market attractiveness and businessposition using three criteria for each high, medium and low. The market attractivenessconsiders variables relating to the market itself, including the rate of market growth, marketsize, potential barriers to entering the market, the number and size of competitors, theactual profit margins currently enjoyed, and the technological implications of involvement inthe market. The business position criteria look at the businesss strengths and weaknesses ina variety of fields. These include its position in relation to its competitors, and the businesssability to handle product research, development and ultimate production. It also considershow well placed the management is to deploy these resources. The matrix differs in itscomplexity compared with the Boston Consulting Group matrix. Superimposed on the basicdiagram are a number of circles. These circles are of variable size (see Figure 22). The size of each represents the size of each market. Within each circle is a clearly defined segment

which represents the businesss market share within that market. The larger the circle, thelarger the market, and the larger the segment, the larger the market share.

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

Ans. A management information system (MIS) is a system or process that providesinformation needed to manage organizations effectively [1]. Management informationsystems are regarded to be a subset of the overall internal controls procedures in a business,which cover the application of people, documents, technologies, and procedures bymanagement accountants to solve business problems such as costing a product, service or abusiness-wide strategy. Management information systems are distinct from regularinformation systems in that they are used to analyze other information systems applied inoperational activities in the organization.[2] Academically, the term is commonly used torefer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executiveinformation systems.


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MIS as System: MIS is a system, which makes available the right information to the rightperson at the right place, at the right time, in the right form & at the right cost.

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

Early on, business computers were mostly used for relatively simple operations such astracking sales or payroll data, often without much detail. Over time these applicationsbecame more complex and began to store increasing amounts of information while alsointerlinking with previously separate information systems. As more and more data was storedand linked man began to analyze this information into further detail, creating entiremanagement reports from the raw, stored data. The term "MIS" arose to describe thesekinds of applications, which were developed to provide managers with information about

sales, inventories, and other data that would help in managing the enterprise. Today, theterm is used broadly in a number of contexts and includes (but is not limited to): decisionsupport systems, resource and people management applications, ERP, SCM, CRM, projectmanagement and database retrieval application.

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

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

Any successful MIS must support a businesses Five Year Plan or its equivalent. It mustprovide for reports based up performance analysis in areas critical to that plan, with feedbackloops that allow for titivation of every aspect of the business, including recruitment andtraining regimens. In effect, MIS must not only indicate how things are going, but why they

are not going as well as planned where that is the case. These reports would includeperformance relative to cost centers and projects that drive profit or loss, and do so in such away that indentifies individual accountability, and in virtual real-time.

Benefits

1. Improves personal efficiency2. Expedites problem solving(speed up the progress of problems solving in an

organization)3. Facilitates interpersonal communication4. Promotes learning or training5. Increases organizational control6. Generates new evidence in support of a decision7. Creates a competitive advantage over competition8. Encourages exploration and discovery on the part of the decision maker9. Reveals new approaches to thinking about the problem space


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10. Helps automate the Managerial processes.

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

Definition: Management Information Systems (MIS) is the term given to the disciplinefocused on the integration of computer systems with the aims and objectives on anorganisation. It does the following function .- sub serves managerial function- collects stores , evaluates information systematically and routinely- supports planning and control decisions- Includes files , hardware , software , software and operations research modelsIt Facilitates planningIn Minimizes information overloadMIS Encourages DecentralizationIt brings Co ordinationIt makes control easierMIS assembles, process , stores , Retrieves , evaluates and Disseminates the information

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

Management information systems can be used as a support to managers to provide acompetitive advantage. The system must support the goals of the organization. Mostorganizations are structured along functional lines, and the typical systems are identified asfollows:Accounting management information systems : All accounting reports are shared by alllevels of accounting managers.

Financial management information systems: The financial management informationsystem provides financial information to all financial managers within an organizationincluding the chief financial officer. The chief financial officer analyzes historical and currentfinancial activity, projects future financial needs, and monitors and controls the use of funds

over time using the information developed by the MIS department.Manufacturing management information systems: More than any functional area,operations have been impacted by great advances in technology. As a result, manufacturingoperations have changed. For instance, inventories are provided just in time so that greatamounts of money are not spent for warehousing huge inventories. In some instances, rawmaterials are even processed on railroad cars waiting to be sent directly to the factory. Thusthere is no need for warehousing.Marketing management information systems: A marketing management informationsystem supports managerial activity in the area of product development, distribution, pricingdecisions, promotional effectiveness, and sales forecasting. More than any other functionalarea, marketing systems rely on external sources of data. These sources include competitionand customers, for example.

Human resources management information systems: Human resources managementinformation systems are concerned with activities related to workers, managers, and other


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individuals employed by the organization. Because the personnel function relates to all otherareas in business, the human resources management information system plays a valuablerole in ensuring organizational success. Activities performed by the human resourcesmanagement information systems include, work-force analysis and planning, hiring, training,and job assignments.

Components

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

Q.4.Suppose you need to conduct a small marketing research in your neighborhoodregarding the purchase and use of toothpastes, what will be your approach in theprocess.

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

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

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

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

In fact, with fluoride in toothpastes and alcohol in mouthwashes being increasingly linkedto oral cancer by scientists worldwide, the switch to natural-based tooth and gum cleansersand mouth fresheners is not only suggested but actually encouragedeven more so forchildren with their delicate gums and susceptible teeth.

Pepsodent Complete Care Enamel-Safe Whitening Toothpaste

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

Promotes Healthy Teeth and Gums


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

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

Inactive Ingredients: Sorbitol, Water, Hydrated Silica, PEG 32, Sodium Lauryl Sulfate, SDAlcohol 38B, Flavor, Cellulose Gum, Zinc Citrate Trihydrate, Sodium Saccharin, TitaniumDioxide

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

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

any purchase. This is summarised in the diagram below:

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

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

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

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

An aroused customer then needs to decide how much information (if any) is required. If theneed is strong and there is a product or service that meets the need close to hand, then a


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purchase decision is likely to be made there and then. If not, then the process of informationsearch begins.

A customer can obtain information from several sources:

Personal sources: family, friends, neighbours etc Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-saledisplays Public sources: newspapers, radio, television, consumer organisations; specialist magazines Experiential sources: handling, examining, using the product

The usefulness and influence of these sources of information will vary by product and bycustomer. Research suggests that customers value and respect personal sources more thancommercial sources (the influence of word of mouth). The challenge for the marketingteam is to identify which information sources are most influential in their target markets.

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

and services.

How does the customer use the information obtained?

An important determinant of the extent of evaluation is whether the customer feels involved in the product. By involvement, we mean the degree of perceived relevance andpersonal importance that accompanies the choice.

Where a purchase is highly involving, the customer is likely to carry out extensiveevaluation.

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

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

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

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

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

In high-involvement decisions, the marketer needs to provide a good deal of informationabout the positive consequences of buying. The sales force may need to stress the importantattributes of the product, the advantages compared with the competition; and maybe evenencourage trial or sampling of the product in the hope of securing the sale.

Post-purchase evaluation - Cognitive Dissonance

The final stage is the post-purchase evaluation of the decision. It is common for customers toexperience concerns after making a purchase decision. This arises from a concept that isknown as cognitive dissonance. The customer, having bought a product, may feel that analternative would have been preferable. In these circumstances that customer will notrepurchase immediately, but is likely to switch brands next time.

To manage the post-purchase stage, it is the job of the marketing team to persuade thepotential customer that the product will satisfy his or her needs. Then after having made apurchase, the customer should be encouraged that he or she has made the right decision.


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Q6. Explain the different consumer behaviour models?

ENVIRONMENTAL FACTORS BUYER'S BLACK BOXBUYER'SRESPONSEMarketing

Stimuli

Environmental

Stimuli

Buyer

Characteristics

Decision

Process

ProductPricePlacePromotion

EconomicTechnologicalPoliticalCulturalDemographicNatural

AttitudesMotivationPerceptionsPersonalityLifestyleKnowledge

ProblemrecognitionInformationsearchAlternativeevaluationPurchase decisionPost-purchasebehaviour

Product choiceBrand choiceDealer choicePurchase timingPurchase amount

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

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

Information search

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

Sources of information include:

Personal sources Commercial sources Public sources Personal experience

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

The selective perception process

Stage Description
http://en.wikipedia.org/wiki/Consumer_behaviour#cite_note-sandhusen218-0http://en.wikipedia.org/wiki/Stimulus_(psychology)http://en.wikipedia.org/wiki/Black_box_theoryhttp://en.wikipedia.org/wiki/Behaviorismhttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Consumer_behaviour#cite_note-sandhusen218-0http://en.wikipedia.org/wiki/Stimulus_(psychology)http://en.wikipedia.org/wiki/Black_box_theoryhttp://en.wikipedia.org/wiki/Behaviorismhttp://en.wikipedia.org/wiki/Marketing


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

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

Information evaluation

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

Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchasedecision. Sometimes purchase intention does not result in an actual purchase. The marketingorganization must facilitate the consumer to act on their purchase intention. The organisationcan use variety of techniques to achieve this. The provision of credit or payment terms mayencourage purchase, or a sales promotion such as the opportunity to receive a premium orenter a competition may provide an incentive to buy now. The relevant internal psychologicalprocess that is associated with purchase decision is integration. Once the integration is

achieved, the organisation can influence the purchase decisions much more easily.

Post purchase evaluation

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

To manage the post-purchase stage, it is the job of the marketing team to persuade thepotential customer that the product will satisfy his or her needs. Then after having made apurchase, the customer should be encouraged that he or she has made the right decision. It

is not affected by advertisement.

Internal influences

Consumer behaviour is influenced by: demographics, psychographics (lifestyle), personality,motivation, knowledge, attitudes, beliefs, and feelings. Consumer behaviour concern withconsumer need consumer actions in the direction of satisfying needs leads to his behaviour of every individual depend on thinking

External influences

Consumer behaviour is influenced by: culture, sub-culture, locality, royalty, ethnicity, family,social class, reference groups, lifestyle, and market mix factors.


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MBA II SEMFinancial Management - MB0030

Set 2

Q1. Give a short note on bases of Segmentation?

Ans. Process of dividing the market according to similarities that exist among the varioussubgroups within the market. The similarities may be common characteristics or commonneeds and desires. Market segmentation comes about as a result of the observation that allpotential users of a product are not alike, and that the same general appeal will not interestall prospects. Therefore, it becomes essential to develop different marketing tactics based onthe differences among potential users in order to effectively cover the entire market for aparticular product. There are four basic market segmentation strategies: behaviorsegmentation, demographic segmentation, geographic segmentation, and physiographicsegmentation.

B. Analyse the pricing methods with relevant examples.

Pricing methods

The main methods used are:

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

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

Method Explanation

Return onInvestmentpricing 1

The investment in publishing terms is defined as the first editioncosts up to printing stage (and perhaps including promotionalexpenditure. The profit is the difference between revenues fromsales less printing, distribution and royalty costs. This method is notwidely used in book publishing as the investment per title is low

Return onInvestmentpricing 2

The cashflows are calculated for all costs and revenues directlyassociated with the title as above. The Internal Rate of Return (IRR)or Net Present Value (NPV) is then calculated. This method isbecoming more widely used in the media industries as computerspreadsheets facilitate the calculation.

Cash flowPricing

This is a simplified version of Return on Investment Pricing. ThePayback rather than the Net Present Value is calculated. Both

methods can be combined usefully


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Competitorpricing

This is a pricing policy rather than method of calculation. Thepublisher will estimate the cost of developing a book that will sellsuccessfully against books from competitors. The selling price maybe different to those of competitors products if the publisher decidesto compete by offering a different treatment, design approach,

selling price, and pagination.Price Slotpricing

Where market search proves the need for price slots, or majorcustomers demand, publishers will work backwards to producebooks that will sell at the agreed slots

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

NewspapersBenefits

Your ad has size and share, and can be as large as necessary to communicate as

much of a story as you care to tell. The distribution of your message can be limited to your geographic area. Split-run tests are available to test your copy and your offer. Free help is usually available to create and produce your ad. Fast closings. The ad you decide to run today can be in your customer's hands two

days from now.

Demerits Clutter. Your ad has to compete for attention against large ads run by supermarkets

and department stores. Poor photo reproduction limits creativity. A price-oriented medium. Most ads are for sales. Short shelf life. The day after a newspaper appears, it's history. Waste circulation. You're paying to send your message to a lot of people who will

probably never be in the market to buy from you. A highly visible medium. Your competitors can quickly react to your prices.

MagazinesBenefits

High reader involvement means more attention will be paid to your advertisement. Less waste circulation. You can place your ads in magazines read primarily by buyers

of your product or service. The smaller the page (generally eight and half by eleven inches) permits even small

ads to stand out.

DemeritsLong lead times (generally 90 days) mean you have to make plans a long time in advance.

The cost for space is higher in addition to higher creative costs.

Yellow PagesBenefits

Everyone uses the yellow pages. Ads are reasonably inexpensive.


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You can easily track your responses.

Demerits All of your competitors are listed so you run the ad as a defensive measure. Ads are not very creative since they follow certain formats.

RadioBenefits

A universal medium. Can be enjoyed at home, at work, and while driving. Most people

listen to the radio at one time or another during the day. Permits you to target your advertising dollars to the market most likely to respond to

your offer. Permits you to create a personality for your business using only sounds and voices. Free creative help is ususally available. Rates can generally be negotiated. Least inflated medium. During the past ten years, radio rates have gone up less than

other media.

Demerits Because radio listeners are spread over many stations, to totally saturate your market

you have to advertise simultaneously on many stations. Listeners cannot refer back to your ads to go over important points. Ads are an interruption to the entertainment. Because of this, radio ads must be

repeated to break through the listener's "tune out" factor. Radio is a background medium. Most listeners are doing something else while

listening, which means your ad has to work hard to be listened to and understood.

Advertising costs are based on ratings which are approximations based on diaries keptin a relatively small fraction of a region's homes.

TelevisionBenefits

Permits you to reach great numbers of people on a national or regional level. Independent stations and cable offer new opportunities to pinpoint local audiences. Very much an image-building medium.

Demerits Ads on network affiliates are concentrated in local news broadcasts and on station

breaks. Creative and production costs can quickly mount up. Lead time can result in items being sold out before ad runs. Most ads are ten or thirty seconds long, which limits the amount of information you

can communicate.

Direct MailBenefits

Your advertising message is targeted to those most likely to buy your product or

service.

Your message can be as long as necessary to fully tell your story. You have total control over all elements of creation and production.


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A "silent" medium. Your message is hidden from your competitors until it's too late for

them to react.

Demerits Long lead times required for creative printing and mailing. Requires coordinating the services of many people: artists, photographers, printers,

etc. Each year over 20% of the population moves, meaning you must work hard to keep

your mail list up to date. Likewise, a certain percentage of the names on a purchased mailing list is likely to be

no longer useful.

TelemarketingBenefits

You can easily answer questions about your product/service. It's easy to prospect and find the right person to talk to. Cost effective compared to direct sales. Highly measurable results. You can get a lot of information if your script is properly structured.

Demerits Many business use telemarketing. Professionals should draft the script and perform the telemarketing in order for it to

be effective. Can be extremely expensive. Most appropriate for high-ticket retail items or professional services.

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

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

New Product Development Process:

Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization

Product Mix : Product mix is a combination of products manufactured or traded by the samebusiness house to reinforce their presence in the market, increase market share and increasethe turnover for more profitability. Normally the product mix is within the synergy of otherproducts for a medium size organization. However large groups of Industries may have

diversified products within core competency. Larsen & Toubro Ltd, Godrej, Reliance in Indiaare some of the examples.

One of the realities of business is that most firms deal with multi-products .This helps a firm


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diffuse its risk across different product groups/Also it enables the firm to appeal to a muchlarger group of customers or to different needs of the same customer group .So whenVideocon chose to diversify into other consumer durables like music systems, washingmachines and refrigerators, it sought to satisfy the needs of the middle and upper middleincome group of consumers.

Likewise, Bajaj Electricals a household name in India has almost ninety products in i8tsportfolio ranging from low value items like bulbs to high priced consumer durables likemixers and luminaires and lighting projects .The number of products carried by a firm at agiven point of time is called its product mix. This product mix contains product lines andproduct items .In other words its a composite of products offered for sale by a firm.

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

LUX

Lux soap was first launched in 1916 as laundry soap targeted specifically at 'delicates'. LeverBrothers encouraged women to home launder their clothes without fear of satins and silksbeing turned yellow by harsh lyes that were often used in soaps at the time. The flake-typesoap allowed the manufacturer some leeway from lye because it did not need to be shapedinto traditional cake-shaped loaves as other soaps were. The result was a gentler soap thatdissolved more readily and was advertised as suitable for home laundry use. Lux toilet soapwas introduced in 1925 as bathroom soap. The name 'Lux' was chosen as a play on the word"luxury." Lux has been marketed in several forms, including bar and flake and liquid (handwash, shower gel and cream bath soap). Lux in step with the changing trends and evolvingbeauty needs of the consumers, offers an exciting range of soaps and Body Washes withunique elements to make bathing time more pleasurable. One can choose from a range of skincare benefits like firming, fairness and moisturising. Lux stands for the promise of beautyand glamour as one of India's most trusted personal care brands. Since its launch in India inthe year 1929, Lux has offered a range of soaps in different colours and world classfragrances. Lux is a beauty soap of film stars. Lux recognized the need for a compellingmessage about beauty that would resonate with women of today. From the 1930s rightthrough to the 1970s, Lux soap colours and packaging were altered several times to reflectfashion trends. In 1958 five colours made up the range: pink, white,blue, green and yellow. People enjoyed matching their soap with their bathroom colours. Inthe early 1990s, Lux responded to the growing trend away from traditional soap bars bylaunching its own range of shower gels, liquid soaps and moisturizing bars. Lux beauty facialwash, Lux beauty bath and Lux beauty shower were launched in 1992.In 2004, the entire Lux range was re-launched in the UK to include five shower gels, three

bath products and two new soap bars. 2005 saw the launch of three exciting new variantswith dreamy names such as Wine & Roses bath cream, Glowing Touch and SparklingMorning shower gels. Lux has recently launched its two fruit extract variants New LuxStrawberry & Cream and Lux Peach & Cream contain a blend of succulent fruits & lusciousChantilly cream. The most recent addition in the brand is Lux Crystal Shine.

Study of LUX with respect to 4 Psa. ProductA product is anything that can be offered to a market to satisfy a need or want. Products thatare marketed include physical goods, services, experiences, events, persons, places,properties, organizations, information and ideas.Product Classification

LUX is a Tangible, Non Durable Good on the basis of this classification. LUX and other soaps fall into the category of Convenience Good

Sales Promotion


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

75 years written inside the star, she will get a years supply of Lux free.

Price segments of toilet soapsSegment Price/weight

Premium > Rs. 15 / 75 gmsPopular Rs. 8-15/75 gmsEconomy < Rs. 8 /75 gmsHowever, recently HUL has been forced to hike its price by one rupee, to Rs17 (for 100 gm),giving in to the pressures of inflation. This paves the way for competing soap makers likeGodrej Consumer Products (GCPL) to take price increases. Lux has versions in all the threeprice segments:Recent pricing of Lux (100 g) Lux Crystal Shine Rs 17 Lux Festive Glow Rs 15 Mini Lux Rs5

STRENGTHS OF LUX

1. Strong Market Research (door to door sampling is done once a year in Urban and Ruralareas)2. Many variants (Almond Oil, Orchid Extracts, Milk Cream, Fruit Extracts, Saffron,

Sandalwood Oil, and Honey to name a few)3. Strong sales and distribution network backed by HLL4. Strong brand image5. Positioning focuses on the attractive beauty segment6. Dynamically continuous innovation of the product and brand rejuvenation new variants

(Aromatic Glow and Chocolate Seduction and Lux White Spa body wash) and innovativepromotions (22 carat gold coin promotion Chance Hai)

7. Perceived to have high value for money (strong brand promotion but relatively lower price

which is a winning combination in the popular segment)8. Though it is in popular segment, it is having mass appeal/market presence across allsegments (15% of the soap market captured by Lux (sales / volume)

9. Unique advantage of having access to resources and assets of HLL

WEAKNESSES1. Lux is mainly positioned as beauty soap targeted towards women, hence it lacks unisexappeal2. Usage rate/ wear rate is high and is generally mushy and soggy3. Some variants like the sunscreen, International variant did not do well in the market4. Certain advertisements like the recent one with Shah Rukh Khan resulted in controversial

interpretations of the message of the advertisement and lead to some loss of focus (of message of the advertisements)

5. Stock out problems - replenishment time is high in semi-urban/rural areas6. Earlier positioning as the soap of the stars has somewhat alienated the brand from a

portion of the consumers especially in rural areas.


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Q5. As a salesperson in a fast moving consumer goods company, What kind of training and development methods do you feel are required? How important istraining for sales force and how can it be evaluated?

Customers informed, professional salespeople continuously prepare to meet the serviceand product needs of customers. Training salespeople gives customers the assurance thatyou value and respect their time. Knowledgeable, educated sales people add value.Customers trust and view them as business partners. Customers feel their needs come firstwhen trained salespeople work with them.

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

The trained sales force produces more with confidence. In addition, theyre aware of trendsin the market, technology, industry and environment. This knowledge enhances their abilityto sell and the reputation of your company.

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

The factors affecting the development of a sales team include:

External market and industry trends, customers, economy, government regulation,society, competition, and personal bias.

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

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

International Marketing is defined as The performance of business activities designed toplan, price, promote and direct the companys flow of goods and services to consumers orusers in more than one nation for a profit. A company that wants to sell their product inother than domestic market should understand the environmental factor, consumerbehaviours, market forces and other character relevant to the international market. After

understanding the definition, several questions may arise in your mind like why marketershould go to the international market?

International Market Entry Strategies

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

a) In how many countries would the company like to operateb) What are the types of countries it plans to enter. To answer the above question

companies evaluate each country against the market size, market growth and, costof doing business, competitive advantage and risk level.


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Once the market is found to be attractive companies should decide how to enter this market.Companies can enter the international market from any one of the following strategies theyare

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

Licensing : According to Philip kotlor, licensing is a method of entering a follow market inwhich the company enters into an agreement with a license in the follow market, offering the

right to use of manufacturing, process the trade market, patent, or other items of value for afee or royalty.

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

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

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

Direct investment : In this method of international market entry, company invests inmanufacturing or assembling. The company may enjoy the low cost advantage of thatcountry. Many manufacturing forms invested directly in the Chinese market to get its lowcost advantage. Some governments provide incentives and companies benefits to thecompany which manufacturers the product in their country. There is government restrictionin some countries to opt for direct investment, is it produce the jobs to the local people. Thismade also debts on the country attractiveness. It may become risk if the market mature orunstable government exists.


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mb0030 assingment set1 set2

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