2017 – Solved Question Paper | Marketing Management | Final Year – Masters of Commerce (M.Com) | Dibrugarh University

2017 – Solved Question Paper | Marketing Management | Final Year – Masters of Commerce (M.Com) | Dibrugarh University

2017

(Commerce)

Paper- 202

(Marketing Management)

Full Marks- 80

The figures in the margin indicate full marks for the questions.

1. (a) Mention the uncontrollable variables influencing the marketing strategies and policies of a firm in a competitive market. Describe any two such variables. (16)

-> The four controllable factors of the marketing mix (product, price, promotion, and place) can be manipulated to develop an effective marketing plan, but what can companies do about the uncontrollable factors? Successful marketers focus on these aspects of marketing, as well.

The acronym, CERTS, represents the uncontrollable factors:

Competition – It is important for marketers to understand their competition’s marketing mix. This involves looking at what they are doing and how they go about doing it. This allows you to see what they could be doing better, and use that information within your marketing strategy. And depending on your size, you may be able to influence your competition when you make the most of your signature strengths.

Economy – The current economy must also be taken into consideration. Luxury items may not do as well in a hurting economy. You can see the opportunities available to offer the most affordable product. Your marketing strategy will need to be adjusted in order to maintain or increase your market position in challenging circumstances.

Regulations – Changes in current laws and regulation are also key factors for companies to keep into consideration. As laws and regulations change, what kinds of products are allowed, how they are produced, exporting and importing regulations, and shipping can change drastically. There could be barriers of trade, such as quotas restricting the amount of imports or tariffs that would affect the entire market and, perhaps, necessitate and complete change in strategy which to a nimble company can create new opportunities.

Technology- Having the latest technology can reduce costs, improve the quality of your product, and make marketing more effective. This can allow you to better target your customer, produce more efficiently, and create innovative products. As technology changes, your product or service may become obsolete, like the many manufacturers of buggy whips after the invention of the automobile. It is the role of marketers to monitor the marketplace and changing technology and to adapt to those changes.

Social – Marketing can be improved by paying attention to current social trends, such as concern for the environment and going “green”. Knowing what is most important to your customers will allow you to fine tune your marketing strategy to better target customers and create the kind of products and services they.

CERTS are the uncontrollable factors of marketing which cannot be changed or manipulated by companies to sell their products. These factors must be closely paid attention to and researched in order to best reach the target customers. If companies develop their marketing plan around these factors, they could market their products in a more effective manner.

The key strategy is to recognize and utilize the opportunities uncontrollable factors can bring for your company.

(b) What do you understand by the “New Concept of Marketing”? Discuss the various components of Marketing Mix. (6+10=16)

-> The consumer-oriented marketing has given rise to a new philosophy in business known as ‘marketing concept’. The marketing concept emphasizes the determination of the requirements of potential customers and supplying products to satisfy their requirements.

Under the marketing concept customer is the fulcrum around which the business moves. The objective of a firm is not the maximization of profitable sales volume but profits through satisfaction of customers. And all the marketing activities in a firm are integrated and directed towards this objective. The managers practicing this philosophy think in terms of what benefits the market or what needs are they satisfying.

The marketing concept considers marketing as an integrated process of identification, assessment and satisfaction of human needs and wants. It regards creation of customer and satisfaction of his wants as the justification of business.

Determination of wants of the customers takes precedence over production and other business activities. In other words, production is carried on according to the needs of the customers. Thus, the emphasis in modern business is on selling satisfaction and not merely on selling goods.

The marketing concept is based on the following pillars:

(i) Identification of the prospective customers or the target market.

(ii) Understanding the needs and wants of the customers or the target market by connecting with them.

(iii) Development of products or services for satisfying the needs of the target market.

(iv) Satisfying the needs of target market better than the competitors.

(v) Ensuring profitable sales for the business.

Features of the Marketing Concept:

The marketing concept is characterized by the following features:

(i) Customer Orientation:

It emphasizes the necessity of consumer- orientation of the entire business. Marketing starts with the determination of customers’ wants and continues until the customers’ wants are completely satisfied and they are delighted with the goods and services.

(ii) Integrated Approach:

Marketing concept forces business firms to use an integrated approach in their operations. Each firm should coordinate the activities of production, finance and marketing departments to satisfy the needs and expectations of customers. Thus, marketing should not be considered merely as a fragmented assortment of marketing functions. Each and every department has to contribute for the satisfaction of customers.

(iii) Long-Term Perspective:

Marketing concept seeks development of the business and profits over a long period of time. The marketers offer value proposition to the customers and build lasting relationships with them so as to attract new customers and retain them in future.

(iv) Profitable Sales Volume:

Marketing is considered successful only when it is capable of maximising profitable sales through customer satisfaction over the long-run.

The various components of marketing mix:-

4 P of Marketing

Product in Marketing Mix:

A product is a commodity, produced or built to satisfy the need of an individual or a group. The product can be intangible or tangible as it can be in the form of services or goods. It is important to do extensive research before developing a product as it has a fluctuating life cycle, from the growth phase to the maturity phase to the sales decline phase.

A product has a certain life cycle that includes the growth phase, the maturity phase, and the sales decline phase. It is important for marketers to reinvent their products to stimulate more demand once it reaches the sales decline phase. It should create an impact in the mind of the customers, which is exclusive and different from the competitor’s product. There is an old saying stating for marketers, “what can I do to offer a better product to this group of people than my competitors”. This strategy also helps the company to build brand value.

Price in Marketing Mix:

Price is a very important component of the marketing mix definition. The price of the product is basically the amount that a customer pays for to enjoy it. Price is the most critical element of a marketing plan because it dictates a company’s survival and profit. Adjusting the price of the product, even a little bit has a big impact on the entire marketing strategy as well as greatly affecting the sales and demand of the product in the market. Things to keep on mind while determining the cost of the product are, the competitor’s price, list price, customer location, discount, terms of sale, etc.,

Place in Marketing Mix:

Placement or distribution is a very important part of the marketing mix strategy. We should position and distribute our product in a place that is easily accessible to potential buyers/customers.

Promotion in Marketing Mix:

It is a marketing communication process that helps the company to publicize the product and its features to the public. It is the most expensive and essential components of the marketing mix, that helps to grab the attention of the customers and influence them to buy the product. Most of the marketers use promotion tactics to promote their product and reach out to the public or the target audience. The promotion might include direct marketing, advertising, personal branding, sales promotion, etc.

7 P of Marketing:

The 7Ps model is a marketing model that modifies the 4Ps model. As Marketing mix 4P is becoming an old trend, and nowadays, marketing business needs deep understanding of the rise in new technology and concept. So, 3 more new P’s were added in the old 4Ps model to give a deep understanding of the concept of the marketing mix.

People in Marketing Mix:

The company’s employees are important in marketing because they are the ones who deliver the service to clients. It is important to hire and train the right people to deliver superior service to the clients, whether they run a support desk, customer service, copywriters, programmers…etc. It is very important to find people who genuinely believe in the products or services that the particular business creates, as there is a huge chance of giving their best performance. Adding to it, the organization should accept the honest feedback from the employees about the business and should input their own thoughts and passions which can scale and grow the business.

Process in Marketing Mix:

We should always make sure that the business process is well structured and verified regularly to avoid mistakes and minimize costs. To maximize the profit, it’s important to tighten up the enhancement process.

Physical Evidence in Marketing Mix:

In the service industries, there should be physical evidence that the service was delivered. A concept of this is branding. For example, when you think of “fast food”, you think of KFC. When you think of sports, the names Nike and Adidas come to mind.

2. (a) Discuss the causes of growing consumerism. What are the remedies to provide consumer satisfaction? (10+6=16)

-> Consumerism is a social force to make business more honest and responsible towards consumers. It makes the consumers aware of their rights and also pressurizes the government to adopt the necessary measures to protect consumer interests.

Consumers are often denied their rights in the process of selling. Sellers want consumers as buyers and not as complainants. So, the position of the consumer has been rather weak in relation to the seller. In this regard, consumerism should be regarded as a movement with the involvement of public and the government to protect the rights and interests of the consumers.

Consumerism may be defined as a social movement of consumers seeking redress, restitution and remedy for dissatisfaction that they have accumulated in the purchase of products / service and their performance.

Reasons for Consumerism

The major causes for the evolution of consumerism have been the continuous rise in prices, underperformance of product, quality of the service, Shortage of product and deceptive advertising.

1. Rising prices: The value of a rupee was a rupee in 1949 matching its full face value. But now it is worth less than 10 paise. The pricing theory holds that price is directly related to quality and quantity. But prices of mass consumer goods such as soaps, tooth paste etc., are 10% — 20% above the real prices. So, often dealers earn a good margin of profit and create an artificial demand for them.

2. Adulteration: Unscrupulous traders indulge in adulteration. They make illegitimate and abnormal profit through adulterated products. Adulteration involves cheap ingredients mixed with the product intended for sale. Such adulterated product is detrimental to health. A survey says about 25 to 35% of the food we eat today is adulterated. Presence of stones in grains, cheaper fats in ghee, mixing of coconut oil with palmoleins etc., are common in adulteration. They all leave behind harmful effects on consumers.

3. Duplication: Duplicates are made for all types of products like automobile components, medicines, blades, pens, watches; clothes and even currency notes. Consumers are not able to differentiate the original products from duplicates. Duplicate products are available through wide marketing network undertaken by dishonest traders. Some home made products are stamped “Made in Japan”, “Made in USA” just to lure the consumers.

4. Artificial demand: When the price of a product is steadily increasing, some traders buy in bulk and hoard them. They put up a sign “No stock” in front of their shops, though stocks are in abundance with them. As a result, consumers pay higher prices because of the artificial scarcity created. In certain cinema houses, selling tickets in black is quite common. Though seats may be vacant, these theaters will be claiming “full house“. But the sale in ‘ black‘ will be very brisk outside the theater.

5. Sub-standard products: Substandard products are made using inferior raw materials or by cutting short the required production processes. After a product is well received in the market, some manufacturers deliberately downgrade the quality of the product without reducing the price. Customers cannot inspect the goods as they are packed and sealed. Only after the use of the goods purchased, they will be in a shock.

6. Product risks: Some products are valid or potent only for a particular period. Example: medicines, drugs, fruits, etc. On the expiry of a particular period, consumption of such items proves to be detrimental to health.

7. Misleading Advertisements: Misrepresentation of facts, false claims, cheating do occur in advertising. An advertiser may make a tall claim about the usefulness of his product, just to lure the consumers to buy them, whereas the product may not be as useful. So, consumers should be protected against deceptive advertisements.

8. Warranty and service: At the time of sale, sellers guarantee a good performance of the product they sell. If a product becomes defective after being sold, buyers are not given any remedy for the defect noticed in the goods. In such cases, remedy is available through consumer redressal forums.

9. Fitness of products: Salesmen are supposed to assist the buyers in making wise selection of goods. The products that buyers buy must suit their needs. Product fitness refers to product quality, durability and suitability in relation to the purchase objective of the consumers. But most of the goods are sold by pressurizing the buyers.

Customer satisfaction, for years has been less of a concept and more of an event — you gave a customer a product or service, they paid you money, and everyone was satisfied with the result. And yet, for the past few decades it has morphed into something broader, more fluid, and much more elusive. Today, marketers and business owners generally define customer satisfaction as a measurement of how well a product or service meets up to — or surpasses — the customer’s expectations. This modern concept of customer satisfaction first emerged as a core consideration of marketing in the 1950’s, but over the decades it has steadily grown in importance, before reaching its current peak. Arguably the sharpest incline in the importance of customer satisfaction occurred when social media became main stream. Nowadays, customers will post, share, or tweet their satisfaction (or dissatisfaction) regarding any given product or service, and it has the potential to directly affect the business.

How to improve customer satisfaction?

So there is no questioning that it is important, but the challenge that so many business owners are still trying to tackle is how to improve customer service, and subsequently customer satisfaction. There is no perfect answer to this, and every business has a different customer base, with different expectations. However, there are a few practices that, when followed, can improve customer satisfaction regardless of industry.

Listen to customers.

In order to give customers what they want, you have to know what they want. Customers are more vocal than ever — 65 percent of customers are likely to speak negatively about their customer service experience. This is something that affects both a business and a brand. Luckily, keeping tuned in to what people are saying is easier than ever. Using modern customer service tools, companies are able to track social conversations and address concerns immediately.

Be proactive.

That tracking becomes important when it comes to avoiding crises, or even simply reaching out to customers in a positive way. Using the right tools you can create a customer service culture that is proactive, rather than reactive.

Practice honesty and manage expectations in marketing.

One of the biggest sources of customer dissatisfaction is when a service or product does not match up to the customer’s expectations. Marketing efforts should be carefully crafted so that nothing is promised that cannot be met.

Understand your customers.

People are unique, and understanding them on a personal level is the key to unlocking customer satisfaction. Of course, it is impossible for your marketing team and customer service reps to understand each individual with whom they interact, but through collecting and utilizing data, they can better understand their needs and wants, and address them accordingly.

A lot of this comes down to using the right tools. Indeed, perhaps the most important step forward in recent years regarding how to improve customer satisfaction, has been the emergence of cloud-based customer support platforms.

(b) What do you mean by term “buyer behavior”? Illustrate and explain the consumer decision making at different levels. (6+10=16)

-> Buyer behavior refers to the decision and acts people undertake to buy products or services for individual or group use. It’s synonymous with the term “consumer buying behavior,” which often applies to individual customers in contrast to businesses.

Buyer behavior is the driving force behind any marketing process. Understanding why and how people decide to purchase this or that product or why they are so loyal to one particular brand is the number one task for companies that strive for improving their business model and acquiring more customers.

Buyer behavior patterns

Each consumer may have unique buying habits. Still, there are typical tendencies, which allows distinguishing the following buyer behavior patterns:

Place of purchase

If customers have access to several stores, they are not always loyal to one place. So even if all items are available in one outlet, they may divide their purchases among several shops.

Items purchased

There are two things to consider: the type of the product customers purchase and its quantity. As a rule, people buy necessity items in bulk. In contrast, luxury items are more likely to be purchased in small quantities and not frequently. The amount of goods people buy is influenced by such factors:

  • Product durability
  • Product availability
  • Product price
  • Buyer’s purchasing power
  • Number of customers for whom the product is intended

The analysis of a buyer’s shopping cart may bring many valuable insights about buyer behavior.

Time and frequency of purchase

With the development of e-commerce, purchases have become only a few clicks away. Anyway, marketers should understand how often and at what time of the year or day people tend to buy more goods. The product purchase frequency may depend on the following factors:

  • Product type
  • Customer’s lifestyle
  • Product necessity
  • Customer’s traditions and customs

Method of purchase

People buy goods in different ways: some go to the store, while others prefer ordering items online. Some pay cash, while others use a credit card. Among customers who buy goods in online stores, some pay on delivery, while others are ready to pay right after they place an order. The way customers choose to purchase products tells a lot about their buyer persona.

Consumer Decision Making refers to the process under which consumers go through in deciding what to purchase, including problem recognition, information searching, evaluation of alternatives, making the decision and post-purchase evaluation.

Reasons behind Consumer Decisions:

In the present world, a consumer has a lot of options while taking any decision. But basically the consumer has five decision dimensions

These are as follows:

1. What to buy?

2. How much to buy?

3. Where to buy?

4. When to buy?

5. How to buy?

1. What to buy?

The decision to buy any product is the most important task. Until and unless if a decision is made a consumer cannot buy anything. The consumer has also to make the choice of the product available in the market. After taking any decision consumers buy a product. Then the consumer takes a decision about which brand to buy. This can be attached with the price and features of the product.

2. How much to buy?

The next decision the consumer has to make is to how much of the product to be purchased. It depends on the type of the product to be purchased and then the purchases can be made. The quantity to be purchased by the consumer depends on the availability and frequency of use of the product.

3. Where to buy?

Another decision the consumer has to make is where the product should be bought. Consumers usually will go to a place where the services offered are excellent. Also the other factors like prices and outlets are being decided by the consumers. The consumer expects a discount on the product. So, consumers usually go to such places where availability of the product quantity and quality can be decided by just looking at the other brands of the same product to be purchased. Many products have different features and therefore after thoroughly examining the purchase is made.

4. When to buy?

The consumer also has to decide the time when the purchase has to be made. This also is influenced by the availability of the products. Usually the purchase made by a consumer is very high during the festive season, due to large volume of discount. This not only ensures the consumer that they can get a product at a discount price. It is also influenced by opening times, sale and clearance period, transportation etc., for the goods purchased.

5. How to buy?

Under this the consumer has to decide whether to pay cash or by credit payment. Also the consumer expects the goods purchased to be delivered by the retailer. Also the installment facility on line purchased option may boost the sale of the products. If this part is handled with utmost care, the revenue for the retailer will go up. So, all the facility the consumer needs if available, there is no problem to dispatch the goods. The sale will go up automatically of course the proper paper work is done, depending on which the sale is made.

Every day we are involved in taking decisions related to the various aspects of our lives. Usually such decisions are taken automatically without the involvement of any particular decision making process.

For instance say a housewife goes to purchase a mid-priced range of tea, her decision making merely involves making a selection from the various brands of tea like Taj Mahal, Tata Tea, Red label, Yellow Label and so on. The process by which a person is required to make a choice from various alternative options is referred to as decision making.

Levels of Consumer Decision Making:-

The decisions to buy shaving cream, a tennis racket, a personal computer, and a new car are all very different. If all purchase decisions required extensive effort, then consumer decision-making would be an exhausting process would leave little time for anything else. Types of buying habits of consumer/buying situations are also known as levels of consumer decision making process.

Consumer decision making varies with the types of buying decision. On the other hand, if all purchases were routine, then they would tend to be monotonous and would provide little pleasure or novelty.

On a continuum of effort ranging from very high to very low, we can distinguish four specific levels of consumer decision-making:

1. Complex buying behavior

2. Dissonance-reducing buying behavior

3. Habitual buying behavior

4. Variety-seeking buying behavior

High Involvement:

1. Significant differences between brands – Complex buying behavior.

2. Few differences between brands – Dissonance-reducing buying behavior.

Low Involvement:

1. Significant differences between brands – Variety-seeking buying behavior.

2. Few differences between brands – Habitual buying behavior.

3. Write short notes on: (any two): (8×2=16)

a) Pricing Setting Mechanism.

-> A price-setting mechanism refers to how the price of a commodity (or price relationship between multiple commodities) is determined by the market.

It is essentially the link between pricing behavior and the underlying physical behavior that affects pricing.

Common examples of price-setting mechanisms are:

· Marginal cost of production

· Value in use

· Substitution value (versus alternatives)

· Import parity pricing

· Export net-back pricing

Price-setting mechanisms can be determined either by market forces or by direct, explicit contract terms.

b) Product mix.

-> Product mix, also known as product assortment or product portfolio, refers to the complete set of products and/or services offered by a firm. A product mix consists of product lines, which are associated items that consumers tend to use together or think of as similar products or services.

Dimensions of a Product Mix

1. Width

Width, also known as breadth, refers to the number of product lines offered by a company. For example, Kellogg’s product lines consist of: (1) Ready-to-eat cereal, (2) Pastries and breakfast snacks, (3) Crackers and cookies, and (4) Frozen/Organic/Natural goods.

2. Length

Length refers to the total number of products in a firm’s product mix. For example, consider a car company with two car product lines (3-series and 5-series). Within each product line series are three types of cars. In this example, the product length of the company would be six.

3. Depth

Depth refers to the number of variations within a product line. For example, continuing with the car company example above, a 3-series product line may offer several variations such as coupe, sedan, truck, and convertible. In such a case, the depth of the 3-series product line would be four.

4. Consistency

Consistency refers to how closely related product lines are to each other. It is in reference to their use, production, and distribution channels . The consistency of a product mix is advantageous for firms attempting to position themselves as a niche producer or distributor. In addition, consistency aids with ensuring a firm’s brand image is synonymous with the product or service itself.

d) Product Life Cycle.

-> The product life cycle is the process a product goes through from when it is first introduced into the market until it declines or is removed from the market. The life cycle has four stages – introduction, growth, maturity and decline.

While some products may stay in a prolonged maturity state, all products eventually phase out of the market due to several factors including saturation, increased competition, decreased demand and dropping sales.

Additionally, companies use PLC analysis (examining their product’s life cycle) to create strategies to sustain their product’s longevity or change it to meet with market demand or developing technologies.

4 Stages of the Product Life Cycle

Generally, there are four stages to the product life cycle, from the product’s development to its decline in value and eventual retirement from the market.

1. Introduction

Once a product has been developed, the first stage is its introduction stage. In this stage, the product is being released into the market. When a new product is released, it is often a high-stakes time in the product’s life cycle – although it does not necessarily make or break the product’s eventual success.

During the introduction stage, marketing and promotion are at a high – and the company often invests the most in promoting the product and getting it into the hands of consumers. This is perhaps best showcased in Apple’s ( AAPL) – Get Report famous launch presentations, which highlight the new features of their newly (or soon to be released) products.

It is in this stage that the company is first able to get a sense of how consumers respond to the product, if they like it and how successful it may be. However, it is also often a heavy-spending period for the company with no guarantee that the product will pay for itself through sales.

Costs are generally very high and there is typically little competition. The principle goals of the introduction stage are to build demand for the product and get it into the hands of consumers, hoping to later cash in on its growing popularity.

2. Growth

By the growth stage, consumers are already taking to the product and increasingly buying it. The product concept is proven and is becoming more popular – and sales are increasing.

Other companies become aware of the product and its space in the market, which is beginning to draw attention and increasingly pull in revenue. If competition for the product is especially high, the company may still heavily invest in advertising and promotion of the product to beat out competitors. As a result of the product growing, the market itself tends to expand. The product in the growth stage is typically tweaked to improve functions and features.

As the market expands, more competition often drives prices down to make the specific products competitive. However, sales are usually increasing in volume and generating revenue. Marketing in this stage is aimed at increasing the product’s market share.

3. Maturity

When a product reaches maturity, its sales tend to slow or even stop – signaling a largely saturated market. At this point, sales can even start to drop. Pricing at this stage can tend to get competitive, signaling margin shrinking as prices begin falling due to the weight of outside pressures like competition or lower demand. Marketing at this point is targeted at fending off competition, and companies will often develop new or altered products to reach different market segments.

Given the highly saturated market, it is typically in the maturity stage of a product that less successful competitors are pushed out of competition – often called the “shake-out point.”

In this stage, saturation is reached and sales volume is maxed out. Companies often begin innovating to maintain or increase their market share, changing or developing their product to meet with new demographics or developing technologies.

The maturity stage may last a long time or a short time depending on the product. For some brands, the maturity stage is very drawn out, like Coca-Cola ( KO) – Get Report .

4. Decline

Although companies will generally attempt to keep the product alive in the maturity stage as long as possible, decline for every product is inevitable.

In the decline stage, product sales drop significantly and consumer behavior changes as there is less demand for the product. The company’s product loses more and more market share, and competition tends to cause sales to deteriorate.

Marketing in the decline stage is often minimal or targeted at already loyal customers, and prices are reduced.

Eventually, the product will be retired out of the market unless it is able to redesign itself to remain relevant or in-demand. For example, products like typewriters, telegrams and muskets are deep in their decline stages (and in fact are almost or completely retired from the market).

4. (a) Critically evaluate the marketing and social aspects of promotion. Should it be controlled by law? Justify. (16)

(b) Define channel of distribution. Indicate the relative importance of different channels. (8+8=16)

-> A distribution channel, in simple terms, is the flow that a good or service follows from production or manufacturing to the final consumer/buyer. Distribution channels vary but typically include a producer, a wholesaler, a retailer, and the end buyer/consumer. A distribution channel can also provide a sense of how money flows back from the buyers to the producer or original point of sale.

Types of Distribution Channels

Distribution channels can either be direct or indirect. The indirect channels can be divided up into different levels.

1. Direct distribution channels

The direct distribution channel does not make use of any intermediaries. The manufacturer or producer sells directly to the end consumer. The direct form of distribution is typically used by producers or manufacturers of niche and expensive goods and items that are perishable. An example is a baker.

2. Indirect distribution channels

The indirect distribution channel makes use of intermediaries in order to bring a product to market. The three types of indirect channels are:

One-level channel

The one-level channel entails a product coming from a producer to a retailer and then to the end buyer. The retailers buy the product from the manufacturer and sell it to the end buyers. The one-level channel is ideal for manufacturers of furniture, clothing items, toys, etc.

Two-Level Channel

Two-level channel

The two-level channel follows the following process:

One-Level Channel

Wholesalers generally make bulk purchases, buy from the producer, and divide the goods into smaller packages to sell to retailers. The retailers then sell the goods to the end buyers. The two-level channel is suitable for more affordable and long-lasting goods with a larger target market.

Three-level channel

The three-level channel is similar to the two-level channel, except the goods flow from the producer to an agent and then to a wholesaler. Agents assist with selling the goods and getting the goods delivered to the market promptly.

The agents normally receive a commission and are allocated the task of product distribution in a particular area. The three-level channel is suitable for goods that are in high demand and with a target market that stretches across a country.

Three-Level Channel

Importance of distribution channels:

Manufacturers may always do not always need distribution channels. As discussed, it depends on several factors. Some of the importance’s are

1. They create exchange efficiency by reducing the number of contacts needed.

2. The distribution channels can perform many functions like transportation, storage, selling, scale of operation and advertising better than the manufacturers.

3. Large manufacturing companies can reduce their costs and time required to reach their products with the help of distribution channels.

4. These can offer promotion and financial support.

5. Answer briefly on any two of the following: (8+8=16)

a) Compare and contrast primary and secondary data of information.

-> 15 differences between primary and secondary data

  • Definition

Primary data is the type of data that is collected by researchers directly from main sources while secondary data is the data that has already been collected through primary sources and made readily available for researchers to use for their own research.

The main difference between these 2 definitions is the fact that primary data is collected from the main source of data, while secondary data is not.

The secondary data made available to researchers from existing sources are formerly primary data which was collected for research in the past. The availability of secondary data is highly dependent on the primary researcher’s decision to share their data publicly or not.

  • Examples:

An example of primary data is the national census data collected by the government while an example of secondary data is the data collected from online sources. The secondary data collected from an online source could be the primary data collected by another researcher.

For example, the government, after successfully the national census, they share the results in newspapers, online magazines, press releases, etc. Another government agency that is trying to allocate the state budget for healthcare, education, etc. may need to access the census results.

With access to this information, the number of children who needs education can be analyzed and hard to determine the amount that should be allocated to the education sector. Similarly, knowing the number of old people will help in allocating funds for them in the health sector.

  • Data Types

The type of data provided by primary data is real-time, while the data provided by secondary data is stale. Researchers are able to have access to the most recent data when conducting primary research , which may not be the case for secondary data.

Secondary data have to depend on primary data that has been collected in the past to perform research. In some cases, the researcher may be lucky that the data is collected close to the time that he or she is conducting research.

Therefore, reducing the amount of difference between the secondary data being used and the recent data.

  • Process

Researchers are usually very involved in the primary data collection process, while secondary data is quick and easy to collect. This is due to the fact that primary research is mostly longitudinal.

Therefore, researchers have to spend a long time performing research, recording information, and analyzing the data. This data can be collected and analyzed within a few hours when conducting secondary research.

For example, an organization may spend a long time analyzing the market size for transport companies looking to talk into the ride-hailing sector. A potential investor will take this data and use it to inform his decision of investing in the sector or not.

  • Availability

Primary data is available in crude form while secondary data is available in a refined form. That is, secondary data is usually made available to the public in a simple form for a layman to understand while primary data are usually raw and will have to be simplified by the researcher.

Secondary data are this way because they have previously been broken down by researchers who collected the primary data afresh. A good example is the Thomson Reuters annual market reports that are made available to the public.

When Thomson Reuters collect this data afresh, they are usually raw and may be difficult to understand. They simplify the results of this data by visualizing it with graphs, charts, and explanations in words.

  • Data Collection Tools

Primary data can be collected using surveys and questionnaires while secondary data are collected using the library, bots, etc. The different ones between these data collection tools are glaring and can it be interchangeably used.

When collecting primary data, researcher’s lookout for a tool that can be easily used and can collect reliable data. One of the best primary data collection tools that satisfy this condition is Form plus.

Form plus is a web-based primary data collection tool that helps researchers collect reliable data while simultaneously increasing the response rate from respondents.

  • Sources

Primary data sources include; Surveys, observations, experiments, questionnaires, focus groups, interviews, etc., while secondary data sources include; books, journals, articles, web pages, blogs, etc. These sources vary explicitly and there is no intersection between the primary and secondary data sources.

Primary data sources are sources that require a deep commitment from researchers and require interaction with the subject of study. Secondary data, on the other hand, do not require interaction with the subject of study before it can be collected.

In most cases, secondary researchers do not have any interaction with the subject of research.

  • Specific

Primary data is always specific to the researcher’s needs, while secondary data may or may not be specific to the researcher’s need. It depends solely on the kind of data the researcher was able to lay hands on.

Secondary researchers may be lucky to have access to data tailored specifically to meet their needs, which mag is not the case in some cases. For example, a market researcher researching the purchasing power of people from a particular community may not have access to the data of the subject community.

Alternatively, there may be another community with a similar standard of living to the subject community whose data is available. The researcher mag uses to settle for this data and use it to inform his conclusion on the subject community.

  • Advantage

Some common advantages of primary data are its authenticity, specific nature, and up to date information while secondary data is very cheap and not time-consuming.

Primary data is very reliable because it is usually objective and collected directly from the original source. It also gives up to date information about a research topic compared to secondary data.

Secondary day, on the other hand, is not expensive making it easy for people to conduct secondary research. It doesn’t take so much time and most of the secondary data sources can be accessed for free.

  • Disadvantage

The disadvantage of primary data is the cost and time spent on data collection while secondary data may be outdated or irrelevant. Primary data incur so much cost and takes time because of the processes involved in carrying out primary research.

For example, when physically interviewing research subjects, one may need one or more professionals, including the interviewees, videographers who will make a record of the interview in some cases and the people involved in preparing for the interview. Apart from the time required, the cost of doing this may be relatively high.

Secondary data may be outdated and irrelevant. In fact, researchers have to surf through irrelevant data before finally having access to the data relevant to the research purpose.

  • Accuracy and Reliability

Primary data is more accurate and reliable while secondary data is relatively less reliable and accurate. This is mainly because the secondary data sources are not regulated and are subject to personal bias.

A good example of this is business owners who lay bloggers to write good reviews about their product just to gain more customers. This is not the case with primary data which is collected by being a researcher himself.

One of the researcher’s aim when gathering primary data for research will be gathering accurate data so as to arrive at correct conclusions. Therefore, biases will be avoided at all costs (e.g. same businesses when collecting feedback from customers).

  • Cost-effectiveness

Primary data is very expensive while secondary data is economical. When working on a low budget, it is better for researchers to work with secondary data, then analyze it to uncover new trends.

In fact, a researcher might work with both primary data and secondary data for one research. This is usually very advisable in cases whereby the available secondary data does not fully meet the research needs.

Therefore, a little extension on the available data will be done and cost will also be saved. For example, a researcher may require a market report from 2010 to 2019 while the available reports stop at 2018.

  • Collection Time

The time required to collect primary data is usually long while that required to collect secondary data is usually short. The primary data collection process is sometimes longitudinal in nature.

Therefore, researchers may need to observe the research subject for some time while taking down important data. For example, when observing the behavior of a group of people or particular species, researchers have to observe them for a while.

Secondary data can, however, be collected in a matter of minutes and analyzed to dead conclusions—taking a shorter time when compared to primary data. In some rare cases, especially when collecting little data, secondary data may take a longer time because of difficulty consulting different data sources to find the right data.

Similarities between Primary & Secondary Data

  • Contains Same Content:

Secondary data was once primary data when it was newly collected by the first researcher. The content of the data collected does not change and therefore has the same content with primary data.

It doesn’t matter if it was further visualized in the secondary form, the content does not change. A common example of these is definitions, theorems, and postulates that were made years ago but still remain the same.

  • Uses

Primary data and secondary data are both used in research and statistics. They can be used to carry out the same kind of research in these fields depending on data availability. This is because secondary data and primary data have the same content. The only difference is the method by which they are collected.

Since the method of collection does not directly affect the uses of data, they can be used to perform similar research. For example, whether collected directly or from an existing database, the demography of a particular target market can be used to inform similar business decisions.

c) Discuss the role of relationship marketing.

-> Relationship marketing is a facet of customer relationship management ( CRM ) that focuses on customer loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and individual sales. The goal of relationship marketing (or customer relationship marketing) is to create strong, even emotional, customer connections to a brand that can lead to ongoing business, free word-of-mouth promotion and information from customers that can generate leads.

Relationship marketing stands in contrast to the more traditional transactional marketing approach, which focuses on increasing the number of individual sales. In the transactional model, the return on customer acquisition cost may be insufficient. A customer may be convinced to select that brand one time, but without a strong relationship marketing strategy, the customer may not come back to that brand in the future. While organizations combine elements of both relationship and transactional marketing, customer relationship marketing is starting to play a more important role for many companies.

d) Explain the features of rural marketing in India.

-> Rural marketing is now a two-way marketing process. There is inflow of products into rural markets for production or consumption and there is also outflow of products to urban areas. The urban to rural flow consists of agricultural inputs, fast-moving consumer goods (FMCG) such as soaps, detergents, cosmetics, textiles, and so on. The rural to urban flow consists of agricultural produce such as rice, wheat, sugar, and cotton. There is also a movement of rural products within rural areas for consumption.

Features of Rural Marketing:

The main reason why the companies are focusing on rural market and developing effective strategies is to tap the market potential, that can be identified as follows:

1. Large and scattered population:

According to the 2001 census, 740 million Indians forming 70 per cent of India’s population live in rural areas. The rate of increase in rural population is also greater than that of urban population. The rural population is scattered in over 6 lakhs villages. The rural population is highly scattered, but holds a big promise for the marketers.

2. Higher purchasing capacity:

Purchasing power of the rural people is on rise. Marketers have real­ized the potential of rural markets, and thus are expanding their operations in rural India. In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in purchasing power of rural communities.

3. Market growth:

The rural market is growing steadily over the years. Demand for traditional products such as bicycles, mopeds and agricultural inputs; branded products such as toothpaste, tea, soaps and other FMCGs; and consumer durables such as refrigerators, TV and washing machines has also grown over the years.

4. Development of infrastructure:

There is development of infrastructure facilities such as con­struction of roads and transportation, communication network, rural electrification and public service projects in rural India, which has increased the scope of rural marketing.

5. Low standard of living:

The standard of living of rural areas is low and rural consumers have diverse socio-economic backwardness. This is different in different parts of the country. A con­sumer in a village area has a low standard of living because of low literacy, low per capita income, social backwardness and low savings.

6. Traditional outlook:

The rural consumer values old customs and traditions. They do not prefer changes. Gradually, the rural population is changing its demand pattern, and there is demand for branded products in villages.

7. Marketing mix:

The urban products cannot be dumped on rural population; separate sets of prod­ucts are designed for rural consumers to suit the rural demands. The marketing mix elements are to be adjusted according to the requirements of the rural consumers.

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