Course Code : MBA - 205

Course Title : Marketing Management

Assignment No. : MBA-205/ 2022
Maximum Marks : 30

Q2. Define pricing policy. What are the factors to be considered while making a pricing decision?

Ans. A pricing policy is a standing answer to recurring question. A systematic approach to pricing requires the
decision that an individual pricing situation be generalised and codified into a policy coverage of all the principal
pricing problems. Policies can and should be tailored to various competitive situations. A policy approach which is
becoming normal for sales activities is comparatively rare in pricing.

Most well managed manufacturing enterprises have a clear cut advertising policy, product customer policy and
distribution-channel policy. But pricing decision remains a patchwork of ad hoc decisions. In many, otherwise well
managed firms, price policy has been dealt with on a crisis basis. This kind of price management by catastrophe
discourages the kind of systematic analysis needed for clear cut pricing policies.

The pricing of the products involves consideration of the following factors:

(i) Cost Data.

(ii) Demand Factor.
(iii) Consumer Psychology.
(iv) Competition.
(v) Profit.
(vi) Government Policy.

(i) Cost Data in Pricing:

Cost data occupy an important place in the price setting processes. There are different types of costs incurred in the
production and marketing of the product. There are production costs, promotional expenses like advertising or
personal selling as well as taxation, etc.

They may necessitate an upward fixing of price. For example, the prices of petrol and gas are rising due to rise in the
cost of raw materials, such as crude transportation, refining, etc. If costs go up, price rise can be quite justified.
However, their relevance to the pricing decision must neither be underestimated nor exaggerated. For setting prices
apart from costs, a number of other factors have to be taken into consideration. They are demand and competition.

Costs are of two types:

Fixed costs and variable costs. In the short period, that is, the period in which a firm wants to establish itself, the firm
may not cover the fixed costs but it must cover the variable cost. But in the long run, all costs must be covered. If the
entire costs are not covered, the producer stops production.

Subsequently, the supply is reduced which, in turn, may lead to higher prices. If costs are not covered, the producer
stops production. Subsequently, the supply is reduced which, in turn, may lead to higher prices. If costs were to
determine prices why do so many companies report losses?

There are marked differences in costs as between one producer and another. Yet the fact remains that the prices are
very close for a somewhat similar product. This is the very best evidence of the fact that costs are not the
determining factors in pricing.

In fact, pricing is like a tripod. It has three legs. In addition to costs, there are two other legs of market demand and
competition. It is no more possible to say that one or another of these factors determines price than it is to assert
that one leg rather than either of the other two supports a tripod.
Price decisions cannot be based merely on cost accounting data which only contribute to history while prices have to
work in the future. Again it is very difficult to measure costs accurately. Costs are affected by volume, and volume is
affected by price.

The management has to assume some desired price-volume relationship for determining costs. That is why, costs
play even a less important role in connection with new products than with the older ones. Until the market is
decided and some idea is obtained about volume, it is not possible to determine costs.

Regarding the role of costs in pricing, Nickerson observes that the cost may be regarded only as an indicator of
demand and price. He further says that the cost at any given time represents a resistance point to the lowering of
price. Again, costs determine profit margins at various levels of output.

Cost calculation may also help in determining whether the product whose price is determined by its demand, is to be
included in the product line or not. What costs determine is not the price, but whether the production can be
profitably produced or not is very important.

Relevant Costs:

The question naturally arises: “What then are the relevant costs for pricing decision? Though in the long run, all costs
have to be covered, for managerial decisions in the short run, direct costs are relevant. In a single product firm, the
management would try to cover all the costs.”

In a multi-product firm, problems are more complex. For pricing decision, relevant costs are those costs that are
directly traceable to an individual product. Ordinarily, the selling price must cover all direct costs that are
attributable to a product. In addition, it must contribute to the common cost and to the realisation of profit. If the
price, in the short run, is lower than the cost, the question arises, whether this price covers the variable cost. If it
covers the variable cost, the low price can be accepted.

But in the long run, the firm cannot sell at a price lower than the cost. Product pricing decision should be lower than
the cost. Product pricing decision should, therefore, be made with a view to maximise company’s profits in the long
run.

(ii) Demand Factor in Pricing:

In pricing of a product, demand occupies a very important place. In fact, demand is more important for effective
sales. The elasticity of demand is to be recognised in determining the price of the product. If the demand for the
product is inelastic, the firm can fix a high price. On the other hand, if the demand is elastic, it has to fix a lower
price.

In the very short term, the chief influence on price is normally demand. Manufacturers of durable goods always set a
high price, even though sales are affected. If the price is too high, it may also affect the demand for the product.
They wait for arrival of a rival product with competitive price. Therefore, demand for product is very sensitive to
price changes.

(iii) Consumer Psychology in Pricing:

Demand for the product depends upon the psychology of the consumers. Sensitivity to price change will vary from
consumer to consumer. In a particular situation, the behaviour of one individual may not be the same as that of the
other. In fact, the pricing decision ought to rest on a more incisive rationale than simple elasticity. There are
consumers who buy a product provided its quality is high.

Generally, product quality, product image, customer service and promotion activity influence many consumers more
than the price. These factors are qualitative and ambiguous. From the point of view of consumers, prices are
quantitative and unambiguous.

Price constitutes a barrier to demand when it is too low, just as much as where it is too high. Above a particular
price, the product is regarded as too expensive and below another price, as constituting a risk of not giving adequate
value. If the price is too low, consumers will tend to think that a product of inferior quality is being offered.
With an improvement in incomes, the average consumer becomes quality conscious. This may lead to an increase in
the demand for durable goods. People of high incomes buy products even though their prices are high. In the
affluent societies, price is the indicator of quality.

Advertisement and sales promotion also contribute very much in increasing the demand for advertised products.
Because the consumer thinks that the advertised products are of good quality. The income of the consumer, the
standard of living and the price factor influence the demand for various products in the society.

(iv) Competition Factor in Pricing:

Market situation plays an effective role in pricing. Pricing policy has some managerial discretion where there is a
considerable degree of imperfection in competition. In perfect competition, the individual producers have no
discretion in pricing. They have to accept the price fixed by demand and supply.

In monopoly, the producer fixes a high price for his product. In other market situations like oligopoly and
monopolistic competition, the individual producers take the prices of the rival products in determining their price. If
the primary determinant of price changes in the competitive condition is the market place, the pricing policy can
least be categorised as competition based pricing.

(v) Profit Factor in Pricing:

In fixing the price for products, the producers consider mainly the profit aspect. Each producer has his aim of profit
maximisation. If the objective is profit maximisation, the critical rule is to select the price at which MR = MC.
Generally, the pricing policy is based on the goal of obtaining a reasonable profit. Most of the businessmen want to
hold the price at constant level.

They do not desire frequent price fluctuation. The profit maximisation approach to price setting is logical because it
forces decision makers to focus their attention on the changes in production, cost, revenue and profit associated
with any contemplated change in price. The price rigidity is the practice of many producers. Rigidity does not mean
inflexibility. It means that prices are stable over a given period.

(vi) Government Policy in Pricing:

In market economy, the government generally does not interfere in the economic decisions of the economy. It is
only in planned economies, the government’s interference is very much. According to conventional economic
theory, the buyers and sellers only determine the price. In reality, certain other parties are also involved in the
pricing process. They are the competition and the government.

The government’s practical regulatory price techniques are ceiling on prices, minimum prices and dual pricing. In a
mixed economy like India, the government resorts to price control. The business establishments have to adopt the
government’s price policies to control relative prices to achieve certain targets, to prevent inflationary price rise and
to prevent abnormal increase in prices.

Q3. Discuss different steps in the process of personal selling.

Ans. The different steps in the process of personal selling are a follows;

1. Prospecting:

Searching for prospects is prospecting. Here, prospect is a person or an institution who is likely to be benefited by
the product the salesman wants to sell and can afford to buy it.

Prospecting is the work of collecting the names and addresses or persons who are likely to buy the firm’s products
and services. Provide encompasses even the discovery of special needs and multiplying the sales with existing
clientele.

While collecting the details, ‘suspects’ must be separated from ‘prospects’ to avoid or reduce waste of time, treasure
and talent. There are definite methods of prospecting.
The most popular ones are:

1. Endless chain method

2. Centre of influence method
3. Personal observation method
4. Spotter’s method
5. Cold-canvas method
6. Direct mail and
7. Telephone method.

2. Pre-approach:

Pre-approach is to get more detailed facts about a specific individual to have effective sales appeals on him or her. It
is a record round effort to get details regarding the prospect such as his ability, need, authority, accessibility to buy;
it is a closer look of prospects, likes and dislikes, tastes, habits, financial status, social esteem, material status, family
background and the like.

The objectives of pre-approach are to providing additional qualifying information; to design an effective approach
strategy; to better the planning information; to avoid serious errors and to build-up confidence.

The sources of information are his fellow salesmen, customers, local newspapers, special investigators, sales office,
directories, observation and the prospect.

3. Approach:

Approach means the meeting of the prospect in person by the salesman where he makes face to face contact with
prospects to understand them better. Approach is such a delicate and critical stage of the sales process that the sales
are either won or lost.

Approach is stepping stone for sales presentation. It is because of this delicacy that sales are likened to a chain
where break of one link will break it into useless lump of hooks.

Success follows the salesman who possesses courage, courtesy and confidence. The objectives of approach are: To
help the salesman to make a favourable impression; to amplify the detailed information obtained by the salesman at
pre-approach level; to convert the favourable attention of the prospect easily and smoothly into the sales
proposition.

4. Presentation and demonstration:

Presentation implies an array and decoration of articles in the shop. It is the heart of selling process. Effective
presentation has the capacity to convince the customer of his sales proposition. It creates and holds the interest of
customers towards the products. It would be wrong to assume that all those who enter the shop do buy the
products.

Normally, most of the prospects visit the shop to see prior to their decision to buy. This casual visit can be a
commitment visit provided products are displayed, presented and demonstrated by the salesmen in an appealing
manner. Demonstration is a part of presentation because, more description is not enough.

Demonstration is the crucial task of providing the proofs and providing the statements about quality, utility,
performance and service of a product by evidences of experiment, operation or a test.

The significance of demonstration lies in reducing the sales talk, facilitating the comparison, appealing to senses,
fortifying the sales talks and convincing the fastidious customers. Here, A-I-D-A approach works wonders.

5. Overcoming objections:

For a creative and persuasive salesman, the process of selling really starts when the prospect raises objections. In
absence of sales resistance the salesman is merely an order booking clerk. For every action of salesman there is
prospect’s pro-action or reaction that is, approval or disapproval.
Each salesman should understand the reasons as to why prospects raise objections because; each objection has its
roots in the buying decision. An objection is the expression of disapproval of an action taken by salesman; it is an
adverse reason or an argument indicating clearly that the prospect is not yet ready to buy.

These objections may be genuine or mere excuses. Overcoming objections is really a delicate stage that makes or
mars the unbroken chain of selling process.

Being a very crucial aspect, the experts have a set procedure for overcoming the objections namely, listen to the
prospect cushion the jolt anticipate the objections and prevent their occurrence. It is the creative task of bringing the
customer to the sales track once again.

6. Closing:

All the earlier stages of sales talk namely, prospecting, pre-approach; approach, presentation and handling the
objections have been designed to induce the prospect to make decision to buy so that a sale can be concluded.

The success in earlier stages will lead to the last stage of closing the sale and clinch the deal. Here, ‘close’ means the
act of actually getting the prospect’s assent to the sales proposal or he gets an order.

The underlying point of closing sale is to persuade the prospect to act right now than postponing or delaying the
action. It is here that the prospect is turned into a customer desire into demand.

Though it sounds very easy, it is the most difficult task. It is the positive attitude and self-confidence that plays a
decisive role in converting wish into desire and desire into demand. A poor closer is a poor salesman and salesman
who cannot close well will have to close the line.

Q4. Define green marketing. What green marketing chosen by most marketing?

Ans. Green marketing also referred to as eco-marketing or environmental marketing, is the practice of promoting a
company's products to demonstrate their sustainability. Companies might design sustainable packaging, create
products that reduce the consumer's carbon footprint or use eco-friendly procedures during the distribution
process.

Some companies also use green marketing when they make public donations to non-profit entities that have
sustainability initiatives. Green marketing is part of a larger societal movement toward more sustainable and ethical
business practices in response to rapid developments in climate change.

By using green marketing strategies, companies can attract different demographics. A growing number of consumers
are concerned with how large corporations are affecting the environment.

Consumers want to know how products are made and how using those products can impact the world they live in,
and with green marketing, an organization can attract these individuals. These initiatives also help organizations
compete against other companies that may not implement environmentally friendly practices.

Eight green marketing techniques that an organization can use to develop a sustainable strategy:

1. Producing sustainable products

One of the most popular green marketing techniques is producing sustainable products for consumers to use as
alternatives to non-sustainable ones. These products range from shampoos with less harmful ingredients that more
easily dissolve in water to reusable straws and water bottles.

Such products may help consumers feel better about their impact on the environment, so companies can gain
traction on the green market by providing alternative products to consumers.

2. Using sustainable materials to make products

Companies can practice green marketing by using sustainable materials to manufacture their products. This can
mean using recycled materials or other eco-friendly materials, like product packaging that is more easily
biodegradable.

For instance, a coffee company that uses compostable bags and a printing press that uses re-manufactured ink
would both be using sustainable materials to their advantage.

3. Responsible waste disposal

Practicing responsible waste disposal is a way to offset a company's impact on the environment. Manufacturing
products can result in the creation of hazardous waste materials, which often harm the environment if they're
improperly disposed of.

Companies can practice green marketing by advertising their responsible waste disposal programs as a sustainable
contribution. This is an especially effective strategy to help companies stand out from competitors that don't employ
responsible waste disposal practices.

4. Opting for electronic marketing

A small way that companies can practice green marketing is by shifting their entire marketing strategy to digital
platforms. Print materials like flyers, brochures, magazines and catalogues are costly to the environment, especially
if consumers don't recycle them properly.

Companies seeking to switch over to a fully digital strategy can use mechanisms like social media marketing, email
marketing campaigns and text marketing to reduce their ecological footprint.

5. Implementing eco-friendly energy practices

When companies switch to using renewable energy sources, like solar, wind, hydropower or geothermal power, they
can drive down manufacturing costs and make a difference environmentally. In recent years, access to renewable
energy sources has increased, and the market for harvesting renewable energy is expected to expand in the next few
decades as more nations invest in it.

Implementing eco-friendly energy practices may cause a decrease in the price of the goods and services a company
offers to consumers. If a company spends less money creating the product, it can decrease the cost of buying that
product for the consumer.

6. Using emission-minded shipping practices

Shipping goods across long distances can leave a large carbon footprint. Trucks and planes, among other
transportation methods, are some of the largest contributors to greenhouse gas emissions.

To reduce their footprint, companies can choose to ship items in bulk rather than individually, or they can offer a
green shipping option when consumers check out. When consumers opt for green shipping options, they can choose
longer shipping times or combine multiple orders into a single package to help drive down emissions.

7. Promoting a green alliance

Companies that practice environmental solidarity with consumers are also a part of the green marketing movement.
By pledging donations to designated non-profit or activist organizations geared toward saving the environment in
some way, companies can become part of a green alliance.

Companies looking to improve consumer perception of their brand's environmental practices often choose this
green marketing strategy as a starting point for future sustainability endeavours.

Q7. Define promotion Mix. Explain the various elements of promotion Mix?

Ans. The Promotion Mix refers to the blend of several promotional tools used by the business to create, maintain
and increase the demand for goods and services.
The fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses on creating the awareness and
persuading the customers to initiate the purchase. The several tools that facilitate the promotion objective of a firm
are collectively known as the Promotion Mix.

The Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion, Public Relations and Direct
Marketing. The marketers need to view the following questions in order to have a balanced blend of these
promotional tools.

 What is the most effective way to inform the customers?

 Which marketing methods to be used?
 To whom the promotion efforts be directed?
 What is the marketing budget? How is it to be allocated to the promotional tools?

Elements of Promotion Mix

1. Advertising: The advertising is any paid form of non-personal presentation and promotion of goods and
services by the identified sponsor in the exchange of a fee. Through advertising, the marketer tries to build a
pull strategy; wherein the customer is instigated to try the product at least once. The complete information
along with the attractive graphics of the product or service can be shown to the customers that grab their
attention and influences the purchase decision.

2. Personal Selling: This is one of the traditional forms of promotional tool wherein the salesman interacts with
the customer directly by visiting them. It is a face to face interaction between the company representative
and the customer with the objective to influence the customer to purchase the product or services.

3. Sales Promotion: The sales promotion is the short term incentives given to the customers to have an
increased sale for a given period. Generally, the sales promotion schemes are floated in the market at the
time of festivals or the end of the season. Discounts, Coupons, Payback offers, Freebies, etc. are some of the
sales promotion schemes. With the sales promotion, the company focuses on the increased short-term
profits, by attracting both the existing and the new customers.

4. Public Relations: The marketers try to build a favourable image in the market by creating relations with the
general public. The companies carry out several public relations campaigns with the objective to have a
support of all the people associated with it either directly or indirectly. The public comprises of the
customers, employees, suppliers, distributors, shareholders, government and the society as a whole. The
publicity is one of the form of public relations that the company may use with the intention to bring
newsworthy information to the public.

E.g. Large Corporates such as Dabber, L&T, Tata Consultancy, Bharti Enterprises, Services, Unites and PSU’s
such as Indian Oil, GAIL, and NTPC have joined hands with Government to clean up their surroundings, build
toilets and support the swatch Bharat Mission.

5. Direct Marketing: With the intent of technology, companies reach customers directly without any
intermediaries or any paid medium. The e-mails, text messages, Fax, are some of the tools of direct
marketing. The companies can send emails and messages to the customers if they need to be informed
about the new offerings or the sales promotion schemes.

E.g. The Shopper stop send SMS to its members informing about the season end sales and extra benefits to
the golden card holders.

Thus, the companies can use any tool of the promotion mix depending on the nature of a product as well as
the overall objective of the firm.

Q8. Define global marketing. What are the advantages and disadvantages of global marketing?

Ans. the influence of globalization is obvious. More and more brands try to sell their product worldwide for several
reasons. Firstly, reaching global markets gives companies access to a large customer base. Secondly, it allows
business owners to reduce spending by achieving economies of scale. Thirdly, companies that sell goods worldwide
diversify their risks and are less influenced by crises in certain countries.

Reaching global markets helps increase people’s awareness of the product significantly. You can build a strong
reputation as a worldwide-known brand by selling in different countries, which gives you an amazing competitive
advantage. Moreover, extending the company brings huge business opportunities and, as a result, new ways of
getting income.

Understanding all these benefits makes many business owners start selling internationally. However, there are many
cultural, legislative, demographic, and political differences that you should consider in your products’ promotion. It is
not enough to develop one marketing strategy for all countries. Your company should be flexible to satisfy
consumers worldwide, so global marketing is necessary.

You should understand all the pros and cons before starting to work with consumers worldwide. Continue reading to
discover them in the next section.

Advantages and Disadvantages of Global Marketing

Working in the worldwide market is the chance to grow and develop for many companies. However, you should
understand both the positive and negative peculiarities of international business processes to manage sales
successfully.

The advantages of global marketing.

1. You can reach a wider audience. If your company grows constantly, you can find out that there are few
consumers in the country to increase your revenue. This is the time to start product promotion abroad.
Global marketing allows you to sell more products, attract more customers and enlarge your market share in
different countries.

2. Your brand influence will increase. Building a well-known brand's reputation gives you a powerful
competitive advantage in local markets of different countries. Moreover, by adopting your advertisements to
the peculiarities of each culture, you can make the audience more loyal to your company. Brands with a
strong reputation, like Coca-Cola or Nike, can influence not only consumers' purchases but their worldview
and lifestyle.

3. You can reduce costs on product development. Working with the global market means attaining the
economy of scale that helps you avoid overspending, particularly on shipping raw materials. Also, you can
locate your plants or factories in the countries with loyal taxation policies to save company's money. Global
marketing allows businesses to sell worldwide and reduce spending on raw materials by standardizing.

4. Your company can get much more feedback. This fact will influence the speed of your growth directly.
Knowledge of your brand’s weaknesses and problems in markets of different countries means the possibility
to improve them much faster. Global marketing can help you gain feedback worldwide in a few clicks,
especially by using social media advertising and email marketing.

5. Local crises will not influence your company so much. If you are focused on the market of a certain country,
its economic or legislative problems may mean the end for your business. However, diversifying risks will
help you make this influence not so crucial. Sometimes, conflicts with political organizations or competitors
do not let companies succeed in the local arena. Working with global markets allows businesses to avoid
these problems or reduce their influence.

The disadvantages of global marketing.

1. It can be difficult to overcome cultural barriers. Adopting your promotion strategy to the global market
means satisfying audiences with different cultural backgrounds. For example, McDonald’s had to change
their standard recipe and replace beef with vegetarian cutlets in all their burgers in India because of the
national values. If you want to succeed in a foreign market, it is essential to deeply understand people's
 cultures and privileged consumer behaviour types. Some companies may not be so flexible, and it will be a
roadblock to their product's promotion in the global market.

2. Your company should adapt to the legislation of foreign countries. It can be costly and risky to start
working without understanding the laws and taxations of the new markets. Sometimes businesses need
lawyers’ help to make their start abroad smoother and avoid fines. This process may be time-consuming, but
it is necessary before launching the promotional campaign.

3. It may be difficult to avoid overspending on buying raw materials. If you start working with foreign markets
without proper research, the inventory costs can increase significantly. Firstly, it may be challenging to find
the balance between supply and demand because the results of your promotional campaigns will not be the
same as in your country. Secondly, if you start working with local suppliers, finding the cheapest resources in
the area requires time to save your costs.