MARKETING --- QNS AND ANSWERS --- USEFUL FOR LIC ADO - BANK EXAMS

MARKETING – QNS. AND ANSWERS

1.         Explain the five marketplace concepts.

The core marketplace concepts are: needs, wants, and demands; marketing offers; value and satisfaction; exchanges, transactions, and relationships; and markets. Addressing customer needs and want is at the very heart of the marketing concept. The four elements of the marketing mix help firms meet the challenges of value creation, customer satisfaction, and to establish meaningful and profitable relation­ships.

2.         One of the major developments in marketing can be summed up on one buzzword: relationships. Define customer relationship management and its associated strategies for building long-term relationships.

Customer Relationship Management (CRM) is the process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Companies develop customer relationships with target markets at multiple levels. The most basic form of a relationship for mass-marketed products/services is through a Web site, sales promotion offer, or a 1-800 customer-response number. At the other end of the spectrum, companies like Amazon.com create full partnerships with key customers. Other marketers work closely with retailers, for example. Some marketers use tools such as financial benefits like rewards based on frequency of purchase. Other tools include social benefits, like offering key customers the opportunity to network and create communities. Another approach adds structural ties to the aforementioned financial and social benefits. Hence, to retain current customers and remain profitable, companies today are going beyond transactional marketing to customer relationship management. The key is to create and sustain relationships for the long term.    

3.         Define customer equity.

Customer equity is the sum of the lifetime values of all the company’s customers. Customer equity is dependent upon customer loyalty by a firm’s profitable customers. Because customer equity is a reflection of a company’s future, companies must manage it carefully.

4.         What are some problems with matrix approaches?

The BCG and other portfolio planning approaches can be difficult to execute, time consuming, and also costly to implement. Defining SBUs and the measurement of relative market share and growth can be a difficult task too. A serious flaw with these approaches is that although the approaches are helpful for classifying current businesses, little or no advice is available for future planning. There are several examples of firms that have plunged into new unrelated market, only to scale back and get back to basics based on their core competencies.

5.                  Outline the three major steps in target marketing.

The first step is market segmentation: dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors, who might require separate products or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segment. The second step is target marketing: evaluating each market segment’s attractiveness and selecting one or more of the market segments to enter. The third step is market positioning: setting the competitive positioning for the product and creating a detailed marketing mix.

6.      Why do businesses segment their markets?

By going after segments instead of the whole market, companies have a much better chance to deliver value to customers and to receive maximum rewards for close attention to customer needs. Businesses segment using variables of operating characteristics, purchasing approaches, situational factors, and personal characteristics.

7.         Given the rapid changes in consumer tastes, technology, and competition, companies must develop a steady stream of new products and services. Briefly explain the common ways of accomplishing this.

One way to develop new products and services is through acquisition—by buying a whole company, a patent, or a license to produce someone else’s product. The other way is through new product development in the company’s own research and development department.

8.            Explain why so many new products fail and provide some ideas for a company to improve its odds of new product success.

Although an idea may be good, the market size may have been overestimated. The actual product was not designed as well as it should have been. It may have been incorrectly positioned in the market, priced too high, or advertised poorly. A high-level executive may push a favorite idea despite poor marketing research findings. Sometimes the costs of product development are higher than expected, and sometimes competitors fight back harder than expected. One way to improve the odds is to identify successful new products and find out what they have in common. Another is to study new product features to see what lessons can be learned. A company must understand its customers, markets, and competitors and develop superior value to customers.

9.            Briefly describe the steps in the new-product development process.

New-product development starts with idea generation from internal and/or external sources. Next, the ideas must be reduced through idea screening. Once the new ideas are decided upon, the product concept must be developed and tested. A marketing strategy must be developed to introduce the product to the market. Once the product concept and marketing strategy are chosen, a business analysis is conducted to review the sales, costs, and profit projections to see if they will satisfy the company’s objectives. A prototype will next be created in the product development stage. Test marketing will follow where the new product and its marketing program will be introduced into more realistic market settings. The last step is to launch or not launch the new product. If the company decides to launch the product, it will go ahead with the commercialization stage and later test its sales and profit results.

10.       What are the two advantages of an idea management system for developing new products? Provide five ideas for a company to use to accomplish a successful system.   

An idea management system helps create an innovation-oriented company culture. It shows that top management supports, encourages, and rewards innovation. It will yield a larger number of ideas, among which will be found some especially good ones. As the system matures, ideas will flow more freely. The company can do the following: (1) Appoint a respected senior person to be the company’s idea manager; (2) create a cross-functional idea management committee with people from each department; (3) set up a toll-free number or Web site for anyone who wants to send a new idea to the idea manager; (4) encourage all company stakeholders to send their ideas to the idea manager; and (5) set up formal recognition programs to reward those who contribute the best new ideas.

11.          Define commercialization. During the product launch stage, the company must first decide on two important issues. Explain.

Introducing a new product into the market is called commercialization. The company launching a new product must first decide on introduction timing. Next, the company must decide where to launch the new product—in a single location, a region, the national market, or the international market. Confidence, capital, and capacity are required to launch new products on a large-scale basis. Hence, firms plan a market rollout over time. Large companies pursue a national rollout while some firms plan global rollouts. For example, Colgate introduced a battery-powered toothbrush into 50 countries in a year.

12.          Explain concept testing.

Concept testing calls for testing new product concepts with groups of target consumers. The concepts may be physical or symbolic. A more concrete and physical presentation, however, will increase the reliability of the concept test. After being exposed to the concept, consumers are asked questions about it; their answers reveal to the marketer whether the concept needs to be altered in any way.

13.          Explain product line pricing.

With this option, management must decide on the price steps to set between the various products in a line. The price steps should take into account cost differences between the products in a line, customer evaluations of their different features, and competitors’ prices. The seller’s task is to establish perceived quality differences that support the price differences between various price points.

14.       When would price cuts and price increases be necessary?

Price cuts may be necessary when there is excess capacity. Another reason is that market share may be falling in the face of strong price competition. A company may also cut prices in a drive to dominate the market through lower costs. A major factor in price increases is cost inflation. Rising costs squeeze profit margins and lead companies to pass cost increases along to customers. Another factor leading to price increases is over-demand. When a company cannot supply all its customers’ needs, it can raise its prices, ration products to customers, or both.

1.              15.       Explain the factors involved in setting international pricing.

In some cases, a company can set a uniform worldwide price. However, most companies adjust their prices to reflect local market conditions and cost considerations. A firm must consider economic conditions, competitive situations, laws and regulations, and development of the wholesaling and retailing system. Consumer perceptions and preferences also may vary from country to country, calling for different prices. The company may have different marketing objectives in various world markets. Costs play an important role in setting international prices. Management must prepare for price escalation that may result from the differences in selling strategies or market conditions. The additional costs of product modifications, shipping and insurance, import tariffs and taxes, exchange-rate fluctuations, and physical distributions must all be factored into the “price.”

1.         Name five promotional tools that retailers use.

These may include advertising, personal selling, sales promotion, public relations, and direct marketing.