MB0046 Solved Fall Drive Assignment 2011

8/3/2019 MB0046 Solved Fall Drive Assignment 2011

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MB0046 Marketing Management

Q.1 What is Marketing Information System? Explain its characteristics, benefits and information types.

Ans. A Marketing Information System can be defined as a system in which marketing information is

formally gathered, stored, analysed and distributed to managers in accord with their informational

needs on a regular basis.

Set of procedures and practices employed in analyzing and assessing marketing information, gathered

continuously from sources inside and outside of a firm. Timely marketing information provides basis for

decisions such as product development or improvement, pricing, packaging, distribution, media

selection, and promotion.

Characteristics of MIS

Philip Kotler defines MIS as a system that consists of people, equipment and procedures to gather,

sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision

makers.

Its characteristics are as follows:

1. It is a planned system developed to facilitate smooth and continuous flow of information.

2. It provides pertinent information, collected from sources both internal and external to the company,

for use as the basis of marketing decision making.

3. It provides right information at the right time to the right person.

A well designed MIS serves as a companys nerve centre, continuously monitoring the market

environment both inside and outside the organization. In the process, it collects lot of data and stores

in the form of a database which is maintained in an organized manner. Marketers classify and

analyze this data from the database as needed.

Benefits of MIS(Marketing Information System)

Various benefits of having a MIS and resultant flow of marketing information are given below:

1. It allows marketing managers to carry out their analysis, planning implementation and control

responsibilities more effectively.

2. It ensures effective tapping of marketing opportunities and enables the company to develop


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effective safeguard against emerging marketing threats.

3. It provides marketing intelligence to the firm and helps in early spotting of changing trends.

4. It helps the firm adapt its products and services to the needs and tastes of the customers.

5. By providing quality marketing information to the decision maker, MIS helps in improving the

quality of decision making.

Types of Marketing Information

A Marketing Information System supplies three types of information.

1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly, quarterly,

or annual interval. This includes data such as sales, Market Share, sales call reports, inventory levels,

payables, and receivables etc. which are made available regularly. Information on customer awareness

of companys brands, advertising campaigns and similar data on close competitors can also be provided.

2. Monitoring Information is the data obtained from regular scanning of certain sources such as trade

journals and other publications. Here relevant data from external environment is captured to monitor

changes and trends related to marketing situation. Data about competitors can also be part of this

category. Some of these data can be purchased at a price from commercial sources such as Market

Research agencies or from Government sources.

3. Problem related or customized information is developed in response to some specific requirement

related to a marketing problem or any particular data requested by a manager. Primary Data or

Secondary Data (or both) are collected through survey Research in response to specific need. Forexample, if the company has developed a new product, the marketing manager may want to find out

the opinion of the target customers before launching the product in the market. Such data is generated

by conducting a market research study with adequate sample size, and the findings obtained are used to

help decide whether the product is accepted and can be launched.

Q.2 a. Examine how a firms macro environment operates.

b. Mention the key points in Psychoanalytic model of consumer behaviour.

Ans. The term micro-environment denotes those elements over which the marketing firm has control or

which it can use in order to gain information that will better help it in its marketing operations. In otherwords, these are elements that can be manipulated, or used to glean information, in order to provide

fuller satisfaction to the companys customers. The objective of marketing philosophy is to make profits

through satisfying customers. This is accomplished through the manipulation of the variables over which

a company has control in such a way as to optimise this objective. The variables are what Neil Borden

has termed the marketing mix which is a combination of all the ingredients in a recipe that is

designed to prove most attractive to customers. In this case the ingredients are individual elements that

marketing can manipulate into the most appropriate mix. E Jerome McCarthy further dubbed the


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variables that the company can control in order to reach its target market the four Ps. Each of these is

discussed in detail in later chapters, but a brief discussion now follows upon each of these elements of

the marketing mix together with an explanation of how they fit into the overall notion of marketing.

A scan of the external macro-environment in which the firm operates can be expressed in terms of the

following factors:

y Politicaly Economicy Socialy Technological

The acronym PEST (or sometimes rearranged as STEP) is used to describe a framework for the analysis

of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in

the following diagram:

Environmental Scan

/ \

External Analysis Internal Analysis

/\

Macroenvironment Microenvironment

|

P.E.S.T.

Political Factors

Political factors include government regulations and legal issues and define both formal and informalrules under which the firm must operate. Some examples include:

y tax policyy employment lawsy environmental regulationsy trade restrictions and tariffsy political stability

Economic Factors

Economic factors affect the purchasing power of potential customers and the firms cost of capital. The

following are examples of factors in the macroeconomy:

y economic growthy interest ratesy exchange ratesy inflation rate

Social Factors


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Social factors include the demographic and cultural aspects of the external macro environment. These

factors affect customer needs and the size of potential markets. Some social factors include:

y health consciousnessy population growth ratey age distributiony career attitudesy emphasis on safety

Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and

influence outsourcing decisions. Some technological factors include:

y R&D activityy automationy technology incentivesy rate of technological change

External Opportunities and Threats

The PEST factors combined with external micro environmental factors can be classified as opportunities

and threats in a SWOT analysis.

The Psychoanalytical Model: The psychoanalytical model draws from Freudian Psychology.

According to this model, the individual consumer has a complex set of deep-seated motives which drive

him towards certain buying decisions. The buyer has a private world with all his hidden fears,

suppressed desires and totally subjective longings. His buying action can be influenced by appealing tothese desires and longings. The psychoanalytical theory is attributed to the work of eminent

psychologist Sigmund Freud. Freud introduced personality as a motivating force in human behavior.

According to this theory, the mental framework of a human being is composed of three elements,

namely,

1. The idor the instinctive, pleasure seeking element. It is the reservoir of the instinctive impulses that a

man is born with and whose processes are entirely subconscious. It includes the aggressive, destructive

and sexual impulses of man.

2. The superego or the internal filter that presents to the individual the behavioral expectations ofsociety. It develops out of the id, dominates the ego and represents the inhibitions of instinct which is

characteristic of man. It represents the moral and ethical elements, the conscience.

3. The ego or the control device that maintains a balance between the id and the superego. It is the

most superficial portion of the id. It is modified by the influence of the outside world. Its processes are

entirely conscious because it is concerned with the perception of the outside world.


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The basic theme of the theory is the belief that a person is unable to satisfy all his needs within the

bounds of society. Consequently, such unsatisfied needs create tension within an individual which have

to be repressed. Such repressed tension is always said to exist in the subconscious and continues to

influence consumer behavior.

4. The Sociological Model: According to the sociological model, the individual buyer is influenced by

society or intimate groups as well as social classes. His buying decisions are not totally governed by

utility He has a desire to emulate, follow and fit in with his immediate environment.

5. The Nicosia Model: In recent years, some efforts have been made by marketing scholars to build

buyer behavior models totally from the marketing mans standpoint. The Nicosia model and the Howard

and Sheth model are two important models in this category. Both of them belong to the category called

the systems model, where the human being is analyzed as a system with stimuli as the input to the

system and behavior as the output of the system. Francesco Nicosia, an expert in consumer motivation

and behavior put forward his model of buyer behavior in 1966.

The model tries to establish the linkages between a firm and its consumer how the activities of the

firm influence the consumer and result in his decision to buy. The messages from the firm first influencethe predisposition of the consumer towards the product. Depending on the situation, he develops a

certain attitude towards the product. It may lead to a search for the product or an evaluation of the

product. If these steps have a positive impact on him, it may result in a decision to buy. This is the sum

and substance of the activity explanations in the Nicosia Model. The

Nicosia Model groups these activities into four basic fields. Field one has two subfields the firms

attributes and the consumers attributes. An advertising message from the firm reaches the consumers

attributes. Depending on the way the message is received by the consumer, a certain attribute may

develop, and this becomes the input for Field Two. Field Two is the area of search and evaluation of the

advertised product and other alternatives. If this process results in a motivation to buy, it becomes the

input for Field Three. Field Three consists of the act of purchase. And Field Four consists of the use ofthe purchased item.

Q.3 Explain the key roles played and various steps involved in organizational buying.

Ans.

Point 1 Introduction.

The need for an understanding of the organizational buying process has grown in recent years due to

the many competitive challenges presented in business-to-business markets. Since 1980 there have

been a number ofkey changes in this area, including the growth of outsourcing, the increasing powerenjoyed by purchasing departments and the importance given to developing partnerships with

suppliers.

Point 2 The organizational buying behaviour process.

The organizational buying behaviour process is well documented with many models depicting the

various phases, the members involved, and the decisions made in each phase. The basic five phase


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model can be extended to eight; purchase initiation; evaluations criteria formation; information search;

supplier definition for RFQ; evaluation of quotations; negotiations; suppliers choice; and choice

implementation (Matbuy, 1986).

Point 3 The buying centre. The buying centre consists of those people in the organizational who are

involved directly or indirectly in the buying process, i.e. the user, buyer influencer, decider and

gatekeeper to who the role of initiator has also been added. The buyers in the process are subject to a

wide variety and complexity of buying motives and rules of selection. The Matbuy model encourages

marketers to focus their efforts on who is making what decisions based on which criteria.

Point 4 Risk and uncertainty

The driving forces of organizational buying behaviour. This is concerned with the role of risk or

uncertainty on buying behaviour. The level of risk depends upon the characteristics of the buying

situation faced. The supplier can influence the degree of perceived uncertainty by the buyer and cause

certain desired behavioural reactions by the use of information and the implementation of certain

actions. The risks perceived by the customer can result from a combination of the characteristics of

various factors: the transaction involved, the relationship with the supplier, and his position vis-a-vis the

supply market.

Point 5 Factors influencing organizational buying behaviour.

Three key factors are shown to influence organizational buying behaviour, these are, types of buying

situations and situational factors, geographical and cultural factors and time factors.

Point 6 Purchasing Strategy.

The purchasing function is of great importance because its actions will impact directly on theorganizations profitability. Purchasing strategy aims to evaluate and classify the various items

purchased in order to be able to choose and manage suppliers accordingly. Classification is along two

dimensions: importance of items purchased and characteristics of the supply market. Actions can be

taken to influence the supply market. Based on the type of items purchased and on its position in the

buying matrix, a company will develop different relationships with suppliers depending upon the

number of suppliers, the suppliers share, characteristics of selected suppliers, and the nature of

customer-supplier relationships. The degree of centralization of buying activities and the missions and

status of the buying function can help support purchasing strategy. The company will adapt its

procedures to the type of items purchased which in turn will influence relationships with suppliers.

Point 7 The future.

Two activities which will be crucial to the future development of organizational buying behaviour will be

information technology and production technologies.

Point 8 Conclusion.


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Organizational buying behaviour is a very complex area, however, an understanding of the key factors

are fundamental to marketing strategy and thus an organizations ability to compete effectively in the

market place.

Q.4 Explain the different marketing philosophies and its approach.

Ans. Marketing is a societal process by which individuals and groups obtain what they need and want

through creating, offering and freely exchanging products and services of value with others.

According to the American Marketing Association, Marketing is the process of planning and executing

the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges

that satisfy individual and organizational goods

There are six competing philosophies under which organizations conduct marketing activities the

production concept, product concept, selling concept, marketing concept, customer concept; and

societal concept.

1) The Production Concept: The production concept is one of the oldest concepts in business. The

production concept holds that consumers will prefer products that are widely available and inexpensive.

Managers of production-oriented businesses concentrate on achieving high production efficiency, low

costs and mass distribution.

They assume that consumers are primarily interested in products availability and low prices. This

philosophy makes sense in developing countries, where consumers are more interested in obtaining the

product than its features. It is also used when a company wants to expand the market.

2. The product Concept Product concept holds that consumer will favour these products that offer the

most quality, performance and innovative features. Managers in these organizations focus on making

superior products and improving them over time. They assume that buyers admire well-made productsand can evaluate quality and performance product oriented companies often trust that their engineers

can design exceptional products. They get little or no customer input, and very often they will not even

examine competitors products.

3. The Selling Concept: The selling concept holds that consumers and businesses, if left alone, will

ordinarily not buy enough of the organizations products. The organization most, therefore, undertakes

an aggressive selling and promotion effort. This concept assumes that consumers typically show buying

inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole

battery of effective selling and promotion tools to stimulate more buying. The selling concept is

epitomized by the thinking that The purpose of marketing is to sell more stuff to more people for more

money in order to make more profit

Most firms practice the selling concept when they have over capacity. Their aim is to sell what they

make rather then make what market wants.

4. The Marketing Concept: The marketing concepts hold that the key to achieving its organizational

goals consists of the company being more effective then competitors in creating, delivering and

communicating superior customer value to its chosen target markets.


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The marketing concept rests on four pillars: target market, customer needs, integrated marketing and

profitability. There is a contrast between selling and marketing concepts:

Selling focuses on the needs of the seller; marketing on the needs of the buyer.

Selling is preoccupied with the sellers need to convert his product into cash; marketing with the ideas of

satisfying the needs of the customers by means of the product and the whole cluster of things

associated with creating, delivering and finally consuming it.

5. The customer Concept: Under customer concept, companies shape separate offers, services and

messages to individual customers. These companies collect information on each customers past

transactions, demographics, psychographics and media and distribution preferences. They hope to

achieve profitable growth through capturing a larger share of each customers expenditures by building

high customer loyalty and focusing on customer lifetime value.

The ability of a company to deal with customers are at a time become practical as a result of advances in

factory customization, computers, the internet and database marketing software.

6. The Societal Marketing Concept: The societal marketing concept holds that the organizations goal is

to determine the needs, wants and interests of target markets and to deliver the desired satisfactions

more effectively and efficiently than competitors in a way that preserves or enhances the consumers

and the societys well being.

The societal marketing concept calls upon marketers to build social and ethical considerations into their

marketing practices. They must balance and juggle the often-conflicting criteria of company profits,

consumer want satisfaction and public interest.

Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise

brand awareness, increase customer loyalty, build sales and increase press coverage. They believe thatconsumers will increasingly look for signs of good corporate citizenship that go beyond supplying

rational and emotional benefits.

Q. 5 What are the various stages involved in decision process when a consumer is buying new

product? Also, explain the adoption process.

Ans. Stages of the Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only

one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not

always include all 6 stages, determined by the degree of complexitydiscussed next.

The 6 stages are:

1. Problem Recognition(awareness of need)difference between the desired state and the actualcondition. Deficit in assortment of products. HungerFood. Hunger stimulates your need to eat.

Can be stimulated by the marketer through product informationdid not know you were


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deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you

need a new pair of shoes.

2. Information searcho Internal search, memory.o External search if you need more information. Friends and relatives (word of mouth).

Marketer dominated sources; comparison shopping; public sources etc.

A successful information search leaves a buyer with possible alternatives, the evoked set.

Hungry, want to go out and eat, evoked set is

1.o chinese foodo indian foodo burger kingo klondike kates etc

2. Evaluation of Alternativesneed to establish criteria for evaluation, features the buyer wants ordoes not want. Rank/weight alternatives or resume search. May decide that you want to eatsomething spicy, indian gets highest rank etc.

If not satisfied with your choice then return to the search phase. Can you think of another restaurant?

Look in the yellow pages etc. Information from different sources may be treated differently. Marketers

try to influence by framing alternatives.

1. Purchase decision Choose buying alternative, includes product, package, store, method ofpurchase etc.

2. PurchaseMay differ from decision, time lapse between 4 & 5, product availability.3. Post-Purchase Evaluationoutcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have

you made the right decision. This can be reduced by warranties, after sales communication etc.After eating an indian meal, may think that really you wanted a chinese meal instead.

Adoption Process

Adoption is an individuals decision to become a regular user of a product. How do potential

customers learn about new products, try them, and adopt or reject them? The consumer adoption

process is later followed by the consumer loyalty process, which is the concern of the established

producer. Years ago, new product marketers used a mass market approach to launch products. This

approach had two main drawbacks: It called for heavy marketing expenditures, and it involved many

wasted exposures. These drawbacks led to a second approach, heavy user target marketing. This

approach makes sense, provided that heavy users are identifiable and are early adopters. However,even within the heavy user group, many heavy users are loyal to existing brands. New product

marketers now aim at consumers who are early adopters.

The theory of innovation diffusion and consumer adoption helps marketers identify early adopters.

An innovation is any good, service, or idea that is perceived by someone as new. The idea may have a

long History, but it is an innovation to the person who sees it as new. Innovations take time to spread


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through the social system. The Innovation diffusion process is defined as the spread of a new idea

from its source of invention or creation to its ultimate users or adopters. The consumer adoption

process is the mental process through which an individual passes from first hearing about an innovation

to final adoption.

Adopters of new products have been observed to move through five stages:

1. Awareness : The consumer becomes aware of the innovation but lacks information about it.

2. Interest : The consumer is stimulated to seek information about the innovation.

3. Evaluation: The consumer considers whether to try the innovation

4. Trial: The consumer tries the innovation to improve his or her estimate of its value.

5. Adoption : The consumer decides to make full and regular use of the innovation.

Q. 6 Explain briefly the marketing mix elements for an automobile company giving sufficient

examples.

Ans. Marketing mix is the combination of elements that you will use to market your product. There are

four elements: Product, Place, Price and Promotion. They are called the four Ps of the marketing mix.

The objectives of this lesson about marketing mix is to give you:

-The tools you need for establishing your detailed marketing plan and forecasting your sales.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

1-CHALLENGE

You have gotten a rough idea about the market situation and the possible positioning of your product.

Of course, its far to be sufficient. Now, you must write your detailed planning. It means thatbrainstorming is ended and that you have to go to the specifics in examining and checking all the

hypothesis you had made in the preceding chapters. You will use the marketing mix.

Some people think that the four Ps are old fashionable and propose a new paradigm: The four Cs!

Product becomes customer needs; Place becomes convenience, price is replaced by cost to the user,

promotion becomes communication. It looks like a joke but the Cs is more customer-oriented.

2-PRODUCT

A good product makes its marketing by itself because it gives benefits to the customer. We can expect

that you have right now a clear idea about the benefits your product can offer.

Suppose now that the competitors products offer the same benefits, same quality, same price. You have

then to differentiate your product with design, features, packaging, services, warranties, return and so

on. In general, differentiation is mainly related to:

-The design: it can be a decisive advantage but it changes with fads. For example, a fun board must offer

a good and fashionable design adapted to young people.


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-The packaging: It must provides a better appearance and a convenient use. In food business, products

often differ only by packaging.

-The safety: It does not concern fun board but it matters very much for products used by kids.

-T

he green: A friendly product to environment gets an advantage among some segments.

In business to business and for expensive items, the best mean of differentiation are warranties,

return policy, maintenance service, time payments and financial and insurance services linked to the

product

3-PLACE-DISTRIBUTION

A crucial decision in any marketing mix is to correctly identify the distribution channels. The question

how to reach the customer must always be in your mind.

-Definition: The place is where you can expect to find your customer and consequently, where the sale

is realized. Knowing this place, you have to look for a distribution channel in order to reach your

customer.

In fact, instead of place it would be better to use the word distribution but the MBA lingo uses

place to memorize the 4 Ps of the marketing mix!

4-PRICE

Price means the pricing strategy you will use. You have already fixed, as an hypothesis a customer price

fitted to your customer profile but you will have now to bargain it with the wholesalers and retailers. Do

not be foolish: They know better the market than you and you have to listen their advices.

5-PROMOTION

Advertising, public relations and so on are included in promotion and consequently in the 4Ps.

Sometimes, packaging becomes a fifth P. As promotion is closely linked to the sales, I will mention here

the most common features about the sale strategy.

-Definition: The function of promotion is to affect the customer behavior in order to close a sale.

Of course, it must be consistent with the buying process described in the consumer analysis.

Promotion includes mainly three topics: advertisement, public relations, and sales promotions.

-Advertisement:

It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice

about three important notions:


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Reach is the percentage of the target market which is affected by your advertisement. For example, if

you advertise on radio you must know how many people belonging to your segment can be affected.

Frequency is the number of time a person is exposed to your message. It is said that a person must be

exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating

point. You have to evaluate it before any advertisement campaign.

Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest,

create desire and finally require action that is to say close the sale.

Down-earth-advice:

There are some magical words that you can use in any message:

-Your-YouI-Me-MyNow-Today

-Fast-Easy-Cool-New-Fun-Updated-Free-Exciting-Astonishing

-Success-Love-Money-Comfort-Protection-Freedom-Luck.

-Public relations:

Public relations are more subtle and rely mainly on your own personality. For example, you can deliver

public speeches on subjects such as economics, geo-economics, futurology to several organizations

(civic groups, political groups, fraternal organizations, professional associations)

6-SALES STRATEGY

Sales bring in the money. Salesmen are directly exposed to the pressure of finding prospects, makingdeals, beating competition and bringing money.

MB0046 Solved Fall Drive Assignment 2011

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