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NIOS Class 12 Business Studies Chapter 20 Marketing Mix
Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 12 Business Studies Chapter 20 Marketing Mix, NIOS Senior Secondary Course Data Business Studies for All Chapter, You can practice these here.
Marketing Mix
Chapter: 20
Module – 7 : MARKETING MANAGEMENT
INTEXT QUESTIONS 20.1
Q. 1. List the four components of marketing mix.
Ans: (a) Product.
(b) Price.
(c) Place. and
(d) Promotion.
Q. 2..Give one word/phrase for the following statements:
(a) The crucial decision area of marketing that has direct effect on demand for the product and profitability of the firm.
Ans: Price.
(b) The component of marketing that relates to channels of distribution.
Ans: Place.
(c) The components that are combined to achieve the marketing goal.
Ans: Marketing mix,
(d) The goods and services offered by the organisation for sale.
Ans: Product.
(e) The ingredient of marketing mix relating to informing, persuading and influencing a consumer to make choice of the product to be bought.
Ans: Promotion.
INTEXT QUESTIONS 20.2
Q. 1. Classify the following products into consumer goods and industrial goods and further classify them into convenience goods, shopping goods and speciality goods, if they are consumer goods:
(a) Stationery for the office.
Ans: Industrial goods.
(b) Washing machine for use at home.
Ans: Consumer goods- shopping goods.
(c) A car for the family use.
Ans: Consumer goods – speciality goods.
(d) Oil for manufacturing soap.
Ans: Industrial goods.
(e) A pair of shoes for yourself.
Ans: Consumer goods – shopping goods.
(f) An electric lift for lifting weight workshop.
Ans: Industrial goods.
(g) A packet of biscuits for your breakfast.
Ans: Consumer goods – convenience goods.
Q. 2. For the following categories of goods, give two examples of each, from the products that you see around you:
(a) Intangible goods.
Ans: banking and insurance services.
(b) Durable goods.
Ans: car and washing machine.
(c) Non-durable goods.
Ans: salt, pickles and soap.
Q. 3. (a) The following words refers to tangible and intangible products. You are required to put these products into their right class in the appropriate boxes.
(i) Cricket Bat.
(ii) Ball.
(iii) Boarding a bus.
(iv) ‘Pollution check’.
(v) Pen.
(vi) Getting medical advice from a Doctor Tangible [ ] Intangible.
Ans:
| Tangible | Intangible |
| (i) Cricket bat | (iii) Boarding a bus |
| (ii) Ball | (iv) Pollution check |
| (v) Pen | (vi) Getting medical advice from a doctor |
(b) The following is a list of durable and non durable consumer goods. You are required to put them in the appropriate boxes.
(i) Refrigerator.
(ii) Salt.
(iii) Soap.
(iv) Washing Machine.
(v) Television.
(vi) Cooking oil.
(vii) Sauce.
(viii) Note Book.
Durable [ ] Non-Durable.
Ans:
| Durable | Non-durable |
| (i) Refrigerator | (ii) Salt |
| (iv) Washing machine | (iii) Soap |
| (v) Television | (vi) Cooking oil |
| (viii) Note book | (vii) Sauce |
INTEXT QUESTIONS 20.3
Q. 1. List the main factors affecting pricing decision of a firm.
Ans: (a) Cost.
(b) Demand.
(c) Competition.
(d) Marketing objectives.
(e) Government regulation.
Q. 2. Which method of price fixation is being referred to here?
(a) Hari fixes the price of shirts that he manufactures and sells at a price 10% higher than its cost.
Ans: Cost based pricing.
(b) Mannat introduces a new brand of biscuits at a low introductory price.
Ans: Objective based pricing.
(c) Sheetal fixes the price of her glassware keeping in mind the prices for similar products in the nearby shops.
Ans: Competition based pricing,
(d) Rahul, a fruit-seller increases the price of mangoes if there is a heavy demand for them during the summer season.
Ans: Demand based pricing.
(e) Pinky charges a high price for the exclusive designer handkerchiefs that she designs for a selective group of customers.
Ans: Objective based pricing.
(f) Jahanavi lowers the price of the vegetables at her shop in the evening, so that customers purchase them even when they are not as fresh as they were in the morning time.
Ans: Demand based pricing.
INTEXT QUESTIONS 20.4
Q. 1. Give any four important functions performed by a channel of distribution.
Ans: Primarily a channel of distribution performs the following functions:
(a) It helps in establishing a regular contact with the customers.
(b) It facilitates the transfer of ownership as well as the delivery of goods.
(c) It helps in financing by giving credit facility.
(d) It assists the provision of after sales services, if necessary.
Q. 2. Which type of channel of distribution will be suitable in each of the following cases? Name it and draw a labelled diagram (in the space given below) depicting the channel.
(a) For a perishable product.
(b) Where large number of wholesalers are involved and are scattered throughout the country.
(c) For durable products like washing machines.
Ans: (a) Zero stage channel of distribution
INTEXT QUESTIONS 20.5
Q. 1. What are the main objectives of promotion? List them.
Ans: (a) Arouse buyer’s interest in the product.
(b) Inform buyer about its availability.
(c) Inform him/her how it is different from other products.
Q. 2. State the main factors affecting the choice of distribution channels.
Ans: (a) Nature of market.
(c) Nature of product.
(b) Nature of the company.
(d) Middlemen consideration.
Q. 3. Which element of the promotion mix is being referred to in the following statements?
(a) It is a temporary incentive to induce trial or purchase of a new product.
(b) It does not cost money but may involve
considerable time and effort by the marketeer.
(c) It is an effective promotion tool for machines, lubricant etc.
(d) Press conference, publications and news in the electronic media are its various tools.
(e) It is a paid form of non-personal communication by an identified sponsor.
(f) It is done through popular media like radio, television, magazines, newspapers etc.
Ans: (a) Sales promotion.
(b) Publicity.
(c) Personal Selling.
(d) Publicity.
(e) Advertising.
(f) Advertising.
Q. 4. Multiple Choice Questions:
(i) To which tool of marketing mix does ‘Brand Name’ relate?
(a) Product.
(b) Price.
(c) Place.
(d) Promotion.
Ans: Product.
(ii) Identity the philosophy in management which suggests that aggressive selling and promotional efforts are needed to sell product.
(a) Production concept.
(b) Product concept.
(c) Sales concept.
(d) Societal concept.
Ans: (c) Sales concept.
(iii) A cool drinks manufacturing company is using chemicals to make its product (cool drinks), name the marketing philosophy which is ignored here:
(a) Production concept.
(b) Product concept.
(c) Sales concept.
(d) Societal concept.
Ans: (d) Societal concept.
TERMINAL EXERCISE
Very Short Answer Type Questions:
Q. 1. Define the term ‘Advertising’.
Ans: Advertising is a paid form of non-personal communication through different media about a product, idea, service or organisation, by an identified sponsor.
Q. 2. What is meant by the term ‘product’?
Ans: Product is defined as anything that can be offered to a market to satisfy a want. It not only includes physical objects and services but also the supporting services like packaging, installation, after sales services etc.
Q. 3. Give two examples each of tangible products and intangible products.
Ans: Tangible products – Groceries, Cars and Machinery.
Intangible products – Postal, Banking and Insurance Servies.
Q. 4. What are speciality goods? Give one example.
Ans: Because of some special characteristics of certain categories of goods people generally put special efforts to buy them. They are ready to buy these goods at prices at which they are offered and also put in extra time to locate the seller to make the purchase. The nearest car dealer may be ten kilometers away but the buyer will go there to inspect and purchase it. In fact, prior to making a trip to buy the product he/she will collect complete information about the various brands. Examples of speciality goods are cameras, TV sets, new automobiles etc.
Q. 5. Define the term ‘promotion’.
Ans: Promotion is an applied communication used by marketeers to convey persuasive messages and information between the firm and its potential customers.
Q. 6. What do you mean by labeling?
Ans: Label is a part on the cover of the product which will devote its name, contents, ownership, expiry date, manufacturing date etc. A label helps in identifying the product. It is full of information about the product. It helps in grading the product. It attracts customers because of its colorful packing.
Q. 7. What is the purpose of packaging a product?
Ans: Packaging protects the product from damage. It helps to identify a product. It enables convenient handling of the product. As package increases the sale of a product, it acts as a silent salesman.
Q. 8. What is meant by the ‘product concept of marketing’?
Ans: Marketing concept insist of designing product according to the taste of customer. It helps to give customer satisfaction.
Short Answer Type Questions:
Q. 9. What are ‘convenience goods’ and ‘shopping goods’? Explain giving examples for each type.
Ans: (i) Convenience Goods: These goods belong to the categories of convenience goods which are bought frequently Marketing without much planning or shopping effort and are also consumed quickly. Buying decision in case of these goods does not involve much pre-planning. Such goods are usually sold at convenient retail outlets.
(ii) Shopping Goods: These are goods which are purchased less frequently and are used very slowly like clothes, shoes, household appliances. In case of these goods, consumers make choice of a product considering its suitability, price, style, quality and products of competitors and substitutes, if any. In other words, the consumers usually spend a considerable amount of time and effort to finalise their purchase decision as they lack complete information prior to their shopping trip. It may be noted that shopping goods involve much more expenses than convenience goods.
Q. 10. Explain ‘cost based pricing’ and ‘objective based pricing’.
Ans: Cost Based Pricing: Under this method, price of the product is fixed by adding the amount of desired profit margin to the cost of the product. If a particular soap costs the marketeer Rs 8 and he desires a profit of 25%, the price of the soap is fixed at Rs 8+Rs (8 x 25/100) = Rs 10. While calculating the price in this way, all costs (variable as well as fixed) incurred in manufacturing the product are taken into consideration.
Objective Based Pricing: This method is applicable to introduction of new (innovative) products. If, at the introductory stage of the products, the organisation wishes to penetrate the market i.e., to capture large parts of the market and discourage the prospective competitors to enter into the fray, it fixes a low price. Alternatively, the organisation may decide to skim the market i.e., to earn high profit by taking advantage of a group of customers who give more importance to their status or distinction and are willing to pay even a higher price for it. In such a situation they fix quite high price at the introductory stage of their product and market it to only those customers who can afford it.
Q. 11. State four functions performed by channel of distribution.
Ans: A channel of distribution performs the following functions:
(a) It helps in establishing a regular contact with the customers and provides them the necessary information relating to the goods.
(b) It provides the facility for inspection of goods by the consumers at convenient points to make their choice.
(c) It facilitates the transfer of ownership as well as the delivery of goods.
(d) It helps in financing by giving credit facility.
(e) It assists the provision of after sales services, if necessary.
(f) It assumes all risks connected with the carrying out the distribution function.
Q. 12. Describe the various factors affecting choice of distribution channels.
Ans: Following factors affecting choice of distribution channels:
(a) Nature of Market: There are many aspects of market which determine the choice of channel of distribution. Say for example, where the number of buyers is limited, they are concentrated at few locations and their individual purchases are large as is the case with industrial buyers, direct sale may be the most preferred choice. But in case where number of buyers is large with small individual purchase and they are scattered, then need may arise for use of middlemen.
(b) Nature of Product: Nature of the product considerably affects the choice of channel of distribution. In case the product is of technical nature involving a good amount of pre-sale and after sale services, the sale is generally done through retailers without involving the wholesalers. But in most of the consumer goods having small value, bought frequently in small quantities, a long channel involving agents, wholesalers and retailers is used as the goods need to be stored at convenient locations. Items like toiletries, groceries, etc. fall in this category. As against this in case of items like industrial machinery, having large value and involving specialised technical service and long negotiation period, direct sale is preferred.
(c) Nature of the Company: A firm having enough financial resources can afford to have its own distribution force and retail outlet, both. But most business firms prefer not to create their own distribution channel and concentrate on manufacturing. The firms who wish to control the distribution network prefer a shorter channel.
(d) Middlemen Consideration: If right kind of middlemen having the necessary experience, contacts. financial strength and integrity are available, their use is preferred as they can ensure success of newly introduced products. Cost factors also have to be kept in view as all middlemen add their own margin of profit to the price of the products. But from experience it is learnt that where the volume of sales are adequate, the use of middlemen is often found economical and less cumbersome as against direct sale.
Q. 13. What are durable and non-durable goods? Give two examples of each of them.
Ans: (a) Durable Goods: Durable goods are products which are used for a long period i.e., for months or years together. Examples of such goods are refrigerator, car, washing machine etc. Such goods generally require more of personal selling efforts and have high profit margins. In case of these goods. seller’s reputation and pre-sale and after-sale service are important determinants of purchase decision
(b) Non-durable Goods: Non-durable goods are products that are normally consumed in one go or last for a few uses. Examples of such products are soap. salt, pickles, sauce etc. These items are consumed quickly and we purchase these goods more often. Such items are generally made available by the producer through large number of convenient retail outlets. Profit margins on such items are usually kept low and heavy advertising is done to attract people towards their trial and use.
Q. 14. Write short notes on the elements of promotion.
Ans: Following are the elements of promotion:
1. Advertising: It is a paid form of non-personal communication through different media about a product, idea, a service or an organisation by an identified sponsor.
2. Publicity: This is a non-paid process of generating wide range of communication to contribute a favourable attitude towards the product and the organisation.
3. Personal selling: It is a direct presentation of the product to the consumers or prospective buyers. It refers to the use of salespersons to persuade the buyers to act favourably and buy the product. It is most effective promotional tool in case of industrial goods.
4. Sales promotion: This refers to short-term and temporary incentives to purchase or induce trials of new goods. The tool include contests, games, gifts, trade shows, discounts, etc.
Q. 15. State the functions of packaging.
Ans: Following are the functions of packaging:
(a) Product promotion.
(b) Product identification.
(c) Product Protection.
(d) Convenient handling of the product.
Long Answer Type Questions:
Q. 16. What is meant by Marketing Mix? Describe the four components of marketing mix.
Ans: According to Philip Kotler “Marketing Mix is the set of controllable variables that the firm can use to influence the buyer’s response”. The controllable variables in this context refer to the 4 ‘P’s [product, price, place (distribution) and promotion]. Each firm strives to build up such a composition of 4 ‘P’s, which can create highest level of consumer satisfaction and at the same time meet its organisational objectives. Thus, this mix is assembled keeping in mind the needs of target customers, and it varies from one organisation to another depending upon its available resources and marketing objectives.
The four components of marketing mix are:
Product: Product refers to the goods and services offered by the organisation. A pair of shoes, a plate of dahi-vada, a lipstick, all are products. All these are purchased because they satisfy one or more of our needs. We are paying not for the tangible product but for the benefit it will provide. So, in simple words, product can be described as a bundle of benefits which a marketeer offers to the consumer for a price. While buying a pair of shoes, we are actually buying comfort for ourfeet, while buying a lipstick we are actually paying for beauty because lipstick is likely to make us look good. Product can also take the form of a service like an air travel, telecommunication, etc. Thus, the term product refers to goods and services offered by the organisation for sale.
Price: Price is the amount charged for a product or service. It is the second most important element in the marketing mix. Fixing the price of the product is a tricky job. Many factors like demand for a product, cost involved, consumer’s ability to pay, prices charged by competitors for similar products, government restrictions etc. have to be kept in mind while fixing the price. In fact, pricing is a very crucial decision area as it has its effect on demand for the product and also on the profitability of the firm.
Place: Goods are produced to be sold to the consumers. They must be made available to the consumers at a place where they can conveniently make purchase. Woollens are manufactured on a large scale in Ludhiana and you purchase them at a store from the nearby market in your town. So, it is necessary that the product is available at shops in your town. This involves a chain of individuals and institutions like distributors, wholesalers and retailers who constitute firm’s distribution network(also called a channel of distribution). The organisation has to decide whether to sell directly to the retailer or through the distributors/wholesaler etc. It can even plan to sell it directly to consumers.
Promotion: If the product is manufactured keeping the consumer needs in mind, is rightly priced and made available at outlets convenient to them but the consumer is not made aware about its price, features, availability etc, its marketing effort Marketing may not be successful. Therefore promotion is an important ingredient of marketing mix as it refers to a process of informing, persuading and influencing a consumer to make choice of the product to be bought. Promotion is done through means of personal selling, advertising, publicity and sales promotion.
Q. 17. Describe the classification and sub- classification of products on the basis of their use.
Ans: Based on use, the product can be classified as:
(a) Consumer goods: Goods meant for personal consumption by the households or ultimate consumers are called consumer goods. This includes items like toiletries, groceries, clothes etc.
Based on consumer’s buying behaviour the consumer good scan be further classified as:
(i) Convenience Goods: These goods belong to the categories of convenience goods which are bought frequently Marketing without much planning or shopping effort and are also consumed quickly. Buying decision in case of these goods does not involve much pre-planning. Such goods are usually sold at convenient retail outlets.
(ii) Shopping Goods: These are goods which are purchased less frequently and are used very slowly like clothes, shoes, household appliances. In case of these goods, consumers make choice of a product considering its suitability, price, style, quality and products of competitors and substitutes, if any.
(iii) Speciality Goods: Because of some special characteristics of certain categories of goods people generally put special efforts to buy them. They are ready to buy these goods at prices at which they are offered and also put in extra time to locate the seller to make the purchase. The nearest car dealer may be ten kilometres away but the buyer will go there to inspect and purchase it. In fact, prior to making a trip to buy the product he/she will collect complete information about the various brands. Examples of speciality goods are cameras, TV sets, new automobiles etc.
(b)Industrial Goods: Goods meant for consumption or use as inputs in production of other products or provision of some service are termed as ‘industrial goods’. These are meant for non-personal and commercial use and include
(i) raw materials.
(ii) machinery.
(iii) components. and
(iv) operating supplies (such as lubricants, stationery etc).
The buyers of industrial goods are supposed to be knowledgeable, cost conscious and rational in their purchase and therefore, the marketeers follow different pricing, distribution and promotional strategies for their sale. It may be noted that the same product may be classified as consumer goods as well as industrial goods depending upon its end use. Take for example the case of coconut oil. When it is used as hair oil or cooking oil, it is treated as consumer goods and when used for manufacturing a bath soap it is termed as industrial goods. However, the way these products are marketed to these two groups are very different because purchase by industrial buyer is usually large in quantity and bought either directly from the manufacturer or the local distributor.
Q. 18. Explain the four broad methods of price fixation of a product.
Ans: Methods of Price Fixation: Methods of fixing the price can be broadly divided into the following categories:
1. Cost Based Pricing: Under this method, price of the product is fixed by adding the amount of desired profit margin to the cost of the product. If a particular soap costs the marketeer Rs 8 and he desires a profit of 25%, the price of the soap is fixed at Rs 8 + Rs (8 × 25/100) = Rs 10. While calculating the price in this way, all costs (variable as well as fixed) incurred in manufacturing the product are taken into consideration.
2. Competition Based Pricing: In case of products where market is highly competitive and there is negligible difference in quality of competing brands, price is usually fixed closer to the price of the competing brands. It is called ‘young rate pricing’ and is a very convenient method because the marketeers do not have to worry much about demand and cost and effect the change as per the changes by the industry leaders.
3. Demand Based Pricing: At times, prices are determined by the demand for the product. Under this method, without paying much attention to cost and competitors prices, the marketeers try to ascertain the demand for the product. If the demand is high they decide to take advantage and fix a high price. If the demand is low, they fix low prices for their product. At times they resort to differential prices and charge different prices from different groups of customers depending upon their perceived values and capacity to pay. Take the case of cinema halls where the rates of tickets differ for the different sets of rows in the hall.
4. Objective Based Pricing: This method is applicable to introduction of new (innovative) products. If, at the introductory stage of the products, the organisation wishes to penetrate the market i.e., to capture large parts of the market and discourage the prospective competitors to enter into the fray, it fixes a low price. Alternatively, the organisation may decide to skim the market i.e., to earn high profit by taking advantage of a group of customers who give more importance to their status or distinction and are willing to pay even a higher price for it. In such a situation they fix quite high price at the introductory stage of their product and market it to only those customers who can afford it.
