Principles of Marketing Unit 3 Product

By Dev Kirtonia / Principles of Marketing

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Principles of Marketing Unit 3 Product

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Product

PRINCIPLES OF MARKETING

VERY SHORT TYPES QUESTION & ANSWERS

A. Fill up the blanks:

1. The product life cycle follow a typical pattern of ____________ phases cycle.

Ans. Five.

2. The letter ‘R’ in a circle on each package indicates that the brand is duly ____________.

Ans. Registered.

3. Family brand name is limited to one ____________ of a product.

Ans. Line.

4. ____________ is the last phase of product life cycle concept.

Ans. Decline.

5. Product differentiation is done through branding and ____________.

Ans. Packaging.

6. Diversification occurs when a firm seeks to enter a new ____________ with a completely new product.

Ans. Market.

7. Standardization and ____________ are two important marketing functions which facilitate the sales of the products.

Ans. Grading.

8. Protection is the function of ____________.

Ans. Packaging.

B. Multiple choice questions and answers:

1. Product based organizations are divided into units that specialize in marketing certain products or types of ?

(a) Product.

(b) Service.

(b) Firm.

(d) Channel.

Ans. (a) Product.

2. Product line covers-

(a) General retailer.

(b) One price retailer.

(d) All of these.

Ans. (d) All of these.

3. Product life cycle characteristics consists of –

(a) Customers.

(b) Channel.

(d) All of these.

Ans. (d) All of these.

4. Product plays a — role in the activities of a business–

(a) A central.

(b) A secondary.

(d) None of these.

Ans. (a) A central.

5. Product market integration may be defined as a state where there is a match between product attributes and consumer expectation both economic and–

(a) Non economic.

(b) Political.

(d) None of these.

Ans. (a) Non economic.

C. State whether the following statements are true or false:

1. A product may be tangible or intangible.

Ans. True.

2. A product must have Consumer’s satisfying capacity.

Ans. True.

3. Shopping goods are consumer durable items.

Ans. True.

4. Modification and adding new features in the existing products amount to new product.

Ans. True.

5. Consumers may evaluate identical products differently depending on how they are branded.

Ans. True.

6. Physical goods, services and stores can be branded, but ideas and people cannot?

Ans. False.

7. Packaging products protect the products from heat, light, dust etc?

Ans. True.

8. A registered brand name or mark becomes a trade mark?

Ans. True.

SHORT TYPE QUESTIONS & ANSWERS

1. What is the product life cycle?

Ans. A product is like a human being. It is born, grows up fast, matures and then finally passes away. Product life cycle is the stages through which a product or its category bypass. From its introduction to the marketing, growth, maturity to its decline or reduce in demand in the market. Not all products reach this final stage, some continue to grow and some rise and fall. In short, The PLC discusses the stages which a product has to go through since the day of its birth to the day it is taken away from the market.

2. Define packaging?

Ans. Packaging may be defined as the general group of action in the planning of a product. These activities concentrate on formulating a design of the packaging and producing an appropriate and attractive container and wrapper for a product.

3. What is product planning and development?

Ans: Product planning is the initial step of the overall marketing programme. In the competitive business world, producers try to produce products which can be nearer to consumer expectation. The pressure of competition forces the producers to replace the existing products by developing new consumers’ suitable and friendly products. Product planning covers all activities which enable producers and middle men to determine what should constitute a company’s line of products. Product development covers the technical activities of product research, production and design. The well attempt effort of product development increases the scope to satisfy the needs of the customers.

4. What do you mean by product development?

Ans. Product development and research is very necessary owing to rapid technological changes, cut throat competition, changes in the habits and preferences of the customers etc.

It Should be remembered that there is always a risk of failure in the marketing of new products. So, a big responsibility falls on the managers for conducting research work in the direction of product development. For the very survival of the concern, research is very necessary.

5. What do you mean by Test Marketing?

Ans. Before starting commercial production of any product at a large scale it is important to conduct test marketing of it. Test marketing involves introduction a new product into one or more test market areas which are carefully chosen. Test marketing is generally undertaken by the producer of consumer products rather than industrial goods manufactures.

According to T.A. Gold, Test Marketing is a research technique in which the product under study is placed on sale in one or more selected localities or areas, and its reputation by consumers and trade is observed, recorded and analyzed.

6. What is meant by product life cycle?

Ans. Every product posses through certain different or distinct stages during its life span. Hence the term PLC denotes the stages through which a product passes from its introduction to the market till its disappearance from the market.

According to Philip Kotler, A product life cycle is an attempt to recognize distinct stages in sales history of the product.

Most of the marketing economist compare the life of a product to that of a human being. The human being passes through certain stages namely infantry, growth, maturity, old age health. In the case of a product, more or less, we came across the same stages.

7. What do you mean by Brand?

Ans: A brand is a name or symbol or design to identify the goods or services and to differentiate them from those of the competitors.

According to American Marketing Association, “A brand is a name, sign, symbol, design or a combination of them which is included to identify the goods or services of one seller or group of sellers and to differentiate them from those competitors.

8. What do you mean by packaging?

Ans. Packaging is considered as one of the essential feature of marketing. Although it protects goods against physical damage. Packaging is sales oriented. Before they are delivered to the buyers, the goods are placed in small packages, specially designed to suit their size. Packaging differ from product to product. It has assumed more importance in the market oriented economy.

9. Write a short note on product simplification?

Ans. When the product line of a company becomes unmanageable, the company has no alternative but to reduce its product line. Thus, the process of reducing the product line is called product simplification.

Simplification may be defined as deleting or eliminating those product item from the product. One which cannot satisfy the criteria laid down by the company. It is also termed as product elimination. It is just the opposite of product diversification.

10. What is the concept of product in marketing?

Ans. In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retail, products are called merchandise. In manufacturing, products are purchased as raw materials and sold as finished goods.

11. What is the aim of product concept?

Ans. The real objective of developing a product concept is to provide enough information about the Market needs to justify pursuing further investigation at a deeper level.

12. What are three types of product?

Ans. Types of products – 3 Main Types: Consumer Products, Industrial products and services.

13. What is product mix and examples?

Ans. Product Mix, another name as product Assortment, refers to a number of products that a company offers to its customers. For example, a company might sell multiple lines of products, with the product lines being fairly similar, such as toothpaste, toothbrush, or mouthwash, and also other such toiletries.

14. What is the function of product mix?

Ans. The function of a product mix is to provide or advertise one type of product to as many consumers as possible.

15. What is a product mix strategy?

Ans. A successful product mix strategy enables a company to focus efforts and resources on the products and product lines within its offerings that have the greatest potential for growth, market share, and revenue.

16. What is the purpose of product labeling?

Ans. Product Labeling is a key feature in marketing. It helps to market the product allowing customers to know about the items and give necessary messages including ingredients, instructions, and uses.

17. What are the four types of Labeling?

Ans. The four types of Labeling are:

(a) Brand label.

(b) Grade label.

(d) Information label.

18. What is grade labeling?

Ans. Grade labeling mostly like a tag, sticker, label, letter, mark or symbol which identifies the quality or grade of a product for sale.

19. Why is product support services Marketing?

Ans. Product support plays a vital role in the market in order to achieve and maintain customer satisfaction. Once a customer buys the product, he may have several questions in his mind regarding the product all of which are answered by the product support services provided by the company.

20. What is product support services important?

Ans. Providing high-quality support is good for the customer and your business. When done well, customer support helps to: Increase Customer Loyalty and Retention. Good support makes customers feel like you’re on their side, which improves their sense of loyalty to your product and your business.

21. What are product services?

Ans. Support services means those activities provided to or on behalf of a person in the areas of personal care and assistance and property maintenance in order to allow a person to live in the least restrictive environment.

22. What is consumer adoption process?

Ans. The consumer adoption process is a 5 step mental process which consists of awareness, interest, evaluation, trial, and adoption. All consumer goes through this process while adopting the product from leaning to becoming a loyal customer.

23. What is an adoption process in marketing?

Ans. Adoption process is a series of stages by which a consumer might adopt a NEW product or service.

24. What is the product concept?

Ans. Product concept status that customers or consumers prefer product which is of the highest quality, performance and features. Product concept is a mandatory concept in order to give the best possible product to the consumer as per the demand and expectation. A product is not complete in itself and requires other factors of business like marketing, distribution, sales, service etc. to be successful.

25. What is a trademark?

Ans: In General, a trade mark is defined as any sign, as any combination of sign, inherently capable of distinguish the goods or service of one undertaking. Trade marks may be a combination of words, letters, and numerals. They may consist of drawings, symbols, colours used as distinguish features. The owner of the mark may not be involved in the relevant trade and acts purely as a certification authority. The internationally accepted ,ISO 9000 quantity standards are examples of such widely recognized certifications.

26. Write the importance of product Concept with example.

Ans. Using product concept, a company can give identity to the product and can add functional value and usability so that the intended customers can derive this benefit and eventually buy the product in the market.

Product concept is one of the orientation strategies & marketing strategies towards market which a company can follow. Other being selling Concept, Production Concept, Marketing Concept etc. Marketing pull is generated because of superior products which helps in success of the brand.

Innovation helps to get new products with features which customers would like.

Example of product concept: Apple is one company which works highly on product concept to get the best products to their consumers. Apple’s products are perceived to be very high quality with innovative features and great performance. Customers go after the products of Apple and that creates a marketing pull.

27. What are the advantages and disadvantages of product concept?

Ans. Advantages & Disadvantage of product Concept:

The merits of product concept are:

(a) Innovation is more using product Concept as the companies vouch to make better products leading to innovations and inventions which is good for everyone.

(b) Quality is the central focus of this concept which fulfills the needs and wants of the customers at the same time.

(c) It raises the overall bench mark of the offerings in the market as competitors also try to come to the same level as the innovator which tries to give the best product.

The drawbacks are:

(a) Leads to expensive products for basic needs as all manufacturers try to give best possible product to the customers even though the demand can be fulfilled.

(b) Customers need supports, service along with a product, so just focusing only on product features can lead to not providing the holistic customer experience.

28. What is product Labeling?

Ans. Product labeling is the writing and displaying information about a product’s packaging. The product labels show important details which customers must know.

However, some confuse labeling from the packaging.

Product packaging covers the brand colors, logo, material, and shape of the package, while labeling is focused on the product’s information or written part.

LONG TYPE QUESTIONS & ANSWERS

1. What is a product? Discuss the various steps of product planning and development.

Ans. A product is anything which can satisfy a need, want or desire of consumers and can be offered in an exchange process. A product can be a commodity, service, idea or a combination of all these. A commodity is a tangible object such as book. A product is of value to someone only as long is it is perceived as satisfying some needs. Products are basically purchased for the benefits they provide.

There are seven steps in the planning and development of a new product:

(i) New product Ideas: We visualize the detailed features of a model product. Ideas may be contributed by scientists, professional designers rivals, customers, sales force, top management, dealers etc. We may need sixty new ideas to get one commercially viable product.

(ii) Ideas screening: We have to evaluate all ideas and inventions. Poor or bad ideas are dropped and through the process of elimination only most promising and profitable ideas are picked up for further detailed investigations and research.

(iii) Concept Development testing: All ideas that survive the process of screening (preliminary investigation) will be studied in details. They will be developed into mature product concepts. We will have precise description for the ideas and features of the proposed product. At this stage we can incorporate consumer meaning into our product ideas. Concept testing helps the company to choose the best among the alternatives products concepts. Consumers are called upon to offer their comments on the precise written description of the product concept viz, the attributes and expected benefits.

(iv) Business Analysis: Once the best product concept is picked up, it will be subjected to rigorous scarcity to evaluate its market potential, capital investment, rate of return on capital etc. Business analysis is a combination of marketing research, cost benefit analysis and assessment of competition. We have demand analysis, cost analysis and profitability analysis. Business analysis will prove the economic prospects of the new product concept. It will also prove soundness and viability of the selected product concept from business viewpoint. Now we can proceed to concentrate on product development programme. The proposed product must offer a realistic profile objectives.

(v) Product Development programme: We have three steps in this stage; when a paper idea is duly converted into a physical product.

(a) Prototype development given visual image of the product.

(b) Consumer testing of the model or prototype. and

Consumer testing of the model products will provide the ground for final selection of the most premising model for mass production and mass distribution.

(vi) Test Marketing: Entire product marketing programme is tried out for the first time in a small number of well selected test markets i.e. test cities or areas. Test marketing is necessary to find out the viability of full marketing programme for national distribution, customer reactions can be tested under normal market conditions. It helps the company to learn through trial and error and get additional valuable clues for product improvement and for modifications in our marketing mix.

(vii) Commercialization: One the test marketing gives green signal for the product with or without expected modification the company can proceed to finalize all feature of the product. Now, marketing management can launch full-fledged advertising and promotion campaign for mass distribution. Mass production will start and all distribution channels will be duly organized. The product is now born and it will start its life cycle in due course.

2. Define product life cycle? Discuss the various stages in the product life cycle?

Ans. The product life cycle concept derives from the fact that a product’s sale volume and sales revenue follow a typical pattern of five phase cycle. According to Philip Kotler the life time sale of many branded products reveal a typical pattern of development known as the product life cycle.

A product life cycle has the following six stages:

(i) Introduction or market pioneering: The first stage is the product introduction. During this stage the main problem is to stimulate primary demand. There being virtually no competition, the innovating company sets out to inform the target market segment and intervening middlemen of the product’s existence. Generally, this is done through aggressive promotion. Limited distribution is obtained and sales rise very slowly. Technical imperfections in the product frequently appear during, this stage. Thus, the market pioneering stage is a period of heavy promotion demand creation and market capturing.

(ii) Growth: When pioneering stage of product is over, the growth in sales of the product begins. The main problem during this stage is to produce the product in sufficient volume and to market the output with minimum delay. During this stage, the manufacturing and distribution efficiency become important keys to marketing success. Demand generally continues to out place the availability supply. Competition also increases rapidly. Advertising and personal selling also change the nature. In the introduction stage, It was directed mainly to getting new outlets, while now emphasis shifts to selling against competitors. During the stage competition because very acute and keen.

(iii) Maturity: During this stage, competition becomes more intense. Sales continue to increase a decreasing rate eventually leveling it off as the market becomes saturated. The mass market is now buying the product and opportunities for increasing sales further are limited. During this period marketing techniques become highly important. Competitors heavily promote their brands emphasizing the stable difference, supply exceeds demand and replacement sales dominate the market. Industry remain relatively stable and only those companies extremely which have effective marketing programmes succeed in enlarging their market.

(iv) Saturation: This period is of stability. The sales of the product reach the peak and there is no possibility of further increase. The substitute brands begin to be popular.

(v) Decline: This stage is characterized by the product’s gradual displacement by some new innovations evolving change in consumer buying behavior. During the stage of decline industry sales drop off and the number of competitors shrinks. Production overcapacity puts increasing pressure on the surviving firms to scramble for the available business and price trends to become the main competitive weapon. Cost control is increasingly important and some competitors manage to use it effectively in keeping the product profitable.

(vi) Obsolescence: The last stage is obsolescence. At this stage, there is no chance of profitable sale of the product and the product becomes totally out of date. Hence, the management has to drop it from the product line.

The product life cycle of a particular product can be shown in the following diagram:

3. Define packaging? Explain the functions of packaging?

Ans. In this age of competition, good and appropriate packaging occupies much significance. The policies pertaining to the packaging are a part of the product planning and product development program.

In the opinion of Prof. Rustom S. Davar, Packaging is that art and/or science which is related to the development and use of materials, methods and equipment, for the packing of the goods in some containers, so that the product, while passing through various stages of distribution, could remain fully safe.

The functions of packaging are as follows:

(i) Packaging is a sales Tool: It identifies the market as well as the product and carries the brand name. The package label informs the buyer about inner contents and how to use them. It is the biggest advertising medium. It moves the product at the point of purchase. It encourages impulse buying. It establishes a product image. It identifies the product with advertising.

(ii) Protection: This is the fundamental function of packaging. The product demands protections until it is used or consumed. Package prevent damage or loss during transport and warehousing. Foreign trade without sound packaging is impossible. Aur tight package protects the quality of inner contents. Package can prevent the disappearance of volatile or gaseous articles.e.g. spirit acid, gas etc.

(iii) Dependable: Truthfulness and honest representation is the most important function and quality of the packaging. Consumers rely on the package itself for the quality of the product inside the packaging.

(iv) Handling: Modern packaging facilitates easy handling and movement during the process of distribution.

(v) Identification: Identification is an important function of packaging following closely protection and easy in handling. Your product can be identified by a consumer from the rival’s because packing creates individuality and helps quick identification. The product gains special and separate existence due to branding and packaging.

(vi) Convenience: Convenience in packaging is not simply a matter of customer service. Middlemen, wholesalers, retailers and warehousekeepers, i.e. all agencies in the machinery of distribution demand convenience. The size and shape of the package will determine the function of convenience viz adaptability.

(viii) Attractiveness: Attractiveness is a major consideration in modern packaging. The design and the label in the package, printed matter, picture layout or get up of the package, colour combination all these are special aspects of the package and act as selling points of the package. Package must have an artistic appeal. Picture on the package adds to the attention value by drawing and holding the onlooker’s eye to it. Prominent clear and attractive advertising message given on the package label plays the role of a silent salesman performing the functions of a salesman, attracting attention, arousing interest, creating desire and gaining action. Promotional potency of packaging is also tremendous.

4. Explain briefly the reason why new product failed? How to avoid new product failure or precautions necessary in introducing new product?

Ans. The following are the usual reasons for the failure of new product:

(a) Inadequate Marketing Analysis: If the market analysis is inadequate and improper, the analysis will yield only wrong idea. Acting on wrong analysis and data lead to produce failures.

(b) Product problems and defects: It arises out of technical mistakes in the process of production. This is a basic reason for product failure.

(c) Inadequate sales force: The promotional activities should be packed by adequate sales force. If the sales force is inadequate at the time of introduction of the product, market failure may occur.

(d) Bad timing of introduction: The product may be introduced at wrong time in the market without doing an analysis of market conditions and the consumer behaviour. This may also lead to product failure.

(e) Higher costs than Estimated costs: This is an another reason for product failure. The cost estimates often go wrong when products are finally introduced in the market.

(f) Failure to estimate strength of competition: This is also an important factor that leads products to struggle hard in the market. The company may be unable to make proper estimate of the competition and the product may fail with stand the competition.

(g) Insufficient and ineffective marketing efforts: The marketer may not be able to Market his product by proper promotional activities resulting in product failure.

The following precautions are to be taken by the manufacturer in introducing new product so as to avoid its failure:

(a) The manufacturer must consult marketing experts before introducing a new product in the market.

(b) He should carefully investigate the trend of the marketing environment.

(d) He should give proper attention to the selection of proper channel of distribution and the expenses to be incurred in distribution.

(e) He must be able to make the product acceptable to the society.

(f) He should lay proper emphasis on accurate and reliable sales forecast.

(g) He should fix the prices of the product reasonably keeping in view the competitive pricing.

(h) The marketer must make arrangements of adequate storage and transport facilities to meet the consumer demand in time.

(i) The manufacturer must be able to analyze the market strength before introducing the new product.

5. What are the features of good packaging? Discuss the importance/functions of packaging?

Ans. The features of good packaging are explained below:

(a) Attractive: The package should be very attractive. When a customer sees the packaged goods, he / she must be immediately impressed by the package.

(b) Cost of packages: The first of packages should be reasonable. It should not increase the price of the products.

(c) Strength: The containers of the package must be strong enough to withstand the rough handling.

(d) Storage: It should help in proper storage of goods. A small number of packages should not occupy lots of space in a Wearhouse.

(e) Protection: It should be protective. The main aim of good packaging is to protect the goods against damage.

(f) Transport cost: Packaging should be designed in a manner to keep the transport cost to the minimum.

(g) Shape and size: The shape and size of the package should meet the needs of the customer. They should be neither low nor heavy, but easily portable.

(h) Easy Handling: It should facilitate easy handling of the goods. The loading and unloading of goods should be simple.

Importance (Functions) of Packaging:

(i) Safety of the Products: The main function of packaging is to protect the things from dust, water, moisture, insects, etc. Good packing saves the products against perishing, loss and other damages.

(ii) Facility in Marketing Activities: Due to the packing, the movement of the products, shifting, preserving, opening, collecting and storage, become economical and easier for both the middlemen as well as the consumers.

(iii) Advertisement: One of the functions of packing is advertisement too. Till there exists any product packet, it keeps us aware of the same.

(iv) Facility in Collecting: It is easier to store the packaged goods. Due to packing, the products remain safe in the godowns.

(v) Information to the Customers: While making the product attractive, the packing could also make the product useful and informative. It can extend necessary instructions and information more effectively to the customer regarding the use of the product.

6. Define branding? Explain the various advantages/ Benefits of Branding. Discuss the elements of good branding.

Ans. A brand is define as a name, term, sign, symbol or special design or some combinations of these elements that is intended to identify the goods or services of one seller or a group of sellers. A brand differentiates these products from those of competitors. A brand in short is an identifier of the seller or the maker. A brand name consists of words, letters and / or numbers that can be vocalized. A brand mark is the visual representation of the brand like a symbol, design, distinctive colouring or lettering.

The advantages or benefits of branding may be analyzed from the following points of view:

(a) Advantages from consumer point of view:

(i) Easy to identify: Brand name help the consumer to identify the product very easily. Thus, a lot of time and energy of the Consumers is saved in shopping.

(ii) Easy selection: Brand distinguishes the goods of different manufacturers and enables the consumers to select their products quite easily.

(iii) Assurance of quality: The branded goods assure a certain quality and standard.

(iv) Consumer satisfaction: Certain brands acquire a great popularity in the market, such as pear soap, maruti car, Godrej Almirah etc. The consumers buying those branded products get immense satisfaction.

(b) Advantages from producers point of view:

(i) Builds up reputation and Image: A brand enables the manufacturer to build up reputation of his products and creates an image in the public mind.

(ii) Widen Market: It widens market for product on account of its popularity.

(iii) Building Product loyalty: The brand helps to build loyalty for the product among the customers.

(iv) Assist in Advertising and sales promotion: It assist advertising and promotion. When a brand becomes popular advertising and sales promotion cust is automatically reduce.

(c) Advantages from Distribution point of view:

(i) Easier the selling process: Widely popular brands case the selling process. The distributors may display the brand and the products is sold.

(ii) Reduces Distribution cost: Special selling efforts need not be undertaken by the Middlemen. This reduce the cost of distribution considerably.

(iii) Increase the sales: When the brand gain popularity in the market sales of the distribution are automatically increased.

Elements of banding: While selecting the brand, the following qualities must be essentially borne into consideration:

(i) Indicative of the Qualities or Merits of the Product: The brand which is selected must be capable of expressing the maximum qualities of the products.

(ii) No Confusion about the Product: It must not be leading to confusion to the consumers.

(iii) Simple and Brief: The brand must be brief so that the people could easily remember it, e.g. Murphy, Bush, Amul, Cibaca, Dalda, etc.

(iv) Simple to Pronounce: It must be capable of being easily spoken or pronounced.

(v) Facility in Advertising: The brand must be such that by means of any advertising medium, it could be used to publicize the same.

(vi) Attractive: The brand should be such that it could be melodious in hearing and could attract consumers.

(vii) Not Vulgar: From social point of view, the brand should not be vulgar or obscene.

(viii) Facility in Registration: The brand should be such that there is not much problem in getting it registered.

(ix) Specific: It must be specific and it must contain some differentiating characteristics, compared to other products.

(x) Economical: There must not be much expenditure to be incurred in getting the brand printed on the label or packet during the advertising campaign.

7. What do you mean by product Mix? What is its example? What the three dimensions of product mix are there?

Ans. Product mix is the composite of products offered for sale by a firm or a business unit. It is a collection of all products offered for sale by a company. Charges are frequently made by the manufacturers in the product mix for the purpose of diversification. A broad product mix spreads the risk of failure over a number of product line. This is the application of “dictum” (do not all your eggs in one busket). Like wise a firm should not depend only one or two products.

For example: Product Mix, another name as product Assortment, refers to a number of products that a company offers to its customers. For example, a company might sell multiple lines of products, with the product lines being fairly similar, such as toothpaste, toothbrush, or mouthwash, and also other such toiletries.

The three important dimensions of product mix are explained below:

(a) Product width: The width of the product refers to different products Which are offered to public by a company. The greater the number of different kinds of products, the greater the product width.

(b) Product Depth: The term depth of a product mix refers to the average number of articles offered within each category of product or product line. The offered for sale are related to the main product of the company. The greater the number of brands in any product class, the greater the product line depth.

(c) Product consistency: A company is said to be product consistency if the same skills and process are required in the manufacture or distribution of each product line. Many companies maintain product consistency when they introduce new products through their product line. However consistency is ignored in search of new acquisition.

8. What do you mean by price? What are the various objectives of pricing? Explain the importance of pricing?

Ans: Price is defined as the amount we pay for goods or a service or an idea. Price is the only element in the marketing mix of a firm that generates revenue. All other elements generates only cost. Price is a matter of importance to both seller and buyer in the market place. Only when a buyer and a seller agree on price, we can have exchange of goods and services leading to transfer of ownership.

But pricing is different from price. It refers to decisions related to fixing of price of a commodity. A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors.

Objectives of Pricing: A business firm will have a number of objectives in the area of pricing. These objectives can be short term or long term or primary objectives:-

(i) Profit maximization in the short term.

(ii) Profit optimization in the long term.

(iii) A minimum return on investment

(iv) A minimum return on sales turnover.

(v) Achieving a particular sales volume.

(vi) Achieving a particular market share.

(vii) Deeper penetration of the market.

(viii) Entering new markets.

(ix) Target project on the entire product line.

(x) Keeping competition out, or keeping it under check.

Importance of Pricing are as follows:

(i) Price is the pivot for an economy: Price is the prime mover of the wheels of the economy namely, production, consumption, distribution and exchange price influences consumer purchase decision. It reflects purchasing power of currency. It can determine the general living standards of people. In essence, by and large every facet of our economy life is directly or indirectly governed by pricing.

(ii) Price Regulates Demand: Price increase or decrease the demand for the product de- marketing strategy can be easily implemented to meet the rising demand for goods and service.

(iii) Price is the competitive weapon: The marketers have to perform in a highly competitive environment. Price is a very important instrument to fight competition. It is the competition that contributes maximum to the importance of pricing. Pricing is a highly dynamic function. Because of the immense competition and in meeting competition, pricing decisions acquire their real importance.

(iv) Price is the Determinants of profitability: Price determines the profitability of firm by influencing the sales revenue. Low price is not always necessary to increase profit. A right price can increase the sales volume and there by profit. The impact of price rise of fall is reflected instantly in the rise or fall of the product profitability.

(v) Price is a Decision Input: Pricing is highly risky decision area and mistakes in pricing might reasonably affect the firm, its profits, growth and future.

(vi) Marketing Communication: Price plays an important role in marketing communication. High price may indicate higher quality. Price communicates value to the consumer. Customers are basically value-maximizes. They want to have the maximum value from a given purchase. They form an expectation of value and act on it. A buyer’s satisfaction is a function of the product’s perceived performance and the buyer’s expectations.

9. Define test marketing? Explain the various methods of Test Marketing?

Ans. Test marketing is a method that aims to explore consumer response to a product or marketing campaign by making it available on a limited basis to test markets before a wider release. It’s important to note that customers exposed to the product or campaign may be part of a test group without the customers’ knowledge.

There are many methods adopted by the manufacturer for test marketing to their products:

(a) Simple survey Method: Under this method some products are distributed to potential customers for the opinion and recommendations if any. But the main limitation of this method is that consumers may not take the trouble of informing their opinion to the test marketers.

(b) Dealer’s opinion Method: It is assumed that dealers are in a position to offer valuable market material to the market testers as they are in close contact with the consumers.

(c) Playback Audit Method: Under this method company appoints trained men to interview consumers who have already tested their sample products motion to the company. The playaudit na method provides valuable information to the company.

(d) Consumer’s panel method: Another expensive but frequently employed method of product testing is consumer panel method. It is mostly done in western countries. The product are given to a small panel of selected customers and requested to give their frank opinion about the price, quality, utility, durability and so on.

10. What is product labeling? What are the Seven essential parts of a product label?

Ans. Product labeling is the act of writing and displaying information about a product’s packaging. The product labels show important details which customers must know. However, some confuse labeling from the packaging.

Following are the seven essential parts of a product label:

(a) Required Details: There are product details that are legally required to show on the label. In some cases, these details are even required to be placed on a label’s specific area.

The details depend on the type of the product:

(i) Food and Drug Administration – ingredient lists on all food labels.

(ii) Consumer Safety protection Commission – Choking hazard warning on toys with small parts. They also require suffocating warnings on products with plastic or latex.

(iii) There are also many areas that require bottle and can redeem information on returnable containers.

Companies may face fines and lawsuits if they fail to include these legally required details on the label.

(b) Brand Name: The brand name is always prominently displayed on the labels so customers can easily recognize the company. When customers become more aware and interested in your company, it creates customer loyalty, leading to more sales.

(c) Product Name: Other than the brand name, the product name must also be prominently displayed on the label, describing the product to communicate the product to the customer.

(d) Series Name: When a product is part of a series, the series name must be indicated on the label. It’s not required to be prominently shown like the brand or the product names, but it should be visible enough for customers to identify.

(e) Packaging Size: In some areas, the packaging size is required detail that must be shown on the label. Indicating the amount lets customers know how they’re buying is exactly, which builds trust.

Displaying the packaging size depends on the type of product. For foods and beverages, weight and volume are frequently shown. For Clothing and jewelry, measuring the unit is often used.

(g) Company Contact Information: Providing company contact information makes it easier for government agencies to contact the company if there’s an issue with the product. Furthermore, it gives customers away to reach the company for feedback such as complaints or suggestions to improve the product.

(h) Barcode: A barcode represents data in a visual, machine – readable form. Major warehouses and retailers use barcodes to track their products, especially in high-volume stores.

11. Define product support services.

Ans. Product support services refer to lagbor-based services for hardware or software, which can be performed by the manufacturer of the product or parties other than the vendor that created the product. These services can be provided by several types of vendors, typically including hardware OEMs, such as Dell, HP, EMC or IBM; software publishers, such as Microsoft, Oracle or SAP. Formal channel partners of hardware and software vendors also provide support services.

Product support services are also delivered by additional independent service providers and third-party support providers. An independent service provider delivers a broad range of services for hardware and / or software products (such as consulting or support), and may have an alliance with the product manufacturers but not as a primary means to its services business. A third party support provider primarily delivers break/fix Technical support for hardware and / or software products and is not typically aligned with the product manufacturers but may have a relationship in certain specific exceptional cases.

12. What are the main Concept of Consumer Adoption process? Explain all the Five Stages of Consumer Adoption process.

Ans. Though most buyers of a product have some common needs, they are not alike in all respects.

Purchasers in the initial stages of a product’s life are considerably different from those who make their purchase later. Some of their demographic characteristics may vary, their buying behaviour may be distinct, and their purchasing motives may differ.

To describe the various types of buyers who purchase a product over the course of its life cycle, the marketing experts proposed an adoption process.

To build an effective strategy for market penetration, management must understand the consumer adoption process. Kotler defines adoption as an individual’s decision to become a regular user of a product.

There was a time when Marketers would offer their products to the mass market. Under this concept, people everywhere were thought to buy a company’s product, and consequently, companies were inviting everybody to buy their products by making them available in wider areas.

It would cost companies to spend heavily on promotion and distribution most of which were wasted.

It led to the development of a concept called ‘heavy – user target marketing.’

Under this concept, companies would Target heavy users initially with their offers. This also suffered some limitations as the heavy users vary in their tastes preferences,adopter status, and brand loyalty levels.

From this experience, companies now prefer approaching the early adopters with their offers. To understand the consumer adoption process, you should understand, in the beginning, two other concepts – innovation and innovation diffusion process.

If you have clear ideas on these two, you will identify early adopters by utilizing your knowledge.

“Innovation refers to any good, service, or idea that is perceived by someone as new.” This Suggests that even an old product can be considered by someone as an innovation, provided he perceives it as new.

The reason may be that he was not exposed to the product until now. On the contrary, the innovation diffusion process is the spread of a new idea from its source of invention or creation to its final adopters or buyers / users.

We are now in a position to define the consumer adoption process. “The consumer adoption process focuses on the mental process through which an individual passes from first hearing about an innovation to final adoption.”

This suggests that an adopter of an innovation passed through five stages. In the following section, we shall turn out attention to the stages of the adoption process.

Consumers go through five stages in the process of adopting a new product.

(a) Product Awareness.

(b) product Interest.

(d) Product Trial.

(e) Product Adoption.

These stages imply that the new-product Marketer should consider how to help consumers move through these stages. A manufacturer of large screen television may discover that many consumers in the interest stage do not move to the trial stage because of uncertainty and the large investment.

If these same consumers would be willing to use a large-screen television on a trial basis for a small fee, the manufacturer should consider offering a trial-use plan with the option to buy.

For adopting a new product, at first, the consumer becomes aware of the new product but does not have information about it. The consumer shows interest and searches for information about the new product. In the third stage, the consumer evaluates whether trying the new product is worthwhile. After that, the consumer tries the new product on a limited scale to improve its value assessment. At the last stage, the consumer decides to make full and regular use of the new product.

Let’s understand them in details:

(a) Product Awareness: The Consumer becauses aware of the new product but lacks information about it. Initially, the consumer must become aware of the new product.

Awareness leads to interest, and the customer seeks information about the new product.

Whether an innovation is continuous or not, people are either little aware of aware of it initially.

Innovation, therefore, has to inform the adopters about the innovation. In the awareness stage, individuals become aware that the product exists, but they have little information about it and are not concerned about getting more.

Adopters may be informed through advertising, publicity, or any other effort of the market.

(b) Product Interest: The consumer seeks information about the new product. Once the information has been gathered, the consumer enters the evaluation stage and considers buying the new product.

By this time, the innovation is introduced. It is now the time for the decision-markers to determine whether the innovation relates to their needs.

They enter the interest stage when they are motivated to get information about its features, uses, advantages, disadvantages, price, or location.

Interest may or may not sparked, depending on whether the decision makers perceive the innovation as a relevant, feasible alternative to existing items.

(c) Product Evaluation: Next, in the trial stage, the consumer tries the product on a small scale to improve its value estimate. The consumer considers whether trying the new product makes sense.

Adopters of the innovations have to establish some evaluation measures to compare the new product with existing ones.

During the evaluation stage, individuals consider whether the product will satisfy certain critical criteria for meeting their specific needs. The potential adopters consider the innovation’s benefits and determine whether to try it.

(d) Product Trial: The consumer tried the new product on a small scale to improve their estimate of its value. If the consumer is satisfied with the product, they enter the adoption stage, deciding to use the new product thoroughly and regularly.

At this stage, the potential adopters examine, test or try the innovation product to determine its usefulness.

In this stage, they use or experience the product for the first time, possibly by purchasing a small quantity, taking advantage of a free sample or demonstration, or borrowing the product from someone.

During this stage, potential adopters determine the product’s usefulness under the specific conditions they need.

The trial stage for innovations is complex. Successful introduction depends greatly on the new product’s characteristics, benefits, and perceived risks. Effective communication is the key to achieving trial by consumers.

(e) Product Adoption: The consumer decides to make full and regular use of the new product. The new product is a good, service, or idea perceived by some potential customers as new.

Individuals move into the adoption stage when choosing that specific product when they need a product of that general type. Here the buyers purchase the new product and can be expected to see it to solve problems.

So,this final stage of the product is indicated most directly by sales, but the innovation’s visibility is also a success measure.

However, please do not assume that they will eventually adopt the new product because a person enters the adoption process. Rejection may occur after any stage, including the adoption stage.

13. What are the factors affecting price or product or service?

Ans: (i) Internal Factors: As regards pricing, the firm has certain objectives -long term as well as immediate. For example, the firm has certain costs of manufacturing and marketing; and it seeks to recover these costs through the price and thereby earning a profit. In respect of all the products, the firm may have a basic philosophy on pricing. The pricing decisions of the firm have to be consistent with this philosophy. Pricing also has to be consistent with the overall objectives of the firm.

(a) Corporate and marketing objectives of the firm: All pricing objectives emanate from the corporate and marketing objectives of the firm. A business firm will have a number of objectives in the area of pricing. Some of these objectives are long-term, while others are short-term.

(d) The image sought by the firm through pricing: If a firm offers high quality goods at high prices, the firm will develop a premium image.

(c) The characteristics of the product: Sophisticated, complex and new to the world products normally carry high prices. Products having more features carry higher prices.

(d) Price elasticity of demand of the product: If price increases, demand decreases and if price decreases demand increases. Marketers may decide on pricing based on ‘what the traffic can bear”.

(e) The stage of the product on the product life cycle: When a product is introduced for the first time it carries a higher price.

(ii) External Factors: In addition to the internal factors mentioned above, any business firm has to encounter a set of external factors while formulating its pricing decisions. An enterprise exists in an environment and is influenced by environmental factors. The external factors are:

(a) Market characteristics: Some markets are having very stiff competition and some are having less. The number of players in a market could be more or less. Market leadership factors also may be different.

(b) Buyer behaviour in respect of the given product: Value conscious buyers are likely to be interested in low prices. Image conscious buyers may be more attracted by product image rather than low price of the product.

(c) Bargaining power of major customers: In industrial buying situations major buyers have a bargaining power. They are in a better position to negotiate prices.

(d) Bargaining power of major suppliers: Similar is the case with major suppliers. They are in a better position to supply bulk quantities. They are also in a better position to negotiate terms.

(e) Competitors’ pricing policy: Firm’s decision to set a price is heavily influenced by the price set by the competitors. In case of highly unique product having a niche market, a firm can have its own price.

14. What are the factors affecting the adoption process? Explain the five characteristics of an innovative adoption process?

Ans. The three important factors affecting the adoption process are people’s readiness to try New products, personal influence, and innovation characteristics.

We shall now take up a brief discussion on how they influence the product adoption process:

People’s Readiness: People differ in their readiness to accept new products, services, opinions, and ideas. Some people always prefer adopting new market offers. Those who are venturesome and enjoy taking risks, younger in age, have higher social status, and have favourable financial positions will be the innovators.

Those who are guided by respect treated as opinion leaders and consider themselves as cautions adopt early. The deliberate persons are usually the early majority. Those who are skeptical and follow the majority adopt once a large number of people try the product.

Those who are tradition-bound, having insular attitudes, and are suspicious, usually accept a product when the masses use it.

To understand adopter categories and locate the innovation and early adopters, a marketer should undertake an extensive study based on potential customers demographic, psychographic, and media characteristics.

Personal Influence: Since we are social and human beings, we are always subject to interpersonal influence in our decisions. The degree of personal influence varies according to the buying situation and individual in question.

There are some buying situations where we are influenced more by others. Again, personality type determines the susceptibility of interpersonal influence.

The submission type of person is more influenced by others than do the aggressive type of persons. In complex buying situation, particularly while buying expensive items, personal influence works more than in simple buying situation and in buying small items.

Following are the five characteristics of an innovation influence the adoption process:

(a) Relative Advantage: If a new product is perceived as superior to existing products, it will be adopted quickly.

(b) Compatibility: If innovation is considered consistent with the individual’s value and experiences, it will soon be adopted.

(c) Complexity: If innovation is perceived as complex by a particular group of people, they will adopt it slowly.

(d) Divisibility: If there is a scope of trying the innovation on a test or sample basis, the chance will be adopted soon.

(e) Communicability: If the benefits of the innovations can be described easily or observed, it will be adopted fast.

There are some other characteristics of the innovation that also influence the rate of adoption of the innovation. They are the cost, risk and uncertainty, technical standard, social acceptance, and so on.

15. Define after sales service?

Ans: After-sales service refers to the ongoing support and assistance that a business provides to customers after they have purchased a product or service. It includes resolving customer complaints, offering technical support, providing maintenance services and addressing product issues or defects.After-sales service is the support you give your customers after they’ve purchased your product. It might include an onboarding period, extended customer support hours, and proactive support outreach to identify small roadblocks before they become major obstacles.

(i) Word-of-mouth referrals: Happy customers are valuable assets because they almost always refer your brand to family and friends. Positive word-of-mouth from satisfied customers can drive up to 50% of a business’ total sales.

(ii) Customer loyalty: A great product with poor customer support is a tragedy. However, when backed by excellent customer service, pre-and post-sale, an average product does exceedingly well. The purpose of after-sales service is to increase loyalty among customers and promote brand advocacy.

(iii) Assurance: letting the customer know that if the purchased product is defective or isn’t working properly, it can be returned or exchanged. Warranty, guarantee, upgrades, returns and replacement policies are examples of assurance that can instill a sense of trust and confidence in users.

Dev Kirtonia

Hi, I’m Dev Kirtonia, Founder & CEO of Dev Library. A website that provides all SCERT, NCERT 3 to 12, and BA, B.com, B.Sc, and Computer Science with Post Graduate Notes & Suggestions, Novel, eBooks, Biography, Quotes, Study Materials, and more.