Marketing Prev Questions Answers
Marketing Prev Questions Answers
Marketing Prev Questions Answers
Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape
every industry and helps determine an industry's weaknesses and strengths. Michael Porter has
identified five forces that determine the intrinsic long-run attractiveness of a market or market
segment: industry competitors, potential entrants, substitutes, buyers, and suppliers. The threats
these forces pose are as follows:
1. Threat of intense segment rivalry - The first of the Five Forces refers to the number of
competitors and their ability to undercut a company. The larger the number of
competitors, along with the number of equivalent products and services they offer, the
lesser the power of a company.
2. Threat of new entrants - A company's power is also affected by the force of new
entrants into its market. The less time and money it cost for a competitor to enter a
company's market and be an effective competitor, the more an established company's
position could be significantly weakened.
An industry with strong barriers to entry is ideal for existing companies within that
industry since the company would be able to charge higher prices and negotiate better
terms.
3. Threat of suppliers’ growing bargaining power - The next factor in the Porter model
addresses how easily suppliers can drive up the cost of inputs. The fewer suppliers to an
industry, the more a company would depend on a supplier.
As a result, the supplier has more power and can drive up input costs and push for other
advantages in trade.
4. Threat of buyers’ growing bargaining power - The ability that customers have to drive
prices lower or their level of power is one of the Five Forces. It is affected by how many
buyers or customers a company has, how significant each customer is, and how much it
would cost a company to find new customers or markets for its output.
A smaller and more powerful client base means that each customer has more power to
negotiate for lower prices and better deals. A company that has many, smaller,
independent customers will have an easier time charging higher prices to increase
profitability.
5. Threat of substitute products - The last of the Five Forces focuses on substitutes.
Substitute goods or services that can be used in place of a company's products or services
pose a threat. Companies that produce goods or services for which there are no close
substitutes will have more power to increase prices and lock in favorable terms. When
close substitutes are available, customers will have the option to forgo buying a
company's product, and a company's power can be weakened.
Market-Challenger Strategies
CHOOSING A GENERAL ATTACK STRATEGY can distinguish five: frontal, flank,
encirclement, bypass, and guerilla attacks.
1. Frontal Attack: The frontal attack is the direct attack, wherein the market challenger
matches with the competitor’s product, price, advertising, and promotion activities. The
market challenger can even cut the price of the product, provided he convinces the
customers that the quality is not compromised and is as good as the high-priced
products.
For Example- Pepsi and Coca-Cola have been “at war” for decades, and both have
captured immense global market share. Both companies have a diverse product
portfolio, and if one brand launches a product, the other one counterattacks with a
similar product. For instance, when Coca-Cola introduced Diet Coke, Pepsi responded
with Diet Pepsi.
2. Flank Attack: The flank attack means, attacking the competitor on its weak points. Here
the market challenger determines the weak areas of the competitor in terms of two
strategic dimensions i.e., Geographic and segmental. The challenger finds the areas
where the competitor is under performing and then push its marketing strategies in that
area. Also, the challenger spots the segments which the competitor left untapped and try
to cover that segment through its products and services.
For Example- Red Bull, the energy drinks company decided to concentrate only on the
energy drinks market that companies like Coca-Cola and Pepsi had neglected.
3. Encirclement Attack: The encirclement attack means, attacking the market leader or a
competitor from all the fronts simultaneously, it is the combination of both the frontal
and the flank attack. Here, the market challenger launches several offensive campaigns
i.e., surrounds the competitor with a varied brand and forcing the competitor to defend
himself from all the sides simultaneously. This strategy is adopted to enjoy the long-term
market dominance.
For Example- The eCommerce market can be an excellent example of the encirclement
attack strategy. eCommerce companies often reduce their profit margins to overthrow
the competition on the basis of turnover. They would try to go all lengths just to capture
the market share and boost their customer base.
4. Bypass Attack: The bypass attack is the indirect attack, wherein the market challenger
does not attack the leader directly, but broaden its market share by attacking the easier
markets. The challengers can bypass the leader by following any of the strategies viz.
Expanding into the untapped markets, diversifying into the unrelated products,
modernizing the existing product with the invention of technology.
For Example- The iPod from Apple company completely bypassed the Walkman from
Sony.
5. Guerrilla Warfare: The Guerrilla warfare is the intermittent attacks imposed by the
challenger to demoralize the competitor by adopting both the conventional and
unconventional means of attack.
For Example- The punch line, “Nothing official about it,” was Pepsi’s counterattack
when Coca-Cola became the official partner of the world cup.
Market-Nicher Strategies
Market niche strategy is defined as a narrow group of customers who are looking for specific
products or benefits. They have clearly defined needs and are ready to pay a higher price for a
specific product (service) or its quality to satisfy them. Consumers in a niche market have
specific preferences or needs that differ from the broader sector. Brands divide almost every
market into subsections according to things like:
• Geographic location
• Psychographic data (interests, attitudes, and values)
• Demographic base (age, income level, gender, education level)
• Quality level (premium, moderate, high, low)
• Price (high, discount, wholesale)
Brand Equity Models
Although marketers agree about basic branding principles, a number of models of brand equity
offer some different perspectives. Here we highlight four of the more-established ones.
1. Brand Asset Valuator (BAV): The Brand Asset Valuator, developed by Young &
Rubicam, focuses on four dimensions of brand equity:
i) Differentiation measures how unique and distinct a brand is compared to
competitors.
ii) Relevance assesses how well the brand meets customer needs.
iii) Energy measures the brand's sense of momentum.
iv) Esteem reflects the brand's reputation and consumer perception,
v) Knowledge gauges brand awareness and recognition.
2. BrandZ Model: The BrandZ model, created by Kantar Millward Brown, combines
financial analysis with consumer research to evaluate brand equity. It assesses a brand's
value by considering its market capitalization and consumer perceptions of its meaning,
difference, and salience. This model provides insights into the financial value and
consumer-driven strength of a brand.
3. Aaker Model: The Aaker model, developed by David Aaker, identifies five dimensions
of brand equity:
i) Brand Awareness measures the extent to which consumers are familiar with the
brand.
ii) Brand Associations involve the thoughts and feelings linked to the brand.
iii) Brand Loyalty reflects the level of customer commitment.
iv) Perceived Quality refers to the customer's perception of the brand's quality.
v) Brand Assets encompass unique and proprietary brand elements.
4. Brand Resonance Model: The Brand Resonance Model, proposed by Kevin Keller,
emphasizes building a strong emotional connection with consumers. It consists of six
steps:
i) Brand Salience (creating brand awareness and identity),
ii) Brand Performance (meeting or exceeding customer expectations),
iii) Brand Imagery (developing strong brand associations and personality),
iv) Brand Judgments (focus on customers' own personal opinions and evaluations.).
v) Brand Feelings (customers' emotional responses and reactions with respect to the
brand)
vi) Brand Resonance (refers to the nature of the relationship customers have with the
brand and the extent to which they feel they're "in sync" "with it.)
Branding Decision
Branding is a critical decision. Due to huge competition companies are creating a brand for
each product.
The following are various brand strategies generally used by the firm.
1. Individual brand name - This policy is followed by many companies. Here each product
of the company is given an independent brand name
For E.g., Hindustan Unilever has established the brand for each product like in bathing
soap line offering Lux, Dove, pears others in hair care, baby product
2. Umbrella/ Blanket Family brand - In this type of branding name of the company is
used in a diverse product category.
For e.g., Tata has followed umbrella branding for diversified products ranging from Tea,
Coffee, Automobiles, Steel, etc.
3. Separate family names for all products - When companies produce a diversified
product, they may go for a separate family name.
4. Company name combined with an individual product name - This is a sub-branding
strategy where the parent brand is used & to this product names are added.
For e.g.- SONY TV, SONY Camera, SONY mobiles, and SONY DVD.
Product Levels
Product Levels represent different layers or dimensions of a product. Here is a brief explanation
of each level:
1. Core Benefit: The core benefit is the fundamental or primary value that customers seek
when purchasing a product. It addresses the basic need or problem that the product aims
to solve. For example, the core benefit of a smartphone is communication and
connectivity.
2. Basic Product: The basic product refers to the basic form or features of a product that
deliver the core benefit. It includes the essential attributes and functionalities required for
the product to fulfill its intended purpose. For a smartphone, the basic product would
include the device itself, its screen, processor, and basic communication capabilities.
3. Expected Product: The expected product represents the set of attributes and features that
customer typically expect from a product in a particular category. It includes the features
that are considered standard or normal in the eyes of customers. In the case of a
smartphone, customers may expect additional features like a camera, internet
connectivity, and access to various apps.
4. Augmented Product: The augmented product refers to additional features, benefits, or
services that go beyond the customer's expectations. These additions aim to provide
extra value and enhance the customer's experience. Examples of augmented product
elements for a smartphone can include extended warranty, customer support, pre-
installed software, or additional accessories.
5. Potential Product: The potential product represents the future possibilities and
innovations that could be added to the product. It includes potential improvements,
advancements, or new features that are not currently available but might be introduced
in the future to meet evolving customer needs and technological advancements.
Product Classifications
Marketers classify products on the basis of durability, tangibility, and use (consumer or
industrial). Each type has an appropriate marketing-mix strategy.
Products fall into three groups according to durability and tangibility:
1. Nondurable goods are tangible goods normally consumed in one or a few uses, such as
beer and shampoo. Because these goods are purchased frequently, the appropriate
strategy is to make them available in many locations, charge only a small markup, and
advertise heavily to induce trial and build preference.
2. Durable goods are tangible goods that normally survive many uses: refrigerators,
machine tools, and clothing. Durable products normally require more personal selling
and service, command a higher margin, and require more seller guarantees.
3. Services are intangible, inseparable, variable, and perishable products that normally
require more quality control, supplier credibility, and adaptability. Examples include
haircuts, legal advice, and appliance repairs.
Consumer-Goods Classification
Consumer goods can be classified into four main categories based on their consumer buying
behavior.
1. Convenience goods: Convenience goods are products that consumers buy frequently
with minimal effort. They are further categorized into:
- Staples: Essential everyday items like bread, milk, and toiletries.
- Impulse goods: Products purchased on the spur of the moment, often due to
appealing packaging or promotional efforts.
- Emergency goods: Items bought during urgent situations, such as medicine or
spare tires.
2. Shopping goods: Shopping goods require more consumer involvement and comparison
before purchase. They can be classified as:
- Homogeneous shopping goods: Products that are similar across different brands,
such as basic household appliances.
- Heterogeneous shopping goods: Products that differ significantly across brands,
like clothing or furniture, where consumers compare features, quality, and price.
3. Specialty goods: Specialty goods are unique or high-end products that consumers are
willing to make special efforts to obtain. Examples include luxury cars, designer
clothing, or rare collectibles. Consumers have strong brand preferences and are less
price-sensitive.
4. Unsought goods: Unsought goods are products that consumers may not actively seek
out or be aware of. These include products like life insurance, funeral services, or certain
medical treatments. Companies often need to use persuasive marketing techniques to
generate demand for these goods.
Product Differentiation
Product Differentiation is a key strategy for companies to create a competitive advantage and
stand out in the market. Here are various dimensions of product differentiation:
• Form: Form differentiation refers to the physical appearance or design of a product.
Companies can differentiate their products by offering unique shapes, sizes, or packaging
that distinguish them from competitors.
• Features: Product features encompass specific functionalities or characteristics that add
value to the product. Offering unique or innovative features can help differentiate a
product and attract customers. These features can include advanced technology,
additional capabilities, or special functionalities.
• Customization: Customization allows customers to tailor the product to their specific
needs or preferences. Offering options for customization or personalization provides a
differentiated experience and enhances customer satisfaction.
• Performance Quality: Performance quality refers to how well a product performs its
intended function. Differentiating a product through superior performance quality, such
as faster speed, higher efficiency, or better overall performance, can attract customers
seeking top-tier products.
• Conformance Quality: Conformance quality relates to the consistency and reliability of
a product in meeting established standards and specifications. Providing products with
superior conformance quality builds customer trust and loyalty.
• Durability: Durability is the ability of a product to withstand wear and tear or maintain
its quality over an extended period. Differentiating a product by offering enhanced
durability can attract customers looking for long-lasting and reliable products.
• Reliability: Reliability refers to the consistency and dependability of a product to
perform as expected. Emphasizing high reliability through rigorous quality control and
testing can differentiate a product and build customer confidence.
• Repairability: Repairability relates to the ease of fixing or servicing a product if issues
arise. Offering products that are easily repairable or providing convenient repair services
can differentiate a brand and enhance customer satisfaction.
• Style: Style encompasses the aesthetic appeal and design elements of a product.
Differentiating through unique and appealing styles can attract customers who prioritize
visual aesthetics and align with their personal preferences.
• Design: Design is the totality of features that affect how a product looks, feels, and
functions in terms of customer requirements.
Product Mix
Product mix, also known as product assortment or product portfolio, refers to the complete set
of products and/or services offered by a firm.
Dimensions of a Product Mix
1. Width - Width, refers to the number of product lines offered by a company.
For example, Kellogg’s product lines consist of: (1) Ready-to-eat cereal, (2) Pastries and
breakfast snacks, (3) Crackers and cookies, and (4) Frozen/Organic/Natural goods.
2. Length - Length refers to the total number of products in a firm’s product mix.
For example, consider a car company with two car product lines (3-series and 5-series).
Within each product line series are three types of cars. In this example, the product
length of the company would be six.
3. Depth - Depth refers to the number of variations within a product line.
For example, continuing with the car company example above, a 3-series product line
may offer several variations such as coupe, sedan, truck, and convertible. In such a case,
the depth of the 3-series product line would be four.
4. Consistency - Consistency refers to how closely related product lines are to each other.
Line stretching
Line stretching, also known as product line extension or line expansion, is a strategy in which a
company adds new products or variations to an existing product line.
Line stretching involves expanding a product line in three directions:
1. Upward Line Stretching: Upward line stretching occurs when a company introduces
new products or variations at higher price points or with enhanced features and quality.
2. Downward Line Stretching: Downward line stretching involves introducing new
products or variations at lower price points or with stripped-down features to target more
price-sensitive or budget-conscious customers.
3. Two-Way Stretching: Introducing new products into a product line at both the higher
and lower priced ends at the same time.
Setting The Price
Setting the price involves a systematic approach. Here are the steps involved:
1. Selecting the pricing objective:
a. Survival: Setting prices to cover costs and ensure the business's survival.
b. Maximize current profits: Setting prices to maximize short-term profitability.
c. Maximize market share: Setting prices to gain a larger market share.
d. Market skimming price: Setting high initial prices to target early adopters and
maximize revenue.
e. Product quality leader: Setting prices to position the product as a leader in terms
of quality.
2. Determining demand:
a. Assessing price sensitivity: Understanding how customers respond to price
changes.
b. Estimating demand curves: Analyzing the relationship between price and
quantity demanded.
c. Price elasticity of demand: Measuring the responsiveness of demand to price
changes.
3. Estimating cost:
a. Identifying types of costs and levels of production to determine the cost structure.
4. Analyzing competitors' cost, prices, and offers:
a. Assessing competitors' pricing strategies and market positioning.
5. Selecting a pricing method:
a. Markup pricing: Calculating the price based on adding a markup percentage to
the unit cost.
b. Target-return pricing: Determining the price to achieve a desired return on
investment.
c. Perceived-value pricing: Setting prices based on the perceived value of the
product in the eyes of the customer.
d. Value pricing: Pricing based on the value delivered to the customer.
e. Going-rate pricing: Setting prices based on prevailing market prices.
f. Auction-type pricing: Conducting auctions to determine the price.
g. Group pricing: Offering discounts or special prices for specific customer groups.
6. Selecting the final price:
a. Utilizing psychological pricing tactics to influence consumer perception.
b. Implementing gain-and-risk-sharing pricing strategies.
Promotional Pricing
Companies can use several pricing techniques to stimulate early purchase:
1. Loss-leader pricing. Supermarkets and department stores often drop the price on well-
known brands to stimulate additional store traffic. This pays if the revenue on the
additional sales compensates for the lower margins on the loss-leader items.
Manufacturers of loss-leader brands typically object because this practice can dilute the
brand image and bring complaints from retailers who charge the list price.
Manufacturers have tried to keep intermediaries from using loss-leader pricing through
lobbying for retail-price-maintenance laws, but these laws have been revoked.
2. Special event pricing. Sellers will establish special prices in certain seasons to draw in
more customers. Every August, there are back-to-school sales.
3. Special customer pricing. Sellers will offer special prices exclusively to certain
customers. Road Runner Sports offers members of its Run America Club “exclusive”
online offers with price discounts twice those for regular customers.
4. Cash rebates. Auto companies and other consumer-goods companies offer cash rebates
to encourage purchase of the manufacturers’ products within a specified time period.
Rebates can help clear inventories without cutting the stated list price.
5. Low-interest financing. Instead of cutting its price, the company can offer customers
low interest financing. Automakers have used no-interest financing to try to attract more
customers.
6. Longer payment terms. Sellers, especially mortgage banks and auto companies, stretch
loans over longer periods and thus lower the monthly payments. Consumers often worry
less about the cost (the interest rate) of a loan, and more about whether they can afford
the monthly payment.
7. Warranties and service contracts. Companies can promote sales by adding a free or
low-cost warranty or service contract.
8. Psychological discounting. This strategy sets an artificially high price and then offers the
product at substantial savings; for example, “Was $359, now $299.” Discounts from
normal prices are a legitimate form of promotional pricing; the Federal Trade
Commission and Better Business Bureaus fight illegal discount tactics.
Differentiated Pricing
The Differential Pricing is a method of charging different prices for the same type of a product,
and for the same number of quantities from different customers based on the product form,
payment terms, time of delivery, customer segment, etc.
The companies can charge different amounts from different customers considering the following
basis:
1. Customer-Segment pricing: Different group of people pays different prices for the same
kind of a product on the basis of a segment they belong to.
E.g., In any government examination, the form fee varies for the general category people
and the other backward class people.
2. Image pricing: The companies can charge different prices for the same kind of a product
on the basis of an image, a product enjoys in a market.
E.g., cosmetics and clothing brands are the best examples.
3. Product-form Pricing: Different prices charged for different variants of the same
product.
E.g., The price of the same type of a car may vary because of different color and add-on
features.
4. Channel pricing: Channels are a good way to differentiate between customers who are
willing to pay more for your products and those who are price-sensitive.
E.g., a fashion shop on a posh shopping street is likely to attract customers who are
willing to pay more than online shoppers.
5. Location Pricing: The companies charge different prices for the same product on the
basis of different locations where it is offered.
E.g., In movie theaters the customer pays different amounts for the different locations
from where they can watch movies.
6. Time pricing: The price of a product varies with the time, such as the price charged is
less in the off-season as compared to the season time. Also, the movie tickets for the
matinee show are less as compared to other show timings.
Mathematical Problems: -
Analyzing Customer Needs and Wants
Consumers may choose the channels they prefer based on price, product assortment, and
convenience, as well as their own shopping goals (economic, social, or experiential). As with
products, segmentation exists, and marketers must be aware that different consumers have
different needs during the purchase process.
Analyzing the customer's desired service output level involves understanding their expectations
and preferences regarding various aspects of the service. Here are some factors to consider-
1. Lot size—The number of units the channel permits a typical customer to purchase on
one occasion. In buying cars for its fleet, Hertz prefers a channel from which it can buy a
large lot size; a household wants a channel that permits a lot size of one.
2. Waiting and delivery time—The average time customers wait for receipt of goods.
Customers increasingly prefer faster delivery channels.
3. Spatial convenience—The degree to which the marketing channel makes it easy for
customers to purchase the product. Toyota offers greater spatial convenience than Lexus
because there are more Toyota dealers, helping customers save on transportation and
search costs in buying and repairing an automobile.
4. Product variety—The assortment provided by the marketing channel. Normally,
customers prefer a greater assortment because more choices increase the chance of
finding what they need, although too many choices can sometimes create a negative
effect.
5. Service backup—Add-on services (credit, delivery, installation, repairs) provided by the
channel. The greater the service backup, the greater the work provided by the channel.
Channel-Design Decisions
Channel design decisions involve analyzing customer preferences, establishing objectives and
constraints, identifying channel alternatives, and evaluating those alternatives. Here is a brief
overview:
1. Analyze customer's desired service output level:
- Consider factors such as lot size, waiting time, spatial convenience, product
variety, and service backup to understand the level of service customers expect
from the channel.
2. Establish objectives and constraints:
- Define the goals and limitations that guide the channel design process. This
includes considering factors such as cost, reach, customer satisfaction, and
control over distribution
3. Identify major channel alternatives:
- Evaluate different options for channel structure and configuration. This includes
determining the number of intermediaries involved in the distribution process.
a. Exclusive distribution:
- Involves using a limited number of intermediaries to distribute products in
specific geographic areas or market segments.
b. Selective distribution:
- Involves using a moderate number of intermediaries to distribute products in
selected locations or to specific customer groups.
c. Intensive distribution:
- Involves using a large number of intermediaries to achieve widespread availability
and market coverage.
4. Evaluate the major alternatives:
- Assess the advantages, disadvantages, costs, and feasibility of each channel
alternative. Consider factors such as the intermediary's capabilities, market reach,
control over distribution, and potential impact on customer experience and
satisfaction.
• Gather information about potential and current customers, competitors, and other actors
and forces in the marketing environment.
• Develop and disseminate persuasive communications to stimulate purchasing.
• Negotiate and reach agreements on price and other terms so that transfer of ownership or
possession can be affected.
• Place orders with manufacturers.
• Acquire the funds to finance inventories at different levels in the marketing channel.
• Assume risks connected with carrying out channel work.
• Provide for the successive storage and movement of physical products.
• Provide for buyers’ payment of their bills through banks and other financial institutions.
• Oversee actual transfer of ownership from one organization or person to another.
Sales Promotion
Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive
tools, mostly short term, designed to stimulate quicker or greater purchase of particular products
or services by consumers or the trade.
In using sales promotion, a company must establish its objectives, select the tools, develop the
program, pretest the program, implement and control it, and evaluate the results.
1. Establishing Objectives: The first step in making sales promotion decisions is to
establish clear objectives. These objectives should be specific, measurable, achievable,
relevant, and time-bound (SMART). Objectives could include increasing sales volume,
attracting new customers, increasing brand awareness, encouraging repeat purchases, or
boosting overall market share.
2. Selecting Consumer Promotion Tools: The next step is to select consumer promotion
tools that will effectively reach and engage the target audience. Consumer promotion
tools include techniques such as discounts, coupons, rebates, samples, contests, loyalty
programs, and product demonstrations. The selection of these tools should be based on
the target market's preferences, behaviors, and motivations.
3. Selecting Trade Promotion Tools: Trade promotion tools are aimed at stimulating
demand within the distribution channel and encouraging retailers or wholesalers to stock
and promote the product. These tools may include trade discounts, point-of-purchase
displays, co-operative advertising, trade shows, or sales training programs. The selection
of trade promotion tools should consider the needs and preferences of intermediaries in
the distribution channel.
4. Selecting Business and Sales Force Promotion Tools: Business and sales force
promotion tools are designed to motivate and support the sales team and other business
partners. These tools may include sales contests, incentives, bonuses, training programs,
conferences, or recognition programs. The selection of these tools should align with the
objectives and requirements of the sales force and other business partners.
5. Developing the Program: Once the promotion tools have been selected, the next step is
to develop a comprehensive program that integrates these tools into a cohesive strategy.
This involves determining the timing, duration, budget, and allocation of resources for
each promotion tool. It also includes developing clear guidelines and procedures for
implementing the program effectively.
6. Implementing and Evaluating the Program: After developing the program, it is
important to implement it according to the established guidelines. This involves
coordinating and executing the various promotion activities, monitoring their progress,
and making any necessary adjustments along the way. Additionally, it is crucial to
evaluate the program's effectiveness against the established objectives, using appropriate
metrics and feedback mechanisms.