ICFAI Sample Assignments and Papers: Marketing Management (MB221) : April 2006

Section A : Basic Concepts (30 Marks)

• This section consists of questions with serial number 1 - 30.

• Answer all questions.

• Each question carries one mark.

• Maximum time for answering Section A is 30 Minutes.

1. Which of the following expresses sales as a dependant variable and as a function of a number of

independent variables?

(a) Survey of buyer intentions (b) Time & motion studies

(e) Past sales analysis.

< Answer >

2. Which of the following statements about segmentation by age is true?

(a) For most products, it can effectively be used as a single stand alone basis for segmentation

(b) Although it is easy to measure, it is difficult to estimate how many people in a particular age

bracket live in a particular town or country

(d) Consumers tastes don't change as they get older, but they do need different products

(e) Segmentation by age completely reflects the buyer behavior of the customer.

< Answer >

3. As Rahul prepares a market attractiveness-business position model for his firm, he comes to the point of

assessing the business position of the firm's line of jet skis. Which one of the following would be an

input with regard to business position?

(a) End users (b) Relative market share (c) Industry sales

(d) Market growth (e) Profit margins.

< Answer >

4. If Amstrad wants to focus its marketing efforts on price competition, the firm's long-run success will

depend on having

I. Higher prices than its competitor.

II. Lower prices than it has historically charged.

III. Promotional campaign for lower prices.

IV. A lower cost structure than its competitors.

(a) Only (II) above (b) Only (IV) above

(e) (I), (II) and (III) above.

< Answer >

5. If an intermediary wants to carry 'Tide detergent' and Procter & Gamble agrees only if the intermediary

purchases it's entire line of detergents as well, the company is engaging in which of the following

channel management practices?

(a) Exclusive dealing (b) Dual distribution

(e) Restricted sales territories.

< Answer >

6. Which of the following does not constitute a personal communication channel?

(a) Face-to-face interactions

(b) Telephone conversations

(d) Communicating through e-mails

(e) Electronic media.

< Answer >

7. Among industrial products, large tools and machines used for production of goods or for providing

services for a considerable length of time are classified as

(a) Capital equipment (b) Accessory equipment

(e) Consumable supplies.

< Answer >

8. The strategy of choosing one attribute to excel at to create competitive advantage is known as

(a) Unique selling proposition (b) Underpositioning

(e) Repositioning.

< Answer >

9. Which of the following is/are true with regard to brand strategy decisions?

I. They involve identification of the availability of resources for allocating budgets for brand

building.

II. They involve identifying, which products to brand.

III. They involve enhancing the brand name by linking the organization's name with a particular

event.

IV. The company's capability to take required initiative is important for a brand strategy decision.

(a) Only (III) above (b) Both (I) and (II) above

(e) All (I), (II), (III) and (IV) above.

< Answer >

10. Which of the following is not true of channel levels and behaviour?

(a) Indirect marketing channels have at least one intermediary

(b) The number of intermediaries indicates the length of a channel

(d) Horizontal conflict refers to conflict between different intermediaries of the same channel

(e) The sale of personal computers through mail order rather than through dealers is an example of a

direct marketing channel.

< Answer >

11. Which of the following are a type of wholesalers, who do not possess the title of the goods and who

negotiate for purchases and sell the goods immediately?

(a) Merchant wholesalers (b) Agents

(e) Specialty line wholesalers.

< Answer >

12. Prakash Kumar was a computer wizard. While he could work almost anywhere as a production

engineer, Prakash enjoyed his work at Xenon where he went from department to department helping

different specialists create new software for their particular areas. In terms of the generic value chain,

Prakash is involved in which activity?

(a) Firm infrastructure (b) Marketing and sales (c) Operations

(d) Technology development (e) Procurement.

< Answer >

13. A buyer for Cadila Department Store orders handbags from a certain supplier because the supplier

allows the buyer to maintain the store's policy of thirty-day advance purchase notice. Which of the

following factors affect the buying decision process in this case?

(a) Environmental (b) Organisational

< Answer >

14. Neopure Corporation has developed an artificial haemoglobin that can be used in place of blood

transfusions and holds the patent on this product. Therefore, Neopure has

(a) Potential external opportunities (b) Core competencies

(e) Competitive advantage.

< Answer >

15. Which of the following statements describes a key difference between advertising and publicity?

(a) Publicity is more expensive on a cost-per-contact basis than advertising

(b) Publicity is usually directly paid and advertising is usually indirectly paid

(d) Advertising provides an immediate feedback loop and publicity does not

(e) Publicity always has a much greater reach than advertising.

< Answer >

16. The salesperson for Ferrara Pan Company has an appointment to make a sales call on the owner of a

chain of convenience stores in Mumbai. During the pre-approach for this prospect, the salesperson

should

(a) Decide how many times he is going to close the sale

(b) Determine whether he needs to bring charts and graphs to the presentation

(d) Remove all noise from the communication channel

(e) Plan an introductory close with which to begin his approach.

< Answer >

17. A team at Consolidated Diversified worked in international operations. Margaret helped set up networks

of independent international middlemen to carry some CD products. Rahul contracted with foreign

manufacturers to produce several CD products. Margaret works in which method of entering foreign

markets?

(a) Indirect exporting (b) Licensing

(e) Joint venture.

< Answer >

18. Which of the following relates to many large companies employing marketing controllers, whose

responsibility is to determine the various marketing expenditures of the company and provide necessary

training for the marketing personnel on the financial dimensions of the marketing activities?

(a) Tactical control (b) Profitability control

(e) Annual-plan control.

< Answer >

19. A company provides online solutions such as database software and server suites to e-commerce

companies. This is an example of

(a) Business-to-consumer services

(b) Business-to-business services

(d) Government-to-government services

(e) Consumer services.

< Answer >

20. Stakeholders act like the spokes of a wheel of an organization. Stakeholders of a business firm consist

of its shareholders, employees, suppliers, customers and

(a) Distributors (b) Financial resources (c) Managers

(d) Team leaders (e) Agents.

< Answer >

21. The expansion of the definition of marketing to include non-business activities adds which one of these

examples to the field of marketing?

(a) Proctor and Gamble selling toothpaste

(b) St. Pauls Church attracting new members

countries

(d) Lever's donating 25 pence to a charity with every pack purchased

(e) GlaxoSmithkline acquisition of Viva and Maltova from Jagjit industries.

< Answer >

22. Which of the following is the process wherein an organization depends on several different suppliers for

purchase of goods and services?

(a) Multiple sourcing (b) Logistics

(e) Outsourcing.

< Answer >

23. A culture can be divided into subcultures according to

(a) Personality characteristics

(b) The motives that people have for their behavior

(d) Geographic regions and income levels

(e) The information to which consumers allow themselves to be exposed.

< Answer >

24. Concept testing helps the company in

I. Selecting the strongest concept from the available alternatives.

II. Eliminating the concepts that are not approved by the target market.

III. Identifying consumer criteria of evaluating the product.

IV. Deciding upon the product positioning.

(a) Only (III) above (b) Both (I) and (III) above

(e) All (I), (II), (III) and (IV) above.

< Answer >

25. In service retailing, annual maintenance contracts for PCs and printers are examples of

(a) Rented goods services (b) Owned goods services

(e) Cooperatives.

< Answer >

26. Which of the following business practices constitute enlightened marketing activities of a firm aimed at

leveraging long-term benefits?

I. Social responsibility. II. Innovative marketing.

III. Sense-of-mission. IV. Environmentalism.

(a) Only (II) above (b) Both (I) and (IV) above

(e) All (I), (II), (III) and (IV) above.

< Answer >

27. Decor Ltd, which makes, markets, and retails, paint and home decorating products in a co-ordinated

channel, is an example of

(a) Administered vertical marketing system

(b) Horizontal marketing system

(d) Contractual vertical marketing system

(e) Corporate vertical marketing system.

< Answer >

28. All of the following are essential elements of direct marketing, except

(a) Record of existing and potential customers

(b) System for measuring response

(d) System to follow up inquiries

(e) Feedback system.

< Answer >

29. Change in which of the following will affect the sales of durables like appliances, furniture and

automobiles?

(a) Disposable income (b) Taxable income

< Answer >

30. All of the following are personal factors affecting a buyer's purchase decisions except

I. Personality. II. Lifestyle. III. Financial status. IV. Social class.

(a) Only (II) above (b) Only (IV) above

(e) All (I), (II), (III) and (IV) above.

< Answer >

END OF SECTION A

Section B : Caselets (50 Marks)

• This section consists of questions with serial number 1 – 7.

• Answer all questions.

• Marks are indicated against each question.

• Detailed explanations should form part of your answer.

• Do not spend more than 110 - 120 minutes on Section B.

Caselet 1

Read the caselet carefully and answer the following questions:

1. Star Gold has taken many measures to revamp it's offerings to its customers. At this stage, you are asked to

develop a strategic business plan for Star Gold's continued success. What steps or factors will you consider in

developing a strategic business plan for Star Gold?

(7 marks) < Answer >

2. Do you think the various initiatives taken by Star Gold will help it in long run? Explain.

(6 marks) < Answer >

One is the new kid on the block, struggling for acceptance even as the neighborhood children line themselves up with

the established leaders. The other is an old hand, trying to reinvent itself - again - now that it's confirmed that the earlier

game plan hasn't worked. In Disney and Star Gold's differences lies the similarity. Neither television channel is

priority viewing for its target audience, and both are pulling out the stops trying to change that.

Looking at the case of Star Gold, while the channel has been beaming into Indian households since 2000, it's still losing

the battle of the remote to Zee Cinema and Set Max. Will recent releases like Swades and Paheli achieve for Star Gold

what the golden oldies couldn't? Five years on, Star Gold is not exactly the gold standard among Hindi movie channels.

According to data by TAM media research, in 2005, the channel share of Star Gold in the north and west markets (east

and south are predominantly regional movie markets) is 24 percent, while Zee Cinema nearly twice the size at 45

percent; Set Max has a 31 percent share.

A large part of the reason is the way Star Gold began its journey. In 2000, when channels like Sony, Zee and even Star

Plus were elbowing each other to telecast the newest Bollywood movie first, Star Gold decided to be different. It

decided to offer old classics, going back to the days of Bimal Roy and Guru Dutt. Inspired by American popular

channel, Turner Classic Movies, Star Gold was targeting a mature audience - viewers in the 50-plus age bracket.

Just a year later, Star Gold realised the picture needed adjusting. Advertisers hadn't proved too keen in investing

heavily in a niche channel that appealed to the older generation, especially in a market where roughly 40 percent of the

population is below 35 (source: NRS 2004). "It works only when the revenue model is subscription-based," admits a

TV channel executive. Besides, research had shown that in most households, the younger generation decides what the

family will watch — and that doesn't include black & white movies. So Gold fast-forwarded to movies from the 1970s

and 1980s. Another year on, it was on to even newer Bollywood releases and even some dubbed foreign flicks. At

present, just 5 percent of the programme list of Star Gold (it shows 30-35 movies every week) is made up of the original

oldies.

How did that come about? "Surveys pointed to the need to move away from the dated look and feel," says a Star TV

executive. Media planners add that the classic positioning was restrictive - it appealed to an older set and very few

brands and companies that advertise on television target this age group. The changing character of Star Gold's target

audience also came into play; typically, older people no longer want to be seen doing "old" things. As Sai Nagesh,

executive vice president, Insight (the media division Lintas Media Group) says, "Today, the old want to remain young

forever. Youthfulness, modernity and urban are cues that everyone is looking forward to."

Zee Cinema and Set Max already have a headstart in that area. Launched in 1995, Zee was the first movie channel on

cable networks; even Set Max came on only in 1999. By the time Star Gold came into the picture a year later, Zee and

Set Max had already built up considerable libraries of newer releases; they continued adding to that easily, since Gold

was focusing on the oldies. At present, of course, new movie acquisitions are split equally between the three channels.

Gold was a little slow in upping the ante on promotions. Apart from a few on-air promos on other Star channels, the

movie channel didn't really focus on events until 2003, when it launched the annual 'sabsey favourite kaun' contest,

which invited viewers to vote for their favourite actor. Perhaps the biggest hurdle for Star Gold is its lack of identity -

the channel continues to be seen by media planners and advertisers as one more in the Star bouquet. Ad rates on Set

Max and Zee Cinema, too, are higher than for Star Gold. It hasn't helped that until now, Star's strategy for new movie

releases has been secondhand.

While Zee and Set Max premiered two or three blockbusters each on their movie channels first, Star continued to debut

new movies on Star Plus, and then replay them on Gold. The return of Kaun Banega Crorepati on Star Plus helped usher

in some much-needed changes. The weekend prime time slots are now devoted to KBC 2, so Star is pushing all its

movies to StarGold.

Accordingly, Gold has a new logo, a new look and even a new lineup of films. The channel has spent more than Rs 24

crore, shopping for the latest releases, including Viruddh, Paheli and Black. Is this the beginning of a gold rush?

Caselet 2

Read the caselet carefully and answer the following questions:

3. What is price competition? With reference to the caselet, explain how the various brands in the FMCG sector are

involved in price competition.

(7 marks) < Answer >

4. Low priced brands in the FMCG market have become market challengers to established players and leaders in the

past few years. Explain what competitive strategies market leaders, market challengers, market followers and

market nichers can adopt to survive in the FMCG market.

(8 marks) < Answer >

5. Given that there is no more scope for FMCG companies to slash prices, what strategies should they adopt to

(7 marks) < Answer >

Lower-priced stalwarts may well have to overhaul their strategies to retain a hold on the fast moving consumer goods

(FMCG) market. All through 2004 and the latter half of 2003, low-priced brands with a strong regional recall had

successfully become challengers to the established majors, giving the latter a run for their money. Whether it was the

case of Anchor and Ajanta against mighty Colgate in toothpastes or Ghadi versus the Surf, Ariel and Tide portfolio in

detergents, it looked as if the multinational companies were helpless against the challenger brands, who were selling at

significant price discounts. But this scenario has altered dramatically, thanks largely to the aggressive pricing strategy

of the big boys in FMCG. All through 2004, national players such as Hindustan Lever Ltd (HLL), Procter & Gamble

(P&G), Dabur India and Colgate Palmolive fought a bitter war, offering consumers a better price-value equation across

detergents, oral care products, soaps and shampoos.

And the results are there for all to see. Slowly but surely, the national players have managed to snatch market share

from the regional brands in most FMCG categories. And this analysis appears to be particularly true if one looks at the

discount (lower price-end) segment of each product category in FMCG. Take the case of the Rs 2,500-crore oral care

market. Challenger brands such as Anchor, Ajanta and Babool - which ruled the discount segment of toothpastes till 2

years ago - have given way to brands with a national footprint.

S. Raghunandan, Vice-President-Sales at Dabur India Ltd (DIL), says Babool - the toothpaste brand of the erstwhile

Balsara, which DIL acquired recently - was also a victim of this strategy. "But we are now reworking the entire value

proposition of Babool. This brand has lost considerable share due to aggressive pricing by market leaders. What we

want to do is give Babool new pricing, improved packaging and fresh communication."

The story appears to be similar in detergents. Ghadi has lost its standing by a couple of percentage points over the last

12-15 months. A. Satishkumar, Managing Director at Henkel Spic, says his company has refrained from making largescale

price corrections. "The share of Henkel's brands in the overall detergent market has been maintained at five

percent throughout 2004 and continues to remain there this year too. We have not lost market share since we continue to

largely maintain prices," he said. Nirma has also lost some market share whereas HLL's Wheel has gained a couple of

percentage points during the last one year. It's the same case with shampoos, with challenger brands such as Ayur, Chik

and Nile losing out and national ones such as Vatika, Pantene and Head & Shoulders gaining a couple of percentage

points in terms of market share.

But will this resurgence of the national level players continue? In the beginning of 2005, market leaders across each

product category have cut prices, spruced up distribution and offered better value for money, luring consumers towards

their brands. Analysts say that as long as market leaders maintain a grip on the price-value equation, the FMCG

consumer will continue to patronise these brands. Discount chain Subhiksha's Managing Director, R. Subramanian,

points out that the lack of innovation by challenger brands has also led to their apparent marginalisation. "These brands

have not innovated - they launched with an offering and have not been able to grow beyond it. Sometimes, their

overheads have also grown, resulting in margin pressures. The challenger brands have to stay focused on narrow niches

in terms of product offering and geography, otherwise there will be a lot of pain for them."

Analysts also point out that while volume market share gains for national-level brands may have been significant, their

consequent value gains have been much lower. "Having slashed prices mercilessly through most of 2004, the large

FMCG companies realized that there is little scope for further pricing action. Besides, input costs have been rising

steadily over the last couple of months, making it all the more difficult for these companies to pursue further price

discounts. "So, if one were to take a close look at the March quarter of 2005, most FMCG companies have begun to

raise prices by small amounts. And the battle has already shifted from being price-centric to feature-centric. Amit

Adarkar, Vice-President at research agency Synovate, said pricing would no longer be the dominant platform for market

share battle; innovation will assume significance.

"Prices have bottomed out in most FMCG products. The next big discontinuity will be in terms of product variety. So,

the toilet soaps category may see liquid soaps and shower gels being launched, confectionery may see more launches in

sugar-free and multi-flavour platforms. And there could be more multi-functional toothpastes on offer," he says. He

endorses Subramanian's viewpoint that challenger brands would do well to concentrate on regional niches with specific

value propositions instead of trying to emulate the national leaders in each product category. Now, it is up to the

regional players to come up with the next salvo.

According to research, the third quarter of 2005 saw FMCG companies registering growth and the sector seems to be

back on track and on the path to recovery. Further, the growth potential for all the FMCG companies is huge, as the per

capita consumption of almost all products in the country is amongst the lowest in the world. Fast Moving Consumer

Goods (FMCG) products will be witnessing over 40% growth in the semi-urban and urban areas, the size of which will

go up from Rs.38,500 crore to Rs.50,000 crore by 2010, according to an analysis carried out by the Associated

Chambers of Commerce and Industry of India (ASSOCHAM).

Caselet 3

Read the caselet carefully and answer the following questions:

6. While there has been a spurt in the number of malls in India, the going is still tough for a number of players.

Explain

a. Reasons for growth of malls in India.

b. Why malls retailing has a long way to go?

(7 marks) < Answer >

7. Strategic issues in retailing involve an overall set of plans that help the retailer to effectively conduct his business.

Explain the six major elements of a retail strategy.

(8 marks) < Answer >

What is your family's favourite Sunday outing? A visit to the crowded local market or a stroll through the airconditioned

mall just outside the city? Most likely the latter. Malls today present convenience and choice, be it the

prospect of food courts offering several cuisines under a single roof, escaping the vagaries of the weather or just

window-shopping. And this penchant for the average middle-class Indian shopaholic is being translated into big

business. Sample this: Within the next 12 months, organised retail in this country will touch the Rs 35,000-crore mark

from the present Rs 28,000 crore. And the growth curve is expected to zoom in the years to come. Estimating organised

retail to log growth rates of between 25-30 percent over the next few years, an Images-KSA Technopak study has

predicted the industry will cross the Rs 1-lakh crore mark by 2010.

But the going is still tough for a number of players. For one, the industry is still highly fragmented. It also suffers from

over-generalization, thus stopping several established names from making their mark. Take, for example, William

Bissell, the Managing Director of Fabindia. He says malls are not where fabindia would like to be seen. "Conventional

malls don't interest me. They need to be more efficiently designed so as to differentiate serious footfalls from those

loitering around. Fabindia targets a very sharply defined target audience, so I do not see why we must be present in

conventional malls." Fabindia has set up shop in a mall in Mulund, Mumbai, but Bissell says the concept here is novel

and in line with the target audience. Bissell is not alone in this contrarian view. There are several established retailers

that have shied away from being present in conventional malls because they are looking for a well-defined customer

profile and are not really enthusiastic about getting window shoppers.

Says a Chennai-based retailer, "Malls are getting slotted in India not as shopping but as entertainment, so it works for

McDonald's, gaming parlours and the like but not for serious sellers. Spencer Plaza is an exception - driven by small

tenants with wide merchandise. People who can get traffic on their own to the store will prefer standalones; the me-toos

or small/frivolous who cannot will act as parasites and get into a mall." He adds that malls are not getting positioned as

places to shop but ones to visit. For this, malls have to be like exhibitions drawing people who can buy something or the

other - lots of low-value impulse goods and the occasional planned purchase. Apart from the reluctance of several

players to endorse the mushrooming malls and sky-high realty prices, a long gestation period and unimaginative retail

concepts have also proved dampeners. Also, the Government's hesitation in opening up retail to foreign direct

investment (FDI) has also slowed down investments and growth to some extent, say analysts.

Godrej Group chairman Adi B. Godrej terms intermediaries and small traders' claims that if retail is opened up, their

business will get adversely affected as "myopic." FDI will not only encourage greater investment in retail but also skill

and technological upgrade besides substantial job creation. "Competition does not hurt anyone and I do not think the

retail industry is any exception. In fact, FDI will mean faster growth and creation of many more jobs." And while the

Government is debating whether to open up retail and grant it industry status, several entrepreneurs are coming up with

innovative concept malls.

But will specialty malls fuel the overall retail boom? KSA's Singhal feels otherwise. "I think the Indian market is still

not mature enough for specialty malls. Many of these are being built only because the realtor has got hold of land." And

his skepticism appears to be supported by the time required for such ventures to begin making money. Narula said

break-even for Ishanya could take five or six years at least. Consumers too may take much more time to get used to the

specialty concept. So what does the future hold for retail? Despite all these hiccups, the sector appears on the verge of

explosive growth. Management consultant A.T. Kearney has ranked India as the second most attractive retail

destination among emerging markets globally, ahead of China, despite the ban on FDI and relatively low market

attractiveness. In its 2004 'Global Retail Development Index (top 30 Emerging Markets)' report, A.T. Kearney ranked

India 88 on a scale of 100, aggregating points earned over parameters such as economic and political risks, market

attractiveness, market saturation and time pressure. However, it has ranked India's market attractiveness a lowly 34,

besides listing other downsides such as the market being fragmented with the top 10 companies holding only about 2

percent market share.

END OF SECTION B

Section C : Applied Theory (20 Marks)

• This section consists of questions with serial number 8 - 9.

• Answer all questions.

• Marks are indicated against each question.

• Do not spend more than 25 -30 minutes on section C.

8. Hindustan Lever Ltd. identified that its personal care products such as fairness creams, soaps, etc., are facing a

threat from Cavin Kare's products. The company hired the services of a marketing research agency to identify the

reasons for declining sales. Explain the various steps in the process of marketing research that the agency would

follow.

(10 marks) < Answer >

9. Vision Infotech is a company that has extended its business online. Explain the various methods of online

advertising, Vision Infotech can employ.

(10 marks) < Answer >

END OF SECTION C

END OF QUESTION PAPER

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