Marketing Management (MB221) July 2004

Question Paper
Marketing Management (MB221) July 2004
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. A brand is a name intended to identify the product of one seller and differentiate the product from
competing products. Coca-Cola is the best-known brand name in the world. The name has a highperceived
quality and high brand loyalty among soft drink users. The company has developed the brand
name for over 100 years. Coca-Cola has a valuable
(a) Line extension (b) Brand mark (c) Private brand
(d) Package (e) Brand equity.
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2. Pepsi and Coca-Cola have been battling in the "cola war" for years. Both products have been in the
market for nearly 100 years and they spend much of their marketing budgets on short-term promotions
to grab market share from each other. Pepsi and Coca-Cola are in which stage of the product life cycle?
(a) Maturity stage (b) Decline stage (c) Introductory stage
(d) Growth stage (e) None of the above.
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3. Sigma-Sunco has decided to introduce its new sunscreen eye drops in a limited market consisting of
only two cities and closely monitor the reactions of potential customers to the product and marketing
program. This is called
(a) Diffusion analysis (b) Use test (c) Concept test
(d) Test marketing (e) Laboratory test.
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4. At the Melting Moments, an ice cream parlour, customers place their orders, watch their ice-cream
sundaes being prepared, and then quickly eat the sundaes in the store before the ice cream melts. This is
an example of a characteristic of services known as
(a) Inseparability (b) Intangibility (c) Heterogeneity
(d) Perishability (e) Dependency.
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5. A new edition of a marketing textbook has just been released. The Library Department of the University
of Mumbai has always liked the textbook and authorizes the purchase of the new edition without even
looking at other textbooks. This is an example of a
(a) Modified rebuy (b) New task (c) Straight rebuy
(d) Both (a) and (b) above (e) None of the above.
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6. General Electric sells large home appliances both through independent retailers (department stores and
discount houses) and directly to large housing-tract builders. This is an example of
(a) Intensive distribution (b) Selective distribution
(c) Exclusive distribution (d) Dual distribution
(e) Both (a) and (b) above.
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7. Microsoft offers spreadsheet software, word processing software, and graphics software as part of its
"Microsoft Office" suite of products. This is an example of:
(a) Target pricing (b) Captive-product pricing
(c) Psychological pricing (d) Penetration pricing
(e) Price bundling.
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8. Rajeev Kapoor is a chef in a new downtown restaurant. He has sent out press releases to the major local
media and has invited food critics to dine in his restaurant. Rajeev is engaging in:
(a) Public relations (b) Personal selling (c) Sales promotion
(d) Advertising (e) Direct marketing.
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9. Peter's Perfumes is currently deciding how much space or time will be placed in each medium that the
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company has selected. Peter's Perfumes is determining its:
(a) Marketing mix (b) Promotional plan (c) Media mix
(d) Advertising campaign (e) Reach objectives.
10. Klean Detergent is the market leader of detergents and is in the maturity stage of its life cycle. There are
many competitors in the market that challenge Klean's leadership. Which of the following statements is
most likely true about Klean's pricing?
(a) As a market leader, Klean does not need to worry about price
(b) Klean uses price promotion in order to maintain its market leadership
(c) Klean must price lower than the other brands to maintain its leadership
(d) Klean can increase its price since it is in the maturity stage
(e) Klean should maintain a high price to maintain a high quality image.
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11. A large oil company runs advertisements that show how its employees are involved in the community
development activities. This is an example of
(a) Informative advertising (b) Institutional advertising
(c) Comparative advertising (d) Reminder advertising
(e) Product advertising.
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12. When a customer buys one of its cars, a Ford Motor Company dealership sends out the entire team that
was responsible for handling the customer's business to meet the customer. The team congratulates the
customer for his/her purchase in a small celebration. This is an example of
(a) Increasing the effectiveness of distribution channel marketing
(b) Reinforcing customer purchase decisions
(c) Identifying the best customers
(d) Designing targeted marketing communications
(e) Inducing product trial by new customers.
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13. PepsiCo is a large conglomerate that has separate subsidiaries called Pepsi-Cola (soft drinks), Tropicana
(juices), Pepsi Bottling, and Frito-Lay (snack foods). Each of these subsidiaries has its own functional
departments, its own planning, its own financial goals, and its own target markets. These subsidiaries
may also be called
(a) Ancillary units (b) Diversified divisions
(c) Strategic business units (d) Strategic alliances
(e) None of the above.
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14. In its portfolio of business subsidiaries, Lepakshi’s craft shop has three units that are showing rapid
growth but poor profit margins. Apparently, everything about these units demands more and more
additional cash. In the Boston Consulting Group's portfolio matrix, these units would be classified as:
(a) Dogs (b) Cash cows (c) Problem children
(d) Stars (e) None of the above.
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15. Rahul is a marketing manager faced with planning marketing strategies during times of inflation. He
should be aware that inflation causes consumers to:
(a) Purchase more goods and services to support their psychological well-being such as counseling
and stress management training
(b) Decrease their brand loyalty to products they have traditionally used
(c) Buy in small quantities until inflation is over
(d) Consume more meals away from home
(e) Put more money into savings accounts because prices are too high.
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16. When the salesperson told the safety engineer his company needed to buy a mercury clean-up kit, the
engineer promptly replied his company did not need such a thing and refused to introduce the
salesperson to the company’s purchasing agent. In this instance, the safety engineer acted in which
buying center role?
(a) Influencer (b) Buyer (c) User (d) Decider (e)
Gatekeeper.
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17. Forecasting or estimating the actual size of a market is often a key goal in a marketing research study.
Good sales forecasts are important for a firm as it schedules production. Which of the following
statements about sales forecasting is true?
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(a) The most expensive forms of sales forecasting are trend extrapolation and a survey of experts
(b) With the lost-horse forecast, former customers are asked if they are likely to buy the product again
(c) A lost-horse survey is more expensive to conduct than a survey of buyers' intentions
(d) Trend extrapolation is the easiest method of sales forecasting
(e) A sales force survey forecast is less expensive to conduct than trend extrapolation.
18. A number of variables can be used to segment consumer markets. Whether a person is a nonuser or a
light, medium, or heavy user is important in many segmentation problems. The 80/20 rule is a concept
which suggests
(a) Eighty percent of a firm's inventory should be readily available, and twenty percent should be
reserved for emergency demand
(b) Eighty percent of a firm's first time users will become brand loyal and twenty percent of the firm's
first time users will use the product only once
(c) Eighty percent of a firm's sales are obtained from twenty percent of its customers.
(d) Eighty percent of a firm's expenditures are tax deductible and twenty percent are not.
(e) Eighty percent of a firm's products will ultimately be sold at the original markup price, and twenty
percent will not.
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19. A local private college has been offering an accounting program for several years. The program has a
large but declining enrollment, and the program represents the largest income earner for the business
division. The recommended strategic option is/are to
(a) Build (b) Divest (c) Hold
(d) Harvest (e) Both (a) and (b) above.
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20. WestJet Airlines charges some of the lower prices in the industry. As a result, the airline has been able
to reach the mass market and to increase the incidence of air travel among those who might have chosen
another means of travel. The company's current pricing policy would best be described as:
(a) Skimming (b) Price discrimination
(c) Penetration (d) Dumping
(e) Predatory pricing.
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21. When Procter & Gamble introduced Swiffer, a new product to make it easier to clean increasingly
popular hardwood floors, it knew it had to achieve high brand awareness among its potential consumers
because the product was low-tech and fairly easily imitated. Which promotional element did P & G
emphasize?
(a) Advertising (b) Personal selling (c) Sales
promotion
(d) Public relations (e) All of the above equally.
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22. When Steve goes to the grocery store every other week, he buys the same brands of coffee, milk, cereal,
and dog food. This type of buying behaviour is called
(a) Routine response behaviour (b) Extensive decision making
(c) Limited decision making (d) Situation convenience
(e) Both (b) and (d) above.
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23. If Videocon engineers its washing machines to spin the clothes faster regardless of whether or not
customers want that speed, then Videocon has characteristics associated with
(a) Production concept (b) Selling concept (c) Marketing concept
(d) Product concept (e) Societal marketing concept.
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24. The Kewl Clothing Company has just hired you to develop a marketing strategy for their new line of
casual wear. The firm wants to target several different ethnic groups, so you suggest a "stitching niches"
approach. Which of the following would you use to illustrate your suggestion?
(a) Create a different product for each of the niche markets the firm is targeting
(b) Position the products so they simultaneously meet the needs of the different ethnic groups
(c) Maintain Kewl's core identity by creating different promotional campaigns and brand extensions
for the various markets served
(d) Use the same marketing mix that has worked so well for the firm throughout the West Coast
(e) Gain market share by developing an entirely distinct marketing mix for the largest niche market.
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25. Prasad is trying to decide what kind of new car he is going to buy. He relies on Consumer Reports, car
magazines, and the advice of car mechanics. Prasad is using
(a) Marketing controlled information sources
(b) Nonmarketing controlled information sources
(c) Demographic information sources
(d) Secondary data sources
(e) Internal search sources.
26. Pooja, a Chartered Accountant, reads an article that states that CAs receive the highest starting salary
offers from consulting firms. The article also states that marketing majors start with lower salaries but
surpass all other majors' salaries within ten years. Pooja doesn't remember reading this last part of the
article, just the first part. This is an example of
(a) Selective distortion (b) Selective exposure (c) Selective
retention
(d) Subliminal perception (e) Selective comprehension.
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27. When the demand for soft drinks grew by 12 percent in one year, the demand for aluminum cans and
glass bottles grew also. The aluminum and glass industries are enjoying the effects of
(a) Joint demand (b) Inelastic demand (c) Derived
demand
(d) Unitary demand (e) Elastic demand.
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28. Wrigley's Chewing Gum ran an advertising campaign that targeted heavy smokers. The advertising
indicated that "when you can't smoke, chew Wrigley's." This is an example of what type of
segmentation?
(a) Geographic (b) Usage rate (c) Demographic
(d) Psychographic (e) None of the above.
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29. Which of the following is the best example of a marketing research objective?
(a) To determine why sales have decreased over the past three years
(b) To create a print advertisement emphasizing customer service
(c) To determine what role children have in influencing family decisions about vacation destinations
(d) To increase sales by 10 percent
(e) To develop a method to track consumer attitudes.
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30. Munna jumps out of his truck and runs into a Foodworld store to grab a drink. While he is paying for his
drink, he notices the chocolate bars at the counter and grabs one to buy. The chocolate bar in this case is
considered to be a(n)
(a) Specialty product (b) Unsought product (c) Convenience
product
(d) Shopping product (e) None of the above.
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END OF SECTION A
Section B : Problems/Caselets (50 Marks)
• This section consists of questions with serial number 1 – 7.
• Answer all questions.
• Marks are indicated against each question.
• Detailed workings/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. Telemarketing works best on prospects who have already purchased something from your company or initiated a
contact. Explain how Nambiar would get an edge over face-to-face selling who do not have access to call the
prospect.
(8 marks) <>
2. Elucidate how the Indian telemarketing firms would be affected, and discuss how they will react if do-not-call law
is enacted in India?
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SORRY! Wrong Number
Anil Nambiar has been told not to use the phone in the office. Not surprising, since Nambiar works for a conservative
marketing company; he doesn't even have his own permanent seat there.
He is a salesman and according to the company's rule he should be out the whole day meeting customers, not talking
over the phone. But Nambiar's problem is that his customers are spread across the city and traveling is tough these days.
Days on the road together with bad food have worn down Nambiar's health and he now suffers from acidity and
dyspepsia.
Some offices even have an insulting board that reads: "Salesmen not welcome." Which means he cannot just walk in
and make cold calls to increase sales. His boss wants him to fulfill his target, but how can Nambiar fulfill that if he is
not allowed to use the phone to make appointments? He strongly feels that a telephone is a must if he has to achieve his
target and improve on it. But the company thinks providing a telephone to salesmen is a waste of money. What's the
way out? Nambiar quits his job in frustration.
Nambiar joins Spectrum Systems. The company is progressive and has a telemarketing department supervised by Geeta
Iyer. When he goes to meet his clients Iyer briefs him about his clients and their specific needs. Now his job is mainly
to close sales, collect payments and give service. His sale productivity goes up, so does his salary and incentives.
Nambiar is happy.
But the happiness may not last long. On 28 June 2003, the US administration introduced what it calls a "do-not-call"
list, which would block unwanted telemarketing calls to customers beginning 1 October 2003. If one registers in this donot-
call list the government guarantees that one will not be disturbed in one's sleep, nor in the middle of whispering
sweet nothings to one's wife or girl/boyfriend. If such do-not-call listers are called, the penalty could be stiff —
$11,000, no less. Telemarketers like Iyer could be out of her job if such a law is enacted in India.
Shortly after this announcement there was a stampede to register at the website of do-not-call www.donotcall.govand at a tollfree
number, and around 735,000 phone numbers have already been registered. Customers were so desperate to log in
that the website received 1,000 hits every second. Customers have over two months to register in the initial do-not-call
list. It is expected that 60 million phone numbers will be listed in the do-not-call list in the first year and the registration
will have to be renewed every five years.
By a natural corollary if this law is enacted in India then the fledgling call centres and telemarketers could be wading in
troubled waters. Imagine Sheila Saxena receiving a call from Iyer in the middle of the latest episode of some saas-bahu
soap opera. Iyer is selling credit cards now. She assures Saxena that "all formalities will be completed by us." When
Saxena tells her that she already has a credit card, Iyer changes pitch and flicks to the "handling objections" section of
her telemarketing manual.
The script clearly lays down what she should say when the customer raises particular objections. "But our credit card
charges only 1.8-per cent interest, the lowest in the business," Iyer says. But Saxena counters: "I don't want an
additional card," rather piqued. Iyer intensifies her pitch and looks up this particular objection in her manual and says:
"Madam, we will waive your joining fee." All this while the latest episode of some saas-bahu soap opera is playing on
television and Saxena is missing all the treacherous palace intrigues in the Virani family. Expectedly, Saxena slams the
phone down on Iyer.
Telemarketing, it would seem from the above episode, is a dirty word and telemarketers like Iyer know it and accept it
as a professional hazard. Iyer is given a target of a certain number of prospects every day and she has to work hard to
achieve that. Spectrum Systems has to generate so many prospects for its sales executives to convert to sales or its
profitability and the salaries of its employees are on the line.
The company has realised that the percentage of orders received through telemarketing is quite high at 4 per cent to 10
per cent (i.e., one in 25 or one in 10 calls) than direct mail at 1 per cent to 2 per cent (i.e., one in a 100 or one in 50
mailings). That is the reason it has established a full-fledged telemarketing department.
Iyer has to meet her sales target and Spectrum has to meet its profitability target to pay the bills. The socio-economic
category A (SEC A), which is the most potent and affluent of customers (also the most conscious of their right to
privacy), would immediately log on and register in the do-not-call list. That would leave only the emaciated SEC B and
SEC C sections of the market to be exploited. Would telemarketers like Geeta have a job and companies like Spectrum
Systems stay in business?
Caselet 2
Read the caselet carefully and answer the following questions:
3. Is PSI successful in delivering the message to the target audience? Justify your comments.
(7 marks) <>
4. Government represented organisations play a vital role in the social marketing campaigns. Explain the advantages
and disadvantages if government has an active role in such campaigns.
(7 marks) <>
The question has the assembled audience squirming. "How many of you have touched a condom this week? Those who
have, raise your hands," urges the speaker. Amidst silence, some shifting and some embarrassed laughter, Sanjay,
Programme Director (HIV/AIDS Prevention), Population Services International (PSI), tries to make the point that the
stigma attached to discussing sexual health issues is more dangerous than the virus that causes AIDS. Sanjay is giving a
presentation at the regional conference on AIDS prevention.
PSI, which was set up in India in 1988, uses social marketing to deliver health products and services to lower-income
groups in developing countries, to motivate their use and promote healthy behaviour. A Washington, DC-based nonprofit
organisation working in over 50 countries, its forte is AIDS prevention, family planning, maternal and child
health. In India, PSI markets its own brand of Masti condoms, and helps market the Kama Sutra and Nirodh Dlx brands
in smaller towns and remote areas. Among other health products it markets are the Pearl brand of contraceptive pills,
the Union Government's Mala D, oral rehydration solution and a clean delivery kit.
PSI, which has just launched a campaign in Tamil Nadu and Andhra Pradesh, among the States with the highest
incidence of HIV, is involved in social marketing and communications for health. Aimed at increasing awareness of the
risk of contracting HIV/AIDS through unprotected sex with non-regular partners and at busting certain misconceptions
associated with it, the campaign has two parts to it. The campaign is part of Operation Lighthouse, a port-based
HIV/AIDS/STD intervention, set to reach millions of people, specifically vulnerable populations in port communities,
with the information, services, and products they need to protect themselves from HIV/AIDS. The key target groups
include truck drivers, commercial sex workers and their clients, and port workers. These high-risk populations are
responsible for the vast majority of HIV incidence in port communities. They also play a critical role in accelerating the
spread of HIV to the general population.
"Puli Rajavukku AIDS varumaa?" is the horrified question that rings through the teaser ad. This goes on to three more
spots which advise the target 'consumer' to practise safe sex with non-regular partners. The other part urges the target
group to `be faithful'. The exercise is based on the Balbir Pasha campaign that PSI ran in Mumbai, one that generated
much controversy and flak for the organisation. The Balbir Pasha campaign (developed by Lowe) was slammed for
being "anti-women", perceived as implying that women spread HIV/AIDS and charged with stigmatizing sex workers
but was "remarkably successful" in that post campaign, PSI's helpline received 250 per cent more calls; its Saadhan
clinics, (Saadhan integrates the multiple issues of family health by offering more accessible information on more
choices) voluntary counselling and testing centres, had 150 per cent more visitors and there was a 300 per cent rise in all
brands of condoms sold in the red light district of Mumbai.
The Puli Raja campaign uses TV, radio, print and outdoors. It uses locations frequented by the target group. In Mumbai,
Kolkata and Delhi, there are clearly defined red light areas, but not so in TN and AP, which is major challenge of this
endeavour.
The points that PSI seeks to address are, that a healthy-looking person or known partner need not necessarily be
HIV/AIDS-free, and that alcohol-induced forgetfulness leads to the failure of using a condom. In fact, this is the ideal
on which the second sub-campaign, Be Faithful, is based. It shows how, by having extra-marital affairs, men can give
HIV to their wives and thus to unborn children, putting their lives at risk. Puli Raja, who was visualised as a tall, hefty,
invincible, fun-loving hero in pre-campaign testing, actually remains faceless throughout the campaign. "He is every
man, his conscience. He's an idea. By keeping him abstract, it's easier for those in the target group to identify with him.
Giving him a face will lead people to develop associations and reject similarities with him.
The organisation is looking at developing a campaign with a local celebrity who urges the target group to overcome
their reserve in talking about AIDS. In Mumbai, the Balbir Pasha campaign was followed by a primarily print one
which created awareness of the Saadhan clinics, and this is what is planned for TN and AP too.
The campaign tries to break away from the established pattern of social cause advertising, which is "not engaging"
though informative. Mass media can be effective in such contexts if they are used strategically, PSI's tack is to focus on
the consumer, get him involved in on-ground activity (interpersonal communication) and then go on to making him
aware of the products and the services available.
Caselet 3
Read the caselet carefully and answer the following questions:
5. FedEx promises sophisticated real time tracking information, free packaging, on-time delivery or money back in
select territories. Discuss how the above services would give a headstart vis-à-vis its competitors?
(6 marks) <>
6. Explain the convenience FedEx provided to its customers?
(7 marks) <>
7. Explain how a small cargo company operating in around three states in India will get benefited if it would adopt
the shipment tracking system?
(7 marks) <>
FedEx
FedEx Ground is the second largest small package ground carried in North America, with a network of 370 facilities
including 27 fully automated distribution hubs and local pick-up and delivery terminals. FedEx Ground offered
guaranteed delivery service to 100 percent of business throughout America, supported by a team of 3,50,000 employees
and contractors. With an operating company of FedEx corporation and FedEx Express. FedEx ground reported revenue
of $2billion for fiscal year 2000.
FedEx had pioneered the concept of express distribution. It delivered documents, packages and freight. Fed Ex did not
just ship goods on behalf of its clients but also streamlined supply chain logistic practices using the Internet. FedEx had
entered e-business with the launch of its website www.FedEx.com in 1994. Customers were allowed to complete all the
tasks from the website, rather than calling a person. FedEx included several software that enabled them to reduce the
time they spend on shipping, thereby increasing efficiency through these tools.
It introduced a world tracking software in 1998 to install, menu-driven and easy to use. The multi-lingual stand alone
and self-installable windows software allowed customers to get real-time tracking information on their shipment
anywhere in the world, from pick-up to delivery. Tracking was made possible through a unique airway bill number. As
soon as a customer entered the tracking number and clicked on the track button, the location of the package was
displayed.
FedEx discovered that providing “on-call” services, that is, picking up customers’ packages from them was significantly
more costly than servicing customers who dropped off their own packages. FedEx wanted to understand why customers
were making “on-calls” and what it would take to convert them to “drop-off” customers.
FedEx home delivery takes into account all the aspects of the customer such as his availability, flexibility in fixing time
etc. The customer could prefer any of the premium services like FedEx signature home delivery, FedEx date certain
home delivery, FedEx evening home delivery and FedEx appointment home delivery. Under signature home delivery, it
ensures that the package will not be delivered without the recipients signature. Date certain home delivery allows
recipients to choose a specific day for delivery, the evening home delivery guarantees a package will be delivered
between 5 P.M and 8 P.M. Appointed home delivery guarantees that delivery within an hour of a specified time, which
is given by the recipient when contacted by the local FedEx home delivery terminal.
Suggested Answers
Marketing Management (MB221) July 2004
Section A : Basic Concepts
FedEx had money back guaranteed approach too. FedEx home delivery uses technology to provide better service to
shipper and their residential customer. Shippers transit all package data electronically, via electronic date interchange,
which allowed FedEx home delivery,as FedEx was receiving all its shipping data electronically from shippers that can
tailor its delivery services specifically for the residential customer.
For example, Federal Express the first service company to win the Balridge Quality award, is built on a commitment to
reliable and fast delivery service. The company makes an explicit promise to its customers. “When it absolutely,
positively has to be there overnight”. Keeping that promise is essential to the relationship FedEx has established with its
customers because FedEx – like a travel agent, stockbroker, or realtor- acts on behalf of a customer. For this reason,
relationship marketing is a major strategy practiced by FedEx.
To strengthen its customer relationships in 1993 FedEx introduced the Power-ship program. Regular FedEx customers
are given a computer loaded with special software; the customer only has to pay for a phone line to connect the
computer to the local FedEx office. Using this computer, a customer can check on the status of all its FedEx shipmentswhether
they have left the local FedEx office, arrived in the destination city, or been received at their final destinations
(including the name of the person who actually received the item and at what time). This ability to check a shipment’s
progress and easily confirm its arrival provides customers with peace of mind, a definite added value. With its addedvalue
service, FedEx is building stronger customer relationships. Some experts speculate that this concept of
relationship marketing is as important in the 1990s as the basic marketing concept was thirty years ago.
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. Assume that you are in charge of test marketing your company's new brand of nonalcoholic wine. List ten criteria
you should consider when choosing a good test market city. What is an advantage for your company of using test
marketing? What is a disadvantage of using test marketing?
(10 marks) <>
9. Services have four unique characteristics that distinguish them from goods. Name and briefly define each of these
four characteristics. These characteristics can make the marketing of services more difficult. What special
strategies should marketers adopt for services to address each of the four characteristics? Use the example of a
restaurant to help describe each of the four characteristics.
(10 marks) <>
END OF SECTION C
END OF QUESTION PAPER
1. Answer