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Tuesday, October 6, 2009

Marketing Management (MB221) : October 2004

Question Paper
Marketing Management (MB221) : October 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. Reinforcement advertising is a form of
(a) Reminder Advertising (b) Persuasive Advertising
(c) Informative Advertising (d) Comparative Advertising
(e) Teaser Advertising.
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2. Which of the following methods of pricing does Bata, the leading footwear company, follows when it
prices its products at such price points as Rs. 599.95?
(a) Target-return (b) Perceived Value
(c) Going-rate (d) Mark-up (e) Psychological.
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3. Manufactures of razors and cameras often price them low and set high mark-ups on razor blades and
films respectively. This method of pricing is known as
(a) Two-Part Pricing (b) By-product Pricing
(c) Captive Product Pricing (d) Mark-up Pricing
(e) Going-rate Pricing.
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4. BPL Sanyo brand of televisions is an example of a/an
(a) Co-brand (b) Flanker Brand
(c) Brand Extension (d) Umbrella Branding
(e) Blanket Branding.
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5. Which of the following describes the buying behavior, where customer involvement is high and
significant differences between brands exist?
(a) Habitual buying behavior (b) Variety seeking behavior
(c) Complex buying behavior (d) Dissonance reducing buying behavior
(e) Rational buying behavior.
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6. The shift in marketing from trying to maximize profit on individual transactions to maximizing
mutually beneficial relationships with consumers and others is called
(a) Social marketing (b) Green marketing
(c) Mega marketing (d) Relationship marketing
(e) Proactive marketing.
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7. If Levi Strauss company decides to enter the sportswear market, in which it currently has no presence, it
would be pursuing which growth strategy?
(a) Market penetration (b) Market development
(c) Product development (d) Diversification
(e) Cost leadership.
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8. Marketing chewable vitamins for children and a different version for adults is an example of
(a) Geographic segmentation (b) Psychographic segmentation
(c) Regional segmentation (d) Age and life-cycle segmentation
(e) Physiological segmentation.
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9. Elena intends to buy her favorite brand of camera but her best friend persuades her to buy the lowestpriced
one. Which of the following can be said to have influenced her purchase decision?
(a) Purchase intention (b) The self-concept
(c) External influences (d) Unexpected situational factors
(e) Competitor’s price.
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10. A firm that bases its price on how it thinks the competitors will price, rather than on its own costs or
demand, in order to win a contract, is most likely using
(a) Going-rate pricing (b) Cost-plus pricing
(c) Perceived-value pricing (d) Sealed-bid pricing
(e) Auction-type pricing.
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11. When Julie gives her customers her card during a sale and invites them to call with any questions they
might have later, which of the following levels of relationship marketing is Julie practicing?
(a) The basic level (b) The reactive level
(c) The accountable level (d) The proactive level
(e) The partnership level.
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12. If Wrigley’s makes bubble gum and sells it through middlemen, who market it under individual store
brands, which type of brand-sponsorship is Wrigley’s utilizing?
(a) Manufacturer's brand (b) Slotting brand
(c) Private brand (d) Licensed brand
(e) Dealer brand.
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13. Which of the following are runner-up companies that aggressively attack competitors to get more
market share?
(a) Market leaders (b) Market challengers
(c) Market followers (d) Market nichers
(e) Market penetrators.
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14. What is market segmentation based on customer’s values and lifestyles, known as?
(a) Geographics (b) Demographics
(c) Psychographics (d) Biographics
(e) Behavioral.
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15. Ellen decided to conduct an experiment in her mall's car park to see if shoppers would respond to a
lower parking price to park in some of the under-utilized sections of the car park. Which of the
following types of market research was Ellen using?
(a) Exploratory (b) Causal (c) Descriptive (d) Investigative
(e) Behavioral.
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16. In which of the following stages of new product development is the brainstorming technique used?
(a) Commercialization (b) Concept testing
(c) Market analysis (d) Idea generation
(e) Idea screening.
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17. The order of the steps in the consumer adoption process is
(a) Awareness, Interest, Evaluation, Trial, Adoption
(b) Interest, Evaluation, Awareness, Trial, Adoption
(c) Evaluation, Awareness, Interest, Adoption
(d) Trial, Evaluation, Awareness, Interest, Adoption
(e) Adoption, Evaluation, Trial, Interest, Awareness.
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18. Which of the following is/are included in product mix?
(a) Product length (b) Product width
(c) Product depth (d) Product consistency
(e) All of the above.
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19. The level of product which gives actual benefit to the basic consumer need is
(a) Augmented Product (b) Actual Product
(c) Core Product (d) Product Mix
(e) Product service.
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20. The pricing strategy, where a low quality product is offered at a high price, is called
(a) Super value strategy (b) High value strategy
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(c) Medium value strategy (d) Rip-off strategy
(e) Good value strategy.
21. Supermarkets and department stores often drop the prices on well-known brands to stimulate additional
store traffic. Such pricing is called
(a) Special event pricing (b) Cash rebates
(c) Low interest financing (d) Loss leader pricing
(e) Psychological pricing.
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22. Which type of advertising is most appropriate for introducing new product categories?
(a) Reminder advertising (b) Informative advertising
(c) Persuasive advertising (d) Comparison advertising
(e) Reinforcement advertising.
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23. When a coffee shop in an airport and a fine restaurant in a luxury hotel charge different prices for the
same meal to customers who find the atmosphere in the hotel worth the difference, which of the
following methods of pricing is used?
(a) Markup pricing (b) Going-rate pricing
(c) Sealed-bid pricing (d) Value-based pricing
(e) Perceived-value pricing.
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24. When a service firm effectively trains and motivates its customer-contact employees and the support
personnel to work as a team to provide customer satisfaction, it is practicing
(a) Results-oriented marketing (b) Internal marketing
(c) Interactive marketing (d) Marketing myopia
(e) Captive marketing.
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25. Sandy has decided to go to Wofford College because of the scholarships she will receive. Which stage
of the Buying Decision Process is Sandy in?
(a) Problem Recognition (b) Post Purchase
(c) Information Search (d) Purchase
(e) Dissonance.
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26. When IBM and Apple Computer announced a joint operation to develop a new computer operating
system, it was an example of a (n)
(a) Corporate marketing system (b) Administered marketing system
(c) Conglomerate marketing system (d) Horizontal marketing system
(e) Contractual marketing system.
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27. Which of the following statements best reflects the definition of a product?
(a) A product is anything that is offered to the market for need satisfaction
(b) Services are intangible and do not result in the ownership of anything
(c) Organizations tend to compete at the augmented product level
(d) The core product is what consumers really seek when obtaining a product
(e) All of the above statements are true vis-à-vis definition of a product.
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28. In terms of buyer decision processes, if Naina looks for reading material, phones friends, and seeks out
information about laptops because she is thinking of buying one, she is said to be in
(a) A state of heightened attention
(b) Active information search
(c) Exploratory prepurchase mode
(d) The dynamic exchange paradigm
(e) Post purchase dissonance.
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29. When a university charges tuition fee that does not cover costs, knowing that it must rely on private
endowments and public grants to cover the remainder, which of the following pricing objectives is the
university pursuing?
(a) Survival (b) Product-quality leadership
(c) Partial cost recovery (d) Full cost recovery
(e) Market-skimming.
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30. A themed TV programme, typically 30 minutes long, during which the features or virtues of a product
are discussed by 'experts', is known as
(a) Commercial (b) Infomercial
(c) Consumer affairs (d) Home shopping (e) Advertorial.
END OF SECTION A

Section B : Caselets (50 Marks)

• This section consists of questions with serial number 1 – 8.
• 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. Companies are banking on ‘star power’ to enhance the visibility of their brands. Discuss at least six uses of celebrity endorsements.
(6 marks) <>
2. Advertisements featuring celebrities do not always produce the desired results. Explain some of the reasons why celebrity endorsements may not work.
(6 marks) <>
3. Getting a brand endorsed by a celebrity has its share of risks. Discuss the risks associated with celebrity endorsements and explain how the same can be hedged.
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CELEBS: DO THEY DELIVER?
Stars, who are known to shape destinies, cast an enormous influence. No, we’re not talking about astrology here. We’re referring to the powerful effect of celebrities on destinies of brands. One approving nod from a famous face can translate into millions in brand sales. Perhaps that’s why the world over, companies have been using stars to endorse everything, from food to food chains, from soft and hard drinks to health drinks, from clothes and accessories to cars (and the tyres on which they run). Even political parties are awestruck by the charisma of stars. Such is the magnetism of celebrities in this country that in the recent general elections, major political parties fielded a record number of film stars and cricketers to contest from important constituencies around the country. So what is great about celebrities that drives companies to spend in millions on obtaining their stamp of approval on their brands? Signing up stars for endorsements is a time-tested strategy and has been effectively used by some of the top brands in the world including Nike and Pepsi. In India too, HLL has used Hindi film stars to endorse their beauty soap Lux since the fifties. Vimal, Thums Up, Gwalior and Dinesh are some of the other brands that used star-appeal in the early days of mass advertising. And who can forget Kapil ‘Palmolive’ Dev? Ask about the objective of using a celebrity in an ad and most admen will talk about making an impact on the bottom line. They believe that star endorsements have several benefits, key among them being building credibility, fostering trust and drawing attention… any or all of which can translate into higher brand sales. So how does one decide whether to put a celebrity in an ad? Ideally, this should be dictated by the communication idea. Advertising professionals recommend celebrity endorsements when the case is justified. There are many cases where you need to use the celebrity to break out of a category clutter. At times celebrity endorsement is used to build credibility to the brand offer. Most experts concur that, when used judiciously, celebrity endorsements can be an effective strategy. Using a celebrity
by itself is not a bad idea provided it is done intelligently. And there are many examples of good and bad use of celebrities. Take Amitabh Bachchan, who has been used by some companies like Parker Pens and ICICI Home Loans remarkably well while some others have been unable to exploit his Big B status too well. Shah Rukh Khan’s endorsement of Hyundai Santro too seems to have worked well. Ad agency FCB Ulka used cricketers like Rahul Dravid for Castrol in an attempt to break out of the clutter, as well as have an image rub off of ‘dependability’ on to the brand. Yet, there are some who don’t have much conviction in star endorsements. Some admen do not recommend celebrity endorsements because they think that to be really successful, a brand needs to have a strong identity of its own. It should ideally not piggyback on the identity of a celebrity and hope to achieve success. They feel that not much effort is put in to think through an ad with a celebrity. Most times it seems like it is just the celebrity saying ‘I use this product,
so why don’t you’ kind of thing and the ad agency thinks it has done its job. Celebrity endorsements are capable of manifesting both favorable and adverse effects for the brands with which they associate. Celebrity endorsements are very expensive. Therefore their use in an ad should be justified. In other words, the message strategy for a brand should strongly warrant the use of a known face in an idea. Sadly, very often the celebrity is hired first and an idea is then weaved around his or her presence. The important thing to remember is that putting a celebrity
in an ad is not an idea in itself. Unfortunately, this is how most celebrities are being used in Indian advertising, where they just become a prop. Ideally, there should be an idea that makes the celebrity relevant to the product and the consumer. A celebrity’s presence in the ad should be contextual. When Sachin Tendulkar declares, “Boost is the secret of my energy,” it doesn’t seem out of context. Internationally, Nike’s association with Michael Jordan is legendary and also
logical. Celebrity endorsements work best when the celebrity is not introducing the brand. When the product already has a strong identity and a USP that is well established, then a celebrity can come in and give the brand an added fillip and generate some more interest value. However, what is of paramount importance is to find a complete fit between the values of the brand and the values of the celebrity. One needs to create a unique situation or story that links the celebrity to the product.
In the last decade or so, there has been a spurt in the use of celebrity endorsements. And with it, there has been an increase in the number of instances of brands failing to take off in spite of the biggest and brightest stars endorsing it and consequently leading to speculation about the soundness of celebrity endorsements as a communication strategy. Many celebrity endorsements fail because they identify a celebrity they like in an emotive and un-researched manner, and then try to create advertising to force-fit the celebrity into the creative concept. Often, the finished advertising is at best contrived, and often, simply laughable. In the end, the brand suffers from a mismatched concept and celebrity, and
millions of dollars are flushed away. If this company is publicly listed, imagine the disservice the company has done for its shareholders.
There are several reasons why celebrity endorsements fail to produce the desired effect, and each of them has more to do with the core communication strategy and less with the celebrity’s pull. Celebrities cannot really be blamed if their endorsements fail to push up the brand sales. Indeed, it is important to recognize that celebrities can create interest -
whether that interest converts into sales depends on various factors such as brand-celebrity disconnect, improper positioning, clutter of celebrities, or even product life-cycle.
Caselet 2

Read the caselet carefully and answer the following questions:
4. Several MNCs have chosen the M&A route to expand their brand portfolios in India. But this strategy is not without risks. How can MNCs derive the maximum mileage out of brand acquisitions?(6 marks) <>
5. MNCs that have an understanding of the ground realities, the heterogeneity of the Indian market, and the tastes and preferences of the Indian customer have a distinct edge. Suggest some steps that would enhance the brandequity of MNCs in India.
(8 marks) <>

MNCs AND BRANDING IN INDIA
Emerging markets like India constitute major growth opportunities in the evolving economic order. In a liberalized global business regime, the potential of markets like India has already affected an accent in the approach of MNCs, which now customarily highlight emerging market investments even when communicating with shareholders. Traditionally, India has always featured in the strategic plans of the multinationals globally. European and American
MNCs were among the first ones to enter the Indian market and gain a sound foothold here.
MNCs in recent times have exhibited the tendency to grow inorganically - through M&As - since that is a fast track route to enter markets, with a host of facilitators existing. However, it will be more important in the future forcompanies to own markets than factories. And the only way to own markets is to own dominant brands. A brand can be timeless. Hence the issues of brand acquisition by MNCs - through M&As - and ultimately brand value creation, are of
extreme importance. Business strategists too have always emphasized the significance of 'Brand Value,' while confronted with the subject area of M&A as a strategy to pursue growth objectives. The opportunity for exploiting common use of a well-known brand name among others is a significant pointer towards the existence of 'strategic fit', whenever exploring the case for
related diversification strategies. Similarly germane are the aspects of a company's brand name and reputation in thecontext of these virtues being transferable to other businesses (vide M&As) arising from cross-business strategic fits along the value chain. A 'Profit Impact of Market Share' study showed a strong interaction between, among other things, brand rank and
profitability. The evidence shows that it is difficult to make profits unless the company has one of the three leading brands. The framework, further assessing strategic potential of businesses, assigns an important rating to brands constituting competitive strength of a firm.
Total Research Corporation's EquiTrend study shows that firms experiencing the largest gains in brand equity saw their ROI average 30 per cent, those with the largest losses in brand equity saw their ROI average a negative 10 per cent. The success of a venture by the MNC floating in tested waters is dependent on a multitude of factors. The extent of awareness of the acquired brand is the key in any success script. The marriage of an Indian brand with an MNC will be
a hit love story if, and only if, the MNC is able to rouse the interest in the offering as an international brand with better standards than its local counterparts. There have been cases where MNCs wanting to enter the Indian market, acquired companies with successful brands. In
the quest for wanting scale, merger partners were identified; whose products and brands more or less complemented their line of businesses. The example in this regard would be the buying of Modern Foods by HLL. Analysts say Modern Foods fits into HLL's major thrust in the area of foods. The company's branded atta business (under the Annapurna brand) has been showing a
handsome growth. In this context, Modern Foods has a strategic fit with the HLL's business plans. There are directbuying synergies in the area of wheat procurement, which ensures that maida (wheat flour), the main raw material for bread, is made available at the desired quality and at the most competitive prices to the company. HLL has been trying to synergize the Modern Foods brand with its other brands at regional levels. In New Delhi for
instance, Modern buns were promoted along with Kwality Walls ice cream and Taj Mahal tea.
Gillette, having identified oral care as one of the faster growing categories, acquired the old Parle brand, Prudent. The objective here was the acquisition of a brand in the popular segment to extend the Gillette Oral Care franchise. Gillette also wanted to acquire a vehicle to extend the franchise to a larger universe of outlets and to enter the rural market, largely untouched hitherto. Also, Gillette wanted to synergize with Oral B worldwide, which has a two-brand strategy. However the challenges facing Gillette were manifold. Prudent had fairly high brand awareness, but carried some negative perceptions. Faced with these challenges, Gillette revamped the entire product range, changed the packaging completely, making it much more contemporary, rationalized price points and put in place a well thought-out sales
strategy, backing it up with powerful trade and consumer promotion. The results were phenomenal. A dead brand was revived. The Prudent brand turnover doubled! Prior to acquisition, the turnover was roughly Rs. 20 crore and one year post-acquisition it was Rs. 45 crore! But the icing on the cake was that the flagship brand Oral B grew too. But there have also been cases of overlapping and unrelated brand acquisitions. Duracell, one of the MNC Gillette's
brands, undertook the acquisition of Geep, an Indian player in the non-alkaline batteries segment in 1998. Gillette needed a plank in the low price segment, rural market as also the non-alkaline segment. But after acquisition its turnover reduced from Rs. 150 crore to Rs 100 crore in one year. Gillette ended up with huge trade outstanding.
Margins on the business continued to be low and all re-launches failed. Gillette did not perhaps assess the market of Geep correctly. Geep had limited equity outside of Uttar Pradesh and Madhya Pradesh, which contributed to half of the total volumes. Gillette was unable to manage the wholesaler dynamics - this was not an area of core competence for the company. Brand/displays/technology, which were Gillette's core competence, were irrelevant in this industry. Brandmisfits, thus, are a result of limited market and straying competencies and hence a brand loses its sheen.
Caselet 3

Read the caselet carefully and answer the following questions:
6. Krispy Kreme is considered the king of the doughnut world. What made it so successful in so short a period?
(6 marks) <>
7. Will Krispy Kreme benefit financially from supermarket sales? If not, suggest a suitable distribution strategy forthe company.
(6 marks) <>
8. Krispy Kreme has created a lot of buzz for their products. What are the advantages of buzz marketing? Does it (buzz) happen naturally?
(6 marks) <>
HAS KRISPY KREME PEAKED?
I walked into the store for a quick snack. A vast glass wall invited me to see the inner workings of the operation. They truly had nothing to hide. A conveyor belt carried fist-sized rings into a pool of oil. An employee was there to snag anything that did not fit the company’s exacting standards of what the product should look like. Out of the oil, and through a thin waterfall of sweet glaze, the fluffy hoops of delight were then placed in flat boxes or set neatly in display
trays. I proceeded to the counter, and stood there for a moment examining the menu of choices. As I carefully considered my options, an employee handed me one of the newly created treats, and invited me to enjoy it in the house. After one bite, the words “I’ll take a dozen” flew out of my salivating mouth. A two-doughnut snack turned into a treat for the whole family when I got home. If you haven’t heard about Krispy Kreme doughnuts by now, you don’t have any friends, and you don’t have access to any news sources. It’s the king of the doughnut world. Krispy Kreme spends almost nothing on advertising. No TV commercials. No billboards. No radio ads. No print ads. They let the press give them free TV, radio, and print coverage
because their store openings are so popular. Hundreds of people line up on the first day of a new store opening. After going public in 2000, its stock has whipped every major stock index over that time period. Many stories have been written about how they have grown so fast in the last few years. They give away free samples in areas they will open stores. They only open one store in any single community to create demand for a scarce product. They embrace and support a community of Krispy Kreme fans. Their product is damn tasty, and as addicting as a
doughnut can be. If it weren’t, they would never have attracted the legions of loyalists they now have. Word of mouth has worked well for them. Not only is the product without peer, but also the customer experience is the best in the business. While Subway lets you see your food being made, it’s not nearly the same magical trip you get at a Krispy Kreme store. A sandwich can be very tasty, but a hot Krispy Kreme is a religious experience. Watching the doughnuts
being made adds to the magic of the product. One of my friends drags people to the nearest Krispy Kreme store if they say they have never had one. He won’t let them have their first taste out of a box from a grocery store. While shopping at my local mega supermarket, I saw boxes of Krispy Kreme doughnuts near the entrance to the store. Obviously, some marketing genius at Krispy Kreme thought this would be a great way to leverage the buzz about their
product. Make it easier for people to buy the product, and sales will multiply exponentially, right? But the joy ride appears to be eventually coming to an end for Krispy Kreme with sales beginning to go down hill. If the product is wonderful, and the experience is magical, what could possibly slow them down?
END OF SECTION B

Section C : Applied Theory (20 Marks)
This section consists of questions with serial number 9 - 10.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on section C.
9. Britannia’s flavored milk, ‘Milkwala’ offered in different flavors did not succeed in the market. P&G’s ‘Ivory’, a floating soap bar, failed to impress the consumers. Bakeman’s cookies also could not leave a lasting impression in the consumers’ minds. Analyze the reasons for the failure of these and other products in general. How can marketing research help in making them successful?
(10 marks) <>
10. Assume that you are the vice-president of marketing in a small firm that has the following departments: marketing, finance, purchasing, and strategic planning. The sales manager has mentioned to you that one of the salespersons thought that cellular phones would help the sales force become more efficient. The manager requests that eight such phones be purchased. Illustrate the six buying decision roles that would be relevant for the purchaseof these cellular phones.
(10 marks) <>
END OF SECTION C
END OF QUESTION PAPER

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