NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce

Commerce: NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce

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Very Short Answer Type Questions

Question 1. Explain the advantages of branding to marketers of goods and services.
Branding is an important function performed by a marketer. It has following

advantages to the marketers

(i) Enables marking product differentiation.
(ii) Helps in advertising and display programmes.
(iii) Differential pricing.
(iv) Ease in introduction of new products.

Question 2. List the characteristics of a good brand name.
Following are the characteristics of a good brand name
(i) It should be short, easy to pronounce, recognise and remember e.g., Rin, Vim.
(ii) It should suggest product’s qualities e.g .• Genteel, Rasna.
(iii) It should be distinctive e.g., Zodiac.
(iv) It should be versatile to accommodate new products which are added to the product
line e.g, Maggie, Videocon
(v) It should be capable of being registered and protected legally.
(vi) Chosen name should have staying powers e.g., it should not get out of date.

Question 3. What is the societal concept of marketing?
 Answer T
he societal concept of marketing means an extension of marketing concept.
Apart from the consumer satisfaction, it pays attention to the social, ethical and
ecological aspects of marketing.

Question 4. List the characteristics of convenience products.
Following are the characteristics of convenience products
(i) These goods are purchased at convenient locations with least efforts and time.
(ii) They have regular and continuous demand.
(iii) They are purchased in small quantities and per unit price IS low.
(iv) They are mostly branded and have standardised price.
(v) The competition is high as the supply is greater than the demand.
(vi) Sales promotion schemes play an important role in the marketing of such products.

Question 5. Enlist the advantages of packaging of a consumer products.

Importance of Packaging

(i) Helps in raising the standard of health and sanitation.
(ii) Helps in self service outlets as consumer own what to buy. can easily decide on his
(iii) Innovational opportunity e.g., new types of packaging availability have made it
easier to market the product.
(iv) Product Differentiation Packaging is one of the very important means creating
product differentiation.

Question 6. What are the limitations of a advertising as a promotional tool? Enlist.
Following are the limitations of advertising
(i) Less forceful
(ii) Lack of feedback
(iii) Inflexibility
(iv) Low effectiveness

Question 7. List five shopping products purchased by you or your family during the last
 few months.

(i) Curtains
(ii) Shirts
(iii) Cosmetics
(iv) Travelling bags
(v) Hand bags

Short Answer Type Questions

Question 1. What is marketing? What functions does it play with process of exchange of
 goods and services? Explain.
Marketing is a total system of business activities designed to plan. price,
promote and distribute want satisfying goods and services to present and potential
customers. Marketing is concerned with exchange of goods and services from producer
to consumers which involves many activities.

(i) Gathering and Analysing Market Information This is done to identify the needs of
the customers and take various decisions for the successful marketing of the products
and services.

(ii) Marketing Planning Another important activity or area of work of a marketer is to
develop appropriate marketing plans. so that the marketing objective of the organisation
can be achieved.

(iii) Product Designing and Development The design of the product contributes to
make the product attractive to the target customers.
A good design can improve performance of a product and also give it a competitive
advantage in the market.

(iv) Standardisation and Grading Standardisation refers to producing goods of
predetermined specification which helps in achieving uniformity and consistency in the
output which reduces the need for Inspection. testing and evaluation of the products.
Grading is the process of classification of products into different groups, on the basis of
its features such as quality, size etc. It ensures that goods belong to a particular quality
helps in releasing higher prices for high quality output.

(v) Packaging and Labelling Packaging refers to designing the package for the
products. Labelling refers to designing the label to be put on the package. Packaging
provides protection to the product and also helps in its promotion. Labelling helps in self

(vi) Branding Brand names help in creating product differentiations i.e., how the
product can be distinguished from Its competitors.

(vii) Customer Support Service Marketing management relates to developing
customer support service such as after sales services. handling customer complaints.
All these aim at provides customer satisfaction which is a key to marketing success.

(viii) Pricing of Product Price IS an Important factor affecting the success or failure of a
product in the market. The marketers have to analyse properly the factors determining
the price of a product.

(ix) Promotion Promotion of products and services involves informing the customers
about the firm’s product, its features etc and persuading them to purchase these
products. It includes four method advertising, sales promotion, personal selling and

(x) Physical Distribution The important decisions areas under physical distribution
include managing inventory, storage, warehousing and transportation of goods from one
place to the other.

(xi) Transportation Transportation involves physical movement of goods from one
place to another. A marketer has to perform this function very efficiently keeping in mind
the nature of product. cost, location of target market etc.

(xii) Storage or Warehousing In order to maintain smooth flow of products in the
market, there is a need for proper storage of the products. Further, there is a need for
storage of adequate stock of goods to protect against unavoidable delays in delivery or
to meet out contingencies in the demand. Wholesalers and retailers are playing an
important role.

Question 2. Distinguish between the product concept and production concept of
Difference between Product and Production Concept

NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce
Question 3. Product is a bundle of utilities. Do you agree? Comment.
Yes, product is a bundle of utilities, which is purchased because of its
capability to provide satisfaction of certain need. A buyer buys a product or service for
what it does or service for what it does for her or the benefits it provides. There can be
three types of benefits, it provides to a customer

(i) functional benefits
(ii) psychological benefits
(iii) social benefits.
e.g., the purchase of a motorcycle provides functional utility of transportation, but at the
same time satisfies the need for prestige and esteem and provides social benefit by the
way of acceptance from a group by riding it.

Question 4. What are industrial products? How are they different from consumer
 products? Explain.
Industrial products are those products. which are used as inputs in providing
other products e.g., raw material, engines, tools, lubricants etc.
The difference between consumer products and industrial products is based on their
ultimate use and nature of purchases.

NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce

Question 5. Distinguish between convenience product and shopping product.
Difference between Convenience and Shopping Product

  NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce

Question 6. Products is a mixture of tangible and intangible attributes. Discuss.
In marketing, product is a mixture of tangible and intangible attributes which
are capable of being exchanged for a value, with ability to satisfy customer needs.
Beside physical objects, include services, ideas, persons and places in the concept of
product. Thus, product may be defined as anything that can be offered in a market to
satisfy a want or need. It is offered for attention, acquisition, use or consumption.

Question 7. Describe the functions of labelling in the marketing of products.
Label on a product provides detailed information about the product, its
contents, methods of use etc. The various functions performed by a label are as follows

(i) Describe the Product and Specify its Contents One of the most important functions of
labels is that it describes the product, its usage, cautions in use etc and specify its

(ii) Identification of the Product or Brand A label helps in identifying the product or brand
e.g., we can easily pick our favourite soap from a number of packages only because of
its label.

(iii) Grading of Products Labels help grading the products into different categories.
Sometimes, marketers assign different grades to indicate features or quality of the
product e.g., different type of tea is sold by some brands under Yellow, Red and Green
label categories.

(iv) Help in Promotion of Products An important function of label is to aid in promotion of
the products. A carefully designed label can attract the customer to purchase. So, many
labels provide promotional messages, some show discount or other schemes etc.

(v) Providing Information Required by Law Another important function of labelling is
to provide information required by law. e.g., the statutory warning on the package of
cigarette or pan masala – ‘Smoking is injurious to health’ or ‘Chewing tobacco causes cancer.’

Question 8. Discuss the role of intermediaries in the distribution of consumer nondurable
The term channels of distribution refers the facilitate to the movement of goods
and services and their title between the point of production and point of consumption, by
performing a variety of marketing activities. Following are the functions performed by
the channels of distribution

(i) Accumulation It aims at holding the stock to match between the consumer demand
and supply condition, warehousing helps in maintaining continuous flow of goods and

(ii) Promotion The marketing channels also help in promoting the demand for the
product by displaying demonstrating and participating in various promotional activities
organised by the producers.

(iii) Negotiating The marketing channels are the intermediaries between the producers
and the consumers. They attempt to reach final agreement on price and other terms of
the offer, so that transfer of ownership is properly affected.

(iv) Risk Taking Risk taking is the basic responsibility of the intermediaries. It may arise
out of physical deteriorations, changes in price levels, natural calamities, change in
fashion etc. These are unavoidable as they hold sufficiently large and variety of
inventories till the sale of stock.

(v) Grading/Sorting Grading is the process whereby they sort the products on the basis
of different sizes, qualities, moisture contents and so on. It helps us realising the time
value for the product and at the same time ultimate consumer feels satisfied with the
uniform quality of the product.

(vi) Packaging The products are packed in the small tradable lots for the convenience of
the consumer.
(vii) Assembling/Assortment Marketing channels aim at satisfying the needs of the
customers. The products desired by the consumer may not be available in the market.
They procure such goods from different sources, assemble or assort them as per the
requirements of the consumers.

Question 9. Explain the factors determining choice of channels of distribution.
The choice of channels depend on various factors, which are discussed as

(i) Product Related Factors The important product related considerations is deciding the
channels. It includes whether the’ product is an industrial product or a consumer
product. Industrial product require shorter channel and consumer products require
longer channel.

(ii) Company Characteristics The important company characteristics affecting the choice
of channels of distribution include the financial strength of the company and the degree
of control it wants to hold on other channel member. Direct selling involves lot of foods
to be invested in fixed assets say starting own retail outlets or engaging large number at
sales force. Similarly if the management want to have greater control on the channel
number, short channels are used but if the management do not want more control over
the middlemen, it can go in for longer channel or large number of intermediaries.

(iii) Competitive Factors The choice of channel is also affected by what the competitor
has selected as its channel. Sometimes, firm may decide to go for the same channel
and sometimes absolutely opposite.

(iv) Market Factors Important market factors affecting the choice of channel of
distribution include size of market, geographical concentration of potential buyers and
quantity purchased.

(V) Environmental Factors Sometimes environmental factors also helps in deciding the
channel of distribution. e.q., in a depressed economy, marketers use shorter channels
to distribute their goods In an economical way.

Question 10. Explain briefly the components of physical distribution.
The main components of physical distribution are as follows

(i) Order Processing If a firm takes more time to process the order, then the consumer
remains dissatisfied. Therefore, order processing has to made faster by using
information technology.

(ii) Inventory Control Inventories ensure the availability of the product as and when
consumer demand arises. There are various factors which influence a firm decision
regarding the level of inventory e.g., degree of accuracy of sales forecast, cost of
blocking of the working capital etc.

(iii) Warehousing It refers to the storage of goods from the time of production to the time
of consumption, Warehousing is important as it creates time utility,

(iv) Transportation It creates place utility, It refers to the carrying of raw materials or
finished goods from one place to another, The most important thing to be kept in mind is
that the value addition by transportation should be greater than the cost of

Question 11. Define advertising, what are its main features? Explain.
Advertising is defined as the impersonal form of communication which is paid
form by the marketer to promote some goods or services, It is commonly use as the
promotional tool of the company, The important features of advertising are as follows

(i) Paid Form Advertising is a paid form of communication which means the sponsor has
to bear the cost of communication with the prospects,

(ii) Impersonality There is no direct face to face contact between the prospect and
advertiser, It is therefore, referred as the impersonal method of promotion,

(iii) Identified Sponsor Advertising is undertaken by some Identified individual or
company, who makes the advertising efforts and also bears the cost of it.

Question 12. Discuss the role of ‘Sales Promotion’ as an element of promotion mix.
Sales promotion includes those marketing activities other than personal selling,
advertising and publicity that stimulate consumer purchasing and dealer effectiveness,
such as display, shows and exhibitions, demonstrations and various non-current selling
efforts not in the ordinary routine, The main objectives of sales promotion activities are

(i) Creation of demand for the product.
(ii) Educating the consumers about new products or new uses of the old product.
(iii) Building the brand loyalty for the product among the consumers,

Long Answer Type Questions
 Question 1. Define Marketing, How is it different from selling? Discuss.
Marketing is a total system of business activities designed to plan, price,
promote and distribute want, satisfying goods and services to present and potential

Difference between Selling and Marketing

NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce

Question 2. What is the marketing concept? How does it help in the effective marketing
 of goods and services?
Orientation of marketing implies that focus on the satisfaction of customers
need, is the key to the success of any organisation in the market. All the decisions in the
firm are taken from the point of view of the customers. e.g., What product will be
produced, with what features and at what price shall it be sold or where shall it be made
available for sale will depend on what do the customer wants.

Marketing concept helps in effective marketing of goods and services by using the

(i) Identification of market or customer who are chosen e.s the target of marketing effort.
(ii) Understanding needs and wants of customers in the target market.
(iii) Development of products or services for satisfying needs of the target market.
(iv) Satisfying needs of target market better than the competitors.
(v) Doing all this at a profit.

Question 3. What is marketing mix? What are its main elements? Explain.
Marketing mix refers to the combination of four basic elements known as four
P’s – Product, Price, Promotion and Place.

The various components of marketing mix are

(i) Product Mix Product mix basically concerns with the features related to a product
e.g., range, quality, size, labelling, packaging, branding etc. All products must satisfy
consumer needs and expectations. It aims at providing good quality products at fair

(ii) Price Mix It includes decisions relating to price determination, discounts and
allowances credit terms. It covers pricing objectives and pricing policies. Price should
cover not only cost of production and selling expenses but also a reasonable profit
margin. The price policy adopted by the enterprise should not only be cost based but
also demand based and competition based.

(iii) Place Mix Place mix links the seller and buyer. The choice of channels of
distribution and transport are the two major issues here. There are various factors which
help in deciding the channel e.g., the time and the place, where the goods have to
reach or transportation. It is the nature of goods, place of destination, cost and
availability etc.

(iv) Promotion Mix It refers to all marketing activities to increase the volume of sales of
the product of an enterprise. It consists of means of markellng communication with a
view to informing and persuading the prospective buyers to buy a certain product. It
includes advertising, personal selling, publicity and sales promotion.

Question 4. How does branding help in creating product differentiation? Does it help in
 marketing of goods and services? Explain.
Branding helps a firm in distinguishing its products from that of its competitors.
This helps the firm to secure and control the market for its products. If products were
sold by generic names, it would be very difficult for the marketers to distinguish their
products from its competitors. Thus, most marketers give a name to their product, which
helps in identifying and distinguishing their products from their competitors product. This
process of giving a name or a sign or a symbol etc to a product is called Branding.

Question 5. What are the factors affecting determination of the price of a product or
 service? Explain.
There are number of factors which affect the fixation of the price of a product.
Some of the important factors in this regard are discussed as below

(i) Product Cost The cost sets the minimum level or the floor price at which the product
may be sold. There are broadly three types of cost-fixed costs, variable costs and semi
variable cost. Total cost IS the sum of all these three. Generally, all firms try to cover all
their costs, atleast in the long Sun. In addition, they aim at earning a margin of profit
over and above the costs.

(ii) The Utility and Demand The utility provided by the product and the Intensity of
demand of the buyer sets the upper limit of price. which a buyer would be prepared to
pay. Infact the price must reflect the interest of both the parties to the transaction – the
buyer and the seller. The buyer may be ready to pay up to the point, where the utility
from the product is atleast equal to the sacrifice made in terms of the price paid. The
seller would, however, try to cover the costs. According to the law of demand,
consumers generally purchase more units at a low price than at a high price.

(iii) The Extent of Competition in the Market The price is also affected by the nature
and degree of competition. The price will tend to reach the upper limit in case there is
less degree of competition while under free competition, the price will tend to be set at
the lowest level.

(iv) Government and Legal Regulations In order to profit the interest of public against
unfair practices in the field of price fixing, Government can intervene and regulate the
price of commodities. Government can declare a product as essential product and
regulate its price.

(v) Pricing Objectives Pricing objectives are another important factor affecting the
fixation of the price of a product or a service. Apart from price maximisation. the pricing
objectives of a firm may Include.

(a) Obtaining Market Share Leadership If a firm objective is to obtain larger share of
the market, it will keep the price of its products at lower level, so that greater number of
people are attracted to purchase the products.

(b) Surviving in a Competitive Market If a firm is facing difficulties surviving in the
market because of intense competition or introduction of a more efficient substitute by a

(c) Attaining Product Quality Leadership higher prices are charged to cover high In
this case, normally quality and high cost of R&D (Research and Development).

(vi) Marketing Methods used Price Fixation Price is also affected by other elements
of marketing such as distribution system, quality of salesmen employed, quality and
amount of advertising, sales promotion efforts. the type of packaging, product
differentiation, credit facility and customer service provided.

Question 6. What do you mean by ‘Channels of distribution’? What functions do they
 play in the distribution of goods and services? Explain.
People, institutions, merchants and functionaries, who take part in the
distribution of goods and services are called ‘Channels of Distribution’. Channels of
distribution are set of firms and individuals that take title or assist in transferring title, to
particular goods or services as it moves from the producers to the consumers.
Channels of distribution smoothen the flow of goods by creating possession. place and
time utilities. They facilitate movement of goods by overcoming various barriers The
important function performed by middlemen are

(i) Sorting Middlemen procure supplies of goods from a variety of sources. which is
often not of the same quality, nature and size. These goods are sorted into
homogeneous groups on the basis of the size or quality.

(ii) Accumulation This function involves accumulation of goods into larger
homogeneous stock. which help in maintaining continuous flow of supply.

(iii) Allocation Allocation involves breaking homogeneous stock Into smaller,
marketable lots to sell them to different types of buyers.

(iv) Assorting Middlemen build assortment of products for resale. There is usually a
difference between the product lines made by manufacturers and the assortment or
combinations desired by the users. Middlemen produce variety of goods from different
sources and delivers them in combinations, desired by customers.

(v) Product Promotion Middlemen also participate in some sales promotion activities.
such as demonstration. special display, contests etc. to increase the sale of products.

(vi) Negotiation Channels operate with manufacturers on the one hand and customer
on the other. They negotiate the price, quality. guarantee and other related matters with
customers. so that transfer of ownership is properly affected.

(vii) Risk Taking In the process of distribution of goods, the merchant middlemen take
title of the goods and thereby assume risks on account of price and demand
fluctuations, spoilage, destinations etc.

Question 7. Explain the major activities involved in the physical distribution at products.
Physical distribution covers all the activities required to physically move goods
from manufacturer to the customers. Important activities involved in the physical
distribution include transportation, warehousing, material handling and inventory control.

(i) Order Processing In a typical buyer-seller relationship order placement is the first
step. Products flow from the manufacturers to customers via channel members while
orders flow from customers to manufacturers. Therefore, a good speedy and accurate
system of order processing becomes a necessity.

(ii) Transportation Transportation is the means of carrying goods and raw materials
from the point of production to the point of sale. It is one of the major element in the
physical distribution of goods. It is important because unless the good are physically
made available. the sale can not be completed.

(iii) Warehousing Warehousing refers to the act of storing and assorting products in
order to create time utility in them. The basic purpose of warehousing activities is to
arrange placement of goods and provide facilities to store them. The need for
warehousing arises because there may be difference between the time, a product is
produced and the time it is required for consumption. Generally, the efficiency of a firm
in serving its customers will depend on, where these warehouses are located and where
are these to be delivered.

(iv) Inventory Control A very important decision in respect of inventory is deciding
about the level of inventory. Higher the level of inventory, higher will be the level of
service to customers but the cost of carrying the inventory will also be high because lot
of capital would be tied up in the stock. The decision regarding level of inventory
involves prediction about the demand for the product. A correct estimate of the demand
helps to hold inventory and cost level down to a minimum. The major factors
determining inventory levels include.

(a) Firm’s policy regarding the level of customer service. Higher the level of service,
greater will be the need to keep more inventories.
(b) Degree of accuracy of the sales forecast. In case more accurate estimates are
available, the need for keeping very high level of Inventory can be minimised.
(c) Responsiveness of the distribution system i.e., ability of the system to transmit
inventory needs back to the factory and get products to the market.
(d) Cost of inventory, which includes holding cost, such as cost of warehousing, tied up
capital etc and the manufacturing cost

Question 8. ‘Expenditure on advertising is a social waste’. Do you agree? Discuss.
The opponents of advertising say that the expenditure on advertising is a social
waste as it adds to the cost, multiplies the needs of the people and undermines social
values. The proponents, however argue that advertising is very useful as it increases
the reach, brings the per unit cost of production down and adds to the growth of the

Following are the points of criticism

(i) Adds to Cost The opponents of advertising argue that advertising unnecessarily
adds to the cost of product, which is ultimately passed on to the buyers in the form of
high prices. It is line that advertisement of a product cost lots of money but it helps to
increase the demand for the product as large number of potential buyers come to know
about the availability of the products, its features etc and are persuaded to buy it. This
increases the demand and therefore the production. As a result, the per unit cost of
production comes down as the total cost is divided by larger number of units.

(ii) Undermines Social Values Advertising undermines social values and promotes
materialism. It breeds discontentment among people as they come to know about new
products and feel dissatisfied with their present state of affairs. This criticism is not
entirely time. Advertisement in fact helps buyer by informing them about the new products
which may be Improvement over the existing products.

(iii) Confuses the Buyers Another criticism against advertisements is that so many
products are being advertised which makes similar claims that the buyer gets confused
as to which one is true and which are should be relied upon. e.g., there are so many
brands of soaps, shampoos. cars. TVs. cell phones etc which are advertised. The
supporters of advertisement. however argued that we are all rational human beings who
make our decisions for purchase of products on factors. such as price. style. size, etc.
Thus the buyers can clear their confusion by analysing the Information provided on the
advertisements and other sources before taking a decision to purchase a product.

(iv) Encourages Sale of Inferior Product Advertising does not distinguish between
superior and inferior products and persuade people to purchase even the inferiors
products. The desired level of quality will depend on the economic states and
preferences of the target customers. Advertisements sell products of a given quality and
the buyers will buy. if it suits their requirements.

(v) Some Advertisements are in Bad Taste Another criticism against advertising is
that some advertisements are in bad taste. They Show something which is not
approved by some people. Some advertisement spoil the relationship between
employer and employee. husband and wife etc.
From the above discussion, we have learnt that through advertisements are criticised
but still they have their own advantages. It is not a social waste. rather it adds value to
the social cause by giving a boost to production and generating employment.

Question 9. Distinguish between advertising and personal selling.
r Difference between AdvertiSing and Personal Selling

NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce

Application Type Questions

Question 1. As marketing manager of a big hotel located at an important tourist
 destination, what societal concerns would be faced by you and what steps would you
 plan to take care of these concerns? Discuss.

The societal marketing concept holds that the task of any organisation is to identify the
needs and wants of the target market and deliver the desired satisfaction in an effective
and efficient manner, so that the long term well-being of the consumers and the society
is taken care of. In case any business activity encourages pollution, deforestation,
storage of resources population explosion, then its benefits can not be justified. As
marketing manager of a big hotel located at an important tourist destination certain care
need to be taken regarding environment

(i) Proper drainage facility
(ii) In-built plant for re-cycling the waste
(iii) Solar geysers to be used
(iv) Rain water harvesting
(v) proper maintenance of greenery-lawns, parks, gardens
(vi) CNG based vehicles to be used to provide transport facility to the guests.

Question 2. Suppose you are the marketing Vice President of an insurance company,
 planning to design a new mediclaim policy for senior citizens. What information would
 you like 10 collect to perform this task and how will, you collect such information?
The following information about the senior citizens should be collected
(i) Age of the senior citizen
(ii) Their source of income
(iii) Medical background
(iv) Present working states

There are various sources of collecting the above information – personal visits,
questionnaires, medical reports from nursing homes, doctor clinics etc.

Question 3. What shopping products have been purchased by you/your family in the last
 six months? Make a list and specify what factors influenced the purchase of each of
 these products.
The following shopping goods were purchased by my family
(i) Clothes Price, fashion, occasion for which they were bought.
(ii) Refrigerator Brand, price, features, books, durability.
(iii) Shoes Size, price, brand, material used.
(iv) Furniture (study table) Design, quality, finishing, comfort level, cost.

Question 4. What information is generally placed on the package of a food product?
 Design a label for one of the food product of your choice.
The following information is normally placed. on the package of good product
(i) Name of the product
(ii) Brand name
(iii) Veg/Non-veg sign (green/red dot)
(iv) Price
(v) Manufacturing date and date of expiry
(vi) Ingredients
(vii) Net weight
(viii) Directions for use
(ix) FPO mark
(x) Preservatives used

Question 5. For buyers of consumer durable products, what ‘customer care services’
 would you plan as a manager of a firm marketing new brand of motorcycle. Discuss.
r For marketing motorcycles, the following customer care services can be
(i) Specified period warranties
{ii} Easy monthly instalments
(iii) Exchange offer
(iv) 0% finance scheme
(v) Free servicing

Case Problem

Nokia takes four-lane road to consumers.

NEW DELHI After having grabbed a king size 79% share of the 15,000 crore mobile
handset market in India, Nokia India has found a new way of connecting people.

The mobile handset manufacturer has embarked upon a brand new retail strategy that
is based on a classification of its consumers into four major groups that separates
people in terms of usage, income level and lifestyle.

The classification is based on an extensive survey- the Nokia Segmentation Study -that
was carried over two years involving 42,000 consumers from 16 countries. It studied the
impact lifestyle choices and attitudes have on the mobile devices consumers buy and
how they use them.

The strategy, which was announced globally in June last year, is being unfolded in India
now. While the nitty-gritty of the new strategy is still being worked out, it is likely that the
company would follow separate marketing strategies for the four different segments.

The advertising campaigns could be different for the segments.
Nokia’s entire product portfolio has now been re-aligned towards these four groups to
address the specific needs of each. The first of these segments Live, aimed a first time
users whose basic need is to stay in touch with voice as the main driver, would have
basic handsets low on features and price.

“These may be functional phones but the target group for these phones range from SEC
C (low socio-economic class) to SECA1 + (very high socio-economic class) markets”,
says Nokia India marketing head Devinder Kishore. The second segment Connect looks
at more evolved users who look for more functionality and features and connectivity.
Accordingly, phones in this segment would have GPRS, camera and music capabilities.

The next two categories, Achieve and Explore, are aimed at high-end users and have
Nokia’s top-end handsets. e.q., Achieve segment looks at enterprise users who need to
have business functionalities in their phones. Nokia’s new E-series has been put under
this segment with handsets having QWERTY keyboards and full Internet capabilities.
Aimed at high-end lifestyle users, Explore would be the most prominent segment for the
company in the coming years. Says Nokia India multimedia business director Vineet
Taneja, “This segment would see the most vibrant growth in the coming year. It will look
at five different areas-applications, imaging, mobile, TV, music and gaming. We are fast
developing (the ecosystem to support Ihese areas.”

Nokia acquired music solution and content provider LoudEye and GPS solution provider
Gate5. It is all slated to launch its most high-profile handset, which boasts of having a 5
mega pixel camera and GPS capabilities apart from iPod quality music, in February.
Says Taneja, “There is increasing demand for convergence and multiple functionalities
in high-end handsets. The N-series will try to address that”. Nokia feels that the new
platform strategy wherein different handsets are launched under a platform, like the NSeries,
will become a status and style statement and drive numbers.

Question 1. Identify the four market segments that Nokia plans to address as per the
 news report above.
Live, Connect, Achieve and Explore.

Question 2. What is the basis of classification of the market used by the company?
SEC Socio-Economic Class, usage and lifestyle

Question 3. What do you mean by realignment of product portfolio? Illustrate this from
 the case above.
It means that whatever product Nokia is planning to develop now, it will be
according to the needs of the consumers. The four different handsets are Live, Connect,
Achieve and Explore, being planned keeping the needs of four different types of users.

Question 4. Identify the points that can be highlighted in marketing campaigns for each
r The points that can be highlighted in marketing campaigns for each segment
can be
(i) Latest model
(ii) Reasonable price
(iii) Better performance
(iv) Advanced technology
(v) Consumer friendly

Question 5. What are the different considerations in the mind of consumers of each
 segment while purchasing mobile phones as given in the above case?
r Different considerations in the mind of each segment while purchasing mobile
phones are
(i) The first of these segments Live, aimed at first time users whose basic need is to
stay in touch with voice as the main driver So, here pnce of the phone is the main
(ii) The second segment connect looks at more evolved users who look for more
functionality and features and connectivity. So, here the features of the phone as well as
an economic price tag are considered.
(iii) The next two categories, Achieve and Explore, are aimed at high•end users. So
here the uniqueness of the handset and its business functionalities are the main points
considered by the consumer.

The document NCERT Solutions - Marketing Management Notes | Study Business Studies (BST) Class 12 - Commerce is a part of the Commerce Course Business Studies (BST) Class 12.
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