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» SMU ASSIGNMENT OM0011
SMU ASSIGNMENT OM0011
This is a research report on
SMU ASSIGNMENT OM0011
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Master of BUSINESS ADMINISTRATIOn
Second Semester (MB0011)
MB0011 Enterprise Resource Planning
SHILPI GUPTA Roll No: 521062880 MBA
This is to certify that the project report entitled “Enterprise Resource Planning” Submitted to Sikkim Manipal University Center code 1822, is an original work carried out by SHILPI GUPTA
SHILPI GUPTA Roll No: 521062880 MBA
Name: Registration Number: Learning Cente: Management Learning Center Code: Course: Subject: Semester: Module Number: Date of Submission at Learning Center: Marks Awarded:
SHILPI GUPTA 8A92509 INSOFT Institute of IT & 01822 MBA Enterprise resource Planning 3rd MB0011 20 Dec 2011
Directorate of Distance Learning Sikkim Manipal University II Floor, Syndicate Building Manipal – 576 104
Signature of Coordinator
Signature of Center
Signature of Evaluator
Course Subject Assignment
MBA – 3rd Semester Enterprise Resource Planning MB0011 – Set 1
Q.1 What is Marketing Information System? Explain its characteristics, benefits and information types.
Ans. A Marketing Information System can be defined as ‘a system in which marketing information is formally gathered, stored, analyzed and distributed to managers in accord with their informational needs on a regular basis’.
Set of procedures and practices employed in analyzing and assessing marketing information, gathered continuously from sources inside and outside of a firm. Timely marketing information provides basis for decisions such as product development or improvement, pricing, packaging, distribution, media selection, and promotion.
Characteristics of MIS
Philip Kotler defines MIS as “a system that consists of people, equipment and procedures to gather,
sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision
Its characteristics are as follows:
1. It is a planned system developed to facilitate smooth and continuous flow of information.
2. It provides pertinent information, collected from sources both internal and external to the company, for use as the basis of marketing decision making.
3. It provides right information at the right time to the right person.
A well designed MIS serves as a company’s nerve centre, continuously monitoring the market
environment both inside and outside the organization. In the process, it collects lot of data and stores
in the form of a database which is maintained in an organized manner. Marketers classify and
analyze this data from the database as needed.
Benefits of MIS(Marketing Information System)
Various benefits of having a MIS and resultant flow of marketing information are given below:
1. It allows marketing managers to carry out their analysis, planning implementation and control
responsibilities more effectively.
2. It ensures effective tapping of marketing opportunities and enables the company to develop
effective safeguard against emerging marketing threats.
3. It provides marketing intelligence to the firm and helps in early spotting of changing trends.
4. It helps the firm adapt its products and services to the needs and tastes of the customers.
5. By providing quality marketing information to the decision maker, MIS helps in improving the
quality of decision making.
Types of Marketing Information
A Marketing Information System supplies three types of information.
1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly, quarterly,
or annual interval. This includes data such as sales, Market Share, sales call reports, inventory levels, payables, and receivables etc. which are made available regularly. Information on customer awareness of company’s brands, advertising campaigns and similar data on close competitors can also be provided.
2. Monitoring Information is the data obtained from regular scanning of certain sources such as trade journals and other publications. Here relevant data from external environment is captured to monitor changes and trends related to marketing situation. Data about competitors can also
be part of this category. Some of these data can be purchased at a price from commercial sources such as Market Research agencies or from Government sources.
3. Problem related or customized information is developed in response to some specific requirement related to a marketing problem or any particular data requested by a manager. Primary Data or Secondary Data (or both) are collected through survey Research in response to specific need. For example, if the company has developed a new product, the marketing manager may want to find out the opinion of the target customers before launching the product in the market. Such data is generated by conducting a market research study with adequate sample size, and the findings obtained are used to help decide whether the product is accepted and can be launched.
Q.2 a. Examine how a firm’s macro environment operates.
b. Mention the key points in Psychoanalytic model of consumer behavior.
Ans. The term micro-environment denotes those elements over which the marketing firm has control or which it can use in order to gain information that will better help it in its marketing operations. In other words, these are elements that can be manipulated, or used to glean information, in order to provide fuller satisfaction to the company’s customers. The objective of marketing philosophy is to make profits through satisfying customers. This is accomplished through the manipulation of the variables over which a company has control in such a way as to optimise this objective. The variables are what Neil Borden has termed ‘the marketing mix’ which is a combination of all the ‘ingredients’ in a ‘recipe’ that is designed to prove most attractive to customers. In this case the ingredients are individual elements that marketing can manipulate into the most appropriate mix. E Jerome McCarthy further dubbed the variables that the company can control in order to reach its target market the ‘four Ps’. Each of these is discussed in detail in later chapters, but a brief discussion now follows upon each of these elements of the marketing mix together with an explanation of how they fit into the overall notion of marketing.
A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: Political Economic Social Technological
The acronym PEST (or sometimes rearranged as “STEP”) is used to describe a framework for the analysis of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:
Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include: • • • • • tax policy employment laws environmental regulations trade restrictions and tariffs political stability
Economic factors affect the purchasing power of potential customers and the firm’s cost of capital. The following are examples of factors in the macroeconomy: • • • • economic growth interest rates exchange rates inflation rate
Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include : • • • • • health consciousness population growth rate age distribution career attitudes emphasis on safety
Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include: • • • • R&D activity automation technology incentives rate of technological change
External Opportunities and Threats
The PEST factors combined with external micro environmental factors can be classified as opportunities and threats in a SWOT analysis.
The Psychoanalytical Model: The psychoanalytical model draws from Freudian Psychology.
According to this model, the individual consumer has a complex set of deep-seated motives which drive him towards certain buying decisions. The buyer has a private world with all his hidden fears, suppressed desires and totally subjective longings. His buying action can be influenced by appealing to these desires and longings. The psychoanalytical theory is attributed to the work of eminent psychologist Sigmund Freud. Freud introduced personality as a motivating force in human behavior.
According to this theory, the mental framework of a human being is composed of three elements, namely,
1. The id or the instinctive, pleasure seeking element. It is the reservoir of the instinctive impulses that a man is born with and whose processes are entirely subconscious. It includes the aggressive, destructive and sexual impulses of man.
2. The superego or the internal filter that presents to the individual the behavioral expectations of society. It develops out of the id, dominates the ego and represents the inhibitions of instinct which is characteristic of man. It represents the moral and ethical elements, the conscience.
3. The ego or the control device that maintains a balance between the id and the superego. It is the most superficial portion of the id. It is modified by the influence of the outside world. Its processes are entirely conscious because it is concerned with the perception of the outside world.
The basic theme of the theory is the belief that a person is unable to satisfy all his needs within the bounds of society. Consequently, such unsatisfied needs create tension within an individual which have to be repressed. Such repressed tension is always said to exist in the subconscious and continues to influence consumer behavior.
4. The Sociological Model: According to the sociological model, the individual buyer is influenced by society or intimate groups as well as social classes. His buying decisions are not totally governed by utility? He has a desire to emulate, follow and fit in with his immediate environment.
5. The Nicosia Model: In recent years, some efforts have been made by marketing scholars to build buyer behavior models totally from the marketing man’s standpoint. The Nicosia model and the Howard and Sheth model are two important models in this category. Both of them belong to the category called the systems model, where the human being is analyzed as a system with stimuli as the input to the system and behavior as the output of the system. Francesco Nicosia, an expert in consumer motivation and behavior put forward his model of buyer behavior in 1966.
The model tries to establish the linkages between a firm and its consumer – how the activities of the firm influence the consumer and result in his decision to buy. The messages from the firm first influence the predisposition of the consumer towards the product. Depending on the situation, he develops a certain attitude towards the product. It may lead to a search for the product or an evaluation of the product. If these steps have a positive impact on him, it may result in a decision to buy. This is the sum and substance of the ‘activity explanations’ in the Nicosia Model. The
Nicosia Model groups these activities into four basic fields. Field one has two subfields the firm’s attributes and the consumer’s attributes. An advertising message from the firm reaches the consumer’s attributes. Depending on the way the message is received by the consumer, a certain attribute may develop, and this becomes the input for Field Two. Field Two is the area of search and evaluation of the advertised product and other alternatives. If this process results in a motivation to buy, it becomes the input for Field Three. Field Three consists of the act of purchase. And Field Four consists of the use of the purchased item.
Q.3 Explain the key roles played and various steps involved in organizational buying.
Point 1 – Introduction.
The need for an understanding of the organizational buying process has grown in recent years due to the many competitive challenges presented in business-to-business markets. Since 1980 there have been a number ofkey changes in this area, including the growth of outsourcing, the increasing power enjoyed by purchasing departments and the importance given to developing partnerships with suppliers.
Point 2 – The organizational buying behavior process.
The organizational buying behavior process is well documented with many models depicting the various phases, the members involved, and the decisions made in each phase. The basic five phase model can be extended to eight; purchase initiation; evaluations criteria formation; information search; supplier definition for RFQ; evaluation of quotations; negotiations; suppliers choice; and choice implementation (Matbuy, 1986).
Point 3 – The buying centre. The buying centre consists of those people in the organizational who are involved directly or indirectly in the buying process, i.e. the user, buyer influencer, decider and gatekeeper to who the role of ‘initiator’ has also been added. The buyers in the process are subject to a wide variety and complexity of buying motives and rules of selection. The Matbuy model encourages marketers to focus their efforts on who is making what decisions based on which criteria.
Point 4 – Risk and uncertainty –
The driving forces of organizational buying behavior. This is concerned with the role of risk or uncertainty on buying behavior. The level of risk depends upon the characteristics of the buying situation faced. The supplier can influence the degree of perceived uncertainty by the buyer and cause certain desired behavioral reactions by the use of information and the implementation of certain
actions. The risks perceived by the customer can result from a combination of the characteristics of various factors: the transaction involved, the relationship with the supplier, and his position vis-a-vis the supply market.
Point 5 – Factors influencing organizational buying behavior.
Three key factors are shown to influence organizational buying behavior, these are, types of buying situations and situational factors, geographical and cultural factors and time factors.
Point 6 – Purchasing Strategy.
The purchasing function is of great importance because its actions will impact directly on the organization’s profitability. Purchasing strategy aims to evaluate and classify the various items purchased in order to be able to choose and manage suppliers accordingly. Classification is along two dimensions: importance of items purchased and characteristics of the supply market. Actions can be taken to influence the supply market. Based on the type of items purchased and on its position in the buying matrix, a company will develop different relationships with suppliers depending upon the number of suppliers, the supplier’s share, characteristics of selected suppliers, and the nature of customer-supplier relationships. The degree of centralization of buying activities and the missions and status of the buying function can help support purchasing strategy. The company will adapt its procedures to the type of items purchased which in turn will influence relationships with suppliers.
Point 7 – The future.
Two activities which will be crucial to the future development of organizational buying behavior will be information technology and production technologies.
Point 8 – Conclusion.
Organizational buying behavior is a very complex area, however, an understanding of the key factors are fundamental to marketing strategy and thus an organization’s ability to compete effectively in the market place.
Q.4 Explain the different marketing philosophies and its approach.
Ans. Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.
According to the American Marketing Association, “Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goods”
There are six competing philosophies under which organizations conduct marketing activities “the production concept, product concept, selling concept, marketing concept, customer concept; and societal concept.
1) The Production Concept: The production concept is one of the oldest concepts in business. The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs and mass distribution.
They assume that consumers are primarily interested in products availability and low prices. This philosophy makes sense in developing countries, where consumers are more interested in obtaining the product than its features. It is also used when a company wants to expand the market.
2. The product Concept – Product concept holds that consumer will favour these products that offer the most quality, performance and innovative features. Managers in these organizations focus on making superior products and improving them over time. They assume that buyers admire well-made products and can evaluate quality and performance product oriented companies often trust that their engineers can design exceptional products. They get little or no customer input, and very often they will not even examine competitor’s products.
3. The Selling Concept: The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products. The organization most, therefore, undertakes an aggressive selling and promotion effort. This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate more buying. The selling concept is epitomized by the thinking that “The purpose of marketing is to sell more stuff to more people for more money in order to make more profit
Most firms practice the selling concept when they have over capacity. Their aim is to sell what they make rather then make what market wants.
4. The Marketing Concept: The marketing concepts hold that the key to achieving its organizational goals consists of the company being more effective then competitors in creating, delivering and communicating superior customer value to its chosen target markets.
The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. There is a contrast between selling and marketing concepts:
“Selling focuses on the needs of the seller; marketing on the needs of the buyer”.
Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the ideas of satisfying the needs of the customers by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.
5. The customer Concept: Under customer concept, companies shape separate offers, services and messages to individual customers. These companies collect information on each customer’s past transactions, demographics, psychographics and media and distribution preferences. They hope to achieve profitable growth through capturing a larger share of each customer’s expenditures by building high customer loyalty and focusing on customer lifetime value.
The ability of a company to deal with customers are at a time become practical as a result of advances in factory customization, computers, the internet and database marketing software.
6. The Societal Marketing Concept: The societal marketing concept holds that the organization’s goal is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well being.
The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often-conflicting criteria of company profits, consumer want satisfaction and public interest.
Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales and increase press coverage. They believe that consumers will increasingly look for signs of good corporate citizenship that go beyond supplying rational and emotional benefits.
Q. 5 What are the various stages involved in decision process when a consumer is buying new product? Also, explain the adoption process.
Ans. Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity…discussed next.
The 6 stages are: Problem Recognition(awareness of need)–difference between the desired state and the actual condition. Deficit in assortment of products. Hunger–Food. Hunger stimulates your need to eat. Can be stimulated by the marketer through product information–did not know you were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.
Information search– Internal search, memory. External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc.
A successful information search leaves a buyer with possible alternatives, the evoked set.
Hungry, want to go out and eat, evoked set is chinese food indian food burger king klondike kates etc Evaluation of Alternatives–need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, indian gets highest rank etc.
If not satisfied with your choice then return to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by “framing” alternatives. Purchase decision–Choose buying alternative, includes product, package, store, method of purchase etc. Purchase–May differ from decision, time lapse between 4 & 5, product availability. Post-Purchase Evaluation–outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc. After eating an indian meal, may think that really you wanted a chinese meal instead.
Adoption is an individualâ€™s decision to become a regular user of a product. How do potential customers learn about new products, try them, and adopt or reject them? The consumer adoption process is later followed by the consumer loyalty process, which is the concern of the established producer. Years ago, new product marketers used a mass market approach to launch products. This approach had two main drawbacks: It called for heavy marketing expenditures, and it involved many wasted exposures. These drawbacks led to a second approach, heavy user target marketing. This approach makes sense, provided that heavy users are identifiable and are
early adopters. However, even within the heavy user group, many heavy users are loyal to existing brands. New product marketers now aim at consumers who are early adopters.
The theory of innovation diffusion and consumer adoption helps marketers identify early adopters.
An innovation is any good, service, or idea that is perceived by someone as new. The idea may have a long History, but it is an innovation to the person who sees it as new. Innovations take time to spread through the social system. The Innovation diffusion process is defined as â€œthe spread of a new idea from its source of invention or creation to its ultimate users or adopters. The consumer adoption process is the mental process through which an individual passes from first hearing about an innovation to final adoption.
Adopters of new products have been observed to move through five stages:
1. Awareness : The consumer becomes aware of the innovation but lacks information about it. 2. Interest : The consumer is stimulated to seek information about the innovation. 3. Evaluation: The consumer considers whether to try the innovation 4. Trial: The consumer tries the innovation to improve his or her estimate of its value. 5. Adoption : The consumer decides to make full and regular use of the innovation.
Q. 6 Explain briefly the marketing mix elements for an automobile company giving sufficient examples.
Ans. Marketing mix is the combination of elements that you will use to market your product. There are four elements: Product, Place, Price and Promotion. They are called the four Ps of the marketing mix.
The objectives of this lesson about marketing mix is to give you:
-The tools you need for establishing your detailed marketing plan and forecasting your sales.
1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching
You have gotten a rough idea about the market situation and the possible positioning of your product. Of course, it’s far to be sufficient. Now, you must write your detailed planning. It means that brainstorming is ended and that you have to go to the specifics in examining and checking all the hypothesis you had made in the preceding chapters. You will use the marketing mix.
Some people think that the four Ps are old fashionable and propose a new paradigm: The four Cs! Product becomes customer needs; Place becomes convenience, price is replaced by cost to the user, promotion becomes communication. It looks like a joke but the Cs is more customeroriented.
A good product makes its marketing by itself because it gives benefits to the customer. We can expect that you have right now a clear idea about the benefits your product can offer.
Suppose now that the competitors products offer the same benefits, same quality, same price. You have then to differentiate your product with design, features, packaging, services, warranties, return and so on. In general, differentiation is mainly related to:
-The design: it can be a decisive advantage but it changes with fads. For example, a fun board must offer a good and fashionable design adapted to young people.
-The packaging: It must provides a better appearance and a convenient use. In food business, products often differ only by packaging.
-The safety: It does not concern fun board but it matters very much for products used by kids.
-The “green”: A friendly product to environment gets an advantage among some segments.
In business to business and for expensive items, the best mean of differentiation are warranties, return policy, maintenance service, time payments and financial and insurance services linked to the product
A crucial decision in any marketing mix is to correctly identify the distribution channels. The question ” how to reach the customer” must always be in your mind.
-Definition: The place is where you can expect to find your customer and consequently, where the sale is realized. Knowing this place, you have to look for a distribution channel in order to reach your customer.
In fact, instead of “place” it would be better to use the word “distribution” but the MBA lingo uses “place” to memorize the 4 Ps of the marketing mix!
Price means the pricing strategy you will use. You have already fixed, as an hypothesis a customer price fitted to your customer profile but you will have now to bargain it with the wholesalers and retailers. Do not be foolish: They know better the market than you and you have to listen their advices.
Advertising, public relations and so on are included in promotion and consequently in the 4Ps. Sometimes, packaging becomes a fifth P. As promotion is closely linked to the sales, I will mention here the most common features about the sale strategy.
-Definition: The function of promotion is to affect the customer behavior in order to close a sale.
Of course, it must be consistent with the buying process described in the consumer analysis.
Promotion includes mainly three topics: advertisement, public relations, and sales promotions.
It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice about three important notions:
Reach is the percentage of the target market which is affected by your advertisement. For example, if you advertise on radio you must know how many people belonging to your segment can be affected.
Frequency is the number of time a person is exposed to your message. It is said that a person must be exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating point. You have to evaluate it before any advertisement campaign.
Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest, create desire and finally require action that is to say close the sale.
There are some magical words that you can use in any message:
Public relations are more subtle and rely mainly on your own personality. For example, you can deliver public speeches on subjects such as economics, geo-economics, futurology to several organizations (civic groups, political groups, fraternal organizations, professional associations)
Sales bring in the money. Salesmen are directly exposed to the pressure of finding prospects, making deals, beating competition and bringing money.
Course Subject Assignment
MBA – 3rd Semester Enterprise Resource Planning MB0011 – Set 2
Q.1 What is product mix? What are the strategies involved in product mix and product line?
The product mix of a business includes product lines and individual products. A product line is a set of products in the product mix that are closely interrelated either because they serve in a similar way, sold to the similar client groups or have same price range. A product is a unique component in the product line that is different in size, cost, look, or some other attribute. Product choices at these levels are normally of 2 sorts: Those that have variety and range of the product line and those that are modified in the product mix occur over time.
Product Mix is the total number of product choices a company offers their customer. If you make muffins, and you offer Blueberry and Cranberry, your product mix has 2 choices. The product mix grows as the number of features on the product grows. A true evaluation of the mix can ONLY be done with a feature/option level analysis. That is because customers buy features and
options. The strength of the mix is based on how well the feature choices are capturing sales and market demand.
Strategies involved in Product Mix and Product Line
When the product is a part of product-mix, there are five kinds of strategies involved:
I. Product Line Pricing In product line pricing, management must decide on the price steps to set between various products in a line. This should take into account the differences in products features, customer evaluations, competitor’s prices etc.
II. Optional-Product Pricing The pricing of optional or accessory products along with the main product. For example, a car buyer may choose to order a CD changer as an optional product.
III. Captive-Product Pricing Setting a price for products which must be used along with the main product. For example, HP makes printers and cartridges. It makes very low margins on its printer (the main product) but very high margins on cartridges .
IV. By-Product Pricing Setting a price for the by-products. Like in processing meats, petroleum products, chemicals etc. Using by-product pricing, the manufacturer will find a market for the byproducts and should accept any price that covers more than the cost of storing and delivering them. For example, at Alba, water is obtained as a by-product while manufacturing aluminum. This water can now be sold to the market.
V. Product Bundle Pricing Combining several products and offering the bundle at a reduced price. For example, fast food restaurants bundle a burger, French fires and soft drink at a combo price.
Q.2 What is a distribution channel? Explain the factors to be considered while setting up a distribution channel Ans. Distribution channel
Definition: Path or ‘pipeline‘ through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A distribution channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each
intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer. Also called channel of distribution or marketing channel.
Channel of Distributions
A channel of distribution or trade channel is defined as the path or route along which goods move from producers or manufacturers to ultimate consumers or industrial users. In other words, it is a distribution network through which producer puts his products in the market and passes it to the actual users. This channel consists of :- producers, consumers or users and the various middlemen like wholesalers, selling agents and retailers(dealers) who intervene between the producers and consumers. Therefore, the channel serves to bridge the gap between the point of production and the point of consumption thereby creating time, place and possession utilities.
A channel of distribution consists of three types of flows:• • • Downward flow of goods from producers to consumers Upward flow of cash payments for goods from consumers to producers Flow of marketing information in both downward and upward direction i.e. Flow of information on new products, new uses of existing products,etc from producers to consumers. And flow of information in the form of feedback on the wants,suggestions,complaints,etc from consumers/users to producers.
An entrepreneur has a number of alternative channels available to him for distributing his products. These channels vary in the number and types of middlemen involved. Some channels are short and directly link producers with customers. Whereas other channels are long and indirectly link the two through one or more middlemen.
These channels of distribution are broadly divided into four types:-
Producer-Customer:- This is the simplest and shortest channel in which no middlemen is involved and producers directly sell their products to the consumers. It is fast and economical channel of distribution. Under it, the producer or entrepreneur performs all the marketing activities himself and has full control over distribution. A producer may sell directly to consumers through door-to-door salesmen, direct mail or through his own retail stores. Big firms adopt this channel to cut distribution costs and to sell industrial products of high value. Small producers and producers of perishable commodities also sell directly to local consumers. Producer-Retailer-Customer:- This channel of distribution involves only one middlemen called ‘retailer’. Under it, the producer sells his product to big retailers (or retailers who buy goods in large quantities) who in turn sell to the ultimate consumers.This channel
relieves the manufacturer from burden of selling the goods himself and at the same time gives him control over the process of distribution. This is often suited for distribution of consumer durables and products of high value. Producer-Wholesaler-Retailer-Customer:- This is the most common and traditional channel of distribution. Under it, two middlemen i.e. wholesalers and retailers are involved. Here, the producer sells his product to wholesalers, who in turn sell it to retailers. And retailers finally sell the product to the ultimate consumers. This channel is suitable for the producers having limited finance, narrow product line and who needed expert services and promotional support of wholesalers. This is mostly used for the products with widely scattered market. Producer-Agent-Wholesaler-Retailer-Customer:- This is the longest channel of distribution in which three middlemen are involved. This is used when the producer wants to be fully relieved of the problem of distribution and thus hands over his entire output to the selling agents. The agents distribute the product among a few wholesalers. Each wholesaler distribute the product among a number of retailers who finally sell it to the ultimate consumers. This channel is suitable for wider distribution of various industrial products.
An entrepreneur has to choose a suitable channel of distribution for his product such that the channel chosen is flexible, effective and consistent with the declared marketing policies and programmers of the firm. While selecting a distribution channel, the entrepreneur should compare the costs, sales volume and profits expected from alternative channels of distribution and take into account the following factors:-
- Product Consideration:- The type and the nature of products manufactured is one of the important elements in choosing the distribution channel. The major product related factors are:• • • • Products of low unit value and of common use are generally sold through middlemen. Whereas, expensive consumer goods and industrial products are sold directly by the producer himself. Perishable products; products subjected to frequent changes in fashion or style as well as heavy and bulky products follow relatively shorter routes and are generally distributed directly to minimize costs. Industrial products requiring demonstration, installation and after sale service are often sold directly to the consumers. While the consumer products of technical nature are generally sold through retailers. An entrepreneur producing a wide range of products may find it economical to set up his own retail outlets and sell directly to the consumers. On the other hand, firms producing a narrow range of products may their products distribute through wholesalers and retailers. A new product needs greater promotional efforts in the initial stages and hence few middlemen may be required.
-Market Consideration:- Another important factor influencing the choice of distribution channel is the nature of the target market. Some of the important features in this respect are:-
If the market for the product is meant for industrial users, the channel of distribution will not need any middlemen because they buy the product in large quantities. short one and may as they buy in a large quantity. While in the case of the goods meant for domestic consumers, middlemen may have to be involved.
If the number of prospective customers is small or the market for the product is geographically located in a limited area, direct selling is more suitable. While in case of a large number of potential customers, use of middlemen becomes necessary. If the customers place order for the product in big lots, direct selling is preferred. But, if the product is sold in small quantities, middlemen are used to distribute such products. Other Considerations:- There are several other factors that an entrepreneur must take into account while choosing a distribution channel. Some of these are as follows:• • • A new business firm may need to involve one or more middlemen in order to promote its product, while a well established firm with a good market standing may sell its product directly to the consumers. A small firm which cannot invest in setting up its own distribution network has to depend on middlemen for selling its product. On the other hand, a large firm can establish its own retail outlets. The distribution costs of each channel is also an important factor because it affects the price of the final product. Generally, a less expensive channel is preferred. But sometimes, a channel which is more convenient to the customers is preferred even if it is more expensive. If the demand for the product is high, more number of channels may be used to profitably distribute the product to maximum number of customers. But, if the demand is low only a few channels would be sufficient. The nature and the type of the middlemen required by the firm and its availability also affects the choice of the distribution channel. A company prefers a middlemen who can maximize the volume of sales of their product and also offers other services like storage, promotion as well as after sale services. When the desired type of middlemen are not available, the manufacturer will have to establish his own distribution network.
All these factors or considerations affecting the choice of a distribution channel are inter-related and interdependent. Hence, an entrepreneur must choose the most efficient and cost effective channel of distribution by taking into account all these factors as a whole in the light of the prevailing economic conditions. Such a decision is very important for a business to sustain long term profitability.
Q.3 Discuss the communication development process with examples.
Ans. Everyone communicates. Some better than others. Understanding the communication process can help improve communication at home, at work and with friends.
Communication seems so natural and one generally assumes that there is no need of working on it. It is so untrue. Most fights or arguments with spouses, children or friends are the result of bad communication. How much of an argument is caused by ineffective communication? How much of what is said is taken in the wrong context? How much of the meaning was changed or lost?
How much was totally misunderstood or came out wrong? All of those are examples of broken communication. Development Communication designs communication strategies for development projects and reform programs, economic and sector work, Country Assistance Strategies and Poverty Reduction Strategies. Building on the communication audit, which provides an understanding of the social, cultural and political nuances and assessment of local communication capacity, the Development Communication division works with task teams and government counterparts to prepare communication strategies with the objective of promoting constituencies for support and putting in place a transparent and inclusive development process.
• • • • • • •
segmenting audiences based on their positions, framing the issues, preparing appropriate messages to mobilize support and address the right concerns, finding the most effective mix of channels to reach audiences, creating communication capacity on the ground to implement the process, building consensus, and designing mechanisms for supervision and evaluation.
Development Communication is creating a repository of knowledge based on its own experience and international best practices in development communications. This intellectual base of Development Communication operational and capacity building work is continually updated and customized to meet country-specific needs. The division also maintains a database of communication professionals around the world and their market costs so their expertise can be harnessed when needed.
Q.4. Select any mobile handset and mobile company and then evaluate its positioning strengths or weakness in terms of attributes, benefits, values, brand name and brand equity.
Strength or Weakness of HTC Mobile Handset
HTC is one of the leading manufacturers of PDAs and smart phones around the world. It is one of the fastest growing companies in the world and maximizing its market share rapidly. SWOT Analysis
SWOT is the tool to see that where organization stands, which areas required improvement, which areas required serious consideration, which would be the source of growth, which things need avoidance and so on. The SWOT of HTC will help to understand the position of HTC in the market. Strengths
It is the leading maker of PDAs smart phones in the world. It is establishing in the world rapidly and attracting more and more customers from all around the world.
It has successfully recognized its brand name and has got the good image about the product quality. Its products are considered as reliable products and its gaining more and more success rapidly.
The research and development in HTC has been given more importance as it is the way to know what customers want.
There is the strong set up of research and development in HTC.
The portfolio of HTC is quite wide it has made 42 smart phones product up till now.
The customer base of HTC is also very wide as it caters the customer national and international both and the no. of customers also increasing as the time passes. Weaknesses
As its weakness, HTC is not a very much recognized brand in the market. Its competitors, which are Nokia, Blackberry, Apple etc. are way much popular and have acquired a big share of market.
Another weakness is that, they got a very small range of cell phones models as compared to their competitor, Nokia, which has got a huge variety of smart phones, from cheapest to most expensive one. Opportunities
HTC is providing Touch Screen Cell Phones, which are very much in demand these days, most of the people, who use expensive cell phones, goes for Touch Screen. On the other side, Since HTC collaborated with Google and launched their cell phones with Google Android OS install in it, their market also got increased. It is also said that, because of the name of Google, HTC got popularity. Google popularity plays a huge role in the success of HTC.
3G technology has been launched all over the world, and is getting launched in other countries as well. Since HTC cell phones have got 3G technology support, so it is an opportunity for HTC company that where ever the 3G technology launches, HTC’s cell phones demands would raise their. Threats
The major threat to HTC, or any other Smartphone company, is a very much popular and highly in-demand brand, Apple iPhone. It is a big hindrance in the demand of HTC cell phones.
Apart from that, the financial crunch could also be the threat for the company. That’s because HTC smart phones are expensive and are not affordable for many of the smart phones users. On the other side Nokia’s smart phones are way cheaper, and are providing the same characteristics, which a Smartphone should have. So lot of people prefers Nokia on HTC.
Q. 5 What is retailing? Explain the functions and different types of retailing with its key features.
Retailing involves selling products and services to consumers for their personal or family use. Department stores, like Burdines and Macy’s, discount stores like Wal-Mart and K-Mart, and specialty stores like The Gap, Zales Jewelers and Toys ‘R’ Us, are all examples of retail stores. Service providers, like dentists, hotels and hair salons, and on-line stores, like Amazon.com, are also retailers.
Retailers play a significant role as a conduit between manufacturers, wholesalers, suppliers and consumers. In this context, they perform various functions like sorting, breaking bulk, holding stock, as a channel of communication, storage, advertising and certain additional services.
Manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few buyers to redu7ce costs. Final consumers, in contrast, prefer a large variety of goods and services to choose from and usually buy them in small quantities. Retailers are able to balance the demands of both sides, by collection an assortment of goods from different sources, buying them in sufficiently large quantities and selling them to consumers in small units.
The above process is referred to as the sorting process. Through this process, retailers undertake activities and perform functions that add to the value of the products and services sold to the consumer. Supermarkets in the US offer, on and average, 15,000 different items from 500 companies. Customers are able to choose from a wide range of designs, sizes and brands from just one location. If each manufacturer had a separate store for its own products, customers would have to visit several stores to complete their shopping. While all retailers offer an assortment, they specialize in types of assortment offered and the market to which the offering is made. Westside provides clothing and accessories, while a chain like Nilgiris specializes in food and bakery items. Shoppers’ Stop targets the elite urban class, while Pantaloons is targeted at the middle class.
Breaking bulk is another function performed by retailing. The word retailing is derived from the French word retailer, meaning ‘to cut a piece off’. To reduce transportation costs, manufacturers and wholesalers typically ship large cartons of the product, which are then tailored by the retailers into smaller quantities to meet individual consumption needs.
Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory that allows for instant availability of the product to the consumers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of products at home as they know that this can be replenished by the retailer and can save on inventory carrying costs.
Retailers ease the change in ownership of merchandise by providing services that make it convenient to buy and use products. Providing product guarantees, after-sales service and dealing with consumer complaints are some of the services that add value to the actual product at the retailers’ end. Retailers also offer credit and hire-purchase facilities to the customers to enable them to buy a product now and pay for it later. Retailers fill orders, promptly process, deliver and install products. Salespeople are also employed by retailers to answer queries and provide additional information about the displayed products. The display itself allows the consumer to see and test products before actual purchase. Retail essentially completes transactions with customers.
Channel of Communication
Retailers also act as the channel of communication and information between the wholesalers or suppliers and the consumers. From advertisements, salespeople and display, shoppers learn about the characteristics and features of a product or services offered. Manufacturers, in their turn, learn of sales forecasts, delivery delays, and customer complaints. The manufacturer can then modify defective or unsatisfactory merchandise and services.
Transport and Advertising Functions
Small manufacturers can use retailers to provide assistance with transport, storage, advertising and pre-payment of merchandise. This also works the other way round in case the number of retailers is small. The number of functions performed by a particular retailer has a direct relation to the percentage and volume of sales needed to cover both their costs and profits.
Q. 6 a. What is CRM? What are its objectives? (2 marks)
b. Write a short note on Brand development. (8 marks)
Ans. CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers’ needs and behaviors in order to develop stronger relationships with them. There are many technological components to CRM, but thinking about CRM in primarily
technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.
CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers.
Objectives of CRM
CRM, the technology, along with human resources of the company, enables the company to analyze the behavior of customers and their value. The main areas of focus are as the name suggests: customer , relationship , and the management of relationship and the main objectives to implement CRM in the business strategy are: To simplify marketing and sales process To make call centers more efficient To provide better customer service To discover new customers and increase customer revenue To cross sell products more effectively
The CRM processes should fully support the basic steps of customer life cycle . The basic steps are: Attracting present and new customers Acquiring new customers Serving the customers Finally, retaining the customers
A plan to improve the performance of a particular product or service. For example, as part of brand development a firm may initiate a new advertising campaign that includes free samples.
Total Quality Management
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