CPU Business and Information Technology College

School of Graduate Studies

Department of Business Administration

Marketing management
individual assignment

Prepared by: - Getahun Mulat ID EMBA/1295/2014

Submitted to: - Saleamlak Mola (Ph.D.)

Q-1 Define marketing and outline and discuss the steps in the marketing process

What is marketing?
Marketing is managing profitable customer relationships. The two fold goal is to attract new
customers through value and to keep and grow customers through continual satisfaction.
Marketing can be both traditional (advertising in newspapers and magazines, and on
television and radio), but in recent years they have adapted new marketing approaches which
utilize newer technology such as social networking, smartphone apps and imaginative
websites. Successful organizations all have a strong market orientation, which means they are
focused on their customers and competitors. Understanding and satisfying the needs of
customers in well-defined target markets are important for high levels of customer satisfaction.
There for we can define marketing as the activity, set of institutions, and processes for creating,
communicating, delivering and exchanging offers that have value for customers, clients,
partners and society at large

The marketing process

Step 1 Understanding The Marketplace and Customer Needs and Wants

It is important to understand customer needs, wants, and demands to build want- satisfying
market offerings and building value-laden customer relationships. This increases long-term
customer equity for the firm.
Needs – States of felt deprivation
They include the physical need for necessities like food, clothing, shelter, warmth, safety, and
individual needs for knowledge and self-expression. The marketers cannot create these needs as
they are a basic part of human markup.
Wants – The forms of human needs take as shaped by culture and individual personality.Wants
are shaped by one’s society and are described in terms of objects that will satisfy needs.
For example, an American in Dhaka needs food but wants mcdonald’s.
Demands – Human wants that are backed by buying power.
Given their wants and resources, people demand products with benefits that add to the most
value and satisfaction.
Step 2 Designing A Customer-Driven Marketing Strategy

Focus areas for designing a marketing strategy:

 Selecting customers to serve -defining the target market
 Deciding how to serve customers in the best way – choosing a value proposition
Selecting customers to serve:
The company first decides who it will serve and divides the market into segments of the
customer. Then it goes after specific sections of the market or its target market.
They target customers based on their level, timing, and nature of demand.
Choosing a value proposition
They decide how it will serve their customer. That is how it will differentiate and position itself
in the market. A brand’s value proposition is the set of values and benefits that it promises to
deliver its customers.
Companies need to design strong value propositions to give them the greatest advantage in their
target markets.
5 alternative concepts for designing a customer-driven marketing strategy are;

Production concept: Consumers will favor products that are available and highly affordable.
Management should focus on improving production and distribution efficiency.
Product concept: Consumers will favor products that offer the most quality, performance, and
innovative features. Focus on making continuous product improvements.
Selling concept: Consumers will not buy enough of the firm’s products unless it undertakes a
large-scale selling and promotion effort. It is typically practiced with unsought goods that the
company needs to sell and generally results in aggressive selling practices. The company sells
what it makes rather than what the market wants.
Marketing concept: Organizational goals are achieved by knowing the target markets’ needs and
wants and delivering the desired satisfactions better than competitors do.
Societal concept: Marketing strategy should deliver value to customers in such a way that
improves both customers as wells as society’s wellbeing and long-run interests.

Step 3 Constructing an integrated marketing plan that delivers superior value

The company’s marketing strategy outlines which customers the company will serve and how it
will create value. Then the marketer develops integrated marketing plans that will the intended
value to target customers.
It consists of the firm’s marketing mix (4Ps), the set of marketing tools the firm uses to
implement its marketing strategy.
The marketing program builds customer relationships by transforming the marketing strategy
into action.
For this, it needs to blend all of these marketing tools into a comprehensive, integrated marketing
program that communicates and delivers the customers’ expected value.

Step 4: Build Profitable Relationships

Customer relationship management is the overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction.
Customer relationship management aims to produce high customer equity, the total combined
customer lifetime values of all of its customers.
The key to building lasting relationships is the creation of superior customer value and
satisfaction.
Companies today want to acquire profitable relationships and build relationships that will
increase their share of the customer portion of the customers purchasing that a company gets in
its product categories.
Step 5: Capturing Value from Customers
Customer relationship management’s ultimate aim is to produce high Customer equity – total
combined lifetime values of all of the company’s current and potential customers.
The more loyal to the company’s profitable customers, the higher are the customer equity.
Customer equity may even be a better way to measure its performance than market share or
current sales.
Marketers cannot create customer value and build customer relationships by themselves. They
need to work closely with other company departments and with partners outside the firm.
In addition to being good at customer relationship management, they also need to be good at
partner relationship management.
Final Words Managing Marketing Process
The last step of the marketing process is arranging resources necessary to carry out the marketing
plan, putting the plan in action, and exerting control.
For the implementation of the marketing plan, the firm needs to build a marketing organization.
This type of organization consists of many specialists responsible for carrying out marketing
research, advertising, product development, customer service, etc.
Such an organization calls for setting up a department called the marketing department headed
up by a Vice-President/Director/GM. He usually performs three types of tasks.
First, he coordinates activities performed by different personnel in the marketing department.
Second, he must closely work with other key personnel charged with other responsibilities, such
as personnel, finance, etc.
Third, he must perform several operative and technical functions as selecting, training, directing,
motivating, and evaluating his department’s personnel for better performance by each of them.
When the plan is implemented, management must make sure that everything is going fine. He
can ensure this by receiving feedback and taking corrective action if necessary, i.e., controlling.

Q-2 Describe the key elements of a customer-driven marketing strategy and discuss the marketing
management orientations that guide marketing strategy.

The first & foremost task in marketing strategy is to understand customers & the marketplace.
After completing this task, marketing managers prescribe a customer-driven marketing strategy.
Actually, marketing management is the art and science of choosing target markets & building
profitable relationships with them &  his aim is to find, attract, keep & grow target customers. He
also tries to create, deliver & communicate superior customer value.
After designing a perfect marketing strategy, the marketing manager must answer two important
questions. They are-
1. What customers will we serve ( what's our target market )?
2. How can we serve these customers best ( whats our value proposition)?
Let me describe this:
Selecting customers to serve:

Every company must first decide whom it will serve; its mean who is their target market. For this
reason, the company dividing the market into many segments & select the most profitable
segment to enter.
It is true that marketing managers can't serve all customers in every way. When they go to do
that, they always fail. That's why they select their customers so that they can serve them well &
profitably.
For example, arong generally select higher class people for their product & treat them well &
profitably.
Choosing a value proposition:
Obviously, every company must also decide how they will serve their targeted customers; it's
mean how differently from competitors & try to create a position in the marketplace.
Actually, a brands value proposition is the set of benefits or values it promises to deliver to
customers to satisfy their needs.
 Have a look some examples: BMW promises the ultimate driving machine whereas smart car
suggests opening your mind to the car that challenges the status quo; Youtube provides a place
for people to connect, inform & inspire others across the globe whereas facebook helps connect
& share with people.

Marketing management orientations:

Marketing management orientations are also called core concept & philosophy in marketing
strategy.
It also designs strategies that help to build profitable relationships with target consumers.
There are five concepts under this orientation. They're-
1. The Production Concept: Production concept is an idea that customers will favor their
products that are available & highly affordable. Based on this idea, the company should focus on
improving production & distribution efficiently. Actually, it is an old concept. It is only helpful
for leading brands.
2. The Product concept:  Product concept holds that product that are most quality, high
performance & high features contain, customers will favor these types of product. Based on this
idea, the company devotes its energy to making continues product improvements.
In every marketing strategy, product quality & improvement are the most important parts. But
another question may arise that only quality improvement can't ensure the goals. That's why, it
also needs better manufacturing designs, packagings & pricings it attractively; placing in the
convenient place; try to bring it to the attention of people who need it & try to convince buyers
that it will be better for them.

3. The Selling concept: It is an idea in which customers will not buy enough of the firm's
products unless the firm takes necessary selling actions & promotion efforts. Like insurance &
blood donations are an unsought product. Buyers may not actually think of this product to buy
that's why industries should take selling & promotion efforts. They only selling their product not
to build a long run customer relationship. So, it is clear that this concept states that sell what the
company makes rather than what the market wants.
4. The marketing concept: This concept holds that achieve organizational goals based on
knowing consumers’ needs, wants & demands & delivered the desired satisfaction that
consumers want & fulfill it better than competitors do. This concept mainly focused on building
profitable customers relationship by delivering superior value.
5. The societal marketing concept:  This concept is mainly based on companies overall
marketing decisions should consider customers’ needs, wants & demands; companies goals;,
customers long-run interest & society's long-run interests.

Q-3 Discuss the concept of customer satisfaction. How do customer relationship management and
customer perceive value affect customer satisfaction?

In the marketing process , building & managing profitable customer relationship is the fourth
but most important step because first three steps are lead up through this step.
 Obviously,  the most important concept of modern marketing is perhaps customer relationship
management; in short CRM. Some marketers think that CRM is only related to consumers’ data
management activity. But in reality, CRM related to managing detailed information about their
target customers & they always try to carefully managing the customer touchpoint to maximize
customer loyalty. Actually it is a process of building & maintaining profitable customer
relationship. In this process, they also deliver superior customer value & satisfaction. The main
purpose of CRM is to acquiring ,keeping & growing customers.
Customer Value :

Customer value means to create superior satisfaction. It is the key concept for building a
profitable relationship. In business, it is said that if you satisfied your target customers; if
customers get enough satisfaction, they will purchased again & again ; it seems that they are
more likely to be loyal customers. Companies get a larger share of profit from them.
But another thing we should keep in your mind that attracting & maintaining customers is not a
easy task. In the market, customer face a different types of product & services there. From there,
they choose their product. But a customer only purchased from whom who offers the highest
customer- perceived value, in short CPV.
CPV actually is " the customers evaluation of the difference between all the benefits & all costs
of a marketing offer relative to those of competing offers".
The most important thing is that customer  mostly act on  perceived value.
Some consumers define value means a sensible product at affordable price; another may define
value might mean paying more to get more.

Customer Satisfaction:

When buyers expectation is related to product perceived performance then it is called customer
satisfaction. If the product performance is low, customer may have dissatisfied; if product
performance is equal to customer expectation, customer is satisfied. But if the product
performance exceeds the buyers expectation, customer  may highly satisfied & delighted.
Most  successful companies try to keep their customers satisfied. Because if they create higher
level of customers satisfaction that may lead to greater level of customer satisfaction.
Customer relationship levels & tools:

At many levels, companies can build customer relationships depending on the nature of target
market through advertising, public relation, web sites visits etc.

Companies & firms try satisfied their customers more than competitors by lowering the price &
increasing their services 

Q -4 Discuss the company’s marketing environment actors and forces outside marketing that affect
a marketing management’s ability to build and maintain successful relationships with target
customers

Marketing environment consists of the actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful relationships with target customers.
Microenvironment consists of the actors close to the company that affect its ability to service its
customers.
Micro environment consists of larger societal forces that affect the microenvironment.
THE MICROENVIRONMENT
1- The Company: All the interrelated groups form the internal environment
2- Suppliers: provide the resources needed by the company to produce its goods and
services.
3- Marketing Intermediaries: help the company to promote, sell, and distribute its products
to final buyers.
A. Resellers are distribution channel firms that help the company find customers or make
sales to them. These include wholesalers and retailers.
B. Physical distribution firms help the company to stock and move goods from their points
of origin to their destinations.
C. Marketing services agencies are the marketing research firms, advertising agencies,
media firms, and marketing consulting firms that help the company target and promote its
products to the right markets.
D. Financial intermediaries include banks, credit companies, insurance companies, and other
businesses that help finance transactions or insure against the risks associated with the
buying and selling of goods
4- Competitors
5- Publics: A public is any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives.
6- Customers
There are five types of customer markets. The company may target any or all of these:

1. Consumer markets: individuals and households that buy goods and services for personal
consumption.
2. Business markets: buy goods and services for further processing or for use in their
production process.
3. Reseller markets: buy goods and services to resell at a profit.
4. Government markets: composed of government agencies that buy goods and services to
produce public services.
5. International markets: buyers in other countries, including consumers, producers,
resellers, and governments.
THE MACROENVIRONMENT
1- Demographic Environment: Demography is the study of human populations in terms
of size, density, location, age, gender, race, occupation, and other statistics
2- Economic Environment: The economic environment consists of factors that affect
consumer purchasing power and spending patterns
 Industrial economies constitute rich markets for many different kinds of
goods.
 Subsistence economies consume most of their own agricultural and industrial
output, and offer few marketing opportunities.
 In between are developing countries, which can offer outstanding marketing
opportunities.
3- The Natural Environment: the natural environment involves the natural resources that
are needed as inputs by marketers, or that are affected by marketing activities.
4- Technological Environment: The technological environment is perhaps the most
dramatic force now shaping our destiny.
5- The Political and Social Environment: Marketing decisions are strongly affected by
developments in the political environment. This consists of laws, government
agencies, and various pressure groups
6- The Cultural Environment: The cultural environment consists of institutions and other
forces that affect a society’s basic values, perceptions, preferences, and behaviors.

Q-5 Define the consumer market and describe the four major sets of factors that influence
consumer buyer behavior. Which characteristics influenced your choice when deciding on the
school you would attend?

Consumer behavior is the study of how people make decisions about what they buy, want,
need, or act in regards to a product, service, or company. It is critical to understand consumer
behavior to know how potential customers will respond to a new product or service. It also helps
companies identify opportunities that are not currently met.
1. Consumer Behavior – Cultural factors
Culture plays a very vital role in the determining consumer behavior it is sub divided in
 Culture
Culture is a very complex belief of human behavior it includes the human society, the roles that
the society plays, the behavior of the society, its values customs and traditions. Culture needs to
be examined as it is a very important factor that influences consumer behavior.
 Sub-Culture
Sub-culture is the group of people who share the same values, customs and traditions. You can
define them as the nation, the religion, racial groups and also groups of people sharing the same
geographic location
 Social Class
Society possesses social class; in fact every society possesses one. It is important to know what
social class is being targeted as normally the buying behavior of a social class is quite similar.
Remember not just the income but even other factors describe social class of a group of
consumers.
2. Consumer Behavior – Social Factors
Social factors are also subdivided into the following
 Reference groups
Under social factors reference groups have a great potential of influencing consumer behavior.
Of course its impact varies across products and brands. This group often includes an opinion
leader.
 Family 
The behavior of a consumer is not only influenced by their motivations and personalities but also
their families and family members who can two or more people living together either because of
blood relationship or marriage.
 Role and status
People who belong to different organizations, groups or club members, families play roles and
have a status to maintain. These roles and status that they have to maintain also influences
consumer behavior as they decide to spend accordingly.
3. Consumer Behavior – Personal factors
A number of personal factors also influence the consumer behavior. In fact this is one major
factor that influences consumer behavior. The sub factors under personal factor are listed below.
Age and life cycle stage
Age of a consumer and his life cycle are two most important sub factors under personal factors.
With the age and the life cycle the consumers purchase options and the motive of purchase
changes, with his decisions of buying products change. Hence this stage does affect consumer
behavior.
 Occupation
Occupation of a consumer is affects the goods and services a consumer buys. The occupations
group has above average interest in buying different products and services offered by
organizations. In fact, organizations produce separate products for different occupational groups.
Financial or economic situations
Everything can be bought and sold with the help of money. If the economic situation of a
consumer is not good or stable it will affect his purchase power, in fact if the consumers or the
economy of a nation is suffering a loss it defiantly affects the consumers purchase or spending
decisions.
 Life style
People originating from different cultures, sub cultures, occupations and even social class have
different styles of living. Life style can confirm the interest, opinions and activities of people.
Different life styles affect the purchase pattern of consumers.
Self-concept and personality
Every individual is different and have different and distinct personalities. Their distinct
personalities and distinct physiology effects their buying decisions. Hence purchase of products
and services defers from person to person.
4. Consumer Behavior – Psychological factors
Psychological factors affect consumer behavior very strongly. Let’s look at them in detail.
 Motivation
Motivation is activating the internal needs and requirements of the consumer. It can also be
described as goals and needs of the consumers. Motivation arouses and directs the consumers
towards certain goals. These needs can be psychological needs, needs of security, social needs,
esteem needs and also self-actualizing needs.
 Perception
Perception is sensing the world and the situations around and then taking a decision accordingly.
Every individual look as the world and the situations differently. The judging ability and
capacity of every individual is different and hence the look at the world differently. This is what
separates the decision taking abilities.
 Learning and experience
Learning is the research of products and services before the consumer takes the decision of
buying a product. Learning and self-educating these days is done online and also in groups.
Experience is taking a lesson from the past experiences of a product and service. Learning and
experience both again play an important role in influencing the consumer’s behavior as it
influences their purchase decision.
 Attitude and beliefs
Attitude is a consumer’s favorable and unfavorable emotional condition or emotional feeling,
also its tendency of reaction to certain actions and behaviors. Beliefs of people that are the belief
that people assume the products to be as make the specifications of the products. Hence attitude
and beliefs are also important and need to be taken into consideration while studying human
behavior.
For me psychological factors/characteristic are affect my choice mainly motivation part.

Q-6 Explain how the market structure and demand differ for business markets compared with
consumer markets.

Like many well-known business organizations, they sell their product to other business
organization.  Even in consumer products companies also sell most of their product in other
businesses. This way refers to business buyer behavior of any organization. This organization
buys goods & services for further process, sold, rented or supplied to others. This also includes
in retailing & wholesaling business behavior.
In the business buying process, buyers decide which types of product they need when they try to
find out that product, evaluate, and choose the best alternatives. B-2-B marketers must
understand the business markets & business buyer’s behavior very efficiently. Then they sell the
final output to the final customer. They always try to build profitable customer relations with
their customers by delivering superior customer value.
Business markets
The business market is higher than the consumer market because business market involves
million dollars & items than in consumer markets. For example: Think about the Unilever. It has
all types of consumer’s goods item & every year Unilever earn million dollars. But think about
Goodyear. A large number of the business transaction occurs only for Goodyear tires, steel,
rubber. Goodyear has a high demand in the business markets. Thus many business buyers buy
only for resale the products.
In another way, business markets are the same as consumer markets. Because both are involved
in buying & selling decisions to satisfy the needs. The main differences between business market
& consumer’s markets are-
1. Market structure & demand
2. Nature of the buying unit
3. Types of decisions & the decision process
Market structure & demand
Business marketers generally work more than consumer marketers. The business marketer deals
with a large number of buyers but they stay far fewer. Besides, the demand for the business
market is different from the consumer markets. The business market always faces a derived
demand. Derived demand means that demand usually comes from the demand for consumer
goods.
Another business market may face inelastic demand & more fluctuating demand. These types of
demand effect on price changes only for the short run. A reduction in price may not increase the
purchase of that product unless the demand for this product existing in the markets.
Nature of the buying unit
Here, every time compared with the consumer market, the business market involves in two ways
like –
 More decision participants
 More professional purchasing effort
There are some trained agents who purchase a product that can perform better. If there are too
many agents, the buying decision may be more complex. That’s why the buying committees
select expert people for their work.

Types of decisions & the decision process

Than consumer buyers, business buyers face more complexity in buying decision. A business
buyer usually buys a large number of inventories, invest large sums of money, adopt technical &
economic considerations, and interact with many people in the different channel of the
organization. This process is so longer & more formalities need to do. Even, a large business
organization maintains a formal written approval with other partners.
Finally, buyer & seller depends on each other in the business markets.

Q-7 Describe the tools B-to-B marketers use to engage customers

The key tool used by B2B marketers is CRM tools. CRM stands for customer relationship
management tools. It is used to track customer order levels, usage level, communication strategy,
social connects, and integrated marketing techniques. In addition to this, one the common ways
that a marketer engages B2B customers is through email and phone calls

Q-8 Describe micromarketing, local marketing, and individual marketing. When should marketers
consider using these segmentation strategies

Micromarketing is a marketing strategy that is used over a targeted group of customers in a niche
market. It is typically used to advertise a product or service with a narrow customer base. The
customer base is chosen by the marketer based on a certain characteristic such as age, gender, job
title, location, etc

Micromarketing is a practice of altering products and marketing plans to suit the choices of
specific individuals and locations. Micro marketers see individual in every customer rather than
seeing customer in every individual. Micromarketing consists of local marketing and individual
marketing.

1. Local Marketing
Local marketing involves altering brands and promotions according to the needs and wants of
local customer groups, like neighborhoods, cities and specific stores. For example, Citibank
provides various mixes of banking services in all of its branches, depending on neighborhood
demographics. Kraft helps many supermarkets chains to identify the specific cheese variety and
shelf positioning that will help to optimize cheese sales in low-income, middle-income and high-
income stores and in different cultural communities.

But there are some drawbacks in local marketing. It can drive up marketing and manufacturing
costs by dropping economies of scales. It can also generate logistics issues as companies try to
gather the varied requirements of various local and regional markets. Furthermore, an overall
image of brand might be damaged if the message and product vary too much in various
localities. 

2. Individual Marketing

In the extreme, micromarketing becomes individual marketing. Individual marketing involves

altering products and marketing plans to the needs and preferences of individual customers.
Individual marketing has also been labeled as mass customization, one-to-one marketing and
markets-of-one-marketing.

The extensive use of mass marketing has doubted the facts that for million consumers are served
as individuals. The tailor-custom made the suit, the cobbler designed shoes for each individual
and cabinetmaker made furniture to order. Today, though, new technologies are authorizing
many companies to return to customized marketing. More powerful computers, robotic
production, detailed databases, flexible manufacturing and interactive communication media
such as email and internet, these all have combined to encourage mass customization. Mass
customization is a process through which firms interact one-to-one customers to design goods
and services tailor made to individual needs.

So in micromarketing, marketers need to involve individual customers and make sure to provide
them customized services.

Q-9 How can a company gain competitive advantage through differentiation? Describe an example
of a company that illustrates each type of differentiation.

Differentiation means companies deliver better benefits than anyone else. A firm can achieve
differentiation by providing a unique or high-quality product. Another method is to deliver it
more quickly. A third is to market in a way that reaches customers better.
A company with a differentiation strategy can charge a premium price, which means it usually
has a higher profit margin.
Companies typically achieve differentiation with innovation, quality, or customer service.
Innovation means they meet the same needs in a new way. An excellent example of this is
Apple. The iphone was innovative because it provided a simple handheld device with the power
of a computer. Quality means that the firm provides the best product or service. Tiffany's can
charge more because patrons see it as far superior to other jewelry stores.
In short, customer service means going out of the way to delight shoppers, like in the case of
Nordstrom's, which was the first to allow returns with no questions asked.

Q-10 What is a consumer product? Describe the characteristics of each type of consumer product
and give examples of each.

Consumer products, also referred to as final goods, are products that are bought by individuals or
households for personal use. In other words, consumer products are goods that are bought for
consumption by the average consumer. From a marketing perspective, there are four types of
consumer products, each with different marketing considerations.
Types of consumer products

1. Convenience products
2. Shopping products
3. Specialty products
4. Unsought products

Convenience Products

Convenience products are bought the most frequently by consumers. They are bought
immediately and without great comparison between other options. Convenience products are
typically low-priced, not-differentiated among other products, and placed in locations where
consumers can easily purchase them. The products are widely distributed, require mass
promotion, and are placed in convenient locations. Sugar, laundry detergent, pencils, pens, and
paper are all examples of convenience products.

Characteristics of Convenience Products

Purchased frequently
At a low price point
Easily available
Not commonly compared with other products
Shopping Products
Shopping products are bought less frequently by consumers. Consumers usually compare
attributes of shopping products such as quality, price, and style between other products.
Therefore, shopping products are more carefully compared against, and consumers spend
considerably more time, as opposed to convenience products, comparing alternatives. Shopping
products require personal selling and advertising and are located in fewer outlets (compared to
convenience products) and selectively distributed.
Airline tickets, furniture, electronics, clothing, and phones are all examples of shopping
products.
Characteristics of Shopping Products
Purchased less frequently
At a medium price point
Commonly compared among other products
Specialty Products
Specialty products are products with unique characteristics or brand identification. Consumers
of such products are willing to exert special effort to purchase specialty products. Specialty
products are typically high priced, and buyers do not use much time to compare against other
products. Rather, buyers typically spend more effort in buying specialty products compared to
other types of products.
Take, for example, a Ferrari (a specialty product). Purchasers of a Ferrari would need to spend
considerable effort sourcing the car. Specialty products require targeted promotions with
exclusive distribution; they are found in select places. Sports cars, designer clothing, exotic
perfumes, luxury watches, and famous paintings are all examples of specialty products
Characteristics of Shopping Products
With unique characteristics or brand perception Purchased less frequently At a high price point
Seldom compared between other products Only available at select/special places
Unsought Products
Unsought products are products that consumers do not normally buy or would not consider
buying under normal circumstances. Consumers of unsought products typically do not think
about these products until they need them. The price of unsought products varies. As unsought
products are not conventionally thought of by consumers, they require aggressive advertising
and personal selling.
Diamond rings,  pre-planned funeral services, and life insurance are all examples of unsought
products.
Characteristics of Unsought Products
Not top-of-mind of consumers
Requires extensive advertising and marketing efforts

Q-11 Why is finding and implementing the right pricing strategy critical to a company’s success?

pricing is very important because it is the main factor to earn profit on the sales of the products
or services of a company.it is the main task of marketers to choose the right pricing strategy for
its products or services. Your pricing strategy involves evaluating the price you will charge for
your product or service, and how this price fits in with your overall marketing plan. Unlike
advertising, which overtly disseminates a message, pricing provides a subtler cue about your
company, attracting a particular demographic or making a statement about your product's value.
A pricing strategy is also a practical matter because your company cannot succeed if you do not
earn enough to cover costs

Q- 12 Discuss methods of pricing a product. Define price elasticity and discuss why it is important
for marketers to understand this concept.

In the entire marketing mix, price is the one element that produces revenue; the others produce
costs. Price is also one of the most flexible elements: It can be changed quickly, unlike product
features and channel commitments. Although price competition is a major problem facing
companies, many do not handle pricing well. The most common mistakes are these: Pricing is
too cost-oriented; price is not revised often enough to capitalize on market changes; price is set
independent of the rest of the marketing mix rather than as an intrinsic element of market-
positioning strategy; and price is not varied enough for different product items, market segments,
and purchase occasions.

The different methods of pricing can be grouped under the following categories:-
 Cost based pricing
 Demand based pricing
 Competition-oriented pricing
 Differential pricing
 Going rate or “Follow the crowd”

1. COST-BASED PRICING

Under this category, only one approach has been taken into consideration i.e. Mark-up pricing /
Cost plus pricing.

Mark-up Pricing refers to the pricing method in which the selling price of the product is fixed by
adding a margin to the cost price. The mark-ups vary depending on the nature of products &
markets. Usually, the higher the value of the product (unit cost of the product) the larger the
mark-up & vice-versa. Again, the faster the turn round of the product, the smaller the mark-up
vice-versa.

2. Differential pricing

Some firms charge different prices for the same product in different zones / areas of the market.
Sometimes, the differentiation in pricing is made on the basis of customer class rather than
marketing territory. Sometimes, the differentiation is on the basis of volume of purchase.
Differentiation on the basis of volume is more common than differentiation based on customer
class in marketing territory.

3. Going rate or “follow the crowd”

In this method, the firm prices its products at the same level as that of the competition. This
method assumes that there will be no price wars within the industry. This is a method commonly
used in an oligopolistic market. Despite its advantage of preventing price wars, the method
suffers from serious limitations. The first is that, it is not necessarily true that all firms or the
leader firm is operating efficiently. In case, it is not, it will mean that the follower firm will also
adopt a price level which reflects leader’s inefficiency rather than the firm’s efficiency. Besides,
it is not always true that a decision taken in collective wisdom is the best. It may certainly not be
so from the customer’s point of view.

4. Demand / market based pricing

The following methods belong to the category of demand / market based pricing:

 ‘What The Traffic Can Bear’ Pricing

 Skimming Pricing
 Penetration Pricing

The basic feature of all these demand based methods is that profits can be expected independent
of the costs involved, but are dependent on the demand.
‘What the Traffic Can Bear’ Pricing

As per pricing based on ‘what the traffic can bear’, the seller takes the maximum price which the
customers are willing to pay for the product under the given circumstances. It is not a
sophisticated method. It is used more by retail traders than by manufacturing firms.

Skimming Pricing

Skimming Pricing aims at high price & high profits in the early stage of marketing the product.
As the word skimming indicates, this method literally skims the market in the first instance
through high price & subsequently settles down for a lower price.

Penetration Pricing

Penetration pricing, as the name indicates, seeks to achieve greater market penetration through
relatively low prices. It is the opposite of skimming pricing. This method too is quite useful in
pricing of new products under certain circumstances.

5. Competition oriented pricing

In several industries, competition oriented pricing methods are followed. The methods under this
category rest on the principle of competitive parity in the matter of pricing. Competition based
pricing, or competitive parity pricing does not, however, mean exactly matching competition.

We can define Elasticity as a measure of the change in the demanded or supplied quantity of a
product based on the change in its price. Understanding price elasticity is important for
businesses. It is a measure of how changes in prices impact the buying behavior of users. Price
Elasticity helps businesses understand how much they can stretch the price (hence the term
elasticity) of any product before it impacts.

Q-13 What is an advertising agency? Discuss the changes in advertising agencies today compared
with how they operated in the past

An advertising agency, often referred to as a creative agency, is a company providing services

associated with creating, planning, and managing advertising campaigns, but may also handle
other forms of promotion and marketing for its clients. Advertising agencies are generally
independent, external companies working for their clients, which can include businesses,
international corporations, non-profit organizations, and other agencies.

Traditionally, brands hired ad agencies to produce television commercials and run print
campaigns in magazines, newspapers, and on billboards.

Today, many agencies create, run, and manage online campaigns using an array of advertising
and marketing technologies. These types of agencies are also known as interactive, media, or
digital agencies.