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GNDU Question Paper-2023
Bachelor of Business Administration
BBA 3
rd
Semester
FUNDAMENTALS OF MARKETING MANAGEMENT
Time Allowed: Three Hours Max. Marks: 50
Note: Attempt Five questions in all, selecting at least One question from each section. The
Fifth question may be attempted from any section. All questions carry equal marks.
SECTION-A
1. Discuss the Marketing Strategy for Service Organizations. Explain the Functions of
Marketing Research.
2. "Marketing Begins and Ends with the Consumer"-Discuss it in detail.
SECTION-B
3. What is the Object of Market Segmentation and write the bases of Market
Segmentation.
4. Write the Strategic considerations in the Product Life Cycle concept.
SECTION-C
5. What are the various kinds of Pricing Strategies? Discuss.
6. What is branding? Explain the various Methods to measure Brand Equity.
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SECTION-D
7. Discuss the changing role of Direct Selling. Comment on the qualities of a successful
Salesman.
8. What is advertising? Why is it required for business organizations ? Discuss the methods
for deciding the budget for advertising.
GNDU Answer Paper-2023
Bachelor of Business Administration
BBA 3
rd
Semester
FUNDAMENTALS OF MARKETING MANAGEMENT
Time Allowed: Three Hours Max. Marks: 50
Note: Attempt Five questions in all, selecting at least One question from each section. The
Fifth question may be attempted from any section. All questions carry equal marks.
SECTION-A
1. Discuss the Marketing Strategy for Service Organizations. Explain the Functions of
Marketing Research.
Ans: Marketing Strategy for Service Organizations & Functions of Marketing Research
Imagine this: You walk into your favorite coffee shop. The moment you enter, the staff
greets you with a smile, the aroma of freshly brewed coffee surrounds you, and within
minutes, your customized order arrives—exactly the way you like it. Now think about it: why
do you return to this coffee shop again and again when there are dozens of others nearby?
The answer lies not just in the taste of coffee but in the marketing strategy that the service
organization has adopted. Unlike physical products, services are intangible—you cannot
touch them, store them, or test them before buying. That makes marketing in service
industries both exciting and challenging. To win customers, service organizations must
design strategies that focus on customer experience, trust, and long-term relationships.
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At the same time, before planning any marketing strategy, these organizations need to
understand what people actually want, how they behave, and what trends are shaping their
choices. This is where marketing research steps in as a guiding compass. Without research,
marketing is like sailing a ship without a map—you may float, but you won’t know where
you are heading.
Let’s dive deeper into these two parts—marketing strategy in service organizations and the
functions of marketing research—as if we are unfolding a story of how businesses win
hearts, not just wallets.
1. Marketing Strategy for Service Organizations
Marketing strategies for services revolve around what we call the “7 Ps of Service
Marketing”—Product, Price, Place, Promotion, People, Process, and Physical Evidence. But
instead of throwing textbook definitions, let’s imagine a real-life situation.
Suppose a new hospital opens in your city. How can it convince people to choose it over
other hospitals that have been around for years? Here’s how the hospital might design its
marketing strategy:
(a) Product (or Service Offering)
Unlike goods, here the “product” is the service—healthcare. Since patients can’t touch or
see the service beforehand, the hospital must assure quality through specialized doctors,
advanced technology, quick diagnosis, and empathetic staff.
Lesson: In service organizations, the “product” is the experience and trust they deliver.
(b) Price
Pricing services is tricky. If the hospital charges too high, patients may avoid it. If it charges
too low, people may doubt the quality. So, it balances affordability with premium facilities,
maybe offering health packages or discounts for regular checkups.
Lesson: Service pricing must reflect both value and perceived quality.
(c) Place
For services, “place” means accessibility. A hospital located in a prime area with online
appointment systems will attract more patients. Some may even offer teleconsultations,
bringing doctors to patients’ mobile screens.
Lesson: Place = Convenience.
(d) Promotion
Since services are invisible, promotion must focus on building trust. The hospital might use
patient testimonials, success stories, health camps, and social media to show people the
quality of care.
Lesson: In service marketing, storytelling is more powerful than just advertisements.
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(e) People
Services are delivered by people—doctors, nurses, receptionists, attendants. Even one rude
staff member can destroy the hospital’s reputation. So, training, motivation, and a service-
oriented attitude are crucial.
Lesson: Employees are the real brand ambassadors.
(f) Process
Imagine if patients had to wait hours despite having an appointment—frustrating, right? A
smooth process, like quick registrations, digital reports, and emergency support, makes the
service seamless.
Lesson: A good process makes the invisible service “visible” through efficiency.
(g) Physical Evidence
Since patients can’t physically test treatment before receiving it, they rely on what they
see—clean infrastructure, organized reception, well-maintained rooms, digital facilities.
These physical cues build confidence.
Lesson: Tangible evidence helps reduce the uncertainty of intangible services.
In short: Service marketing strategy is about experience, trust, and relationship building.
Whether it’s a hospital, bank, hotel, airline, or coaching institute, the aim is the same:
deliver consistent quality and make customers feel valued.
2. Functions of Marketing Research
Now let’s shift to the second part of the story. Imagine the hospital simply launched its
services without knowing what people in the city actually need. Maybe most people require
affordable child care, but the hospital invested heavily in expensive cosmetic surgeries.
What will happen? The project may fail, even if the service is excellent.
That’s why marketing research is like a flashlight in the dark—it shows the organization
where to move and what decisions to make. Let’s look at its major functions in a simple,
story-like way:
(a) Understanding Consumer Needs
Research asks questions like:
• What health problems are most common in this city?
• What do patients value more—low cost, modern equipment, or personalized care?
By collecting surveys, interviews, and feedback, the hospital learns what people actually
want. This ensures it doesn’t waste resources on irrelevant services.
(b) Market Analysis
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Just like a soldier studies the battlefield before the war, marketing research studies the
market before launching. It helps identify:
• How big is the demand?
• Who are the competitors?
• What price range do people expect?
This avoids blind decision-making.
(c) Forecasting and Trends
Research doesn’t just look at today; it predicts tomorrow. For example, if studies show that
online consultations are growing, the hospital can invest in telemedicine before others do.
This proactive move creates an advantage.
(d) Evaluating Marketing Performance
Research also acts like a report card. Suppose the hospital runs an ad campaign. Did people
actually notice it? Did patient numbers increase? Research measures the effectiveness of
promotions and strategies.
(e) Risk Reduction
Every business decision involves risk. By providing data and insights, research reduces
uncertainty. It tells the hospital what is likely to succeed and what might fail, minimizing
costly mistakes.
(f) Customer Satisfaction Measurement
The story doesn’t end after providing service. Research continuously collects feedback
through patient reviews, satisfaction surveys, or complaint analysis. This helps the hospital
improve and build long-term trust.
Bringing Both Together
If we put it all together, here’s how it works:
• Marketing research acts as the “eyes and ears” of a service organization—it tells
what customers want, what competitors are doing, and what trends are emerging.
• Marketing strategy is the “heart and brain” that uses this information to design
offerings, set prices, choose communication methods, train staff, and deliver an
outstanding service experience.
Think of it like preparing for an exam:
• Research = studying the syllabus, previous year papers, and teachers’ hints.
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• Strategy = planning your timetable, practicing, and writing answers effectively.
Only when both are combined can you achieve success.
Conclusion
Service organizations are unique because they sell experiences, not objects. Their marketing
strategy must focus on customer satisfaction, human interaction, and trust-building. At the
same time, marketing research ensures that these strategies are based on facts, not
assumptions.
So, whether it’s a coffee shop, a hospital, a hotel, or a bank—the secret of success lies in
blending research-backed insights with customer-centered strategies. That’s how services
turn ordinary transactions into lifelong relationships.
2. "Marketing Begins and Ends with the Consumer"-Discuss it in detail.
Ans: “Marketing Begins and Ends with the Consumer” – A Detailed Discussion
Imagine this: You walk into a bakery one morning. The sweet smell of freshly baked bread
and cakes fills the air. The baker smiles at you and says, “Good morning! Would you like to
try our new chocolate muffin?”
Now pause for a moment and think—why did the baker bake that muffin? Why did he greet
you warmly? Why did he offer you a sample before you even asked?
The answer is simple: you, the consumer, are the center of his entire business.
This little bakery story explains the heart of marketing. Whether it’s a small bakery in your
neighborhood or a multinational company like Apple, marketing always begins with the
consumer and ends with the consumer. Let’s dive into this idea step by step, in a way that
feels like a journey rather than just a textbook definition.
1. Understanding the Core Idea
The phrase “Marketing begins and ends with the consumer” means that every activity in
marketing—research, product design, pricing, distribution, promotion, and after-sales
service—is driven by the needs, wants, and satisfaction of the consumer.
Think of it like a circle:
• At the beginning, the business tries to understand what the consumer really wants.
• In the middle, it creates and delivers a product or service that matches those wants.
• At the end, the consumer’s satisfaction decides whether the business will succeed or
fail.
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If consumers are happy, they come back and even tell others. If not, the circle breaks, and
the business struggles.
2. Why the Consumer is the Starting Point
Before a company creates anything, it must ask:
• Who will buy it?
• What problems do they face?
• What do they desire?
For example, think about how smartphones evolved. Years ago, phones were mainly for
calling and texting. But as consumers wanted more—music, internet, cameras—companies
like Samsung and Apple listened carefully and designed products that matched those needs.
If Apple ignored consumers and kept selling only basic phones, would they be as successful
today? Of course not. Their marketing started with studying the consumer.
3. Marketing as a Bridge of Value
Marketing is like a bridge between a company and its consumers. Companies have products,
while consumers have needs. Marketing connects the two. But here’s the twist: the bridge
can only stand strong if it’s built on consumer satisfaction.
Take Domino’s Pizza as an example. They realized consumers hated waiting too long for
food, so they promised “30 minutes or free.” That simple focus on consumer needs made
them stand out in the crowded fast-food market.
4. Consumer at the Center of the Marketing Mix
You may have heard of the 4 Ps of Marketing: Product, Price, Place, Promotion. Notice how
each one revolves around the consumer:
• Product – Designed according to what the consumer needs (e.g., eco-friendly
products for environmentally conscious buyers).
• Price – Fixed at a level consumers are willing and able to pay.
• Place – Products are distributed where consumers can conveniently buy them (think
of online shopping today).
• Promotion – Messages are shaped in ways that attract and convince consumers
(advertisements that speak their language, emotions, or aspirations).
Without considering the consumer, these 4 Ps are meaningless.
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5. Marketing Ends with the Consumer
The story doesn’t stop once a product is sold. The real test of marketing comes after the
purchase. Is the consumer satisfied? Will they buy again? Will they recommend the
product?
For example, Amazon focuses heavily on after-sales service. Easy returns, 24/7 customer
support, and quick refunds ensure consumers are not just buyers but also loyal promoters.
This shows that marketing doesn’t end when the product leaves the shelf. It ends only when
the consumer feels happy and valued.
6. The Emotional Side of Consumers
Here’s something interesting: consumers don’t always buy with logic; they often buy with
emotions. A child begging for a packet of chips doesn’t care about ingredients—he cares
about the cartoon character on the packet. A young professional buying a luxury watch isn’t
only buying a watch; she’s buying status and pride.
That’s why marketing pays attention not just to needs (basic requirements) but also to
wants and desires. The more deeply a company understands the human side of consumers,
the more successful its marketing becomes.
7. Real-Life Examples
• Nike: Their tagline “Just Do It” isn’t about shoes—it’s about inspiring consumers to
push their limits. They sell motivation wrapped in sneakers.
• Coca-Cola: Instead of just selling a drink, they sell happiness, friendship, and
celebration. Notice how their ads often show people laughing and enjoying together.
• Tesla: Elon Musk built Tesla by listening to consumers who wanted eco-friendly cars
without compromising on style or performance.
Each of these companies thrives because they place the consumer at the heart of
everything.
8. What Happens If Businesses Ignore Consumers?
History shows that ignoring consumers can be disastrous.
• Nokia once ruled the mobile world but failed to listen to consumers who wanted
smartphones with advanced features. They stuck to old designs, and competitors like
Apple and Samsung took over.
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• Kodak, famous for cameras, ignored the shift to digital photography. Consumers
moved ahead, but Kodak didn’t, and the company collapsed.
These examples prove that when businesses forget the consumer, they lose the game.
9. The Circle of Marketing
So, let’s imagine marketing as a complete circle:
1. Begin with research → understand what the consumer needs.
2. Design and deliver value → create the right product at the right price.
3. Communicate effectively → tell the consumer why it’s useful.
4. Ensure satisfaction → provide support, care, and improvements.
5. End with feedback → listen again and start the cycle all over.
This cycle shows that the consumer is not just the starting point but also the finishing line.
10. Conclusion
In the end, “Marketing begins and ends with the consumer” is not just a slogan; it’s a truth
that decides the survival of every business. Consumers are like the heartbeat of marketing.
If the heartbeat stops, the entire body of business collapses.
A company may have the smartest managers, the biggest factories, or the most advanced
technology—but without happy consumers, it all means nothing.
So, whether it’s the baker smiling at you in the morning, or a global brand launching its
latest innovation, the story remains the same: the consumer is king.
Marketing is not about selling what a company makes; it is about making what the
consumer wants. That is why marketing truly begins with the consumer and ends with the
consumer.
SECTION-B
3. What is the Object of Market Segmentation and write the bases of Market
Segmentation.
Ans: A New Way to Look at It
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Imagine you are the owner of a large bakery in your city. You bake all kinds of items—cakes,
biscuits, breads, pastries, cookies, and sweets. Now, one morning, you think: “If I just make
one type of bread for everyone, will it satisfy all my customers?” The answer is a big No.
• A college student rushing to class may want a quick snack like a sandwich or biscuit.
• A fitness enthusiast might ask for brown bread or sugar-free cookies.
• A child’s parent may demand a colorful birthday cake.
• A senior citizen may prefer something soft, light, and healthy.
Here lies the secret: every customer is different. If you treat them all the same, you may lose
many customers. But if you divide your customers into groups based on their needs and
wants, you can serve them better and grow your business.
This is exactly what Market Segmentation does. It is the art of dividing the big, diverse
market into small groups (segments) where people share similar characteristics. Each group
has its own needs, tastes, and behavior, and companies design special products or strategies
for them.
Now, let’s dive deeper into its objectives and then its bases, but in a way that feels like a
natural journey.
Objects (Objectives) of Market Segmentation
The objectives of market segmentation are like the goals of a student preparing for exams.
You don’t study the whole book blindly; you break it into chapters, focus on important
topics, and prepare smartly. Similarly, businesses divide the market to achieve certain
purposes. Let’s look at them one by one:
1. To Identify Customer Needs Clearly
Customers are not all the same. By segmenting the market, a company can
understand exactly who needs what. For example, a shampoo brand knows that
teenagers want “trendy and fragrant shampoos,” while older people might look for
“anti-hair fall or dandruff control.” Without segmentation, this clarity is lost.
2. To Design Products that Fit
Once needs are identified, businesses can design products that fit those needs. Think
of it like tailoring clothes—small size for kids, medium for adults, and XXL for those
who need it. Market segmentation allows firms to tailor their offerings just like a
perfect fit.
3. To Use Resources Wisely
No company has unlimited money. Instead of wasting resources on everyone, firms
focus on selected segments. For instance, a luxury car company will not waste time
advertising to middle-class families; they will directly target high-income groups. This
saves money and effort.
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4. To Gain Competitive Advantage
When a company serves its chosen group better than anyone else, customers
become loyal. For example, Apple targets premium users who want technology with
status. By segmenting smartly, Apple maintains its unique identity and keeps its loyal
fan base.
5. To Increase Profitability
Serving the right people with the right product naturally increases sales and profits.
When Domino’s segments the market into “pizza lovers who want quick delivery,” it
makes money not by selling to everyone, but by focusing on that group effectively.
6. To Plan Better Marketing Strategies
Segmentation acts like a compass for a company. It guides them on what message
to send, what media to use, and what pricing to set. Without segmentation,
marketing would be like shooting arrows in the dark.
So, in short, the main object of market segmentation is:
To divide the market into meaningful groups so that the company can serve each group
effectively, save costs, build loyalty, and increase profits.
Bases of Market Segmentation
Now comes the interesting part—how do we divide the market? Think again about our
bakery story. You can divide your customers in different ways: by their age, by their
location, by their income, or even by their lifestyle. These are called bases of segmentation.
Let’s explore them:
1. Geographic Segmentation
This is dividing the market based on where people live.
• Example: A company selling woolen clothes will target customers in colder regions
like Shimla or Kashmir, not in Chennai or Goa.
• Similarly, McDonald’s serves Aloo Tikki Burger in India (because people love
vegetarian food), while in the U.S. it focuses on beef burgers.
So, location plays a huge role in deciding customer needs.
2. Demographic Segmentation
This is the most common base and is like the “ID card” of a customer—age, gender, income,
education, religion, occupation, etc.
• Age: Toys for kids, anti-aging cream for adults.
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• Gender: Fairness creams designed separately for men and women.
• Income: Honda Activa scooter for middle-class buyers; BMW cars for the rich.
• Religion/Culture: Clothing companies making special collections for festivals like
Diwali or Eid.
Demographics give clear, measurable divisions.
3. Psychographic Segmentation
This looks at the lifestyle, personality, and social class of people.
• A young adventure lover may prefer GoPro cameras.
• A luxury lifestyle customer may prefer Louis Vuitton bags.
• A health-conscious person may buy organic food instead of regular groceries.
This type of segmentation digs into the psychology of customers—what they value, how
they live, and what they dream of.
4. Behavioral Segmentation
This is based on customer behavior—how they buy, how often they buy, and what benefits
they seek.
• Occasion-based: Greeting card companies earn most during festivals like Diwali or
Christmas.
• Usage-based: Telecom companies divide customers into heavy users (unlimited
plans), moderate users, and light users.
• Benefit-based: Some buy toothpaste for whitening, others for cavity protection, and
some for fresh breath.
Behavioral segmentation focuses on actual usage and buying habits.
5. Combination Segmentation
In real life, companies don’t rely on just one base. They often combine two or more.
• Example: Nike may target young urban males (demographic) who are fitness
enthusiasts (psychographic) and who shop online frequently (behavioral).
By combining, firms get sharper and more accurate segments.
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Wrapping It Up with a Story Note
Think of market segmentation as a magic magnifying glass for businesses. Instead of seeing
the market as a confusing crowd, it helps companies zoom in on smaller groups where
people share common needs.
The objects of segmentation are to understand customers better, save resources, create
suitable products, and increase profits.
The bases of segmentation are like different lenses—geography, demographics,
psychographics, and behavior—that help companies see their customers more clearly.
Just like our bakery owner who divides customers into children, fitness lovers, students, and
elders, businesses that segment wisely can bake the perfect recipe for success
4. Write the Strategic considerations in the Product Life Cycle concept.
Ans: Strategic Considerations in the Product Life Cycle
Imagine you are watching the life of a human being. A baby is born, nurtured, grows into a
child, then into an adult, later becomes old, and finally exits the world. In the same way,
products in the market also live a life. They are “born” (launched), “grow up” (gain
acceptance), “mature” (peak sales and stability), and eventually “age” (decline in demand).
This journey is called the Product Life Cycle (PLC).
Now, if you think carefully, just like parents and doctors take special care of a person at
every stage of life, business managers and marketers also need to make smart decisions at
each stage of the product’s life. These decisions are known as strategic considerations in the
Product Life Cycle. They help the product survive longer, perform better, and bring more
profit to the company.
Let’s walk through this cycle stage by stage like a story—so you’ll remember it forever.
1. Introduction Stage – The Birth of a Product
Think about a newborn baby. The baby needs a lot of care, support, and protection.
Similarly, when a product is newly launched in the market, it requires huge investment,
strong promotion, and careful strategies.
Strategic Considerations in this stage:
• High investment in promotion: Since customers don’t know much about the new
product, heavy advertising and promotional campaigns are needed to create
awareness.
• Selective distribution: The company must carefully choose where to sell the product
to reach the right audience.
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• Pricing strategies: Firms may adopt either penetration pricing (low price to attract
customers) or skimming pricing (high price initially to recover investment).
• Focus on building demand: The goal is not profit at this stage but survival and
recognition.
Example: When electric cars were first introduced, companies like Tesla had to invest
heavily in educating customers about how EVs work, set up charging infrastructure, and
create curiosity and trust among buyers.
2. Growth Stage – The Childhood Years
Now, imagine a child who starts walking and talking. This is the most exciting phase because
growth is fast, and people start noticing the child. Similarly, when a product enters the
growth stage, its sales rise rapidly, customers accept it, and competitors start entering the
market.
Strategic Considerations in this stage:
• Product improvement: Companies must upgrade the product by adding new
features or improving quality.
• Aggressive promotion: Marketing should focus on brand loyalty and customer
satisfaction rather than just awareness.
• Expansion of distribution: The product must be made available in more markets and
through multiple channels.
• Competitive pricing: Since new competitors arrive, pricing must remain attractive
but profitable.
• Building brand image: Differentiation from competitors becomes very important
here.
Example: Think about smartphones. When they first became popular, only a few brands
offered them. But during the growth stage, almost every company—Samsung, Apple,
Xiaomi—entered the race, adding better cameras, apps, and features to capture customers’
hearts.
3. Maturity Stage – Adulthood and Stability
Now, think about a person in their 30s or 40s. Life has settled; there is stability, but also
competition at work and in society. In the product world, the maturity stage is when sales
reach the highest point but start leveling off because most potential customers already have
the product.
Strategic Considerations in this stage:
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• Product diversification: Companies launch new versions, models, or variations of the
product to keep customers interested.
• Cost efficiency: Since competition is intense, firms must control costs to maintain
profits.
• Strong branding and loyalty programs: Retaining existing customers becomes more
important than attracting new ones.
• Global expansion: Companies often enter new international markets to extend the
life of the product.
• Intensive competition management: Firms may adopt aggressive marketing,
discounts, or bundling strategies.
Example: Soft drink brands like Coca-Cola and Pepsi have been in the maturity stage for
decades. To stay relevant, they launch new flavors, different packaging, festive offers, and
global campaigns, all to ensure customers remain loyal.
4. Decline Stage – Old Age of the Product
Finally, think about old age. Energy declines, dependency increases, and eventually, the
person leaves the world. Similarly, products face decline when demand falls, new
technologies replace them, or customer tastes change.
Strategic Considerations in this stage:
• Product discontinuation: If sales are too low, companies may stop production.
• Harvesting strategy: Reduce marketing and investment but continue selling as long
as possible to gain some remaining profits.
• Product innovation: Replace the old product with a new, updated version.
• Exploring niche markets: Sometimes, even in decline, there are small groups of
customers who still want the product. Companies can target them.
Example: DVD players are almost extinct because of online streaming platforms. However,
some companies still sell them to niche customers who prefer physical discs.
Why Strategic Considerations are Important?
Without proper strategies at each stage, even a good product can fail. Imagine if parents did
not take care of a newborn, the child would struggle to survive. Similarly, if a company
ignores marketing in the introduction stage or fails to innovate in the maturity stage, the
product may die early.
Strategic considerations ensure that:
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1. The product gets maximum life.
2. Profits are earned at the right time.
3. The brand’s image stays strong.
4. Customer loyalty is developed.
The Bigger Picture – Lessons from the Product Life Cycle
The Product Life Cycle teaches us that change is the only constant. No product, however
successful, will remain popular forever. Companies must be alert, flexible, and ready to
adapt strategies according to the stage of the product’s life.
Think about Nokia phones. Once the market leader, Nokia failed to adapt during the
smartphone growth and maturity stages, and thus declined rapidly. On the other hand,
Apple keeps reinventing the iPhone with new features, marketing, and designs to prolong its
maturity stage.
Conclusion
The Product Life Cycle is not just a business concept; it is a story of survival, growth, and
decline—just like human life. The smartness of a company lies in identifying the stage
correctly and applying the right strategies.
• At Introduction, focus on awareness and survival.
• At Growth, build loyalty and fight competition.
• At Maturity, defend market share and innovate.
• At Decline, either revive or gracefully exit.
When written and understood like a story, the PLC feels less like a theory and more like
common sense. After all, every product is like a character in the grand drama of the market,
and strategies are the guiding script that helps it perform its best role before exiting the
stage.
SECTION-C
5. What are the various kinds of Pricing Strategies? Discuss.
Ans: A Walk Through “Global Bazaar”
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You and I step into Global Bazaar, a huge market filled with everything from handcrafted
jewelry to the latest gadgets. The place is alive with colours, sounds, and the chatter of
buyers bargaining with sellers.
We notice something interesting: Two stalls sell almost identical sunglasses. One seller is
asking ₹200, while another is asking ₹750. Both have customers. Why? This is where the
magic — and strategy — of pricing comes into play.
What is a Pricing Strategy?
In simple terms, pricing strategy is the method a business uses to decide how much to
charge for its products or services. It’s not random — it’s a careful decision influenced by
costs, competition, customer psychology, and the company’s goals.
The right pricing can:
• Attract customers
• Position the brand in a certain way (luxury vs. budget)
• Maximize profits
• Beat competition
The Many Faces of Pricing Strategies
Let’s “walk” through different sections of the bazaar — each stall representing a different
kind of pricing strategy.
1. Penetration Pricing
We reach a stall selling brand-new organic teas. The seller announces a special low price for
the first three months.
• Idea: Start with a low price to attract customers quickly and grab market share.
• Why it works: People try the product because it’s affordable; if they like it, they may
stay loyal even when the price goes up later.
• Example: A new internet service provider offers the first 6 months at half price.
2. Skimming Pricing
Across the aisle, a tech stall is selling the latest smartphone — at a steep price.
• Idea: Start high when the product is new and unique, then lower the price over time.
• Why it works: Early adopters are willing to pay more; later, lower prices attract the
broader market.
• Example: Gaming consoles and flagship smartphones often use this.
3. Competitive Pricing
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We find two food stalls selling samosas at exactly the same price — clearly keeping an eye
on each other.
• Idea: Set prices based on what competitors are charging.
• Why it works: Customers see similar prices across sellers and focus more on quality
or convenience.
• Example: Petrol stations often price competitively.
4. Value-Based Pricing
We see a seller of handcrafted pottery explaining the story behind each piece — heritage,
craftsmanship, uniqueness. The prices are higher, but buyers see the value.
• Idea: Price based on the perceived value to the customer, not just production cost.
• Why it works: Customers pay more when they believe the product has special
benefits or meaning.
• Example: Luxury brands like Rolex or designer clothing use this.
5. Cost-Plus Pricing
A bakery owner tells us: “It costs me ₹100 to make this cake, so I add 30% profit — that’s
₹130.”
• Idea: Add a fixed percentage of profit to the cost of making the product.
• Why it works: Simple to calculate and ensures all costs are covered.
• Example: Common in manufacturing and retail.
6. Premium Pricing
At the far end, we spot a perfume stall with shimmering gold packaging, soft lighting, and a
price tag far above average.
• Idea: Keep prices high to suggest exclusivity and superior quality.
• Why it works: Attracts customers who see high price as a status symbol.
• Example: Luxury cars, high-end watches, boutique hotels.
7. Economy Pricing
A grocery stall sells no-frills rice and pulses at rock-bottom prices.
• Idea: Keep costs low and appeal to cost-conscious buyers.
• Why it works: Basic products at affordable rates reach mass markets.
• Example: Discount store brands.
8. Bundle Pricing
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A seller says, “Buy a scarf and gloves together for ₹500 instead of ₹600.”
• Idea: Offer several products together for a combined lower price.
• Why it works: Customers feel they are getting more value; sellers increase total
sales.
• Example: Fast food combo meals, holiday travel packages.
9. Psychological Pricing
We find a T-shirt priced at ₹999 instead of ₹1,000 — and people are buying happily.
• Idea: Use prices that look smaller to the brain, even if the difference is tiny.
• Why it works: ₹999 feels cheaper than ₹1,000 due to customer perception.
• Example: Retail stores everywhere use it.
10. Dynamic Pricing
At a nearby taxi stand, fares change depending on demand. Rainy evening? Prices go up.
Midday lull? Prices drop.
• Idea: Adjust prices in real time based on market demand and supply.
• Why it works: Maximizes profit during peak demand and encourages sales in slow
periods.
• Example: Airlines, ride-hailing apps, hotels.
11. Geographic Pricing
In the spice section, we overhear: “Same spice, but overseas buyers pay more due to
shipping costs.”
• Idea: Adjust prices based on location and market conditions.
• Why it works: Reflects cost variations and local purchasing power.
• Example: International product pricing.
12. Penalty Pricing
A car rental stall charges extra if the vehicle is returned late.
• Idea: Higher charges for not following agreed conditions.
• Why it works: Encourages customer compliance and covers potential losses.
• Example: Library late fees, ticket change fees.
What We Learn From the Bazaar
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Every pricing strategy has its place, just like every stall in this market has its own character.
Businesses choose their approach based on:
• Nature of the product (luxury vs. necessity)
• Customer behaviour (price-sensitive or value-focused)
• Competition (crowded or niche market)
• Business objectives (quick market capture or long-term profitability)
The Future of Pricing
As we leave the bazaar, Neha — an imaginary guide who has joined us — says:
• “In the digital age, pricing will become even more dynamic, personalized, and data-
driven. AI can help companies set just the right price for each customer at each
moment.”
Think about e-commerce platforms that offer you special discounts based on your browsing
habits or loyalty programs that change prices just for you.
Final Takeaway
A pricing strategy isn’t just a number on a tag — it’s a carefully chosen tool that tells a story
about the product, the brand, and the customer’s place in it.
From penetration pricing’s warm welcome to premium pricing’s red-carpet allure, from
bundle deals to psychological sweet spots, each method is a chapter in a company’s success
story. The clever part? Knowing which chapter to use — and when.
6. What is branding? Explain the various Methods to measure Brand Equity.
Ans: What is Branding? Explain the various Methods to measure Brand Equity
Imagine you are standing in a supermarket. On one shelf you see a packet of chips with no
name, just plain packaging. On the other shelf, there is a bright red packet with the word
“Lays” written in bold letters.
Now, here’s the interesting part: both packets might contain the exact same potato chips.
But most people will still pick Lays without thinking twice.
Why?
Because of branding.
Branding is not just about a name or a logo. It’s about the feelings, trust, image, and identity
that a product builds in the minds of customers. It is the reason why people pay extra for an
iPhone when other smartphones can do almost the same tasks. It is also why children prefer
Maggi noodles over any other instant noodle brand.
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In simple words, branding is the process of creating a unique identity for a product, service,
or company in the minds of customers. It is like giving a “soul” to a product so that people
remember it, trust it, and choose it over competitors.
The Story of Branding
Let’s imagine a new bakery called “Sweet Crust.” At first, it just sells bread and cakes like
hundreds of other bakeries. But then the owner decides to create a strong identity:
• They design a unique logo with a smiling cupcake.
• They choose the tagline: “Happiness in Every Bite.”
• They make sure the packaging is attractive.
• They provide warm service so that customers feel valued.
Soon, people in the neighborhood don’t just say, “Let’s buy bread.” They say, “Let’s buy
from Sweet Crust.”
That emotional connection, that trust, and that recognition is the power of branding.
What is Brand Equity?
Now comes the next part: If branding is the process, brand equity is the result.
Think of brand equity as the “value” a brand holds in the marketplace, beyond the actual
product. For example:
• A plain white T-shirt may cost ₹300.
• But if the same T-shirt has the Nike logo, suddenly the price jumps to ₹1500.
That extra ₹1200 is not for the cloth—it’s for the brand value.
So, brand equity means the worth of a brand in the eyes of customers. It is the power of a
brand name that influences consumer choice, loyalty, and willingness to pay a higher price.
Why Measure Brand Equity?
For a company, measuring brand equity is like checking its health report. It helps in knowing:
1. How strong the brand is compared to competitors.
2. Whether customers love, trust, or ignore the brand.
3. How much extra value the brand brings in terms of sales and profit.
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Just like doctors use different methods to check health (blood pressure, sugar level, etc.),
marketers also use different methods to measure brand equity.
Methods to Measure Brand Equity
1. Financial Methods
This is like counting money to check how valuable a brand is. Companies look at how much
extra revenue or profit comes because of the brand name.
• Example: Coca-Cola sells cola for ₹40. If a local brand sells the same cola for ₹20, the
extra ₹20 customers willingly pay is due to Coca-Cola’s brand equity.
• Techniques include:
o Price premium analysis (how much extra customers pay for the brand).
o Market value of the brand.
o Stock price impact.
Story angle: Imagine if tomorrow Coca-Cola decided to sell its brand name to another
company. The billions it would earn is the financial measure of its brand equity.
2. Consumer-Based Methods
Here, the focus is not on money, but on the customer’s mind and heart. It asks: What do
customers think and feel about the brand?
• Surveys and interviews are conducted to understand customer awareness,
perception, loyalty, and trust.
• For example, if people are asked to name a toothpaste and 90% immediately say
Colgate, it shows high brand equity.
Example: When you hear the word “photocopy,” you often say “Xerox” without thinking.
That’s because consumer-based equity is so strong that the brand name replaces the
generic product name.
3. Perceptual Mapping
This is like drawing a map in the customer’s mind. It shows where a brand stands compared
to competitors.
• For example, in soft drinks, customers may place Coca-Cola as “cool and classic,”
while Pepsi may be placed as “young and trendy.”
• Marketers use this map to see how customers position their brand.
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Story angle: Imagine asking 100 people to draw where different car brands fit. They might
place Mercedes in the “luxury” corner, Maruti Suzuki in the “affordable” corner, and Tesla in
the “innovative” corner. That’s perceptual mapping.
4. Brand Asset Valuator (BAV)
This is a scientific model developed by Young & Rubicam. It measures a brand based on four
pillars:
1. Differentiation – How unique is the brand compared to others?
2. Relevance – How meaningful is it to consumers?
3. Esteem – How much respect and trust does it hold?
4. Knowledge – How well do customers actually know the brand?
Example: Apple scores high in all four pillars—it is different, relevant, respected, and well-
known.
5. Brand Resonance Model
Proposed by Kevin Keller, this method explains how deeply customers connect with a brand.
It has four levels (like steps on a ladder):
1. Brand Identity – Do customers know the brand?
2. Brand Meaning – Do they understand what it stands for?
3. Brand Response – How do they feel about it?
4. Brand Resonance – Do they have loyalty and attachment strong enough to
recommend it?
Story angle: Think about how fans camp outside Apple stores the night before a new iPhone
launches. That’s the highest form of brand resonance—an emotional bond.
6. Market-Based Methods
This looks at how a brand performs in the real market.
• Market share: Does the brand dominate compared to competitors?
• Customer loyalty: Do people keep buying the brand repeatedly?
• Sales growth: Is the brand expanding year after year?
Example: In India, despite many new tea brands, Tata Tea continues to hold a strong market
share. That’s proof of its brand equity in action.
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Conclusion
Branding is like giving life and personality to a product. Without branding, products are just
commodities. But with branding, they become part of people’s emotions and lifestyle.
And brand equity? That’s the power, trust, and value the brand builds over time. Measuring
it is essential because it tells companies whether their brand is growing strong or fading
away.
From financial methods to consumer surveys, from perceptual maps to resonance models—
each technique gives a different lens to see the true worth of a brand.
SECTION-D
7. Discuss the changing role of Direct Selling. Comment on the qualities of a successful
Salesman.
Ans: The Changing Role of Direct Selling and the Qualities of a Successful Salesman
Imagine this: It’s the year 1980. A salesman knocks on your door carrying a big suitcase.
Inside the suitcase, there are shiny utensils, attractive beauty products, or perhaps a set of
vacuum cleaners. He smiles warmly, greets the family, and begins his demonstration right
there in the living room. This was direct selling in its traditional form — personal, face-to-
face, and heavily dependent on human interaction.
Now, fast forward to today. Instead of knocking on doors, the salesman might message you
on WhatsApp, send you a personalized link on Instagram, or even host a live-streaming
session demonstrating the same product. You might not even meet him physically, but you
still end up buying — sometimes even more enthusiastically than before.
This journey, from door-to-door knocking to digital networking, beautifully explains how the
role of direct selling has transformed over time. Let’s walk through this transformation like a
story, and then explore what makes a salesman truly successful in this new age.
The Evolution of Direct Selling: From Streets to Screens
1. The Traditional Era – The Human Touch
In earlier decades, direct selling was all about physical presence. Salesmen (and
often women too) traveled from one home to another, carrying products with them.
Their biggest weapon was persuasion and personality. They explained the benefits of
the product, sometimes even gave a free demo, and won customers with trust and
relationship-building.
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At that time, people did not have malls, online shopping, or 24x7 supermarkets. So direct
selling filled a major gap in distribution and access. It was not just about selling; it was about
creating a bond of trust, sometimes even turning into long-lasting customer relationships.
2. The Transition Phase – Changing Lifestyles
With the rise of supermarkets, shopping complexes, and later, e-commerce, the
dependence on direct selling began to decline. People had more options to buy,
compare, and choose. Yet, direct selling did not vanish — it adapted. Companies
started organizing community events, group meetings (sometimes called "home
parties"), and workshops where products were showcased collectively rather than
one-to-one.
This was the phase where networking and word-of-mouth played a huge role. One satisfied
customer could bring ten more buyers.
3. The Modern Era – Technology Reshaping Direct Selling
Today, direct selling has taken on a new avatar. Instead of door-to-door knocks, sales
happen on social media platforms like Instagram, Facebook, and WhatsApp. Digital
wallets and UPI payments have made transactions smoother. Sellers create short
videos, reels, or even blogs to explain their products.
For instance, a beauty product seller may post a "before and after" video on YouTube. A
nutrition supplement seller might organize an online webinar about fitness. Customers are
reached instantly, across cities or even countries, without physical presence.
In short, technology has expanded the reach, speed, and style of direct selling. It is no longer
limited to personal interaction but has blended with digital influence.
4. The Future – Blending Human Touch with AI
The future of direct selling seems even more exciting. Artificial Intelligence (AI)
chatbots can answer customer queries instantly. Virtual reality may allow people to
“try” products online. But despite all this, one thing will always remain constant —
the personal trust and credibility of the salesman.
The Changing Role of Direct Selling: Key Highlights
• From face-to-face demonstrations to online digital marketing.
• From limited local reach to global customer base.
• From manual persuasion to influencer-style promotion.
• From simple transactions to long-term brand building.
Thus, the role of direct selling has shifted from being merely a selling technique to becoming
a relationship-building and trust-creating process in a modern marketplace.
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Qualities of a Successful Salesman
Now comes the heart of the question — what makes a salesman truly successful, especially
in this new era? Let’s imagine a salesman as a character in our story and see what qualities
he needs to shine.
1. Excellent Communication Skills
Words are the salesman’s magic wand. A successful salesman knows how to explain
the product simply, clearly, and persuasively. He does not confuse the customer with
jargon but instead uses relatable examples.
2. Ability to Build Trust
Whether offline or online, trust is everything. People will not buy from someone they
don’t trust. A good salesman is always honest about his product, highlights its real
benefits, and never oversells. Transparency makes customers loyal.
3. Adaptability and Tech-Savviness
Gone are the days when only physical presence mattered. Today’s salesman must be
comfortable with technology — using social media, video calls, digital payments, and
even online advertising. The faster he adapts, the better he survives.
4. Listening Skills
Many salesmen talk endlessly but forget to listen. A successful one listens to the
customer’s needs, problems, and preferences before offering solutions. This makes
the buyer feel valued and increases the chance of closing the deal.
5. Confidence and Positivity
Sales often involve rejection. Not every customer will say yes. A great salesman does
not lose hope; instead, he stays positive and keeps improving. Confidence makes him
appear trustworthy and professional.
6. Knowledge of the Product and Market
Customers today are smart. They can compare products online within seconds. So a
salesman must have in-depth product knowledge and also be aware of competitors.
This helps him answer doubts effectively and prove why his product is the best.
7. Relationship Building
In direct selling, the sale is not the end — it’s the beginning. A successful salesman
maintains relationships with customers, checks on their satisfaction, and informs
them about new offers. This creates repeat buyers and long-term loyalty.
A Story to Wrap it Up
Think of direct selling as a tree. In the past, its roots were planted in door-to-door selling,
watered by personal touch and trust. As the years passed, new branches grew —
community meetings, workshops, and events. Today, the tree has spread its branches even
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wider with social media, e-commerce, and digital platforms. Tomorrow, the tree may bear
fruits of AI and virtual reality.
But just like a tree needs good soil and care, direct selling will always need good salesmen.
Their qualities — communication, honesty, adaptability, and positivity — are the soil that
keeps this tree alive and growing.
Conclusion
The role of direct selling has shifted dramatically from being a simple door-to-door sales
practice to a dynamic blend of human interaction and digital innovation. While technology
has reshaped the way products are promoted and sold, the essence of direct selling — trust,
relationships, and personal touch — remains unchanged.
A successful salesman is not just someone who sells a product; he is someone who wins
hearts, builds trust, and adapts with time. Whether he is knocking on doors in the 1980s or
sending product reels on Instagram today, his qualities are what make direct selling thrive.
8. What is advertising? Why is it required for business organizations ? Discuss the methods
for deciding the budget for advertising.
Ans: What is Advertising?
Imagine you opened a small bakery shop in your town. Every morning, you wake up early,
bake the freshest bread, make delicious pastries, and decorate your little shop with love.
But there’s a problem — nobody knows about your bakery. People just walk past it, maybe
smelling the bread, but they don’t even realize how good it tastes inside.
This is where advertising enters the story. Advertising is like a loud but polite friend who
goes out into the world and tells everyone, “Hey, there’s a wonderful bakery here. You
should try it once!”
In simple words, advertising is a way of communicating with the public about products or
services to encourage them to buy or use them. It is a paid form of communication where
businesses use different media (TV, radio, newspapers, social media, hoardings, YouTube
ads, etc.) to reach people and persuade them.
So, advertising is not just about selling — it’s about telling a story, creating awareness, and
connecting people with a product or service they might need but don’t yet know about.
Why is Advertising Required for Business Organizations?
Let’s continue with our bakery story, because business examples feel more alive when told
like that.
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1. To Create Awareness:
If nobody knows about your bakery, they’ll never come. Similarly, in business, if
customers don’t know about a product, it won’t sell. Advertising acts like a
torchlight, making the product visible in a crowded marketplace.
2. To Build Identity and Brand Image:
Think of Coca-Cola. Even if you never drink it, you know its logo, its red color, and
even its jingle. That’s the power of advertising — it makes a product more than a
product; it makes it a brand.
3. To Beat the Competition:
In your bakery’s street, suppose another bakery opens. Now customers have two
options. If you advertise better — maybe by highlighting your “freshly baked
croissants at 6 AM” — you’ll pull more customers. Businesses advertise to stand out
from competitors.
4. To Increase Sales and Profits:
Of course, the ultimate aim of any business is profit. Advertising brings in more
customers, which means more sales and revenue.
5. To Educate Consumers:
Sometimes advertising isn’t only about buying. For example, toothpaste ads also tell
us about dental hygiene. Similarly, insurance ads educate people about financial
security.
6. To Introduce New Products:
Imagine you’ve introduced a new cake flavor — chocolate-orange. Without
advertising, only a few walk-in customers will know. But with an Instagram reel,
suddenly, hundreds of people in your town want to taste it.
So, in short, advertising is not just helpful, it is almost essential in today’s business world.
Without it, even the best product may remain invisible.
Methods of Deciding the Advertising Budget
Now comes the practical side of business. You might think — “Okay, I know advertising is
important, but how much money should a business actually spend on it?”
Deciding an advertising budget is like planning how much pocket money you’ll save for a
school trip. You can’t spend everything, but you also can’t spend too little, or you’ll miss the
fun. Businesses face the same challenge. Let’s understand the main methods:
1. Percentage of Sales Method
This is the most common way. A business decides a fixed percentage of its sales to spend on
advertising.
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For example:
If your bakery earns ₹1,00,000 in a month, you may decide to spend 10% of it (₹10,000) on
advertising.
Pros: It’s simple and directly linked to how much you earn.
Cons: If sales are low, advertising budget also becomes low — but actually, that’s when you
might need advertising more!
2. Affordable Method (What You Can Spare)
Here, businesses spend only what they can afford after covering other expenses.
Example: After paying rent, electricity, salaries, and buying ingredients, you have ₹5,000
left. So, you spend that much on advertising.
Pros: Safe, doesn’t risk the financial health of the business.
Cons: May lead to under-spending, and growth becomes slow.
3. Competitive Parity Method
In this method, a business looks at competitors — how much they’re spending — and then
decides its own budget.
Example: If the bakery across the street spends ₹15,000 on Instagram ads, you may decide
to match or slightly exceed it.
Pros: Keeps you competitive.
Cons: Every business has different strengths; blindly copying competitors may not always
work.
4. Objective and Task Method
This is the most logical and modern method. Here, businesses first set clear goals — like
“increase brand awareness by 20%” or “gain 500 new customers this month.” Then they
calculate how much money is needed to achieve that goal.
Example: If running Instagram and Facebook ads costs ₹20,000 to reach 10,000 people, and
that’s your goal, then that’s your budget.
Pros: Scientific and goal-oriented.
Cons: Requires proper research and planning.
5. Experimental Method
Sometimes businesses try different budgets and test which one works best.
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Example: Spend ₹5,000 on advertising one month, ₹10,000 the next month, and then
compare results.
Pros: Practical and based on real performance.
Cons: Time-consuming and requires continuous monitoring.
Wrapping Up the Story
If we look back, our bakery example shows us a simple truth: a good product is not enough;
people must know about it, trust it, and remember it. That’s the job advertising does.
It is the bridge between businesses and customers. Whether it’s through billboards, TV, or
Instagram reels, advertising ensures that the effort businesses put into making products
doesn’t go unnoticed.
And just like we carefully decide our daily budget for food, clothes, or entertainment,
businesses too must decide wisely how much to spend on advertising — not too little, not
too much, but just enough to make people curious, interested, and willing to buy.
So, advertising is both an art (storytelling) and a science (budget planning). The bakery,
Coca-Cola, Apple, or even a local tuition center — all need it, because without advertising,
even the brightest star may remain unseen in the dark sky of competition.
“This paper has been carefully prepared for educational purposes. If you notice any mistakes or
have suggestions, feel free to share your feedback.”
