QUESTION BANK EEM
UNIT-8
Q1. What is marketing? Explain Marketing Mix /4 ps of marketing
The marketing mix refers to the set of actions, or tactics, that a company uses to promote
its brand or product in the market. The 4Ps make up a typical marketing mix Product,
Price, Place and Promotion. Marketing mix considers having
The right product
Sold at the right price
At the right place
Using the most suitable promotion.
Product
A product can be either a tangible good or an intangible service that fulfills a need or
want of consumers.
The product has to have the right features - for example, it must look good and work
well.
Marketers must also create the right product mix.
Its imperative to have a clear grasp of exactly what your product is and what makes
it unique before you can successfully market it.
Price
Once a concrete understanding of the product offering is established we can start
making some pricing decisions.
It depends on costs of production, segment targeted, ability of the market to pay,
supply - demand and a host of other direct and indirect factors.
Of all the aspects of the marketing mix, price is the one, which creates sales revenue
- all the others are costs.
It is also a very important component of a marketing plan as it determines your
firms profit and survival.
Place:
'Place' is concerned with various methods of transporting and storing goods, and
then making them available for the customer.
Getting the right product to the right place at the right time involves the distribution
system.
The customer will not buy your product if it is not convenient to them.
Company must evaluate what the ideal locations are to convert potential clients into
actual clients
Promotion
Promotion is the business of communicating with customers. It will provide
information that will assist them in making a decision to purchase a product or
service.
The cost associated with promotion or advertising goods and services often
represents a sizeable proportion of the overall cost of producing an item.
Promotion includes elements like: advertising, public relations, social media
marketing, email marketing, search engine marketing, video marketing and more.
Each touch point of promotions must be supported by a well positioned brand to
truly maximize return on investment.
Q2. Explain different concepts of marketing.
Every company can have different ideas or philosophy .T here are FIVE competing concepts
under which organizations conduct their marketing activities. Each concept will vary in the
function that they deal with.
Production Concept The Production Concept is one of the oldest orientations.
Consumers prefer products that are widely available and inexpensive.
The production concept is more operations oriented than any other concept.
It follows the idea that consumers will favor products that are available and highly
affordable. Therefore, the aim of the organization is to improve production and
distribution efficiency.
It assumes that consumers are primarily interested in product availability and low
prices.
Product Concept- the aim is to improve the product.
Consumers favor products that offer the most quality, performance, or innovative
features.
The product concept believes in the consumer and it says the consumers are more
likely to be loyal if they have more options of products or they get more benefits
from the product of the company.
It is based on the idea that consumers will favor products which offer the most
quality, performance and features.
Selling Concept
The Selling Concept is, as the name indicates, all about selling, which involves
aggressive selling to any customer.
It is of minor importance who is your customer may be, which usually automatically
leads to a short-term customer relationship.
It undertakes a large selling and promotion effort.
Selling is not the only tactic to sell your product. It must focus on marketing as well.
Marketing Concept
The Marketing Concept is the first approach which can actually fulfill the needs of a
marketing strategy: building profitable long-term relationships by maximizing value
for the customer.
Focuses on needs/wants of target markets & delivering value better than
competitors.
The Marketing Concept is a customer-centered sense and respond philosophy.
Instead of finding the right customers for a product it aims to find the right products
for target customers.
Marketing Concept yields more customer value by creating lasting relationships
with the right customers, which is based on customer value and satisfaction.
Societal Marketing
The Societal Marketing Concept addresses these issues. Therefore, it is an
advanced version of the Marketing Concept.
Focuses on needs / wants of target markets & delivering value better than
competitors that preserves the consumers and societys well-being.
The Societal Marketing Concept considers what the customer wants now, but at the
same time looks at what society wants now and in the future, calling for the
satisfaction of societys long-term interests.
Companies have to balance three considerations at the same time: the companys
profits, consumer wants, and societys interests.
Holistic marketing concept
Holistic Marketing Concept is probably the newest approach to marketing and the
latest business concept
Holistic marketing concept involves interconnected marketing activities to ensure
that the customer is likely to purchase their product rather than competition.
According to holistic marketing concept, even if a business is made of various
departments, the departments have to come together to project a positive & united
business image in the minds of the customer.
Holistic marketing recognizes that everything matters with marketing and that a
broad, integrated perspective is necessary to attain the best solution.
Four main components of holistic marketing are: relationship marketing, integrated
marketing, internal marketing, and socially responsible marketing.
Q3. What is demand forecasting? Explain different methods of demand forecasting.
Consumers behavior is the most unpredictable one because it is motivated and influenced
by a multiplicity of forces.
Demand forecasting is used to determine the number of products or services that will be
purchased by consumers in the future.
Numerous methods can be used when integrating demand forecasting into any business.
The information regarding future demand is essential for planning and scheduling
production, purchase of raw materials, acquiring of finance and advertising.
METHODS OF FORECASTING
Demand forecasting involves techniques including both informal methods, such as
educated guesses, and quantitative methods, such as the use of historical sales data and
statistical techniques or current data from test markets. The various methods of demand
forecasting can be summarized as:-
1. Opinion Surveys:
The most direct method of estimating demand in the short-run is to ask
customers what they are planning to buy for the forthcoming time period
usually a year.
Here the burden of forecasting is shifted to the consumer. In this method,
customers may tend to exaggerate their requirements.
This is the direct method of estimating demand in the short run
The firm may go in for complete enumeration or for sample surveys.
2. Sales Force Opinion Method:
This is also known as collective opinion method. In this method, instead of
consumers, the opinion of the salesmen is sought.
It is sometimes referred as the grass roots approach as it is a bottom-up method
that requires each sales person in the company to make an individual forecast for
his or her particular sales territory.
The advantages of this method are that it is easy and cheap. It does not involve any
elaborate statistical treatment.
3. Experts Opinion Method:
In expert method requires a panel of experts, all the experts to have access to all the
information for forecasting.
The method is used for long term forecasting to estimate potential sales for new
products
4. Sample Survey and Test Marketing:
Statistical Method: Under this method some representative households are
selected on random basis as samples and their opinion is taken as the generalized
opinion.
Product testing essentially involves placing the product with a number of users for a
set period. Their reactions to the product are noted after a period of time and an
estimate of likely demand is made from the result.
Statistical methods have proved to be immensely useful in demand forecasting.
The important statistical methods are:
Trend Projection Method: A firm existing for a long time will have its own data
regarding sales for past years. Such data when arranged chronologically yield what is
referred to as time series.
Regression Analysis: It attempts to assess the relationship between at least two
variables (one or more independent and one dependent. This method starts from the
assumption that a basic relationship exists between two variables
Q4. What is segmentation? Explain different bases of market segmentation.
The process of defining and subdividing a large homogenous market into clearly
identifiable segments having similar needs, wants, or demand characteristics.
Market segmentation is a marketing concept which divides the complete market set
up into smaller subsets comprising of consumers with a similar taste, demand and
preference.
The four bases for segmenting consumer market are as follows: Demographic
Segmentation, Geographic Segmentation, Psychographic Segmentation and
Behavioral Segmentation.
1. Demographic Segmentation:
Demographic segmentation divides the markets into groups based on variables
such as age, gender, family size, income, occupation, education, religion, race and
nationality. Demographic factors are the most popular bases for segmenting the
consumer group.
Demographic Age group Pre-teens, teens, young adults, older
adults
Generation Baby boomers, Gen X, Gen Y
Gender Male, female
Marital status Married, single, widowed
Family life cycle Young married no kids, married young
kids
Family size Couple only, small family, large family
Occupation Professional, trade, unskilled
Education High school, university, vocational
Religion Christian, Jewish, Hindu, Muslim
2. Geographic Segmentation:
Geographic segmentation refers to dividing a market into different geographical
units such as nations, states, regions, cities, or neighborhoods.
Geographic segmentation refers to the classification of market into various
geographical areas. A marketer cant have similar strategies for individuals living at
different places.
Geographic Country/continent India, England, UK, Europe
Region/area of the country North India, West India, South India
City New Delhi, Mumbai, Ahmedabad
Urban/rural Measured by the areas population
density
Climate Tropical, arid, alpine
3. Psychographic Segmentation:
Psychographic segmentation pertains to lifestyle and personality traits. In the case
of certain products, buying behavior predominantly depends on lifestyle and
personality characteristics.
The basis of such segmentation is the lifestyle of the individuals. The individuals
attitude, interest, value help the marketers to classify them into small groups.
Psychographic Lifestyle Family, social, sporty, travel, education
Values (VALS) VALS = values and lifestyles
Social class Upper class, middle class, lower class
Personality/self-concept Ongoing, creative, innovator, serious
Activities, interests, opinions Various hobbies, sports, interests
(AIO)
4. Behavioral Segmentation:
In behavioral segmentation, buyers are divided into groups on the basis of their
knowledge of, attitude towards, use of, or response to a product
Behavioral segmentation includes segmentation on the basis of occasions, user
status, usage rate loyalty status, buyer-readiness stage and attitude.
The loyalties of the customers towards a particular brand help the marketers to
classify them into smaller groups, each group comprising of individuals loyal
towards a particular brand.
Behavioral Occasion Birthday, anniversary, Valentines Day
Buying stage Ready to buy, gathering information
only
User status Regular, occasional, never
Usage rate Heavy, light
Loyalty status Loyal, occasional switcher, regular
switcher
Q5. What is financial management? Explain different functions of financial
management.
One needs money to make money. Finance is the life-blood of business and there must be a
continuous flow of funds in and out of a business enterprise
Meaning of Financial Management:
Financial management may be defined as planning, organizing, directing and
controlling the financial activities of an organization. It is concerned with the
procurement and utilization of funds in the proper manner.
Financial Manager is the executive who manages the financial matters of a business.
Functions of Financial Management
1. Estimation of capital requirements: A finance manager has to make estimation
with regards to capital requirements of the company. This will depend upon
expected costs and profits and future programmes and policies of a concern.
Estimations have to be made in an adequate manner which increases earning
capacity of enterprise.
2. Determination of capital composition: Once the estimation have been made, the
capital structures have to be decided. This involves short- term and long- term debt
equity analysis. This will depend upon the proportion of equity capital a company is
possessing and additional funds which have to be raised from outside parties.
3. Choice of sources of funds: For additional funds to be procured, a company has
many choices like-
a. Issue of shares and debentures
b. Loans to be taken from banks and financial institutions
c. Public deposits to be drawn like in form of bonds.
4. Utilization of Funds: The funds procured by the financial manager are to be
prudently invested in various assets so as to maximize the return on investment:
While taking investment decisions, management should be guided by three
important principles, viz., safety, profitability, and liquidity.
5. Investment of funds: The finance manager has to decide to allocate funds into
profitable ventures so that there is safety on investment and regular returns is
possible.
6. Disposal of surplus: The net profits decisions have to be made by the finance
manager. The financial manager has to decide how much to retain for ploughing
back and how much to distribute as dividend to shareholders out of the profits of
the company.
7. Management of Cash: Management of cash and other current assets is an
important task of financial manager. It involves forecasting the cash inflows and
outflows to ensure that there is neither shortage nor surplus of cash with the firm.
8. Financial Control: Evaluation of financial performance is also an important
function of financial manager. The overall measure of evaluation is Return on
Investment (ROI). The other techniques of financial control and evaluation include
budgetary control, cost control, internal audit, break-even analysis and ratio
analysis.
Q6. Explain different objectives of financial management/ explain goals of financial
management.
Financial management is one of the functional areas of business. Therefore, its objectives
must be consistent with the overall objectives of business. The overall objective of financial
management is to provide maximum return to the owners on their investment in the long-
term.
The objectives or goals of financial management are:
1. Profit Maximization.
2. Wealth Maximization.
3. Return Maximization.
Profit Maximization: Very often maximization of profits is considered to be the main objective of
financial management. Profitability is an operational concept that signifies economic efficiency.
It is said that profit maximization is a simple and straightforward objective. It also
ensures the survival and growth of a business firm.
Profit maximization objective does not take into consideration the social
responsibilities of business. It ignores the interests of workers, consumers,
government and the public in general.
Wealth Maximization: Wealth maximization is also known as Value or Net present worth
maximization.
Its operational features satisfy all the three requirements of the operational of the
financial course of action namely, exactness, quality of benefits, and the time value
of money.
Focus on; stakeholders include groups such as employees, customers, suppliers,
creditors, owners and others who have a direct link to the firm.
This goal directly affects the policy decision of the firm about what to invest in and
how to finance these investments.
Wealth maximization involves a comparison of value of cost.
Increase in market price lead to appreciation in shareholders wealth and vice versa.
So the major goal of financial management is to maximize the market price of the
equity shares of the company.
Return Maximization: The third objective of financial management says to safeguard the
economic interest of all the persons who are directly or indirectly connected with the
company whether they are shareholders, creditors or employees. All these parties must
also get maximum return on the investment and this can be possible only when the
company earns higher profits to discharge its obligations to them.
Q7. Explain scope of financial management.
The major scope of financial management are as follows:
1. Investment Decision
2. Financing Decision
3. Dividend Decision
4. Working Capital Decision.
1. Investment Decision:
The investment decision involves the evaluation of risk, measurement of cost of capital and
estimation of expected benefits from a project. Capital budgeting and liquidity are the two
major components of investment decision.
2. Financing Decision:
While the investment decision involves decision with respect to composition or mix of
assets, financing decision is concerned with the financing mix or financial structure of the
firm. The raising of funds requires decisions regarding the methods and sources of finance,
relative proportion and choice between alternative sources.
3. Dividend Decision:
In order to achieve the wealth maximization objective, an appropriate dividend policy must
be developed. One aspect of dividend policy is to decide whether to distribute all the profits
in the form of dividends or to distribute a part of the profits and retain the balance.
4. Working Capital Decision:
Working capital decision is related to the investment in current assets and current
liabilities. Current assets include cash, receivables, inventory, short-term securities, etc.
Q8. Explain different sources of finance
Sources of finance mean the ways for mobilizing various terms of finance to the industrial
concern. The companies belong to the existing or the new which need sum amount of
finance to meet the long-term and short-term requirements
Long-term sources: Finance may be mobilized by long-term or short-term. When the
finance mobilized with large amount and the repayable over the period will be more than
five years, it may be considered as long-term sources.
Long-term sources of finance include:
Equity Shares
Preference Shares
Debenture
Long-term Loans
Fixed Deposits
Short-term sources: Apart from the long-term source of finance, firms can generate
finance with the help of short-term. Short-term source of finance needs to meet the
operational expenditure of the business concern.
Short-term source of finance include:
Bank Credit
Customer Advances
Trade Credit
Factoring
Public Deposits
Money Market Instruments
Internal Sources: Internal source of capital is the capital which is generated internally
from the business. Internal sources are as follows:
Retained profits
Reduction or controlling of working capital
Sale of assets etc.
External Sources: External source of finance is the capital which is generated from outside
the business. Apart from the internal sources finance, all the sources are external sources of
capital. There are two types: loan capital and share capital.
