Question Paper Marketing Management – II (MB222): January 2008

• Answer all 100 questions.
• Each question carries one mark.
1. There are about seven modern marketing principles that address the public policy towards marketing. Which of the
following principles describes that any marketing effort will be successful if it improves the quality of life of
customers?
(a) Principle of potential harm
(b) Principle of consumer protection
(c) Principle of meeting basic needs
(d) Principle of curbing potential harm
(e) Principle of consumer and producer freedom.

2. Hindustan Unilever's (HUL) distribution network is recognised as one of its key strengths. The company’s focus
is not only to enable easy access to its brands, but also to touch consumers with a three-way convergence - of
product availability, brand communication, and higher levels of brand experience. HUL's products, manufactured
across the country, are distributed through a network of about 7,000 redistribution stockists covering about one
million retail outlets. The distribution network directly covers the entire urban population. Recognizing the
growth of self-service stores and supermarkets in metros and large towns. The company wants to establish a selfservice
store to sell its wide assortment of products. In its endeavor to select a suitable location for a retail outlet,
the company decided to follow the analog model. With respect to following the analog model, what would be the
first task for HUL?
(a) Estimating the competitive environment
(b) Studying the capability of the store to attract the customers from different geographic locations
(c) Identifying a retail outlet that is similar to proposed outlet
(d) Estimating the sales that the proposed retail outlet can generate
(e) Creating the store image.

3. Retailer sponsored co-operative organizations are a type of vertical marketing system. Which of the following
is/are not true regarding retailer-sponsored cooperative organizations?
I. They are a type of contractual vertical marketing system in which retailers concentrate their buying power.
II. These group of retailers buy together in bulk and are involved in collective merchandising.
III. Retail members receive rebates at the end of the year on the basis of the purchases they have made throughout
the year.
IV. They are similar to traditional channels of distribution.
(a) Only (II) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) (I), (II) and (III) above
(e) All (I), (II), (III) and (IV) above.

4. If marketers set prices to recover research and development expenses and establish a premium quality image for
their product, they have in mind which type of pricing objective?
(a) Survival
(b) High return on investment
(c) Increasing market share
(d) Communicating product quality
(e) Improving cash flow.

5. Which of the following is/are the crucial factor(s) that should be considered in brand name selection?
I. Brand names should be distinguishable from other brands.
II. Brand names should be related in some way to products or services the company is offering.
III. Brand names should consider how long the company has been in the market.

IV. They should be names that can be legally protected.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.
6. Distribution channels typically perform all of the following functions, except
(a) Enabling smooth flow of products from the producer to the end-user
(b) Making goods locally available
(c) Providing expert local market knowledge
(d) Facilitating direct communication between the customer and manufacturer
(e) Promoting the products through efficient product displays.

7. Which of the following consists of a unique sequence of lines that identifies a product with the help of an
electronic scanner usually placed at the retail checkout counters?
(a) Retail product code
(b) Inventory status code
(c) Universal product code
(d) Product price code
(e) Product line code.

8. Which of the following methods of product testing is carried out on a long-term basis, where the customer uses
the product extensively?
(a) Alpha testing
(b) Lamda testing
(c) Gamma testing
(d) Kappa testing
(e) Beta testing.

9. Sailaga Rani is a chef in a new downtown restaurant. She has sent out press releases to the major local media and
has invited food critics to dine in her restaurant. Sailaga is using which promotional element?
(a) Public relations
(b) Personal selling
(c) Sales promotion
(d) Advertising
(e) Publicity.

10. Research on salesperson motivation suggests that what produces motivated salespeople is a clear job description,
effective sales management practice, a sense of achievement, and
(a) A swift kick in the butt now and then
(b) No targets to be reached
(c) An unlimited expense account
(d) Proper incentives and rewards
(e) Support from customers.

11. A Japanese electronics firm has launched a new CD player in the competitive American market. The firm prices
its products very low in order to gain a foothold in the market. The pricing objective of this firm is
(a) Increasing market share
(b) Maximizing ROI
(c) Attaining satisfactory profits
(d) Survival
(e) Increasing product quality.

12. Which of the following is/are public relations techniques used by firms in consumer communication?
I. Customer press releases.
II. Celebrity endorsement.
III. Direct mailings.
IV. Trade exhibitions.
(a) Only (I) above
(b) Both (I) and (II) above

(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.
13. Buffington Bookcases sells specialty bookcases and office furniture accessories nationally through its catalogue.
The company wants to simplify pricing and reduce its risk. Buffington also desires some type of difference in
prices due to distance; therefore, the company uses
(a) Two-part pricing
(b) Uniform delivered pricing
(c) Freight absorption pricing
(d) Zone pricing
(e) Flexible pricing.

14. The face of the retailing industry has undergone significant global changes over the past two decades. Retailing has
evolved from a small time local merchandising business to its present global state. The emergence of which of the
following can be stated to have caused the primary disruption in retailing?
(a) Local merchandisers
(b) Departmental stores
(c) Catalogue retailing
(d) Internet retailing
(e) Discount retailing.

15. Which of the following is/are the causes of channel conflicts?
I. Conflicts result when channel members have individual goals and objectives that are not compatible.
II. Lack of clearly defined roles and responsibilities.
III. Manufacturer and channel members targeting the same market.
IV. Channel members use persuasive mechanisms to influence the behavior of other channel members.
(a) Only (II) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

16. There are various factors that affect price sensitivity. Which of the following implies that customers are less price
sensitive, when the cost incurred on the product is too little compared to the total cost of the end product?
(a) Unique value effect
(b) Total expenditure effect
(c) Sunk investment effect
(d) Price quality effect
(e) End benefit effect.

17. Sandiko company is in the business of manufacturing and marketing of premium shoes. The company has a good
reputation in the market for the quality of its products. Now the company, in a move towards diversification wants
to enter the textile market. The company is all set to start the new business. Though the company’s brand value is
high, it is still a major challenge for them to face the competition from the big as well as small players in the textile
industry. The top management’s prime focus is on the pricing strategy to be followed. Therefore, the management
aimed at adopting a pricing strategy that would help them to penetrate the market. They know that a wrong step
regarding the pricing may lead them to disaster. The top management has considered various alternative pricing
strategies given below. Which of the following strategies best suits a company like Sandiko?
(a) Set the price by calculating the production cost
(b) Set the price keeping in mind all the costs incurred in the launch of the product
(c) Set the price such that the profit margin is maximum and costs incurred can be covered soon
(d) Set the price such that the profit margin is minimal and a large market can be covered
(e) Set the price depending upon different market situations.

18. In the New Product Development process, which of the following gives useful information like customer’s first
impression about the product and provides early use experiences of the customers and their further expectations?
(a) Idea Screening
(b) Test marketing
(c) Business analysis

(d) Concept testing
(e) Product testing.
19. Which of the following business practices constitute enlightened marketing activities of a firm aimed at
leveraging long-term benefits?
I. Social responsibility.
II. Innovative marketing.
III. Sense-of-mission.
IV. Environmentalism.
(a) Only (II) above
(b) Both (I) and (IV) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

20. Blue Pox is a company that sells specialty products to allergy sufferers through its website and offline through
various retail stores. Blue Pox uses a
(a) Bilateral distribution strategy
(b) Dual distribution strategy
(c) Vertical integration strategy
(d) Unilateral distribution strategy
(e) Franchising strategy.

21. Which of the pricing methods is adopted for the products that do not possess a market price or for products for
which it is difficult to fix the price owing to attributes like varying levels of quality and specifications?
(a) Going-rate pricing
(b) Target return pricing
(c) Perceived-value pricing
(d) Sealed-bid pricing
(e) Mark-up pricing.

22. Aravind Eye Hospital (AEH) was established in Madurai district of Tamil Nadu in 1978 by Dr.G.Venkataswamy
to eradicate blindness caused by cataract. The dedication and perseverance of Dr.Venkataswamy and his team in
collaboration with various international universities and organizations, has helped AEH gain the status of a premier
hospital. Aravind has its own manufacturing division called Aurolab that specializes in manufacturing high quality
intra ocular lens inserted after cataract surgery. 40% of all eye surgeries of Tamil Nadu, i.e. 5% of the surgeries
conducted in India, are carried out by Aravind eye hospital. The hospital gives the same treatment to all its
patients, irrespective of their economic status. The hospital provides free eye care to almost two thirds of its
patients. It also undertakes community welfare and education programs like free screening eye camps in rural
areas, school children screening and diabetic retinopathy detection and awareness camps. Which of the following
best describes the nature of business, Aravind hospital is involved in?
(a) AEH is a not-for-profit organization working to serve the community
(b) AEH is working for the society for the upliftment of the economically backward
(c) AEH is working for the society in order to increase its goodwill in the society
(d) AEH is working for the society on behalf of the government
(e) AEH is working for the society in order to generate revenues.

23. It is very important for marketers to analyze the impact of the pricing policy of the company on the players of the
industry. In this context, who among the following would constitute the player(s)?
I. Suppliers.
II. Producers of complimentary products and services.
III. Government.
IV. Customers.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

24. Which of the following is/are true regarding two-part pricing?
I. It is normally followed in services where a company charges a fixed price for an initial service and

subsequent charges for over and above the minimum service consumed.
II. The sales of one product with a two-part pricings in the product line may affect others.
III. It is done for the accessories that come along with a product.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
25. Strategic issues in retailing involve an overall set of plans that help the retailer to effectively conduct his business.
A retail strategy has six major elements. Which of the following is the correct sequence of implementation of these
elements?
I. Setting objectives.
II. Situational analysis.
III. Identification of target markets and consumers.
IV. Developing specific activities on the basis of the day-to-day operations and also business environment.
V. Developing an overall strategy considering the controllable and uncontrollable variables.
VI. Effective control and feedback mechanism.
(a) I, II, III, IV, V, VI
(b) I, II, III, V, IV, VI
(c) II, I, III, IV, V, VI
(d) II, I, III, V, IV, VI
(e) III, I, II, IV, V, VI.

26. Which of the following types of advertising involves companies aiming at retaining their customers by enhancing
their resistance to withstand competitors’ appeal?
(a) Inoculative advertising
(b) Institutional advertising
(c) Comparative advertising
(d) Reminder advertising
(e) Product advertising.

27. Brand rejuvenation is a process of revitalizing an ailing brand. It involves the basic steps of discovery, innovation
and expression. Which of the following is/are true regarding ‘discovery’ process of brand rejuvenation?
I. It represents a process of identifying the company and its brand in terms of what they mean to the customers.
II. It reveals the hidden values of the firm, helping it to effectively communicate the uniqueness of its brand.
III. It deals with perceptional mismatch.
(a) Only (II) above
(b) Only (III) above
(c) Both (I) and (II) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.

28. Jim Lippe is the new R&D manager at an electrical goods manufacturing company. He has been given the
responsibility to develop a new electrical switch. In organizing for the product development, Jim Lippe shows
more interest in forming a product venture team to develop this new product. From which functional areas is he
most likely to take members to form the team?
(a) Marketing department
(b) Research and development department
(c) Production and finance department
(d) Various functional areas of an organization
(e) Marketing and production department.

29. The personal selling process has several steps. Which of the following is/are true regarding the ‘approach’ step of
personal selling process?
I. In this stage, creating a favorable impression is more important than pushing the product.
II. Salesperson makes initial contact with the potential customer.
III. Salesperson make preparation for the presentation.
(a) Only (II) above
(b) Only (III) above
(c) Both (I) and (II) above

(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
30. Stark Brothers nursery has patented a group of miniature fruit trees that can grow and produce full-sized fruit in
containers as long as they are able to get full sunlight. The catalog which the nursery sends out to tell prospective
customers about the miniature trees is part of which of the following elements of the marketing mix?
(a) Promotion
(b) Price
(c) Place
(d) Product
(e) Process.

31. Honda is popularly known for its automobiles and motor cycles. Later on, it started using the same name for its
lawnmowers, marine engines and snow mobiles. This allows Honda to advertise that it can fit “six Hondas in a
two-car garage”. Honda uses
(a) Brand extension
(b) Brand proliferation
(c) Sub branding
(d) Co-branding
(e) Multi branding.

32. A retailer-sponsored cooperative organization is a form of which type of vertical marketing system?
(a) Independent vertical marketing system
(b) Corporate vertical marketing system
(c) Administered vertical marketing system
(d) Contractual vertical marketing system
(e) Conglomerate vertical marketing system.

33. If an intermediary wants to carry ‘Tide detergent’ and, Procter & Gamble, the manufacturer of Tide, agrees only if
the intermediary purchases Procter & Gamble's entire line of detergents as well, the company is engaging in which
of the following channel management practices?
(a) Exclusive dealing
(b) Dual distribution
(c) Tying agreement
(d) Refusal to deal
(e) Restricted sales territories.

34. The primary task of marketing channels is to move the goods from the producer to the end user. Which of the
following is/are the various tasks that marketing channels perform in order to close the gaps that arise between
producers and customers?
I. Promotion.
II. Ownership.
III. Negotiation.
IV. Financial flow.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

35. When Sony introduced the first high-definition television (HDTV) to the Japanese market in 1990, the high-tech
sets costed $43,000. These televisions were purchased by customers who could afford to pay a high price for the
new technology. Sony rapidly reduced the price over the next three years to attract new buyers, and by 1993 a 28-
inch HDTV costed a Japanese buyer just over $6000. In 2001, a Japanese consumer could buy a 40-inch HDTV
for about $2000, a price many could afford. Which of the following can be stated to be true about Sony’s pricing
strategy in this case?
(a) Sony adopted market skimming pricing in order to reap maximum revenue from various segments of the
market
(b) Sony adopted market penetration pricing by reducing its pricing
(c) The objective of Sony’s pricing was survival
(d) Sony adopted value pricing by reducing the price so that many customers could buy their television

(e) Sony reduced its price because it was dealing with a price sensitive market.
36. At the Melting Moments, an ice cream parlour, customers place their orders, watch their ice-cream sundaes being
prepared, and then eat the sundaes in the store. This is an example of the service characteristic of
(a) Inseparability
(b) Intangibility
(c) Heterogeneity
(d) Perishability
(e) Durability.

37. Many organizations conduct social audit to evaluate their business activities. Which of the following is/are the
steps in a social audit?
I. Identify positive and negative impacts of its marketing activities.
II. Try to minimize the negative impact and maximize the positive impact of the business activities.
III. Review whether the profits are increasing at an steady pace.
IV. Evaluate the impacts and analyze implications for the management.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

38. Which of the following is/are reasons behind the failure of outsourced projects in companies and the resulting
dissatisfaction with outsourcing?
I. Companies’ failure to achieve the expected cost reductions from outsourcing.
II. Breach of service agreements.
III. Lack of trust between employer and employees in the outsourcing firm.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

39. Which of the following deals with existing products that are targeted to new markets or segments?
(a) Addition of new product line
(b) Line extension
(c) Repositioning
(d) Line pruning
(e) Line stretching.

40. Which of the following refers to an agreement between the manufacturer and the distributor in which the
manufacturer agrees not to sell his products to any other distributor other than the appointed one within a
designated geographical territory?
(a) Exclusive dealing
(b) Dual distribution
(c) Tying agreement
(d) Refusal to deal
(e) Restricted sales territories.

41. Which of the following refers to the introduction of new products with new brand names in the same product
category?
(a) Brand relaunch
(b) Multibranding
(c) Brand proliferation
(d) Co-branding
(e) Brand rejuvenation.

42. In the personal selling process, which of the following is/are reasons for prospects raising objections?
I. Prospect may not have enough time to talk to the salesperson.
II. The product may not suit the needs of the prospect.

III. The prospect might raise objections out of sheer habit.
IV. The prospect might not have had a good experience with the salesperson during the presentation stage.
(a) Only (II) above
(b) Both (I) and (III) above
(c) Both (III) and (IV) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.
43. The moral principles and values that govern actions and decisions are called
(a) Social responsibilities
(b) Social responsiveness
(c) Values
(d) Green marketing
(e) Ethics.

44. Adverd wants to open a small, specialty toy store and is considering locating it in a regional shopping mall. He
should know that
(a) Parking is usually inadequate in malls
(b) The leases required are usually inexpensive
(c) His store could be the mall anchor
(d) The mall atmosphere and other stores will help attract shoppers
(e) There is usually a problem with image because malls have no unified image, as a shopping centre does.

45. Which of the following is/are important factors to be considered in deciding the timing of an advertisement?
I. Type of audience.
II. Seasonal demand.
III. Type of endorser.
IV. Advertisement length.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

46. The evaluation of the distribution channels is a very important aspect. The evaluation process consists of which of
the following?
I. Setting objectives.
II. Analyzing.
III. Forecasting.
IV. Observing the external factors.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

47. A branded, high volume, low value consumer good is most likely to be sold through which of the following types
of distribution channels?
(a) Direct sale from the manufacturer to consumer
(b) Sale through brokers
(c) Sale through specialist retail outlets
(d) Sale through many general retail outlets
(e) Directly from the wholesalers without retailers.

48. Companies develop the channel structure according to their own interests. However companies do not use certain
exclusionary practices to stop competitors from using a particular channel. Which of the following statements
is/are not true with regard to these practices?
I. Exclusive dealing agreement is an agreement between a manufacturer and a distributor that makes the
distributor purchase other products produced by the manufacturer along with his main line of product.
II. Franchising may be considered as an example of tying agreement wherein the franchiser gives the franchisee
exclusive sale rights in a particular area.

III. In dual distribution, a manufacturer distributes his products through more than one marketing channel.
IV. Tying agreements are legal as far as distributors are allowed to carry competing products.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV)above
(e) All (I), (II), (III) and (IV) above.
49. When both the franchiser and the franchisee realize the importance of working together and one’s success is
dependent on the other, it is called a
(a) Business relationship
(b) Non-business relationship
(c) Legal relationship
(d) Dependent relationship
(e) Mutual relationship.

50. In services retailing, which of the following is/are the factor(s) that have to be taken into consideration?
I. The buyers are called customers.
II. Services are perishable and therefore, cannot be stocked.
III. Mass-production of services is not possible.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

51. Which of the following is/are true regarding canned sales approach of sales presentation?
I. It is based on the principle that each customer has a different set of needs.
II. It is extensively used in door-to-door selling and telemarketing.
III. It is based on stimulus-response.
(a) Only (II) above
(b) Only (III) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

52. Microsoft offers spreadsheet software, word processing software, and graphics software as part of its "Microsoft
Office" suite of products. This is an example of
(a) Multi-part pricing
(b) Psychological pricing
(c) Price lining
(d) Two-part pricing
(e) Product bundling pricing.

53. Which of the following is/are feature(s) of distribution channels?
I. A horizontal marketing system is when two or more companies at the same level join together.
II. A joint venture by Nestle and Coca-Cola is an example of a horizontal marketing system.
III. Retailer sponsored co-operative is the joining together of independent retailers; this is an example of a vertical
marketing arrangement.
IV. Administered vertical marketing systems are characterized by the size and power of one party rather than
through common ownership.
(a) Only (I) above
(b) Both (I) and (III) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

54. Which of the following relates to many large companies employing marketing controllers, whose responsibility is
to determine the various marketing expenditures of the company and provide necessary training for the marketing
personnel on the financial dimensions of the marketing activities?
(a) Tactical control

(b) Profitability control
(c) Efficiency control
(d) Strategic control
(e) Annual-Plan control.
55. Economic order quantity (EOQ) is the replenishment order quantity that minimizes the overall cost of inventory
i.e. the sum of ordering and carrying. Which of the following is/are the assumptions on which EOQ model is
based?
I. All the demand will be satisfied.
II. The price of inventory is dependent on the order quantity.
III. There is huge inventory in transportation.
IV. There is no interaction between the multiple components of inventory.
(a) Only (III) above
(b) Both (I) and (IV) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

56. Snowbone, a snowsport products manufacturing company, has developed a unique new snowsports product. The
product is basically a handlebar attachment for any snowboard that allows beginners to ride a board more like a
BMX bike. With no bindings, it allows beginners to step off if they are getting nervous or it allows experts the
opportunity to develop new tricks. And it folds down so is transportable. After exploratory discussions the product
quantity and quality requirements were defined, and a new product introduction process was started. The
components making up the product were using relatively standard manufacturing processes (laser cutting, folding,
tube bending), and so the emphasis was on design for manufacture and assembly. The product existed as a series of
CAD files, and the first requirement was to produce detailed engineering drawings and bill of material. This
ensured that the product specification was clear, and provided a basis to select potential suppliers, and obtain
quotations. Quotes were received from a number of North West Manufacturers, on a turnkey basis. With respect to
the New Product Development process, what would be the next logical step to be followed by Snowbone?
(a) Developing the prototype of the product
(b) Identifying a sample of the target customer group
(c) Testing the production process
(d) Comparing the new product with the existing products of both the company and its competitors
(e) Finding out customer preferences and identifying the product’s desirability and marketability.

57. Fabrique Inc. invented a fabric that was fire-proof and tear-proof. The week after the product was invented, a
group of the firm's employees got together and listed ways the product might be used. This is an example of
(a) Lateral thinking
(b) Concept testing
(c) Brainstorming
(d) Venture group activities
(e) Screening.

58. There are certain factors that companies need to consider before franchising their businesses. Which of the
following are the factors that a company needs to consider before franchising?
I. The company has to establish its brands in the market.
II. The company while choosing a franchisee should always watch out for new entrants.
III. The company should secure the confidence of the franchisee.
IV. The company should opt for a short term contract with the franchisee.
(a) Both (I) and (II) above
(b) Both (I) and (III) above
(c) (I), (II) and (III) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

59. Which of the following is/are true regarding vertical marketing systems?
I. It consists of producers, wholesalers, and retailers acting as a unified system.
II. Contractual agreements are not a requisite for a vertical marketing system.
III. It was initiated to control channel behavior and to manage conflict.
IV. It can be dominated by the producer, wholesaler, or retailer.
(a) Only (II) above

(b) Both (I) and (III) above
(c) (I), (II) and (III) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.
60. Franchising is a contractual and legally binding agreement between a franchiser and a franchisee. Which of the
following is not an advantage of franchising to the franchiser?
(a) Low capital and low risk
(b) Business control
(c) Extended market penetration
(d) Motivation of the franchisee
(e) Speedier expansion.

61. Which of the following would be the advertising objective of manufacturers of products and/or service, targeting
individual customers?
(a) Attracting wholesalers and retailers to stock the products and then promote them to end users
(b) Attaining sales for the product, brand or service
(c) Attracting retailers’ continuous patronage
(d) Selling individual property, used vehicles, matrimonial, etc.
(e) Creating awareness about social, environmental, health and family issues.

62. Davies furnishings, a South Dakota-based producer and marketer of fine home furnishings, authorized Dan River
Mills to produce and market a line of sheets under the Dakotah name. This arrangement is an example of
(a) Brand extension
(b) Brand licensing
(c) Family branding
(d) Individual branding
(e) Co-branding.

63. In recent years there has been a gradual increase in the tourism compared to previous times. With the entry of
MNCs and development of the information technology industry, the earning power has increased largely. Work
cultures have changed, competition has increased. As a result, work pressures has increased. To get away from
stress employees are opting for holidays in good places far away from their work and tensions. This has
encouraged many companies to enter the holiday industry. Vaishnav Holidays is one of them. The company has its
resorts in Ooty, Kulu Manali, Darjeeling and Shimla. The company has established many branches across the
country to promote its business. The company wants to attract IT professionals and corporate executives on a oneto-
one basis and provide them with product information. Which of the following would be most suitable strategy
for Vaishnav Holidays to attract them?
(a) Sending catalogs containing details about the resorts so as to attract IT professionals and corporate
executives
(b) Appointing telemarketing personnel to promote their resorts to IT professionals and corporate executives
(c) Placing kiosks near the IT parks, which provide information about the resorts
(d) Communicating the details about the resorts through television, and accepting bookings through phone
call or mails
(e) Placing ads in the local news papers providing details about the resorts.

64. Advertisers have a wide variety of advertising media to choose from. A firm has to ask which of the following
questions, before selecting the appropriate medium?
I. Who should be reached?
II. Where are they located?
III. When do we run the advertising campaign?
IV. What is the advertising cost?
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

65. Harsha, a trained engineer, is a salesperson for a chemical manufacturer. He provides current customers with
advice about a product's characteristics and applications. He is a
(a) Missionary salesperson

(b) Trade salesperson
(c) Field order taker
(d) Inside order taker
(e) Technical salesperson.
66. After designing the distribution channels, issues relating to the management of channels need to be addressed.
Modifying channel arrangements becomes necessary when
I. The purchase patterns of consumers change.
II. Rapid expansion of the market takes place.
III. A new competitor comes into the market.
IV. Channel technology is updated to carry on the business.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

67. Greg is a physical distribution manager. He is currently developing and maintaining assortments of products that
are adequate for customer demand. In which stage of market logistics is Greg currently involved?
(a) Order processing
(b) Manufacturing
(c) Inventory management
(d) Transportation
(e) Warehousing.

68. In fulfilling customers’ expectations of service output, marketers attempt to provide various channel output
utilities. With respect to these utilities, which of the following takes into consideration the time for which the
customer must wait to receive the product or service?
(a) Lot size utility
(b) Temporal convenience
(c) Selection utility
(d) Service utility
(e) Spatial convenience.

69. When Tata AIG Insurance Services sends a mailer to tap consumers and encloses a reply card so that the mail
recipient can request for more information on insurance planning, then it is engaging in
(a) Approaching
(b) Follow up
(c) Handling objections
(d) Closing sale
(e) Prospecting.

70. Which of the following is/are essential element(s) of direct marketing?
I. Record of existing and potential customers.
II. System for measuring response.
III. Mass media advertising campaign.
IV. System to follow up inquiries.
(a) Only(I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.

71. When the modern dishwasher was invented, many of its users felt the need to prewash, scrub, or simply rinse the
dishes before loading them into the dishwasher. Cascade introduced Cascade Complete a dishwasher detergent
with the slogan, "Skip the Sink". When this dishwashing product was used, it was not necessary to rinse and/or
scrub dishes before putting them in the dishwasher. The marketing of Cascade Complete should emphasize on
(a) Product quality
(b) Value for price
(c) Ease in using the dishwasher
(d) How the dishwasher detergent differs from those currently on the market and its benefits to consumers

(e) Modern methods of dishwashing.
72. Sometimes resellers are offered a temporary price reduction for purchasing specified quantities of a product. Such
offers are used to provide them with an incentive to handle a new product, to achieve a temporary price reduction,
or to stimulate the purchase of an item in quantities that are considered larger than those usually purchased. What
is this sales promotion known as
(a) Push money
(b) Buy-back allowance
(c) Buying allowance
(d) Money-off offer
(e) Installment offer.

73. Which of the following is/are true regarding experience curve pricing?
I. It enables introducing new products at a low price.
II. It is done to attract price sensitive customers to purchase these products.
III. It is used to increase the stock movement and thus increase the sales volume.
(a) Only (II) above
(b) Only (III) above
(c) Both (I) and (II) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.

74. Franchising has several advantages and disadvantages for both the franchiser as well as the franchisee. Which of
the following are the disadvantages to a franchisee?
I. Limited freedom.
II. Lower profit potential.
III. Substantial fee payment.
IV. Non performance of the franchiser.
(a) Both (I) and (II) above
(b) Both (II) and (IV) above
(c) (I), (II) and (III) above
(d) (I), (III) and (IV) above
(e) (II), (III) and (IV) above.

75. Delite Milk and Drinks company is in the process of introducing a drink that can be an instant breakfast drink for
adults who want a quick nutritious breakfast without preparation or a health supplement, and a tasty snack drink
for children. Delite Milk’s main competitors were considered to be bacon, eggs, breakfast cereals, coffee and other
breakfast alternatives and other soft drinks, fruits juices and thirst quenchers. After analyzing results from
prototype testing, the company planned to introduce the instant breakfast drink in different flavors of chocolate,
vanilla, and strawberry in attractive packages available in different quantities. Which of the following would be the
next step Delite Milk and Drinks company should follow in its new product development process?
(a) Delite Milk and Drinks should test the drink under standard conditions and defects should be noted
(b) Delite Milk and Drinks must test its product in few selected cities
(c) Delite Milk and Drinks should check the economic feasibility
(d) Delite Milk and Drinks should develop the mission statement of its company
(e) Delite Milk and Drinks should develop and prepare the sales, cost and profit projections.

76. Which of the following major types of retailers would be described as offering several product lines, typically
clothing, home furnishings, and household goods-with each line operated as a separate department managed by
specialist buyers or merchandisers?
(a) Specialty store
(b) Department store
(c) Convenience store
(d) Supermarket
(e) Hypermarket.

77. Advertisers primarily evaluate the effectiveness of an advertisement because firms spend crores of rupees on
advertising. Marketers use intermediate method, where the target audiences are tested after they are exposed to the
ad and before they take any action. Which of the following is/are the various questions the marketers would
address to the target audience?
I. Whether the audiences have spread the message?

II. Whether the audiences have clearly received the message?
III. Whether the audiences have understood the message?
IV. Whether the audiences have accepted the message?
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.
78. The Clean Company manufactures and markets bleaches, bathroom cleaners, disinfecting wipes, and stain
removers under the Clean brand. This is an example of
(a) Umbrella branding
(b) Co-branding
(c) Family branding
(d) Sub branding
(e) Branding duality.

79. Homestore.com is an online real estate company that allows agents to advertise their home listings on Homestore
sites for a fee. Rather than cut out the middlemen and go straight to buyers, as similar Web companies sought to
do, Homestore included real estate agents. The company has a 200-person sales force that calls on real estate
agents every day, educating agents about Internet basics like how to use e-mail and surf the Web as well as
pushing subscriptions to Homestore's network of websites. During a sales call, a Homestore salesperson asks a real
estate agent if he or she would like to list homes starting today or next Monday. The salesperson is using a(n)
(a) Assumptive close
(b) Direct close
(c) Alternative close
(d) Cautious close
(e) Concession close.

80. Logistics is the process of getting products and services where they are required and when they are required.
Which of the following is/are the significant objective(s) of market logistics?
I. To meet customer expectations on time with maximum accuracy and without damage to the products being
delivered.
II. To cut down distribution costs to the maximum extent possible, either by building an internal distribution
process, or by hiring outside expertise.
III. To reduce the time from which requisition is placed with the vendor to the time the product reaches the final
customer.
IV. To deliver the goods and services to the customers and match the needs of buyers and sellers.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III)above
(d) (I), (II) and (IV)above
(e) All (I), (II), (III) and (IV) above.

81. Which of the following is/are part of the ‘pre-approach’ stage of personal selling process?
I. Developing a profile of the prospect.
II. Identifying a potential prospect.
III. Establish the objectives of sales call.
IV. Deciding on approach.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

82. During which of the following stages of the product life cycle does the marketer induce customers to purchase the
product or service by differentiating it from that of the competitor(s)?
(a) Introductory stage
(b) Growth stage
(c) Maturity stage
(d) Decline stage

(e) Termination stage.
83. Himalaya Book Group, the nation's largest book wholesaler, saw how retailers were struggling to keep books in
stock, placing orders with hundreds of different publishers and sometimes waiting weeks for the books to arrive.
With Himalaya, retailers can place one order, receive one shipment, and be billed on one invoice, even if the
titles come from many different publishers. Which logistical function is Himalaya Book Group performing for
retailers?
(a) Sorting and assorting
(b) Assorting and grading
(c) Risk taking and selling
(d) Marketing and sorting
(e) Financing, transporting and sorting.

84. Akio Marita, is the CEO of Tokyo Tsushin Kogyo Kabushiki Kaisha an electronic home appliances manufacturing
company. He realized that the existing name of the firm would not be suitable as a product name. He also
recognized that in order to be successful abroad, the name of the product should be catchy. He initially worked on
certain alternatives such as a shortened version of the firm’s existing name, Tatsuko, but that was difficult to
pronounce for English-speaking people. He wanted to use in some way the company’s name as the brand name.
What would be the main advantage to Akio Marita by using the company name as the brand name?
(a) Reduce advertising costs
(b) Differentiating the company’s products from the products of competitors
(c) Utilizing all marketing efforts and to build brand equity
(d) Checking brand performance from time-to time
(e) Conveying attributes of the product.

85. A sales lead can be in the form of an individual or an organization that might need or buy the company’s product.
Which of the following is/are the various sources available to salespersons to generate leads?
I. People.
II. Published information.
III. Competitors.
IV. Events.
(a) Only (III) above
(b) Both (I) and (II) above
(c) (I), (II) and (IV) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

86. In which of the following pricing methods, does a retailer try to maintain a set price for an extended period of
time?
(a) Going-rate pricing
(b) Target return pricing
(c) Variable pricing
(d) Odd pricing
(e) Customary pricing.

87. Members of the marketing channel perform a number of key functions. Which of the following is/are the functions
that are performed?
I. Developing and disseminating persuasive communications to stimulate purchasing.
II. Assuming risks connected with carrying out channel work.
III. Negotiating price and transfer of ownership.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

88. Zakki owns Pet Plus, a complete pet service that offers grooming, obedience training, show training for animals
and handlers, boarding, special food preparation, and minor veterinary care. To maintain a quality image and to
standardize the service, Zakki provides complete training for each employee in the company operations, objectives,
and expected performance benchmarks. What unique aspect of services is Zakki attempting to address?
(a) Perishability

(b) Consistency
(c) Intangibility
(d) Inseparability
(e) Heterogeneity.
89. Which of the following is/are true regarding inside order takers?
I. They go to the customer and take the order for the products.
II. They are usually hired by retailers and wholesalers, motor vehicle dealers, etc.
III. They share a relationship of mutual dependency with the customer.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.

90. The Maggi brand was launched in 1982 with the product noodles. Maggi had to fight hard to survive and gain a
foothold in the Indian market because of consumers’ hard-to-change eating habits. Maggi consistently associated
itself with mainstream television programs for promotion. Which of the following would have been the best
strategy for Maggi to get success in the Indian market?
(a) Use a celebrity to endorse the Maggi brand through television medium
(b) Distribute free samples of Maggi to the target market
(c) Build noodles as a concept first, before it promoted Maggi as a brand
(d) Use point of purchase (POP) displays in retail outlets
(e) Introduce special offers on the product to the customers.

91. Which of the following could be the reason(s) why sellers use markup pricing?
I. Because it simplifies the pricing process.
II. Because it helps marketers to achieve a specified rate of return.
III. Because it reduces price competition when all firms in an industry use it.
(a) Only (I) above
(b) Both (I) and (II) above
(c) Both (I) and (III) above
(d) Both (II) and (III) above
(e) All (I), (II), and (III) above.

92. ICICI Bank is India’s largest private bank with the largest market value of all banks in India, and is widely seen as
a sophisticated bank able to take on many global banks in the Indian market. Adding on to its success the bank is
expanding in overseas markets. It has operations in the UK, Hong Kong, Singapore and Canada. It recently also
acquired a small bank in Russia and has tie-ups with major banks in the US and China as well. The bank is
aggressively targeting the NRI (Non Resident Indian) population for expanding its business. Which of the
following best explains why ICICI Bank can be considered to be practicing global marketing?
(a) It operates within a defined national or geographic boundary where the bank is relatively free to plan,
implement and control marketing plans
(b) It seeks to lever its assets across political and cultural boundaries by maximizing opportunities and
exploiting market similarities and differences in search of global competitiveness
(c) It explores markets which are outside the national boundaries of its domestic market which normally
begins with direct or indirect exporting to neighboring country
(d) It exports excess products to a foreign country
(e) It is large enough to implement its activities on a worldwide basis.

93. Identifying the target market and its needs accurately, while striving to serve those needs according to customer
expectations will help a firm gain a competitive advantage. Which of the following is the correct sequence of steps
that help identify the most appropriate target audience?
I. Grouping the customers into homogenous segments on the basis of their common needs.
II. Selecting a sample from the total potential market to identify the individual needs of the customers.
III. The target audience has to be selected for developing a specific marketing communication program.
IV. Factors influencing the various need-based subgroups should be identified.
V. The products and services should be appropriately positioned.
(a) I, II, III, IV, V
(b) I, III, II, IV, V
(c) II, I, III, IV, V

(d) II, I, IV, III, V
(e) III, II, I, IV, V.
94. The primary use of ‘packaging’ for products is to provide protection to products and also to differentiate from
competitors’ products. If Amway uses a spray bottle to package its glass cleaner, the spray bottle could be
considered a secondary-use package because
(a) Its shape is ideal for multiple-unit packaging
(b) Glass cleaner works on chrome as well as glass
(c) Customers can reuse it for other purposes
(d) It has a shape similar to other glass cleaner bottles
(e) It can be used as a promotional tool.

95. Which of the following is a form of publicity, done by supporting and linking the organization’s name with a
particular event?
(a) Brand extension
(b) Brand sponsorship
(c) Brand loyalty
(d) Line extension
(e) Brand equity.

96. There are several stages in the evolution of the marketing department. In which of the following stages does the
top management bring the sales department under the purview of marketing department in order to overcome the
lack of trust between these departments?
(a) Simple sales department
(b) Sales department with auxiliary marketing functions
(c) An individual marketing department
(d) Modern marketing department
(e) Modern marketing company.

97. Intensive distribution is a form of distribution in which manufacturer distributes products through as many outlets
as possible. This type of distribution
(a) Is used to deliver the maximum service quality to the customers
(b) Is used to reduce the distribution costs
(c) Is used for those products that are characterized by low involvement of the customer
(d) Helps the producer ensure that the distributor do not sell competing products along with the producer’s
products
(e) Is used to price the products at a higher price.

98. Which of the following is/are public relations techniques used by firms, in business communication?
I. Annual reports, brochures, videos.
II. In-house newsletters and magazines.
III. Trade exhibitions.
IV. Community involvement programs.
(a) Only (III) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.

99. Amongst methods of online advertising, which of the following is a form of broadcasting an event where
customers give their consent to receive and be updated with certain information from time to time?
(a) Forum
(b) Newsgroup
(c) Webcasting
(d) E-mails
(e) Bulletin board.

100.Reverse channels are those that flow in the opposite direction of normal channels. There are a number of cases
when a reverse flow channel would be used. Which of the following would be of that/those case(s)?
I. Reusing products or containers.
II. Sale of consumer durables.

END OF QUESTION PAPER
III. Refurbishing products.
IV. Recycling products.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.
Suggested Answers
Marketing Management – II (MB222): January 2008
Answer Reason
1. E Principle of consumer and producer freedom: This principle describes that any marketing effort will be
successful if it improves the quality of life of customers. It implies that an individual will excel in his
pursuits if he is given complete freedom.
<>
2. C In the analog model, a retail outlet that is similar to the proposed outlet is identified. Next, the
researchers study the capability of the store to attract the customers from different geographic locations.
This is followed by an analysis to estimate the sales that the proposed retail outlet can generate. In this
way, a location that will generate the maximum sales can be selected. The drawback of the analog model
is that it does not take into consideration the competitive environment.
<>
3. C Statement (II) is not true because wholesaler-sponsored voluntary organizations buy together in bulk
and are involved in collective merchandising. Statement (IV) is not true because administered vertical
marketing systems are similar to traditional channels of distribution.
<>
4. D When firms adopt the objective of improving product quality, firms try to set the prices of their products
to reflect the product’s quality leadership in the market. Firms set high prices for their products so as to
cover the high R&D costs incurred in improving the quality of the product.
<>
5. D There are several factors that have to be considered before the brand name is selected. The company has
to ensure that the brand name is related in some way to products or services the company is offering.
Brand names should be distinguishable from other brands. Brand names that can be legally protected.
Time period for which the company has been in the market is not a factor to be considered for brand
name selection.
<>
6. D Intermediaries often hamper the process of making direct communication between a manufacturer and
the customers who ultimately buy its products, which explains why many manufacturers have adopted a
direct sales strategy, which cuts out the role of the intermediary.
<>
7. C Labeling many products is done by attaching a universal product code (bar code) which consists of a
unique sequence of lines that identifies a product with the help of an electronic scanner usually placed at
the retail checkout counters. This lines also give the data regarding the price and the inventory status.
<>
8. C Gamma testing is carried out on a long-term basis, where the customer uses the product extensively. <>
9. A Public relations is essentially a function of an organization, where it tends to develop and manage its
goodwill in the market. The primary aim is to create a suitable environment for the firm. Public relations
helps organizations create a positive opinion about the firm in the market through appropriate
communications. An organization can develop its public relations with several member groups such as
suppliers, customers, employees, the government, shareholders, distributors, members of the public, etc.
<>
10. D Sales managers use financial incentives and non-financial incentives to motivate sales teams. Financial
incentives include salaries, bonus and commission. Non-financial incentives may include job security,
appreciation, training and education, flexibility, power and authority, prizes, recognition for
achievement, promotion, etc.
<>
11. A By pricing low to gain short-term unit sales volume, the firm is trying to gain market share. <>
12. B Companies use a variety of communication tools like customer press releases, promotional videos,
consumer exhibitions, competitions and prizes, product launch events, celebrity endorsements, etc.
<>
13. D With zone pricing, the freight prices are set according to geographic areas. <>
14. B The primary disruption in retailing took place when departmental stores came up. <>
15. C The causes of channel conflicts are as follows:
(i) Channel members have individual goals and objectives that are not compatible with other.
(ii) Lack of clearly defined roles and responsibilities.
(iii) Manufacturer and channel members targeting for the same market.
<>
16. E End benefit effect: Customers are less price sensitive, when the cost incurred on the product is too little
compared to the total cost of the end product.
<>
17. D The best option available for Sandiko is to set the price of the product so that the profit margin is
very minimal. By doing this they can enter in to the market very easily and also cover a larger portion of
the customers. This is the best option since there are already many big as well as small players in the
market. To overcome the competition from them will never be an easy job for any company. The
<>
previous brand image will definitely help the company to create awareness in the market about their
new products. But there is no guarantee that the product will succeed in the market, when the company
is diversifying its products. So, the premium price of the previous price may not do well. So, it will be
better for them to push as much product as possible in the market and create initial market for
themselves. And after that make possible changes depending upon the market conditions then.
18. E Product testing is carried out to evaluate the product characteristics and examine the functional
performance of the product. It gives useful information like customer’s first impression about the
product and provides early use experiences of the customers and their further expectations.
<>
19. C Environmentalism does not constitute enlightened marketing activities of a firm aimed at leveraging
long-term benefits.
<>
20. B In dual distribution, a manufacturer distributes his products through more than one marketing channel. <>
21. D In some markets, business is carried out on the basis of sealed bids rather than on the basis of openly
setting prices for products. This method is adopted for the products that do not possess a market price or
for products for which it is difficult to fix the price owing to attributes like varying levels of quality and
specifications
<>
22. A As the hospital provides free eye care to almost two thirds of its patients. It also undertakes community
welfare and education programs like free screening eye camps in rural areas, school children screening
and diabetic retinopathy detection and awareness camps. Therefore the organization is a Non profit
organization. It is not a commercial organization/business, where the main objective is to earn profits
and at the same time it is not government organization. As the main contents insists upon the free
services provided , there fore the best option is (a)
<>
23. E It is very important for marketers to analyze the impact of the pricing policy of the company on the other
players of the industry. The other players could be suppliers, distributors, producers of complimentary
products and services, the government and most importantly customers.
<>
24. A Two-part pricing is normally followed in services in which a company charges a fixed price for an initial
service and subsequent charges for over and above the minimum service consumed.
<>
25. D Strategic issues in retailing involve an overall set of plans that help the retailer to effectively conduct his
business. A retail strategy has six major elements. They are
I. Situational analysis.
II. Setting objectives.
III. Identification of target markets and consumers.
IV. Developing an overall strategy considering the controllable and uncontrollable variables.
V. Developing specific activities on the basis of the day-to-day operations and also business
environment.
VI. Effective control and feedback mechanism.
Hence option (d) is the answer.
<>
26. A In inoculative advertising, companies aim at retaining their customers by enhancing their resistance to
withstand competitors’ appeal. A company can highlight the weaknesses of a competitors’ product to
convince the customers that its product is superior to that of the competitor. (b) Institutional advertising
promotes a concept, idea, or philosophy. The objective of institutional advertisements is to build
goodwill or an image for an organization, rather than to promote a specific good or service (c) When a
brand is directly or indirectly compared to a competitor, it is known as comparative advertising. (d) The
objective of reminder advertising is to remind people about the brand. (e) Product advertising places a
message to promote a good or service.
<>
27. C Perceptional mismatch is a issue to be considered for brand extension. <>
28. D Venture team is a group of people brought together from various departments. <>
29. C Approach is the stage in the personal selling process in which the salesperson makes an initial contact
with the potential customer and tries to find out his needs. At this stage, creating a favourable
impression on the buyer is more important to the salesperson than pushing the product.
<>
30. A The catalog the nursery sends out to tell prospective customers about the miniature trees is part of the
promotion element of the marketing mix. Therefore option (a) is the correct answer.
<>
31. A A brand extension is where a company use its existing brand name to launch new products in other
categories. Honda is using its existing brand name to its new products. Therefore option(a) is the correct
answer. Where as option (b)Brand proliferation is the converse of brand extension. It is the introduction
of products with new brand names in the same product category.
<>
32. D A contractual vertical marketing system comprises independent firms operating at different channel
levels that coordinate their distribution processes on a contractual basis. A retailer-sponsored
cooperative organization is a type of contractual vertical marketing system in which the retailers
concentrate their buying power.
<>
33. C Tying agreement is an agreement between a manufacturer and a distributor that makes the distributor
purchase other products produced by the manufacturer along with his main line of product.
<>
34. D The primary task of marketing channels is to move the goods from the producer to the end user. The
following are the various tasks that marketing channels perform in order to close the gaps that arise
between producers and customers:
• Possession.
• Ownership.
• Financial flow.
• Information flow.
• Risk flow.
• Negotiation.
Hence option (d) is the answer.
<>
35. A Sony adopted market skimming pricing and in order to reap maximum revenue from various segments
of the market. A skimming strategy is where the company sets a high price initially to skim revenues
from the market.
Penetration pricing involves setting a low price initially. Therefore, the given example is not of
penetration pricing. Value pricing is where the customer is offered value for the price he pays. The
example does not indicate anything about customer value, therefore, there is not enough information to
conclude that the pricing strategy adopted is value pricing. Similarly there is no information about price
sensitivity of the customers or the pricing objective of Sony. Therefore, options (b), (c), (d) and (e) can
be eliminated.
<>
36. A Production and consumption of services takes place simultaneously. Therefore, services are
characterized by inseparability of production and consumption. This necessitates interaction between the
consumer and the service provider for the service to be delivered or in other words the customer has to
be physically present at the time of service delivery.
<>
37. D There are three vital steps in a social audit:
1st Identify positive and negative impacts of its marketing activities.
2nd Try to minimize the negative impact and maximize the positive impact.
3rd Evaluate the impacts and analyze their implications for the management.
Hence option (d) is the answer.
<>
38. E The key issues that result in the failure of outsourced projects include companies’ failure to achieve the
expected cost reductions from outsourcing, poor service quality, breach of service agreements, lack of
trust between the employees and the employer in the outsourcing firm, failure of companies to identify
the exact reasons for outsourcing and neglect of the human relations aspects involved in outsourcing.
<>
39. C Repositioning deals with existing products that are targeted to new markets or marketing segments. (a)
New product lines allow a company to enter an established market for the first time with new products.
(b) Additions to existing product lines and revisions of existing products are made to the existing market
segments.
<>
40. E Restricted sales territories refers to an agreement between the manufacturer and the distributor in which
the manufacturer agrees not to sell his products to any other distributor other than the appointed one
within a designated geographical territory.
<>
41. C Brand proliferation refers to the introduction of new products with new brand names in the same product
category.
<>
42. E Some common reasons why the prospects raise objections are as follows:
(i) Prospect may not have enough time to talk to the salesperson.
(ii) The product may not suit the needs of the prospect.
(iii) The prospect might raise objections out of sheer habit.
(iv) The prospect might not have had a good experience with the salesperson during the presentation
stage.
<>
(v) The prospect may raise objections to gain more information about the product.
43. E The moral principles and values that govern actions and decisions are called ethics. <>
44. D Malls have unified images, convenient parking, and expensive leases. It is unlikely that a small,
specialty store would be an anchor. The mall atmosphere and other stores will attract shoppers.
<>
45. B In Advertising messages can be aired any time during the year depending upon the product or service.
Normally the timing of the ad can be decide on the basis of seasons, months, weeks, days and even
minutes and seconds. The type of audience also plays a significant role while deciding the timing to air
an advertisement.
<>
46. D The evaluation of the distribution channels is a very important aspect. The evaluation process consists of
analyzing, forecasting and observing the external factors that may influence the channel environment.
<>
47. D Branded, high volume, low value consumer good such as bars of chocolate or soft drinks are most likely
sold through general retail outlets. Here the challenge for manufacturers is to make the product available
through as many channels as feasible.
<>
48. B Tying agreement is an agreement between a manufacturer and a distributor that makes the distributor
purchase other products produced by the manufacturer along with his main line of product. Franchising
may be considered as an example of restricted sales territory agreement wherein the franchiser gives the
franchisee exclusive sale rights in a particular area.
<>
49. B When both the franchiser and the franchisee realize the importance of working together and one’s
success is dependent on the other, it is called a Non-business relationship.
<>
50. D In service retailing the following factors have to be taken into consideration. The buyers are called
clients not customers, services are perishable and therefore, cannot be stocked, mass-production of
services is not possible, and the experience of each service client is different from that of the other.
<>
51. D In canned sales approach, the salesperson delivers a memorized sales talk. It is used when the product is
not very technical and/or when the salesperson is inexperienced. Need satisfaction approach is based on
the principle that each customer has a different set of needs.
<>
52. E Product bundling pricing is a procedure where the manufacturer provides a set of related products at a
price.
<>
53. D A retailer-sponsored cooperative organization is a type of contractual vertical marketing system in
which the retailers concentrate their buying power. The members of this group jointly open a
wholesaling firm or a cooperative, which offers products to retail members at subsidized rates. A
contractual vertical marketing system comprises independent firms operating at different channel levels
that coordinate their distribution processes on a contractual basis. Administered vertical marketing
systems are similar to traditional channels in the sense that they are independently owned and operated.
However, the system possesses a high degree of inter-orgnizational management.
<>
54. C Efficiency control relates to many large companies employing marketing controllers, whose
responsibility is to determine the various marketing expenditures of the company and provide necessary
training for the marketing personnel on the financial dimensions of the marketing activities.
<>
55. B The EOQ model is based on certain assumptions given below:
• All the demand will be satisfied.
• The price of inventory is independent of order quantity.
• There is no inventory in transportation.
• There is no interaction between the multiple components of inventory.
• Demand is predictable and constant.
• Capital is available in abundance.
• Replenishment cycle time is known.
• Ordering cost is constant.
• The lead time for material delivery is known with certainty and it remains constant.
Hence option (b) is the answer.
<>
56. A Once the attributes of the new product, identifying the target consumers, financial issues related to the
product, production requirements for developing the new product are over, it (product protocol) is
handed over to the R&D department to develop the prototype of the product. All production
requirements were over. Now it is the responsibility of R&D department to develop prototype. (b)It
already targeted beginners. (c)Testing the production process is the next step of developing prototype.
(d)After developing the product comparison is possible. (e)This is possible after developing the
<>
product.
57. C Brainstorming : A method of shared problem solving in which all members of a group spontaneously
contribute ideas.
<>
58. B There are certain factors that companies need to consider before franchising their businesses. Companies
have to establish their brands in the market before venturing in to franchising. Franchisee should be
chosen on the basis of their prior experience and local knowledge. A long term contract with the
franchisee is likely to result in greater success.
Hence option (b) is the answer.
<>
59. D Vertical marketing system is a process where producers, wholesalers and retailers perform the marketing
activities jointly. In vertical marketing system, one of the channel members owns or franchises or wields
considerable authority over other channel members, and as a result, is able to obtain their cooperation.
The basic purpose behind the development of vertical marketing system is to reduce the conflict that
arises when independent businesses in the channel strive to pursue their individual objectives. Channel
members can enter the vertical marketing system through contractual agreements.
<>
60. B The franchiser runs a risk by agreeing to do business with the franchisee because any negligence or
failure in maintaining quality standards on the part of the franchisee will have an adverse impact on the
franchiser's business or brand image. Moreover, the franchising agreement made with the franchisee
should be devoid of any loopholes or flaws that would benefit the franchisee. Failure to have a strong
franchising agreement can lead to the franchiser's loss of control over his business.
<>
61. B Manufacturers of products and/or services have the objective of attaining sales for the product, brand or
service.
<>
62. B Licensing is a form of providing access to a patent or a trademark to some other company by charging a
fee or royalty. (a) Brand extensions are brand names extended to new product categories. (c) Family
branding occurs when all the products that come under one family are given the same brand name. (d)
Individual branding refers to different brands for different products. (e) Co-branding refers to the
phenomenon where two or more well-known brands are combined in an offer.
<>
63. A For a company Like Vaishnav Resorts, it is always suitable to promote their business using the catalogs.
Since it is a service industry, they can’t easily convince customers to go to their place for an holiday. So
by promoting it through the catalogs, they can convince them, by placing some nice photographs and
information about their resorts.
<>
64. C Advertisers have a wide variety of advertising media to choose from. Before selecting the appropriate
medium, the firm wanting to advertise has to find answers to four important questions. They are:
• Who should be reached?
• Where are they located?
• What is the message that has to be delivered?
• When do we run the advertising campaign?
<>
65. E Technical salesperson is the salesperson that contributes technical expertise and assistance to the selling
function.
<>
66. C Modifying channel arrangements becomes necessary when consumers purchase patterns change or when
rapid expansion of the market takes place or when a new competitor comes into the market or when the
existing channel technology is obsolete and is not sufficient to carry on the business.
<>
67. C Inventory management is a concerted effort to integrate the firm’s value chain and its inventory policy. <>
68. B Temporal convenience takes into consideration the time for which the customer must wait to receive the
product or service.
<>
69. E Prospecting is the first stage in the personal selling process, and involves finding and evaluating
potential customers. It does not generally involve personal contact. Tata AIG insurance sending a mailer
to tap consumers is an example of prospecting. (a) Approach is the stage in the personal selling process
where the sales person makes initial contact with the potential customer and tries to find out his needs.
(b) The objective of every sales person is to ensure repeat sales. This can be achieved by enhancing
customer satisfaction through follow-up. (c) In handling objections, the sales persons seek to clarify any
doubts of customers or impart any other information the customer may want regarding the purchase. (d)
Closing the sale involves the sales person asking the potential customer to make the purchase.
<>
70. D Mass media advertising is often used to support direct marketing, but is not an essential element of it.
Think, for example, of Avon Cosmetics, which has traditionally placed very few advertisements in mass
circulation titles.
<>
<>
71. D New product marketing activities should emphasize points of difference and benefits to consumers.
Cascade should advertise how the dishwasher detergent differs from those currently on the market and
its benefits to consumers.
72. C Buying allowance is a temporary price reduction offered to the retailer for purchasing a specific quantity
or units of the product. Such an offer acts as an incentive to stimulate short-term profit of the retailer and
promote new products for the company.
<>
73. C Statement III i.e. pricing policies should be in tune with the other marketing mix variables. is not true. <>
74. D Franchising has several advantages and disadvantages for both the franchiser as well as the franchisee.
The following are the disadvantages of franchisee:
• Limited freedom.
• Fee payment.
• Nonperformance of the franchiser.
Hence Option (d) is the answer.
<>
75. B Following a successful prototype test, the new product manager of a company should do market
testing by introducing the new product in few selected cities.
<>
76. B Department stores are the general merchandise retailers with considerably large retail space with
separate sections allocated for toiletries, food stuff, body care products, etc. Thus they offer a wide
selection of products to consumers.
<>
77. D In the intermediate method, the researchers question the respondents to analyze their receptiveness, their
comprehension of the ad and their response towards the ad.
Receptiveness: Whether the audiences have clearly received the message.
Comprehension: Whether the audiences have understood the message.
Response: Whether the audiences have accepted the message.
Hence option (d) is the answer.
<>
78. C In family branding the company uses same brand name or part of the brand name for all its products. <>
79. A The stage in which the salesperson asks the potential customer to make a purchase is known as closing.
The salesperson assumes the customer’s consent for the close. The salesperson just says, “I have
completed all the necessary paperwork. All you need to do is to read through and sign the papers.”
<>
80. C The objectives of market logistics are I. To meet customer expectations on time with maximum
accuracy and without damage to the products being delivered, II. To cut down distribution costs to the
maximum extent possible, either by building an internal distribution process, or by hiring outside
expertise. III. To reduce the time from which requisition is placed with the vendor to the time the
product reaches to the final customer. So (c) is the answer.
<>
81. D Identifying a potential lead or prospect is done during the prospecting and evaluating stage of personal
selling process.
<>
82. B When the product is in the growth stage, the marketer induces customers to purchase the product or
service by differentiating it from that of the competitor(s).
<>
83. A Sorting activities include the purchasing of large quantities and breaking into smaller amounts desired
by consumers. Assorting is the creation of product assortments from several sources to service
customers.
<>
84. A The main advantage to the firm by maintaining firm name as brand name is that it can reduce
advertising cost. The remaining options all are advantages to a firm of maintaining a brand name.
<>
85. C Salespersons use a variety of sources to generate leads such as:
• People.
• Events.
• Published information.
• Associations.
<>
86. E In customary pricing, retailer tries to maintain a set price for an extended period of time. <>
87. E The flow of information from the channel to the customers is essential in order to create awareness
among them about the availability of the products. The flow of information can help in obtaining
customer orders, producer promotions, etc. Risks may flow from one channel member to another in the
form of product perishability, fluctuating demand patterns, price fluctuations, risks generated by faulty
products, etc. Negotiation is the process of reaching an agreement on the price and other conditions for
<>
<>
facilitating easier transfer of ownership and possession of goods.
88. E No two customers can be provided exactly the same service. Hence, there is variability or heterogeneity
in providing a service. This can be reduced by standardizing the service through employee training etc.
<>
89. B Inside order takers are the salesperson who operate the store and do not make any field calls. Inside
order takers are usually hired by retailers and wholesalers, motor vehicle dealers, furniture and home
finishing stores, etc.
<>
90. C Maggi first built the concept of noodles, before it could promote Maggi as a brand. Maggi did not face
the problem of awareness about the brand but it was lacked the awareness about the product. Noodles
were totally a new product to the Indian culture. No promotional activity can change the eating habits of
the people suddenly. First the people have to know about the product i.e. about the noodles. When they
accept the product as a part of their food, then it will be very easy for them to promote the brand Maggi.
<>
91. B In mark-up pricing, a marketer adds a mark-up on its cost of the product. Mark-up pricing is most
common in retailing where the product is purchased for resale.
<>
92. B ICICI Bank can be considered to be practicing global marketing because it seeks to lever its assets
across political and cultural boundaries by maximizing opportunities and exploiting market similarities
and differences in search of global competitiveness.
<>
93. D The following series of steps help identify the most appropriate target audience:
II. Selecting a sample from the total potential market to identify the individual needs of the customers.
I. Grouping the customers into homogenous segments on the basis of their common needs.
IV. Factors influencing the various need-based subgroups should be identified.
III. The target audience has to be selected for developing a specific marketing
communication program.
V. The products and services should be appropriately positioned.
Hence option (d) is the answer.
<>
94. C Packaging is changed to give protection, increase the visibility of the product, and for better shelf space
utilization. Secondary use is developing packaging for reuse.
<>
95. B Brand sponsorship is a form of publicity, which is done by supporting and linking the organization’s
name with a particular event.
<>
96. D The top management might bring the sales department under the purview of marketing department in
order to overcome the lack of trust between these departments. This forms the basis of modern
marketing department where the sales manager works under the marketing department.
<>
97. C Intensive distribution is a form of distribution in which the manufacture distributes his products through
as many outlets as possible. This type of distribution is used for those products that are characterized by
low involvement of the customer and where customers look for location convenience. Products like
chocolates, biscuits, shaving blades, soaps and detergents are distributed in this manner, so that they are
easily available to the customers at their nearest locations.
<>
98. D A company can communicate to its business associates and other publics through company and product
videos, direct mailings, trade press releases, websites, trade exhibitions, articles, etc. It can also use a
host of other external corporate communication channels like company literature like annual reports,
brochures, videos, etc., community involvement programs, local, national and international media
relations, shareholder meetings and meeting with stock market analysts, fund managers, etc.
<>
99. C Webcasting is a form of broadcasting an event using Internet technologies. Information is dispatched to
customers as per their requirement by obtaining their consent for receiving and being updated from time
to time.
<>
100. D Reverse channels are channels that are used for recycling and repair and that flow in the opposite
direction of normal channels. Sales of consumer durables is in forward direction.
<>