Chapter 10 Financial Markets Class 12 Business Studies

1. State any two advantages of branding to marketers of goods and services?

Enables Product Differentiation: Branding helps in distinguishing a company’s product from that of its competitors.
Helps in Advertising and Display Programmes: Without a brand name, an advertiser cannot advertise his product.

2. How does branding help in differential pricing?

Branding creates customer loyalty and a perception of quality. When customers like a brand and become habituated to it, they are willing to pay a higher price for it compared to unbranded or competitor products, allowing the firm to charge a different (higher) price.

3. What is the societal concept of marketing?

[Image of societal marketing concept] The societal marketing concept holds that a company should determine the needs, wants, and interests of target markets and deliver the desired satisfaction more effectively than competitors in a way that preserves or enhances the consumer’s and the society’s well-being (e.g., eco-friendly products).

4. Enlist the advantages of packaging of consumer products.

Rising Standards of Health and Sanitation: Packaged goods are seen as cleaner and safer.
Self-Service Outlets: Packaging acts as a “silent salesman” in modern retail stores.
Innovational Opportunity: Innovative packaging (e.g., tetra packs for milk) increases the scope of marketing.
Product Differentiation: Color, size, and material of the package help customers identify the brand.

5. List five shopping products purchased by you or your family during the last few months.

(Examples of Shopping Products – items where customers compare quality, price, and style):

Smartphone / Laptop
Readymade Garments (Jeans/Shirts)
Television Set
Furniture (Sofa/Bed)
Shoes

6. Case Study: Marketer of Color TV specifies action programme to increase share from 20% to 50%. Name the function.

Situation: Aiming to enhance market share from 20% to 50% in three years and specifying an action programme.

Function: Marketing Planning.

1. What is marketing? What functions does it perform in the process of exchange of goods and services? Explain.

Marketing is a social process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.

Functions in Exchange Process:

Buying and Assembling: Gathering goods from various sources.
Selling: Persuading customers to buy the product (transfer of title).
Standardisation and Grading: Ensuring uniformity and classifying products into grades.
Transportation & Storage: Creating place and time utility.

2. Distinguish between the product concept and production concept of marketing.

Basis	Production Concept	Product Concept
Focus	Quantity of product (Availability & Affordability).	Quality, performance, and features of product.
Means	Large scale production to reduce cost.	Continuous product improvement.
Ends	Profit through volume of production.	Profit through product quality.

3. Product is a bundle of utilities. Explain.

A customer does not just buy a physical object; they buy the benefits or satisfaction (utilities) that the product provides. A product consists of:

Functional Utility: The basic job the product does (e.g., a car provides transportation).
Psychological Utility: Satisfaction of pride or esteem (e.g., owning a luxury car).
Social Utility: Acceptance by the group (e.g., wearing trendy clothes).

4. What are industrial products? How are they different from consumer products? Explain.

Industrial Products are those used as inputs in producing other goods (e.g., raw materials, machinery).

Differences:

Number of Buyers: Industrial markets have fewer buyers compared to consumer markets.
Channel: Industrial products usually use shorter channels (Direct selling) than consumer products.
Demand: Demand for industrial goods is derived demand (depends on demand for consumer goods).
Technicality: Industrial products are technically complex.

5. Distinguish between convenience product and shopping product.

Basis	Convenience Product	Shopping Product
Effort	Bought frequently with minimum effort (e.g., Salt, Bread).	Bought after comparing price/quality (e.g., Furniture, TV).
Price	Low unit price.	High unit price.
Frequency	Regular/Frequent purchase.	Less frequent purchase.

6. Describe the functions of labeling in the marketing of products.

Describe the Product and specify contents: e.g., Ingredients, usage instructions.
Identify the Product or Brand: Helps recognition (e.g., Cadbury’s purple wrapper).
Grading of Products: Labels differentiate categories (e.g., Green Tea vs. Regular Tea).
Help in Promotion: Attractive labels attract attention (e.g., “50% Extra”).
Providing Information required by Law: e.g., Statutory warnings on tobacco, Veg/Non-veg symbol.

7. Discuss the role of intermediaries in the distribution of consumer non-durable products.

Consumer non-durables (like soap, toothpaste) require wide reach. Intermediaries (Wholesalers, Retailers) play a vital role:

Breaking Bulk: They buy in large quantities from producers and sell in small lots to consumers.
Assortment: They provide a variety of products from different manufacturers under one roof.
Storage: They hold inventory, reducing the storage burden of manufacturers.
Market Information: They provide feedback about customer tastes to producers.

8. Define advertising? What are its main features? Explain.

Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.

Features:

Paid Form: The sponsor has to pay for the space or time used.
Impersonality: There is no direct face-to-face contact between the prospect and the advertiser.
Identified Sponsor: The advertisement is issued by an identified individual or company.

9. Discuss the role of ‘sales promotion’ as an element of promotion mix.

Sales promotion refers to short-term incentives used to encourage immediate purchase.
Role:

Immediate Effect: Creates urgency (e.g., “Limited time offer”).
Stock Clearance: Helps clear excess inventory.
Introducing New Products: Samples/coupons induce trial of new products.
Supplement: It supplements advertising and personal selling efforts.

10. As a Hotel Marketing Manager at a tourist spot, what societal concerns would you face and what steps would you plan?

Societal Concerns:

Environmental pollution (waste generation).
Disrespect to local culture.
Safety of tourists.

Steps to Plan (Societal Marketing):

Eco-friendly Practices: Use solar energy, rainwater harvesting, and minimize plastic use.
Waste Management: Proper sewage treatment plant (STP) and recycling.
Cultural Respect: Employ locals and promote local handicrafts/cuisine.
Awareness Campaigns: Educate guests about preserving the beauty of the destination.

11. What information is generally placed on the package of a food product? Design a label.

Information Required: Name of product, Name/Address of manufacturer, Net Weight, MRP, Manufacturing/Expiry Date, Ingredients, Nutritional Information, Veg/Non-Veg symbol, FSSAI logo.

Design for “Crunchy Oats Cookies”:

CRUNCHY OATS COOKIES

Rich in Fibre & Iron

Veg Symbol (Green Dot) | Net Wt: 200g

MRP: ₹ 50 (Incl. of all taxes)

Ingredients: Oats, Wheat Flour, Sugar, Butter.

Best before 6 months from Mfg.

Mfd By: Tasty Treats Ltd, Pune.

12. For consumer durable buyers (New Motorcycle Brand), what ‘customer care services’ would you plan?

Customer care is crucial for durables. I would plan:

Warranty/Guarantee: 2-3 years extended warranty on engine.
Free Servicing: First 3-5 services free of labor cost.
24×7 Helpline: For roadside assistance and queries.
Spare Parts Availability: Ensuring genuine parts are available at dealers.
Easy Finance: Tie-ups with banks for 0% interest EMI schemes.

1. What is marketing concept? How does it help in the effective marketing of goods and services?

Marketing Concept implies that customer satisfaction is the key to organizational success. It assumes that a firm can achieve its goals only by identifying the needs of the target market and satisfying them better than competitors.

Role in Effective Marketing:

Customer Focus: All activities start with the customer (identifying needs) and end with the customer (satisfaction).
Integrated Marketing: It integrates all departments (production, finance, HR) to work towards customer satisfaction.
Long-term Profit: Satisfied customers become loyal customers, ensuring long-term profitability rather than short-term sales volume.
Adaptability: It encourages firms to adapt products to changing customer tastes.

2. What is marketing mix? What are its main elements? Explain.

[Image of marketing mix 4Ps diagram] Marketing Mix refers to the set of marketing tools that a firm uses to pursue its marketing objectives in the target market.

Main Elements (The 4 Ps):

Product: The goods/services offered (Quality, Design, Features, Packaging, Branding).
Price: The money charged for the product (MRP, Discounts, Credit terms). It affects revenue.
Place (Physical Distribution): Making the product available to the target customer (Channels, Warehousing, Transport).
Promotion: Communication activities to persuade customers (Advertising, Personal Selling, Sales Promotion, Public Relations).

3. How does branding help in creating product differentiation? Does it help in marketing of goods and services? Explain.

Branding and Differentiation: Branding gives a unique name, sign, or symbol to a product. This allows customers to distinguish it from competitor products even if the physical features are similar (e.g., Lux vs. Dove). It creates a mental image of quality or status associated with that specific name.

Help in Marketing:

Advertising: Without a brand name, you cannot advertise “soap”; you must advertise “Lux soap”.
Price Control: Strong brands can charge a premium price.
New Product Launch: An established brand (like Samsung) can easily launch new products (TV, Phone, Fridge) using its existing reputation.
Customer Loyalty: Branding builds a loyal base of repeat buyers.

4. What are the factors affecting determination of the price of a product or service? Explain.

Product Cost: The minimum price must cover the cost of production and distribution.
The Utility and Demand: Higher utility and high demand allow for higher prices. Inelastic demand allows higher prices.
Extent of Competition: High competition forces firms to lower prices; monopoly allows higher prices.
Government and Legal Regulations: Govts may fix price ceilings for essential commodities (e.g., medicines).
Pricing Objectives:
- Profit Maximization: High Price.
- Market Share Leadership: Low Price (Penetration pricing).
Marketing Methods Used: High quality packaging, distribution, and expensive advertising may justify a higher price.

5. Explain the major activities involved in the physical distribution of products.

Physical distribution involves moving goods from point of production to point of consumption.

Order Processing: The flow of orders from customer to firm. Accurate and fast processing leads to customer satisfaction.
Transportation: Physical movement of goods. It creates place utility. Choice of mode depends on speed, cost, and nature of goods.
Warehousing: Storage of goods until they are sold. It creates time utility and stabilizes prices.
Inventory Control: Maintaining the right level of stock to balance the cost of holding inventory vs. the risk of running out of stock (Opportunity cost).

6. ‘Expenditure on advertising is a social waste.’ Do you agree? Discuss.

This is a debated topic.
Arguments for “Social Waste” (Against Advertising):

Adds to Cost: Costs are passed to consumers.
Undermines Social Values: Promotes materialism.
Confuses Buyers: Too many claims make choice difficult.

Arguments for “Investment” (For Advertising):

Reduces Cost: Increases demand -> economies of scale -> lower unit cost.
Provides Information: Educates consumers about new products.
Generates Employment: In advertising industry and media.

Conclusion: Advertising is not a waste if used ethically. It fuels the economy by driving demand, though wasteful/deceptive ads should be checked.

7. Distinguish between advertising and personal selling.

Basis	Advertising	Personal Selling
Form	Impersonal / Non-personal form.	Personal form (Face-to-face).
Reach	Reaches masses (Millions).	Reaches limited people.
Cost per person	Very low.	Very high.
Feedback	Immediate feedback not possible.	Immediate feedback possible.
Flexibility	Standardized message (Rigid).	Message can be adjusted (Flexible).

8. Explain the factors determining the choice of channel of distribution.

Product Related Factors:
- Perishable: Short channel.
- Durable/Standardized: Long channel.
- Technical/Expensive: Direct selling (Short channel).
Market Related Factors:
- Size of Market: Large market -> Long channel.
- Geographical Concentration: Concentrated -> Direct; Scattered -> Long channel.
Company Related Factors:
- Financial Strength: Rich firms can own channels (Direct); Weak firms rely on middlemen.
- Degree of Control: Desire for high control -> Short channel.
Environmental Factors: Economic depression -> Shorter/Cheaper channels to cut costs.