Please refer to Class 12 Business Studies Sample Paper Term 1 With Solutions Set D provided below. The Sample Papers for Class 12 Business Studies have been prepared based on the latest pattern issued by CBSE. Students should practice these guess papers for class 12 Business Studies to gain more practice and get better marks in examinations. The Term 1 Sample Papers for Business Studies Standard 12 will help you to understand the type of questions which can be asked in upcoming examinations.
Term 1 Sample Paper for Class 12 Business Studies With Solutions Set D
1. The welfare and survival of an organization are the main functions performed by …………………….. level of management. (Fill the gap)
In order to survive an organization must earn enough revenue to cover cost. Which management objective is highlighted?
a. Organistional objective
b. Growth objective
c. Social objective
d. Individual objective
Organistional objective OR Organistional objective
2. Highlight the feature of management depicted by the image given here
a. Group activity
b. Goal oriented
3. Match the following on the basis of effect-
a. Division of work (i) ensures congenial atmosphere
b. Discipline (ii) Employees suggestion system
c. Remuneration of Employees (iii) Invites penalty if violated
a-(iv) b-(iii) c-(i)
5. “free flow of goods and services between different countries of the world is an example of.
6. he Uttarakhand government has developed surveillance network using latest satellite technology. Under this system, the state’s mining department would be in a position to check illegal mining activities across the state. The state government is also considering the use of drones in its proposed campaign against illegal mining . Identify the related dimensions of business environment.
a. Economic dimension and Legal dimension
b. Social dimension and Economic dimension
c. Technological dimension and Political dimension
d. Political dimension and Economic dimension
7. State how planning reduces creativity? Or, Identify the correct sequence of steps involved in the planning process.
a. Evaluating alternative courses, Identifying alternative course of actions, Setting objectives, Developing premises
b. Setting objectives, Identifying alternative course of actions, Evaluating alternative courses, Developing premises
c. Setting objectives, Developing premises, Identifying alternative course of actions, Evaluating alternative courses
d. Setting objectives, Developing premises, Identifying alternative course of actions, Evaluating alternative courses
12. Which of the following is not an external source of recruitment
a. Campus recruitment
c. Casual callers
d. Direct recruitment
13. Many big organisations maintain a close liaison with the universities, vocational schools and management institutes to recruit qualified personnel for various jobs. This is known as
a. Placement agencies and management consultants
b. Direct recruitment
c. Labour contractors
d. Campus recruitment
14. Which of the following is not an assumption of Maslow’s theory?
a. People’s behaviour is not based on their needs.
b. Satisfaction of such needs influences their behaviour.
c. A satisfied need can no longer motivate a person; only next higher level need can motivate him.
d. A person moves to the next higher level of the hierarchy only when the lower need is satisfied.
15. Identify the style of leadership in which the superior uses file forces from within the groups in order to establish control.
a. Autocratic leadership
b. Democratic leadership
c. Laissez-faire leadership
d. Authoritarian leadership
17. Return on investment is computed as?
a. Total Investment * EBIT
b. EBIT * EBT
c. EBIT / Total Investment
d. EBT / Total Investment
18. Maturity period to call money is-
a. 1 to 15 days
b. 15 to 90 days
c. 15 to 1 years
d. 1 to 30 days
19. In order to get feedback about its new product launch, Taggi Limited conducted an online survey through a short questionnaire. Identify the marketing function being mentioned in the given line.
a. Gathering and analysing market information
b. Marketing planning
c. Product designing and development
d. Packaging and labelling
20. ______ is the standardized mark on jewellery
Fill in the blank:-
10. It is the process of ——— where in we decide in advance what and how to do.
16. Controlling ensures that an organization’s resources are being used ………………… and ………………. for the achievement of pre-determined goals.
effectively and efficiently
4. In ABC Ltd an employee has an objective of getting more salary but the organizations main objective is to maximize profit at economic cost. There was some dispute for a while. Eventually, organizations interest was given priority. Name the principle related to this principle.
Ans. Subordination of individual interest to general interest.
8. One of the functions of Management is considered as base’ for all other functions? Name that function.
11. The management of ABC Ltd. set up the target of selling 10,000 units per week and made all their plans based on this target. But due to change in technology adapted by competitors which reduced their cost, the ABC Ltd. could not achieve their target.
(i) Identify the limitation of planning discussed in the above para.
Ans. Planning may not work in dynamic environment.
21. Mr. Ajay after completing MBA from USA comes to India to start a new business under the banner Ecom Creations Ltd. He launches a new product in a e-learning for senior Secondary School students in Commerce stream, which already has n established market in UK and USA but not in India. His business starts flourishing in India. Now more Indian companies entered into the market with other subjects also.
Identify and quote the lines from above para which highlight the significance of understanding business environment.
Eco-friendly products are gaining power as the consumers‟ awareness about environmental issues has increased over the years and they are conscious about choosing products that do not have adverse effects on the environment. They are now more conscious about the carbon emission and climate change effects, and want themselves to be „seen‟ as a green advocate among their peers. In such a scenario, it has become a challenge for the companies as they have to not only meet the needs of the consumers but also ensure that their products are safe and environment friendly. At a result, there is growing need for better and advanced technologies to works as a catalyst in this regard.
1. Identify the relevant feature of business environment being discussed above.
2. Describe briefly any two points which highlight the importance of business environment and its understanding by managers.
Ans. (i) “Comes to India to start a new business … launches a new product in e-learning for Senior secondary school students in Commerce stream.”
1. It helps in assisting in planning and policy formulation.
2. It helps the firm to identify opportunities and get the first mover advantage.
(ii) “His business starts flourishing in India.”
1. It helps in improving performance.
(iii)“Now more Indian companies entered into the market with different subjects also.”
1. It helps the firm to identify threats and early warning signals.
1. Inter-relatedness is the relevant feature of business environment which is being discussed above.
2. The two points which highlighted the importance of business environment and its understanding by managers are described below: (Any two)
1. It enables the firm to identify opportunities and getting the first mover advantage: The dynamic business environment provides numerous opportunities for a business to evolve as per the changing needs. Therefore, early identification of the forthcoming opportunities helps an enterprise to be the first to exploit them instead of losing them to the competitors.
2. It helps the firm to identify threats and early warning signals: sometimes the changes in the external environment may pose as a threat and hinder a firm‟s performance. An awareness about the business environment helps the managers to identify such threats on time and take necessary decisions and action.
3. It helps in tapping useful resources as the enterprise designs policies that allow it to get the resources that it needs so that it can convert those resources into outputs that the environment desires.
22. Anubhav has set up an export house after completing his masters in fashion designing. As the quality of the garment depends on the quality of raw materials used, he assures that the fabric meets the requirements by conducting a series of tests for the fabrics like shrinkage test, testing colour fastness to washing, colour fastness to light, colour fastness to perspiration etc. through laboratory tests. Later on, at the production areas, fabric inspection is also conducted by stopping the production process. The tests help to detect the deviations and also take corrective action. Moreover, the ensures that complete training about production work was given to every worker at the time of joining his export house.
In context of the above case:
1. Identify the function of management being performed by Anubhav by conducting tests to assure for the quality of the garments manufactured in his export house.
2. Briefly explain the term „deviations.‟
Ans. 1. Controlling is the function of management being performed by Anubhav by conducting tests to assure for the quality of the garments manufactured in his export house.
2. The term „deviations‟ refers to the difference between the actual performance and planning performance. If the actual performance is more than the planned performance, it may be said to be positive in nature or vice-versa.
23. Supriya‟s grandmother who was unwell, called her and gave her a gift packet. Supriya opened the packet and saw many crumpled share certificates inside. Her grandmother told her that they had been left behind by her late grandfather.
As no trading is now done in physical form, Supriya wants to know the process by adopting which she is in a position to deal with these certificates.
1. Identify and state the process.
2. Also give two reasons to Supriya why dealing with shares in physical form had been stopped.
Ans. 1. Dematerialization – It is a process where securities held by the investor in physical form are cancelled and the investor gives an electronic entry or number so that she/he can hold it as an electronic balance in an account
2. Problems with dealing in physical form – (any two)
2. Fake/forged transfers
3. Transfer delays
4. Paper work associated with share certificates or debentures held in physical form.
24. As a project work in Business Studies, the Commerce students of KV Bengdubi, West Bengal though of preparing apple jam from the apples grown in their school premises and sell it in the school annual fete. They approached the Principal who not only appreciated the students but also gave her consent for the same. The school decided to donate 50% of the revenue generated from the sale to a nearby orphanage. After the school fete, the school also decided to extend this project by providing employment to visually challenged and disadvantaged sections of society or regular basis.
1. Explain any two product-related decisions which the students had to take.
2. Suggest any one functions that the “label’’ of the jam-bottle must perform.
Unilever has found a new way to make ice creams by using an ingredient called “ice structuring protein” which is widely found in nature especially, in fishes which allows them to survive in freezing arctic waters. Combining ISP with stabilizer technology allows to make ice creams that don‟t melt so easily thereby making it more convenient for small children and consumer in hot countries.
In the context of above case:
1. Identify the component of marketing mix being taken into consideration by the company.
2. Explain briefly the function of marketing highlighted here.
Ans. 1. The two product-related decisions which the students had to take are branding and packaging.
2. The two important functions that the label of the jam – bottle must perform are: (any one) Describe the product and specify its contents: Helps in identification of the product or brand:
1. The component of marketing mix being taken into consideration by the company is „Product‟.
2. Product designing and development: Every marketer strives to achieve his marketing objectives by creating offerings to satisfy a need or a want. Therefore one of the core functions of marketing is to develop the product in the most effective and efficient way. Every marketer endeavours to add value to his product by introducing constant innovations in the product to enhance both its utility and attractiveness in the eyes of the potential buyers and gain a competitive edge.
25. The management of Vrinda Ltd. strongly believes that the members of an organization should work towards fulfilling the common organizational goals. This requires team work and integration of efforts of all individuals, departments and specialists. This is because all the individuals and departments depend on each other for information and resources to perform their respective activities. Managers need to reconcile differences in approach, timing, effort or interest. At the same time it should enable all its members to grow and develop. Thus, there is a need to harmonize individual goals and organizational goals.
1. Identify the concept of management discussed above.
2. State any three features of the concept identified in a..
Ans. 1. Coordination
2. Features of coordination:
1. Coordination integrates group efforts by unifying diverse interest.
2. Coordination ensures unity of action by acting as a binding force between departments.
3. Coordination is a continuous process as it begins at planning stage and continues till controlling.
26 Explain Fayol’s principles of ‘equity’ and ‘order’ with examples.
Explain in brief any four features of Principles of management?
Ans. (i) Equity The principle of equity implies a sense of fairness and justice to all workers working in an organisation. Observance of equity alone would make workers loyal and devoted to the organisation. Equity does not mean equal salary to a peon and supervisor. But equity means application of same disciplinary rules, leave rules, etc irrespective of their grade, position and gender, language, religion or nationality, etc. For example, the rules for granting medical leave to an employee should be same irrespective of their position grade or gender.
(ii) Order According to Fayol, ‘People and material must be in suitable place at appropriate time for maximum efficiency’. This principle states that there should be a place for everything and everyone in an organisation and that thing or person should be found at its alloted place. This will lead to increased productivity and efficiency. For example, raw material should be available at the place prescribed for it.
Principles of management are the statements of fundamental truth, which possess the capability to anticipate the outcome of managerial pursuits. Below mentioned are the features:
♦ Universal applicability: Management principles are relevant to all sorts of establishments – business & non-business. They are applicable to all levels of management. Every business must make the best potential effectiveness by the use of management principles. Hence, they are universal or all-pervasive.
♦ Principles of Management have a Cause & Effect Relationship: Principles of management mean cause and effect relationship between associated variables. They imply what will be the outcome or result of some actions. Consequently, if one is known, the other can be determined.
♦ Principles of Management – Aims at Influencing Human Behavior: Human behaviour is complicated and unpredictable. Management principles are aimed towards controlling human behaviour so that people can contribute their best to the organization. Management is concerned with combining efforts and harmonizing them towards a purpose. But in situations, even these principles fail to understand human behaviour.
♦ Principles of Management are Flexible: Management principles are effective guidelines and not inactive rules. There is enough room for managerial responsibility i.e. they can be altered as per the necessities of the situation. Modification & development is a perpetual phenomenon in case of principles of management.
27 An established firm has fifty years of experience in shipping industry. The company time and again proves itself as one of the dominant figures in the market. The plan for the whole year is given a lot of importance. According to the owner of the company their plans are the basic structures upon which other important functions of management rest. It is important that the plans are communicated to the employees. The top management ensures that the plans are communicated and implemented at all levels and in all departments. To learn from past mistakes is a habit of this successful company. They prepare plans for short term as well as long term where it can be seen that throughout the year the plans are prepared one after another. Shipping industry needs such dedicated companies. The goals are specific and the activities to achieve these specific goals are undertaken. The company has planned a growth of 20% in revenue this year. Let’s see how much it’s possible for it to achieve it by the end of the year. In the above case identify and explain in brief the various features of planning highlighted.
Ans. The features of planning highlighted above are:
1. Planning is a primary function of management. According to the owner of the company their plans are the basic structures upon which other important functions of management rest .
2. Planning is pervasive. The top management ensures that the plans are communicated and implemented at all levels and in all departments.
3. Planning is continuous. They prepare plans for short term as well as long term where it can be seen that throughout the year the plans are prepared one after the other.
4. Planning focuses on achieving objectives. Goals are specific and the activities to achieve these specific goals are undertaken.
28 ‘Rats & Fleas’ is a pesticide producing company. The company identifies the various types of activities to be done. For this it divides the work into various departments. The company then gets involved in its business with a lot of zeal. After one year of successful run the company decides to transfer the decision making authority to the lower most level of the employees. For this a major policy decision is taken.
(i) Identify the function of management highlighted above and another concept also.
(ii) Give the next two steps of this function.
Ans. (i)The function of management highlighted in the above case is ‘Organising’. This can be seen in the first paragraph. The other concept of management which is highlighted in the second paragraph is ‘Decentralisation’. After one year of successful run the company decides to transfer the decision making authority to the lower most level of the employees. For this a major policy decision is taken.
(ii)The next two steps of this function ‘Organising’ is
♦ Assignment of duties and
♦ Establishing reporting relationships.
29 Explain any four factor affecting requirement of Working Capital.
Ans. Factors affecting the requirement of Working Capital:( any four )
1. Nature of business. Nature of business is an important factor that influences the requirement of working capital. For example: Public utility services like transport concerns, electricity undertakings where much of the investment is in a fixed form, require less amount of working capital. On the other hand, trading or manufacturing concerns have to invest large amounts in raw materials, wages, etc., hence these require a large amount of working capital.
2. Scale of operation. An organisation which operates on a higher scale, requires large amount of working capital as compared to the organisation which operates on a lower scale.
3. Business cycle. Different phases of business cycle affect the requirement of working capital of a firm. During boom period, sales as well as production are likely to be higher, therefore more working capital is needed. During depression, sales and production are low, as a result the requirement of working capital would be lower.
4. Seasonal factors. Industries, which produce and sell seasonal goods, require large working capital during off-season, as this is the period when production is carried on to prepare for the season when the products would be sold in comparison to industries with regular production and sales.
5. Rapidity of turnover. Business units, which sell their products quickly, such as newspapers, retail shops, bakeries, etc., require a lesser amount of working capital.
30 Prakhar purchased an ISI mark electric iron from Bharat Electricals. While using it, he found that it was not working properly. He approached the seller and complained about the same. The seller satisfies Prakhar by saying that he will ask the manufacturer to replace the iron. The manufacturer refused to replace and Bharat Electricals decided to file a complaint in the consumer court. Can Bharat Electricals do this? Why? Also explain who is a consumer as per Consumer Protection Act, 1986.
‘Vastra Ltd.’ is engaged in the manufacturing of apparel. Over the years, it has became a popular brand due to its good product quality and exclusive designing. The company plans to open its own retail showrooms in metropolitan cities in India. In order to meet its financial needs it has offered for subscription an IPO of Rs. 4 lakh equity shares in the price band of Rs. 430 – Rs. 445 each. As per the guidelines of SEBI, the company has provided a complete disclosure of the relevant details in its prospectus.
1. Identify and explain the right of the consumer being fulfilled by the directives of SEBI in the above mentioned case.
2. Briefly explain any two points highlighting the importance of consumer protection from the point of view of the businessmen.
Ans. No, Bharat Electricals will not be able to file a complaint under Consumer Protection Act 1986 because according to this act a person is not deemed to be a customer if he buys goods for resale or commercial purpose. Under the Consumer Protection Act 1986, a consumer is defined as:
♦ Any person who buys any goods for a consideration, which has been paid or promised, or partly paid and partly promised or under any scheme of deferred payment. It includes any uses of such goods, when such use is made with the approval of the buyer, but does not include a person who obtains goods for re-sale or any commercial purpose.
♦ Any person who hires or avails of any service, for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment. It includes any beneficiary of services when such services are avails of such services for any commercial purposes.
1. The Right to information is being fulfilled by the directives of SEBI in the above mentioned case. According to the Right to information, the consumer has the right to get complete information about the product that he/she may propose to buy including its contents, date of manufacture and expiry, maximum retail price, quantity, directions for use etc. Moreover, as per law, it is mandatory for the marketers to provide complete information about the product/service to buyers.
2. The importance of consumer protection from businessmen’s point of view is outlined below: o Long-term interest of business: In order to ensure long term interest of business it is important that businessmen strive to earn profits only through consumer satisfaction. This will not only ensure the survival of business but also lead to its growth in the future. o Business uses society’s resources: Since a business employs society’s resources to create offerings so they need to safeguard the consumer’s interests.
31 Anjana chemicals is looking for qualified and talented people to apply for vacant jobs in the organisation. With the passage of time the organisation has learned a lot with its experience. It knows when it goes for final selection of candidates, if will have to design different tests. They want to test the employees on the basis of their learning and decision making ability. The company wants to ensure proper testing of the recruited candidates. After this the candidates will be judged on the basis of in-depth formal conversation. After the selection the candidates are placed and trained. Employees have to be trained on the equipment they will be using but this training will take place away from the workplace.
1. Which type of recruitment should the company depend upon?
2. Which type of test should be conducted done by the organisation to suit their need?
3. Which stage in the selection process is highlighted after the written test?
4. What type of training is given to the candidates?
Ans 1. The company should depend upon external recruitment to meet its needs. Anjana chemicals is looking for qualified and talented people to apply for vacant jobs in the organisation.
2. The type of test needed by the organisation to suit their need is intelligence test. They want to test the employees on the basis of their learning and decision making ability.
3. The stage in the selection process which is highlighted after the written test is employee interview. After this a stage in the selection process will come when the candidates will be judged on the basis of in-depth formal Conversation.
4. The type of training given to the candidates is vestibule training. Employees have to be trained on the equipment they will be using but this training will take place away from the workplace.
32. Identify the elements of directing in the following cases:
1. Arun who is the departmental head of his organisation decides to improve the performance of his department. He decides to give some financial and non financial incentives to his subordinates. He knows these incentives will satisfy their needs. Therefore they will be stimulated to take actions from their side.
2. Rajeev is an HR manager leading a team of 12 people. He knows that the duties and responsibilities of an HR employee are challenging. He knows in order to make his team work with a positive frame of mind, he
will have to set a personal example as a role model and influence their behaviour and working style to increase the output of his team.
3. Priya and Raghav are discussing about an element of directing. They say that without this element no group or people can achieve a common understanding. This element requires effort from both the sides and consumes 90% of the time of a manager.
4. Rajesh who works at the shop floor is a lower level manager. He is heading a team of 25 workers. He oversees and guides their efforts on a regular basis and tries to maximize the output of his unit by timely giving them feedback. His team has group unity and works with dedication to complete their targets on time.
5. Kavita is a CEO. She has recently replaced Mr. Anuj who was an unsuccessful CEO. The profits of the company fell to a new low during his time. Kavita has a lot of challenges in front of her, major being the lack of enthusiasm in the organisation. In order to set things right she is trying to set a personal example in front of the employees by working with dedication and putting 16 to 17 hours in her job on a daily basis.
6. Akash works in a telecom company. He is leading a team of more than 100 employees. Daily he drops messages to them, convenes meeting and arranges a suggestion box in his department. He listens to the advices and suggestions of his subordinates very carefully and tries to implement them where ever possible. He is quite clear in his delivery of messages and conveys his thoughts properly.
Ans. The elements of directing identified in respective cases are:
33 State and explain any four factors affecting Dividend decision.
Well being Ltd. is a company engaged in production of organic foods. Presently, it sells its products through indirect channels of distribution. But, considering the sudden surge in the demand for organic products, the company is now inclined to start its online portal for direct marketing. The financial mangers of the company are planning to use debt in order to take advantage of trading on equity. In order to finance its expansion plans, it is planning to raise a debt capital of Rs.40 lakhs through a loan @ 19% from an industrial bank. The present capital base of the company comprises of Rs.9 lakh equity shares of Rs.10 each. The rate of tax is 30%.
In context of the above case:
a. What are the two conditions necessary for taking advantage of trading on equity?
b.Assuming the expected rate of return on investment to be same as it was for the current year i.e. 15%, do you think the financial managers will be able to meet their goal. Show your workings clearly
Ans. Factors affecting divided decision:
1. ‘Consistently earning good profits’. It relates to the stability of earnings of the company as a company having stable income is always in a better position to pay higher dividend. Companies having inconsistent and unstable earnings do not prefer declaring high rate of dividend.
2. ‘There is availability of enough cash in the company’. The above line reflects the cash flow position of the business which is another major factor influencing the dividend decision. In order to declare higher rate of dividend the company should have enough cash. A company remaining short of cash finds it difficult to pay dividend.
3. ‘It has many shareholders who prefer to receive a regular income’. Shareholders’ preference is highlighted in the above statement. The management of the company should keep in mind the preferences of shareholders while they declare dividend. Some shareholders prefer to receive a regular income in the from of dividend.
4. ‘It has taken a loan of Rs.50 lakhs from I.C.I.C.I Bank and is bound by certain restrictions on the payment of dividend’. The above statement highlights contractual constraints due to which the company is bound by certain restrictions on the payment of dividend. If a company has taken loan, the lender may impose few restrictions on the declaration of dividend in future. The dividend policy of the firm should not violate the terms and conditions of the loan agreement.
a. The two conditions necessary for taking advantage of trading on equity are:
(i) The rate of return on investment should be more than the rate of interest.
(ii) The amount of interest paid should be tax deductible.
b. Hence, it can be said that being increase in the EPS, the financial managers will be able to meet their goal.
34. Identify the marketing management philosophy involved in the following cases:
1. Geetika scooters are the leading manufacturers of scooters in the industry. They have the first mover advantage in the industry. When they started manufacturing scooters no other company was doing it. They manufacture scooters and the middle class purchases them in a high number. With each passing year the number of scooters sold is increasing. The company’s main concern usually is to produce maximum number of scooters. Company’s profit is governed by the maximum number of scooters they produce.
2. Aman microwaves produce microwaves but they do not try to understand the needs of the customers. Their main focus is always on the quality of the product but never on customer requirement. They try’ to include as many features as possible in their product. This year they have added a special type of alarm in their product which is a unique feature. The alarm is available in ten varieties. However, the customers say that the product is not of much use to them as it consumes a lot of electricity.
3. Ravi coolers is a very progressive company. The owners of the company feel that unless and until they contribute to society it is worthless to exist as a company. In a recent move by the government the organisation has decided to help it. The organisation will be making five teams of hired environmentalists from foreign countries. This team will help the local people clean the portions of a polluted river in the country. The costs of this project will be borne by the company.
4. A company which deals in apparels has decided to clear its stock. The company has a huge pile of clothes to be cleared across its various branches. The company has decided to give discount on its products. It even has decided to go for various fashion shows in different colleges. It has also decided to sponsor a few events. However, people say that the clothes are not much of current fashion and the company is not considering the choice of the customers.
5. An automobile company is a leading manufacturing company in its segment. The company has decided to launch fully solar charged vehicles. This technology will cost the company ?2000 crores annually. When the relationship manager of the company was asked about the reason of bearing so much extra cost he replied that the company considered environmental friendly techniques as the only solution to increasing pollution. The company feels by bearing extra cost it is fulfilling its responsibility.
Ashima purchased a bottle of tomato-sauce from the local grocery shop. The information provided on the bottle was not clear. She fell sick on consuming it. She filed a case in the District Forum under Consumer Protection Act and got the relief.
(i) Identify the important aspect neglected by the marketer in the above case.
(ii) Explain briefly any five functions of the aspect identified in a. above.
Ans. 1. Production concept
2. Product concept
3. Societal marketing concept
4. Selling concept
5. Societal marketing concept
1. Labelling 2. Functions of Labelling:
o Describes the product and specifies its contents. One of the most important functions of labels is to describe the product, its usage, cautions in use and to specify its contents.
o Identification of product/brand. A label helps in identifying and differentiating the product or brand from other similar types of products or brands produced by the company as well as by the competitors.
o Helps in product promotion. An attractively designed label entices the customers to buy the product. This is particularly true for fast moving consumer products like toothpastes, salt, butter, jams, soaps, etc.
o Grading of products. With the help of labels, products can be graded and put in different categories. For example, Brooke Bond Red Label Tea, Brooke Bond Yellow Label Tea, Green Label Tea, etc. Marketers assign different grades to different features or different qualities of the product.
o Providing information required by Law. Labelling also provides statutory warning or important information as required by law.
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