Students can read the important questions given below for Enterprise marketing Class 12 Entrepreneurship. All Enterprise marketing Class 12 Notes and questions with solutions have been prepared based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS. You should read all notes provided by us and Class 12 Entrepreneurship Important Questions provided for all chapters to get better marks in examinations. Entrepreneurship Question Bank Class 12 is available on our website for free download in PDF.
Important Questions of Enterprise marketing Class 12 Entrepreneurship
VERY SHORT ANSWER TYPE QUESTIONS
Question. What is marketing strategy?
Answer: Marketing strategy is defined by David Aaker as “A process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage.”
Question. What is TTL?
Answer: “Through the line” or TTL refers to an advertising strategy which involves both above-and below-the- line communications in which one form of
advertising points the target to another form of advertising thereby crossing the “line”.
Question.To be successful, you need to do what?
Answer:To be successful, you need to make things happen, not just let things happen.
Question. What are components of marketing mix in typical sense and also in the recent?
Answer: The 4Ps that make up a typical marketing mix are — Price, Product, Promotion and Place. But these days, the marketing mix includes several other Ps like Packaging, Positioning, People and Politics as vital mix elements.
Question. What is another name of Distribution Mix?
Answer: Distribution Mix is also known as Price Mix.
Question. What type of distribution would you adopt for consumable and perishable goods?
Answer: Direct selling mode will be preferred for consumable and perishable goods.
Question. What is the goal of business?
Answer: The goal of business is to make profit; which may be in terms of money, improved customer relations, goodwill, etc.
Question.Which is the shortest channel of distribution?
Answer: Producer-customer, Direct channel or zero level is the shortest channel of distribution.
Question. What is labelling?
Answer: It is the display of information about a product on its container, packaging, or the product itself.
Question. What is meant by goal setting?
Answer: “Establishing short or long term objectives, usually incorporating deadlines and quantifiable measures.”
Question. Explain the meaning of CRM.
Answer: CRM is the abbreviation for customer relationship management.
Question 14. When do we conclude that a business has failed? Answer: We can conclude that a business has failed when it does not generate adequate cash flow to meet expenses.
Question. What are the components to a successful sales strategy?
Answer: Components of successful sales strategy are creating an effective sales strategy requires market knowledge, awareness of competitor activities, awareness of current trends and detailed business analysis.
Question. Explain the term packaging.
Answer: Processes and materials employed to contain, handle, protect, or transport any commodity. Packaging is done to attract attention, assist in promotion, provide machine identification (barcodes, etc.), impart essential or additional information, etc.
SHORT ANSWER TYPE QUESTIONS
Question. What does the marketing strategy of a company include?
Answer: Marketing strategy includes:
1. all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company.
2. the formulation, evaluation and selection of market-oriented strategies.
3. several strategies for growth and interrelated components called the marketing mix.
Question. ollowing are the two types of sales strategies:
1. Direct:In this strategy sales people talk about each feature of the
competition’s product and compare it to theirs. It is also referred to as “negative selling”.
2. Indirect: Indirect sales uses demonstrating features and benefits not available with the competition’s products or services without ever mentioning them by name. It is also referred as “positive selling”.
Question. What is employee management?
Answer: Employee management:
1. Is first concern of a manager at work.
2. Allows manager to accomplish goals at work.
3. Allow manager or entrepreneur to capitalize on the strengths of other employees and their ability to contribute to the accomplishment of work goals.
4. Helps in promoting employee engagement, motivation, development, and employee retention.
Question. What are the rules for goal setting?
Answer: The rules of goal setting are:
1. Relevant: To be relevant, a business goal has to be profitable in some fashion. Every business goal has to be measurable in rupees, and must possess a clear advantage to the specific business.
2. Actionable: When we’re setting business goals, we have to be sure that we have developed them from general statements. Goals without action plans are just pretty words.
3. Achievable stretches: The purpose of business goals is to move the businesses forward. If expectations are set too high, we set up for failure and disappointment. If the expectations are set too low then we won’t get enough satisfaction or recognition from the accomplishment. A goal has to stretch us to be worth doing.
Question. Differentiate between trade mark and brand mark.
Answer: 1. Brand name is “that part of a brand which can be spoken like Asian Paints, Pepsi, Uncle Chips, etc.” Brand names are signals that carry meaning in the minds of consumers., E.g.“Wal-Mart”. Trademark refers to words, names, symbols and product design features that are used to distinguish the products or services of one manufacturer or seller from another.
2. Brand helps in identification of the product of a company, while trademark helps in preventing others from copying.
3. If a brand has not been registered, anyone can copy it, and there is no provision of any penalty, while in case of trademark violation, there is legal action available.
Question. Why should we advertise?
Answer: We should advertise to:
1. Make business and product name familiar to the consumers and public,
2. Create goodwill and build a favourable image of the product and the company.
3. Educate and inform the public about the aspects related to product.
4. Offer specific products or services.
5. Attract customers.
SHORT ANSWER TYPE QUESTIONS–
Question. Explain the disadvantages of skimming price method.
Answer: Disadvantages of skimming price method:
1. High promotional cost: In this method there is heavy expenditure on advertisement and other promotional techniques. All the entrepreneurs may not have such financial strength.
2. Short run; This method is applicable only till the competitors are not entering. As the competitors enter from window, the price skimming method has to leave from the door.
3. Innovation: Such method is applicable only to innovative products and ideas cannot be introduced for normal goods.
Question. Explain in detail SMART goals.
Answer: SMART is made from following words:
1. Specific: Great goals are well- defined and focused.
2. The moment we focus on a goal, our goal becomes a magnet, pulling us and our resources towards. “The more focused are our energies, the more power we generate.”
3. Measurable: A goal without a measurable outcome is like a sports competition without a scoreboard or scorekeeper. To know whether we are on track, we have to put concrete numbers in our goals.
4. Attainable:It means dream big and aim for the stars but keep one foot firmly based in reality. Entrepreneur must get a handle on realistic growth in the industry to set smart goals.
5. Relevant: Achievable business goals are based on the current conditions and realities of the business climate.
6. Time-Based: Business goals and objectives just don’t get done when there’s no time frame tied to the goal-setting process.
Question. What are Public Relations?
Answer: Public relations is the deliberate, planned and sustained effort to establish and maintain mutual understanding between an enterprise and their public. It is related to building good relations with the stakeholders of the business by having favourable publicity, building a goodwill and encouraging favourable informative system about the product and the enterprise.
LONG ANSWER TYPE QUESTIONS
Question. What are the various factors which help in employee management?
Answer: Various factors which lead to effective employee relationship are as follows:
1. Identifying objectives: It is essential to define what is meant by employee relationship management and what areas of the relationship will be managed. Mainly relationship management centers around attracting and retaining employees.
2. Determining employee needs: Needs varies depending on employee characteristics—age, gender, etc. and also on the type of job being performed. Directly asking the employees through one-on-one conversations is the best way to find the needs. Such contact is take place during formal employee evaluation meetings, through surveys and polls.
3. Balancing work and life needs:Effective employee relationship management requires consideration of the whole employee i.e. taking steps to ensure that the employee’s work-life is well balanced. This can be done through creative staffing involving part-time, flex-time or even off-site work assignments.
4. Open and honest communication: Managers and top level management must be committed to communicating regularly and honestly with employees about the various issues that affect their work. The more open the organizations are the more likely they are to establish strong relationships that lead to increased loyalty and productivity. It also helps in removing decreased turnover and dissatisfaction.
5. Measuring and monitoring results: Managers and HR departments should be alert at all times for finding the signs of discontent, this can be done by monitoring the results of more formal assessments. Such results should also be shared with employees of the firm.
6. Relationships are interpersonal: Steps must be taken to interact effectively with employees through various ways of communication channels, both interpersonal and formal. Measurement of the effectiveness of these efforts should be frequent and ongoing, with improvements and adjustments.
Question. What is penetration pricing method and enlist its advantages and disadvantages?
Answer: Penetrating pricing is the method of pricing in which the entrepreneur introduces its product in the market with low price compared to competitors. The low price increases the sale of the product tremendously. Normally for keeping low price, the profit margin is normally kept very low. The product thus captures the major part of the market e.g. Hero Honda, CD Dawn motorbike was introduced with the same pricing method. The CD Dawn penetrated into the market and captured major part of the market. Recently Bajaj CT- 100 also followed the tactics. Wheel active detergent powder kept the price of Rs. 20 per half kilogram. This also captured the market quickly. Advantages: Following are the advantages of penetrating pricing method:
1. Quick rise in sales: Penetrating pricing results in the increase in sales with a very high speed.
2. High turnover: The turnover of the enterprise is raised in very short duration. This strengthens the position of enterprise in the market.
3. Return on investments: This method brings decent return on investments. The minimum profit margin is also assured with the sale of each unit.
4. Best method for price elastic goods: When a small range in price brings more change in demand, such products have penetrating pricing as the best method.
Disadvantages: Following are the disadvantages of penetrating pricing method:
1. This method is applicable only to the products and services, which have high price elasticity. Thus, it is not applicable to all the products.
2. Profit margin is low in the price fixed by such method. This profit may not be sufficiently compared to the cost of production and promotion.
3. Turnover of the enterprise increases tremendously. Such enterprises have to prepare themselves for a situation of more financial requirements.
VERY LONG ANSWER TYPE QUESTIONS
Question. Explain in detail any three pricing strategies.
Answer: Following are the various pricing strategies:
1. Variable pricing technique: Variable pricing technique is the one in which different prices are charged from different categories of customers. There is price discrimination. Many factors are responsible for the variation in the price. If a customer is purchasing more quantity of the product, he will be offered lower price. If the demand for the product increases in the market then higher price can be charged. This method has both the objectives viz. selling more quality and also charging higher price but at , different times, e.g. Indian railways charges different fares for AC 3 tier,AC 2 tier, second class and general compartment.
2. Base pricing and discount: Base pricing and discount method is the method in which the entrepreneur fixes one price for its commodity. This price is calculated in advance considering the point that discount will be offered during the sale. Here, the discount offered is of various types. Depending on the type of customers the various rates of discount are fixed. Discount is offered to all the customers but at different rates. The wholesaler discount may be different from, volume discount, discount for transaction and off¬season discount.
3. Skimming pricing method: Skimming price method is the method of pricing in which the product is introduced in the market with a very high price. High price is kept for recovering the cost of production quickly. Such entrepreneurs normally bring something new in the market with more utility value. Product is introduced with a lot of expenditure on advertisement. High price tends to bring back revenue quickly. High class people are the target of such method of pricing e.g. Philips introduces its new product with the same method, Rumalaya also follows the same trend.
4. Cost plus pricing method: In this method the cost of production of one unit of the product is calculated. This cost covers all the types of costs including explicit cost, variable cost, fixed cost, etc. to this is now added the preplanned profit margin. This method of pricing is very simple method. It can easily be used for determining the price. Any changes in the cost of production or the margin of profit change the price in the same direction. It automatically gets adjusted to the change. Profit margin is not to be calculated. It is already fixed. Thus, by multiplying the profit per unit with the volume of the product, the total profit can be determined. Any upward rise in cost is easily visible. This provides an idea to the entrepreneur to adjust his production for keeping the cost as low as possible. Comparatively less calculations are involved, which makes the implementation of this method simple. This method can easily be implemented because of its simplicity to understand and easy calculations.
Question. Explain any six commonly used media options.
Answer: Commonly used media options are as follows:
1. Window display or office front: It is the external presentation of the firm/enterprise. An attractive, well maintained exterior with clear, bold sign writing is an essential start. Windows should be bright, attractively presented, clean and well lit at night. The display should be arranged neatly so that it has remarkable impact to attract attention.
2. Press advertising: It is a form of general advertising and includes advertising in all press like newspapers, magazines and journals. This form is a key to image building, information dissemination and sales campaigns. It is also a very cheap compared to other forms.
3. Radio: It is an ideal medium due as it has ability to reach specific target groups like teenagers, grocery buyers, etc. It has only sound effect. It covers spot adverts, promotions or talk back/ RJ discussions. Most radio stations offer packages for advertising.
4. Television: It is a powerful advertising medium as it creates impact through sight, sound and movement. It has high producing cost which makes it prohibitive for small businesses.
5. Direct mail: This is a broad category covering direct communication with the consumer through email, post or fax. It can include newsletters, catalogues and letters.
6. Outdoor: This advertising is done outdoors, including static advertising such as billboards, backs of street benches and bus shelters or mobile advertising displayed on buses, trains, taxis or towed signage.
7. Cinema: Firm can purchase cinema advertising for a set amount of screenings or runs. Most providers of this category offer packages which include production and screening of your advertisement
Question. Explain the reasons for business failures. Or Satnam, an IIT-IIM graduate, started three chemists shops at Amritsar, Patiala and Chandigarh in the name of ‘Quality Medicines’. Encouraged with the success of these shops Satnam opened 50 more shops in different parts of Punjab. His strategy was to cut price, focus on lower and upper middle class and open shops near hospitals. He operated on very thin margins. But he was not able to maintain sufficient funds to meet the day-to-day expenses of the business. The staff at the shops did not give much attention to the customers and there was very poor system of control. Because of this mismanagement he started incurring huge losses and his business failed.Based on the above paragraph, identify and explain any four causes of business failure of Satnam.
Answer: Following are the reasons of business failures:
1. Lack of industry experience: The internal resources of a firm has to match the needs of the environment to which the firm belongs. Lack of experience in the field will lead to poor organization of a firm and resources. This may lead to loss and business failure.
2. Inadequate financing: Financing is the lifeblood of a business at every stage. Many businesses fail due to lack of proper financing channels. The lack of planning for funding to support opportunities for growth is the root cause of failure. Planning in advance, rather than looking for financing just when needed, is a good practice. It includes lack of sufficient awareness of the costs involved in raising capital, lack of alternative sources in case of rejection from financiers, etc.
3. Lack of adequate cash flow: Cash flow is the measure of a firm’s ability to maintain sufficient funding to meet its expenses for the day-to-day activities of the business. Many businesses fail because owners have a difficult time projecting what cash will come in every month, and thus, how much can be produced. Cash flow projections and itsknowledge will help owners to understand how much they can afford to spend.
4. Poor business planning: Ninety per cent of business failures are caused by a lack of general business management skills and planning. Owner, manager must have sufficient knowledge of such skills. This will lead to proper understanding of the practical situation which can then be resolved using basic management skills.
5. Management incompetence:Ninety per cent of business failures are associated with “management inadequacy”, which can be due to either management inexperience or incompetence. A good strategic plan is only good as the management’s ability to implement changes in day- to-day operations.
6. Ignoring the competition: Customers always looking for the better deal. If competition offers better products, services, or prices, the customers will succeed at the expense of the business. So keeping an eye on competitors and positioning the products accordingly is vital to staying in business.
7. Unworkable goals: Setting goals is one thing and setting workable goals is another. Enterprises are influenced by uncertainty. Setting realistic goals, within the bounds of acceptable risk taking and optimism, is important.
8. Diminished customer base
9. Uncontrolled growth
10. Inappropriate location
11. Poor system of control
12. Lack of entrepreneurial skills.
II. SHORT ANSWER TYPE QUESTIONS
Question. What is meant by monopolistic market?
Answer: Monopolistic market is a form of market where there are large number of buyers and sellers selling differentiated products. There is presence of non-price competition. The sellers on the promotion of the product do large expenditure e.g., vegetable oil, tape recorders, etc.
Question. What is quantity discounting?
Answer: It is a type of discounting in which discount is offered by entrepreneur or seller on bulk sales. It can be referred as a reduction in price of the product or service that a seller offers to anyone who purchases more than a minimum quantity e.g. a company offers 1.0% discount on purchase of 150,000,15% on purchase upto ? 1 Lakh and 20% discount for the purchase of goods worth above 1 1,50,000.
Question. Give the usefulness of brand.
Answer: Brand is used to:
1. Identify the products of one firm, and
2. Differentiate them from those of the competitors.
Question. How does the Penetrating Price Method of pricing facilitate in expanding the market?
Answer: Penetrating Price Method of pricing is one in which the price of the product is decided lower than the original price of the product with minimal of profit. This method facilitates in expanding the market because the main aim of enterprise to penetrate into the market covering large area by attracting as many customers as possible at the very outlet. The sale is expected to have a high turnover, bring high returns on investment and the necessary profit. Example: Nirma washing powder.
Question 30. The total cost of a heater is Rs. 800. If the manufacturer wishes to have a margin of 20% on the sale price, what should be its selling price? Answer: Let, Sale Price = Rs x The margin of profit is x – 800 (as the total cost is Rs 800) Profit margin required 20% of x i.e. 0.2 x. 0.2 x = x – 800 0.8 x = 800 x = 800/0.8 = Rs 1000. Thus, the selling price should be Rs 1000.
Question. What are the qualities of a good brand?
Answer: A good brand name should possess:
1. Distinctiveness: It should have the capability to stand out amongst various competing names.
2. Short: A brand should be short, sweet and catchy.
Question. Market rate method is useful for new entrepreneurs. Why?
Answer: Market rate method is useful for new entrepreneurs because offollowing reasons:
1. Low risk: Keeping the price of the product equivalent to the market rate minimizes the risk of loss to a new entrepreneur.
2. More chances of success: The prices fixed are competitive. This provides more chances of selling the new product in the market.
Question. Describe a Logo of a famous brand.
Answer: McDonald’s golden arch (M) is a famous logo. By seeing this logo consumers expect fast service, inexpensive prices, and a specific type of food around the corner. This gives a competitive advantage over less recognizable restaurants.
Question. Distinguish between the direct selling mode and the indirect selling mode.
Answer: Direct selling mode and the indirect selling mode can be distinguished under following headings:
1. Length of channel: Direct selling mode has shortest length of channel whereas indirect selling mode has longer length of channel.
2. Competition: In case of intense competition in the market, the direct selling mode is preferred, whereas in case of less intense competition, indirect selling mode is preferred.
3. Nature of product: Product having shorter shelf-life like milk, vegetables etc. are sold through direct selling mode, whereas products with more shelf-life is sold with indirect selling mode.expect fast service, inexpensive prices, and a specific type of food around the corner. This gives a competitive advantage over less recognizable restaurants.
Question. What is the importance of patents?
Answer: Patents grants inventor the right to exclude others from making, using, selling, offering to sell, and importing an invention for a limited period of time, in exchange for the public disclosure of the invention.
Question. What is the significance of after sales service in a Product Mix?
Answer: Significance of after sale service in a Product Mix is as follows:
1. Goodwill: A better after sale service enhances the goodwill of the company.
2. Faith: Faith of the customers is increased with an effective after sale service.
Question. What is trade secret? Give examples.
Answer: Trade secret refers to any confidential business information which provides an enterprise a competitive edge may be referred as trade secret. Example:
1. Formula of Coca Cola.
2. Formula of Pepsi Cola.3. Proportion of ingredients of veg. and non-veg masalas.
Question. Give some examples of generic name and their brand names.
Answer: So, the minute a brand name is used, identification of the product becomes easy.
Question. What do you mean by tag line?
Answer: Taglines are simple but powerful messages that help to communicate an enterprise’s goals, mission, distinct qualities and so much more.These have a small amount of text which serves to clarify a thought it is designed with a dramatic effect. These can be in the form of questions, statements and exclamations.
Question. What is brand? Explain the components of brand.
Answer: ‘Brand’ is a comprehensive term used to denote a name, term, sign, symbol, design or combination of them. Brand has three components:
1. Brand name: It is “that part of a brand which can be spoken like Asian Paints, Pepsi, Amul, Uncle Chips, etc.
2. Brand mark: It is that part of a brand which can be recognized but is non-utter able. It appears in the form of a symbol, design or distinct colour scheme. For example: ‘Girl’ of Amul, ‘Ronald’ of McDonald, etc.
3. Trade mark: A brand or part of it that is given legal protection against its use by other firms is called a trade mark.
Question. What do you mean by logo?
Answer:
1. ‘Logo’ is an identifying symbol design, mark, sign for a product or business which stands associated with the entrepreneur’s offering.
2. It is an important feature of branding.
3. It can be a graphic mark or emblem commonly used by enterprises or individuals to aid and promotes instant public recognition.
Question. How do we know that we’re setting the right business goals? Or What are the rules for goal setting?
Answer: The rules of goal setting are:
1. Relevant: To be relevant, a business goal has to be profitable in some fashion. Every business goal has to be measurable in rupees, and must possess a clear advantage to the specific business.
2. Actionable: When we’re setting business goals, we have to be sure that we have developed them from general statements. Goals without action plans are just pretty words.
3. Achievable stretches: The purpose of business goals is to move the businesses forward. If expectations are set too high, we set up for failure and disappointment. If the expectations are set too low then we won’t get enough satisfaction or recognition from the accomplishment. A goal has to stretch us to be worth doing.
Question. Describe the tag line of Promise tooth paste.
Answer: Balsara Hygiene products, launched their ‘Promise’ toothpaste in 1978 and took an aggressive stand against its competitors. It then secured the second highest market share. It was due to the tagline “The unique toothpaste with time-tested clove-oil.” Clove oil is a traditional herbal remedy for the prevention of dental ailments and toothaches. This captured the minds of the consumers.
LONG ANSWER TYPE QUESTIONS
Question. Explain the various types of brands available.
Answer: Various types of brands available are:
1. Individual brand name: Here every product is promoted by the entrepreneur on the basis of a separate brand name, like—Liril—brand name with the “freshness” concept.Lux—brand name for “beauty soap for film stars”
2. Family brand name (Umbrella branding): Here the entrepreneur’s name or the company’s name is used for all the products, like—KISSAN, is brand name for jams, sauces, etc. AMUL, has been used to market a large variety of dairy products viz. milk, ghee, butter, ice-creams, etc.
3. Corporate names: Here, entrepreneur can choose their corporate name or logo together with some brand names of individual products for example, Godrej, Tata, Bajaj, etc.
4. Alpha-numeric names: It is mainly for industrial products. An alpha¬numeric name signifies its physical characteristics. For example, SX4, Liv52, ANX Grindlay, ilO, i20, etc.
Question. How will you show that market mix is dependent on the type of the product?
Answer: Market Mix is a set of activities. Contribution of each is essential. It can be explained using following example: A toilet soap manufacturer can offer improved quality product at a lower price. He can keep such a low price that it can be penetrating pricing. In the competitive market he would be able to increase its sale by selecting adequate channel of distribution to reach maximum consumers. Promotion on TV and newspapers for timely information will be beneficial in raising his sales. He will have to keep shorter distribution channel for ensuring easy and quick reach of the product to the customers.
Question. While selecting a brand name, what care must be taken by a entrepreneur?
Answer: While selecting a brand name a entrepreneur should choose a name which is :
1. Short, simple and easy to pronounce.
2. Noticeable, easy to recognize and remember.
3. Pleasing, impressive when uttered.
4. Neither obscene, negative, offensive or vulgar.
5. Adaptable to packaging, labelling requirements, to different advertising media and languages.
6. Linked to product and eye catching.
7. Contemporary, capable of being registered and protected legally.
Question. What factors affect the policy of packaging?
Answer: Following factors affect the policy of packaging:
1. Quantity of the product.
2. Quality of the product.
3. Safety of the product.
4. Choice of the customers.
5. Environmental factors.
6. Specific requirement of the product.
7. Cost of packaging material.
Question. What is trade marking? Why is it necessary?
Answer: The process of providing mark of trade by the enterprise to its product is trade marking. By this process a sign, symbol, word, asset of words, picture etc. is provided to the product. The trademark becomes identification mark of the product. Trade marking is necessary because of following:
1. Essentiality: Some of the products need a trademark for their sale. They may be a product of a business house or may be a new enterprise.
2. Identity: Trademark provides identity to the product. Product gets recognition due to trademark.
3. Reach: Easy and simple trademarks always reach to maximum possible customers. The product thus becomes famous.
Question. What is variable pricing technique?
Answer: Variable pricing technique is the one in which different prices are charged from different categories of customers. There is price discrimination. Many factors are responsible for the variation in the price. If a customer is purchasing more quantity of the product, he will be offered lower price. If the demand for the product increases in the market then higher price can be charged. This method has both the objectives viz. selling more quality and also charging higher price but at different times, e.g. Indian railways charges different fares for AC 3 tier, AC 2 tier, second class and general compartment.
Question. Why do different entrepreneurs adopt different types of market mix for their products?
Answer: Different entrepreneurs adopt different types of market mix for their product because of following:
1. Target group: Market mix is different . for different income groups. Higher price is kept for the products meant for rich people. Also the demands of the customers vary from place to place which ultimately depend on their paying capacity.
2. Promotional method: Various types of promotional methods have
varying effect in the same locality. Therefore, the selection of the method is guided by the locality.
3. Distribution: Mode of distribution is different for different areas. If it is city area, then road and air transport is preferable. If supply chain is longer, then it could be a mixture of air, water and land transport. Easily reachable mode is preferred and selected.
Question. What is meant by base pricing and discount?
Answer: Base pricing and discount method is the method in which the entrepreneur fixes one price for its commodity. This price is calculated in advance considering the point that discount will be offered during the sale. Here, the discount offered is of various types. Depending on the type of customers the various rates of discount are fixed. Discount is offered to all the customers but at different rates. The wholesaler discount may be different from, volume discount, discount for transaction and off-season discount. Base price and discount = predetermined price discount.
VERY LONG ANSWER TYPE QUESTIONS
Question. What is skimming pricing method? What are its advantages and disadvantages?
Answer: Skimming price method is the method of pricing in which the product is introduced in the market with a very high price. High price is kept for recovering the cost of production quickly. Such entrepreneurs normally bring something new in the market with more utility value. Product is introduced with a lot of expenditure on advertisement. High price tends to bring back revenue quickly. High class people are the target of such method of pricing e.g. Philips introduces its new product with the same method, Rumalaya also follows the same trend. Advantages of skimming price method:
1. High recovery: The cost of production and investing can be recovered quickly by this method.
2. Quality product: Such method is applicable mainly to quality product.
The entrepreneur is thus able to sell quality product.
3. Encourages innovation: Any innovative idea about product can be quickly introduced by such method. Hence, entrepreneurs normally are in search of innovations. Thus, innovation is encouraged.
Disadvantages of skimming price method:
1. High promotional cost: In this method there is heavy expenditure on advertisement and other promotional techniques. All the entrepreneurs may not have such financial strength,
2. Short rim: This method is applicable only till the competitors are not entering. As the competitors enter from window, the price skimming method has to leave from the door,
3. Innovation: Such method is applicable only to innovative products and ideas cannot be introduced for normal goods.
Question. What do you mean by remote market? How would you arrange a distribution system for the same?
Answer: Remote market is the form of market where the product is sold to greater distances, and deep inside the country i.e., rural area. The shops of such market are not in direct touch with the producers; also it takes time in reaching the products up to consumers. Distribution system for a remote market: Following procedure can be adopted for arranging distribution system for a remote market:
1. Appointment of dealer: Dealers will be firstly appointed by the producer through advertising and interview.
2. Deposit from dealers: For minimizing the risk a suitable amount can be taken as deposit from the dealers.
3. Target for dealers: Producers can enter into contract with dealers for a targeted sale. This may be for monthly target, half yearly target or yearly target.
4. Incentives for achieving target:Dealers achieving the target before the stipulated time can be rewarded by providing, incentives, gifts, free trips, etc.
5. Distribution centres: Regional distribution centres can be established at various places by the entrepreneurs. At these centres, sufficient stock of products can be maintained. Dealers can obtain the product from the nearest centre.
6. Monthly feedback:Entrepreneurs can obtain monthly feedback from dealers in order to monitor the sale procedure. After knowing their difficulties, the entrepreneur can sort out problems of the dealers.
VALUE BASED QUESTIONS
Question. An entrepreneur uses a name of famous brand of product for marketing his product. He uses a similar logo for this purpose. Is he correct? Suggest him a correct way.
Answer: No, he is not correct.Using a similar logo or name of the product for marketing is a crime. It is a violation of copyright/patent right. Also it leads to short term benefits but long term loss. He should create his own brand name and unique logo. This will provide him long term benefit in his business. Also, being fair in the competition is a moral requirement of any enterprise.
