Question

Advertising expenses are usually wasteful, with no guarantee of enhanced sales or higher loyalty from the target audience. Do you agree with the statement? If yes, give logic and present your view point. Also discuss the difference between consumer markets and business market? Also differentiate the three types of buying situations during the purchase decisions. Discuss the difference between penetration and skimming pricing strategy with the reference of manufacturing and services firm.

Answer 1

Advertising expenses are usually wasteful, with no guarantee of enhanced sales or higher loyalty from the target audience. Do you agree with the statement? If yes, give logic and present your view point.

As the statement provides, there are different advantages of and disadvantages of Advertising:

Some of the advantages include:

• Increased Sales
• Enhances Goodwill and brand awareness
• Greater turnover and profits
• Better Standard of living

But there are also some disadvantages such as advertising expenses adds to cost of production and ultimately the burden is transferred to customers, deceptive advertising confuses customers, leads to price wra among producers and sellers etc.

Keeping in view, the advantages and disadvantages, it is concluded that advertising leads to increased sales if executed properly and no misleading material is demonstrated. So, that if sales is increased it will decline the cost of production and thus helps in selling products at cheaper price.

Difference between Consumer markets and business market

Basis of Difference	Business Market	Consumer Market
Meaning	Business Marketing refers to the sale of products or services or both from one organization to other organization for further use in their production of for reselling to potential customers.	Consumer market refers to the market where an organization sells products pr services or both to the potential customers. In consumer market, products are either used by consumer or their famiy members.
Example	FMCG (Fast Moving consumer Goods), household appliances, entertainment appliances (such as DVD players etc),	Office furniture, bulk sms service.

Three types of buying situations are :

Straight rebuy situations
In this situation, goods are purchased for office supplies, raw materials, other items of daily use, when the supplier is known and a procedure is already done.

Modified rebuy situations
Buyers may modify the product as per their situation, for example, nylon rope for ordinary rope, plastic washers in place of steel or brass washers, aluminium instead of copper. The reason for modifying may be economic consideration, or easy procurement.

New task
When a work is performed, products may be bought without having previou experience of buying that product. For example purchases such as machines like computer or Fax machines. For a new work , a new set up and new items are necessary, which may not have been purchased earlier.

Discuss the difference between penetration and skimming pricing strategy with the reference of manufacturing and services firm.

Basis of Difference	Penetration Pricing Strategy	Skimming Pricing Strategy
Meaning	Penetration pricing strategy focuses on kjeeping the price of product low at the time of launch of product in order to get maximum attention of customers.	In this pricing strategy, the price of product is high in the begining to capture maximum profit.
Purpose	The purpose of penetration strategy is to capture larger market share by offering lower prices.	By charging high-markup of products, the purpose is to capture larger profits.
Profit Margin	Profit Margin is low.	Profit Margin is high.