\n2. Institutional advertising is basically not intended to create demand for or to sell a specific product directly.<\/td>\n | \n 2. Informative advertising seeks to develop initial demand for a product when it is introduced in the market.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Question 2:<\/strong> \n(a)<\/strong> Give two conditions under which parity pricing is desirable. [2]<\/strong> \n(b)<\/strong> Briefly describe how advertising sustains the press. ** [2]<\/strong> \n(c)<\/strong> List any two uses of a Balance Sheet. [2]<\/strong> \n(d)<\/strong> State any two merits of external recruitment. [2]<\/strong> \n(e)<\/strong> Mention any two characteristics of public relations. [2]<\/strong> \n** Answer has not given due to out of the present syllabus.<\/p>\nAnswer:<\/strong> \n(a) Parity Pricing is desirable:<\/strong><\/p>\n\n- When it is very difficult to measure cost.<\/li>\n
- When price leadership is well established, charging according to what competitors are charging may be the only safe policy.<\/li>\n<\/ol>\n
(c)<\/strong> The main uses of balance sheet are:<\/p>\n\n- Balance sheet shows the assets owned by a non-trading organisation.<\/li>\n
- It reveals the liabilities of the organisation.<\/li>\n
- It depicts the capital fund of the organisation.<\/li>\n
- It shows the financial position of the organisation. \u00a0 \u00a0(any two)<\/li>\n<\/ol>\n
(d)<\/strong> Two merits of external recruitment are as follows:<\/p>\n\n- Wide choice:<\/strong> External sources offer a wide choice in the selection of candidates because a large number of persons apply for jobs.<\/li>\n
- Fresh Outlook:<\/strong> Recruitment of personal from outside brings in new ideas and fresh thinking. This helps the organisation to remain competitive.<\/li>\n<\/ol>\n
(e)<\/strong> Following are the characteristics of public relations:<\/p>\n\n- Public relations is a planned and sustained effort. It is a management function.<\/li>\n
- It is concerned with relationship between an organisation and the public.<\/li>\n
- It involves evaluation of public opinion and attitudes about the policies, procedures and actions of an organisation is so far as they relate to public.<\/li>\n
- It seeks to ensure that the policies, procedures and action of the organisation are in public interest and socially responsible.<\/li>\n
- It requires both action and communication programmes.<\/li>\n
- The basic purpose bf public relations is to create and maintain harmonious
\nrelations between an organisation and the public. (any two)<\/li>\n<\/ol>\nQuestion 3:<\/strong> \n(a)<\/strong> What is meant by premium offer as one of the Sales Promotion techniques? ** [2]<\/strong> \n(b)<\/strong> Give two differences between the Production oriented stage and the Product oriented stage of Marketing. [2]<\/strong> \n(c)<\/strong> What are the components of Price Mix? [2]<\/strong> \n(d)<\/strong> Explain any two themes or value of a good advertisement. [2]<\/strong> \n(e)<\/strong> List any two circumstances under which a bank can refuse payment of a cheque. [2]<\/strong><\/p>\nAnswer:<\/strong> \n (b)<\/strong> Two differences between Production oriented stage and the product oriented stage are:<\/p>\n\n\n\n\n Features<\/strong><\/p>\n<\/td>\nProduction Oriented Stage<\/strong><\/td>\n\n Product Oriented Stage<\/strong><\/p>\n<\/td>\n<\/tr>\n\n\n 1. Main focus<\/p>\n 2. Means<\/p>\n<\/td>\n | Production volume<\/p>\n Product availability and affordability.<\/td>\n | \n Product improvement<\/p>\n Product features.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n (c)<\/strong> Components of Price Mix are price policy, discounts, allowances, credit and terms of payment. \n(d)<\/strong> The two themes commonly used in advertisements are:<\/p>\n\n- Prestige:<\/strong> This theme is used to popularize luxurious items like motor cars, refrigerators and furniture! Their possession acts as a symbol of prestige to their holders.<\/li>\n
- Comfort:<\/strong> This theme is used to advertise products like fans, air conditioners, refrigerators etc., as such products help to make life comfortable.<\/li>\n<\/ol>\n
(e)<\/strong> A Bank can refuse payment of a cheque in the following conditions:<\/p>\n\n- When the funds to the credit of the drawer are not sufficient to make payment of the cheque.<\/li>\n
- When the cheque is post-dated and is presented for payment before the date it bears.<\/li>\n<\/ol>\n
Question 4:<\/strong> \nJustify either for or against by giving two reasons for each of the following: \n(a)<\/strong> Introduction stage in a Product Life Cycle is not very risky. [2]<\/strong> \n(b)<\/strong> Scope of Public Relations is narrow. [2]<\/strong> \n(c)<\/strong> Advertisements eliminate meddlemen. [2]<\/strong> \n(d)<\/strong> It is marketing which has converted yesterday\u2019s luxuries into today\u2019s necessities. [2]<\/strong> \n(e)<\/strong> A crossed cheque is a safer mode of payment as compared to an open cheque. [2]<\/strong><\/p>\nAnswer:<\/strong> \n(a) Against<\/strong><\/p>\n\n- Introduction stage in a product life cycle is very risky because a high percentage of new product fails during this period. Reasons for product failure are high cost, low sales volume, limited distribution and high prices.<\/li>\n
- Prices are usually high because of small scale of production and heavy promotional expenditure. Growth in sales volume is at a low rate due to lack of knowledge on the part of consumers and limited distribution. Therefore, according to me introduction stage in a product life cycle is very risky.<\/li>\n<\/ol>\n
(b) Against<\/strong><\/p>\n\n- Scope of Public relation is wide. It deals with diverse interests of the publics of a business organisation i.e., employees, stockholders, consumers, distributors, suppliers, Government, community and media.<\/li>\n
- Professional practice of public relations requires knowledge of communication, Art, psychology, social psychology, sociology, economics and the principles of management and ethics.<\/li>\n<\/ol>\n
(c) For<\/strong><\/p>\n\n- Advertisement can establish direct contact with customers, thereby eliminating middlemen.<\/li>\n
- Elimination of middleman helps to reduce prices for consumers.<\/li>\n<\/ol>\n
(d) For<\/strong><\/p>\n\n- Marketing focuses on improving the quality of living of people by providing a wide variety of quality products and services at reasonable prices.<\/li>\n
- It brings awareness about new products and their uses. It has converted yesterday\u2019s luxuries into todays necessities by raising the standard of living of consumers.<\/li>\n<\/ol>\n
(e) For<\/strong><\/p>\n\n- Crossing provides a protection or safeguard against loss to the drawer by securing payment through a bank. While open cheques are liable to great risk as these can be stolen or lost and the founder or the thief can encash them at the bank counter.<\/li>\n
- It is easy to get information later in case of wrong payment, if the cheque is crossed.<\/li>\n<\/ol>\n
Section – B (60 Marks)<\/strong><\/span> \n(Attempt any four<\/strong> questions from this section)<\/em><\/p>\nQuestion 5:<\/strong> \n(a)<\/strong> What do you mean by endorsement of a cheque? \nExplain any three types of endorsements. [5]<\/strong> \n(b)<\/strong> Explain the following with an example for each: \n(i)<\/strong> marginal cost. \u00a0 \u00a0 \u00a0 \u00a0 \u00a0(ii)<\/strong> opportunity cost. [5]<\/strong> \n(c)<\/strong> Mention the various stages of \u2018Product Life Cycle\u2019. How is Product Life Cycle advantageous? [5]<\/strong><\/p>\nAnswer:<\/strong> \n (a) Endorsement of Cheque:<\/strong> When a cheque is transferred by payee to someone else, it has to be endorsed by the payee by putting a signature at the back of the cheque. This act of signing is known as endorsement.<\/p>\n\n- Full or Special Endorsement:<\/strong> When the endorser specifies the name of the endorsee and signs the cheque, it is called full or special endorsement, e.g., \u2018Pay to A Sd\/- X\u2019. The effect of such an endorsement is that the endorsee must endorse it again if he wants to transfer the property in the cheque to somebody else. A blank endorsement can be converted into a special endorsement by simply adding the name of the payee.<\/li>\n
- Partial Endorsement:<\/strong> When the endorsement is made for a part of the amount of the cheque, it is called partial endorsement. For example, a cheque for Rs. 1,000 may be endorsed only for Rs. 500. Such an endorsement is not legally valid. But when Rs. 500 have already been paid to the endorsee, a cheque for Rs. 1,000 may be endorsed for the balance of Rs. 500.<\/li>\n
- Facultative Endorsement:<\/strong> When the endorser waives his right of receiving the notice of dishonour, the endorsement is called facultative endorsement. For example, \u2018Pay to Kishan Lai, notice of dishonour waived Sd\/- Ram Lai\u2019. In such an endorsement, the endorser remains liable even through the endorsee sens no notice of dishonour to him.<\/li>\n<\/ol>\n
(b) (i) Marginal Cost:<\/strong> Marginal cost is the cost of producing one additional unit of a product. The concept of marginal cost is very useful in making managerial decisions concerning price fixation, make or buy decisions, etc. \nIt can be shown as: \n\\(\\text{M}{{\\text{C}}_{\\text{n}}}=\\text{T}{{\\text{C}}_{\\text{n}}}-\\text{T}{{\\text{C}}_{\\text{n-1}}}\\) \nFor example:<\/strong> The marginal cost of 4th unit is the change in total cost when output is increased from 3 units to 4 units. \n(ii) Opportunity Cost:<\/strong> Opportunity cost means the benefit sacrificed for selecting a particular course of action. It is the maximum advantage that could be obtained if the resource was put to an alternative use. The opportunity cost of producing one commodity A is the amount B that must be sacrificed in order to use resources to produce A rather than B. In other words, the opportunity cost of anything is the next best alternative that, could be produced instead by the same factors or by an equivalent group of factors costing the same amount of money. For example, a firm buys a machine for Rs. 25,000. This amount could be invested in shares or debentures. The loss of dividend or interest that could be earned is the opportunity cost. Opportunity cost is not recorded in books. It is useful in comparing alternatives and in making decisions.<\/p>\n(c)<\/strong> Various stages of product life cycle are:<\/p>\n\n- Introduction Stage:<\/strong> During this stage the product is born. The firm informs the market about the existence and features of the product. Prices are high because of small scale of production and heavy promotional expenditure. Thus, the introduction stage is characterised by high costs, low sales volume, limited distribution and high prices.<\/li>\n
- Growth Stage:<\/strong> In this stage the demand and sales grow rapidly, distribution is widened, competition increases and prices fall.<\/li>\n
- Maturity Stage:<\/strong> During this stage, sales continue to grow but at a declining rate. Competition increases further and markets get stabilised. Prices are reduced due to competition but promotional expenditure remains high. As a result profits decline.<\/li>\n
- Decline Stage:<\/strong> Sales fall down sharply and promotional expenditure has to be reduced drastically to minimise loss.<\/li>\n
- Death Stage:<\/strong> Most firms shift their attention to other products gradually phasing out the declining product.<\/li>\n<\/ol>\n
Advantages of Product Life Cycle:<\/strong><\/p>\n\n- When the product life cycle is known the firm can prepare an effective product plan.<\/li>\n
- Management can take advance steps before the decline of the product.<\/li>\n
- The maturity stage can be extended by finding new uses of the product.<\/li>\n
- Technological innovations can be adopted to improve the quality, features and design of the product.<\/li>\n<\/ol>\n
Question 6:<\/strong> \n (a)<\/strong> Marketing is a wider term than selling. Explain. [5]<\/strong> \n(b)<\/strong> Distinguish between Receipts and Payments Account and Income and Expendi-ture Account. [5]<\/strong> \n(c)<\/strong> What pricing strategy will be used to launch: \n(i)<\/strong> a high end smart phone in the market. \n(ii)<\/strong> shampoo in the market. [5]<\/strong><\/p>\nAnswer:<\/strong> \n (a)<\/strong> Marketing is wider in scope than selling. Selling is a part of marketing. Marketing includes not only selling but also other activities such as Market research, product planning and development etc. Marketing starts before the product is produced while selling starts after the product has been produced. Selling ends with the sale of goods. Marketing continues even after sales, e.g., after sale services, study of future demand etc. Marketing focuses attention on product, promotion, pricing and physical distribution whereas selling just pays attention to the promotion. Selling aims at transfer of awnership of the product from the seller to the buydr whereas marketing aims at achieving customer satisfaction after the products has been transfer to customer. Therefore marketing is a wider term because it starts before selling and continues after the selling has been done. \n(b)<\/strong> Differences between Receipt and Payment Account and Income and Expenditure Account are as follows:<\/p>\n\n\n\n\n Basis<\/strong><\/p>\n<\/td>\nReceipt and Payment Account<\/strong><\/td>\n | | | | | | |