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MODEL TEST PAPER- MARKETING ANALYTICS

Q1. What do you mean by Marketing Analytics? List its important characteristics.
Ans. Marketing data analytics is the use and study of data related to marketing
activities.Marketing analytics is the practice of using data to evaluate the effectiveness and
success of marketing activities. Marketing analytics allows you to gather deeper consumer
insights, optimize your marketing objectives, and get a better return on investment. Marketing
analytics is the process of gathering, measuring, analyzing, and interpreting data from a variety
of marketing channels to uncover valuable insights into customer behavior, preferences, and
trends. This data-driven approach empowers businesses to make informed decisions and craft
strategies that connect with their target audience, ultimately leading to improved results and a
higher return on investment (ROI). Marketing analytics refers to the use of data, statistical
analysis, and other quantitative tools to measure and analyze the effectiveness of marketing
campaigns and tactics. It involves the collection, analysis, and interpretation of data to inform
and improve marketing strategies.
A lot of vital information related to the preference and requirements of the customer can be
obtained with the help of marketing analytics apart from the most obvious reason of marketing
activities, i.e., increasing sales and generating leads. Most of the organisations are still not able to
understand the potential of marketing analytics, despite having several advantages from it. The
following reasons induce the use of marketing analytics:
1) Getting information related with new marketing trends;
2) Identifying successful programmes and evaluating their reasons of success;
3) Analysing trends over time;
4) Completely analysing the ROI of each programme and
5) Forecasting the outcomes.
Characteristics Of Marketing Analytics
The characteristics of marketing analytics are as follows:
1) Ensure High-Quality Data→ The analytics rest on the data. That means marketer need a tool
that mines both structured and unstructured customer data from all possible sources, including
various interactions and touch points.
 2) Get Real-Time Insights→ The marketing analytics solution also needs to deliver real-time
insights to marketer. Marketer can’t be effective if his information is out-of-date; tracking the
right metrics at the right time is key.
3) Perfect Dashboard→ While it may be tempting to track as many metrics as possible, the
analytics will not be as useful if marketer do. Rather, define the goals and measure results for the
use cases most important to marketer.
4) Choose Right Analytics Visualization→ Marketing teams and stakeholders must be able to
make something of the data if marketers are to gain meaningful insights from it. The key is to
choose the most appropriate data visualizations so he can find patterns and interpret the data.
Thus, marketer must choose a marketing analytics solution that allows him to choose or
customize visualizations instead of using default charts for displaying data.
5) Use a Tool Featuring Machine Learning and AI (artificial intelligence) to Predict and
Prescribe→ Marketing must be real-time and predictive to be effective today. Marketer must be
able to make accurate predictions, analyse the data, and make data-driven decisions to enhance
each step of the customer journey.
Q 2. What are the different types of marketing analytics?
Ans. For different stages of business analytics huge amount of data is processed at various steps.
Depending on the stage of the workflow and the requirement of data analysis, there are four main
kinds of analytics – descriptive, diagnostic, predictive and prescriptive. These four types together
answer everything a company needs to know- from what’s going on in the company to what
solutions to be adopted for optimising the functions. These types include:
1. Descriptive analytics: It means describing or summarising the existing data using existing
business intelligence tools to better understand what is going on or what has happened.
This type of analytics involves looking at historical data to understand past performance.
It can include metrics such as website traffic, conversion rates, and customer lifetime
value. Descriptive analytics can help identify patterns and trends that can inform future
marketing strategies.
2. Diagnostic analytics: It focus on past performance to determine what happened and why.
The result of the analysis is often an analytic dashboard. This type of analytics involves
analyzing data to identify the causes of past performance. This can include metrics such
as customer demographics, purchase history, and marketing campaign data. It can help to
answer the question of why something happened in the past by doing a deep dive on the
data.
3. Predictive analytics: It emphasizes on predicting the possible outcome using statistical
models and machine learning techniques.This type of analytics uses statistical modelling,
and machine learning to make predictions about future events. It can include metrics such
as churn rate, lifetime value predictions, and predicted response to marketing campaigns.
Predictive analytics can help companies to identify potential issues and opportunities
before they happen and make more informed decisions.
 4. Prescriptive analytics: It is used to recommend one or more course of action on analyzing
the data. This type of analytics involves using advanced analytical techniques, such as
operations research and decision science, to provide actionable recommendations and
automating the decision-making process. It can include metrics such as identifying the
optimal marketing mix, the best target segment, or the most effective pricing strategy.
Q3. How Marketing Analytics plays an important role in Today’s Business Landscape?
Ans. In today’s fast-paced, data-driven business landscape, marketing analytics has become
essential for companies to stay competitive. Marketing analytics allows companies to make data-
driven decisions and track the effectiveness of marketing campaigns and tactics in real-time. By
understanding how customers interact with their brand, companies can identify trends and
patterns that can inform marketing strategies, helping them to reach new customers and increase
sales.
Additionally, marketing analytics can also help companies identify areas of weakness in their
marketing efforts and make adjustments to improve their ROI. It enables to make an informed
decision with the evidence and insights, rather than assumptions. In today’s digital world, it’s
crucial to have a data-driven approach to improve the customer journey, retain customers and
drive growth for the business.
Marketing analytics can be applied in a variety of ways to help companies improve their
marketing strategies and drive business growth. Following are the advantages of marketing
analytics:
1. Customer segmentation: Marketing analytics can be used to segment customers based on
demographic, behavioral, and psychographic data, in order to better target specific groups
of customers with personalized marketing campaigns.
2. Campaign optimization: By analyzing metrics such as website traffic, conversion rates,
and customer lifetime value, companies can optimize their marketing campaigns to better
reach their target audiences and increase ROI.
3. Lead generation and nurturing: Marketing analytics can be used to identify the most
effective channels and tactics for generating leads, as well as to track the performance of
lead nurturing campaigns.
4. Personalization& Customization: Marketing analytics can be used to personalize the
customer journey, messaging, and offers, resulting in better engagement and conversion
rates.With marketing analytics, firms can explore and assess the behaviour of customers
in the targeted regions and predict their likely responses. This enables the firms to
customise the content, timings and channels of delivery of products/services so as to fulfil
the customers’ preferences.
5. Marketing Mix Optimization: Companies can use marketing analytics to optimize their
marketing mix by allocating their marketing budget in the most effective way and
 identifying the optimal combination of product, price, promotion and distribution
channels.
6. Predictive modeling: Marketing analytics can be used for predictive modeling to forecast
future customer behavior, sales, or revenue, allowing companies to proactively plan for
future growth and make informed decisions.
7. Attribution modeling: Marketing analytics can be used for attribution modeling to
understand which marketing channels and activities are driving conversions, enabling
companies to measure the effectiveness of each channel and attribute revenue to the
correct source. Read more – Marketing Attribution
8. Social Media analytics: Companies can use marketing analytics to analyze social media
data, like engagement rates, follower demographics and sentiment analysis to gain
insights on their social media performance and understand customer preferences.
9. Gaining complete View of Customers across Channels: With marketing analytics,
marketing firms can obtain a full view of potential customers across different marketing
channels such as bricks-and-mortar locations, kiosks, call centres mobile, partners, e-
commerce, social media and so on. For this purpose, the firm needs to first establish a
strategy for gaining access to customer data and then integrating and analysing it with
different sources.
10. Becoming More Effective and Proactive: With marketing analytics, firms can anticipate
the behaviours of their customers and target markets and can respond accordingly in a
more proactive manner. Solutions that conduct data mining or statistical methods are
included under marketing analytics which helps the marketing organisations to establish
predictive models based upon the arrangements of different variables.
11. Success across Enterprise: With the help of data visualisation, analytics become
accessible for non-technical marketers which further enables collaboration, sharing, and
decision-making for becoming more effective and efficient.
Q.4. Explain Predictive Analytics in Marketing and also list its key applications in
marketing in detail.
Ans. Predictive analytics is a type of advanced analytics that uses historical data and statistical
models to make predictions about future outcomes. In marketing, predictive analytics can be
used to identify patterns and trends in customer behavior and predict how customers are likely to
respond to different marketing campaigns and strategies.
There are several key applications of predictive analytics in marketing:
1. Customer Segmentation: Predictive analytics can be used to segment customers into
different groups based on their characteristics and behavior, such as their purchase history
or demographics. This can help businesses target their marketing efforts more effectively,
by tailoring campaigns and messaging to specific customer segments.
 2. Churn prediction: Predictive analytics can be used to identify customers who are at risk
of leaving a company, which is known as “churn.” By identifying high-risk customers
early, businesses can target retention campaigns to try to keep them from leaving.
3. Lead scoring: Predictive analytics can be used to score leads based on their likelihood of
becoming customers. This can help businesses prioritize their sales efforts by focusing on
leads that are most likely to convert.
4. Next-best-offer: Predictive analytics can be used to predict which products or services a
customer is most likely to be interested in, based on their purchase history, demographics,
and other data. This can be used to create personalized offers for each customer,
increasing the chances of them making a purchase.
5. Lifetime Value prediction: Predictive analytics can be used to predict how much a
customer is likely to spend over their lifetime, which is known as customer lifetime
value. Knowing the lifetime value of a customer can help businesses make informed
decisions about how much to invest in acquiring and retaining that customer.
Predictive analytics in marketing is mainly based on Machine Learning algorithms like Decision
trees, Random Forests, Gradient Boosting and Neural Networks. These algorithms are trained on
historical data and then make predictions based on new data that is fed to the model.
To be effective, predictive analytics in marketing requires a large amount of high-quality data
and a skilled team with expertise in data science, statistical analysis, and machine learning. But
when it’s implemented correctly, it can give a business a competitive edge by providing insights
that can inform decisions about customer acquisition, retention, product development and
marketing.
Q 5. Explain the meaning of Data.

Ans. Data is representation of facts, concepts or instructions in a formalised manner suitable for
communication, interpretation, or processing by humans or by automatic means.

 Data is a set of values of subjects with respect to qualitative or quantitative variables.

 Data is raw, unorganized facts that need to be processed. Data can be something simple
and seemingly random and useless until it is organized.

 When data is processed, organized, structured or presented in a given context so as to

make it useful, it is called information.

The term data has been derived from the Latin plural word “datum”. Any fact or figure that is
collected by experience, experiment or observation within a computer system is termed as data.
According to Davis, “Data, raw material for information, is defined as groups of non-random
symbols, which represent quantities, actions, objects, etc. Data item in information systems are
formed from the characters. These may be alphabetic, numeric, or special symbols.” Meaningful
information can be generated after processing the data.
Research can be carried-out with the help of two types of data, viz., primary data and secondary
data. The former can be defined as the data which is collected for the first time by the researcher,
while the later can be defined as the data which are already collected and statistically processed
for a particular event or problem.
Secondary data are indirectly based on primary data or are directly calculated from the primary
data. In other words, secondary data can be called as processed primary data. Based on the
purpose of the research study, researchers choose the primary or secondary data to find relevant
solutions. The methods for collecting primary and secondary data are different.
Marketing data is information that can be used to improve product development, promotion,
sales, pricing, distribution and related strategies such as branding.
Q. 6. Explain the different methods of Data Collection with advantages?
Ans. Depending upon the sources being utilised, any statistical data can be divided into two
categories, which are as follows:

1. Primary Data

The data which is directly collected by the researcher and was not available before is called as
“primary data”. The sources of primary data are very useful in finding the real facts about the
incidents or events. It includes the personal observation of the researcher and respondent.
Primary data are the freshly collected data that provide information about a particular problem. It
is the data collected by the investigator for his own purpose from its original source, for the first
time, through personal experience or evidence for problem-solving research work. These are
collected directly from the source of origin in a crude form, which means nobody ever collected
this data before for this particular originated source data for use in statistical analysis. Primary
data collection methods include surveys, observations, physical testing, mailed questionnaires,
personal interviews, telephonic interviews, case studies, etc. It is known as first-hand or raw
data.

Collecting primary data involves gathering information directly from the source, and various
methods of collection can be employed based on the nature of the research and the type of
information needed.
Here are common collection methods for primary data:

 Surveys and Questionnaires: Designing structured surveys or questionnaires and

distributing them to a target audience. Can be conducted through interviews or can be
self-administered, such as online surveys.

 Interview Transcript: Conducting face-to-face, telephonic, or online interviews to gather

in-depth information. They offer the opportunity for clarification and probing.

 Observations: Involves systematically observing and recording behavior, events, or

activities. Can be done in a natural setting or a controlled environment.

 Experiments: Manipulating variables and measuring their effects to establish cause-and-

effect relationships. Common in scientific and psychological research.

 Focus Groups: This entails bringing together a small group of individuals to discuss and
provide insights on a specific topic. The facilitator guides the discussion to extract
valuable information.

 Field Trials: Testing a product, service, or idea in a real-world setting to observe its
performance and gather user feedback.

 Diaries and Journals: In this method of collection, participants maintain written records
of their experiences, thoughts, or activities over a specific period.

 Sensor and Technology-Based Methods: Involves using sensors, wearable devices, or

other technological tools to collect real-time data. Common in health monitoring,
environmental studies, and experimental research.

 Social Media and Online Platforms: Analyzing data from social media platforms or
online communities to understand trends, opinions, and behaviors.

Advantages Of Primary Data

  Primary data is specific to the researcher's needs during data collection. And the
researcher can control the type of data collected.

 The researcher has complete control over the data collected. They can decide which
design method, method, and data analysis techniques will be used.

 It is more accurate in comparison to secondary data. The data is not subject to personal
bias, and therefore, authenticity can be trusted.

 The researcher displays the identity of the data collected by the primary source. He may
choose to make it public, to have a copyright, or to sell it.

 Primary Data is usually up-to-date because it collects data in real-time and does not
collect data from old sources.

2. Secondary data

Secondary data are those that are already in existence, i.e., which have been collected through
primary sources for some purpose other than answering the question at hand. In other words, it
refers to data that some researchers or investigators have already collected in the past and is
available either in published or unpublished form. This information may be impure as statistical
operations may have been performed on them already. It is also known as second-hand data. It
is already processed and compiled with an evaluation. These can be gathered from the published
reports like census reports, annual reports, financial assessment reports, and journals, as well as
from unpublished sources. Various statements and records about the performance of a particular
organisation and its departments like accounting records, minutes of meetings, inventory
records, etc., fall in the category of secondary data sources.

Secondary data is data that has been collected by someone else for a purpose other than the
current research. Here are common methods for collecting secondary data:

 Literature Review: Analyzing existing literature, research papers, books, and articles
relevant to the research topic.
  Government Publications: Utilizing data published by government agencies, including
reports, statistics, and census data.

 Academic Journals: Extracting information from peer-reviewed academic journals and

scholarly publications.

 Books and Magazines: Gathering data from published books, magazines, and other
printed materials.

 Online Databases: Accessing electronic databases such as PubMed, JSTOR, or other

specialized databases to retrieve relevant information.

 Websites and Online Sources: Extracting data from reputable websites, online
repositories, and data archives.

 Reports from Non-Governmental Organizations (NGOs): Utilizing reports and

publications from NGOs, research institutes, and think tanks.

 Market Research Reports: Using market research reports and industry analyses
conducted by market research firms.

 Social Media Analytics: Analyzing data from platforms that analyze social media for
trends, sentiments, and public opinions.

 Historical Data: Examining historical records, archives, and documents for relevant
information.

 Publicly Available Data Sets: Accessing and analyzing data sets made available to the
public by various organizations.

Advantages Of Secondary Data

 Secondary data is more easily accessible compared to primary data.

  Secondary data is available on various platforms that the researcher can access.

 Second-hand information is very affordable. It requires little or no money to get them

because sometimes they are released for free.

 The collection time spent on secondary data collection is usually very short compared to
that of raw data.

 The second-hand data makes it possible to conduct longitudinal studies without waiting
too long to reach conclusions.

 It helps to generate new data based on already existing raw materials.

Q.7. What is the meaning of Pricing analytics?List its benefit also.

Ans. Pricing analytics are the metrics and associated tools used to understand how pricing
activities affect the overall business, analyse the profitability of specific price points, and
optimize a business’s pricing strategy for maximum revenue.
Pricing analytics is a way of analysing the effects of pricing, such as who is purchasing a product
(e.g. age, class, income, etc.), best-selling locations (e.g. store, region, etc.), and also the
effectiveness of deals or discounts. By understanding these types of data, salespeople can better
determine how to adjust the price value of their items accordingly, thereby overriding
competition other businesses pose and increasing profitability.
Pricing Analytics enables companies, across all industries, to dramatically improve profitability
and market share by defining optimal prices and pricing strategy. Deciding the price value of a
product can be very challenging, even amongst the most experienced in marketing and business
management. Despite the challenge, it is a skill that is extremely essential to learn and perform
well, especially in today’s economy. Pricing analytics software can analyse previous pricing data
and accurately predict the outcome of price inflation or deflation, sales and their effect on
company profit, and much more. Pricing analytics software, models and analytics are such
valuable assets to an organization, as they help businesses understand how much of an impact
pricing has on sales and profit.
BENEFITS OF PRICING ANALYTICS
1) Helps in Identifying Competitor Price Tracking→ Businesses can track and monitor
competitor pricing in real-time by leveraging pricing analytics solutions. Additionally, it helps
businesses to formulate pricing strategy by comparing it with that of the competitor’s strategy.
Furthermore, this can improve customer responsiveness and market standing. Price tracking of
competitors can also help businesses in customer retention.
2) Improves Price Triggers Tracking→ For businesses, tracking the price triggering points has
become very important with the frustrating competition. This is where pricing analytics helps. It
helps companies in improving their capabilities to analyse the factors triggering the price of a
product or service and then change their pricing strategies accordingly.
3) Aids in Price Elasticity Analysis→ Price elasticity is one of the foundation of pricing strategy
and pricing analytics helps in analysing price elasticity efficiently by leveraging customer’s
buying behaviour and purchasing data. Furthermore, these solutions can help companies in
measuring the quantity demanded of a good or service by the customers.
4) Helps in Decision Making→ Effective business decisions based on tightly defined issues
including the customers who need to be focused on and the products to rationalize. These
decisions are based purely on clear-cut data rather than intuition
5) Quick Response towards Marketing Changes→ Improved agility (quickness) in responding to
changing market conditions or shifting competitive environment.
6) Helps in Getting Feedback→ Provides clear feedback loops so that pricing teams can assess
the effectiveness and adjust as needed.
7) Reduce Costs→ Pricing analytics provides the ability to avoid costly mistakes or missed
opportunities by running advanced scenario modelling—for instance; it helps identify the
potential impact of a pricing change on the overall demand and profitability.

Q8. What are the Objectives of Pricing?

Ans. Objectives of Pricingareas follows:
1) Profits-related Objectives→ Profit has remained a dominant objective of business activities.
Company’s pricing policies and strategies are aimed at following profits-related objectives:
a) Maximum Current Profit→ One of the objectives of pricing is to maximize current profits.
This objective is aimed at making as much money as possible. Company tries to set its price in a
way that more current profits can be earned. However, company cannot set its price beyond the
limit. But, it concentrates on maximum profits.
b) Target Return on Investment→ Most companies want to earn reasonable rate of return on
investment. Target return may be:
 Fixed Percentage of Sales;
 Return on Investment; or
 A Fixed Rupee Amount.
Company sets its pricing policies and strategies in a way that sales revenue ultimately yields
average return on total investment. For example, company decides to earn 20% return on total
investment of 3 crore rupees. It must set price of product in a way that it can earn 60 lakh rupees
2) Sales-related Objectives→ The main sales-related objectives of pricing may include:
a) Sales Growth→ Company’s objective is to increase sales volume. It sets its price in such a
way that more and more sales can be achieved. It is assumed that sales growth has direct positive
impact on the profits. So, pricing decisions are taken in way that sales volume can be raised.
b) Target Market Share→ A company aims its pricing policies at achieving or maintaining the
target market share. Pricing decisions are taken in such a manner that enables the company to
achieve targeted market share. Market share is a specific volume of sales determined in light of
total sales in an industry. For example, company may try to achieve 25% market shares in the
relevant industry.
c) Increase in Market Share→ Sometimes, price and pricing are taken as the tool to increase its
market share. When company assumes that its market share is below than expected, it can raise it
by appropriate pricing; pricing is aimed at improving market share.
3) Competition-related Objectives→ Competition is a powerful factor affecting marketing
performance. Every company tries to react to the competitors by appropriate business strategies.
With reference to price, following competition-related objectives may be prioritized:
a) To Face Competition→ Pricing is primarily concerns with facing competition. Today’s market
is characterized by the severe competition. Company sets and modifies its pricing policies so as
to respond the competitors strongly. Many companies use price as a powerful means to react to
level and intensity of competition.
b) To Keep Competitors Away→ To prevent the entry of competitors can be one of the main
objectives of pricing. To achieve the objective, a company keeps its price as low as possible to
minimize profit attractiveness of products. In some cases, a company reacts offensively to
prevent entry of competitors by selling product even at a loss.
c) To Achieve Quality Leadership by Pricing→ Pricing is also aimed at achieving the quality
leadership. The quality leadership is the image in mind of buyers that high price is related to high
quality product. In order to create a positive image that company’s product is standard or
superior than offered by the close competitors; the company designs its pricing policies
accordingly.
d) To Remove Competitors from the Market→ The pricing policies and practices are directed to
remove the competitors away from the market. This can be done by forgoing the current profits –
by keeping price as low as possible – in order to maximize the future profits by charging a high
price after removing competitors from the market. Price competition can remove weak
competitors.
4) Customer-related Objectives→ Customers are in center of every marketing decision.
Company wants to achieve following objectives by the suitable pricing policies and practices:
a) To Win Confidence of Customers→ Customers are the target to serve. Company sets and
practices its pricing policies to win the confidence of the target market. Company, by appropriate
pricing policies, can establish, maintain or even strengthen the confidence of customers that price
charged for the product is reasonable one. Customers are made feel that they are not being
cheated.
b) To Satisfy Customers→ To satisfy customers is the prime objective of the entire range of
marketing efforts. And, pricing is no exception. Company sets, adjusts, and readjusts its pricing
to satisfy its target customers. In short, a company should design pricing in such a way that result
into maximum consumer satisfaction.
5) Other Objectives→ Over and above the objectives discussed so far, there are certain
objectives that company wants to achieve by pricing. They are as under:
a) Market Penetration→ This objective concerns with entering the deep into the market to attract
maximum number of customers. This objective calls for charging the lowest possible price to
win price-sensitive buyers.
b) Promoting a New Product→ To promote a new product successfully, the company sets low
price for its products in the initial stage to encourage for trial and repeat buying. The sound
pricing can help the company introduce a new product successfully.
c) Maintaining Image and Reputation in the Market→ Company’s effective pricing policies have
positive impact on its image and reputation in the market. Company, by charging reasonable
price, stabilizing price, or keeping fixed price can create a good image and reputation in the mind
of the target customers.
d) To Skim the Cream from the Market→ This objective concerns with skimming maximum
profit in initial stage of product life cycle. Because a product is new, offering new and superior
advantages, the company can charge relatively high price. Some segments will buy product even
at a premium price.
e) Price Stability→ Company with stable price is ranked high in the market. Company
formulates pricing policies and strategies to eliminate seasonal and cyclical fluctuations. Stability
in price has a good impression on the buyers. Frequent changes in pricing affect adversely the
prestige of company.
f) Survival and Growth→ Finally, pricing is aimed at survival and growth of company’s business
activities and operations. It is a fundamental pricing objective. Pricing policies are set in a way
that company’s existence is not threatened.
Q.9. What is online product assortment?Why Is Product Assortment Important?
Ans. Product assortment simply refers to all the different products a business offers for sale to its
customers.An "online product assortment" refers to the complete range of products a business
offers for sale on their online platform, encompassing the variety of product categories and
specific items within each category that customers can purchase digitally; essentially, it's the
"product mix" available on an online store, including details like different sizes, colors, and
variations of each item.Product assortment is a useful tool in building a product collection, brand
awareness and loyalty, which can also lead to increases in sales, site or store traffic and increased
customer satisfaction.Product assortment is the collection of products that a company offers
for sale, including both physical and digital goods. It is the range of products that a business
keeps in stock to meet the needs and preferences of its customers.
Product assortment is characterized by its breadth, length, depth, and consistency.
1. Breadth: The total number of different product categories that a retailer offers.
2. Length: The total number of products that a retailer offers.
3. Depth: The number of different variations within each product category.
4. Consistency: The degree to which the product assortment is consistent with the retailer’s
overall brand image and target market.
Product assortment is an important strategic decision for businesses of all sizes. It can have a
significant impact on sales, profitability, and customer satisfaction.
EXAMPLE 1 - A grocery store might have a wide breadth of products, including food,
beverages, household goods, and personal care items. It might also have a deep assortment of
products in some categories, such as fresh produce or dairy products
EXAMPLE 2 - An online retailer might have an even wider breadth of products than a brick-and-
mortar store, since it is not limited by physical space. For example, Amazon offers a wide
variety of products, from books and electronics to groceries and home furnishings.
Product assortment is important for a number of reasons, including:
1. Increased sales: A well-curated product assortment can help to increase sales by meeting
the needs of a wider range of customers. When customers can find everything they need
in one place, they are more likely to make a purchase.
2. Improved customer satisfaction: A wide and varied product assortment can help to
improve customer satisfaction by giving customers more choices and making it more
likely that they will find the products they are looking for.
3. Reduced costs: By optimizing their product assortment, businesses can reduce costs
associated with inventory management and storage.
4. Increased profits: A well-managed product assortment can lead to increased profits by
ensuring that businesses are selling the products that are most profitable and in demand.
5. Improved brand image: A product assortment that is consistent with a business’s overall
brand image can help to strengthen the brand and attract new customers.
Q.10. What is meant by Revenue Management?Explain with the help of example.
Ans. Revenue Management is a disciplined analytics technique used to predict consumer
behavior at the micro-level, which is used to optimize product availability and pricing and
maximize revenue growth. In other words, the primary objective is to sell the right product at the
right price to the right customer at the right time.
Revenue management is the strategic process of optimizing the revenue generated by a company
through the pricing and distribution of its products or services. Revenue management aims to
maximize revenue by generating higher prices from more profitable customers while
simultaneously minimizing costs and maximizing capacity utilization.
As a strategy, revenue management allows businesses to adopt a data-driven approach to
decisions on what to sell them. It ensures that informed decisions are made and your business
does its best to drive revenue upward while selling the same products and services as
before.Revenue management is often concerned with predicting demand and optimizing
price and availability to boost revenue.
Revenue management is when you use data and analytics to plan and optimise your pricing. It
helps you predict customer behaviour so you can maximise product availability and pricing.
When you understand your customers, you can sell to them at the right time, at the right price,
and through the right channels.
Market demand changes over time. And analysing data — industry trends, competition,
consumer behaviour — helps you more accurately predict swings in demand. You can use this
information to make strategic changes to your pricing to maximise your profit.
Leveraging revenue management is common in the travel and hospitality industries. These
companies must consider inventory availability, pricing, and customer demand.
Example #1
Let us take the example of a hotel during the festive season. Typically, all the hotels located in
the vicinity of the festival venue increase their room prices to a much higher level than those
located away from the venue. It is an example of seasonal pricing using the revenue management
technique.

Example #2
Let us take the example of an exclusive discount offer at a restaurant. Based on available data,
the restaurant owner realized that they don’t have meager Thursday traffic. So, he decided to
launch a new offer of a 25% discount for diners on Thursdays. It helped him to attract more
diners on that particular day of the week. It is an example of promotions & discounts using the
revenue management technique.
Q.11. What is a distribution channel? Also define Direct and Indirect channel of
distribution.
Ans. A distribution channel is the network of businesses, individuals, and intermediaries
facilitating the journey of a product or service from the manufacturer to the end consumer. It
encompasses the various pathways used to deliver goods to their final destination, such as
wholesalers, retailers, and the Internet.
Direct channel of distribution- Is one where a company sells directly to the end consumer. For
instance, an athletic apparel company who manufactures sports shoes and sells them through an
e-commerce website or at their own retail store is employing a direct channel of distribution.
Products go directly to the buyer with no intermediaries or intervening partners between them.
Indirect channel of distribution- It is one where companies work with one or more distribution
partners or intermediaries to bring products and services to customers. A distribution channel
comprises various essential components that ensure a smooth product journey from
manufacturers to end consumers. At its core, you'll find producers who initiate the process by
creating these goods. Agents or brokers may step in to facilitate connections, while wholesalers
and retailers serve as key intermediaries who play distinct roles in the product's passage. This
dynamic interplay of producers, agents, wholesalers, retailers, and consumers constitutes the
critical components of a distribution channel, harmonising to bring value to all involved parties.
Q.12. Write short notes on-
a) Price bundling
b) Markdown pricing
c) Discounted pricing
d) Price skimming
Ans
a) Price bundling- A competitive pricing strategy that allows buyers to purchase multiple
products or services at a lower price than they would pay if they purchased the individual
product. Bundling is a marketing strategy where companies sell several products or services
together as a single combined unit.The bundled products and services are usually related, but
they can also consist of dissimilar items which appeal to one group of customers. Bundled
products are typically offered at discounts to stimulate demand, lifting revenues often at the
expense of profit margins. Companies occasionally use pure bundling strategies, rolling several
products or services into one item that can only be purchased as a complete package.
b) Markdown pricing

Markdown pricing is a technique used by retailers to cut the price of a product in order to
increase sales and clear out inventory. Products that aren't selling well or are nearing the end of
their seasonal lives should be marked down in price. In some circumstances, businesses may use
markdown pricing to entice new clients by providing discounts on particular products.

Retailers use price markdown tactics to:

 Minimize carrying costs by clearing out the slow-moving inventory

 Sell the stock before the products surpass their expiration date
 Dispose of last season’s collection and make room for new seasonal products
c) Discounted pricing- Discount pricing' refers to a range of strategies where the price of a
product or service is decreased in the interest of generating interest, unloading excess inventory,
or boosting sales. The effectiveness of discount pricing rests on consumers' perception that
they're 'getting a good deal' for an offering. It is a type of promotional pricing strategy where the
original price for a product or service is reduced with the aim of increasing traffic, moving
inventory, and driving sales.
Example- Amazon has leveraged the power of discount pricing to great effect on its own
products. By offering discounts and promotions on a wide range of items, Amazon is able to
drive customer loyalty and increase sales volume. This strategy also allows them to remain
competitive in the market, as they can offer lower prices than other retailers while still
maintaining profitability.
d) Price skimming- It is a pricing strategy that sets new product prices high and subsequently
lowers them as competitors enter the market. Company first starts by charging the highest price
that customers will pay. Over time, the company lowers the price to reach different types of
customers. Initially, the high price targets early adopters willing to pay more for a new product.
As these early customers are satisfied and competitors enter the market, the company reduces
prices to attract more price-sensitive consumers.
Businesses adopt a skim pricing model for several purposes, including:
 Generating high short-term profit
 Attracting early adopters
 Segmenting customers as the price drops, according to what they are willing to pay for a new
product
Q. 13. How is effectiveness of Marketing and Advertising measured?
Ans. Advertising effectiveness pertains to how well a company's advertising accomplishes the
intended.Effectiveness can be measured either before launching the advertisement (pre-testing)
or after launching the advertisement (post-testing).Testing of advertisement is basically done by
two methods—Pretesting and Posttesting.
Methods of Pretesting of the Advertisement
1. Direct questioning: From the respondents/consumers about the Ad in question.
2. Focus group: A group of about 140 people who freely discuss about the Ad and give their
opinion.
3. Portfolio test: It consists of 2 groups of respondents one is exposed to a portfolio of test Ads
interspersed among other Ads. The other group sees the protfolio without the test Ads. • Paired
comparison test: In this the respondent compare each Ad in a group.
4. Order of merit test: Two or more Ads of the same product are put in order of preference or
rank.
5. Direct mail test: Two or more Ads are mailed to different potential customers to see which Ad
attracts more orders.
Posttesting Method- After the advertisement has run for a considerable period of time, it is tested
to measure its effectiveness.
1. Recall Test In this test, the respondents are asked to recall the ads they have seen and the brand
is concealed and asked whether they had seen the ad through reading, listening or viewing
(Aided recall). In unaided recall, no prompting is done and they are asked whether they had read,
seen or heard the message. Respondents are lured by some inducements to answer the enquiries.
It measures the effect of Media as well as individual advertising. Only factor of the
advertisement is examined at a time.
2. Recognition Test This is conducted to see whether the Ad is recognised or not. This test can be
conducted by mail surveys. The Ad can be broken into headlines, layouts, body, copy logo etc.
and it is seen how these elements are remembered by the respondents. The recognition test can
be conducted in a number of ways. The magazines are placed in the home of the respondents and
they are requested to read that magazine on that day. Next day they are asked questions about the
ad appearing in that magazines to assess the recall of ads.
3. Eye Camera The eye camera is used to measure the behaviour of the respondent. The audience
is asked to view a series of pictures. His eye movements are measured by the camera. The eye
can be fixed on the object which may be interpreted as interesting. He can move his eyes from
one corner to the other. It can be discovered which part of the advertisement looks interesting to
him.
4. Attitude Test The attitude of potential customers can be measured on the attitude scale. The
scale measures the customer’s attitude on a continuum from very favourable at one end to very
and unfavourable at the other.
Q. 14. Explain the benefits of Digital Advertising in today’s landscape.
Ans. Digital advertising (also known as online advertising) is a form of marketing used by
companies to promote their brand, product, or service through digital channels.It consists of
actions in web browsers, social media pages, blogs, apps, or any other form of contact through
the Internet
Benefits of Digital Advertising
1. Global Reach
The first advantage of digital advertising is global reach. Traditional advertising is restricted by
geography and creating an international advertising campaign can be hard, expensive, as well as
labor-intensive. However, digital advertising happens on the Internet, which means that the reach
you can achieve with it is immense. Even a very small local business owner has the ability to
reach an international audience with an online store. This would never be possible with
traditional advertising or would cost a whole lot of money to do so. This online accessibility has
opened many growth opportunities for businesses to explore. The combination of global reach
and visibility is a great opportunity for any business.
2. Local Reach
While global reach is a significant advantage of digital advertising, it also improves local
visibility, which is especially important if your business relies on nearby customers. Local
SEO and locally targeted ads can be beneficial for companies trying to bring more customers to
their doors. Think of the reach you can get to a whole neighborhood with digital advertising
versus the reach it would take you to print out flyers and distribute them around.
3. Cost-effective
The next digital advertising advantage is cost-effectiveness. Whether you want to promote your
business locally or internationally, digital advertising provides you with cost-effective solutions.
It allows even the smallest companies to compete with larger companies using highly targeted
strategies. Most of these strategies won’t even cost anything at all to start with (such as SEO,
social media, and content marketing). However, not every form of digital advertising is suitable
for every business and some may even have more costs than others. A business can find
appropriate solutions based on its advertising goals.
4. Brand Awareness
Digital advertising can help businesses build brand awareness and recognition. This is important
for businesses that want to attract new customers and grow their business.
5. Effective Targeting
Even if you don’t have a clear idea of your target audience, digital advertising enables you to
extract data to see which audiences will work best for you and optimize your campaign around
them. There are many different options for targeting such as through keywords for search engine
optimization (SEO), pay-per-click (PPC), or demographic information on social media. This
enormous amount of targeting elements at your disposal makes sure that every campaign reaches
the right audience. It also helps you to analyze the changing behaviors of customers and modify
campaigns for those changes. This ability to understand customers’ changing needs quickly is a
sure way of success for any company.
6. Multiple Strategies
There are different strategies of digital advertising that can be used by different types of
businesses. A B2B business that is interested in gaining international leads may have a totally
different strategy than a B2C local business selling clothes. While some companies can benefit
more easily from content advertising and SEO, others can benefit from conversion-based
ad campaigns. The key is to always analyze the results and develop better tactics and methods
with time. A well-executed digital advertising strategy is one that changes and adapts quickly as
the needs of the business transform.
7. Multiple Content Types
Another crucial advantage of digital advertising is the different content types available to
showcase your brand online. For a lot of platforms, there is a wide range of content types you
can choose from to keep your brand fresh and build effective online campaigns. Unlike
traditional advertising, you can more easily reproduce one piece of content to fit as many
platforms as you want.
Q.15. How is Customer Response measured? Explain.
Ans. Customer response in marketing is how customers feel about a company's products and
services. It can be measured by following performance indicators:

1. Productive Performance Indicator- The productive performance indicator determines

the number of customer orders processed per human-hour. This order processing must be
done is such a way that the time taken for processing is minimal to increase the
productivity. Strategies used in customer service automation can bring immediate
improvements in call center automation, internet ordering, contact management
automation, EDI’s etc. Web integrated customer response systems cuts off the need to
hire more employees as everything is automated.
2. Financial Performance Indicator- The key financial performance indicator is Total
Response Cost (TRC). By the use of TRC organization can easily compute the cost
incurred for customer responses workflow, assets used, infrastructure used within
organization, medium charges like internet and phone, income of executives etc.

Some extended use of TRC is also to indicate the profitable aspects like which response
was profitable and which was not. It can also compute which customers are profitable for
the organization and which are not and which are they who can continue to give more
profit in future.

Total response cost is a powerful system which helps improving the financial aspects of
organization by limiting the investments made by the organization and always keeps a
check on customer response to enhance financial features.

3. Quality Performance Indicator- The Primary quality performance indicator is Order

Entry Accuracy (OEA) and First Time Fill Rate (FTFR). OEA is formulated as specific
orders produced by customers per total order produced.

FTFR is calculated by total products delivered per total products requested. There are
many other indicators which help measuring quality performance of customer responses
like Invoice Accuracy and Order Status communication accuracy.

Invoice accuracy tool keeps a regular check on Invoice automation system and measure
the accuracy of them. It is generally formulated as the total invoices with accurate match
of items, prices and quantities etc per total invoices received.
 More the percentage produced by these tools more is the customer response value. It is
necessary to measure quality performance so that the customers receive best services and
customer satisfaction index always remain on top.

4. Response Cycle Time Indicator- Response cycle time indicator is indicated by Order
Processing Time (OPT). This calculates the time taken for the order; from time it was
entered till the time it is delivered.

One more important indicator called Order Entry Time (OET) is also installed which
calculates the time taken from intimation of order until the order is captured or entered in
the CRM system. This shows the time elapsed in the telephonic conversation or internet.
By this the overall entry time taken by the executive to enter the details in the systems
can be calculated. This is an important factor and can be used for increasing the
productivity and for trying to reduce the time taken for order processing.

Lesser the time taken to process the orders and entering the relevant information in the
system, more are the chances to consume large number of customers in a given specific
interval of time.

Q. 16. What is Conjoint analysis in Product analytics?Also list its types.

Ans. Conjoint analysis is a form of statistical analysis that firms use in market research to
understand how customers value different components or features of their products or services.
It’s based on the principle that any product can be broken down into a set of attributes that
ultimately impact users’ perceived value of an item or service. Conjoint analysis is typically
conducted via a specialized survey that asks consumers to rank the importance of the specific
features in question. Analyzing the results allows the firm to then assign a value to each one.

Types of Conjoint Analysis

Conjoint analysis can take various forms. Some of the most common include:

 Choice-Based Conjoint (CBC) Analysis: This is one of the most common forms of
conjoint analysis and is used to identify how a respondent values combinations of
features.

 Adaptive Conjoint Analysis (ACA): This form of analysis customizes each respondent's
survey experience based on their answers to early questions. It’s often leveraged in
studies where several features or attributes are being evaluated to streamline the process
and extract the most valuable insights from each respondent.

 Full-Profile Conjoint Analysis: This form of analysis presents the respondent with a
series of full product descriptions and asks them to select the one they’d be most inclined
to buy.
  MaxDiff Conjoint Analysis: This form of analysis presents multiple options to the
respondent, which they’re asked to organize on a scale of “best” to “worst” (or “most
likely to buy” to “least likely to buy”).

Q. 17. What is Customer lifetime value? Explain with the help of example.
Ans. Customer lifetime value (CLV or CLTV) is a metric that indicates the total revenue a
business can reasonably expect from a single customer account throughout the business
relationship. The higher the CLV, the more valuable a buyer is to your business, as they would
generate more revenue and are more likely to be loyal. Customer lifetime value (CLV) is a
measure of the average customer’s revenue generated over their entire relationship with a
company. Businesses have several marketing tools to help them improve CLV over time.Looking
at CLV by customer segment may offer expanded insights into what’s working well and what
isn’t working as well for your organization.For example, let’s examine how a grocery chain may
look at CLV. Based on data in the company’s ERP system, it can see that the typical customer
spends $50 per visit and comes in an average of once every two weeks (26 times per year) over a
seven-year relationship. The grocer can find its CLV by multiplying those three numbers — 50 x
26 x 7 — for a value of $9,100.
Advantages of Customer Lifetime Value

 Improve Customer Retention:

One of the biggest factors in addressing CLV is improving customer retention and avoiding
customer attrition. Tracking these details with accurate segmentation can help you identify your
best customers and determine what’s working well.

 Drive Repeat Sales:

Some retailers, tech companies, restaurant chains and other businesses have loyal customer bases
that come back again and again. You can use CLV to track the average number of visits per year
or over the customer lifetime and use that data to strategize ways to increase repeat business.

 Encourage Higher-Value Sales:

Netflix is an example of a business that improved CLV through higher pricing but learned years
ago that increasing costs too quickly may scare off long-time customers. The right balance is key
to success here.

 Increase Profitability:
Overall, a higher CLV should lead to bigger profits. By keeping customers longer and building a
business that encourages them to spend more, you should see the benefit show up on your
bottom line.