Exam Question for Class 12 Entrepreneurship Chapter 3 Enterprise Marketing
Please refer to below Exam Question for Class 12 Entrepreneurship Chapter 3 Enterprise Marketing. These questions and answers have been prepared by expert Class 12 Entrepreneurship teachers based on the latest NCERT Book for Class 12 Entrepreneurship and examination guidelines issued by CBSE, NCERT, and KVS. We have provided Class 12 Entrepreneurship exam questions for all chapters in your textbooks. You will be able to easily learn problems and solutions which are expected to come in the upcoming class tests and exams for standard 12th.
Chapter 3 Enterprise Marketing Class 12 Entrepreneurship Exam Question
All questions and answers provided below for Exam Question Class 12 Entrepreneurship Chapter 3 Enterprise Marketing are very important and should be revised daily.
Short Answer Type Questions
Question. Explain in detail SMART goals.
Answer : SMART is an acronym indicating the following five goals. Businesses use this tool to set result-oriented goals that can be set in action.
1. Specific: The goals set should be well-defined and focused.
2. Measurable: The goals should be measurable. This helps to know where we’re standing at any point of time and whether we’re on track or not.
3. Attainable: The goals should be attainable and not far from reality. Getting acquainted with the current growth in the industry helps to set attainable goals.
4. Relevant: The relevant environment should be taken into account to considering the present conditions and the realities prevailing in the market.
5. Time-Based: Specific time-line should be set to achieve the goals. It should be clearly statement that in how many days or months or years, the goal should be met.
Question. What are the qualities of a good brand name?
Answer : An efficient brand name should posses the following characteristics.
1. Simple and easy to pronounce. It helps to keep it short.
2. Should grab attention, easy to identify and remember.
3. Should sound pleasant when pronounced.
4. Free from negative, obscene, offensive and vulgar nature.
5. Should be compatible with labelling and packaging needs. It should also be compatible with various promotional media and languages.
6. Should be associated to a product and should grab immediate attention from viewers.
7. It should be contemporary, should be suitable for registration. It should be such that it is easy to obtain legal protection.
Question. What is AIDA?
Answer : AIDA is an acronym for the following four responses that can be grabbed by effective advertising.
a. Attention: The advertising will be appealing to the targeted audience and should stand out from the advertisements from the competitors.
b. Interest: Raises interest and causes significant impact through the message or the offering.
c. Desire: Creates enthusiasm to learn more about the product or to possess the product or service.
d. Action: It will trigger an action so that the sole objective of the advertisement is achieved. In other words, it inspires the potential customer to buy or possess the product or service.
Question. What are Public Relations?
Answer : Public relations refer to the establishment and maintenance of mutual understanding between a company or individual and the associated public. Effective public relations should be deliberate, planned and have sustained effort. Thus a public relations ensures that good relationship is maintained with the public or stakeholders of the business. This in-turn help the company to acquire good publicity and develop and maintain goodwill. Public relations also ensure help the companies to handle negative events, stories and rumours effectively. A good public relations not just helps in maintaining good relationships with the existing customers but also ensures that the business is expanded through referrals.
Question. What are the main public relations tools?
Answer : Organizations use the following tools to maintain their public relations.
a. Issuing of
i. Audio-visual presentations
ii. Annual reports
b. Community activities/events, sponsorship
c. Conducting special events like organizing news conferences, product launches and grand openings.
d. Conducting educational programs
e. Creating the news content and distributing it to various media channels.
f. Delivering speeches and presentations
Very Long Answer Type Questions
Question. Explain in detail any 3 pricing strategies.
Answer : 1. Cost Plus Pricing: Cost plus pricing is the most common and simple pricing strategy. As per this strategy the price is determined by calculating the sum of the cost of production and appropriate profit. However, this strategy does not stress on the optimum utilization of all available resources. This strategy completely depends on the manufacturing estimates. Costs associated with manufacturing are calculated to
a. Justify the planned capital expenditure
b. Calculate the cost of production for a new or re-designed product
c. Optimize the use of high cost areas.
The estimation is done by computing the factors like volume of resources, the cost associated with these resources and the duration for which these resources will be used. When it is required to justify the capital-expenditure, the depreciation and cashflow analysis is done using accounting methods.
a. The information required to calculate the price i.e., amount of expenditure and the desired profit is readily available.
b. It is simplest strategy as the price is computed just by adding all the cost incurred and the desired profit.
c. As the information used is with the company itself, it can immediately take corrective measures by analysing the facts if it sees an increase in expenses.
a. The base for estimating the pricing is to consider the demand in the coming days.
This method does not take this factor into account. This is a biggest drawback.
b. As this method does not consider the competitors strategies to determine the pricing, companies depending completely on this method might fail.
c. As this method considers the sunk cost and does not take opportunity cost into account there is a possibility of overestimating the price. In addition to this, the personal bais need to be added to the product.
2. Penetration Pricing: This strategy requires the price to be set to a value lower than the market price. This is usually done to acquire new customers. The whole idea is that the customers will switch to the new brand due to the lower prices. This is a short-term strategy and is usually used to increase the market share or sales volume rather than to incur huge profits. Once the required market share is achieved the prices are increased to regular values.
a. The market share and sales volumes are increased in a short term and before the competitors notice and react.
b. Increases the goodwill among the customers who switch to this product. They intern refer the product to other customers and thereby contributing to the increased sales volumes.
c. It increases the efficiency by introducing the cost control and cost reduction pressures right from start.
d. Due to the lower price competitors hesitate entering into this area.
e. Stock turnover is increased throughout the distribution channel.
f. This method generates very critical and important enthusiasm and support in the channel.
a. The customers expect that the price will stay lower for the coming days and the company might be branded for its lower price. As a result, it becomes difficult to increase the prices in future.
b. It is also possible that some of the customers will only stay with the product as long as the prices are low and they immediately switch to other brands as soon as the price is increased.
c. It is not yet clearly determined whether it will be effective if the prices are increased suddenly or if they are increased over a period of time.
d. Due to very small profit margin, the companies can not stick to this strategy for a longer term as it might result in losses for the company.
Note: To overcome these disadvantages companies adopt a slightly modified version of this strategy where in they do not reduce the price initially. In this case they provide good discounts to the customers initially. This works as the customers do not have expectation that the price will be lower for a longer term.
3. Skimming or Creaming: In skimming or creaming, few goods are sold at a high price so as to reach the break-even point as quickly as possible. The sale of products will last for a limited period of time so that most of the investment is recovered. The organization has to let go of the higher number of sales in this case. This strategy is usually employed in the electronics industry, for example, smart phones. This strategy targets the early adopters, who have lower price-sensitivity, which can be because of their need for the product out-weighs their
a. need for economics
b. more value attributed by them to the product
c. having high disposable income
Once skimming is period is over, the seller must revert back to other pricing strategies like economy or penetration.
a. The cost associated with the research and development are recovered fast.
b. This strategy is more effective when the consumers targeted are more quality conscious than price conscious.
a. It backfires if there are more competitors for the same product. The consumers might think that this company is over-pricing their products and stop purchasing any products from the company.
b. In case the government and legal regulations are stringent, this is not feasible option.
c. When the consumers notice that the company always follows skimming for all their products, they’ll wait and purchase the products after skimming period is over.
4. Variable price method: In this, the same goods or services are sold at different prices to different customers. This is usually found in cultures where dickering is common or where bidding or auction is taking place. Even in place where fixed pricing is standard, the prices may vary depending on the volume of the products purchased by the consumer. To avail this the customers must comply with certain criteria. The following are examples.
a. Siblings joining the same school get lower fee compared to others.
b. Bulk packing’s have lesser unit price as compared to the single packing or small volume packing’s
c. The more the bargaining power of the customer, the lesser will be the price.
d. Depending on the consumer’s ability to pay, the price might vary.
Advantages: It helps the sellers to sells the goods and services that failed to perform as expected there by helping them to make some profits or at-least avoid losses.
Disadvantages: When the customers who paid higher price realize that the products were sold to them at a price higher than the others, the seller might lose them.
Question. Explain Promotional mix in detail
Answer : Promotional mix is a combination of the various promotional strategies put together. Usually the following four promotional strategies are used for bring about the promotional mix.
1. Advertising: Companies pay for advertising where in the communication targeted to persuade the potential customers to incline towards the product or service as against the competitors’ products or services. Advertising will be more effective when it is targeted towards the potential customers who will be more likely to purchase the product or service. Advertising aims to let the customer know about the name and benefits of the products or service and work towards creating a goodwill and positive image. It also encourages the customers to get more educated about the product or service.
Usually this is carried out through the following media:
b. Directory listings
C. Direct mailing
f. Office front or window display
h. Point of sale
2. Personal Selling: Personal selling is carried out by reaching the prospective customer in-person and giving them a presentation of the product or service, thereby creating awareness of the product or service. This is usually carried out through salespersons. The sales person thus acts as an ambassador of the company and plays the following roles.
a. Be informative
b. Be persuasive
c. Service provider
3. Sales promotion: The customer is provided with short-term incentives or activities that persuade the customer to choose the product or service over that of competitors’.
This promotion strategy is a “below the line” strategy. This form of sales promotional activities are targeted towards final buyers, business customers, wholesalers, retailers and the team of sales force. Few examples of the promotional activities are:
a. Business promotions
b. Consumer promotions
c. Sales force promotions ,
d. Trade promotions.
4. Public relations: Public relations is aimed to maintain deliberate, planned and sustained effort to create and maintain relation between the organization and its public.
It strives to maintain good relations with all the stakeholders/public through publicity, building a positive corporate image, ensuring that the negative events/rumors/stories are strategically handled. This ensures that the customer is satisfied and becomes a source of referrals. Usually the following various tools are used in public relations.
a. Annual reports, newsletters, magazines
c. Community events and sponsoring
d. Distribution of news through media.
e. Event organization through news conferences, product launches and grand openings
f. Favourable speeches and presentations.
Question. Enlist some typical sales promotion activities.
Answer : Sales promotion, often called as below-the-line activities, refers to the activities or short-term incentives that are used to encourage the customers to purchase a product or service. The following are the most commonly used sales promotion activities.
1. Consumer Promotions: These are targeted towards final buyers and include
a. Appearance of Celebrities in the store, In-store sampling, demonstrations
b. Bonuses, multi-packs, On-pack offers
c. Competitions, coupons, sweepstakes, games
d. Display material near the point of sale
e. Loyalty reward programs.
2. Business Promotions: These are targeted towards business customers and include
a. Capability documents
b. Conference Presentations
c. Direct mail campaigns and telemarketing
d. Event Sponsorship
e. News Letters
f. Seminars and workshops
g. Tradeshow display
3. Trade promotions: These are targeted towards retailers and wholesalers and include
a. Bonus stock
c. Corporate entertainment
d. Reseller staff incentives
e. Reward incentives linked to purchases or sales
Sales Force Promotions: These are targeted towards members of the sales force and include
a. Awards or prizes after sales competitions
b. Back to top
Question. Explain the reasons for business failures.
Answer : A business is said to have failed when it is not able to make any profits or generate adequate revenue to cover its expenses and subsequently stopping all of its operations. To meet its day to day expenses, a business has to generate enough cash flow. If a profitable business is not able to do this, it is said to have failed.
The following are the various reasons that could cause a business to fail.
1. Adequate cash flow Deficit: Cash flow is defined as a business’s capacity to maintain enough funds to meet its day-to-day expenses related to the business activities.
When a business is not able to estimate the incoming and outgoing cash flow, it is prone to failure. This is especially true in case of small businesses. Due to this reason it is very critical for the entrepreneurs to get enough accounting knowledge so that they can make cash flow projections. This will help them to estimate how much they can spend each month.
Bad/Poor Business Planning: The most common cause for around 90% of business failures is poor business management competencies and planning. A well prepared business plan incorporates
a. Business mission
b. Cost Structure
c. External influences
e. Strengths and Weaknesses
Other details like
◆Operating Plan can also be included. When these details are poor, it leads to business failure.
2. Competition Ignorance: When the business fails to keep a watch on competitors and positioning of the products, the customers, who are always looking for a better/best offers will move out to the competing business which is offering a better product or service or lower price. This will make the customer a winner at the cost of business losing. This will lead to failure of business.
3. Decreased customer base: Businesses tend to lose customers under competition.
Small businesses are better to focus on a customer strategy that suits well for them.
They should also be looking for alter strategies instead of completely sticking to one. It is essential for the business to have a diversifying customer base. The business should always be ready to adapt new ideas and trends. Failure to do so will lead to failure.
4. Entrepreneurial skill deficit/lack: Inadequate entrepreneurial skills, especially during the start up phase, are critical for making a business successful. During the later phases having administrative and management skills pays off. The success of a small business depends on
a. Owner behaviour
b. Owner characteristics
c. Environmental influences
Entrepreneurs being high risk takers and have a greater need for achievement and social awareness, their personal and personality characteristics might lead to business failure.
5. Faulty/Poor System of Control: A business has no control over the external environment but it has easy access and control to internal environment. Failure to
exercise control on the internal environment will lead to business failure. The should be
controlling factors for
a. Quality of production
b. Quantity of production
c. Financial control to ensure financial performance
The control system should be capable of establishing standards, measure performance, compare performance against standards and take corrective measures to eliminate deviation from the standards. Failure to do so will cause the business to fail.
6. Growth Spurt: Uncontrollable growth, if not dealt with properly, will cause the business to fail. There should be professional management team, flexibility in the business, appropriate systems and controls in place for the business to succeed. The business can achieve this through proper planning. When this is not considered, it might lead to failure.
7. Having incompetent Management: When the management is incompetent or inexperienced it will not be possible to manage and effectively implement and monitor the strategic and operational plan of the business. Though a business have an excellent strategic plan, its effectiveness depends on the management’s competence to implement it. Management incompetency is also the root cause of around 90 percent of business failures.
8. Inappropriate Location: Choosing an unsuitable location will cause business failure. This factor is not applicable for all the businesses but for some business being at the right location is very important. Failure to establish the business at the correct location will cause the business to fail.
9. Inadequate Financing: Finance is the life-blood for the business to grow at all stages. Non availability of funds, lack of proper planning for funding to grab growth opportunity will cause the businesses to fail. The financial planning should be done well in advance. The entrepreneurs should
a. possess enough knowledge about the cost involved in raising the capital
b. have proper alternate plans to procure the funds from different sources
c. consider choosing a combination of debt and equity to finance the business
d. consider growing the business to overcome financial crisis, Failure to do so will lead to business failure.
10. Unworkable Goals: It is essential that the entrepreneurs should not just set goals but should also set workable goals. As the entrepreneurial pursuits often involve uncertainty, it is essential to set realistic/achievable goals in the scope of acceptable risk taking and optimism. Failure to do so will lead to business failure.
11. Industry Experience Deficit: The resources available for the business must be compatible to meet the demands of the environment with which the firm deals with.
This can happen when the business have good industry experience. The structure of the industry will dictate the performance of the business greatly. Failure to have the industry experience will lead to failure.