MM & HRM [B.

com 2nd Semester]

Marketing Management
S. No. Chapters Page Number
1. Introduction 01- 15

2. Consumer Behaviour and Market segmentation 16- 26

3. Product 27- 47

4. Pricing, Distribution Channels and Physical Distribution 48 - 61

5. Promotion and Recent developments in marketing 62 - 79

Human Resource Management

6. Nature and Scope 80 - 91

7. Human Resource Planning 92- 104

8. Recruitment and Selection 105 - 128

9. Training and Development 129 - 140

10. Job Evaluation and Performance Appraisal 141 - 156

Question Pattern:
20 MCQ of 1 Marks Each: 20 Marks

30 MCQ of 2 Marks Each: 60 Marks

[2 MCQ of 1 Marks & 3 MCQ of 2 Marks from each chapter]

ii
2nd Semester: Honours & General: CC 2.2 Chg
Marketing Management
Module I
Marketing Management
Internal Assessment: 10 marks
Semester-end Examinations: 40 marks
Total 50 marks
Unit 1: Introduction: No. of classes: 8 / Marks: 8
Nature, scope and importance of marketing; Selling vs Marketing; Marketing mix, Marketing
environment: concept, importance, and components (Economic, Demographic, Technological, Natural,
Socio-Cultural and Legal).

Unit 2: Consumer Behaviour and Market segmentation: No. of classes: 8 / Marks: 8

Consumer Behaviour: Nature and Importance, Factors influencing consumer buying behaviour. Market
segmentation: concept, importance and bases; Product differentiation vs. market segmentation.

Unit 3: Product: No. of classes: 8 / Marks: 8

Concept and importance, Product classifications; Concept of product mix; Branding, packaging and
labeling; Product life-cycle; New Product Development Process.

Unit 4: Pricing, Distribution Channels and Physical Distribution No. of classes: 8 / Marks: 8
Pricing: Significance. Factors affecting price of a product. Pricing policies and strategies. Distribution
Channels and Physical Distribution: Channels of distribution - meaning and importance; Types of
distribution channels; Factors affecting choice of distribution channel.

Unit 5: Promotion and Recent developments in marketing: No. of classes: 8 / Marks: 8

Promotion: Nature and importance of promotion; Communication process; Types of promotion:
advertising, personal selling, public relations & sales promotion, and their distinctive characteristics.
Recent developments in marketing: Social Marketing, online marketing, direct marketing, services
marketing, green marketing, Rural marketing; Consumerism.

iii
 2nd Semester: Honours & General:
HRM: 50 Marks (CC 2.1 Chg)
Internal Assessment: 10 marks
Semester-end Examinations: 40 marks
[10 MCQ x 1, 15 MCQ x 2]
Unit 1: Nature and Scope No. of classes: 8 / Marks: 8
Concept and meaning of HR, Understanding the Nature and Scope of HRM, Functions and importance.

Unit 2: Human Resource Planning No. of classes: 8 / Marks: 8

Definition, Need and Features of Human Resource Planning, factors affecting Human Resource
Planning.

Unit 3: Recruitment and Selection No. of classes: 8 / Marks: 8

Definition of Recruitment, Source, need and importance of Recruitment, Recruitment Policy– process –
sources of Recruitment Definition of Selection, Steps in selection.

Unit 4: Training and Development No. of classes: 8 / Marks: 8

Training and Development Meaning and purpose of training, Benefits of training to organisation and
employees -Training methods.

Unit 5: Job Evaluation and Performance Appraisal No. of classes: 8 / Marks: 8

Job evaluation - objectives, scope, method, Job analysis, Job description, Job Specification - basic
concept and significance, Performance Appraisal - Concept

iv
 Marketing Management
Unit 1: Introduction: [Marks: 8]
Nature, scope and importance of marketing; Selling vs Marketing; Marketing mix, Marketing environment:
concept, importance, and components (Economic, Demographic, Technological, Natural, Socio-Cultural and
Legal).

1. Introduction
In today's world of marketing, everywhere you go you are being marketed to in one form or another. Marketing is
with you each second of your walking life. From morning to night you are exposed to thousands of marketing
messages everyday. Marketing is something that affects you even though you may not necessarily be conscious
of it.
Marketing is an ancient art and is preset everywhere. Good marketing has become an increasingly vital ingredient
for success. It is a comprehensive term, which includes a lot of research in selling, advertising and distributing the
goods. Marketing is a series of different steps and processes which help in getting the products to the consumer
from the producer.
In the business world, marketing is defined by the four P's: (a) Product (b) Price (c) Place (d) Promotion

2. Definition of Marketing
According to American Marketing Association (2004) - "Marketing is an organisational function and set of
processes for creating, communicating and delivering value to customers and for managing relationships in a way
that benefits both the organisation and the stakeholder."
AMA (1960) - "Marketing is the performance of business activities that direct the flow of goods and services
from producer to consumer or user."
According to Eldridge (1970) - "Marketing is the combination of activities designed to produce profit through
ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of the market."
According to C. E. Eldridge, "Marketing is so basic that it cannot be considered a separate function. It is
the whole business seen from the point of view of its final result, that is, from the customer's point of
view."
In the words of Philip Kotler-"Marketing is a social and managerial process by which individuals and
groups obtain what they need and want through creating, offering and exchanging products of value with
others."
William Stanton gives the managerial definition of marketing. According to him, "Marketing is a total
system of business activities designed to plan, price, promote and distribute want-satisfying products,
services and ideas to target markets in order to achieve organisational objectives."
Prof. Harry L. Hansen defines-"Marketing involves the design of the products acceptable to the
consumers and the conduct of those activities which facilitate the transfer of ownership between seller and
buyer."
So "marketing is getting the right goods and services to the right people at the right place at the right time
at the right price with the right communication and promotion." — Philip Kotler and Gary Armstrong
 3. Nature of Marketing
1. Marketing is an Economic Function
Marketing embraces all the business activities involved in getting goods and services , from the hands of
producers into the hands of final consumers. The business steps through which goods progress on their way to
final consumers is the concern of marketing.

2. Marketing is a Legal Process by which Ownership Transfers

In the process of marketing the ownership of goods transfers from seller to the purchaser or from producer to the
end user.

3. Marketing is a System of Interacting Business Activities

Marketing is that process through which a business enterprise, institution, or organisation interacts with the
customers and stakeholders with the objective to earn profit, satisfy customers, and manage relationship. It is the
performance of business activities that direct the flow of goods and services from producer to consumer or user.

4. Marketing is a Managerial function

According to managerial or systems approach - "Marketing is the combination of activities designed to produce
profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of
the market." According to this approach the emphasis is on how the individual organisation processes marketing
and develops the strategic dimensions of marketing activities.
5. Marketing is a social process
Marketing is the delivery of a standard of living to society. According to Cunningham and Cunningham
(1981) societal marketing performs three essential functions:-
 Knowing and understanding the consumer's changing needs and wants;
 Efficiently and effectively managing the supply and demand of products and services; and
 Efficient provision of distribution and payment processing systems.

6. Marketing is a philosophy based on consumer orientation and satisfaction

7. Marketing had dual objectives - profit making and consumer satisfaction

 4. Scope of Marketing
1. Study of Consumer Wants and Needs
Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer needs and wants.
These needs and wants motivates consumer to purchase.

2. Study of Consumer behaviour

Marketers performs study of consumer behaviour. Analysis of buyer behaviour helps marketer in market
segmentation and targeting.

3. Production planning and development

Product planning and development starts with the generation of product idea and ends with the product
development and commercialisation. Product planning includes everything from branding and packaging to
product line expansion and contraction.

4. Pricing Policies
Marketer has to determine pricing policies for their products. Pricing policies differs form product to product. It
depends on the level of competition, product life cycle, marketing goals and objectives, etc.

5. Distribution
Study of distribution channel is important in marketing. For maximum sales and profit goods are required to be
distributed to the maximum consumers at minimum cost.

6. Promotion
Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is crucial in
accomplishment of marketing goals.

7. Consumer Satisfaction
The product or service offered must satisfy consumer. Consumer satisfaction is the major objective of marketing.

8. Marketing Control
Marketing audit is done to control the marketing activities.

5. Difference between Marketing and Selling

Key difference: Marketing plays a major role in creating new channels or clients and maintaining the existing
channels, which contributes to more sales. Selling involves making sales so as to increase the company's
revenues. Despite their differences, the two functions are dependent on each other.
Marketing and selling are both activities aimed at increasing revenue. They are so closely entwined that people
often don‘t realize the difference between the two. This is particularly true in the case of small businesses, which
often equates marketing with selling deliberately due to organizational and resource limitations. However, the fact
is that they are two very different business activities.
 Basis Marketing Selling

It is the strategy of meeting the needs in an

It is a strategy based on a mix of activities
Concept opportunistic, individual method, driven by
that are aimed at increasing the sales.
human interaction.

 It targets the construction of a brand

 It is the final act of buying goods or products
identity, needs of the consumers and
by the consumers through a point sale.
Focus how to reach to the consumers.
 It starts with the seller and is focused with the
 It starts with the buyers and focuses
seller‘s needs.
constantly on the buyer‘s needs.

It makes an effort such that the customers

The company makes the product first and then
Efforts actually want to buy the products in their
figures a way to sell and make profit.
own interest.

Business A customer satisfying process. Actual sales of goods.

The consumers determine the price; the

Cost Cost determines the price.
price determines the cost.

Customer satisfaction is the primary

Motive Sales are the primary motives.
motive.

Orientation External market orientation. Internal production orientation.

Perspective It takes an outside-in perspective. It takes an inside-out perspective.

It is a broad, composite and worldwide It is a narrow concept related to buyer, seller and
Concept
concept. production.

Strategy It has a ‗pull‘ strategy. It has a ‗push‘ strategy.

It begins much before production of It comes after production and ends with delivery
Beginning
goods and services. and collection of payment.

It has a wider connotation and includes

Scope It is a part of marketing.
many research activities.

Concern It concerns with customer satisfaction. It concerns with value satisfaction.

Structure It is an organizational structure. It is a functional structure.

The main job is to find the right products The main job is to find the customers for the
Job
for the customers. products.
 6. Necessity or Importance of Marketing:
(i) Creation of demand for goods and services: In view of the development of science and
technology, the mass-production and mass-distribution have become possible. The consumption for
goods will increase pari passu with the increase in the standard of living. Consequently, with the
increase of consumption, the demand for goods and its production will also increase. So, marketing is
helpful both to producers and to consumers.
(ii) Maintenance of balance between demand and supply: With the help of good marketing system,
the producing organisation may have a general idea on the basis of forecasting about the nature of
consumer demand. As a result, it will be possible for them to avoid probable evil effects of
production.
(iii) Sales promotion: In the present large-scale production system, the function of sales has become
a herculean task. As a result, the importance of sales has increased much. With the help of marketing
system, the customers are generally acquainted with the use of new goods. This will enhance the
quantum of sale of goods.
(iv) Means of living: A group of middlemen has evolved in the channel of distribution of goods from
producer to consumer. As for example, wholesaler, broker, agent, retail trader, etc. In the marketing
system, these middlemen have established themselves in an important position and have been earning
their own living. As such, the contributions of marketing are quite significant.
(v) Betterment in the standard of living: Marketing system creates demand for production of
various types of goods. As a result, with the help of increase in production, the employment
opportunities will also increase and income of the people increases. In this way betterment in the
standard of living can be achieved.
(vi) Increase in the risk-bearing capacity: Selling of manufactured goods is not an easy task. So,
the production of goods is a matter of risk. The producer produces goods with the hope that all his
goods will be sold in due course. That is why he takes risk. A good marketing system ensures the sale
of goods, helps to increase the risk-bearing capacity for production.
(vii) Sense of security: Coordinating between producer and consumer, the marketing system helps to
provide for a sense of security in the system of production. It ensures about the transfer of goods and
services between buyers and sellers. As a result, the enterprises can look over the more important
matters like expansion and development.
(viii) Maintenance of survival and mobility of business: Goods are produced with the object of
selling them in the market. If the goods are not sold, there will be no production of goods. As such, in
order to survive its existence, both production and sales are indispensable. Marketing system itself
makes it possible. Again through survival of existence, mobility of the business is ensured.
(ix) Creation of various utilities: Marketing creates four types of utility-time, place, possession and
image and plays a supporting role in creating form utility.
(x) International / Global Trade: The marketing plays a vital role in today's competitive market
scenario and also in international liberalized market. The people of Russia, sip Darjeeling tea at the
comfort of their home by dint of marketing. Similarly, the Americans as well as the British use
electronics goods of Japan. Cotton cloth of Egypt fulfils the needs of citizens of the rest of the world—
there are all blessings of marketing.
(xi) Exchange of Culture: The marketing helps to exchange the culture and ideas among different
nations and countries and also establishes relations among various nations and countries.
(xii) Contribution to the developing countries: In case of developing countries, the role of
marketing is quite significant and it can be easily understood from the remarks of P. F. Drucker. He
quoted-'The developing countries desire to come out of the vicious circle of poverty and miseries. In
order to convert the unutilized factors into real resources, to fulfill the desires and aspirations of
people, and to create responsible economic leaders as well as responsible citizen conversant with
knowledge of economics, the marketing works tremendously like a magic."
 7. Marketing Mix
The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in
the market. The 4Ps make up a typical marketing mix - Price, Product, Promotion and Place. However,
nowadays, the marketing mix increasingly includes several other Ps like Packaging, Positioning, People and even
Politics as vital mix elements.
It is about putting the right product or a combination thereof in the place, at the right time, and at the right price.

8. Element of Marketing Mix [4P‘s]

A marketing expert named E. Jerome McCarthy created the Marketing 4Ps in the 1960s. This classification has
been used throughout the world. Business schools teach this concept in basic marketing classes. The marketing
4Ps are also the foundation of the idea of marketing mix.
(a) Product: refers to the item actually being sold. The product must deliver a minimum level of performance;
otherwise even the best work on the other elements of the marketing mix won't do any good.
(b) Price: refers to the value that is put for a product. It depends on costs of production, segment targeted, ability
of the market to pay, supply - demand and a host of other direct and indirect factors. There can be several
types of pricing strategies, each tied in with an overall business plan. Pricing can also be used a demarcation,
to differentiate and enhance the image of a product.
(c) Place: refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for
her to buy it is the main aim of a good distribution or 'place' strategy. Retailers pay a premium for the right
location. In fact, the mantra of a successful retail business is 'location, location, location'.
(d) Promotion: this refers to all the activities undertaken to make the product or service known to the user and
trade. This can include advertising, word of mouth, press reports, incentives, commissions and awards to the
trade. It can also include consumer schemes, direct marketing, contests and prizes.
All the elements of the marketing mix influence each other. They make up the business plan for a company and
handled right, can give it great success. But handled wrong and the business could take years to recover. The
marketing mix needs a lot of understanding, market research and consultation with several people, from users to
trade to manufacturing and several others.

9. Marketing Mix 4C‘s

The 4Cs marketing model was developed by Robert F. Lauterborn in 1990. It is a modification of the 4Ps model.
It is not a basic part of the marketing mix definition, but rather an extension. Here are the components of this
marketing model:
(a) Cost – According to Lauterborn, price is not the only cost incurred when purchasing a product. Cost of
conscience or opportunity cost is also part of the cost of product ownership.
(b) Consumer Wants and Needs – A company should only sell a product that addresses consumer demand.
So, marketers and business researchers should carefully study the consumer wants and needs.
(c) Communication – According to Lauterborn, ―promotion‖ is manipulative while communication is
―cooperative‖. Marketers should aim to create an open dialogue with potential clients based on their needs
and wants.
(d) Convenience – The product should be readily available to the consumers. Marketers should strategically
place the products in several visible distribution points.
 10. Concept of Marketing environment:
The marketing activities of the business are affected by several internal and external factors. While some of the
factors are in the control of the business, most of these are not and the business has to adapt itself to avoid being
affected by changes in these factors. These external and internal factors group together to form a marketing
environment in which the business operates.
What is the Marketing Environment?
Marketing Environment is the combination of external and internal factors and forces which affect the company‘s
ability to establish a relationship and serve its customers.
The marketing environment of a business consists of an internal and an external environment.
The internal environment is company specific and includes
 owners,
 workers,
 machines,
 materials etc.
The external environment is further divided into two components:
 micro
 & macro.
The micro or the task environment is also specific to the business but external. It consists of factors
engaged in:
 producing,
 distributing,
 and promoting the offering.
The macro or the broad environment includes larger societal forces which affect society as a whole. The
broad environment is made up of six components:
 demographic,
 economic,
 physical,
 technological,
 political-legal,
 and social-cultural environment.
 11. Internal Environment
The internal environment of the business includes all the forces and factors inside the organisation which affect its
marketing operations. These components can be grouped under the Five Ms of the business, which are:
 Men
 Money
 achinery
 Materials
 Markets
The internal environment is under the control of the marketer and can be changed with the changing external
environment. Nevertheless, the internal marketing environment is as important for the business as the external
marketing environment. This environment includes the sales department, marketing department, the
manufacturing unit, the human resource department, etc.

12. External Environment

The external environment constitutes factors and forces which are external to the business and on which the
marketer has little or no control.

13. Micro Environment

The micro component of the external environment is also known as the task environment. It comprises of external
forces and factors that are directly related to the business. These include suppliers, market intermediaries,
customers, partners, competitors and the public
 Suppliers include all the parties which provide resources needed by the organisation.
 Market intermediaries include parties involved in distributing the product or service of the
organisation.
 Partners are all the separate entities like advertising agencies, market research organisations, banking
and insurance companies, transportation companies, brokers, etc. which conduct business with the
organisation.
 Customers comprise of the target group of the organisation.
 Competitors are the players in the same market who targets similar customers as that of the
organisation.
 Public is made up of any other group that has an actual or potential interest or affects the company‘s
ability to serve its customers.
14. Macro Environment
The macro component of the marketing environment is also known as the broad environment. It constitutes the
external factors and forces which affect the industry as a whole but don‘t have a direct effect on the business. The
macro environment can be divided into 6 parts.
(a) Demographic Environment
The demographic environment is made up of the people who constitute the market. It is characterised as
the factual investigation and segregation of the population according to their size, density, location, age,
gender, race, and occupation.
(b) Economic Environment
The economic environment constitutes factors which influence customers‘ purchasing power and
spending patterns. These factors include the GDP, GNP, interest rates, inflation, income distribution,
 government funding and subsidies, and other major economic variables.
(c) Physical Environment
The physical environment includes the natural environment in which the business operates. This includes
the climatic conditions, environmental change, accessibility to water and raw materials, natural disasters,
pollution etc.
(d) Technological Environment
he technological environment constitutes innovation, research and development in technology,
technological alternatives, innovation inducements also technological barriers to smooth operation.
Technology is one of the biggest sources of threats and opportunities for the organisation and it is very
dynamic.
(e) Political-Legal Environment
The political & Legal environment includes laws and government‘s policies prevailing in the country. It
also includes other pressure groups and agencies which influence or limit the working of industry and/or
the business in the society.
(f) Social-Cultural Environment

15. Importance of Marketing Environment

The social-cultural aspect of the macro environment is made up of the lifestyle, values, culture, prejudice
and beliefs of the people. This differs in different regions.
Every business, no matter how big or small, operates within the marketing environment. Its present and future
existence, profits, image, and positioning depend on its internal and external environment. The business
environment is one of the most dynamic aspects of the business. In order to operate and stay in the market for
long, one has to understand and analyze the marketing environment and its components properly.
(a) Essential for planning
An understanding of the external and internal environment is essential for planning for the future. A
marketer needs to be fully aware of the current scenario, dynamism, and future predictions of the marketing
environment if he wants his plans to succeed.
(b) Understanding Customers
A thorough knowledge of the marketing environment helps marketers acknowledge and predict what the
customer actually wants. In-depth analysis of the marketing environment reduces (and even removes) the
noise between the marketer and customers and helps the marketer to understand the consumer behaviour
better.
(c) Tapping Trends
Breaking into new markets and capitalizing on new trends requires a lot of insight about the marketing
environment. The marketer needs to research about every aspect of the environment to create a foolproof
plan.
(d) Threats and Opportunities
A sound knowledge of the market environment often gives a first mover advantage to the marketer as he
makes sure that his business is safe from the future threats and taps the future opportunities.
(e) Understanding the Competitors
Every niche has different players fighting for the same spot. A better understanding of the marketing
environment allows the marketer to understand more about the competitions and about what advantages do
the competitors have over his business and vice versa.
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) _________is a series of different steps and processes which help in getting the products to the
consumer from the producer.
(a) Marketing
(b) Branding
(c) packaging
(d) labeling
(2) _______ is the performance of business activities that direct the flow of goods and services
from producer to consumer or user.
(a) Marketing
(b) Branding
(c) packaging
(d) labeling
(3) In the words of Philip Kotler-" ________ is a social and managerial process by which individuals
and groups obtain what they need and want through creating, offering and exchanging products
of value with others."
(a) Marketing
(b) Branding
(c) packaging
(d) labeling
(4) is getting the right goods and services to the right people at the right place at the right
time at the right price with the right communication and promotion."
(a) Marketing
(b) Branding
(c) packaging
(d) labeling
(5) In the business world, marketing is defined by the ___________ P's:
(a) Three
(b) Seven
(c) Four
(d) Five
(6) Which of the following is nature of Nature of Marketing
(a) Marketing is an Economic Function
(b) Marketing is a Legal Process by which Ownership Transfers
(c) Marketing is a System of Interacting Business Activities
(d) All of the above
(7) Which of the following is nature of Nature of Marketing
(a) Marketing is a Managerial function
(b) Marketing is a social process
(c) Marketing is a philosophy based on consumer orientation and satisfaction
(d) All of the above
(8) Marketing is a Legal Process by which ___________ Transfers
(a) Ownership
(b) Possession
(c) Both
(d) No one
(9) Scope of Marketing are _________
(a) Study of Consumer Wants and Needs
(b) Study of Consumer behaviour
(c) Production planning and development
(d) All of the above
(10) Scope of Marketing are _________
(a) Pricing Policies
(b) Distribution
(c) Consumer Satisfaction
(d) All of the above
(11) _________plays a major role in creating new channels or clients and maintaining the existing
channels, which contributes to more sales.
(a) Marketing
(b) Selling
(c) Advertising
(d) Promotion
(12) involves making sales so as to increase the company's revenues.
(a) Marketing
(b) Selling
(c) Advertising
(d) Promotion
(13) __________is a customer satisfying process while ___________ is actual sales of goods.
(a) Marketing, Selling
(b) Selling, Marketing
(c) Branding, packaging
(d) advertising , sales promotion
(14) In_________Customer satisfaction is the primary motive., in __________Sales are the primary
motives.
(a) Marketing, Selling
(b) Selling, Marketing
(c) Branding, packaging
(d) advertising , sales promotion
(15) In ____________The consumers determine the price; the price determines the cost. In
___________Cost determines the price.
(a) Marketing, Selling
(b) Selling, Marketing
(c) Branding, packaging
(d) advertising , sales promotion
(16) In ___________The main job is to find the right products for the customers. In__________ The
main job is to find the customers for the products.
(a) Marketing, Selling
(b) Selling, Marketing
(c) Branding, packaging
(d) advertising , sales promotion
(17) Necessity or Importance of Marketing are __________
(a) Creation of demand for goods and services
(b) Maintenance of balance between demand and supply
(c) Sales promotion:
(d) All of the above
(18) Necessity or Importance of Marketing are __________
(a) Creation of various utilities
(b) Betterment in the standard of living
(c) Increase in the risk-bearing capacity
(d) All of the above
(19) The ____________refers to the set of actions, or tactics, that a company uses to promote its
brand or product in the market.
(a) marketing mix
(b) Sales Promotion
(c) Advertising
(d) Branding
(20) The 4Ps make up a typical marketing mix are Price, Product, Promotion and_________
(a) Place
(b) Packaging
(c) Politics
(d) People
(21) Which of the following is included in The 4Ps of a typical marketing mix
(a) Place
(b) Packaging
(c) Politics
(d) People
(22) Which of the following is not included in The 4Ps of a typical marketing mix
(a) Price
(b) Product
(c) Promotion
(d) People
(23) A marketing expert named ____________ created the Marketing 4Ps in the 1960s.
(a) E. Jerome McCarthy
(b) Philip Kotler
(c) Harry L. Hansen
(d) C. E. Eldridge,
(24) refers to the item actually being sold
(a) Price
(b) Product
(c) Promotion
(d) Place
(25) refers to the value that is put for a product
(a) Price
(b) Product
(c) Promotion
(d) Place
(26) refers to the point of sale.
(a) Price
(b) Product
(c) Promotion
(d) Place
(27) this refers to all the activities undertaken to make the product or service known to
the user and trade.
(a) Price
(b) Product
(c) Promotion
(d) Place
(28) Element of Marketing Mix
(a) Price
(b) Product
(c) Promotion
(d) People
(29) The 4Cs marketing model was developed by ____________ n 1990.
(a) Robert F. Lauterborn
(b) E. Jerome McCarthy
(c) Philip Kotler
(d) Harry L. Hansen
(30) Which of the following is not the components of 4Cs marketing model?
(a) Cost
(b) Consumer Wants and Needs
(c) Communication
(d) Competitors
(31) The components of 4Cs marketing model are Cost, Communication, Convenience & ____
(a) Consumer behaviour
(b) Consumer Satisfaction
(c) Consumer Wants and Needs
(d) Consumer Demand
(32) ____________is the combination of external and internal factors and forces which affect the
company‘s ability to establish a relationship and serve its customers.
(a) Market segmentation.
(b) Marketing Environment
(c) Marketing Research
(d) Market behaviour
(33) The internal environment is company specific and includes owners, workers, machines &
(a) Materials
(b) Men
(c) Markets
(d) Money
(34) The _____________is under the control of the marketer and can be changed with the changing
external environment.
(a) External Environment
(b) Micro Environment
(c) Internal Environment
(d) Macro Environment
(35) ____________environment includes the sales department, marketing department, the
manufacturing unit, the human resource department, etc.
(a) External Environment
(b) Micro Environment
(c) Internal Environment
(d) Macro Environment
(36) The _____________constitutes factors and forces which are external to the business and on
which the marketer has little or no control.
(a) External Environment
(b) Micro Environment
(c) Internal Environment
(d) Macro Environment
(37) The micro component of the _____________ is also known as the task environment. It comprises
of external forces and factors that are directly related to the business. These include suppliers,
market intermediaries, customers, partners, competitors and the public
(a) External Environment
(b) Micro Environment
(c) Internal Environment
(d) Macro Environment
(38) The micro component of the external environment include suppliers, market intermediaries,
customers & partners, __________ and the public.
(a) Competitors
(b) Money
(c) Machinery
(d) Materials
(39) The ___________of the marketing environment is also known as the broad environment. It
constitutes the external factors and forces which affect the industry as a whole but don‘t have a
direct effect on the business
(a) macro component
(b) micro component
(c) internal environment
(d) task environment
(40) The internal environment of the business includes all the forces and factors inside the
organisation which affect its marketing operations. These components can be grouped under the
Five Ms of the business, which are Men, Money, Machinery, Materials
(a) Markets
(b) Market intermediaries
(c) Manager
(d) Management
(41) Which of the following is not the component of Macro Environment?
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Marketing Environment
(42) Which of the following is not the component of Macro Environment?
(a) Technological Environment
(b) Political-Legal Environment
(c) Social-Cultural Environment
(d) Marketing Environment
(43) The____________ is made up of the people who constitute the market. It is characterised as the
factual investigation and segregation of the population according to their size, density, location,
age, gender, race, and occupation.
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Technological Environment
(44) The constitutes factors which influence customers‘ purchasing power and spending
patterns. These factors include the GDP, GNP, interest rates, inflation, income distribution, government
funding and subsidies, and other major economic variables.
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Technological Environment
(45) The includes the natural environment in which the business operates. This includes the
climatic conditions, environmental change, accessibility to water and raw materials, natural disasters,
pollution etc.
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Technological Environment
(46) The constitutes innovation, research and development in technology, technological
alternatives, innovation inducements also technological barriers to smooth operation.
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Technological Environment
(47) The includes laws and government‘s policies prevailing in the country. It also includes
other pressure groups and agencies which influence or limit the working of industry and/or the business in
the society.
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Political-Legal Environment
(48) The is made up of the lifestyle, values, culture, prejudice and beliefs of the people. This
differs in different regions.
(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Social-Cultural Environment
(49) Importance of Marketing Environment are
(a) Essential for planning
(b) Understanding Customers
(c) Tapping Trends
(d) All of the above
(50) Importance of Marketing Environment are
(a) Essential for planning
(b) Threats and Opportunities
(c) Understanding the Competitors
(d) All of the above
(51) The micro or the task environment is also specific to the business but external. It consists of factors
engaged in:
(a) producing,
(b) distributing,
(c) and promoting the offering.
(d) All of the above
(52) The micro environment is also known as
(a) Task environment
(b) Demographic Environment
(c) Economic Environment
(d) Physical Environment
(53) of the marketing environment is also known as the broad environment.
(a) Internal Environment
(b) External Environment
(c) Micro Environment
(d) Macro component
(54) includes the sales department, marketing department, the manufacturing unit, the
human resource department, etc.
(a) Internal Environment
(b) External Environment
(c) Micro Environment
(d) Macro component
 Unit 2: Consumer Behaviour and Market segmentation
Consumer Behaviour: Nature and Importance, Factors influencing consumer buying behaviour. Market
segmentation: concept, importance and bases; Product differentiation vs. market segmentation.

1. Consumer Behaviour:
The term consumer behaviour, individual buyer behaviour, end user behaviour and consumer buying behaviour
all stands for the same. Consumer behaviour is the study of how individuals, groups and Organisation select buy,
use and dispose of goods and services, ideas or experiences to satisfy their needs and wants.

Consumer behaviour may be defined as the decision process and physical activity individuals engage in when
evaluating, acquiring, using or disposing of goods and services.

According to Belch and Belch "consumer behaviour is the process and activities people engage in when
searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to satisfy their
needs and desires".

2. Nature of Consumer Behaviour:

Systematic process : Consumer behaviour is a systematic process relating to buying decisions of the customers.
The buying process consists of the following steps :
 Need identification to buy the product
 Information search relating to the product
 Listining and evaluating the alternative
 Purchase decision
 Post purchase evaluation by the marketer

Influenced by various factors : Consumer behaviour is influenced by a number of factors the factors that
influence consumers include marketing, personal, psychological, situational, social and cultural etc.

Different for different customers : All consumers do not behave in the same manner. Different consumers
behave differently. The different in consumer behaviour is due to individual factors such as nature of the
consumer's lifestyle, culture etc.

Different for different products : Consumer behaviour is different for different products there are some
consumers who may buy more quantity of certain items and very low quantity of some other items.

Vary across regions : The consumer behaviour vary across States, regions and countries. For instance, the
behaviour of urban consumers is different from that of rural consumers. normally rural consumers are
conservative (traditional) in their buying behaviour.

Vital for marketers : Marketers need to have a good knowledge of consumer behaviour they need to study the
various factors that influence consumer behaviour of the target customers. The knowledge of consumer behaviour
enables marketers to take appropriate marketing decisions.
Reflect status : Consumer buying behaviour is not only influenced by status of a consumer coma but it also
reflect it. Those consumers who owned luxury cars, watches and other items are considered by others as persons
of higher status.

Result in spread effect : Consumer behaviour as a spread effect. The buying behaviour of one person may
influence the buying behaviour of another person. For instance, a customer may always prefer to buy premium
brands of clothing, watches and other items etc. This may influence some of his friends, neighbours and
colleagues. This is one of the reasons why marketers use celebrities like Shahrukh Khan, sachin to endorse their
brands.

Undergoes a change : The consumer behaviour undergoes a change over a period of time depending upon
changes in age , education and income level etc, for example, kids may prefer colourful dresses but as they grow
up as teenagers and young adults, they may prefer trendy clothes.

Information search : Search for information is a common consumer behaviour. Consumers cannot purchase
goods and services if they are unaware that a good or service exists. When a consumer decides to buy a certain
item, his decision must be based on the information he has gathered about what products our services are
available to fulfill his needs. There might be a product available that would be better suited to the consumers
needs, but if he is an aware of product, he will not buy it.

Brand loyalty : Brand loyalty is another characteristic of consumer behaviour. Brand loyalty is the tendency of a
consumer to buy product products or services from a certain company that one likes or equates with having high
quality goods and services. For example, if Naina's first car was a Honda as a teenager and the car lasted 200,000
miles, she might have a tendency to buy hondas again in the future due to her previous positive experience. This
brand loyalty may be so strong that she forgoes the information search all together when considering for next
vehicle.

3. Scope of Consumer Behaviour:

1) Consumer behaviour and marketing management : Effective business managers realise the importance of
marketing to the success of their firm. A sound understanding of consumer behaviour is essential to the long run
success of any marketing program. In fact, it is seen as a comerstone of the Marketing concept, an important
orientation of philosophy of many marketing managers. The essence of the Marketing concept is captured in three
interrelated orientations consumers needs and wants, company integrated strategy.

2) Consumer behaviour and non profit and social marketing : In today's world even the non-profit
organisations like government agencies, religious sects, universities and charitable institutions have to market
their services for ideas to the "target group of consumers or institution." At other times these groups are required
to appeal to the general public for support of certain causes or ideas. Also they make their contribution towards
eradication of the problems of the society. Thus a clear understanding of the consumer behaviour and decision
making process will assist these efforts.
3) Consumer behaviour and government decision making : In recent years the relevance of consumer
behaviour principles to government decision making. Two major areas of activities have been affected:
i) Government services: It is increasingly and that government provision of public services can benefit
significantly from an understanding of the consumers, or users, of these services.
ii) consumer protection: Many Agencies at all levels of government are involved with regulating
business practices for the purpose of protecting consumers welfare.

4) Consumer behaviour and demarketing: It has become increasingly clear that consumers are entering an era
of scarcity in terms of some natural gas and water. These scarcities have led to promotions stressing conservation
rather than consumption. In other circumstances, consumers have been encouraged to decrease or stop their use of
particular goods believed to have harmful effects. Programs designed to reduce drug abuse, gambling, and similar
types of conception examples. These actions have been undertaken by government agencies non profit
organisations, and other private groups. The term "demarketing" refers to all such efforts to encourage consumers
to reduce their consumption of a particular product or services.

5) Consumer behaviour and consumer education: Consumer also stands to benefit directly from orderly
investigations of their own behaviour. This can occur on an individual basis or as part of more formal educational
programs. For example, when consumers learn that a large proportion of the billions spend annually on grocery
products is used for impulse purchases and not spend according to pre planned shopping list, consumers may be
more willing to plan effort to save money. In general, as marketers that can influence consumers' purchases,
consumers have the opportunity to understand better how they affect their own behaviour.

4. Importance of consumer behaviour:

1) production policies: The study of consumer behaviour effects production policies of enterprise. Consumer
behaviour discovers the habits, tastes and preferences of consumers and such discovery enables and enterprise to
plan and develop its products according to these specifications. It is necessary for an enterprise to be in
continuous touch with the changes in consumer behaviour so that necessary changes in products may be made.

2) Price policies: The buyer behaviour is equally important in having price policies. The buyers of some products
purchase only because particular articles are cheaper than the competitive articles available in the market.

3) Decision regarding channels of distribution: The goods, which are sold and solely on the basis of low price
mast and economical distribution channels. In case of those articles, which week T.V. sets, refrigerators etc. Must
have different channels of distribution. Thus, decisions regarding channels of distribution are taken on the basis of
consumer behaviour.

4) Decision regarding sales promotion: Study of consumer behaviour is also vital in making decisions
regarding sales promotion. It enables the producer to know what motive prompt consumer to make purchase and
the same are utilised in promotional campaigns to awaken desire to purchase.

5) Exploiting marketing opportunities: Study of consumer behaviour helps the marketers to understand the
consumers needs, aspirations, expectations, problems etc. This knowledge will be useful to the marketers in
exploiting marketing opportunities and meeting the challenges of the market.
6) Consumer do not always act or react predictably: The consumers of the past used to react to price levels as
if price and quality had positive relation. Today, week value for money, lesser price but with superior features.
The consumers response indicates that the shift had occurred.

7) Highly diversified consumer preferences: This shift has occurred due to availability of more choice now.
Thus study of consumer behaviour is important to understand the changes.

8) Rapid introduction of new products: Rapid introduction of new product with technological advancement
has made the job of studying consumer behaviour more imperative. For example, the information Technologies
are changing very fast in personal computer industry.

9) Implementing the "Marketing concept": This calls for studying the consumer behaviour, all customers need
have to be given priority. Thus identification of target market before production becomes essential to deliver the
desired customer satisfaction and delight.

5. Applications of consumer behaviour:

1) Analysing market opportunity: Consumer behaviour study help in identifying the unfulfilled needs and
wants of consumers. This requires examining the friends and conditions operating in the Marketplace, consumers
lifestyle, income levels and energy influences. This may reveal unsatisfied needs and wants. Mosquito repellents
have been marketed in response to a genuine and unfulfilled consumer need.

2) Selecting target market: Review of market opportunities often helps in identifying district consumer
segments with very distinct and unique wants and needs. Identifying these groups, behave and how they make
purchase decisions enable the marketer to design and market products or services particularly suited to their wants
and needs. For example, please sleep revealed that many existing and potential shampoo users did not want to
buy shampoo fax price at rate 60 for more and would rather prefer a low price package containing enough
quantity for one or two washers. This finding LED companies to introduce the shampoos sachet, which become a
good seller.

3) Marketing-mix decisions: Once unsatisfied needs and wants are identified, the marketer has to determine the
right mix of product, price, distribution and promotion. Where too, consumer behaviour study is very helpful in
finding answers too many perplexing questions. The factors of marketing mix decisions are:
i) product ii) price iii) promotion iv) distribution

4) Use in social and non profits marketing: Consumer behaviour studies are useful to design marketing
strategies by social, governmental and not for profit organisations to make their programmes more effective such
as family planning, awareness about AIDS.
 6. FACTORS AFFECTING CONSUMER BEHAVIOR
Consumer behavior refers to the selection, acquisition and consumption of goods and services to meet their needs.
There are different processes involved in consumer behavior. Initially, the consumer tries to find what products
you would like to consume, then select only those products that promise greater utility. After selecting the
products, the consumer makes an estimate of available funds that can happen. Finally, the consumer looks at the
current prices of commodities and makes the decision about which products to consume. Meanwhile, there are
several factors that influence consumer purchases, such as social, cultural, personal and psychological. The
explanation of these factors is as follows.
1. CULTURAL FACTORS
Consumer behavior is deeply influenced by cultural factors, such as buyer‘s culture, subculture and social class.
 Culture: Essentially, culture is the share of each company and is the major cause of the person who wants
and behavior. The influence of culture on the purchasing behavior varies from country to country, therefore
sellers have to be very careful in the analysis of the culture of different groups, regions or even countries.
 Subculture: Each culture has different subcultures, such as religions, nationalities, geographical regions,
racial, etc. marketing groups may use these groups, segmenting the market in several small portions. For
example, marketers can design products according to the needs of a specific geographical group.
 Social Class: Every society has some kind of social class is important for marketing because the buying
behavior of people in a particular social class is similar. Thus marketing activities could be adapted to
different social classes. Here we should note that social class is not only determined by income, but there are
several other factors such as wealth, education, occupation etc.

2. SOCIAL FACTORS
Social factors also influence the purchasing behavior of consumers. Social factors are: the reference groups,
family, the role and status.
• Reference groups
Reference groups have the potential for the formation of an attitude or behavior of the individual. The impact of
reference groups vary across products and brands. For example, if the product is visible as clothing, shoes, car
etc., the influence of reference groups will be high. Reference groups also include opinion leader (a person who
influences others by his special skill, knowledge or other characteristics).
• Family
buyer behavior is strongly influenced by a family member. So vendors are trying to find the roles and influence of
the husband, wife and children. If the decision to purchase a particular product is influenced by the wife of then
sellers will try to target women in their ad. Here we should note that the purchase of roles change with changing
lifestyles of consumers.
• Roles and Status
Each person has different roles and status in society in terms of groups, clubs, family, etc. organization to which it
belongs. For example, a woman working in an organization as manager of finance. Now she is playing two roles,
one of the chief financial officer and the mother. Therefore, purchasing decisions will be influenced by their role
and status.
3. PERSONAL FACTORS
Personal factors may also affect consumer behavior. Some of the important factors that influence personal buying
behavior are: lifestyle, economic status, occupation, age, personality and self esteem.
• Age
Age and life cycle have a potential impact on the purchasing behavior of consumers. It is obvious that consumers
change the purchase of goods and services over time. Family life cycle consists of different stages as young
singles, married couples, unmarried couples etc that help marketers to develop suitable products for each stage.
• Occupation
The occupation of a person has a significant impact on their buying behavior. For example, a marketing manager
of an organization is trying to buy business suits, while a low level worker in the same organization buy-resistant
clothing work.
• Economic situation
economic situation of the consumer has a great influence on their buying behavior. If income and savings a
customer is high, then going to buy more expensive products. Moreover, a person with low income and savings
buy cheap products.
• Lifestyle
Lifestyle clients is another factor affecting import purchasing behavior of consumers. Lifestyle refers to the way a
person lives in a society and express things in their environment. It is determined by the client‘s interests,
opinions, etc and activities shapes their whole pattern of acting and interacting in the world.
• Personality
Personality changes from person to person, time to time and place to place. Therefore, it can greatly influence the
buying behavior of customers. In fact, personality is not what one has, but is the totality of the conduct of a man
in different circumstances. Has different characteristics, such as dominance, aggression, confidence etc that may
be useful to determine the behavior of consumers to the product or service.

4. PSYCHOLOGICAL FACTORS
There are four major psychological factors that affect the purchasing behavior of consumers. These are:
perception, motivation, learning, beliefs and attitudes.
• Motivation
The level of motivation also affects the purchasing behavior of customers. Each person has different needs, such
as physiological needs, biological needs, social needs, etc. The nature of the requirements is that some are more
urgent, while others are less pressing. Therefore, a need becomes a motive when it is most urgent to lead the
individual to seek satisfaction.
• Perception
Select, organize and interpret information in a way to produce a meaningful experience of the world is called
perception. There are three different perceptual processes which are selective attention, selective distortion and
selective retention. In the case of selective attention, sellers try to attract the attention of the customer. Whereas in
case of selective distortion, customers try to interpret the information in a way that supports what customers
already believe. Similarly, in the case of selective retention, marketers try to retain information that supports their
beliefs.
• Beliefs and Attitudes
Client has specific beliefs and attitudes towards different products. Because such beliefs and attitudes shape the
brand image and affect consumer buying behavior so traders are interested in them. Marketers can change beliefs
and attitudes of customers with special campaigns in this regard.
 7. Market Segmentation: Concept
 Market segmentation is a marketing concept which divides the complete market set up into smaller subsets
comprising of consumers with a similar taste, demand and preference.
 A market segment is a small unit within a large market comprising of like minded individuals.
 One market segment is totally distinct from the other segment.
 A market segment comprises of individuals who think on the same lines and have similar interests.
 The individuals from the same segment respond in a similar way to the fluctuations in the market.

8. What is Market Segmentation?

 Market segmentation is a process with which a heterogeneous market is divided into homogeneous
groups. A market segment consists of a large identifiable group within a market with similar wants,
purchasing power, geographical location, buying attitudes or buying habits.
 Market segmentation is the process of dividing the total heterogeneous market for a product into several
segments, each of which tends to be homogeneous in all significant aspects.
 Market segmentation is just opposite of market aggregation. Market segmentation is a customer-oriented
philosophy and thus, is consistent with the marketing concept.
 According to Philip Kotler, ―Market segmentation is the act of identifying and profiling distinct group of
buyers who might require separate products.‖

9. Bases of Market Segmentation

The firms can segment the market on the following bases:
1. Geographical Segmentation: Here, the segmentation is done on the basis of the geographical location of the
customers. The geographical segmentation is based on the premise that people living in one area have
different purchasing or buying habits than those living in other areas of the country.
For example, the banking needs of people living in rural and urban areas are different and. Therefore, different
banking products and services are designed keeping in mind the different preferences of each customer group.
Also, the factors like climatic zone, state, region, constitutes geographic segmentation.
2. Demographic Segmentation: The demographic segmentation means dividing the customer market on the
basis of several variables such as age, sex, gender, occupation, income, education, marital status, family size,
community, social status, etc. Such segmentation is based on the premise, that customer‘s buying behaviour is
very much influenced by his demographics, and moreover, these variables can be measured easily as
compared to the other factors.
3. Psychographic Segmentation: The psychographic segmentation relates to the personality, lifestyle, and
attitude of the individual. It is believed that the consumer buying behaviour can be determined by his
personality and lifestyle. The personality refers to the traits, attitudes and habits of an individual and the
market is segmented according to the personal traits such as introvert, extrovert, ambitious, aggressiveness,
etc. The lifestyle means the way a person lives his life and do the expenditures. Here the companies segment
the market on the basis of interest, activities, beliefs and opinions of the individuals.
4. Behavioural Segmentation: Here, the marketer segments the market on the basis of the individual‘s
knowledge about the product and his attitude towards the usage of the product. Several behavioural variables
are occasions, benefits, user status, usage rate, buyer readiness stage, loyalty status and the attitude.
 10. Advantages and Benefits of Market Segmentation
1. Customer needs
It is easier to understand the exact needs of the customer and target the marketing strategy at a particular group. It
is much easier and more successful to create and promote specific and customised products and services.
2. Profit Potential
Mass marketing is a strategy of the past. Target marketing and positioning creates new potential customers and
new ideas for new products and services. Companies can create better products and hence maximise their
potential profit.
3. Growth
Segmenting the markets creates further opportunities for business growth. Specific groups require specific
products.
4. Retaining Customer
It is a great way to retain customers. Firms can establish a life-long relationship with their consumers via
formulating an effective market segmenting strategy.
5. Right Target Market
The company‘s resources are utilized for producing the right product for the right customer.
6. Market Share
Segmenting business and consumer markets is important to maintain existing market share and expand it. A
successful company needs to gain competitive advantage by looking closely at the specific needs of customers
and devising strategies to provide maximum benefit and value.

11. Product Differentiation: Definition

Product differentiation is the strategy of highlighting a product‘s features and attributes so as to distinguish it from
competitors and from other product offerings. There are many ways that a product can differentiate itself, such as
innovation, marketing and distribution. The overall goal of a product differentiation strategy is to make a product
more attractive to a particular target segment. Focusing on the inherit differences of a product should lead
potential customers to consider it unique and therefore valuable. A business communicates these differences
through its advertising, which is the selling proposition.
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) may be defined as the decision process and physical activity individuals engage in
when evaluating, acquiring, using or disposing of goods and services.
(a) Consumer behaviour
(b) Consumer Satisfaction
(c) Consumer Wants and Needs
(d) Consumer Demand
(2) According to Belch and Belch __________ is the process and activities people engage in when
searching for, selecting, purchasing, using, evaluating and disposing of products and services so
as to satisfy their needs and desires
(a) Consumer behaviour
(b) Consumer Satisfaction
(c) Consumer Wants and Needs
(d) Consumer Demand
(3) is the study of how individuals, groups and Organisation select buy, use and dispose
of goods and services, ideas or experiences to satisfy their needs and wants.
(a) Consumer behaviour
(b) Consumer Satisfaction
(c) Consumer Wants and Needs
(d) Consumer Demand
(4) is a systematic process relating to buying decisions of the customers.
(a) Consumer behaviour
(b) Consumer Satisfaction
(c) Consumer Wants and Needs
(d) Consumer Demand
(5) Consumer behaviour is a systematic process relating to buying decisions of the customers. The
buying process consists of the following steps :
(a) Need identification to buy the product
(b) Information search relating to the product
(c) Listining and evaluating the alternative
(d) All of the above
(6) Consumer behaviour is influenced by a number of factors the factors that influence consumers
include ___________
(a) marketing
(b) personal
(c) psychological
(d) All of the above
(7) Nature of Consumer Behaviour are as follows______________
(a) Different for different customers
(b) Different for different products
(c) Vital for marketers
(d) All of the above
(8) Importance of Consumer Behaviour are as follows______________
(a) Consumer do not always act or react predictably
(b) Highly diversified consumer preferences:
(c) Rapid introduction of new products:
(d) All of the above
(9) There are several factors that influence consumer purchases, such as
(a) social,
(b) cultural,
(c) personal and psychological.
(d) All of the above
(10) Consumer behavior is deeply influenced by cultural factors, such as
(a) Buyer‘s culture,
(b) Subculture
(c) Social class.
(d) All of the above
(11) Social factors also influence the purchasing behavior of consumers. Social factors are:
(a) the reference groups,
(b) family,
(c) the role and status.
(d) All of the above
(12) Personal factors may also affect consumer behavior. Some of the important factors that
influence personal buying behavior are:
(a) lifestyle
(b) economic status & occupation
(c) age, personality and self esteem.
(d) All of the above
(13) There are four major psychological factors that affect the purchasing behavior of consumers.
These are:
(a) perception,
(b) motivation,
(c) learning, beliefs and attitudes.
(d) All of the above
(14) ___________is a marketing concept which divides the complete market set up into smaller
subsets comprising of consumers with a similar taste, demand and preference.
(a) Market segmentation
(b) Marketing environment
(c) Marketing Research
(d) Marketing Strategy
(15) Which of the following is the nature of Market Segment?
(a) A market segment is a small unit within a large market comprising of like minded individuals.
(b) One market segment is totally distinct from the other segment.
(c) A market segment comprises of individuals who think on the same lines and have similar
interests.
(d) All of the above
(16) ___________is a process with which a heterogeneous market is divided into homogeneous
groups. each of which tends to be homogeneous in all significant aspects.
(a) Market segmentation
(b) Marketing environment
(c) Marketing Research
(d) Marketing Strategy
(17) A ___________consists of a large identifiable group within a market with similar wants,
purchasing power, geographical location, buying attitudes or buying habits.
(a) Market segment
(b) Marketing environment
(c) Marketing Research
(d) Marketing Strategy
(18) is just opposite of market aggregation.
(a) Market segmentation
(b) Marketing environment
(c) Marketing Research
(d) Marketing Strategy
(19) is a customer-oriented philosophy and thus, is consistent with the marketing concept.
(a) Market segmentation
(b) Marketing environment
(c) Marketing Research
(d) Marketing Strategy
(20) According to Philip Kotler, ― is the act of identifying and profiling distinct group of
buyers who might require separate products.‖
(a) Market segmentation
(b) Marketing environment
(c) Marketing Research
(d) Marketing Strategy
(21) Bases of Market Segmentation are as follows:
(a) Geographical Segmentation
(b) Demographic Segmentation
(c) Psychographic Segmentation
(d) All of the above
(22) The is based on the premise that people living in one area have different purchasing
or buying habits than those living in other areas of the country.
(a) Geographical Segmentation:
(b) Demographic Segmentation:
(c) Psychographic Segmentation:
(d) Behavioural Segmentation
(23) The means dividing the customer market on the basis of several variables such as
age, sex, gender, occupation, income, education, marital status, family size, community, social
status, etc
(a) Geographical Segmentation:
(b) Demographic Segmentation:
(c) Psychographic Segmentation:
(d) Behavioural Segmentation
(24) The relates to the personality, lifestyle, and attitude of the individual. It is believed that
the consumer buying behaviour can be determined by his personality and lifestyle.
(a) Geographical Segmentation:
(b) Demographic Segmentation:
(c) Psychographic Segmentation:
(d) Behavioural Segmentation
(25) The relates to the market on the basis of the individual‘s knowledge about the product
and his attitude towards the usage of the product.
(a) Geographical Segmentation:
(b) Demographic Segmentation:
(c) Psychographic Segmentation:
(d) Behavioural Segmentation
(26) Advantages and Benefits of Market Segmentation are
(a) Customer needs
(b) Profit Potential
(c) Growth
(d) All of the above
(27) is the strategy of highlighting a product‘s features and attributes so as to distinguish
it from competitors and from other product offerings.
(a) Product differentiation
(b) market segmentation.
(c) Marketing research
(d) Market Environment
 Unit 3: Product: [Marks: 8]
Concept and importance, Product classifications; Concept of product mix; Branding, packaging and labeling;
Product life-cycle; New Product Development Process.

1. Product: Concept
A business starts with a need. It is this need of a specific market that the company should provide the solution
to. This solution is a product or a service that the company has the resources to provide. Product is one of the P‘s
referred to in the marketing mix enumerated in basic marketing theories.
Companies have to take time to develop a quality product that is responsive to the needs of its desired target
market. It also has to be relevant, accessible, and affordable to their market.
2. Why Product Development is Important
Product development, is the life-blood of companies and societies. The product could be a physical product such
as an automobile, smart phone, or coffee maker. It could also be services such as new IT solution, new
manufacturing process, or a new real estate marketing concept.
All successful product development actions provide the following:
 New value for customers
 Improved society
 Continued existence of the company
New Value for Customers
The first and most important reason for any new development is to provide new value to the customer. Without
this, there is no reason for them to trade their money for the new device. However, if the product or service offers
overwhelming value, then customers will flock to it.
This new and increasing value is what keeps companies growing. If there is no new value to offer customers, the
firm wilts and eventually dies. If the value offered is not increasing, then the company is losing ground in the
market as its competitors increase their value in the market.
Improved Society
Many new products are simply an incremental improvement over the previous version with only some new
features or slight faster performance. These products may sustain the company by offering enough new value to
generate additional revenue, but they are hardly a boon to society.
There are certain instances where new products will improve society beyond just the immediate gratification of
the consumer. Example of these are innovative new drugs to treat debilitating diseases and automotive safety
devices that save hundreds of lives per year. Neither of these may offer the consumer swift satisfaction, but they
save lives and therefore improve society.
Continued Existence and Growth of the Company
New products and services are the lifeblood of any company. Without them, the firm withers on the vine and
either dies or is absorbed by another firm. Society is well-served by the continuance of these companies from the
employment of the individuals who work there (who are also consumers), and the support for society at-large in
the form of taxation and charitable giving.
Companies (and civilizations) have little choice but grow and improve if they want to move from survival to
thriving. The new products and services created and provided by companies of all sizes provide the mechanism
for this growth and improvement. What are you and your firm doing to improve?
 3. Product Classification – Types of Products
There are three fundamental types of product classification which are durable and non durable products and pure
services. Durable products are those products, which are used for longer period of time, such as Freezer, Car,
Mobile Phones, Shoes, and TV, etc. No durable products are those products, which we need to use quickly as
these products expired after some specific period of time. Such as all the vegetables, fruits, and juices, etc.
Pure services include those benefits that are intangible or inseparable in nature and are offered for sale to
customers. Ownership of nothing is transferred because these products are experiential in nature. Accountant,
Doctors, Lawyer, and Teaching, etc are the best examples that indicates the term pure services.
These all products are purchased by either industrial buyer or final consumer. The consumer products are
purchased by final consumers for personal consumption. The industrial products are purchased by the
organizations for their usage in the processing operations & administration. Moreover the industrial products are
used mostly which includes consumables like raw materials or paper clips that can be transformed into finished
product.
Product classification that is also known as different types of products. These types of products or product
classification are as below in three different forms.
(a) Consumer Products
(b) Industrial Products
(c) Persons, Organizations, Ideas & Places

4. Consumer Products
Those products that are purchased by final consumers for personal consumption are called consumer products.
The way of purchasing these products provides the basis for the marketer to further classify these products. The
following is an important classification of these consumer products on the basis of the manner of purchase &
manner of marketing.
Convenience Products
Those consumer products that are purchased immediately & frequently with little efforts and comparison are
called convenience products. Examples of convenience products include the following.
 Candy
 Newspapers
 Soap
 Fast Food etc.
The convenience products are placed at the front locations of the stores in abundance quantity so that they are
easily available to the customers. The price of these products is kept lower.
Shopping Products:
This type of product is purchased less frequently & careful comparison is made by the customer on the price,
quality, sustainability & style. In case of purchase of shopping products, increased time & effort is made by the
customers in collection of information & comparison making. Following are some of examples of shopping
products.
 Clothing
 Furniture
 Major Appliances
 Used Cars
 Hotel & Motel Services
These products are distributed in fewer outlets by the marketer along with the strong sales support services that
assist customers in their comparison making.
Specialty Products:
Specialty products are those consumer products that have brand identification or unique characteristics and an
important group of customers are happy to purchase these products. Following are some of examples of specialty
products.
 Specific brand & kinds of cars
 Photographic equipment with high price
 Designer clothes
 The services of legal or medical specialist
The customers of such products can make enough effort with them for reaching relevant dealers. However, they
do not compare the specialty products normally.
Unsought Products:
Those consumer products that are either not known to the customers or they are known, but customers do not
usually consider them to purchase. The important innovations are usually included in the category of unsought
products because the customers get the awareness through advertisement. Following are the examples of
unsought products.
 Life Insurance
 Blood donation to Red Cross
A lot of personal selling, advertising & marketing efforts are required for unsought products.

5. Industrial Products:
Those products that are purchased that are buying for further processing or for use in operating a business are
called industrial products. So the main difference between industrial and consumer product is based on the
purpose of purchase of the product. For example, if a lawn mower product is purchased for use around the house,
then this lawn mower is categorized in the consumer product. But if the same lawn mower is purchased for use in
landscaping business, then this is categorized as an industrial product. Following are some of the three product
classification of industrial products.
Material & Parts:
Raw materials, natural products & manufactured materials are included in the category of material & parts. Farm
products & natural products are included in raw material part like cotton, wheat, vegetables, fruits, fish, crude
petroleum, iron etc. Component materials & component parts are included in the manufactured area like yarn,
wires, cement, iron, tires, small motors etc. Manufactured material & parts are mostly sold to the industrial users
directly. Major marketing factors employed in this category are price & service. The advertising & branding is
not so much important. Also the demand of the industrial products is derived demand, which is derived from the
consumer demand.
Capital Items:
Those industrial products that assist the production & operation of customer are called capital items like
accessory equipment‘s & installations. Building & fixed equipment‘s are included in the installations. Office
equipment & portable factory equipment are included in the accessory equipment. Accessory equipment‘s have
much shorter lifetimes & they are only helpful in the process of production.
Supplies & Services:
Supplies contain repair & maintenance items and operating supplies like nails, paint, lubricants, pencil, paper,
coal etc. The supplies are regarded as the industrial convenience products because they are purchased with little
effort & time. Business advisory services and repair & maintenance services are included in business services
category. These services are given under some contract.

6. Persons, Organizations, Ideas & Places:

The marketing entities named persons, organizations, ideas & places are also included in the category of products
recently. The organization sells itself by carrying out certain activities like creating, maintaining & changing the
behavior & attitude of customers for an organization. Similarly, people also perform certain activities for
development, maintenance & change of behavior & attitude towards certain people through person marketing.
Similarly the ideas & places are also regarded as products.

7. New Product Development Process.

There are basically 7 steps involved in the development of a new product. These are the following: Strategy
Development, Generation of Ideas, Screening and Evaluation, Business Analysis, Product Development, Market
Testing, and Commercialization.
Although following these steps is ideal, the reality of it is that new product development tends to be more
complicated. Rather than a step by step process, companies do tend to go back and forth between stages.
(a) Strategy Development
Before pondering on creating a new product, a company has to refer to its own strategy. Firms do use
various approaches. In some cases, stockholders have to interfere with questions on the prudence of the
investment in an effort to manage and reduce risks.
After all, developing a new product requires huge expenses and the ultimate aim should be to create
something profitable for the company.
(b) Generation of Ideas
Ideas do not just come from internal parties or the higher level management. Ideas can come from different
departments. It may come about as a response to the demand of the market.
It can come as a suggestion from a regular employee, etc. In the end, the company has to decide which idea
is worth investing on.
(c) Screening and Evaluation
There are plenty of great ideas that may be thrown in but some are not feasible. Excellent ideas may also be
discarded for the simple reason that it does not blend well with the company‘s core competencies.
Validating new product ideas through market research is also a good idea.
(d) Business Analysis
After determining which ideas are consistent with the core competencies of the company and determining
feasibility, further evaluation and analysis of how the product can help the company reach its business goals
is necessary.
Factors such as risks, potential market size, profit projections, and possible competitive response among
others have to be duly considered.
(e) Product Development
Based on the identified features of the ―best‖ product to meet the customers‘ needs, a team of experts should
be able to come up with a product design.
 The process of product development differs from one industry to another.
No matter what industry the company belongs to, however, the product development process will have to
conform to industry quality standards.
The prototype or samples from product development will then have to go through market testing.
(f) Market Testing
To ensure that the product will be well received by the company‘s target market, it is necessary to conduct
market testing. As compared to the initial product tests conducted in laboratories or company premises, this
test is conducted in a specific marketplace.
Some companies do sampling in retail outlets and ask consumers for feedback. There are also those who test
the market by having pre-launch offers. This will determine whether the product is good enough to attract
market attention and consumer purchase.
(g) Commercialization
Depending on the result of market testing, a company may decide to widen its distribution and release the
product to a broader market, either nationally or international

8. Meaning of Product Mix

Product mix or product assortment refers to the number of product lines that an organisation offers to its
customers. Product line is a group of related products manufactured or marketed by a single company. Such
products function in similar manner, sold to the same customer group, sold through the same type of outlets, and
fall within a same price range .
Product mix consists of various product lines that an organisation offers, an organisation may have just one
product line in its product mix and it may also have multiple product lines. These product lines may
be fairly similar or totally different, for example - Dish washing detergent liquid and Powder are two similar
product lines, both are used for cleaning and based on same technology; whereas Deodorants and Laundry are
totally different product lines. An organisation's product mix has following four dimensions :-
 Width,
 Length,
 Depth, and
 Consistency.
(a) Width: The width of an organisation's product mix pertains to the number of product lines that the
organisation is offering. For example, Hindustan Uni Lever offers wide width of its home care, personal care
and beverage products. Width of HUL product mix includes Personal wash, Laundry, Skin care, Hair care,
Oral care, Deodorants, Tea, and Coffee.
(b) Length: The length of an organisation's product mix pertains to the total number of products or items in the
product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products, hence, the
length of product mix is 23.
(c) Depth: The depth of an organisation's product mix pertains to the total number of variants of each product
offered in the line. Variants includes size, colour, flavors, and other distinguishing characteristics.
For example, Close-up, brand of HUL is available in three formations and in three sizes. Hence, the depth of
Close-up brand is 3*3 = 9.
(d) Consistency: The consistency of an organisation's product mix refers to how closely related the various
product lines are in use, production, distribution, or in any other manner.
 9. Concept of Product Mix:
Product mix refers to the depth and width of product policy of a company. It is concerned with product diversity,
i.e. how far a company can or should diversify its products. It is defined as ―the composite of products offered
for sale by a firm or a business unit.‖ The ‗depth‘ of product policy refers to the various models, designs, sizes,
and colours whereas ‗width‘ involves number of product lines.
For example, a variety of electrical appliances such as fans, lamps, etc. produced and marketed by Bajaj
Electricals is the width of its product policy.

10. Product Mix Decision

Product mix decision refers to the decisions regarding adding a new or eliminating any existing product from the
product mix, adding a new product line, lengthening any existing line, or bringing new variants of a brand to
expand the business and to increase the profitability.
(a) Product Line Decision - Product line managers takes product line decisions considering the sales and profit
of each items in the line and comparing their product line with the competitors' product lines in the same
markets. Marketing managers have to decide the optimal length of the product line by adding new items or
dropping existing items from the line.
(b) Line Stretching Decision - Line stretching means lengthening a product line beyond its current range. An
organisation can stretch its product line downward, upward, or both way.
 Downward Stretching means adding low-end items in the product line, for example in Indian car
market, watching the success of Maruti-Suzuki in small car segment, Toyota and Honda also entered
the segment.
 Upward Stretching means adding high-end items in the product line, for example Maruti-Suzuki
initially entered small car segment, but later entered higher end segment.
 Two-way Stretching means stretching the line in both directions if an organisation is in the middle
range of the market.
(c) Line Filling Decision - It means adding more items within the present range of the product line. Line filling
can be done to reach for incremental profits, or to utilise excess capacity.

11. Factors Influencing Product Mix:

The following factors are generally considered before deciding on product mix:
(1) Marketing strategy and corporate strategy. Does a product fit these strategy.
(2) Resources and strengths of a company. Does the product fit them?
(3) Competitor‘s strategy. Does the product match the competitor s strategy?
(4) Overall impact of profit. Does the product improve the profit of the company?
(5) Effect on other products. Does the product adversely affect the sales of other products?
(6) Management competence. Does the product get the necessary management competence and experience?
(7) Cost of production. Can a by-product or other allied systems or products be developed at a low cost of
production?
(8) Quantity of production. Does the addition of one more item to the existing product line offer economics of
large scale production?
(9) Full utilisation of marketing network. Does the addition of a product contribute towards reducing the
marketing cost by fuller utilisation of marketing personnel?
 12. Branding : Concept
There are millions of products and services all over the world, each claims to be the best among their category.
But, every product is not equally popular. Consumer doesn't remember every product, only few products are
remembered by their name, logo, or slogan. Such products generate desired emotions in the mind of consumer. It
is branding that makes product popular and known in the market; branding is not an activity that can be done
overnight, it might takes months and even years to create a loyal and reputed brand.
Branding gives personality to a product; packaging and labelling put a face on the product. Effective packaging
and labelling work as selling tools that help marketer sell the product.

13. Definition of Branding

According to American Marketing Association - Brand is ―A name, term, design, symbol, or any other feature
that identifies one seller‘s good or service as distinct from those of other sellers. The legal term for brand is
trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a
whole, the preferred term is trade name.‖
According to Philip Kotler - ―Brand is a name, term, sign, symbol, design, or a combination of them,
intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of
competitors‖
Branding is ―a seller‘s promise to deliver a specific set of features, benefits and services consistent to the
buyers.‖

14. Meaning of Branding

Branding is a process of creating a unique name and image for a product in the mind of consumer, mainly
through advertising campaigns. A brand is a name, term, symbol, design or combination of these elements, used
to identify a product, a family of products, or all products of an organisation.
Branding is an important component of product planning process and an important and powerful tool for
marketing and selling products.

15. Elements of Branding

Brand includes various elements like - brand names, trade names, brand marks, trade marks, and trade characters.
The combination of these elements form a firm's corporate symbol or name.
Brand Name - It is also called Product Brand. It can be a word, a group of words, letters, or numbers to represent
a product or service. For example - Pepsi, iPhone 5, and etc.
Trade Name - It is also called Corporate Brand. It identifies and promotes a company or a division of a
particular corporation. For example - Dell, Nike, Google, and etc.
Brand Mark - It is a unique symbol, colouring, lettering, or other design element. It is visually recognisable, not
necessary to be pronounced. For example - Apple's apple, or Coca-cola's cursive typeface.
Trade Mark - It is a word, name, symbol, or combination of these elements. Trade mark is legally protected by
government. For example - NBC colourful peacock, or McDonald's golden arches. No other organisation can use
these symbols.
Trade Characters - Animal, people, animated characters, objects, and the like that are used to advertise a
product or service, that come to be associated with that product or service. For example - Keebler Elves for
Keebler cookies
 16. Branding Strategies
There are various branding strategies on which marketing organisations rely to meet sales and marketing
objectives. Some of these strategies are as following :-
Brand Extension - According to this strategy, an existing brand name is used to promote a new or an improved
product in an organisation's product line. Marketing organisations uses this strategy to minimise the cost of
launching a new product and the risk of failure of new product. There is risk of brand diluting if a product line is
over extended.
Brand Licensing - According to this strategy, some organisations allow other organisations to use their brand
name, trade name, or trade character. Such authorisation is a legal licensing agreement for which the licensing
organisation receives royalty in return for the authorisation. Organisations follow this strategy to increase revenue
sources, enhance organisation image, and sell more of their core products.
Mixed Branding - This strategy is used by some manufacturers and retailers to sell products. A manufacturer of
a national brand can make a product for sale under another company's brand. Like this a business can maintain
brand loyalty through its national brand and increase its product mix through private brands. It can increase
its profits by selling private brands without affecting the reputation and sales of its national brand.
Co-Branding - According to this strategy one or more brands are combined in the manufacture of a product or in
the delivery of a service to capitalise on other companies' products and services to reach new customers and
increase sales for both companies' brands.

17. Role of Branding:

Following points pin down its precise role:
1. Brand is a Massive Asset:
Brand is considered as a major intangible asset because all the physical assets such as plant, equipment,
inventory, building, stocks and bounds can be duplicated or copied very easily, however, it is almost impossible
to duplicate brand name. It has been proved, as there are many case where the firms have gone to hell still brand
remained high in the sky.
2. Brand is a Promotional Tool:
Sales promotion is founded on the idea of product identification or product differentiation. This difference is done
by a brand. Major weapon of product popularization is advertising. And it is futile to advertise a product without
a brand name. Even the work of salesman would be a failure in absence of a brand name. Thus, branding plays a
highly creative role in determining the success or failure of a product.
3. Brand is a Weapon to Protect Market:
Once a consumer has tried and liked a product the brand enables him to identify so well that he is tempted to levy
it again. For instance, a house wife using VIM cleaning powder may not use other powders like BIZ, ODOPIC
etc., as she is soaked in with VIM. That is, the product earns goodwill. In other words, absence of brand name
will make repeated purchases stand still.
4. Brand is Antidote for Middlemen‘s‘ Survival:
If a product wins consumer reputation, the manufacturers gain control over product distribution. The class of
middlemen always tends to go in for a successful brand. That is, without brand identification, these middlemen
find it difficult as to what to buy and sell. In fact, brand names can be so strong and penetrating that the very
survival of middlemen rests on their efforts and ability to sell a powerful branded product.
5. Brand is a Means of Identification for Customers:
Brand is the easiest way of identifying product or service that a customer likes. For him, brand is value, quality,
personality, prestige and image. A branded product is a distinct product in his eyes. Thus Philips bulbs are
regardless of where they are bought. Again, branded products tend to have improvement in quality over the years.

18. Merits of Branding:

The merits of branding can be discussed from the angles of manufacturers, middlemen and consumers:
A. Merits to the Manufacturers:
The makers of the products stand to gain because brand has a definite role to play to assist them in effective
marketing goods.
These are:
1. Products Get Individuality:
2. Control of Product Prices:
3. Increases Bargaining Power:
4. It Reduces the Advertising Costs:
5. Ever Increasing Demand:
6. Introduction of New Product is Made Easy Task:
7. It is A Powerful Weapon of Product Differentiation:
B. Merits to Wholesalers and Retailers:
1. Quicker Sales:
2. Advertising and Display of Products is Rendered Easier:
3. Increases Market Share and Control over Market:
4. Introduction of New Products is Rendered Easier:
5. Branded Products Have More Stabilized Prices:
6. Economical Way of Doing Business:
C. Merits to Consumers:
1. Brand Stands for Quality:
2. Consumer Protection against Cheating:
3. Branded Products Reflect their Life Styles:
4. Steady and Regular Supply of Products:
5. Pre-valance of Stable Prices:

19. Product Packaging: Concept

Packaging is the other side of the product identification. Traditionally, the function of packaging was to protect
goods. However, it is a promotional tool and the major image builder contributing to the product success. It is a
point of sale display that develops a favourable consumer appeal.
‗Packing‘ is a process that speaks of company‘s ability to contain economically man made or natural products for
shipment, storage, sale or final use. It comprises the activities of wrapping or creating the product for performing
the marketing functions more easily and economically.
In simple words, packing is the act of housing the product in the packages or containers like tins, cans, bags, jars,
bottles, boxes, kegs, casks, and the like. A ‗package‘ is a wrapper or a container in which a product is enclosed,
encased, housed or sealed.
‗Packaging‘ on the other hand, deals with activities of planning and designing of different means of packing the
products. What are clothes to human-beings, so are the packages for the products.

20. Definitions of Packaging:

―Packaging is the general group of activities in designing the containers or wrappers for the products‖. Professor
William Stanton
―Package design is the unique combination of colours, graphics and symbols to distinguishing the products.‖
John Bull
―Packaging is an activity which is concerned with the protection, economy, convenience and promotional
considerations‖. Professor Philip
Thus, it embraces the functions of package selection, manufacture, filling and handling. It is worth noting, here,
that the word ‗packing‘ is more comprehensive and, hence, covers ‗packaging‘. Packing is concerned with
product protection while packaging with product promotion.

21. Objectives of Packaging:

Packaging is a market and marketing necessity, at-least five objectives can be identified so far as product
packaging is concerned. These are product protection, product identification, product convenience, product profit
generation and product promotion.
These points can be outlined as given below:
1. Product protection:
The primary objective of packaging is protection of products or contents. It is the package that keeps the contents
fresh, clean and un-spoilt by using moisture proof, vermin-proof and damage resistant materials.
It is powerful weapon to avoid shop-lifting, stealing in shops. This protection is given to the products from their
birth till their death. Thus, product is protected against the possible theft, pilferage, leakage, spilling, breakage,
contamination, deterioration, evaporation and so on.
2. Product identification:
The products available in a shop on shelves must be distinguishable for easy identification. One brand is to be
compared and distinguished from another. Next to brand names, packaging is another easy and convenient
method to identify the products of different producers or marketers.
It is obvious that the packaging of one product is very much different from another. Thus, it becomes a means of
easy identification. The size, the colour combinations, the graphics used in each package are unique that can be
easily remembered and recalled.
3. Product convenience:
A packaging aims at providing maximum convenience to the purchasers, producers and distributors alike. A
nicely designed product package facilitates product shipping, storage, stocking, handling and display on the part
of producers and distributors. It is caused by product density.
4. Product promotion:
Product package is a powerful promotional tool. Packaging performs good many advertising functions.
5. Product profit generation:
Adequate and proper packaging can be the cause for generating increased profits to the producers and
distributors. Because of product density created by good packaging, it reduces costs in storage, transportation and
handling.
 22. Role/Functions of Packaging:
1. It protects the contents:
2. It provides product density:
3. It acts as promotional tool:
4. It provides user convenience:
5. It facilitates product identification:
6. It allows easy product-mix:
7. It extends product life-cycle:

23. Essentials of Good Packaging:

Therefore, the requisites of good packaging are:
1. It should protect the contents:
2. It should be attractive:
3. It should bestow convenience:
4. It should guarantee economy:
5. It should assure adjustability:
6. It should be pollution free:
7. It should be informative:

24. Types of Packages:

When one speaks of types of packaging, there can be three types namely primary, secondary and shipping. Let us
know about each type.
Primary Packaging:
Primary packaging is basically done for protecting the quality of the product and protection against possible
effects caused by exposure. Much depends on the type of product its form namely, Solid or liquid, solids are
packed in polyethylene paper bags, hard boards, bottles both glass and plastic.
The basic idea is to protect or preserve the basic ingredients. Say, a shampoo can be packed in sachets, pouches,
plastic bottles, so in the case with other liquids. Tetra-packing is done in case of soft-drinks, juice, and oil and so
on.
Secondary Packaging:
Secondary packaging serves for providing quantitative convenience of the buyers and sellers. Thus Shampoo
Sachets may be in straps of 10, 20, 30, 40, and 50 and so on. The bottles may be 10, or 12, or 144 units put to
together. This is done for additional protection plus meeting the consumer‘s dealers, convenient for exchange
purpose. It also helps in storage.
Shipping Packaging:
Shipping packaging is the final packaging mainly for transportation and stocking purposes on wholesale basis.
Thus, fruit juice boxes (tetra pack) may be put in cartons of 50, 100, and 200 and so on.
 25. Product Labelling:
Labelling is another significant means of product identification like branding and packaging. Labelling the act of
attaching or tagging labels. A label is anything may be a piece of paper, printed statement, imprinted metal,
leather which is either a part of a package or attached to it, indicating value of contents of price of product name
and place of producers.
It carries verbal information about the product, producer or such useful information to be beneficial to the user.
Thus, a label is an informative tag, wrapper or seal attached to a product or product‘s package.

26. The Purposes of Labelling:

1. To bring home the product features:
2. To facilitate the exchange process:
3. To encourage self-service:
4. Product related services:
(a) Product support services: A product support service is any service that helps the consumers to use the
product. These include installation services and demonstrations in case of items like heaters, air-conditioners
or other mechanical devices.
(b) Product credit service:
(c) Product guarantees and warrantees: Giving a product guarantees and warrantees has been a common thing
these days. A guarantee is a general policy of a manufacturer in respect of defective products.
(d) After-Sale Services:
27. What is the product life cycle?
The product life cycle is an important concept in marketing. It describes the stages a product goes through from
when it was first thought of until it finally is removed from the market. Not all products reach this final stage.
Some continue to grow and others rise and fall.

28. What are the main stages of the product life cycle?
The main stages of the product life cycle are:
1. Introduction – researching, developing and then launching the product
2. Growth – when sales are increasing at their fastest rate
3. Maturity – sales are near their highest, but the rate of growth is slowing down, e.g. new competitors in
market or saturation
4. Decline – final stage of the cycle, when sales begin to fall
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) All successful product development actions provide the following:
(a) New value for customers
(b) Improved society
(c) Continued existence of the company
(d) All of the above
(2) Product classification that is also known as different types of products. These types of products
or product classification are:
(a) Consumer Products
(b) Industrial Products
(c) Persons, Organizations, Ideas & Places
(d) All of the above
(3) include those benefits that are intangible or inseparable in nature and are offered for
sale to customers.
(a) Pure services
(b) durable products
(c) Industrial Products
(d) non durable products
(4) are those products, which are used for longer period of time, such as Freezer, Car,
Mobile Phones, Shoes, and TV, etc.
(a) Durable products
(b) Consumer Products
(c) Industrial Products
(d) non durable products
(5) There are three fundamental types of product classification which are durable Product, non
durable products and ________
(a) Pure services
(b) Industrial Products
(c) Consumer Products
(d) Luxury Product
(6) are those products, which we need to use quickly as these products expired after
some specific period of time. Such as all the vegetables, fruits, and juices, etc.
(a) Durable products
(b) Consumer Products
(c) Industrial Products
(d) non durable products
(7) Accountant, Doctors, Lawyer, and Teaching, etc are the best examples of ________
(a) Pure services
(b) Industrial Products
(c) Consumer Products
(d) non durable products
(8) The____________ are purchased by final consumers for personal consumption.
(a) Durable products
(b) Consumer Products
(c) Industrial Products
(d) non durable products
(9) The ______________are purchased by the organizations for their usage in the processing
operations & administration.
(a) Durable products
(b) Consumer Products
(c) Industrial Products
(d) non durable products
(10) Those consumer products that are purchased immediately & frequently with little efforts and
comparison are called _____________
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(11) Candy, Newspapers, Soap, Fast Food etc are example of______________
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(12) The ___________are placed at the front locations of the stores in abundance quantity so that
they are easily available to the customers. The price of these products is kept lower.
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(13) This type of product is purchased less frequently & careful comparison is made by the customer
on the price, quality, sustainability & style.
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(14) Clothing, Furniture, Major Appliances, Used Cars, Hotel & Motel Services are some of examples
of ______________
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(15) These products are distributed in fewer outlets by the marketer along with the strong sales
support services that assist customers in their comparison making.
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(16) _____________are those consumer products that have brand identification or unique
characteristics and an important group of customers are happy to purchase these products.
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(17) Specific brand & kinds of cars, Photographic equipment with high price; Designer clothes and
the services of legal or medical specialist are examples of
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(18) Those consumer products that are either not known to the customers or they are known, but
customers do not usually consider them to purchase.
(a) Shopping Products
(b) Specialty Products
(c) Unsought Products
(19) Life Insurance, Blood donation to Red Cross are the examples of unsought products.
(a) Convenience Products
(b) Shopping Products
(c) Specialty Products
(d) Unsought Products
(20) Those products that are purchased that are buying for further processing or for use in operating
a business are called __________
(a) industrial products
(b) consumer product
(c) Luxury Product
(d) Durable product
(21) Following are the product classification of industrial products.
(a) Material & Parts
(b) Capital Items
(c) Supplies & Services
(d) All of the above
(22) Raw materials, natural products & manufactured materials are included in the category of
______
(a) Material & Parts
(b) Capital Items
(c) Supplies & Services
(d) All of the above
(23) Those industrial products that assist the production & operation of customer are called capital
items like accessory equipment‘s & installations. Building & fixed equipment‘s are included in
the installations
(a) Material & Parts
(b) Capital Items
(c) Supplies & Services
(d) All of the above
(24) ___________contain repair & maintenance items and operating supplies like nails, paint,
lubricants, pencil, paper, coal etc.
(a) Material & Parts
(b) Capital Items
(c) Supplies & Services
(d) All of the above
(25) The marketing entities named ___________are also included in the category of products
recently.
(a) persons
(b) organizations
(c) ideas & places
(d) All of the above
(26) Steps involved in the development of a new product are:
(a) Strategy Development,
(b) Generation of Ideas
(c) Screening and Evaluation,
(d) All of the above
(27) Steps involved in the development of a new product are:
(a) Business Analysis
(b) Product Development
(c) Market Testing, and Commercialization
(d) All of the above
(28) refers to the number of product lines that an organisation offers to its customers.
(a) Marketing Mix
(b) Product mix or product assortment
(c) Marketing Research
(d) Marketing environment:
(29) ____________is a group of related products manufactured or marketed by a single company.
Such products function in similar manner, sold to the same customer group, sold through the
same type of outlets, and fall within a same price range .
(a) Product line
(b) Marketing Mix
(c) Marketing Research
(d) Marketing environment:
(30) An organisation's product mix has following dimensions :-
(a) Width,
(b) Length,
(c) Depth and Consistency
(d) All of the above
(31) The __________of an organisation's product mix pertains to the number of product lines that
the organisation is offering.
(a) Width
(b) Length
(c) Depth
(d) Consistency
(32) The _________of an organisation's product mix pertains to the total number of products or
items in the product mix
(a) Width
(b) Length
(c) Depth
(d) Consistency
(33) The ______of an organisation's product mix pertains to the total number of variants of each
product offered in the line.
(a) Width
(b) Length
(c) Depth
(d) Consistency
(34) The consistency of an organisation's product mix refers to how closely related the various
product lines are in use, production, distribution, or in any other manner.
(a) Width
(b) Length
(c) Depth
(d) Consistency
(35) Product mix refers to the depth and width of product policy of a company. It is concerned with
product diversity, i.e. how far a company can or should diversify its products.
(a) Product mix
(b) Marketing Mix
(c) Marketing Research
(d) Marketing environment:
(36) It is defined as ―the composite of products offered for sale by a firm or a business unit.‖
(a) Product mix
(b) Marketing Mix
(c) Marketing Research
(d) Marketing environment:
(37) The __________of product policy refers to the various models, designs, sizes, and colours
whereas _________ involves number of product lines.
(a) Depth, Width
(b) Width, Depth
(c) Length, Width
(d) Length, Depth
(38) a variety of electrical appliances such as fans, lamps, etc. produced and marketed by Bajaj
Electricals is the width of its product policy.
(a) Width
(b) Length
(c) Depth
(d) Consistency
(39) _______decision refers to the decisions regarding adding a new or eliminating any existing
product from the product mix, adding a new product line, lengthening any existing line, or
bringing new variants of a brand to expand the business and to increase the profitability.
(a) Product mix
(b) Marketing Mix
(c) Marketing Research
(d) Marketing environment:
(40) Managers have to decide the optimal length of the product line by adding new items or dropping
existing items from the line. This decision is called __________
(a) Product Line Decision
(b) Line Stretching Decision
(c) Line Filling Decision
(d) Product mix decision
(41) means lengthening a product line beyond its current range.
(a) Product Line Decision
(b) Line Stretching Decision
(c) Line Filling Decision
(d) Product mix decision
(42) An organisation can stretch its product line in
(a) Downward Stretching
(b) Upward Stretching
(c) Two-way Stretching
(d) All of the above
(43) means adding low-end items in the product line,
(a) Downward Stretching
(b) Upward Stretching
(c) Two-way Stretching
(d) All of the above
(44) means adding high-end items in the product line,
(a) Downward Stretching
(b) Upward Stretching
(c) Two-way Stretching
(d) All of the above
(45) means stretching the line in both directions if an organisation is in the middle range of
the market.
(a) Downward Stretching
(b) Upward Stretching
(c) Two-way Stretching
(d) All of the above
(46) _________means adding more items within the present range of the product line. ________ can
be done to reach for incremental profits, or to utilise excess capacity.
(a) Product Line Decision
(b) Line Stretching Decision
(c) Line Filling Decision
(d) Product mix decision
(47) The following factors are generally considered before deciding on product mix:
(a) Marketing strategy and corporate strategy
(b) Resources and strengths of a company
(c) Competitor‘s strategy
(d) All of the above
(48) According to Philip Kotler - ―________ is a name, term, sign, symbol, design, or a combination
of them, intended to identify the goods or services of one seller or group of sellers and
to differentiate them from those of competitors‖
(a) Brand
(b) Packaging
(c) Labeling
(d) advertising
(49) __________ is ―a seller‘s promise to deliver a specific set of features, benefits and services
consistent to the buyers.‖
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(50) is a process of creating a unique name and image for a product in the mind of consumer,
mainly through advertising campaigns
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(51) __________includes various elements like - brand names, trade names, brand marks, trade
marks, and trade characters.
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(52) It is a unique symbol, colouring, lettering, or other design element. It is visually recognisable,
not necessary to be pronounced.
(a) Brand Mark
(b) Trade Mark
(c) Trade Characters
(d) Brand Name
(53) It is a word, name, symbol, or combination of these elements. It is legally protected by
government.
(a) Brand Mark
(b) Trade Mark
(c) Trade Characters
(d) Brand Name
(54) Following is the branding strategies on which marketing organisations rely to meet sales and
marketing objectives.
(a) Brand Extension
(b) Brand Licensing
(c) Mixed Branding
(d) All of the above
(55) According to this strategy, an existing brand name is used to promote a new or an improved
product in an organisation's product line.
(a) rand Extension
(b) Brand Licensing
(c) Mixed Branding
(d) Co-Branding
(56) According to this strategy, some organisations allow other organisations to use their brand
name, trade name, or trade character.
(a) Brand Extension
(b) Brand Licensing
(c) Mixed Branding
(d) Co-Branding
(57) This strategy is used by some manufacturers and retailers to sell products. A manufacturer of a
national brand can make a product for sale under another company's brand.
(a) Brand Extension
(b) Brand Licensing
(c) Mixed Branding
(d) Co-Branding
(58) According to this strategy one or more brands are combined in the manufacture of a product or
in the delivery of a service to capitalise on other companies' products and services to reach new
customers and increase sales for both companies' brands.
(a) Brand Extension
(b) Brand Licensing
(c) Mixed Branding
(d) Co-Branding
(59) _________is a process that speaks of company‘s ability to contain economically man made or
natural products for shipment, storage, sale or final use.
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(60) ___________comprises the activities of wrapping or creating the product for performing the
marketing functions more easily and economically.
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(61) __________is the act of housing the product in the packages or containers like tins, cans, bags,
jars, bottles, boxes, kegs, casks, and the like.
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(62) __________ deals with activities of planning and designing of different means of packing the
products.
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(63) ―___________is the unique combination of colours, graphics and symbols to distinguishing the
products.‖
(a) Brand Name
(b) Package design
(c) Label
(d) Trade Mark
(64) Which of the following are the objectives of Packaging?
(a) product protection
(b) product identification & convenience
(c) product profit generation and product promotion.
(d) All of the above
(65) Types of packaging are as follows:
(a) Primary Packaging
(b) Secondary Packaging
(c) Shipping Packaging
(d) All of the above
(66) __________is basically done for protecting the quality of the product and protection against
possible effects caused by exposure
(a) Primary Packaging
(b) Secondary Packaging
(c) Shipping Packaging
(d) All of the above
(67) serves for providing quantitative convenience of the buyers and sellers.
(a) Primary Packaging
(b) Secondary Packaging
(c) Shipping Packaging
(d) All of the above
(68) is the final packaging mainly for transportation and stocking purposes on wholesale
basis.
(a) Primary Packaging
(b) Secondary Packaging
(c) Shipping Packaging
(d) All of the above
(69) Labelling the act of attaching or tagging labels.
(a) Branding
(b) Packaging
(c) Labeling
(d) advertising
(70) A ________ is an informative tag, wrapper or seal attached to a product or product‘s package.
(a) Label
(b) Brand
(c) Patent
(d) Trade Mark
(71) The Purposes of Labelling are as follows:
(a) To bring home the product features
(b) To facilitate the exchange process
(c) To encourage self-service
(d) All of the above
(72) Which of the following are Product related services:
(a) Product support services:
(b) Product credit service:
(c) After-Sale Services:
(d) All of the above
(73) A _________is any service that helps the consumers to use the product, thus, a furniture store
may hint on interior decoration, a short course may be given on how to use camera or a copier
or a computer or a washing machine or a vacuum cleaner
(a) Product support services:
(b) Product credit service:
(c) After-Sale Services:
(d) Product guarantees and warrantees:
(74) A_________ is a general policy of a manufacturer in respect of defective products. It is a
promotional device of making broad promises that may or may not be legally binding.
(a) Product support services:
(b) Product credit service:
(c) After-Sale Services:
(d) Product guarantees
(75) A ________is the assumption of responsibility by the manufacturer and his distributor for the
clear title, quality, character and suitability for intended use of products sold.
(a) Product support services:
(b) Product credit service:
(c) After-Sale Services:
(d) Product warranty
(76) The ________ is an important concept in marketing. It describes the stages a product goes
through from when it was first thought of until it finally is removed from the market
(a) Product life cycle
(b) Working capital cycle
(c) Operating cycle
(d) Accounting cycle
(77) The main stages of the product life cycle are:
(a) Introduction
(b) Growth
(c) Maturity & Decline
(d) All of the above
(78) Final stage of the cycle, when sales begin to fall is _________
(a) Introduction
(b) Growth
(c) Maturity
(d) Decline
(79) The first stages of the product life cycle is ______which includes researching, developing and
then launching the product
(a) Introduction
(b) Growth
(c) Maturity
(d) Decline
 Unit 4: Pricing, Distribution Channels
and Physical Distribution
Pricing: Significance. Factors affecting price of a product. Pricing policies and strategies. Distribution Channels
and Physical Distribution: Channels of distribution - meaning and importance; Types of distribution channels;
Factors affecting choice of distribution channel.

1. Pricing:
Pricing means the process of selecting the pricing objectives, determining the possible range of prices, developing
price strategies, setting the final price, and implementing and controlling pricing decision. The determination of
price is very important and crucial decision. It affects all parties involved in the production, distribution, and
consumption of goods. Price affects the volume of production and the amount of profit. It is a source of income to
distributors.
According to M.J. Jones and S.W. Jetty, ―Pricing begins with an understanding of the corporate mission, target
markets, and the marketing objectives; then pricing objectives are developed; next management estimates as to
extent of flexibility in establishing prices by studying costs and profits internally and demand and competition
externally; prices are, then set between these two extreme ends by deciding price strategies in the light of
objectives so set; specific methods are used to set prices; final aspects in implementation and control that includes
effective monitoring to get feedback on consumer response and competitive reaction.‖
According to W.J.Stanon, ―Pricing is the functions of determining the products value in monetary terms.‖

2. Objectives of Pricing
The pricing objectives reflect overall goal of the organization. It describes the what an organization wants to
achieve through pricing. All the pricing policies and strategies are determined by the parameter of pricing
objectives. So, pricing objective provides the guideline-setting the pricing policies and strategies. Moreover, the
pricing objectives determine the overall objectives of the organization. The pricing objectives are as follows:
Profit Oriented Objectives
Profit oriented objectives focus on profit. This objective can be profit maximization and achieve target return.
 To maximize profit:
 Achieving target return:
 Achieving target return on sales:
 Achieving target return on investment:
Sales Oriented Objectives
Sales oriented pricing objectives focus on sales volume rather than on profit. The profit can be to gain sales
volume and market share.
 Sales volume increase:
 Maintain market share:
3. Status Oriented Objectives
Status oriented pricing focus on maintaining the current position. This objective can be described as ―Don‘t Rock
the Boat‖ objective. The large companies in order to minimize the risk of loss and maintain their status adopt this
objective. Organization does not take any initiative in the price change. These objectives are as follows:
 Stabilization of price:
 Meet competition:
3. Importance of Pricing
The importance of pricing has been increasing substantially in the recent years. The role of the price is crucial not
only in the national economy but also in the marketing sector, especially to the marketing organization or
executives. Pricing is important to the economy, to the organization and to the customers. Some of the
importance of the pricing in the business can be :
 Profit Margin
 Sales Volume
 Position
 Market share
4. Significance of Pricing and Marketing Strategy
Six significance of pricing and marketing strategy are as follows:
(a) The planed market position for the service product
(b) The stage of the life – cycle of the service product
(c) Elasticity of demand
(d) The competitive situation
(e) The strategic role of price.
(f) Price as an Indicator of Service Quality:

5. Factors affecting price of a product.

The pricing decisions for a product are affected by internal and external factors.
A. Internal Factors:
1. Cost:
While fixing the prices of a product, the firm should consider the cost involved in producing the product. This
cost includes both the variable and fixed costs. Thus, while fixing the prices, the firm must be able to recover both
the variable and fixed costs.
2. The predetermined objectives:
While fixing the prices of the product, the marketer should consider the objectives of the firm. For instance, if the
objective of a firm is to increase return on investment, then it may charge a higher price, and if the objective is to
capture a large market share, then it may charge a lower price.
3. Image of the firm:
The price of the product may also be determined on the basis of the image of the firm in the market. For instance,
HUL and Procter & Gamble can demand a higher price for their brands, as they enjoy goodwill in the market.
4. Product life cycle:
The stage at which the product is in its product life cycle also affects its price. For instance, during the
introductory stage the firm may charge lower price to attract the customers, and during the growth stage, a firm
may increase the price.
5. Credit period offered:
The pricing of the product is also affected by the credit period offered by the company. Longer the credit period,
higher may be the price, and shorter the credit period, lower may be the price of the product.
6. Promotional activity:
The promotional activity undertaken by the firm also determines the price. If the firm incurs heavy advertising
and sales promotion costs, then the pricing of the product shall be kept high in order to recover the cost.

B. External Factors:
1. Competition:
While fixing the price of the product, the firm needs to study the degree of competition in the market. If there is
high competition, the prices may be kept low to effectively face the competition, and if competition is low, the
prices may be kept high.
2. Consumers:
The marketer should consider various consumer factors while fixing the prices. The consumer factors that must
be considered includes the price sensitivity of the buyer, purchasing power, and so on.
3. Government control:
Government rules and regulation must be considered while fixing the prices. In certain products, government
may announce administered prices, and therefore the marketer has to consider such regulation while fixing the
prices.
4. Economic conditions:
The marketer may also have to consider the economic condition prevailing in the market while fixing the prices.
At the time of recession, the consumer may have less money to spend, so the marketer may reduce the prices in
order to influence the buying decision of the consumers.
5. Channel intermediaries:
The marketer must consider a number of channel intermediaries and their expectations. The longer the chain of
intermediaries, the higher would be the prices of the goods.
6. Pricing Strategies Concept–
The pricing of any product is extremely complex and intense as it is a result of a number of calculations, research
work, risk taking ability and understanding of the market and the consumers. The management of the company
considers everything before they price a product, this everything includes the segment of the product, the ability
of a consumer to pay for the products, the conditions of the market, action of the competitor, the production and
the raw material cost or you can say the cost of manufacturing, and of course the margin or the profit margins.

7. Pricing Strategies Definition

The main aim of the management of every organization is to maximize profits by effectively getting the products
of the shelf; let‘s define and explain this better.
Pricing strategy is a way of finding a competitive price of a product or a service. This strategy is combined with
the other marketing pricing strategies that are the 4P strategy (products, price, place and promotion) economic
patterns, competition, market demand and finally product characteristic. This strategy comprises of one of the
most significant ingredients of the mix of marketing as it is focused on generating and increasing the revenue for
an organization, which ultimately becomes profit making for the company. Understanding the market conditions
and the unmet desires of the consumers along with the price that the consumer is willing to pay to fulfill his
unmet desires is the ultimate way of gaining success in the pricing strategy of a product or a service.
Do not forget the ultimate goal of the company is to maximize profit being in competition and sustaining the
competitive market. However to maximize profits along with retaining your consumer you have to make sure you
choose the right pricing strategy. The correct strategy will help you attain your objectives as an organization.

8. Pricing Strategies in Marketing

(a) Penetration Pricing or Pricing to Gain Market Share:
A few companies adopt these strategies in order to enter the market and to gain market share. Some
companies either provide a few services for free or they keep a low price for their products for a limited
period that is for a few months. This strategy is used by the companies only in order to set up their
customer base in a particular market. For example France telecom gave away free telephone connections
to consumers in order to grab or acquire maximum consumers in a given market. Similarly the Sky TV
gave away their satellite dishes for free in order to set up a market for them. This gives the companies a
start and a consumer base.
In the similar manner there are few companies that keep their product cost low as their introductory offer
that is a way of introducing themselves in the market and creating a consumer base. Similarly when the
companies want to promote a premier product or service they do raise the prices of the products and
services for that particular time.
(b) Economy pricing or No Frill Low Price
he pricing Strategies of these products are considered as no frill low prices where the promotion and the
marketing cost of a product are kept to a minimum. Economy pricing is set for a certain time where the
company does not spend more on promoting the product and service. For example the first few seats of
the airlines are sold very cheap in budget airlines in order to fill in the airlines the seats sold in the middle
are the economy seats where as the seats sold at the end are priced very high as that comes under the
premium price strategy. This strategy sees more economy sales during the time of recession. Economy
pricing can also be termed as or explained as budget pricing of a product or a service.
(c) Use of Psychological Pricing Strategies
Psychological pricing Strategies is an approach of gathering the consumer‘s emotional respond instead of
his rational respond. For example a company will price its product at Rs 99 instead of Rs 100. The price
of the product is within Rs 100 this makes the customer feel that the product is not very expensive. For
most consumers price is an indicating factor for buying or not buying a product.

(d) Pricing Strategies of Product Line

Products line pricing is defined as pricing a single product or service and pricing a range of products. Let
us take and understand this with the help of an example. When you go for a car wash you have an option
of choosing a car wash for Rs 200 or a car wash and a car wax for Rs 400 or the entire package including
a service at Rs 600. This strategy reflects a strategic cost of making a product popular and consumed by
the consumer with a fair increment over the range of the product or the service. In another example if
you buy a pack of chips and chocolate separately you end up paying a separate price for each product;
however of you buy a combo pack of the two you end up paying comparatively less price for both and if
you buy a combo of both in a higher quantity you end up paying even lesser.

(e) Pricing Optional Products

It is a general approach, if the companies decrease the price of a product or a service they do increase
their price for their other available optional services. Let‘s take a very simple and a common example of
a budget airline. The prices of their airfare are low however they will charge you extra if you want to
book a window seat, if you want to travel with your family and want to book an entire row together you
might have to end up paying extra charges as per the their guidelines, in case you have too much of
luggage to carry you will end up paying extra on the same, in fact you will end up paying extra charges
even if you need extra leg space in a budget airlines. You can say that even if the price of the air fare is
low you will end up paying more for the extra yet mandatory services that you will require as you travel.

(f) Pricing of Captive Products

Captive products have products that compliment the products without which the main product is of no
use or is useless. For example an inkjet printer is of no use without its cartridge it will not work and have
no value and a plastic razor will have no value without its blades. If the company is manufacturing the
inkjet printer it will have to manufacture its cartridges and if the company is manufacturing a plastic
razor it will have to manufacture blades for the same. For a simple reason that any other company
cartridge will not fit into the inkjet printer and neither will any other companies blade fit into the plastic
razor. The consumer has no other option but to buy the complementary products from of the same
company. This increases the sales and the profit margin of the company anyways.
(g) Pricing for promotions
Promotional pricing is very common these days. You will find it almost everywhere. Pricing for
promoting a product is another very useful and helpful strategy. These promotion offers can include,
discount offers, gift or money coupons or vouchers, buy one and get one free, etc. to promote new and
even existing products companies do adopt such strategies where they roll out these offers to promote
their products. An old strategy yet it is one of the most successful pricing strategies till date. Reason of its
success is that the consumer considers buying the product and service for the offer that the consumer
receives.
(h) Pricing as Per Geographic Locations
For simple reasons such as the geographic location the companies do vary or change the price of the
product. Why does location of the market affect the price of the product? The reasons can be many well
some are scarcity of the product or the raw material of the product, the shipping cost of the product, taxes
differ in a few countries, difference in the currency rate for products, etc.

(i) Value Pricing a Product

Let me first be clear about what value pricing means, value pricing is reducing the price of a product due
to external factors that can affect the sales of the product for example competition and recession; value
pricing does not mean that the company has added something or increased the value of a product. When
the company is afraid of factors such as competition or recession affecting their sales and profits the
company considers value pricing.
For example McDonalds the famous food chain has started value meals for their consumer since they
have started facing competition with other fast food chains. They offer a meal or a combination of a few
products as a lower price where the consumer feels emotionally content and continues to buy their
products.

(j) Pricing of Premium Products

Well this strategy works just the other way round. Premium products are priced higher due to their
unique branding approach. A high price for premium products is an extensive competitive advantage to
the manufacturer as the high price for these products assures them that they are safe in the market due to
their relatively high price. Premium pricing can be charged for products and services such as precious
jewelry, precious stones, luxurious services, cruses, luxurious hotel rooms, business air travel, etc. The
higher the cost the more will be the value of the product amongst that class of audience.

(k) Skim-the-cream Pricing.:

Market cream is obtained when skimming pricing policy is adopted. This pricing strategy is deliberately
adopted by the manufacturer of a new product to build up the image of quality and prestige for this new
product. Under the skimming pricing policy, there is a high pricing for the new product. Every product
has a life cycle. In the earlier stages of the life cycle of the new product, there is high promotional
expenditure and high price strategy may be justified.
 9. Channels of distribution - Concept
Various marketing intermediaries are used in transferring the products from the hands of producers to the final
consumers or industrial users. These marketing intermediaries carry alternate names such as wholesalers,
distributors, retailers, franchised dealers, jobbers, authorised dealers and agents. Such marketing intermediaries
compromise the distribution channel. These distribution channels minimize the gap between point of production
and point of consumption, and thereby create place, time and possession utilities

10. Channels of distribution - Meaning

The goods are produced at one place but the customers are scattered over a wide geographical area. Thus, it is
very difficult for a producer to distribute his products all over the country. Therefore, he takes the help of some
intermediaries to distribute his goods. For example, Maruti cars are manufactured at Gurgaon but are available all
over the country with the help of intermediaries.
Channel of distribution refers to those people, institutions or merchants who help in the distribution of goods and
services.
Philips Kotler defines channel of distribution as ―a set of independent organisations involved in the process of
making a product or service available for use or consumption‖.
Channels of distribution bring economy of effort. They help to cover a vast geographical area and also bring
efficiency in distribution including transportation and warehousing. Retailers, Wholesalers are the common
channels of distribution.
Channels of distribution provide convenience to customer, who can get various items at one store. If there were
no channels of distribution, customer would have faced a lot of difficulties.

11. Functions of Distribution Channels:

Following are the main functions performed by the distribution channels:
(a) Sorting: Middlemen obtain the supplies of goods from various suppliers and sort them out into similar
groups on the basis of size, quality etc.
(b) Accumulation: In order to ensure a continuous supply of goods, middlemen maintain a large volume of
stock.
(c) Allocation: It involves packing of the sorted goods into small marketable lots like 1Kg, 500 gms, 250 gms
etc.
(d) Assorting: Middlemen obtain a variety of goods from different manufacturers and provide them to the
customers in the combination desired by them. For example, rice from Dehradun & Punjab.
(e) Product Promotion: Sales promotional activities are mostly performed by the producer but sometimes
middlemen also participate in these activities like special displays, discounts etc.
(f) Negotiation: Middlemen negotiate the price, quality, guarantee and other related matters about a product
with the producer as well as customer.
(g) Risk Taking: Middlemen have to bear the risk of distribution like risk from damage or spoilage of goods
etc. when the goods are transported from one place to another or when they are stored in the god-owns.
 12. Types of Distribution Channels:
Broadly, Channel of distribution is of two types viz., (1) Direct Channel (2) Indirect Channel.
1. Direct Channel or Zero Level Channels:
When the producer or the manufacturer directly sells the goods to the customers without involving any
middlemen, it is known as direct channel or zero level channel. It is the simplest and the shortest mode of
distribution. Selling through post, internet or door to door selling etc. are the examples of this channel. For
example, Mc Donalds, Bata, Mail order etc.
Methods of Direct Channel are:
(a) Door to door selling
(b) Internet selling
(c) Mail order selling
(d) Company owned retail outlets
(e) Telemarketing
2. Indirect Channels:
When a manufacturer or a producer employs one or more middlemen to distribute goods, it is known as indirect
channel.
Following are the main forms of indirect channels:
(a) Manufacturer-Retailer-Consumer (One Level Channel):
This channel involves the use of one middleman i.e. retailer who in turn sells them to the ultimate
customers. It is usually adopted for speciality goods. For example Tata sells its cars through company
approved retailers.
Manufacturer→ Retailer→ Consumer
(b) Manufacturer-Wholesaler-Retailer-Customer (Two level channels):
Under this channel, wholesaler and retailer act as a link between the manufacturer and the customer. This
is the most commonly used channel for distributing goods like soap, rice, wheat, clothes etc.
Manufacturer→ Wholesaler→ Retailer→ Customer
(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer (Three level channels):
This level comprises of three middlemen i.e. agent, wholesaler and the retailer. The manufacturers
supply the goods to their agents who in turn supply them to wholesalers and retailers. This level is
usually used when a manufacturer deal in limited products and yet wants to cover a wide market.
Manufacturer → Agent → Wholesaler → Retailer → Consumer

13. Factors Determining Choice of Channels of

Distribution:
Following are the main factors which help in determining the channels of distribution:
1. Product Related Factors:
Following are the important product related considerations in deciding on channels of distribution:
(a) Nature of Product:
In case of industrial goods like CT scan machine, short channels like zero level channel or first level channel
should be preferred because they are usually technical, expensive, made to order and purchased by few buyers.
Consumer goods Ike LCD, refrigerator can be distributed through long channels as they are less expensive, not
technical and frequently purchased.
(b) Perishable and Non- Perishable Products:
Perishable products like fruits or vegetables are distributed through short channels while non perishable products
like soaps, oils, sugar, salt etc. require longer channels.
(c) Value of Product:
In case of products having low unit value such as groceries, long channels are preferred while those with high unit
value such as diamond jewellery short channels are used.
(d) Product Complexity:
Short channels are preferred for technically complex goods like industrial or engineering products like machinery,
generators like torches while non complex or simple ones can be distributed through long channels.

2. Company Characteristics:
Following are the main Company Characteristics offering choice of channel of distribution:
(a) Financial Strength:
The companies having huge funds at their disposal go for direct distribution. Those without such funds go for
indirect channels.
(b) Control:
Short channels are used if management wants greater control on the channel members otherwise a company can
go in for longer channels.

3. Competitive Factors:
Policies and channels selected by the competitors also affect the choice of channels. A company has to decide
whether to adopt the same channel as that of its competitor or choose another one. For example, if Nokia has
selected a particular channel say Big Bazaars for sale of their hand sets, other firms like Samsung and LG have
also selected similar channels.

4. Market Factors:
Following are the important market factors affecting choice of channel of distribution:
(a) Size of Market:
If the number of customers is small like in case of industrial goods, short channels are preferred while if the
number of customers is high as in case of convenience goods, long channels are used.
(b) Geographical Concentration:
Generally, long channels are used if the consumers are widely spread while if they are concentrated in a small
place, short channels can be used.
(c) Quantity Purchased:
Long channels are used in case the size of order is small while in case of large orders, direct channel may be used.

5. Economic Factor:
Economic factors such as economic conditions and legal regulations also play a vital role in selecting channels of
distribution. For example, in a depressed economy, generally shorter channels are selected for distribution.
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) means the process of selecting the pricing objectives, determining the possible range
of prices, developing price strategies, setting the final price, and implementing and controlling
pricing decision.
(a) Pricing
(b) Promotion
(c) Place
(d) Product
(2) According to W.J.Stanon, ―_____________is the functions of determining the products value in
monetary terms.‖
(a) Pricing
(b) Promotion
(c) Place
(d) Product
(3) Which of the following is the pricing objectives?
(a) Profit Oriented Objectives
(b) Sales Oriented Objectives
(c) Status Oriented Objectives
(d) All of the above
(4) Which of the following is the pricing importance?
(a) Profit Margin
(b) Sales Volume
(c) Position & Market share
(d) All of the above
(5) Significance of pricing and marketing strategy are as follows:
(a) The planed market position for the service product
(b) The stage of the life – cycle of the service product
(c) Elasticity of demand
(d) All of the above
(6) Significance of pricing and marketing strategy are as follows:
(a) The competitive situation
(b) The strategic role of price.
(c) Price as an Indicator of Service Quality:
(d) All of the above
(7) Internal Factors affecting price of a product are:
(a) Cost
(b) The predetermined objectives
(c) Image of the firm
(d) All of the above
(8) Internal Factors affecting price of a product are:
(a) Product life cycle
(b) Credit period offered
(c) Promotional activity
(d) All of the above
(9) External Factors affecting price of a product are:
(a) Competition
(b) Consumers
(c) Government control
(d) All of the above
(10) External Factors affecting price of a product are:
(a) Economic conditions:
(b) Channel intermediaries:
(c) Competition:
(d) All of the above
(11) is a way of finding a competitive price of a product or a service.
(a) Pricing strategy
(b) Sales Promotion
(c) Advertising
(d) Branding
(12) Some companies either provide a few services for free or they keep a low price for their products
for a limited period that is for a few months. This strategy is called__________
(a) Penetration Pricing or Pricing to Gain Market Share:
(b) Economy pricing or No Frill Low Price
(c) Psychological Pricing Strategies
(d) Pricing Strategies of Product Line
(13) Under ____________pricing Strategies, the promotion and the marketing cost of a product are
kept to a minimum. Economy pricing is set for a certain time where the company does not spend
more on promoting the product and service.
(a) Penetration Pricing or Pricing to Gain Market Share:
(b) Economy pricing or No Frill Low Price
(c) Psychological Pricing Strategies
(d) Pricing Strategies of Product Line
(14) is an approach of gathering the consumer‘s emotional respond instead of his rational
respond. For example a company will price its product at Rs 99 instead of Rs 100.
(a) Penetration Pricing or Pricing to Gain Market Share:
(b) Economy pricing or No Frill Low Price
(c) Psychological Pricing Strategies
(d) Pricing Strategies of Product Line
(15) Under ____________ pricing Strategies, if you buy a pack of chips and chocolate separately you
end up paying a separate price for each product; however of you buy a combo pack of the two
you end up paying comparatively less price for both and if you buy a combo of both in a higher
quantity you end up paying even lesser.
(a) Penetration Pricing or Pricing to Gain Market Share:
(b) Economy pricing or No Frill Low Price
(c) Use of Psychological Pricing Strategies
(d) Pricing Strategies of Product Line
(16) Under _____________approach, if the companies decrease the price of a product or a service
they do increase their price for their other available optional services.
(a) Pricing Optional Products
(b) Pricing of Captive Products
(c) Pricing for promotions
(d) Pricing as Per Geographic Locations
(17) Under _______________, price of products that compliment the products without which the
main product is of no use or is useless are charged high to increases the sales and the profit.
(a) Pricing Optional Products
(b) Pricing of Captive Products
(c) Pricing for promotions
(d) Pricing as Per Geographic Locations
(18) Under _________strategy, promotion offers can include, discount offers, gift or money coupons
or vouchers, buy one and get one free, etc.
(a) Pricing Optional Products
(b) Pricing of Captive Products
(c) Pricing for promotions
(d) Pricing as Per Geographic Locations
(19) Under _________strategy, For simple reasons the companies do vary or change the price of the
product for different places.
(a) Pricing Optional Products
(b) Pricing of Captive Products
(c) Pricing for promotions
(d) Pricing as Per Geographic Locations
(20) is reducing the price of a product due to external factors that can affect the sales of
the product for example competition and recession
(a) Value Pricing a Product
(b) Pricing of Premium Products
(c) Skim-the-cream Pricing.:
(d) Pricing of Captive Products
(21) Under _________strategy, Premium products are priced higher due to their unique branding
approach
(a) Value Pricing a Product
(b) Pricing of Premium Products
(c) Skim-the-cream Pricing.:
(d) Pricing of Captive Products
(22) Under the _____________ policy, there is a high pricing for the new product
(a) Value Pricing a Product
(b) Pricing of Premium Products
(c) Skim-the-cream Pricing.:
(d) Pricing of Captive Products
(23) Distribution channels minimize the gap between point of production and point of consumption,
and thereby create place, time and possession utilities
(a) Distribution channels
(b) Sales Promotion
(c) Marketing Strategy
(d) Advertisement
(24) Channel of distribution refers to those people, institutions or merchants who help in the
distribution of goods and services.
(a) Distribution channels
(b) Sales Promotion
(c) Marketing Strategy
(d) Advertisement
(25) Philips Kotler defines ___________ as ―a set of independent organisations involved in the process
of making a product or service available for use or consumption‖.
(a) Distribution channels
(b) Sales Promotion
(c) Marketing Strategy
(d) Advertisement
(26) Which of the Following are the main functions performed by the distribution channels:
(a) Sorting
(b) Accumulation
(c) Allocation
(d) All of the above
(27) Which of the Following are the main functions performed by the distribution channels:
(a) Product Promotion:
(b) Negotiation:
(c) Risk Taking:
(d) All of the above
(28) When the producer or the manufacturer directly sells the goods to the customers without
involving any middlemen, it is known as _____________
(a) direct channel or zero level channel.
(b) Indirect Channels:
(c) Marketing channels
(d) None of the above
(29) Methods of Direct Channel are:
(a) Door to door selling
(b) Internet selling
(c) Mail order selling
(d) All of the above
(30) Methods of Direct Channel are:
(a) Selling through post,
(b) Company owned retail outlets
(c) Telemarketing
(d) All of the above
(31) When a manufacturer or a producer employs one or more middlemen to distribute goods, it is
known as ______________
(a) Direct channel
(b) zero level channel.
(c) Indirect Channels
(d) Marketing channels
(32) This channel involves the use of one middleman i.e. retailer who in turn sells them to the
ultimate customers.
(a) Manufacturer-Retailer-Consumer
(b) Manufacturer-Wholesaler-Retailer-Customer
(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer
(d) None of the above
(33) Under this channel, wholesaler and retailer act as a link between the manufacturer and the
customer.
(a) Manufacturer-Retailer-Consumer
(b) Manufacturer-Wholesaler-Retailer-Customer
(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer
(d) None of the above
(34) This level comprises of three middlemen i.e. agent, wholesaler and the retailer.
(a) Manufacturer-Retailer-Consumer
(b) Manufacturer-Wholesaler-Retailer-Customer
(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer
(d) None of the above
(35) Which of the Following are the main factors which help in determining the channels of
distribution:
(a) Product Related Factors
(b) Competitive Factors
(c) Market Factors
(d) All of the above
(36) Which of the Following are the important product related considerations in deciding on
channels of distribution:
(a) Nature of Product:
(b) Perishable and Non- Perishable Products:
(c) Value of Product:
(d) All of the above
(37) Following are the important market factors affecting choice of channel of distribution:
(a) Size of Market:
(b) Geographical Concentration:
(c) Quantity Purchased:
(d) All of the above
(38) _________such as economic conditions and legal regulations also play a vital role in selecting
channels of distribution. For example, in a depressed economy, generally shorter channels are
selected for distribution.
(a) Economic factors
(b) Market Factors
(c) Competitive Factors
(d) Product Related Factors
(39) In case of industrial goods like CT scan machine,_________ channel should be preferred because
they are usually technical, expensive, made to order and purchased by few buyers.
(a) direct channel or zero level channel or 1st level channel.
(b) Indirect Channels:
(c) Long Channels
(d) 2nd Level channel
(40) Perishable products like fruits or vegetables are distributed through short channels
(a) direct channel or zero level channel or 1st level channel.
(b) Indirect Channels:
(c) Long Channels
(d) 2nd Level channel
(41) In case of products having high unit value such as diamond jewellery short channels are used.
(a) direct channel or zero level channel or 1st level channel.
(b) Indirect Channels:
(c) Long Channels
(d) 2nd Level channel
(42) In case of products having low unit value such as groceries, _________ are preferred
(a) direct channel
(b) zero level channel
(c) 1st level channel.
(d) Indirect Channels Or Long Channels OR 2nd Level channels
(43) In case of non perishable products like soaps, oils, sugar, salt etc. require __________
(a) direct channel
(b) zero level channel
(c) 1st level channel.
(d) Indirect Channels Or Long Channels OR 2nd Level channels
(44) are preferred for technically complex goods like industrial or engineering products
like machinery, generators
(a) direct channel or zero level channel or 1st level channel.
(b) Indirect Channels:
(c) Long Channels
(d) 2nd Level channel
 Unit 5: Promotion and Recent
developments in marketing:[Marks: 8]
Promotion: Nature and importance of promotion; Communication process; Types of promotion: advertising,
personal selling, public relations & sales promotion, and their distinctive characteristics. Recent developments in
marketing: Social Marketing, online marketing, direct marketing, services marketing, green marketing, Rural
marketing; Consumerism.

1. Promotion : Concept
The term ‗Promotion‘ originates from Latin term, promovere meaning to move forward. In this sense, promotion
is used to move forward a product in a channel of distribution.
In earlier days, sales promotion meant clearing out some old stocks or to put some extra pressure behind slow
moving products. It was totally sporadic and unplanned. It was then, only a minor activity related either to
advertising or to personal selling.
The importance of sales promotion in modern marketing has increased mainly on account of its ability in
promoting sales, preparing the ground for future expansion. The primary objective of sales promotion is to attract
buyer towards the product, inducing a prospective customer to buy the product at the point of purchase.
At the salesman‘s level, the objective of sales promotion is to achieve more sales. At the retailer‘s level, the
purpose of sales promotion is to sell a particular product of a manufacturer. At the consumer‘s level, the main
idea of a sales promotion is to enable the consumer to buy more of a product more frequently and also to
introduce new uses for the product.

2. Promotion: Definition:
Promotions refer to the entire set of activities, which communicate the product, brand or service to the user. The
idea is to make people aware, attract and induce to buy the product, in preference over others.
According to Philip Kotler, ―Promotion includes, advertising, personal selling, sales promotion and other
selling tools.‖
According to Stanston, ―Promotion compasses all the tools in the marketing mix whose major role is persuasive
communications.‖
Promotion is defined as the co-ordinated self-initiated efforts to establish channels of information and persuasion
to facilitate or foster the sale of goods or services, or the acceptance of ideas. Thus promotion is persuasive
communication to inform potential customers of the existence of products, to persuade and convince them that
those products have want satisfying capabilities.
3. Promotion: Nature and Characteristics of
Promotion
Promotion is a form of communication with an additional element of persuasion to accept ideas, products,
services and hence persuasive communication becomes the heart of promotion, the third element of marketing-
mix.
Promotion is an important marketing strategy and is the sparkplug of the marketing-mix. Promotion helps people
know that the right product at right price is available at the right place. In a competitive market, without
promotion, practically no sale is effected. Promotion is the process of marketing communication to inform,
persuade, remind and influence consumers in favour of a product or service.
Promotion has following three specific purposes:
(a) It communicates marketing information to consumers, users and resellers.
(b) It persuades and convinces the buyer and influences his/her behavior to take the desired action.
(c) Promotional efforts act as powerful tools of competition, providing the cutting edge of its entire marketing
programme.

4. Why Is Promotion Important for a Business?

Small and medium-sized businesses really need to understand the importance of promotional and marketing
strategies. Business promoting is an active process which needs to be very closely scrutinized for obtaining the
best results. You can utilize the manpower that you have to the fullest and come up with strategies to promote
your business and let it flourish.
Promotional strategies and marketing go hand in hand. Marketing your brand or product will include different
aspects of manufacturing, promoting and selling products to the customers. Promotion is a key element in putting
across the benefits of your product or service to the customers. Well-designed marketing and promotional
strategies ensure long-term success, bring in more customers and ensure profitability for businesses.

5. Role of Promotions
Promotion is the voice of your company which send out your brand‘s message loud and clear to the audience.
Various media platforms can be used to promote your company and brand. They include television, radio,
shopping outlets, billboards, magazines, and social media.
Various promotional strategies can be used to promote and market your business depending on the goals,
objectives and priorities of your company.
Without marketing promotions, your brand or service would not be able to garner the attention of the pre-
occupied customers.

6. Benefits/Importance of Promotion
Promoting your brand will help you in many different ways:
(a) Increase brand awareness
(b) Provide appropriate information
(c) Increase Customer Traffic
(d) Build sales and profits
Not only these but promotions will also help your company to introduce products easily in the ever-so-
competitive market.
(a) Increasing brand awareness – Promotions help in creating brand awareness. With the help of various media
like the television, billboards, radio or local newspaper news, you can spread across information about your
brand and company, which helps people to find out more about you and look into your products and make
purchases.
(b) Segment Identification – If your promotional and marketing strategy is loosely structured, it might not be
successful in targeting the ―right‖ audiences. Having a full-proof and well-thought-out promotional strategy
and marketing plan can help you identify different segments of consumers in the market and offer suitable
solutions for your clients.
(c) Increasing customer traffic – Also, promotion helps in helps in increasing customer traffic. The more you
 promote your brand, the more will the customers know about you and your company and the more will they
be interested in your products. Promotion can be done even by giving out free samples which works wonders
for customers! They try your product and ultimately, come to you and make purchases.
While promotional strategies are very much important, marketers and businesses must take into account a few
aspects in their marketing mix plan. It is essential that businesses make use of the right media tool to target their
customers. These days, when social media is the most effective tool on the online platform, promotional
strategies need to extend beyond radio, television and print.

7. Marketing Communication process: concept

Marketing communications process consist of integrated activities in which the targeted audience is identified and
a well coordinated promotional program is prepared to generate the desired response from the audience. Most
problems of preferences, image and immediate awareness in the target customers is focused by the marketing
communication. But there are certain limitations associated with the concept of communication. These limitations
include high cost and short term duration that cannot generate the desired results from the targeted customers.
In recent years Marketing Communication is used by most of marketers as building customer relationship at the
stages of pre-selling, selling, utilization, and post utilization. Due to differences in customers, different programs
of communications are developed for specific segments & niches.

8. Marketing Communication Process: Steps

There are certain steps that should be involved in the effective marketing communication process. The
marketing and promotional activities should focus on these steps in order to attract a huge portion of long run
customers. Following are the steps that make communication process effective.
(a) Identification of the Target audience
(b) Determination of the communication objectives
(c) Designing of Message
(d) Message Content
(e) Message Structure & Format
(f) Choosing Media
(g) Collecting Feedback

9. Objectives of Sales Promotion

1. To Introduce New Products
2. To attract New Customers
3. To Induce Present Customers to Repeat Purchase More
4. To Help the Firm Remain Competitive
5. To Increase Sales during Off Seasons
6. To Add to the Stock of the Dealers
7. To increase Loyalty
8. To Widen Usage
9. Informing
10. Persuading
11. Reminding
 10. Types of promotion:
(a) Personal Selling: Involved personal contact between company rep and those who make purchase
decisions (e.g. consumers, manager or company buyer). Selling occurs face-to-face or via telephone and
also now online via video conferencing or text chat
(b) Advertising: Non personal, mostly paid promotions often using mass media to deliver the message. The
variations of advertising include; TV, Newspaper, Magazine, Internet and Outdoor advertising (E.g.
billboard, posters, buses, etc.)
(c) Public Relations: This type of promotion uses third-party sources and particularly the news media, to
offer a favorable mention of the marketer's company or product without direct payment to the publisher
of the information.
(d) Sales Promotion: Involves the use of special short-term techniques, often in the form of incentives, to
encourage customers to respond or undertake some activity. (E.g. Sales flyers/ price discounts, Coupons,
Samples/giveaways, special events and point of sale)
(e) Direct Marketing: Involves sending mail direct to the customer, Direct mail can be cheaper than
traditional advertising; you can tailor your message, add more information and better target your market.
Typically Direct mail advertising should be; personal, creative, informal and selectively directed (not
sent to everyone in a database).
(f) Sponsorship: Supporting an event, activity or organization by providing money or other resources that
is of value to the sponsored event. This is usually in return for advertising space at the event or as apart of
the publicity for the event. (E.g. TV/ Radio, Sports, Arts, Events, Charity/Causes.)
(g) Digital Communications: Any promotion made for web, cell phone or digital device (E.g. tablets, game
systems etc.) These include; Online advertising, mobile communications, social media, consumer-
generated content and viral strategies.

11. Advertising:
Advertisement can be defined as the ―paid form of non-personal presentation and promotion of idea, goods or
services by an identified sponsor‖.
It is an impersonal presentation where a standard or common message regarding the merits, price and availability
of product or service is given by the producer or marketer. The advertisement builds pull effect as advertising
tries to pull the product by directly appealing to customer to buy it.
Characteristics of Advertisement:
1. Paid Form: The sponsor has to pay for advertising he has to bear a cost to communicate with customers.
2. Impersonality: There is no face to face contact between customers and advertiser. It creates a monologue
and not a dialogue.
3. Identified Sponsor: Advertisement is given by an identified company or firm or individual.
Advantages/Merits of Advertisement:
(a) Reach:
(b) Choice:
(c) Legitimacy:
(d) Expressiveness:
(e) Economy:
(f) Enhancing Customer Satisfaction and Confidence:
Disadvantages of Advertising:
(a) It is an Impersonal Communication/Less Forceful:
(b) Advertising is less effective:
(c) Difficulty in Media Choice:
(d) Inflexibility:
(e) Lack of Feedback:

Criticism of Advertising:
(a) Effect of Advertising on Values, Materialism and Life Styles:
(b) Advertising Encourages Sale of Inferior and Dubious Products:
(c) Advertising Confuses Rather than Helps:
(d) Some Advertisements are in Bad Taste:
(e) Advertisement Costs are passed on to the Customers in the Form of Higher Price:

12. Sales Promotion:

Sales promotion refers to short term use of incentives or other promotional activities that stimulate the customer
to buy the product. Sales promotion techniques are very useful because they bring:
(a) Short and immediate effect on sale.
(b) Stock clearance is possible with sales promotion.
(c) Sales promotion techniques induce customers as well as distribution channels.
(d) Sales promotion techniques help to win over the competitor.
Sales Promotion Techniques for Customers:
(a) Rebate:
(b) Discounts:
(c) Refunds:
(d) Premiums or Gifts/or Product Combination:
(e) Quantity Deals:
(f) Samples:
(g) Contests:
(h) Instant Draws and Assigned Gifts:
(i) Lucky Draw:
(j) Usable Benefits:
(k) Full Finance @ 0%:
(l) Packaged Premium:
(m) Container Premium:
Merits of Sales Promotion:
(a) Attention Value:
(b) Useful in New Product Launch:
(c) Synergy in Total Promotion Efforts:
(d) Aid to other Promotion Tools:
Demerits of Sales Promotion:
(e) Reflect Crisis:
(f) Spoil Product Image:
 13. Personal Selling:
Personal selling means selling personally. This involves face to face interaction between seller and buyer for the
purpose of sale. The personal selling does not mean getting the prospects to desire what seller wants but the
concept of personal selling is also based on customer satisfaction.
Features of Personal Selling:
(a) Personal Interaction:
(b) Two Way Communication:
(c) Better Response:
(d) Relationship:
(e) Better Convincing:
Role of Personal Selling:
1. Importance to Businessmen:
(a) Effective Promotion Tool:
(a) Flexible Tool:
(b) Minimum Wastage of Efforts:
(c) Consumer Attention:
(d) Relationship:
(e) Personal Support:
(f) Very Effective to Introduce New Product:
2. Importance to Customers:
(a) Helps in Identifying Needs:
(b) Latest Market Information:
(c) Expert Advice:
(d) Induces Customers:
3. Importance to Society:
(a) Converts Latest Demand into Effective Demand:
(b) Employment Opportunities:
(c) Career Opportunities:
(d) Mobility of Sales Persons:
(e) Product Standardisation:

14. Public Relations:

Apart from four major elements of marketing mix, another important tool of marketing is maintaining Public
Relations. In simple words, a public relations means maintaining public relations with public. By maintaining
public relations, companies create goodwill.
Public relations evaluate public attitudes; identify the policies and procedures of an organisation with the public
interest to earn public understanding and acceptance.
Public does not mean only customers, but it includes shareholders, suppliers, intermediaries, customers etc. The
firm‘s success and achievement depends upon the support of these parties for example, firm needs active support
of middle men to survive in market, it must have good relations with existing shareholders who provide capital.
The consumers‘ group is the most important part of public as success of business depends upon the support and
demand of customers only.
Role, Significance, advantages of public relations:
(a) Public relations are significant in the following ways:
(b) Help to convey the policies and programmes of the organisation.
(c) Help to collect information about public opinion about the organisation, management activities etc.
(d) To overcome the complaints and dislikes of public.
(e) To mould people‘s attitude in favour of organisation.
(f) To maintain goodwill and understanding between organisation and public.
(g) To build an image of the organisation.

Ways/Methods and Tools of Public Relations:

(a) News:
(b) Speeches:
(c) Events:
(d) Written Materials:
(e) Public Service Activities:

15. Recent developments in marketing:

(a) More Emphasis on Quality, Value, and Customer Satisfaction:
(b) More Emphasis on Relationship Building and Customer Retention:
(c) More Emphasis on Managing Business Processes and Integrated Business Functions:
(d) More Emphasis on Global Thinking and Local Market Planning:
(e) More Emphasis on Strategic Alliances and Networks:
(f) More Emphasis on Direct and Online Marketing:
(g) More Emphasis on Services Marketing:
(h) More Emphasis on High-tech Industries:
(i) More Emphasis on Ethical Marketing Behaviour:
(j) Other issues:
 Craze for international standards and emphasis on quality, value and customer satisfaction
 Changed attitude toward competition. They compete not for maximum gains but for maximum
offers to customers.
 Relationship marketing at both levels at internal functions of organisation and at outside with
service providers, to satisfy customers.
 Concept of global and complex customers.
 Marketing department is placed in the center of management. It enjoys unique and dominant status
in organisation.
 Use of latest technology for survey and research.
 More emphasis on after-sales services.
 Entertaining value in advertising, etc.
 16. Social Marketing,
Social marketing is an approach used to develop activities aimed at changing or maintaining people‘s behaviour
for the benefit of individuals and society as a whole.
Combining ideas from commercial marketing and the social sciences, social marketing is a proven tool for
influencing behaviour in a sustainable and cost-effective way.
 It helps you to decide:
 Which people to work with
 What behaviour to influence
 How to go about it
 How to measure it
Social marketing is not the same as social media marketing.
Benefits of social Marketing:
(a) Behaviour : The goal of social marketing is always to change or maintain how people behave – not
what they think or how aware they are about an issue. If your goal is only to increase awareness or
knowledge, or change attitudes, you are not doing social marketing.
(b) Benefits people and society : This is the value – perceived or actual – as it is defined by the people who
are targeted by a social marketing intervention. It is not what is assumed to benefit them by the
organisation that is trying to encourage the behaviour change.
(c) Policy: social marketing helps to ensure policy is based on an understanding of people‘s lives, making
policy goals realistic and achievable. Policy example: water rationing in Jordan
(d) Strategy: social marketing enables you to target your resources cost-effectively, and select interventions
that have the best impact over time. Strategy example: lung disease strategy in England
(e) Implementation and delivery: social marketing enables you to develop products, services and
communications that fit people‘s needs and motivations. Delivery example: child car seats in Texas

17. Online marketing,

Online marketing is a set of powerful tools and methodologies used for promoting products and services through
the internet. Online marketing includes a wider range of marketing elements than traditional business marketing
due to the extra channels and marketing mechanisms available on the internet.
Online marketing can deliver benefits such as:
(a) Growth in potential
(b) Reduced expenses
(c) Elegant communications
(d) Better control
(e) Improved customer service
(f) Competitive advantage
Online marketing is also known as internet marketing, web marketing, digital marketing and search engine
marketing (SEM).
 18. Direct marketing,
Direct marketing is a very popular and widely used method of informing people about products and services. It's
a method of contacting customers and potential customers personally, rather than having an indirect medium
between the company and the consumer, such as magazine ads or billboards that are seen by the general public.
Direct marketing can take many forms, including mail, telephone calls, emails, brochures, and coupons. The
information is usually very broad and meant for a general audience. Direct marketing works best for products that
have a wide appeal.
Direct marketing is a type of advertising campaign that seeks to elicit an action (such as an order, a visit to a store
or website or a request for further information) from a selected group of consumers in response to communication
from a marketer. The communication itself may be in any of a variety of formats, including postal mail,
telemarketing, direct email marketing and point-of-sale interactions. Customer responses should be measurable:
For example, the marketer should be able to determine whether or not a customer offered a discount for online
shopping takes advantage of the offer.

19. Services marketing,

The world economy nowadays is increasingly characterized as a service economy. This is primarily due to the
increasing importance and share of the service sector in the economies of most developed and developing
countries. In fact, the growth of the service sector has long been considered as indicative of a country‘s economic
progress.
Definition and characteristics of Services
The American Marketing Association defines services as - ―Activities, benefits and satisfactions which are
offered for sale or are provided in connection with the sale of goods.‖
The defining characteristics of a service are:
(a) Intangibility: Services are intangible and do not have a physical existence. Hence services cannot be
touched, held, tasted or smelt. This is most defining feature of a service and that which primarily
differentiates it from a product. Also, it poses a unique challenge to those engaged in marketing a service
as they need to attach tangible attributes to an otherwise intangible offering.
(b) Heterogeneity/Variability: Given the very nature of services, each service offering is unique and
cannot be exactly repeated even by the same service provider. While products can be mass produced and
be homogenous the same is not true of services. eg: All burgers of a particular flavor at McDonalds are
almost identical. However, the same is not true of the service rendered by the same counter staff
consecutively to two customers.
(c) Perishability: Services cannot be stored, saved, returned or resold once they have been used. Once
rendered to a customer the service is completely consumed and cannot be delivered to another customer.
eg: A customer dissatisfied with the services of a barber cannot return the service of the haircut that was
rendered to him. At the most he may decide not to visit that particular barber in the future.
(d) Inseparability/Simultaneity of production and consumption: This refers to the fact that services are
generated and consumed within the same time frame. Eg: a haircut is delivered to and consumed by a
customer simultaneously unlike, say, a takeaway burger which the customer may consume even after a
few hours of purchase. Moreover, it is very difficult to separate a service from the service provider. Eg:
the barber is necessarily a part of the service of a haircut that he is delivering to his customer.
Types of Services
(a) Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or the services of
lawyer or teacher.
(b) Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg:
Home delivery options offered by restaurants above a minimum bill value.

20. Green marketing,

Green marketing refers to the process of selling products and/or services based on their environmental benefits.
Such a product or service may be environmentally friendly in itself or produced in an environmentally friendly
way, such as:
 Being manufactured in a sustainable fashion
 Not containing toxic materials or ozone-depleting substances
 Able to be recycled and/or is produced from recycled materials
 Being made from renewable materials (such as bamboo, etc.)
 Not making use of excessive packaging
 Being designed to be repairable and not "throwaway"
Examples of Green Marketing
 Grocers that advertise organic produce. The organic food industry has grown in leaps and bounds as
consumers express an increased preference for non genetically modified foods that are free of pesticides.
 Restaurants that promote "locally sourced" meats, vegetables, fish, wines, etc.

21. Rural marketing;

Rural marketing is a process of developing, pricing, promoting, and distributing rural specific goods and services
leading to desired exchange with rural customers to satisfy their needs and wants, and also to achieve
organizational objectives.
Concept of Rural Marketing:
The concept of Rural Marketing in India Economy has always played an influential role in the lives of people. In
India, leaving out a few metropolitan cities, all the districts and industrial townships are connected with rural
markets. The rural market in India generates bigger revenues in the country as the rural regions comprise of the
maximum consumers in this country. The rural market in Indian economy generates almost more than half of the
country‘s income. Rural marketing in Indian economy can be classified under two broad categories.

22. Consumerism.
Consumerism is a cultural model that promotes the acquisition of goods, and especially the purchase of goods, as
a vehicle for personal satisfaction and economic stimulation
When a greater proportion of citizens buy goods and services in excess of their needs, they consume more, they
spend more, and that can create a cycle of demand leading to greater production and to greater employment,
which leads to even more consumption.
Growing consumerism can also be seen with people buying goods and services to publicly display economic
power, buying them "just for fun and pleasure" and buying without a plan or a budget,
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) The term ‗Promotion‘ originates from Latin term, _________ , meaning to move forward.
(a) promovere
(b) Promocare
(c) Promodere
(d) Promohere
(2) refer to the entire set of activities, which communicate the product, brand or service
to the user. The idea is to make people aware, attract and induce to buy the product, in
preference over others.
(a) Promotion
(b) Marketing
(c) Selling
(d) Advertising
(3) According to Philip Kotler, ―___________ includes, advertising, personal selling, sales promotion
and other selling tools.‖
(a) Promotion
(b) Marketing
(c) Selling
(d) Advertising
(4) According to Stanston, ― ___________ compasses all the tools in the marketing mix whose major
role is persuasive communications.‖
(a) Promotion
(b) Marketing
(c) Selling
(d) Advertising
(5) Promotion is defined as the co-ordinated self-initiated efforts to establish channels of
information and persuasion to facilitate or foster the sale of goods or services, or the acceptance
of ideas.
(a) Promotion
(b) Marketing
(c) Selling
(d) Advertising
(6) ___________is persuasive communication to inform potential customers of the existence of
products, to persuade and convince them that those products have want satisfying capabilities.
(a) Promotion
(b) Marketing
(c) Selling
(d) Advertising
(7) Promotion has following specific purposes:
(a) It communicates marketing information to consumers, users and resellers.
(b) It persuades and convinces the buyer and influences his/her behavior to take the desired action.
(c) Promotional efforts act as powerful tools of competition, providing the cutting edge of its entire
marketing programme.
(d) All of the above
(8) Promotion has following benefits______
(a) Increase brand awareness
(b) Provide appropriate information
(c) Increase Customer Traffic
(d) All of the above
(9) consist of integrated activities in which the targeted audience is identified and a well
coordinated promotional program is prepared to generate the desired response from the
audience.
(a) Marketing communications process
(b) Sales Promotion
(c) Advertisement
(d) Publicity
(10) In recent years ______________ is used by most of marketers as building customer relationship
at the stages of pre-selling, selling, utilization, and post utilization
(a) Marketing communications process
(b) Sales Promotion
(c) Advertisement
(d) Publicity
(11) Following are the steps that make communication process effective.
(a) Identification of the Target audience
(b) Determination of the communication objectives
(c) Designing of Message
(d) All of the above
(12) Following are the steps that make communication process effective.
(a) Message Structure & Format
(b) Choosing Media
(c) Collecting Feedback
(d) All of the above
(13) Following are the Objectives of Sales Promotion?
(a) To Introduce New Products
(b) To attract New Customers
(c) To Induce Present Customers to Repeat Purchase More
(d) All of the above
(14) Following are the Objectives of Sales Promotion?
(a) To Help the Firm Remain Competitive
(b) To Increase Sales during Off Seasons
(c) To Add to the Stock of the Dealers
(d) All of the above
(15) Following are the Objectives of Sales Promotion?
(a) To increase Loyalty
(b) To Widen Usage
(c) Informing
(d) All of the above
(16) Following are the types of Promotion?
(a) Personal Selling:
(b) Advertising:
(c) Public Relations:
(d) All of the above
(17) Following are the types of Promotion?
(a) Sales Promotion:
(b) Sponsorship:
(c) Digital Communications:
(d) All of the above
(18) __________, Involve personal contact between company representative and those who make
purchase decisions (e.g. consumers, manager or company buyer). Selling occurs face-to-face or
via telephone and also now online via video conferencing or text chat
(a) Personal Selling
(b) Public Relations
(c) Sales Promotion
(d) Direct Marketing
(19) involves Non personal, mostly paid promotions often using mass media to deliver
the message
(a) Personal Selling
(b) Advertising
(c) Public Relations
(d) Sales Promotion
(20) This type of promotion uses third-party sources and particularly the news media, to offer
a favorable mention of the marketer's company or product without direct payment to the
publisher of the information.
(a) Personal Selling
(b) Advertising
(c) Public Relations
(d) Sales Promotion
(21) Involves the use of special short-term techniques, often in the form of incentives, to encourage
customers to respond or undertake some activity. (E.g. Sales flyers/ price discounts, Coupons,
Samples/giveaways, special events and point of sale)
(a) Personal Selling
(b) Advertising
(c) Public Relations
(d) Sales Promotion
(22) ____________Involves sending mail direct to the customer, Direct mail can be cheaper than
traditional advertising; you can tailor your message, add more information and better target
your market.
(a) Personal Selling
(b) Sales Promotion
(c) Direct Marketing
(d) Public Relations
(23) ______________is supporting an event, activity or organization by providing money or other
resources that is of value to the sponsored event. This is usually in return for advertising space
at the event or as apart of the publicity for the event.
(a) Digital Communications
(b) Sponsorship
(c) Public Relations
(d) Sales Promotion
(24) Involves Any promotion made for web, cell phone or digital device (E.g. tablets, game systems
etc.)
(a) Digital Communications
(b) Sponsorship
(c) Public Relations
(d) Sales Promotion
(25) __________include Online advertising, mobile communications, social media, consumer-
generated content and viral strategies
(a) Digital Communications
(b) Sponsorship
(c) Public Relations
(26) can be defined as the ―paid form of non-personal presentation and promotion of idea,
goods or services by an identified sponsor‖.
(a) Advertisement
(b) Sales Promotion
(c) Direct Marketing
(d) Personal Selling
(27) _________is an impersonal presentation where a standard or common message regarding the
merits, price and availability of product or service is given by the producer or marketer.
(a) Advertisement
(b) Sales Promotion
(c) Direct Marketing
(d) Personal Selling
(28) Characteristics of Advertisement are :
(a) Paid Form:
(b) Impersonality:
(c) Identified Sponsor:
(d) All of the above
(29) Advantages/Merits of Advertisement are:
(a) Reach:
(b) Choice:
(c) Legitimacy:
(d) All of the above
(30) Advantages/Merits of Advertisement are:
(a) Expressiveness:
(b) Economy:
(c) Enhancing Customer Satisfaction and Confidence:
(d) All of the above
(31) Disadvantages of Advertising are
(a) It is an Impersonal Communication/Less Forceful:
(b) Advertising is less effective:
(c) Difficulty in Media Choice:
(d) All of the above
(32) Criticism of Advertising are:
(a) Effect of Advertising on Values, Materialism and Life Styles:
(b) Advertising Encourages Sale of Inferior and Dubious Products:
(c) Advertising Confuses Rather than Helps:
(d) All of the above
(33) refers to short term use of incentives or other promotional activities that stimulate the
customer to buy the product.
(a) Personal Selling
(b) Advertising
(c) Public Relations
(d) Sales Promotion
(34) Sales promotion techniques are very useful because they bring:
(a) Short and immediate effect on sale.
(b) Stock clearance is possible with sales promotion.
(c) Sales promotion techniques induce customers as well as distribution channels.
(d) All of the above
 (35) Rebate, Discounts, Refunds, Premiums or Gifts/or Product Combination:, Quantity Deals,
Samples:, Contests, Instant Draws and Assigned Gifts, Lucky Draw, Full Finance @ 0%,
Packaged Premium etc are techniques of ____________
(a) Personal Selling
(b) Advertising
(c) Public Relations
(d) Sales Promotion
(36) Merits of Sales Promotion are
(a) Attention Value
(b) Useful in New Product Launch
(c) Synergy in Total Promotion Efforts
(d) All of the above
(37) Features of Personal Selling are
(a) Personal Interaction
(b) Two Way Communication
(c) Better Response
(d) All of the above
(38) Role of Personal Selling:
(a) Effective Promotion Tool
(b) Flexible Tool
(c) Minimum Wastage of Efforts
(d) All of the above
(39) A ______________means maintaining public relations with public.
(a) Personal Selling
(b) Advertising
(c) Public Relations
(d) Sales Promotion
(40) ___________evaluate public attitudes; identify the policies and procedures of an organisation
with the public interest to earn public understanding and acceptance.
(a) Personal Selling
(b) Advertising
(c) Public Relations
(d) Sales Promotion
(41) Public relations are significant in the following ways:
(a) Help to convey the policies and programmes of the organisation.
(b) Help to collect information about public opinion about the organisation, management
activities etc.
(c) To overcome the complaints and dislikes of public.
(d) All of the above
(42) Ways/Methods and Tools of Public Relations are___________
(a) News
(b) Speeches
(c) Events
(d) All of the above
(43) Recent developments in marketing
(a) More Emphasis on Quality, Value, and Customer Satisfaction:
(b) More Emphasis on Relationship Building and Customer Retention:
(c) More Emphasis on Managing Business Processes and Integrated Business Functions:
(d) All of the above
(44) is an approach used to develop activities aimed at changing or maintaining people‘s
behaviour for the benefit of individuals and society as a whole.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(45) Benefits of social Marketing are as follows:
(a) Behaviour
(b) Benefits people and society
(c) Implementation and delivery
(d) All of the above
(46) Online marketing is a set of powerful tools and methodologies used for promoting products and
services through the internet.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(47) ___________includes a wider range of marketing elements than traditional business marketing
due to the extra channels and marketing mechanisms available on the internet.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(48) Online marketing can deliver benefits such as:
(a) Growth in potential
(b) Reduced expenses
(c) Elegant communications
(d) All of the above
(49) _________also known as internet marketing, web marketing, digital marketing and search
engine marketing (SEM).
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(50) __________is a very popular and widely used method of informing people about products and
services. It's a method of contacting customers and potential customers personally, rather than
having an indirect medium between the company and the consumer, such as magazine ads or
billboards that are seen by the general public.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(51) can take many forms, including mail, telephone calls, emails, brochures, and coupons.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(52) works best for products that have a wide appeal.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(53) is a type of advertising campaign that seeks to elicit an action (such as an order, a
visit to a store or website or a request for further information) from a selected group of
consumers in response to communication from a marketer.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(54) ___________itself may be in any of a variety of formats, including postal mail, telemarketing,
direct email marketing and point-of-sale interactions.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(55) __________is importing due to the increasing importance and share of the service sector in the
economies of most developed and developing countries.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(56) The American Marketing Association defines _________as - ―Activities, benefits and
satisfactions which are offered for sale or are provided in connection with the sale of goods.‖
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(57) Intangibility, Heterogeneity/Variability, Perishability, Inseparability/Simultaneity of production
and consumption are characteristics of _______________.
(a) Social marketing
(b) Online marketing,
(c) Direct marketing,
(d) Services marketing
(58) Green marketing refers to the process of selling products and/or services based on their
environmental benefits.
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
(59) Grocers that advertise organic produce are examples of __________
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
(60) __________is a process of developing, pricing, promoting, and distributing rural specific goods
and services leading to desired exchange with rural customers to satisfy their needs and wants,
and also to achieve organizational objectives.
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
(61) __________is a cultural model that promotes the acquisition of goods, and especially the
purchase of goods, as a vehicle for personal satisfaction and economic stimulation
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
(62) hen a greater proportion of citizens buy goods and services in excess of their needs, they consume
more, they spend more, and that can create a cycle of demand leading to greater production and to
greater employment, which leads to even more consumption is called _______
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
(63) Restaurants that promote "locally sourced" meats, vegetables, fish, wines, etc. are examples of
__________
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
(64) Marketing of Not containing toxic materials or ozone-depleting substances are examples of
___________
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
(65) Able to be recycled and/or is produced from recycled materials, Being made from renewable
materials (such as bamboo, etc.), Being designed to be repairable and not "throwaway" are
examples of _________
(a) Services marketing,
(b) Green marketing,
(c) Rural marketing;
(d) Consumerism.
 Human Resource Management
Chapter 1: Unit 1: Nature and Scope [8 Marks]
[2 MCQ x 1 Marks, 3 MCQ x 2 Marks]
Concept and meaning of HR, Understanding the Nature and Scope of HRM, Functions and importance.
Human resource management was previously known as personnel management which was concerned with the
1. Concept of HRM
activities of a single department. It was typically concerned with the administration of human. The functions
carried out by the department were recruitment and selection, reward, appraisal, development, grievance
handling, retirement, registration and so forth. It was introduced and developed in the bureaucratic set up in which
importance was given on organization and administration of manpower.
Now, human resource management may be defined as a process in which human resources are recruited and
mobilized in such a way that it helps in achieving the objective of the organization. HRM is concerned with the
people dimension in management under which the consideration is given towards recruitment and selection,
development, motivation and maintenance of human resources in an organization. It is one of the main functions
of management, which is related with the management of human energies and competencies. Human resource
management helps to ensure the right man, for the right position and at the right time in a changing environment.
The organizational performance depends on the efficiency of human resource working in the organization.
Hence, a proper set up should be taken for manpower planning, recruitment, motivation, training and
development, performance evaluation, remuneration management and industrial relation.

Moreover, human resource management is concerned with the development of human skill, knowledge and
ability to perform the organizational tasks effectively and efficiently. It is a field of study consisting of four
functions- acquisition, development, motivation and maintenance of human resources. The acquisition is related
with getting people, development is with preparing them for work, motivation refers to activating them and
finally maintenance refers to keeping them retained in the organization.

Therefore, human resource management is an art of managing and mobilizing people in the organization. It is
done through the application of different practices and policies which ultimately values human resources as major
asset of an organization. It integrates personnel function into strategic management.

2. Meaning of Human Resource Management

Human Resource Management is a management function concerned with hiring, motivating, and maintaining
workforce in an organisation. Human resource management deals with issues related to employees such as hiring,
training, development, compensation, motivation, communication, and administration. Human resource
management ensures satisfaction of employees and maximum contribution of employees to the achievement of
organisational objectives.
According to Armstrong (1997), Human Resource Management can be defined as ―a strategic approach to
acquiring, developing, managing, motivating and gaining the commitment of the organisation‘s key resource –
the people who work in and for it.‖
According to John Bratton and Jeffrey Gold (2007), ―Human Resource Management is a strategic approach to
managing employment relations which emphasises that leveraging people‘s capabilities is critical to achieving
competitive advantage, this being achieved through a distinctive set of integrated employment policies,
programmes and practises.‖
According to George R. Terry, ―Human resources management is concerned with the obtaining and
maintaining of a satisfactory and satisfied work force.‖

3. Nature of Human Resource Management

1. HRM is based on certain principles and policies contribute to the achievement of organisational
objectives.
2. HRM is a pervasive function – Human resource management is not specific to an individual department,
rather it is a broader function and spread throughout the organisation, it manages all type of people from lower
level to top level departments of the organisation.
3. HRM is people oriented – People or human resource is the core of all the activities of human resource
management. Human resource management works with and for people. It brings people and organisation together
to achieve individual and organisational goals.
4. HRM is continuous activity – All factors of production are required to be continuously updated and improved
to cope up with the changes and increased competition. Similarly, human resource also continuously trained,
developed, or replaced to face the next level of competition. Hence, it is a continuous activity.
5. HRM is a part of management function.
6. HRM aims at securing maximum contribution.
7. HRM aims at optimum use of personnel power.

4. Scope of Human Resource Management

1. Personnel Aspect
(a) Human Resource Planning – It is the process by which the organisation identifies the number of jobs
vacant.
(b) Job Analysis and Job Design – Job analysis is the systematic process for gathering, documenting, and
analysing data about the work required for a job. Job analysis is the procedure for identifying
those duties or behaviour that define a job.
(c) Recruitment and Selection – Recruitment is the process of preparing advertisements on the basis of
information collected from job analysis and publishing it in newspaper. Selection is the process of
choosing the best candidate among the candidates applied for the job.
(d) Orientation and Induction – Making the selected candidate informed about the organization‘s
background, culture, values, and work ethics.
(e) Training and Development – Training is provided to both new and existing employees to improve their
performance.
(f) Performance Appraisal – Performance check is done of every employee by Human Resource
Management. Promotions, transfers, incentives, and salary increments are decided on the basis of
employee performance appraisal.
(g) Compensation Planning and Remuneration – It is the job of Human Resource Management to
plan compensation and remunerate.
(h) Motivation – Human Resource Management tries to keep employees motivated so that employees put
their maximum efforts in work.
2. Welfare Aspect – Human Resource Management have to follow certain health and safety regulations for the
benefit of employees. It deals with working conditions, and amenities like - canteens, crèches, rest and lunch
rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc.

3. Industrial Relation Aspect – HRM works to maintain co-ordinal relation with the union members to avoid
strikes or lockouts to ensure smooth functioning of the organisation. It also covers - joint consultation, collective
bargaining, grievance and disciplinary procedures, and dispute settlement.

5. Functions of Human Resource Management

Human Resource Management functions can be classified in following three categories.
 managerial Functions,
 Operative Functions, and
 Advisory Functions
The Managerial Functions of Human Resource Management are as follows:
1. Human Resource Planning - In this function of HRM, the number and type of employees needed to
accomplish organisational goals is determined. Research is an important part of this function, information is
collected and analysed to identify current and future human resource needs and to forecast changing values,
attitude, and behaviour of employees and their impact on organisation.
2. Organising - In an organisation tasks are allocated among its members, relationships are identified, and
activities are integrated towards a common objective. Relationships are established among the employees so that
they can collectively contribute to the attainment of organisation goal.
3. Directing - Activating employees at different level and making them contribute maximum to the organisation
is possible through proper direction and motivation. Taping the maximum potentialities of the employees is
possible through motivation and command.
4. Controlling - After planning, organising, and directing, the actual performance of employees is checked,
verified, and compared with the plans. If the actual performance is found deviated from the plan, control
measures are required to be taken.

The Operative Functions of Human Resource Management are as follows:

1. Recruitment and Selection - Recruitment of candidates is the function preceding the selection, which brings
the pool of prospective candidates for the organisation so that the management can select the right candidate from
this pool.
2. Job Analysis and Design - Job analysis is the process of describing the nature of a job and specifying the
human requirements like qualification, skills, and work experience to perform that job. Job design aims at
outlining and organising tasks, duties, and responsibilities into a single unit of work for the achievement of
certain objectives.
3. Performance Appraisal - Human resource professionals are required to perform this function to ensure that
the performance of employee is at acceptable level.
4. Training and Development - This function of human resource management helps the employees to acquire
skills and knowledge to perform their jobs effectively. Training an development programs are organised for both
new and existing employees. Employees are prepared for higher level responsibilities through training and
development.
5. Wage and Salary Administration - Human resource management determines what is to be paid for different
type of jobs. Human resource management decides employees compensation which includes - wage
administration, salary administration, incentives, bonuses, fringe benefits, and etc,.
6. Employee Welfare - This function refers to various services, benefits, and facilities that are provided to
employees for their well being.
7. aintenance - Human resource is considered as asset for the organisation. Employee turnover is not considered
good for the organisation. Human resource management always try to keep their best performing employees
with the organisation.
8. Labour Relations - This function refers to the interaction of human resource management with employees
who are represented by a trade union. Employees comes together and forms an union to obtain more voice in
decisions affecting wage, benefits, working condition, etc,.
9. Personnel Research - Personnel researches are done by human resource management to gather employees'
opinions on wages and salaries, promotions, working conditions, welfare activities, leadership, etc,. Such
researches helps in understanding employees satisfaction, employees turnover, employee termination, etc,.
10. Personnel Record - This function involves recording, maintaining, and retrieving employee related
information like - application forms, employment history, working hours, earnings, employee absents and
presents, employee turnover and other other data related to employees.

The Advisory Functions of Human Resource Management are as follows:

Human Resource Management is expert in managing human resources and so can give advice on matters related
to human resources of the organisation. Human Resource Management can offer advice to:
1. Advised to Top Management Personnel: Manager advises the top management in formulation and
evaluation of personnel programs, policies, and procedures.
2. Advised to Departmental Heads: Personnel manager advises the heads of various departments on matters
such as manpower planning, job analysis, job design, recruitment, selection, placement, training,
performance appraisal, etc.

6. Importance And Objectives Of Human Resource Management

The main purpose of human resource management is to accomplish the organizational goals. Therefore, the
resources are mobilized to achieve such goals. Some importance and objectives of human resource management
are as follows:
1. Effective Utilization Of Resources
Human resource management ensures the effective utilization of resources. HRM teaches how to utilize human
and non-human resources so that the goals can be achieved. Organization aiming to utilize their
resources efficiently invites the HR department to formulate required objectives and policies.
2. Organizational Structure
Organizational structure defines the working relationship between employees and management. It defines and
assigns the task for each employee working in the organization. The task is to be performed within the given
constraints. It also defines positions, rights and duties, accountability and responsibility, and other working
relationships. The human resource management system provides required information to timely and accurately.
Hence, human resource management helps to maintain organizational structure.
3. Development Of Human Resources
Human resource management provides favourable environment for employees so that people working in
organization can work creatively. This ultimately helps them to develop their creative knowledge, ability and
skill. To develop personality of employees, human resource management organizes training and
development campaigns which provides an opportunity for employees to enhance their caliber to work.
4. Respect For Human Beings
Another importance of human resource management is to provide a respectful environment for each employee.
Human resource management provides with required means and facilitates employee along with an appropriate
respect because the dominating tendency develops that will result organizational crisis. Hence, all of them should
get proper respect at work. Human resource management focuses on developing good working relationships
among workers and managers in organization. So, good human resource management system helps for respecting
the employees.
5. Goal Harmony
Human resource management bridges the gap between individual goal and organizational goal-thereby resulting
into a good harmony. If goal difference occurs, the employees will not be willing to perform well. Hence, a
proper match between individual goal and organizational goal should be there in order to utilize organizational
resources effectively and efficiently.
6. Employee Satisfaction
Human resource management provides a series of facilities and opportunities to employees for their career
development. This leads to job satisfaction and commitment. When the employees are provided with every kind
of facilities and opportunities, they will be satisfied with their work performance.
7. Employee Discipline And Moral
Human resource management tries to promote employee discipline and moral through performance based
incentives. It creates a healthy and friendly working environment through appropriate work design and
assignment of jobs.
8. Organizational Productivity
Human resource management focuses on achieving higher production and most effective utilization of available
resources. This leads to an enhancement in organizational goals and objectives.

7. Components Or Elements Of Human Resources Management

Human resource management is a process which involves around four basic functions- acquisition,
development, motivation and maintenance of human resources. These basic elements are the key steps for
achieving organizational goals. The basic influencing factor of these components is organizational goal because
such activities are to be performed within the given constraints in order to accomplish the task. These four
elements or factors of HRM can be described as follows:

1. Acquisition
Acquisition function is concerned with recruitment and selection of manpower requirement for an organization. It
ensures that the company has the right number of people at the right place and at the right time who are capable to
complete required work. It is the starting point of human resource management function. Acquisition is primarily
concerned with planning, recruitment, selection and socialization of employees. It selects and socializes the
competent employees who have adopted the organization's culture.
2. Development
Development phase begins after the socialization of newly appointed employees in an organization. It is
concerned with imparting knowledge and skill to perform the task properly. Moreover, it is an attempt to improve
employee performance by imparting knowledge, changing attitudes and improving skills. It can be done through
teaching, coaching, class-room courses, assignments, professional programs and so on. The ultimate goal
of employee development is of course to enhance the future performance of the organization by
the efficient employees. The development of employees is not only for newly appointed employees, it is also for
existing employees to develop them according to change in internal and external environment.

3. Motivation
Only training and development do not inspire employees to do better work. For this, they should be motivated.
Here motivation means an activity which induces and inspires people to perform well in actual work floor.
Motivation includes job specification, performance evaluation, reward and punishment, work
performance, compensation management, discipline and so on. It is important for better work performance
because high performance depends on both ability and motivation.

4. Maintenance
Maintenance is the last components of human resource management. it is concerned with the process of retaining
the employees in the organization. This contributes towards keeping the employees who can do extremely better
for the organization. It creates such a homely and friendly environment for those high performers, and make them
to remain in the same organization for a longer period of time. This requires that the organization should provide
additional facilities, safe working conditions, friendly work environment, and satisfactory labor relations. If these
activities are performed in right manner, we can expect to have capable and competent employees in the
organization. These employees are committed to the organizational objectives and are satisfied with their jobs.

8. Features of Human Resource Management

Human resource management is regarded as sub system of the organization. Human resource offers
a distinct approach of managing human resources in today's competitive and changing environment. It is an
emerging discipline, which possesses the following features:

1. Human Resource Management Is A Management Of An Individual

Human resource management is concerned with people dimension of management. Hence it manages different
people such as worker/labour, supervisors, managers, departmental heads and other related top managers too.
Therefore, human resource management is defined as the management of human resource and their commitment
towards work.

2. Human Resource Management Is A Continuous Process

Human resource management is not a shot affair, rather it is an ongoing process of managing people and
their competencies. It is continued till the dissolution of an organization. All the processes involved in HRM
should run continuously.

3. Human Resource Management Is A Dynamic Function

The principles and practices of HRM should not be rigid. Rather they should be dynamic. It means HRM is a
dynamic function whereby the procedures and practices are influenced by the environmental factors. Employees
should gain an updated knowledge and ability to work in the changing environment.
4. Human Resource Management Is a Universal Function
HRM is a universal function in the sense that it is applicable in all types of organizations. The principles and
practices are applied irrespective of size, nature, scope and purpose of the organization.

5. Human Resource Management Is A Strategic Approach

HRM is taken as strategic approach for organizational development. It helps to mobilize human resource in the
organization in order to achieve the stated goals and objectives strategically. All the activities of management are
arranged in such a way that they are interconnected with efficient and effective utilization of human resources
according to change in organizational strategy.

6. Integration Of Goals
Usually there is a goal difference between organizational goal and individual goal. An employee wants to satisfy
his/her individual goal first. But managers want to accomplish organizational goals before something else. Hence,
HRM practices and principles help in integrating individual and organizational goal into a framework. As a result
of which, employees are motivated towards higher level work performance for achievement of organizational
goal.

7. Human Resource Management Is Future-oriented

HRM is future oriented behaviour in the sense that it helps in assessing human resource requirement for future. It
helps in determining future goals and objectives of the organization and it employees the people to get the job
done in future period of time.

Human resource management is the new version of personnel management. There is no any watertight difference
between human resource management and personnel management. However, there are some differences in the
following matters.

1. Personnel management is a traditional approach of managing people in the organization. Human resource
management is a modern approach of managing people and their strengths in the organization.

2. Personnel management focuses on personnel administration, employee welfare and labor relation. Human
resource management focuses on acquisition, development, motivation and maintenance of human resources in
the organization.

3. Personnel management assumes people as a input for achieving desired output. Human resource management
assumes people as an important and valuable resource for achieving desired output.

4. Under personnel management, personnel function is undertaken for employee's satisfaction. Under human
resource management, administrative function is undertaken for goal achievement.
5. Under personnel management, job design is done on the basis of division of labor. Under human resource
management, job design function is done on the basis of group work/team work.
6. Under personnel management, employees are provided with less training and development opportunities.
Under human resource management, employees are provided with more training and development opportunities.

7. In personnel management, decisions are made by the top management as per the rules and regulation of the
organization. In human resource management, decisions are made collectively after considering employee's
participation, authority, decentralization, competitive environment etc.

8. Personnel management focuses on increased production and satisfied employees. Human resource
management focuses on effectiveness, culture, productivity and employee's participation.

9. Personnel management is concerned with personnel manager. Human resource management is concerned with
all level of managers from top to bottom.

10. Personnel management is a routine function. Human resource management is a strategic function.

10. Challenges of Human Resource Management

1. Environmental Challenges
* Globalization Movement
* Change In Economic Outlook
* Change In Political Environment
* Change In Socio-cultural Environment
* Change In Technological Environment

2. Organizational Challenges
* Work Force Diversity
* Organizational Objectives
* Downsizing
* Business Process Re-engineering
* Decentralization
* Management Of Human Relation
* Computerized Information System

3. Individual Challenges
These forces are related to the personnel aspect of the organization. It includes all the complexities that are raised
due to organizational interaction with people. These are similar to the organizational challenges but are primarily
concerned with the individual. Some of its components are as follows:
* Brain Drain
* Individual Norms And Values
* Mobility Of Professional personnel between organizations
* Aspirations Of Employees
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) Human resource management was previously known as _________
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(2) may be defined as a process in which human resources are recruited and mobilized in
such a way that it helps in achieving the objective of the organization.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human resource management
(3) _____________is concerned with the development of human skill, knowledge and ability to
perform the organizational tasks effectively and efficiently.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human resource management
(4) is an art of managing and mobilizing people in the organization.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human resource management
(5) _____________is a management function concerned with hiring, motivating, and maintaining
workforce in an organisation
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human resource management
(6) __________ensures satisfaction of employees and maximum contribution of employees to the
achievement of organisational objectives.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human resource management
(7) Human resource management is _____________ activity.
(a) Continuous
(b) Static
(c) Fixed
(d) Constant
(8) Which of the following are the nature of Human resource management?
(a) HRM is a pervasive function
(b) HRM is people oriented
(c) HRM is continuous activity
(d) All of the above
(9) Which of the following are the nature of Human resource management?
(a) HRM is a part of management function.
(b) HRM aims at securing maximum contribution.
(c) HRM aims at optimum use of personnel power.
(d) All of the above
(10) Which of the following are the Functions (scope) of Human resource management?
(a) It is the process by which the organisation identifies the number of jobs vacant.
(b) Performance check is done of every employee by Human Resource Management
(c) Human Resource Management tries to keep employees motivated
(d) All of the above
(11) Human Resource Management functions can be classified in following categories:
(a) Managerial Functions,
(b) Operative Functions, and
(c) Advisory Functions
(d) All of the above
(12) Which of the following are the Managerial Functions of Human resource management?
(a) Human Resource Planning
(b) Organising
(c) Directing & Controlling
(d) All of the above
(13) Which of the following are the Operative Functions of Human Resource Management?
(a) Recruitment and Selection
(b) Job Analysis and Design
(c) Performance Appraisal
(d) All of the above
(14) Which of the following are the Operative Functions of Human Resource Management?
(a) Training and Development
(b) Wage and Salary Administration
(c) Employee Welfare
(d) All of the above
(15) Which of the following are the Operative Functions of Human Resource Management?
(a) Labour Relations
(b) Personnel Research
(c) Personnel Record
(d) All of the above
(16) Which of the following are the advisory Functions of Human Resource Management?
(a) Advised to Top Management Personnel:
(b) Advised to Departmental Heads
(c) Both
(d) None of the above
(17) Which of the following are the objectives of Human Resource Management?
(a) Effective Utilization Of Resources
(b) Development Of Human Resources
(c) Respect For Human Beings
(d) All of the above
(18) Which of the following are the objectives of Human Resource Management?
(a) Goal Harmony
(b) Employee Satisfaction
(c) Employee Discipline And Moral
(d) All of the above
(19) Which of the following are Components Or Elements Of Human Resources Management
(a) Development
(b) Motivation
(c) Maintenance
(d) All of the above
(20) Which of the following are the features of Human Resources Management
(a) Human Resource Management Is A Management Of An Individual
(b) Human Resource Management Is A Continuous Process
(c) Human Resource Management Is A Dynamic Function
(d) All of the above
(21) Which of the following are the features of Human Resources Management
(a) Human Resource Management Is a Universal Function
(b) Human Resource Management Is A Strategic Approach
(c) Human Resource Management Is Future-oriented
(d) All of the above
(22) Human Resource Management is a Function
(a) Dynamic
(b) Rigid
(c) Constant
(d) Fixed
(23) Human Resource Management Is a Function
(a) Universal
(b) Local
(c) Institutional
(d) National
(24) Human Resource Management Is A Approach
(a) Strategic
(b) Contingency
(c) routine
(d) Traditional
(25) Human Resource Management Is ___________
(a) Future-oriented
(b) Past-oriented
(c) Present-oriented
(d) None of the above
(26) Human resource management is the new version of _____________
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(27) ____________is a traditional approach of managing people in the organization. Human
resource management is a modern approach
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(28) is concerned with personnel manager. Human resource management is concerned
with all level of managers from top to bottom.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(29) Personnel management is a routine function but HRM is a strategic function.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(30) __________focuses on increased production and satisfied employees. Human resource
management focuses on effectiveness, culture, productivity and employee's participation.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(31) In ____________decisions are made by the top management . In human resource management,
decisions are made collectively after considering employee's participation, authority,
decentralization, competitive environment etc.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(32) Under personnel management, employees are provided with less training and development
opportunities. Under__________employees are provided with more training and development
opportunities.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(33) Under personnel management, job design is done on the basis of division of labor.
Under _________, job design function is done on the basis of group work/team work.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(34) Under personnel management, personnel function is undertaken for employee's satisfaction.
Under ______________ , administrative function is undertaken for goal achievement.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(35) Personnel management assumes people as a input for achieving desired output.
_________assumes people as an important and valuable resource for achieving desired output.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(36) Personnel management assumes people as a input for achieving desired output.
__________assumes people as an important and valuable resource for achieving desired output.
(a) Personnel Management
(b) Man-power Management
(c) Man-Resource Management
(d) Human Power management
(37) Which of the following are Challenges of Human Resource Management
(a) Environmental Challenges
(b) Organizational Challenges
(c) Individual Challenges
(d) All of the above
 Unit 2: Human Resource Planning [8 Marks]
[2 MCQ x 1 Marks, 3 MCQ x 2 Marks]
Definition, Need and Features of Human Resource Planning, factors affecting Human Resource Planning.

1. Introduction
Human resource planning is the most important managerial function of an organization. It ensures three
main things:
• It ensures adequate supply of human resources.
• It ensures proper quality of human resources.
• It ensures effective utilization of human resources.
(a) Human resource planning must incorporate the human resource needs in the light of organizational
goals.
(b) Human resource planning must be directed towards clear and well-defined objectives.
(c) Human resource plan must ensure that it has the right number of people and the right kind of people
at the right time doing work for which they are economically most suitable.
(d) Human resource planning should take into account the principle of periodical reconsideration of new
developments and extending the plan to cover the changes during the given long period.
(e) Human resource planning should pave the way for an effective motivational process.
(f) Adequate flexibility must be maintained in human resource planning to suit the changing needs of
the organization. HRP or MPP is essentially concerned with the process of estimating and projecting
the supply and demand for different categories of personnel in the organization for the years to come.

2. Concept of Human Resource Planning

Human resource planning is one of the crucial aspects of human resource management because it helps to ensure
the needed manpower for organizational goal. Due to the globalization movement, the competition to provide
quality and low cost products has been increasing day by day. In this situation, the HR department has to plan in
order to provide the quality manpower to compete in the market. The supply of manpower must be sufficient to
ensure the healthy operation of the organization. Otherwise, the stated goals and objectives cannot be
accomplished on time.

3. Meaning of Human Resource Planning:

Human resource planning may be defined as a process of predetermining future human resources needs and
course of action needed to satisfy those needs to achieve organizational goals. It ensures that organization has
right number and kind of people, at right place, and at right time capable of performing well in the organization.
Human resource planning is a continuous process rather than a one shot affair. It tries to keep the organization
supplied with required and capable people when they are demanded.
Moreover, human resource planning is a process of knowing that what kind of people should be recruited to
ensure the quality performance of the organization. It tries to ensure that the required competency is maintain in
line with organizational mission, vision and strategic objectives. It also determines and organization's human
resource needs. It identifies what is to be done to ensure the availability of human resources needed to achieve
stated goals and objectives within the given constraints
Thus, human resource planning (HRP) is a complex and continuous process which helps determine the
manpower requirement of the organization. It helps to translate the organization's objectives and plans into the
number of workers needed to meet the objectives. Hence, it claims at:
* Balancing demand and supply of workers
* Controlling cost of human labour
* Formulating policies on transfer, succession, relocation of manpower
* Ensuring right kind of people at the right time and right place.

4. Definition of Human Resource Planning:

According to E.W. Vetter, human resource planning is ―the process by which a management determines how an
organisation should make from its current manpower position to its desired manpower position. Through
planning a management strives to have the right number and the right kind of people at the right places, at the
right time to do things which result in both the organisation and the individual receiving the maximum long range
benefit.‖

5. Factors Affecting HRP :

HRP is influenced by several considerations. The more important of them are :
(a) Type and strategy of organization.
(b) Organizational growth cycles and planning.
(c) Environmental uncertainties.
(d) Time horizons.
(e) Type and quality forecasting information.
(f) Nature of jobs being filled.
(g) Off-loading the work.
(a) Type of organization: The type of organization determines the production process and number and type of
staff needed. Manufacturing organizations have a more complex structure compared to service organization. It
goes without saying that the HRP differs according to the nature of the organization.
(b) Strategy of organization: The human resource needs of an organization depend on the strategic plan adopted
by it. For example, growth of the business calls for hiring of additional labour, while mergers will need a plan
for layoffs.
(c) Environmental Uncertainties: HR managers rarely have the privilege in a stable and predictable
environment. Political, social and economic changes affect all organizations. Personnel planners deal with
environmental uncertainties by carefully formulating recruitment , selection, and training and development
policies and programmes. Balancing mechanisms are built into the HRM programme through succession
planning , promotion channels, layoffs, flextime, job sharing , retirement, VRS and other personnel related
arrangements.
(d) Time period: Yet another major factor affecting personnel planning is the horizon. On one hand, there are
short-term plans spanning six months to one year. On the other hand, there are long-term plans which spread
over three to twenty years. The exact time span, however, depends on the degree of certainty prevailing in an
organization‘s environment. Plans for companies operating in an unstable environment, computers for
example, must be for a short period. Plans for others where environment is fairly stable, for example a
university plans, may be long-term. In general , the grater the uncertainty, the shorter the plan‘s time horizon
and vice versa.
(e) Information: The type and quality of information used in making forecast is an important factor influencing
Human Resource Planning. In the absence of a well-developed information mechanism Human Resource
Planning is just impossible. Accurate and timely human resource information system helps in getting better
quality personnel.
(f) Nature of jobs being filled: Job vacancies are very common and arise due to promotions, retirements,
termination of services, growth, expansion, etc. HRP is required to ensure that suitable candidates are
recruited.
(g) Off-loading: This implies giving part of the organizations work to outside parties. If an organization prefers
off-loading to recruitment of more people. Human Resource Planning is not required.

6. Need for human resource planning

Human resource planning is needed for foreseeing the human resource requirements of an organization
and supply of human resources. Its need can be assessed from the following points:
(a) Replacement of Persons: A large number of persons are to be replaced in the organization because
of retirement, old age, death, etc. There will be a need to prepare persons for taking up new position
in such contingencies.

(b) Labour Turnover: There is always labour turnover in every organization. The degree of labour
turnover may vary from concern to concern but it cannot be eliminated altogether. There will be a
need to recruit new persons to take up the positions of those who have left the organization. If the
concern is able to forecast turnover rate precisely, then advance efforts are made to recruit and train
persons so that work does not suffer for want of workers.

(c) Expansion Plans: Whenever there is a plan to expand or diversify the concern then more persons
will be required to take up new positions. Human resource planning is essential under these
situations.

(d) Technological Changes: The business is working under changing technological environment. There
may be a need to give fresh training to personnel. In addition, there may also be a need to infuse
fresh blood into the organization. Human resource planning will help in meeting the new demands of
the organization.

(e) Assessing Needs: Human resource planning is also required to determine whether there is any
shortage or surplus of persons in the organization. If there are less persons than required, it will
adversely affect the work. On the other hand, if more persons are employed than the requirement,
then it will increase labour cost, etc. Human resource planning ensures the employment of proper
workforce.

(f) Identification of Gaps in Existing Manpower: Human resource planning identifies gaps in existing
manpower in terms of their quantity and quality with the help of suitable training and/or any other
steps, these gaps can be filled in time. Existing manpower can also be developed to fill future
vacancies.
(g) Career Succession Planning: Manpower planning facilitates career succession planning in the
organization. It provides enough lead time for internal succession of employees to higher position
through promotions. Thus, manpower planning contributes to management succession as well as
development. 8. Improvement in Overall Business Planning. Manpower planning is an integral part
of overall business planning. Effective manpower planning will lead to improvement in overall
planning also. No management can be successful in the long run without having the right type and
right number of people doing the right jobs at the right time.

(h) Growth of the Organization: Manpower planning facilitates the expansion and diversification of
an organization. In the absence of human resource plans, the required human resources will not be
available to execute expansion and diversification plans at the right time.

(i) Creates Awareness in the Organization: Manpower planning leads to a great awareness about the
effectiveness of sound manpower management throughout the organization. It also helps in judging
the effectiveness of human resource policies and programmes of management.

(j) Beneficial to the Country. At the national level manpower planning facilitates educational reforms,
geographical mobility of talent and employment generation.

7. Objectives of human resource planning

The following are the objectives of human resource planning:
(a) Assessing manpower needs for future and making plans for recruitment and selection.
(b) Assessing skill requirement in future for the organization.
(c) Determining training and the development needs of the organization.
(d) Anticipating surplus or shortage of staff and avoiding unnecessary detentions or dismissals.
(e) Controlling wage and salary costs.
(f) Ensuring optimum use of human resources in the organization.
(g) Helping the organization to cope with the technological development and modernization.
(h) Ensuring career planning of every employee of the organization and making succession programmes.
(i) Ensuring higher labour productivity

8. Determinants of HRP:
There are several factors that affect HRP. These factors or determinants can be classified into external
factors and internal factors.
External Factors
• Government Policies : Policies of the government like labour policy, industrial relations policy,
policy towards reserving certain jobs for different communities and sons-of-the soils, etc. affect the
HRP.
• Level of Economic Development : Level of economic development determines the level of HRD in
the country and thereby the supply of human resources in future in the country.
• Business Environment : External business environmental factors influences the volume and mix of
production and thereby the future demand for human resources.
• Level of Technology : Level of technology determines the kind of human resources required.
• International Factors : International factors like the demand for the resources and supply of human
resources in various countries
Internal Factors
• Company Policies and Strategies: Company‘s policies and strategies relating to expansion
diversification, alliances, etc. determines the human resource demand in terms of quality and
quantity.

• Human Resource Policies: Human resources policies of the company regarding quality of human
resource, compensation level, quality of worklife, etc. influences human resource plan.
• Job Analysis: Fundamentally, human resource plan is based on job analysis. Job description and job
specification determines the kind of employees required.
• Time Horizons: Companies with stable competitive environment can plan for the long run whereas
the firms with unstable competitive environment can plan for only short-term range.

9. Guidelines for making HRP effective

Some of the suggestions for making HR planning effective are as given below:
a. Integration with Organizational Plans: Human resource planning must be balanced with
organizational plans. It must be based on the organizational objectives and plans. This requires
development of good communication channels between organization planners and the human
resource planners.
b. Period of HR Planning: Period of the planning should be appropriate to the needs and
circumstances of the enterprise in question. The size and structure of the enterprise as well as the
anticipated changes must be taken into consideration.
c. Proper Organization: To be effective, the planning function should be properly organized. If
possible, within the human resource department. A separate cell or committee should be constituted
to provide adequate focus and to coordinate planning work at various levels.
d. Support of Top Management: To be effective in the long run, manpower planning must have the
full support of the top management. The support from top management is essential to ensure the
necessary resources, cooperation and support for the success of the planning.
e. Involvement of Operating Executives: Human resource planning is not a function of manpower
planners only. To be effective, it requires active participation and coordinated efforts on the part of
operating executives. Such participation will help to improve understanding of the process and
thereby reduce resistance.
f. Efficient and Reliable Information System: To facilitate human resource planning, an adequate
database must be developed for human resources.
g. Balanced Approach: The human resource experts should give equal importance to both quantitative
and qualitative aspects of manpower. Instead of matching existing people with existing job, stress
should be laid on filling future vacancies with right people. Promotion should also be considered
carefully. Career planning and development, skill levels, morale, etc. should be given due importance
by the planners.
 10. Characteristics of effective human resource planning:
1. Future Oriented
Human resource planning is prepared to assess the future requirement of manpower in the organization. It
helps identify the size and composition of resources for future purpose.

2. Continuous Process
Human resource planning is a continuous process. The human resource planning prepared today may not
be applicable for future due to ever changing external forces of the environment. Hence, to address such
changing factors, the human resource planning needs to be revised and updated continuously.

3. Optimum Utilization of Human Resources

:Human resource planning focuses on optimum utilization of resources in the organization. It checks how
the employees are utilized in a productive manner. It also identifies employees' existing capabilities and
future potentialities to perform the work.

4. Right Kinds And Numbers

Human resource planning determines the right number and kind of people at the right time and right place
who are capable of performing the required jobs. It also assesses the future requirement of manpower for
organizational objective.

5. Determination of Demand And Supply

Human resource planning is a process of determining demand for and supply of human resources in the
organization. Then a match between demand and supply estimates the optimum level of manpower.

6. Environmental Influence
Human resource planning is influenced by environmental changes, hence, it is to be updated as per the
change occupied in the external environment

7. Related To Corporate Plan

Human resource planning is an integral part of overall corporate plan of the organization. It can be
formulated at strategic, tactical and operational levels.

8. A Part of Human Resource Management System

As a part of total human resource management system, human resource planning is regarded as a
component or element of HRM which is concerned with acquisition and assessment of manpower. It
serves as a foundation for the management of human resource in an effective and efficient manner.
 11. Significance Or Importance Of Human Resource Planning
Human resource planning aims at fulfilling the objectives of manpower requirement. It helps to mobilize
the recruited resources for the productive activities. The human resource planning is and important
process aiming to link business strategy and its operation. The importance of human resource planning are
as follows:

1. Future Manpower Needs

Human resource planning ensures that people are available to provide the continued smooth operation of
an organization. It means, human resource planning is regarded as a tool to assure the future availability
of manpower to carry on the organizational activities. It determines the future needs of manpower in
terms of number and kind.

2. Coping With Change

Human resource planning is important to cope with the change associated with the external environmental
factors. It helps assess the current human resources through HR inventory and adapts it to changing
technological, political, socio-cultural, and economic forces.

3. Recruitment Of Talented Personnel

Another purpose of HR planning is to recruit and select the most capable personnel to fill job vacancies.It
determines human resource needs, assesses the available HR inventory level and finally recruit the
personnel needed to perform the job.

4. Development Of Human Resources

Human resource planning identifies the skill requirements for various levels of jobs. Then it organizes
various training and development campaigns to impart the required skill and ability in employees to
perform the task efficiently and effectively.

5. Proper Utilization Of Human Resources

Human resource planning measures that the organization acquires and utilizes the manpower effectively
to achieve objectives. Human resource planning helps in assessing and recruiting skilled human resource.
It focuses on the optimum utilization of human resource to minimize the overall cost of production.

6. Uncertainty Reduction
This is associated with reducing the impact of uncertainty which are brought by unsudden changes in
processs and procedures of human resource management in the organization.
 12. Human Resource Planning Process Or Steps Of HR Planning
Human resource planning is a process through which the company anticipates future business and
environmental forces. Human resources planning assess the manpower requirement for future period of
time. It attempts to provide sufficient manpower required to perform organizational activities. HR
planning is a continuous process which starts with identification of HR objectives, move through analysis
of manpower resources and ends at appraisal of HR planning. Following are the major steps involved in
human resource planning:

1. Assessing Human Resources

The assessment of HR begins with environmental analysis, under which the external (PEST) and internal
(objectives, resources and structure) are analyzed to assess the currently available HR inventory level.
After the analysis of external and internal forces of the organization, it will be easier for HR manager to
find out the internal strengths as well as weakness of the organization in one hand and opportunities and
threats on the other. Moreover, it includes an inventory of the workers and skills already available within
the organization and a comprehensive job analysis.

2. Demand Forecasting
HR forecasting is the process of estimating demand for and supply of HR in an organization. Demand
forecasting is a process of determining future needs for HR in terms of quantity and quality. It is done to
meet the future personnel requirements of the organization to achieve the desired level of output. Future
human resource need can be estimated with the help of the organization's current human resource
situation and analysis of organizational plans an procedures. It will be necessary to perform a year-by-
year analysis for every significant level and type.

3. Supply Forecasting
Supply is another side of human resource assessment. It is concerned with the estimation of supply of
manpower given the analysis of current resource and future availability of human resource in the
organization. It estimates the future sources of HR that are likely to be available from within an outside
the organization. Internal source includes promotion, transfer, job enlargement and enrichment, whereas
external source includes recruitment of fresh candidates who are capable of performing well in the
organization.

4. Matching Demand And Supply

It is another step of human resource planning. It is concerned with bringing the forecast of future demand
and supply of HR. The matching process refers to bring demand and supply in an equilibrium position so
that shortages and over staffing position will be solved. In case of shortages an organization has to hire
more required number of employees. Conversely, in the case of over staffing it has to reduce the level of
existing employment. Hence, it is concluded that this matching process gives knowledge about
requirements and sources of HR.
5. Action Plan
It is the last phase of human resource planning which is concerned with surplus and shortages of human
resource. Under it, the HR plan is executed through the designation of different HR activities. The major
activities which are required to execute the HR plan are recruitment, selection, placement, training and
development, socialization etc. Finally, this step is followed by control and evaluation of performance of
HR to check whether the HR planning matches the HR objectives and policies. This action plan should be
updated according to change in time and conditions.

13. Human Resource Planning Approaches

HR planning is a mechanism created to forecast the required human resource to perform a specific task. It
also assesses the skill requirement of employees for each job. It is a complex task which estimates the
future demand and supply position of HR in the organization. Hence, it gives a picture of infinite future in
advance in terms of human resource requirement for the company. Here, the approaches to HR planning
are as follows:

1. Quantitative Approach
It is also known as top down approach of HR planning under which top level make and efforts to prepare
the draft of HR planning. It is a management-driven approach under which the HR planning is regarded as
a number's game. It is based on the analysis of Human Resource Management Information System and
HR Inventory Level. On the basis of information provided by HRIS, the demand of manpower is
forecasted using different quantitative tools and techniques such as trend analysis, mathematical models,
economic models, market analysis, and so on. The focus of this approach is to forecast human resource
surplus and shortages in an organization. In this approach major role is played by top management.

2. Qualitative Approach
This approach is also known as bottom up approach of HR planning under which the subordinates make
an effort to prepare the draft of HR planning. Hence, it is also called sub-ordinate-driven approach of HR
planning. It focuses on individual employee concerns. It is concerned with matching organizational needs
with employee needs. Moreover, it focuses on employee's training, development and creativity.
Similarly, compensation, incentives, employee safety, welfare, motivation and promotion etc. are the
primary concerns of this approach. In this approach, major role is played by lower level employees.

3. Mixed Approach
This is called mixed approach because it combines both top-down and bottom-up approaches of HR
planning. In fact, the effort is made to balance the antagonism between employees and the management.
Hence, it tends to produce the best result that ever produced by either of the methods. Moreover, it is also
regarded as an Management By Objective(MBO) approach of HR planning. There is a equal participation
of each level of employees of the organization.
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) Human resource planning is the most important managerial function of an organization. It
ensures:
(a) Adequate supply of human resources.
(b) Proper quality of human resources.
(c) Effective utilization of human resources.
(d) All of the above
(2) ___________is essentially concerned with the process of estimating and projecting the supply
and demand for different categories of personnel in the organization for the years to come.
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(3) ___________is one of the crucial aspects of human resource management because it helps to
ensure the needed manpower for organizational goal.
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(4) ________may be defined as a process of predetermining future human resources needs and
course of action needed to satisfy those needs to achieve organizational goals
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(5) Human resource planning is a ___________ process rather than a one shot affair
(a) Continuous
(b) Static
(c) Fixed
(d) Constant
(6) a process of knowing that what kind of people should be recruited to ensure the quality
performance of the organization.
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(7) Human resource planning (HRP) is a __________ process which helps determine the manpower
requirement of the organization
(a) complex and continuous
(b) Simple and continuous
(c) Complex & Constant
(d) Simple & Constant
(8) Following are the objectives of Human resource planning (HRP)
(a) Formulating policies on transfer, succession, relocation of manpower
(b) Ensuring right kind of people at the right time and right place.
(c) Balancing demand and supply of workers
(d) All of the above
(9) According to E.W. Vetter, __________is ―the process by which a management determines how
an organisation should make from its current manpower position to its desired manpower
position.
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(10) Which of the following are the Factors Affecting HRP :
(a) Type and strategy of organization
(b) Organizational growth cycles and planning
(c) Environmental uncertainties
(d) All of the above
(11) Which of the following are the Factors Affecting HRP :
(a) Type and quality forecasting information.
(b) Nature of jobs being filled.
(c) Off-loading the work.
(d) All of the above
(12) ___________is needed for foreseeing the human resource requirements of an organization and
supply of human resources
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(13) Which of the followings are needs/Importance/Benefits of HRP ?
(a) Replacement of Persons
(b) Labour Turnover:
(c) Expansion Plans:
(d) All of the above
(14) Which of the followings are needs/Importance/Benefits of HRP ?
(a) Technological Changes:
(b) Assessing Needs:
(c) Identification of Gaps in Existing Manpower:
(d) All of the above
(15) Which of the followings are needs/Importance/Benefits of HRP ?
(a) Career Succession Planning:
(b) Growth of the Organization
(c) Creates Awareness in the Organization:
(d) All of the above
(16) Which of the following are the objectives of human resource planning?
(a) Assessing manpower needs for future and making plans for recruitment and selection.
(b) Assessing skill requirement in future for the organization.
(c) Determining training and the development needs of the organization.
(d) All of the above
(17) Which of the following are the objectives of human resource planning?
(a) Anticipating surplus or shortage of staff and avoiding unnecessary detentions or dismissals.
(b) Controlling wage and salary costs.
(c) Ensuring optimum use of human resources in the organization.
(d) All of the above
(18) Which of the following are the objectives of human resource planning?
(a) Helping the organization to cope with the technological development and modernization.
(b) Ensuring career planning of every employee of the organization and making succession
programmes.
(c) Ensuring higher labour productivity
(d) All of the above
(19) Which of the following are the Determinant (external Factors) of human resource planning?
(a) Government Policies :
(b) Level of Economic Development
(c) Business Environment :
(d) All of the above
(20) Which of the following are the Determinant (external Factors) of human resource planning?
(a) Government Policies :
(b) Level of Technology :
(c) International Factors :
(d) All of the above
(21) Which of the following are the Determinant (Internal Factors) of human resource planning?
(a) Company Policies and Strategies:
(b) Human Resource Policies:
(c) Job Analysis:
(d) All of the above
(22) Which of the following are the Guidelines for making HRP effective
(a) Integration with Organizational Plans:
(b) Period of HR Planning:
(c) Proper Organization:
(d) All of the above
(23) Which of the following are the Guidelines for making HRP effective
(a) Support of Top Management:
(b) Involvement of Operating Executives:
(c) Efficient and Reliable Information System
(d) All of the above
(24) Which of the following are the Characteristics of effective human resource planning:
(a) Future Oriented
(b) Continuous Process
(c) Optimum Utilization of Human Resources
(d) All of the above
(25) Which of the following are the Characteristics of effective human resource planning:
(a) Right Kinds And Numbers
(b) Determination of Demand And Supply
(c) Environmental Influence
(d) All of the above
(26) Which of the following are the Characteristics of effective human resource planning:
(a) Related To Corporate Plan
(b) A Part of Human Resource Management System
(c) Continuous Process
(d) All of the above
(27) Which of the following are the significance of effective human resource planning:
(a) Future Manpower Needs
(b) Coping With Change
(c) Recruitment Of Talented Personnel
(d) All of the above
(28) Which of the following are the significance of effective human resource planning:
(a) Development Of Human Resources
(b) Proper Utilization Of Human Resources
(c) Uncertainty Reduction
(d) All of the above
(29) Which of the following are the steps of effective human resource planning:
(a) Assessing Human Resources
(b) Demand Forecasting
(c) Supply Forecasting
(d) All of the above
(30) Which of the following are the steps of effective human resource planning:
(a) Assessing Human Resources
(b) Matching Demand And Supply
(c) Action Plan
(d) All of the above
(31) Which of the following are the Human Resource Planning Approaches
(a) Quantitative Approach
(b) Qualitative Approach
(c) Mixed Approach
(d) All of the above
(32) Human resource planning focuses on _________ utilization of resources in the organization.
(a) optimum
(b) Minimum
(c) Maximum
(d) Balanced
(33) determines the right number and kind of people at the right time and right place
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(34) _________a process of determining demand for and supply of human resources in the
organization.
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(35) _________________is an integral part of overall corporate plan of the organization. It can be
formulated at strategic, tactical and operational levels.
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
(36) Human resource planning is regarded as a component or element of HRM which is concerned
with acquisition and assessment of manpower
(a) Human resource planning
(b) Personnel Management planning
(c) Human skill planning
(d) Human power planning
 Unit 3: Recruitment and Selection [8 Marks]
Definition of Recruitment, Source, need and importance of Recruitment, Recruitment Policy– process – sources
of Recruitment Definition of Selection, Steps in selection.

1. Introduction
Recruitment is the first step in procurement function. The importance of manpower planning in every
business is increasing due to increase in global competitiveness and increase in labour market flexibility.

Recruitment function is one of the important parts of an organization‘s Human Resource Planning. It
serves fulfilling organisations‘ need by enabling it to have a set of competitive, motivated, flexible and
more adoptable Human Resources which can ensure continued operation for fulfillment of organisations‘
objective.

Competent Human Resources at the right positions are crucial for the organisation and constitute core
competency. The organisation reaps strategic advantage out of it.

Recruitment helps in creating a pool of prospective employees for the organisations, so that the right
candidates for the right jobs can be selected from this pool.

The objective of recruitment process is to get the required number of employees with proper quality that
can be selected to help the organisation to attain its goals.

Recruitment establishes a link between the job seekers and employers. By which, it ensures the placement
of right candidates at the right place at the right time. Following the right recruitment processes and
practices facilitate the selection of the suitable candidates for the organisation.

This chapter focuses on four important organisational activities such as recruitment, selection, induction,
and placement. These four are important tools for procuring and using Human Resources in an
organisation effectively.
• Recruitment involves employing suitably trained workforce.
• Selection helps in choosing the right candidate for the right job.
• Induction and placement refers to putting the selected personnel on the right jobs.
Due to increasing importance of human resources, it is now imperative for all organisations to retain the
existing manpower and at the same time to recruit and select best possible required talents. To recruit
manpower for unskilled jobs, the organisation faces no problems due to abundances in availability of
these types of people and high rate of unemployment in India. Whereas recruitment function is more
complex and dynamic for managerial positions with professional skills.
 2. Definition and concept of recruitment
Recruitment is the process that identifies as well as hires the best-qualified candidates from within or
outside of an organization for job vacancies, in a most timely and cost effective manner.

According to Edwin B. Flippo, "Recruitment is the process of searching for the potential candidates for
employment and stimulating them to apply for job vacancies in the organisation". Recruitment involves
the activity that links the job seekers with employment providers.
Recruitment is also a process of finding and attracting capable applicants for employment. The process
starts with seeking of new recruits and ends when their applications are submitted. The objective is to
have a pool of applications from which most suitable employees are selected.

As pointed out by Yoder "recruitment is a process to discover sources of manpower to best meet the
requirements of staffing schedule. It also involves employing effective measures for attracting that
manpower in adequate numbers to facilitate effective selection in order to get an efficient work force."
Recruitment is an organisational function that precedes the selection. It helps in creating a wide pool of
prospective employees for the organisation to facilitate the selection of the right candidates for the right
jobs from this pool. Recruitment expedites the process of selection.

Recruitment is a continuous process by which the organisations endeavour to develop a pool of qualified
applicants for the existing vacancies as well as for future human resources needs. In general the
recruitment process starts from employee requisition process for existing or for anticipated vacancies.
Theoretically, recruitment process ends with receipt of applications but in practice the activity continues
up to the screening of applicants that eliminate unqualified people.

3. Recruitment Needs:
There are three types of recruitment needs as follows:
(a) Planned: These types of recruitment needs arise from changes in organization and out of
retirement policy.
(b) Anticipated: Anticipated needs arise due to movements of personnel. An organization can study
the trends of movement by analysing internal and external environment and predict the
recruitment need.
(c) Unexpected: Resignation, deaths, accidents, prolonged illness are the primary cause of
unexpected recruitment needs.

4. Forms of recruitment
Organisations adopt different forms of recruitment practices to cater to its specific needs. The
organisations choose whether to go for centralized forms of recruitment or decentralized forms of
recruitment.
Centralized recruitment
The recruitment practices of an organisation are said to be centralized when all recruitment functions are
performed by the HR department at the head office. One central HR or recruitment department takes the
recruitment decisions for all the business verticals and functional departments of the entire organisation.
Centralized from of recruitment is a common practice in government organisations.
Decentralized recruitment
Decentralized recruitment practices are most common in case of conglomerates that operate in different
and diverse business areas. When the business is diverse and there are geographically spread business
areas and offices, then it becomes imperative to understand the needs of each unit in order to formulate
the appropriate recruitment policies and procedures. In decentralised form of recruitment, each unit
carries out its own recruitment drive taking into consideration of their own recruitment need. However,
choice between the two forms basically depends upon management philosophy and needs of particular
organization. In some cases combination of both form of recruitment is also in practice. Top level
executives as well as lower level staffs are recruited in a decentralized manner.

5. Factors affecting recruitment

The recruitment function of the organisations get affected and governed by both internal and external
forces. The internal factors are endogenous in nature and the organisations do have control over it. The
external factors are basically exogenous and beyond the control of the organisation.
Internal factors of recruitment:
The followings actors are the internal forces to recruitment.
(a) Size of the organization: The organization‘s size and the number of employees employed affect
the recruitment process. Generally larger organizations find recruitment less problematic than
organizations with smaller in size. Besides this the growth and expansion plans of the
organisation also affect recruitment process.
(b) Recruitment policy: The recruitment policy of the organization such as whether to recruit from
internal sources or to go for external sources also affects the recruitment process. Apart from
recruitment policy of the organisation the recruitment cost also affect the recruitment process.
(c) Image of the organization: Organization‘s image has its impact and influence on its recruitment
process. Good image of the organization helps in attracting and stimulating potential and
competent candidates to apply for the organisation. Managerial overt and covert actions such as
good public relations, rendering public services like building roads, hospitals, schools and public
parks earn image and goodwill for organization.
(d) Image of the job: Good image of a job is generally characterised by better remuneration and
good working conditions, Promotion and career development policies of organization. These
factors also have its impact in attracting potential candidates.
External factors of recruitment:
(a) Demographic factors: Demographic compositions such as age, sex, education, literacy rate,
economic status of the society and nation have profound influence on recruitment process of any
organisation.
(b) Labour market: Labour market condition, such as supply and demand of labour is of particular
significance in affecting recruitment process. Recruitment becomes relatively easier, if the
demand for particular skill is high in comparison to its supply.
(c) Unemployment situation: The unemployment rate is another important external factor that
influences recruitment process. When the rate of employment is high in a locality, the recruitment
process becomes simpler and easier because of abundant availability of best-qualified
applications and recruitment process tends to become difficult with low rate of employment.
 (d) Labour laws: There are quite a good number of labour laws and regulations formulated and
implemented by the central and state governments such as the Factory Act, 1948, and the Mines
Act, 1952 etc deal with recruitment and govern employment conditions and living conditions of
employees etc.
(e) Legal consideration: legal consideration such as employment reservation of jobs for schedule
caste (SCs), schedule tribes (STs) and other backward classes (OBC) and like are various external
factors that affect recruitment.

6. Need and importance of Recruitment,

(a) Attract and encourage a good number of candidates to apply for the organisational vacancies.
(b) Create a talent pool of prospective candidates that enables the selection of best candidates to suit for
the organisational need.
(c) Determine present and future organisational requirement taking into consideration of personnel
planning and job analysis activities.
(d) Links the employers with the potential employees.
(e) Increase potential candidates‘ pool at less cost.
(f) Increases success rate of selection process by reducing the number of under qualified or overqualified
job applicants.
(g) Reduce the probability of leaving the organisation only after a short period of time, once recruited and
selected.
(h) Meet the organizations‘ legal and social obligations maintaining its workforce composition.
(i) Determine the appropriateness of the candidates by identifying and preparing potential job applicants.
(j) Increase organizational and individual effectiveness regarding application of various recruitment
techniques and taping different sources of recruitment concerned.

7. Methods of recruitment
Recruitment methods are the means by which an employer organization reaches at the potential job
seekers . Recruitment methods are different from the sources of recruitment. The former is the means of
establishing links with the prospective candidates, whereas, the latter refers to the location where the
prospective employees are available. Dunn and Stephen have broadly classified three methods of
recruitment.
1. Direct method: This is the method by which the representatives of the organizations visit to the
educational and professional institutes in search of the potential candidates . The objective is to establish
contacts with the candidates seeking jobs. Persons pursuing management, engineering, medical and
basically most of the software programmers are picked up by this manner. Sometimes, employer firms
establish direct links with professors of these institutes and solicit information about students with
excellent academic records. Employer organisation also send recruiters to the conventions, seminars, set
up job fairs and take the help of mobile offices to establish direct contact with the job seekers.
2. Indirect method: Indirect methods include advertisements in the newspaper, on radio and television,
in trade and professional journals, technical magazines, and brochures etc. Basically indirect method is
most suitable when the organizations want to reach out a vast territory. Sometimes, many organizations
prefer for blind advertisement, in which only Box No is mentioned and the identity of the organization is
not revealed . Generally, reputed organizations do not go for blind advertisements.
3. Third party method : This method take use of commercial or private employment agencies, state
agencies, management consultant firms, professional bodies, professional associations. It also include
employee referral and recommendation, services of voluntary organization, trade banks, labour
contractors and friends and relatives and so on to establish contact with the job seekers.

8. Recruitment policy:
Every organisation must have suitable recruitment policy. Such a policy asserts the recruitment objective
and provides a framework for implementation of its recruitment programme in the form of procedure. A
sound recruitment policy involves a commitment to broad principles of filling up organisational vacancies
with the best qualified individual. For which it calls for adopting a scientific process of recruitment with
due consideration of need and priorities of organisation. Unless a company adopts a suitable recruitment
policy, it may not be possible for a company to have right candidates for right job. A sound recruitment
policy, therefore, needs to identify--
(a) Organisation objectives
(b) The recruitment needs of the organisation
(c) Preferred sources of recruitment
(d) Suitable criteria for selection
(e) Cost of recruitment

9. Recruitment process
Since recruitment is the process of locating , identifying, and attracting capable applications for available
jobs in an organization. The process of recruitment comprises of the following five steps:
Recruitment Planning: planning is the first step in the recruitment process. It involves drafting a
comprehensive job specification for the positions to be filled up. That defines major and minor
responsibilities associated with the job, prescribes the needed skills, essential qualifications and
experience. It also specify the grade and level of pay, mention joining date, clarify temporary or
permanent, and define the special conditions of the job to be filled.

Strategy Development: Once, an organisation find out the size and quality of candidates to be recruited,
then a suitable recruitment strategy is developed. The strategic considerations considers issues like
whether to choose from internal sources or hire it from outside. It also takes care of choosing recruitment
method , geographical area to be selected for searching the candidates and include sequence of activities
to be followed in recruiting candidates .

Searching: This step involves attracting job seekers to the organization. Broadly, there are two sources
used for recruitment. One is internal source and another is external source.

Screening: Screening may be viewed as the starting point of selection. It can also be considered as an
integral part of recruitment because selection process starts only after the applications have been screened
and short listed. Screening is done on the basis of Job specification. Applications are screened against the
qualification and experiences, knowledge, skills, abilities and interest as mentioned in the job
specification. The techniques used for screening may vary depending upon the sources of supply and
methods used for recruitment. Preliminary applications screening, de-selections tests and screening
interviews are commonly used techniques for screening the candidates.
Evaluation and control: The recruitment process involves considerable cost. The costs generally include
cost of preparing job analysis, advertisement cost, administrative expenses, cost of outsourcing or
overtime, and the cost of recruiting unsuitable candidates. It also includes recruiters‘ salary too.
Therefore, to know the effectiveness of recruitment, its evaluation and control is imperative.

10. Recent Trends in Recruitment

Out sourcing
The HR processes are outsourced by Indian organisations since more than a decade now. Outsourcing
firms provide the required personnel to the recruiter. The outsourcing firms conduct initial screening of
the candidates taking into consideration of the specific needs of the organisation. Thereby create a
suitable pool of talent and make the final selection easier for the employer organisation. The job of the
outsourcing firms is to develop a human resource pool and make them available for other companies as
per their needs. The outsourcing firms function as the intermediaries and they charge the employer
organisations for their services. The followings are the advantages of outsourcing.
• Employer organisation need not worry to plan for their human resources much in advance.
• Value creation may occur by outsourcing.
• It provides operational flexibility and competitive advantage can be obtained by outsourcing.
• Management may focus on strategic level processes of HRM.
• Company can weed the unsuitable resumes/candidates easily.
• Company can save time and lot of its resources.

Poaching/raiding
Poaching is a managerial approach that involves "buying talent" rather than developing it. It is concerned
with employing competent and experienced persons of other reputed companies in the same or different
industry. A rival company offer attractive pay packages and better terms and conditions than that of
current employer in order to attract talent. This practice is considered as unethical and not openly talked
about. Poaching is very predominant feature of Indian software sector. Poaching weakens the human
resource strength of the firm and subsequently the competitiveness. For which, it has become a great
challenge for human resource managers of software companies to tackle poaching.

E-recruitment
In the era of information communication technology era, many medium and large organizations use
Internet as a convenient source of recruitment known as e- recruitment. It takes the help of technology to
facilitate recruitment process. Advertisement of job vacancies to be filled up is done through worldwide
web. The job seekers, after getting the information from the web, fill up the application format or send the
curriculum vitae through e- mail using the Internet. On the other hand, the Job seekers can also place their
CVs in worldwide web. That can also be drawn by prospective employers at the time of need to fulfill
their requirements. E-recruitment is considered as low cost recruitment without any intermediaries. It also
takes less time for recruiting right type of people and the process is regarded as efficient one.
 11. HR Challenges in Recruitment
Recruitment is a procurement function. To find and place the best potential candidates, it requires
business perspective, expertise, and ability of the recruiter that will be beneficial both for the organisation
and individuals. For which, the HR professionals handling the recruitment function always encounter new
challenges. To go for internal source or choose the best people of potential candidates from outside is the
biggest challenge for such professional. The phenomenal changes in job market in terms of technologies,
sources of recruitment, competitions etc also bring lot of challenges for recruitment function to carry on.
Moreover, in an already saturated job market, where the practices like poaching and raiding are gaining
momentum, HR professionals are constantly facing new challenges, while performing recruitment
function for the organisation. They need to conquer different challenges in order to find the best possible
candidates in accordance with the requirements of their respective organisations. The followings are the
major challenges faced by the HR professionals in recruitment function.
1. Adaptability to globalization: The HR professionals are required and expected to perform recruitment
function keeping pace with the changes that are happening all across the globe.
2. Lack of motivation: Recruitment is still considered as thankless job. HR department and professionals
receive no appreciation for recruiting the right candidates and good performers, even if the organisation
achieves the required results, resulting in decrease in motivation.
3. Process analysis: The recruitment process should be flexible, adaptive and responsive enough in
maintaining timeliness and cater to the immediate requirements of the organisation. The process also
needs to be cost effective.
4. Strategic prioritization: HR professionals, while performing recruitment function, need to take a
strategic move, so that they can get opportunity from the challenges associated with emerging new
systems. Therefore, review of staffing needs and prioritization of the tasks in accordance with market
demands has become a major challenge for the recruitment professionals.

12. Sources of Recruitment

There are twomain methods / sources of recruitment which are as follow.
• Internal Recruitment
• External Recruitment
He organizations has two options to fill the vacant posts of the upper level management by either hiring
employees from outside of the organization or by promoting the existing lower level employees. Both
ways have some advantages & disadvantages.

13. Internal Sources of Recruitment

When there come job vacancies in the organization, the first priority that an organization focus is
replacement from internal environment of the organization. The existing employees of the organization
think that they should be preferred for the vacant jobs position of the organization because they are
already serving the organization with potential & commitment. Also the recruiting management of the
organization has access to the records of its existing employees in order to determine which employee has
the potential to bear the higher level responsibilities. Another feature of recruitment from the internal
environment is that it is much cost effective.
Following are some of the main forms of internal recruitment.
• Promotion from within
• Job Posting
• Contacts & Referrals
Promotion from Within
Many organizations prefer to promote their entry level employees to the higher level positions and
therefore such organizations maintain human resource planning system. The human resource planning
system uses the replacement charts & succession plans to point out & promote employees to the higher
level positions. The performance appraisals are reviewed for the purpose of identifying the employees that
have potential & desire to be promoted. The internal recruitment increases the motivation among existing
employees for effective work & this would finally enhance the morale of employees.

Job Posting
Job posting is also used for the internal recruitment by the organizations. The organization informs its
employees about the new job opening through publications, bulletins & personal letters. The main reason
of job posting is to communicate with the employees about the vacant posts. Following are guidelines for
the effective job posting.
• Job posting must be prominent
• The job specifications should be communicated clearly so that the employees can ascertain by
themselves that either they are eligible for the post or not.
• All the applicants must be informed about the decisions made by the management.
• The working of job posting system is quite well.

Contacts & Referrals

Many organizations conclude that their employees can support the recruiting process. The employees can
refer the applications of their friends & associates. The organization supports its existing employees to
attract the applications of their friends & relatives for the vacant posts. In this way the employees refer
their associates & friends to apply for the posts which is much cost effective & quick process of
recruitment. However there are certain problems associated with the hiring the relatives & friends of
existing employees like favoritism etc.
Advantages of Internal Recruitment
The advantages associated with the internal recruitment are as follow.
• The existing employees of the organization are more motivated to perform well.
• There are greater career planning & development opportunities for the existing employees of the
organization.
• The abilities of the existing employees are better assessed by the opportunities of internal
recruitment.
• The morale of employee along with the loyalty to the organization is enhanced.
• The employees can perform well with little loss of time.
Disadvantages of Internal Recruitment
Following are the main disadvantages of internal recruitment.
• Internal recruitment promotes stale ideas & narrow thinking.
• The competition among the employees in enhances for the effective performance due to pressure.
• The workforce of the organization remains homogenous.
• There is probability of the losing of external better outside talent.
• In some cases special management development programs are employed to train for the advanced
technology.
14. External Sources of Recruitment
There are several ways of external sources of recruitment. The organization must clearly determine the
types of positions that need to be filled along with the best recruiting methods so that favourable results
would be generated.
The organization is concerned with the external recruitment in order to fill low level post, acquire
different background employees with unique ideas & obtaining of required skills that existing employees
do not possessed. Following are the sources of external recruitment.
(a) Vocational & High Schools
(b) Community Colleges
(c) Colleges & Universities
(d) Competitors & Other Organizations
(e) Unemployed
(f) Older Individuals
(g) Military Personnel
(h) Self Employed Workers
(a) Vocational & High Schools: Organizations contact with the vocational & high schools for the
recruitment of employees for the post of entry level & operative

(b) Community Colleges: Community colleges serve as sources for the external recruitment of
employees for the relatively higher posts. There are graduates that are passed from these colleges and
who possess marketable skills.

(c) Colleges & Universities: Many organizations contact colleges & universities for search of potential
new employees related to the technical & managerial areas. Many universities publish their booklets
that contain information about qualification & potential level of their students so that the
organizations searching for fresh employees are facilitated.

(d) Competitors & Other Firms: The job positions that require experience and skills can be filled
effectively by contacting the employees of competing organizations.

(e) Unemployed: Unemployed persons are also an important source of external recruitment.

(f) Older Individuals: The old age persons or retired person can also become effective employees for
the organizations.

(g) Military Personnel: This source seems to be attractive to many organizations because military
people have proved a record of motivated, flexible & drug free work.

(h) Self Employed Workers: Self employed workers are also regarded as important source of external
recruitment in the areas of technicians, administration or management etc.
 15. External Recruitment Methods
Recruitment methods are defined as particular means of attracting potential employees towards the
organization. Following are the main external recruitment methods.
Advertising
One effective method to communicate about the vacant posts of the organization is through advertising in
which newspaper, television, radio, internet & industry publication media are used to inform the general
public. In some case the organizations involved in the blind advertisement in which the recruiting
organization is not identified. There are many reasons for the application of blind advertisement like:
• The organization tries to cover low level of applicants & to discourage the irrelevant traffic of
applicants.
• The organization may have bad image or reputation that prevents enough applicants.
• When the purpose of advertisement is test marketing only.

Employment Agencies
Employment agencies are also organizations that not only assist the organizations in the recruitment of the
employee but also facilitate the persons to find a suitable job. There are two kinds of employment
agencies which are as follow.
• Public Employment Agencies
• Private Employment Agencies
Both kinds of agencies facilitate the organizations & individual persons to coordinate for the recruitment
of job. In return of their services, these agencies charge specific fee. In some cases the employment
agencies specialize themselves for only specific areas of jobs like engineering, computer programming,
human resource etc.

Recruiters
The recruiters are associated with the colleges, universities, vocational & technical schools, community
colleges etc.

Special Events
In this method of external recruitment, special effort is made by single or group of employers to attract &
interview large number of applicants.

Internship
In this method a student is placed at a post on temporary basis. The organization has not any
responsibility to convert the internee as a permanent employee & similarly the student is also free to
accept or reject the permanent employment. This method is more similar to training than to the
recruitment but however these internship programs are helpful for the organizations in recruiting potential
& knowledgeable employees.

Executive Search Firms

These firms are also called ―head hunters‖ and these are concerned with the provision of top executives or
highly experienced professionals. Organization that needs special type of person as employee contacts
these searching firms which would provide the required person to the organization.
Professional Associations
In certain business professions like marketing, finance, human resource etc. there are associations that
give the services of recruitment & replacement for their members. Professional associations provide a
bridge that connects professional with their related jobs. Most professional associations post the jobs
through the advertisement on newsletters, trade publications & annual general meeting. The annual
general meeting of these associations provides a chance for professional to know the opened posts of jobs
& also the employers of the posted jobs to interview the professionals.

Unsolicited Walk-In Applicants

The organization that has good reputation for the working employees receives a lot of unsolicited
applications from the prospective applicants. In such cases the organization does not exercise much effort
on recruiting process.
Besides these methods there are also some other methods of external recruitment like open houses, virtual
job fairs, cyber recruiting etc.

16. Advantages of External Recruitment

Following are some of the advantages of external recruitment.
• The new ideas are obtained with the new employees along with the new insights.
• The diversity among the workforce is promoted which helps to accomplish EEO goals through
affirmative action.
• The rapid growth of the organization is effectively handled through external recruitment.
• The employees of the organization remain up-to-date in the field of relevant knowledge & training.

17. Disadvantages of External Recruitment

External Recruitment as also faced with some disadvantages which are as follow.
• One of the main disadvantage of external recruitment is that it is much more time consuming and
expensive for the organization.
• The existing employees lost the incentives of promotion.
• There are more chances that the recruiting management makes mistakes because applicant
assessment is difficult task & if it is failed than it result in wastage of resources.

18. Recruitment and Selection Process

Recruitment and Selection process is defined as the process through which the best individuals are
selected among a pool of applicants for particular positions of job. Mostly managers consider selection
process as one of their critical decision functions in the organization. In selection process, the managers
actually try to match knowledge, skills & abilities of the applicants with the requirements of the jobs.
There is no single selection process that can be considered as standard one for all the organizations.
Rather the steps & procedure of selection process varies from organization to organization.
 19. Factors Effecting Recruitment and Selection Process
Recruitment and Selection Process is supported by a standard & permanent process of screening.
However in some cases the screening process cannot simplify the selection process because there are
certain other factors that influence the selection process. These factors are the environmental factors & are
as follow.
(a) Legal Considerations
(b) Speed of Decision Making
(c) Organizational Hierarchy
(d) Applicant Pool
(e) Types of Organization
(f) Probationary Period
(g) Selection Criteria:
(a) Legal Considerations: Human Resource Management is influenced by the court decisions, executive
orders & legislation. The management of the organization should use the legally defensive selection
tools in the selection process.

(b) Speed of Decision Making: The recruitment and selection process is directly influenced by the
available time to make the decision of selection. In general cases the selection process is followed by
the specified policies & procedures to protect the organization from legal issues. But in certain
situations there is much pressure on the organization that leads the management to follow the
exceptional selection process.

(c) Organizational Hierarchy: Recruitment and selection process varies according to the filling posts of
different levels of hierarchy in the organizational structure.

(d) Applicant Pool: The recruitment and selection process is also influenced by the number of applicants
for a particular job. In case of many qualified applicants for a particular post, the selection process
becomes selective. For this purpose, selection ratio is ascertained by comparing the number of selected
applicants to the number of applicants in a pool.

(e) Type of Organization: The type of the organization like government organization, private or non-
profit organization etc, also affects the selection process for the hiring individuals.

(f) Probationary Period: Certain organization adopts the procedure of probation period in the selection
process to check the potential of the individual on the basis of his performance. This may take the
form of either validity check on the selection process or as a substitute of some steps of the selection
process.
(g) Selection Criteria: In most of the cases the applicants are selected on the basis of following factors or
criterion.
• Education
• Competence
• Experience
• Skills & Abilities
• Personal Characteristics
 In way the applicant that best fits the above criterion is selected rather than the one that has
extraordinary skills or over as well as under qualified because in such case the later selected person
would not properly adjust in the organization.

20. Steps Involved in Recruitment Process in HRM

In typical cases, the selection process starts with the preliminary interview after which the applications for
the employment are filled by the candidates. The candidates pass through a number of selection tests,
interviews of employment and background check & references. The candidates that are successful in all
the previous steps get physical examination test by the company and if the results are satisfactory, they
are selected. There are several internal & external forces that influence the selection process & therefore
the managers must consider these factors before making a final decision of selection. Following are the
standardized steps of the selection process but some organizations may alter some of these steps in their
selection process.
(a) Initial Screening
(b) Application blank
(c) Pre-employment Testing
(d) Interview
(e) Background Checks
(f) Conditional Job Offer
(g) Drug Test/Medical Exam
(h) Final Selection Decision
Now each step is discussed one by one.

(a) Initial Screening: Generally the Selection and the Recruitment Process starts with the initial screening
of applicants so that the unqualified ones are drop out at the initial stage. Initial screening is helpful to
save the time, cost & effort of the selection committee in the following steps of the selection process.
In this step certain general questions are asked from the applicants. There are chances that the some
applicants would be unqualified for the job but some of them would be qualified. So the main purpose
of screening of applicants is to reduce the number of applicants available in the selection process.
Sources used in the Screening Effort
The main source of initial screening is the curriculum vitae of the applicant along with the job
application. Following information is included in the above mentioned documents.
Education & employment History
Evaluation of character
Evaluation of job performance
Screening Interviews
Screening interviews are employed to
To verify the accuracy & validity of the information given in the curriculum vitae of the applicant.
The duration of these interviews is quite short.
Advantages of Successful Screening
When the initial screening step become successful, the removing applicants don not proceed to the
next step of the selection process because they do not meet the minimum requirements. Secondly the
selection costs of the organization are much reduced through proper screening of the applicants.
(b) Application Blank: The person‘s application for employment is formally recorded in the shape of
application blank. In the next step of the selection process, an application form for the employment is
completed by the prospective applicant. The information contained in the application blank differ from
one organization to another organization and in job posts, it may vary even within the same
organization. But generally the informational needs and the requirements of EEO are covered in the
application blank. The historical data from the candidate can be quickly collected through the
application blanks so that further verification about the accuracy of the data is carried out.

(c) Pre-employment Test: The physical & mental abilities, knowledge, skills, personal characteristics &
other aspects of behaviour can be effectively measured through the pre-employment tests. For this
purpose there are hundreds of test that can measure the different aspects of human behaviour. With the
passage of time, the application of pre-employment test is growing at a fast rate in the selection
process because they can explain the qualities & skills of applicant clearly. These tests are more used
in the large & public sector organizations. The advantage of application of tests in the selection
process is that it can ensure the potential & qualified candidate selection from a pool of applicants for
a job.

(d) Job Interviews: In the interview, the interviewer & applicant exchange information in order to
achieve a goal through conversation. The employment interviews are conducted during the selection
process through proper planning. The pleasant location of the interviewing place is selected and the
interviewer has the good personality with empathy & ability to communicate & listen effectively. A
job profile must be prepared on the basis of job description before conducting interview.
Contents of the Interview
Although the contents of the employment interview varies from one organization to another & also
according to the nature of job but still following are the essential contents of the interview.
• Occupational Experience
• Academic Achievement
• Interpersonal Skills
• Personal Qualities
• Organizational Fit
Types of Interviews
The interviews are generally categorized into the following three types.
Unstructured Interview: In unstructured interviews open ended questions are asked from the
applicant in order to perform probing. It is generally non-directive in nature and applicant is
encouraged to give lengthy answers.
Structured Interview: In structured interview, a list of job related questions associated to particular
job are asked from each applicant in a consistent manner. It is directive or patterned in nature and
includes the following four kinds of questions.
• Situational Questions
• Job Knowledge Questions
• Job-sample simulation Questions
• Worker Requirement Questions
 Mixed Interview: It is a special kind of structured interview in which specially designed questions are
asked from the applicant to probe his past behaviour in specific situations. It does not include the self-
evaluative & hypothetical questions & inhibits to judge the personality of the applicant. The
candidates are rated on the basis of their responses in the light of the bench-marked answer of
successful employees.
Methods of Interviewing
Following are the main ways of conducting interviews.
• One-on-One Interview
• Group Interview
• Board Interview
• Stress Interview
(e) Back Ground Checks: The accuracy of the application form of the candidate is verified through
references & former employer. The educational, criminal record & legal status to work are verified.
Personal references of applicant are contacted to confirm the validity & accuracy of the provided
information. Effort is made to know the past behavior of the employees to that the future behaviour
can be predicted from it. Background checks assist the selection committee in dropping the applicants
that have past insubordination issues, attendance problem, theft or special behavioural problems. The
level of responsibility of the new job directs the intensity of the background investigation.

(f) Conditional Job Offer: After going through all the previous steps of selection process, there comes
the most important step of the selection process in which the decision of hiring is made. The applicant
that best meets the requirements of the job is selected. At start conditional job letter is issued which
must be followed by medical exam.

(g) Medical Exam: When the conditional job letter is issued the next step of the selection process starts in
which the physical/medical examination of the selected candidate is conducted. The medical exam of
the candidate is essential to check either he takes the drugs or not. If he passes the exam, he would be
finally selected for the job.

(h) Final Selection Decision After passing the medical exam by the candidate, the final offer for the job is
made to the candidate by the relative department.

21. Selection: Meaning and Steps Involved in Selection Procedure!

Finding the interested candidates who have submitted their profiles for a particular job is the process of
recruitment, and choosing the best and most suitable candidates among them is the process of selection. It
results in elimination of unsuitable candidates. It follows scientific techniques for the appropriate choice
of a person for the job.

The recruitment process has a wide coverage as it collects the applications of interested candidates,
whereas the selection process narrows down the scope and becomes specific when it selects the suitable
candidates.
Stone defines, ‗Selection is the process of differentiating between applicants in order to identify (and
hire) those with a greater likelihood of success in a job‘.
 22. Steps Involved in Selection Procedure:
Brief details of the various steps in selection procedure are given as follows:
1. Inviting applications:
The prospective candidates from within the organization or outside the organization are called for
applying for the post. Detailed job description and job specification are provided in the advertisement for
the job. It attracts a large number of candidates from various areas.
2. Receiving applications:
Detailed applications are collected from the candidates which provide the necessary information about
personal and professional details of a person. These applications facilitate analysis and comparison of the
candidates.
3. Scrutiny of applications:
As the limit of the period within which the company is supposed to receive applications ends, the
applications are sorted out. Incomplete applications get rejected; applicants with un-matching job
specifications are also rejected.
4. Written tests:
As the final list of candidates becomes ready after the scrutiny of applications, the written test is
conducted. This test is conducted for understanding the technical knowledge, attitude and interest of the
candidates. This process is useful when the number of applicants is large.
Many times, a second chance is given to candidates to prove themselves by conducting another written
test.
5. Psychological tests:
These tests are conducted individually and they help for finding out the individual quality and skill of a
person. The types of psychological tests are aptitude test, intelligence test, synthetic test and personality
test
6. Personal interview:
Candidates proving themselves successful through tests are interviewed personally. The interviewers may
be individual or a panel. It generally involves officers from the top management.
7. Reference check:
Generally, at least two references are asked for by the company from the candidate. Reference check is a
type of crosscheck for the information provided by the candidate through their application form and
during the interviews.
8. Medical examination:
Physical strength and fitness of a candidate is must before they takes up the job. In-spite of good
performance in tests and interviews, candidates can be rejected on the basis of their ill health.
9. Final selection:
At this step, the candidate is given the appointment letter to join the organization on a particular date. The
appointment letter specifies the post, title, salary and terms of employment. Generally, initial appointment
is on probation and after specific time period it becomes permanent.
10. Placement:
This is a final step. A suitable job is allocated to the appointed candidate so that they can get the whole
idea about the nature of the job. They can get adjusted to the job and perform well in future with all
capacities and strengths.
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) is the first step in procurement function.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(2) _________helps in creating a pool of prospective employees for the organisations, so that the
right candidates for the right jobs can be selected from this pool.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(3) The objective of __________process is to get the required number of employees with proper
quality that can be selected to help the organisation to attain its goals.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(4) Recruitment establishes a link between the job seekers and employers.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(5) Which of the following are the important organisational activities
(a) Recruitment
(b) Selection
(c) Placement
(d) All of the above
(6) involves employing suitably trained workforce.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(7) helps in choosing the right candidate for the right job.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(8) refers to putting the selected personnel on the right jobs.
(a) Induction
(b) Placement
(c) Selection
(d) Induction and placement both
(9) Which of the following are the important tools for procuring and using Human Resources in an
organisation effectively.
(a) Recruitment involves employing suitably trained workforce.
(b) Selection helps in choosing the right candidate for the right job.
(c) Induction and placement refers to putting the selected personnel on the right jobs.
(d) All of the above
(10) is the process that identifies as well as hires the best-qualified candidates from within
or outside of an organization for job vacancies, in a most timely and cost effective manner.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(11) According to Edwin B. Flippo, "_____________ is the process of searching for the potential
candidates for employment and stimulating them to apply for job vacancies in the organisation".
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(12) Recruitment is also a process of finding and attracting capable applicants for employment
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(13) As pointed out by Yoder " __________ is a process to discover sources of manpower to best meet
the requirements of staffing schedule.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(14) Recruitment is an organisational function that precedes the ___________
(a) Selection
(b) Placement
(c) Induction
(d) None of the above
(15) Recruitment is a _________ process
(a) Fixed
(b) continuous
(c) Static
(d) Constant
(16) Recruitment expedites the process of _________
(a) Selection
(b) Placement
(c) Induction
(d) None of the above
(17) Which of the following are the types of recruitment need?
(a) Planned
(b) Anticipated
(c) Unexpected
(d) All of the above
(18) The recruitment practices of an organisation are said to be ___________when all recruitment
functions are performed by the HR department at the head office
(a) Centralized recruitment
(b) Decentralized recruitment
(c) Both
(d) None of the above
(19) Centralized from of recruitment is a common practice in government organisations.
(a) Centralized recruitment
(b) Decentralized recruitment
(c) Both
(d) None of the above
(20) Under __________One central HR or recruitment department takes the recruitment decisions
for all the business verticals and functional departments of the entire organisation.
(a) Centralized recruitment
(b) Decentralized recruitment
(c) Both
(d) None of the above
(21) __________practices are most common in case of conglomerates that operate in different and
diverse business areas.
(a) Centralized recruitment
(b) Decentralized recruitment
(c) Both
(d) None of the above
(22) Under__________, each unit carries out its own recruitment drive taking into consideration of
their own recruitment need.
(a) Centralized recruitment
(b) Decentralized recruitment
(c) Both
(d) None of the above
(23) Which of the following are the Internal factors of recruitment?
(a) Size of the organization:
(b) Image of the organization:
(c) Image of the job:
(d) All of the above
(24) Which of the following are the external factors of recruitment?
(a) Demographic factors:
(b) Labour market:
(c) Unemployment situation:
(d) All of the above
(25) Which of the following are the external factors of recruitment?
(a) Labour market:
(b) Labour laws:
(c) Legal consideration
(d) All of the above
(26) Which of the following are Demographic factors of recruitment?
(a) age
(b) sex
(c) education
(d) All of the above
(27) Which of the following are the needs/Importance of recruitment?
(a) Attract and encourage a good number of candidates to apply for the organisational vacancies.
(b) Create a talent pool of prospective candidates that enables the selection of best candidates
(c) Determine present and future organisational requirement
(d) All of the above
(28) Which of the following are the needs/Importance of recruitment?
(a) Links the employers with the potential employees.
(b) Increase potential candidates‘ pool at less cost.
(c) Increases success rate of selection process
(d) All of the above
(29) Which of the following are the needs/Importance of recruitment?
(a) Reduce the probability of leaving the organisation
(b) Meet the organizations‘ legal and social obligations
(c) Determine the appropriateness of the candidates
(d) All of the above
(30) Which of the following are the Methods of recruitment
(a) Direct method
(b) Indirect method
(c) Third party method
(d) All of the above
(31) Under __________of recruitment, the representatives of the organizations visit to the
educational and professional institutes in search of the potential candidates .
(a) Direct method
(b) Indirect method
(c) Third party method
(d) All of the above
(32) ____________of recruitment, include advertisements in the newspaper, on radio and television,
in trade and professional journals, technical magazines, and brochures etc.
(a) Direct method
(b) Indirect method
(c) Third party method
(d) All of the above
(33) __________of recruitment, is most suitable when the organizations want to reach out a vast
territory.
(a) Direct method
(b) Indirect method
(c) Third party method
(d) All of the above
(34) __________of recruitment, take use of commercial or private employment agencies, state
agencies, management consultant firms, professional bodies, professional associations.
(a) Direct method
(b) Indirect method
(c) Third party method
(d) All of the above
(35) A sound recruitment policy needs to identify--
(a) Organisation objectives
(b) The recruitment needs of the organisation
(c) Preferred sources of recruitment
(d) All of the above
(36) A sound recruitment policy needs to identify--
(a) Preferred sources of recruitment
(b) Suitable criteria for selection
(c) Cost of recruitment
(d) All of the above
(37) Which of the following are the steps of the process of recruitment?
(a) Recruitment Planning:
(b) Strategy Development:
(c) Searching:
(d) All of the above
(38) Which of the following are the steps of the process of recruitment?
(a) Recruitment Planning:
(b) Screening:
(c) Evaluation and control:
(d) All of the above
(39) is the first step in the recruitment process
(a) Recruitment Planning:
(b) Strategy Development:
(c) Searching:
(d) Screening:
(40) may be viewed as the starting point of selection.
(a) Recruitment Planning:
(b) Strategy Development:
(c) Searching:
(d) Screening:
(41) Which of the following are the Recent Trends in Recruitment
(a) Out sourcing
(b) Poaching/raiding
(c) E-recruitment
(d) All of the above
(42) Which of the followings are the advantages of outsourcing?
(a) Employer organisation need not worry to plan for their human resources much in advance.
(b) Value creation may occur by outsourcing.
(c) It provides operational flexibility and competitive advantage can be obtained by outsourcing.
(d) All of the above
(43) Which of the followings are the advantages of outsourcing?
(a) Management may focus on strategic level processes of HRM.
(b) Company can weed the unsuitable resumes/candidates easily.
(c) Company can save time and lot of its resources.
(d) All of the above
(44) To develop a human resource pool and make them available for other companies as per their
needs is called ________
(a) Out sourcing
(b) Poaching/raiding
(c) E-recruitment
(d) All of the above
(45) is a managerial approach that involves "buying talent" rather than developing it.
(a) Out sourcing
(b) Poaching/raiding
(c) E-recruitment
(d) All of the above
(46) __________is concerned with employing competent and experienced persons of other reputed
companies in the same or different industry.
(a) Out sourcing
(b) Poaching/raiding
(c) E-recruitment
(d) All of the above
(47) A rival company offer attractive pay packages and better terms and conditions than that of
current employer in order to attract talent, it is called _________
(a) Out sourcing
(b) Poaching/raiding
(c) E-recruitment
(d) All of the above
(48) In the era of information communication technology era, many medium and large organizations
use Internet as a convenient source of recruitment known as e- recruitment
(a) Out sourcing
(b) Poaching/raiding
(c) E-recruitment
(d) All of the above
(49) is considered as low cost recruitment without any intermediaries. It also takes less time
for recruiting right type of people and the process is regarded as efficient one.
(a) Out sourcing
(b) Poaching/raiding
(c) E-recruitment
(d) All of the above
(50) Which of the followings are the major challenges faced by the HR professionals in recruitment
function.
(a) Adaptability to globalization:
(b) Lack of motivation
(c) Strategic prioritization:
(d) All of the above
(51) Which of the followings are the Internal Sources of Recruitment
(a) Promotion from within
(b) Job Posting
(c) Contacts & Referrals
(d) All of the above
(52) Which of the followings are the External Sources of Recruitment
(a) Community Colleges
(b) Competitors & Other Organizations
(c) Unemployed
(d) All of the above
(53) Which of the followings are the External Recruitment Methods
(a) Advertising
(b) Employment Agencies
(c) Special Events
(d) All of the above
(54) Which of the followings are the External Recruitment Methods
(a) Internship
(b) Executive Search Firms
(c) Professional Associations
(d) All of the above
(55) Which of the followings are the Factors Effecting Recruitment and Selection Process
(a) Legal Considerations
(b) Speed of Decision Making
(c) Organizational Hierarchy
(d) All of the above
(56) Which of the followings are the Factors Effecting Recruitment and Selection Process
(a) Applicant Pool
(b) Types of Organization
(c) Selection Criteria:
(d) All of the above
(57) Which are the Steps Involved in Recruitment Process in HRM
(a) Initial Screening
(b) Interview
(c) Background Checks
(d) All of the above
(58) Which are the Steps Involved in Recruitment Process in HRM
(a) Initial Screening
(b) Drug Test/Medical Exam
(c) Final Selection Decision
(d) All of the above
(59) In _________ open ended questions are asked from the applicant in order to perform probing. It
is generally non-directive in nature and applicant is encouraged to give lengthy answers.
(a) unstructured interviews
(b) Structured Interview:
(c) Mixed Interview:
(d) All of the above
(60) In __________a list of job related questions associated to particular job are asked from each
applicant in a consistent manner.
(a) unstructured interviews
(b) Structured Interview:
(c) Mixed Interview:
(d) All of the above
(61) is a special kind of interview in which specially designed questions are asked from the
applicant to probe his past behaviour in specific situations
(a) unstructured interviews
(b) Structured Interview:
(c) Mixed Interview:
(d) All of the above
(62) Following are the main ways of conducting interviews.
(a) One-on-One Interview
(b) Group Interview
(c) Board Interview
(d) All of the above
(63) Finding the interested candidates who have submitted their profiles for a particular job is the
process of recruitment, and choosing the best and most suitable candidates among them is the
process of ____________
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(64) Stone defines, ‗_______is the process of differentiating between applicants in order to identify
(and hire) those with a greater likelihood of success in a job‘.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(65) The recruitment process has a wide coverage as it collects the applications of interested
candidates, whereas the ___________ process narrows down the scope and becomes specific when
it selects the suitable candidates.
(a) Recruitment
(b) Selection
(c) Placement
(d) Induction
(66) Which of the following are the Steps Involved in Selection Procedure?
(a) Inviting applications:
(b) Receiving applications:
(c) Scrutiny of applications:
(d) All of the above
(67) Which of the following are the Steps Involved in Selection Procedure?
(a) Written tests
(b) Psychological tests
(c) Personal interview
(d) All of the above
(68) Which of the following are the Steps Involved in Selection Procedure?
(a) Medical examination
(b) Placement
(c) Final selection
(d) All of the above
(69) is the final step of selection?
(a) Reference check:
(b) Medical examination:
(c) Final selection:
(d) Placement:
(70) At this step, the candidate is given the appointment letter to join the organization on a particular
date
(a) Reference check:
(b) Medical examination:
(c) Final selection:
(d) Placement:
(71) _________is a type of crosscheck for the information provided by the candidate through their
application form and during the interviews.
(a) Psychological tests:
(b) Written tests:
(c) Scrutiny of applications
(d) Reference check
(72) are conducted individually and they help for finding out the individual quality and
skill of a person.
(a) Psychological tests:
(b) Written tests:
(c) Scrutiny of applications
(d) Reference check
(73) The First step of selection procedure is_______________
(a) Inviting applications
(b) Receiving applications
(c) Scrutiny of applications
(d) Written tests
 Unit 4: Training and Development [Marks: 8]
Training and Development Meaning and purpose of training, Benefits of training to organisation and employees -
Training methods.

1. Training:
Training refers to the process of imparting specific skills. An employee undergoing training is
presumed to have had some formal education. No training program is complete without an element of
education. Hence we can say that Training is offered to operatives.
Training is an educational process which involves the sharpening of skills, concepts, changing of
attitude and gaining more knowledge to enhance the performance of the employees.
Training is about knowing where you are in the present and after some time where will you reach with
your abilities. By training, people can learn new information, new methodology and refresh their existing
knowledge and skills. Due to this there is much improvement and adds up the effectiveness at work.
The motive behind giving the training is to create an impact that lasts beyond the end time of the
training itself and employee gets updated with the new phenomenon. Training can be offered as skill
development for individuals and groups.

2. Education:
It is a theoretical learning in classrooms. The purpose of education is to teach theoretical concepts and
develop a sense of reasoning and judgment. That any training and development program must contain an
element of education is well understood by HR Specialists.

3. Development:
Lots of time training is confused with development, both are different in certain respects yet
components of the same system. Development implies opportunities created to help employees grow. It
is more of long term or futuristic in nature as opposed to training, which focus on the current job. It also is
not limited to the job avenues in the current organisation but may focus on other development aspects
also.
For example, employees are expected to mandatorily attend training program on presentation skills
however they are also free to choose a course on ‗perspectives in leadership through literature‘. Whereas
the presentation skills program helps them on job, the literature based program may or may not help them
directly.
Similarly many organisations choose certain employees preferentially for programs to develop them for
future positions. This is done on the basis of existing attitude, skills and abilities, knowledge and
performance of the employee. Most of the leadership programs tend to be of this nature with a vision of
creating and nurturing leaders for tomorrow.
The major difference between training and development therefore is that while training focuses often on
the current employee needs or competency gaps, development concerns itself with preparing people for
future assignments and responsibilities.
With technology creating more deskilled workers and with industrial workers being replaced by
knowledge workers, training and development is at the forefront of HRD. The onus is now on the
human development department to take a proactive leadership role in responding to training and
business needs.
 4. Difference between Training and Development
Training is skills focused Development is creating learning abilities
Training is presumed to have a formal Development is not education dependent
education
Training needs depend upon lack or deficiency Development depends on personal drive and
in skills ambition
Trainings are generally need based Development is voluntary
Training is a narrower concept focused on job Development is a broader concept focused on
related skills personality development
Training may not include development Development includes training wherever
necessary
Training is aimed at improving job related Development aims at overall personal
efficiency and performance effectiveness including job efficiencies
Training is meant for operatives Development is meant for executives
It is reactive process It is pro- active process
AIM: To develop additional skills AIM: To develop the total personality
It is short term process It is continuous process
OBJECTIVE: To meet the present need of an OBJECTIVE: To meet the future need of an
employee employee
Initiative is taken by the management Initiative is taken by an individual.

5. Importance of Training and Development:

• Optimum utilization of Human resources
• Development of skills
• To increase the productivity
• To provide the zeal of team spirit
• For improvement of organization culture
• To improve quality, safety
• To increase profitability
• Improve the morale and corporate image
• Helps remove performance deficiencies in employees
• Greater stability, flexibility and capacity for growth in an organization
• Accidents, scraps and damages to machinery can be avoided
• Serves as effective source of recruitment
• It is an investment in HR with a promise of better returns in future
• Reduces dissatisfaction, absenteeism, complaints and turnover of employees
 6. Reasons to go for Training and Development:
• When management thinks that there is a need to improve the performances of employees
• To set up the benchmark of improvement so far in the performance improvement effort
• To train about the specific job responsibility
• To test the new methodology for increasing the productivity

(b) Group level

• To face any change in organization strategy at group levels
• When new products and services are launched
• To avoid scraps and accident rates
 10. Identification of Training Needs (Methods)
(a) Individual Training Needs Identification
• Performance Appraisals
• Interviews
• Questionnaires
• Attitude Surveys
• Training Progress Feedback
• Work Sampling
• Rating Scales
(b) Group Level Training Needs Identification
• Organizational Goals and Objectives
• Personnel / Skills Inventories
• Organizational Climate Indices
• Efficiency Indices
• Exit Interviews
• MBO / Work Planning Systems
• Quality Circles
• Customer Satisfaction Survey
• Analysis of Current and Anticipated Changes

11. Benefits of Training Needs Identification

• Trainers can be informed about the broader needs in advance
• Trainers Perception Gaps can be reduced between employees and their supervisors. Trainers can
design course inputs closer to the specific needs of the participants
• Diagnosis of causes of performance deficiencies can be done

12. Methods of Training

(A) On the Job Trainings: These methods are generally applied on the workplace while employees is
actually working. Following are the on-the-job methods.
Advantages of On-the-Job Training:
• It is directly in the context of job
• It is often informal
• It is most effective because it is learning by experience
• It is least expensive
• Trainees are highly motivated
• It is free from artificial classroom situations
Disadvantages of On-the-Job Training:
• Trainer may not be experienced enough to train
• It is not systematically organized
• Poorly conducted programs may create safety hazards
On the Job Training Methods
(a) Job Rotation: In this method, usually employees are put on different jobs turn by turn where
they learn all sorts of jobs of various departments. The objective is to give a comprehensive
awareness about the jobs of different departments. Advantage – employee gets to know how his
own and other departments also function. Interdepartmental coordination can be improved,
installs team spirit. Disadvantage – It may become too much for an employee to learn. It is not
focused on employees own job responsibilities. Employees basic talents may remain under
utilized.
(b) Job Coaching: An experienced employee can give a verbal presentation to explain the nitty-
gritty‘s of the job.
(c) Job Instruction: It may consist an instruction or directions to perform a particular task or a
function. It may be in the form of orders or steps to perform a task.
(d) Apprenticeships: Generally fresh graduates are put under the experienced employee to learn
the functions of job.
(e) Internships and Assistantships: An intern or an assistants are recruited to perform a specific
time-bound jobs or projects during their education. It may consist a part of their educational
courses.

(B) Off the Job Trainings: These are used away from work places while employees are not working like
classroom trainings, seminars etc. Following are the off-the-job methods;
Advantages of Off-the-Job Training:
• Trainers are usually experienced enough to train
• It is systematically organized
• Efficiently created programs may add lot of value
Disadvantages of Off-the-Job Training:
• It is not directly in the context of job
• It is often formal
• It is not based on experience
• It is least expensive
• Trainees may not be highly motivated
• It is more artificial in nature
Off the Job Training Methods
(a) Classroom Lectures: It is a verbal lecture presentation by an instructor to a large audience.
Advantage – It can be used for large groups. Cost per trainee is low. Disadvantages – Low
popularity. It is not learning by practice. It is One-way communication. No authentic feedback
mechanism. Likely to boredom.
(b) b It can be done using Films, Televisions, Video, and Presentations etc. Advantages – Wide
range of realistic examples, quality control possible,. Disadvantages – One-way communication,
No feedback mechanism. No flexibility for different audience.
(c) b creating a real life situation for decision-making and understanding the actual job conditions
give it. Following are some of the simulation methods of trainings
(d) Case Studies: It is a written description of an actual situation and trainer is supposed to analyze
and give his conclusions in writing. The cases are generally based on actual organizational
situations. It is an ideal method to promote decision-making abilities within the constraints of
 limited data. Role Plays: Here trainees assume the part of the specific personalities in a case
study and enact it in front of the audience. It is more emotional orientation and improves
interpersonal relationships. Attitudinal change is another result. These are generally used in
MDP.
(e) Sensitivity Trainings: This is more from the point of view of behavioural assessment, under
different circumstances how an individual will behave himself and towards others. There is no
preplanned agenda and it is instant. Advantages – increased ability to empathize, listening skills,
openness, tolerance, and conflict resolution skills. Disadvantage – Participants may resort to
their old habits after the training.
(f) Programmed Instructions: Provided in the form of blocks either in book or a teaching
machine using questions and Feedbacks without the intervention of trainer. Advantages – Self
paced, trainees can progress at their own speed, strong motivation for repeat learning, material is
structured and self-contained. Disadvantages – Scope for learning is less; cost of books, manuals
or machinery is expensive.
(g) Computer Aided Instructions: It is extension of PI method, by using computers. Advantages –
Provides accountabilities, modifiable to technological innovations, flexible to time.
Disadvantages – High cost

13. Barriers to Effective Training:

• Lack of Management commitment
• Inadequate Training budget
• Education degrees lack skills
• Large scale poaching of trained staff
• Non-coordination from workers due to downsizing trends
• Employers and B Schools operating distantly
• Unions influence

14. How To Make Training Effective?

• Management Commitment
• Training & Business Strategies Integration
• Comprehensive and Systematic Approach
• Continuous and Ongoing approach
• Promoting Learning as Fundamental Value
• Creations of effective training evaluation system
 15. Stages in a Training Program
The success of a training program is evaluated in terms of the end result or the increase in the work
ability, skill or competency in the trainee. For any training program to be successful it is very essential to
follow a certain process.
The basic process consists of four stages which are
(a) assessment,
(b) development,
(c) delivery and
(d) evaluation.
(a) Assessment stage. The process of training begins with the needs assessment stage. The aim of the
assessment stage is to understand whether or not training is required. If the answer is yes; the next step
is determining competency or skills gaps and the appropriate training intervention required. The
training intervention is essentially decided in terms of attitude, knowledge and skill (ASK), the
combination of which is called as competency. The assessment also called as the ‗training needs
analysis‘ is undertaken at three levels, the job, the individual and organisational analysis.
(b) Development stage: Once the training needs analysis is complete, the next stage is that
of Development. This stage involves the development of content and the training material. Right from
designing the appropriate environment to deciding the various tools, everything is taken care of in the
development stage. Games, Case Studies, Class room intervention are various means that may be
decided upon apart from the content delivered. For example, in behavioural training emotional
intelligence, teamwork, listening are examples of competencies that are required to perform superior
work. The same may be transferred into the trainees through any of the above means depending upon
various factors like demographics, job nature etc which are taken care of in the first stage.
(c) Training Stage: The most important stage and perhaps the least talked upon from the training process
is the delivery. Once the development stage is over it is time to conduct the training. Factors like time
and venue of delivery are already decided in the earlier stages. There are various factors that determine
the process of delivery like the participant demographics, the training intervention, the individual style
of the trainer etc. This brings in a lot of diversity to the training programs.
(d) Evaluation Stage: Evaluation is the last stage in the training process and more important from the
perspective of evaluation of the effectiveness of training. Needless to say, it is aimed at analysing
whether or not the training has been effective in achieving the objective (bridging the competency gap,
changing the attitude, developing new skills etc). There are various ways in which the effectiveness of
training programs can be evaluated but not many are able to answer in terms of ROI. The most
effective tool for evaluation of training is the Kirk Patrick Model of Evaluation.
In order for the evaluation to be effective the both the criteria and design for training program is decided
so that there is no discrepancy and the participants are able to evaluate the benefits effectively for
themselves. The evaluation is made on the basis of participant reaction to the training, their learning and
the change in behaviour. This feedback is then reused in the first step ‗training needs analysis‘ for making
future training more effective.
 16. Training Needs Analysis
Training is an expensive process not only in terms of the money spent on it but also the time and the other
resources spent on the same. The most important question therefore is determining whether or not a need
for training actually exists and whether the intervention will contribute to the achievement of
organisational goal directly or indirectly? The answer to the above mentioned question lies in ‗training
needs analysis‘ which is the first step in the entire process of training and development.
Training needs analysis is a systematic process of understanding training requirements. It is conducted at
three stages - at the level of organisation, individual and the job, each of which is called as the
organisational, individual and job analysis. Once these analyses are over, the results are collated to arrive
upon the objectives of the training program.
As mentioned earlier, the needs analysis / assessment is carried out at three levels - organisational,
Individual and Job. We now take up each one of them in detail.
Organisational Analysis
The organisational analysis is aimed at short listing the focus areas for training within the organisation
and the factors that may affect the same. Organisational mission, vision, goals, people inventories,
processes, performance data are all studied. The study gives cues about the kind of learning environment
required for the training. Motorola and IBM for example, conduct surveys every year keeping in view the
short term and long term goals of the organisation.
Job Analysis
The job analysis of the needs assessment survey aims at understanding the ‗what‘ of the training
development stage. The kind of intervention needed is what is decided upon in the job analysis. It is an
objective assessment of the job wherein both the worker oriented - approach as well as the task - oriented
approach is taken into consideration. The worker approach identifies key behaviours and ASK for a
certain job and the task - oriented approach identifies the activities to be performed in a certain job. The
former is useful in deciding the intervention and the latter in content development and program
evaluation.
Individual Analysis
As evident from the name itself, the individual analysis is concerned with who in the organisation needs
the training and in which particular area. Here performance is taken out from the performance appraisal
data and the same is compared with the expected level or standard of performance. The individual
analysis is also conducted through questionnaires, 360 feedback, personal interviews etc. Likewise, many
organisation use competency ratings to rate their managers; these ratings may come from their
subordinates, customers, peers, bosses etc. Apart from the above mentioned organisations also make use
of attitude surveys, critical Incidents and Assessment surveys to understand training needs which will be
discussed in detail in other articles.
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) refers to the process of imparting specific skills.
(a) Training
(b) Education
(c) Development
(d) All of the above
(2) _________is an educational process which involves the sharpening of skills, concepts, changing
of attitude and gaining more knowledge to enhance the performance of the employees
(a) Training
(b) Education
(c) Development
(d) All of the above
(3) By __________people can learn new information, new methodology and refresh their existing
knowledge and skills
(a) Training
(b) Education
(c) Development
(d) All of the above
(4) It is a theoretical learning in classrooms.
(a) Training
(b) Education
(c) Development
(d) All of the above
(5) implies opportunities created to help employees grow
(a) Training
(b) Education
(c) Development
(d) All of the above
(6) concerns itself with preparing people for future assignments and responsibilities.
(a) Training
(b) Education
(c) Development
(d) All of the above
(7) Importance of Training and Development are _________
(a) Optimum utilization of Human resources
(b) Development of skills
(c) To increase the productivity
(d) All of the above
(8) Importance of Training and Development are _________
(a) Improve the morale and corporate image
(b) To increase profitability
(c) Helps remove performance deficiencies in employees
(d) All of the above
(9) Importance of Training and Development are _________
(a) Serves as effective source of recruitment
(b) It is an investment in HR with a promise of better returns in future
(c) Reduces dissatisfaction, absenteeism, complaints and turnover of employees
(d) All of the above
(10) Reasons to go for Training and Development are __________
(a) need to improve the performances of employees
(b) To train about the specific job responsibility
(c) To test the new methodology for increasing the productivity
(d) All of the above
(11) Objectives OR Advantages of Development are ______________
(a) Creating self awareness
(b) Develop inspiring leadership styles
(c) Teach them about effective communication
(d) All of the above
(12) What are the Training Inputs?
(a) Skills
(b) Education
(c) Development
(d) All of the above
(13) What are the Training Inputs?
(a) Ethics
(b) Problem Solving Skills
(c) Decision Making
(d) All of the above
(14) Which of the following are the Need of Training at Individual level
(a) Diagnosis of present problems and future challenges
(b) Improve individual performance or fix up performance deficiency
(c) Improve skills or knowledge or any other problem
(d) All of the above
(15) Which of the following are the Need of Training at Group level
(a) To face any change in organization strategy at group levels
(b) When new products and services are launched
(c) To avoid scraps and accident rates
(d) All of the above
(16) Which of the following are the Methods of Training?
(a) On the Job Trainings:
(b) Off the Job Trainings:
(c) Sensitivity Trainings:
(d) All of the above
(17) These methods are generally applied on the workplace while employees is actually working
(a) On the Job Trainings:
(b) Off the Job Trainings:
(c) Sensitivity Trainings:
(d) Programmed Instructions:
(18) Advantages of On-the-Job Training are __________
(a) It is directly in the context of job
(b) It is most effective because it is learning by experience
(c) It is free from artificial classroom situations
(d) All of the above
(19) Disadvantages of On-the-Job Training are _________________
(a) Trainer may not be experienced enough to train
(b) It is not systematically organized
(c) Poorly conducted programs may create safety hazards
(d) All of the above
(20) Which of the following are the On the Job Training Methods?
(a) Job Rotation
(b) Job Coaching
(c) Job Instruction
(d) All of the above
(21) Under ___________method, usually employees are put on different jobs turn by turn where they
learn all sorts of jobs of various departments.
(a) Job Rotation
(b) Job Coaching
(c) Job Instruction
(d) Internships and Assistantships:
(22) Under ___________method, An experienced employee can give a verbal presentation to explain
the nitty-gritty‘s of the job.
(a) Job Rotation
(b) Job Coaching
(c) Job Instruction
(d) Internships and Assistantships:
(23) may consist an instruction or directions to perform a particular task or a function.
(a) Job Rotation
(b) Job Coaching
(c) Job Instruction
(d) Internships and Assistantships:
(24) Under ___________method, Generally fresh graduates are put under the experienced employee
to learn the functions of job
(a) Job Coaching
(b) Job Instruction
(c) Internships and Assistantships:
(d) Apprenticeships
(25) Under ___________method, An intern or an assistants are recruited to perform a specific time-
bound jobs or projects during their education. It may consist a part of their educational courses.
(a) Job Coaching
(b) Job Instruction
(c) Internships and Assistantships:
(d) Apprenticeships
(26) are used away from work places while employees are not working like classroom
trainings, seminars etc.
(a) On the Job Trainings:
(b) Off the Job Trainings:
(c) Sensitivity Trainings:
(d) Programmed Instructions:
(27) Advantages of Off-the-Job Training are _______________
(a) Trainers are usually experienced enough to train
(b) It is systematically organized
(c) Efficiently created programs may add lot of value
(d) All of the above
(28) Disadvantages of Off-the-Job Training:
(a) It is not directly in the context of job
(b) It is often formal
(c) It is not based on experience
(d) All of the above
(29) Off the Job Training Methods are ____________
(a) Classroom Lectures
(b) Case Studies
(c) Sensitivity Trainings
(d) All of the above
(30) This is more from the point of view of behavioural assessment, under different circumstances
how an individual will behave himself and towards others.
(a) On the Job Trainings:
(b) Off the Job Trainings:
(c) Sensitivity Trainings:
(d) Programmed Instructions:
(31) ____________Provided in the form of blocks either in book or a teaching machine using
questions and Feedbacks without the intervention of trainer.
(a) On the Job Trainings:
(b) Off the Job Trainings:
(c) Sensitivity Trainings:
(d) Programmed Instructions:
(32) Barriers to Effective Training are _____________
(a) Lack of Management commitment
(b) Inadequate Training budget
(c) Education degrees lack skills
(d) All of the above
(33) Barriers to Effective Training are _____________
(a) Large scale poaching of trained staff
(b) Non-coordination from workers due to downsizing trends
(c) Employers and B Schools operating distantly
(d) All of the above
(34) Measures to Make Training more effective are _ __________
(a) Management Commitment
(b) Training & Business Strategies Integration
(c) Comprehensive and Systematic Approach
(d) All of the above
(35) Measures to Make Training more effective are _ __________
(a) Continuous and Ongoing approach
(b) Promoting Learning as Fundamental Value
(c) Creations of effective training evaluation system
(d) All of the above
(36) Which of the following are Stages in a Training Program
(a) assessment,
(b) development,
(c) delivery and evaluation.
(d) All of the above
(37) Training needs analysis is a systematic process of understanding training requirements. It is
conducted following stages:
(a) Organisational Analysis
(b) Job Analysis
(c) Individual Analysis
(d) All of the above
 Unit 5: Job Evaluation and
Performance Appraisal [Marks: 8]
Job evaluation - objectives, scope, method, Job analysis, Job description, Job Specification - basic concept and
significance, Performance Appraisal - Concept

1. Definition of Job evaluation:

Job evaluation is an orderly and systematic technique of determining the relative worth of the various jobs
within the organisation so as to develop an equitable wage and salary structure.

According to International Labour Organisation (ILO) ―Job evaluation may be defined as an attempt
to determine and compare the demands which the normal performance of particular jobs makes on normal
workers without taking into account of the individual abilities or performance of the workers concerned‖.

The aim of the majority of systems of job evaluation is to establish, on an agreed logical basis, the relative
value of different jobs in a plant/industry.‖

2. Objectives of Job Evaluation:

(a) To determine equitable wage differentials between different jobs in the organisation.
(b) To eliminate wage inequities.
(c) To develop a consistent wage policy.
(d) To establish a rational basis for incentive and bonus schemes.
(e) To provide a frame work for periodic review and revision of wage rates.
(f) To provide a basis for wage negotiation with Trade Unions.
(g) To minimize wage discrimination on the basis of age, sex, caste, region etc.
(h) To enable management to gauge and control the pay roll costs.

3. Principles of Job Evaluation

(a) Definition: Jobs must be clearly defined such that they are identifiable and easily distinguishable.
These jobs must then be part of the job description.
(b) Evaluation: A job evaluation scheme must be arrived upon and used as a standard and all jobs in
the organisation must be evaluated as per that scheme only.
(c) Job Understanding: Job evaluators need to have deep insights into the job design process. They
must have a methodical understanding of various tasks involved.
(d) Concern: Job evaluation must be concerned with the job and not with the person. i.e. it is the job
that has to be evaluated and not the person
(e) Assessment: The assessment has to be carried out in an acceptable manner and by competent
people. Further, it is based on judgement and is not scientific but can however be used to make
objective judgments if used correctly.
 4. Scope of Job Evaluation:
Job evaluation as evident from the word itself aims at evaluating the job and not the person. It is a process
of evaluating and determining the value of the job for an organisation. The evaluation is always in relative
and not absolute terms. The idea is evaluate a certain job against other jobs in the organisation so that a
fair compensation system against various bands or levels can be established.

Organisations use various ways to evaluate jobs for arriving upon a compensation scheme. They vary
with the size of the organisation and the kind of industry they operate in. Job ranking, pair comparison
and benchmarking are the various ways of evaluation.

5. Process of job evaluation

The process of job evaluation involves the following steps:
(a) Gaining acceptance: Before undertaking job evaluation, top management must explain the aims and
uses of the programme to managers, emphasizing the benefits. Employees and unions may be
consulted, depending on the legal and employee relations environment and company culture. To
elaborate the program further, presentations could be made to explain the inputs, process and
outputs/benefits of job evaluation.
(b) Creating job evaluation committee: It is not possible for a single person to evaluate all the key jobs
in an organization. Often a job evaluation committee consisting of experienced employees, union
representatives and HR experts is created to set the ball rolling.
(c) Finding the jobs to be evaluated: Every job need not be evaluated. This may be too taxing and
costly. Certain key jobs in each department may be identified. While picking up the jobs, care must
be taken to ensure that they represent the type of work performed in that department, at various
levels.
(d) Analysing and preparing job description: This requires the preparation of a job description and
also an analysis of job specifications for successful performance. See job analysis.
(e) Selecting the method of evaluation: The method of evaluating jobs must be identified, keeping the
job factors as well as organisational demands in mind. Selecting a method also involves
consideration of company culture, and the capacity of the compensation and benefits function or job
evaluation committee.
(f) Evaluating jobs: The relative worth of various jobs in an organisation may be determined by
applying the job evaluation method. The method may consider the "whole job" by ranking a set of
jobs, or by comparing each job to a general level description. Factor-based methods require
consideration of the level of various compensable factors (criteria) such as level and breadth of
responsibility, knowledge and skill required, complexity, impact, accountability, working conditions,
etc. These factor comparisons can be one with or without numerical scoring. If there is numerical
scoring, weights can be assigned to each such factor and scores are associated with different levels of
each factor, so that a total score is determined for the job. All methods result in an assigned grade
level
 6. Methods of the Evaluation:
There are different methods of job evaluation. They can be classified as:
1. Non-Quantitative Methods:
(a) Ranking or job comparison
(b) Grading or job classification.
2. Quantitative Methods:
(a) Point rating
(b) Factor comparison.

7. Ranking or Job Comparison:

Ranking of job is normally done by an ―expert committee‖ formed by the organisation. This committee
consists of representatives from management and employees.
This committee may also consist of a certain number of experts either as permanent members or co-opted
members on as required basis. Here the jobs are ranked as a ―whole job‖ instead of breaking them into
parts.
Three techniques can be used for ranking jobs.
(a) Job Description: In this technique a written jobs description is prepared for every job. The job
descriptions are then studied and analysed. The differences between them in terms of duties,
responsibilities, skill requirements etc, are noted. Each job is assigned a rank depending upon its
relative significance. Several raters may independently rank each job. The average of these ratings is
calculated to determine the final rankings. In this method, the rate is required to keep in mind all the
jobs being ranked. This may not be possible when the number of jobs is large. To overcome this
paired comparison method can be used.
(b) Paired Comparison: In this technique each job is paired with every other job in the series. The more
difficult job in each pair is identified. Rank is then assigned on the basis of the number of times a job
is rated more difficult.
(c) Ranking along a Number Line: In this technique ranks obtained through job descriptions and
paired comparisons are spread along a number line. Each job is then placed along the line on the
basis of its closeness to the highest ranked job. For example, in the following number line, A is the
highest ranked job; E is the lowest ranked job. Other jobs are spaced according to their closeness to
the highest ranked job.

8. Grading Method:
This method is made popular by civil services used mostly for administrative jobs. Here different
―grades‖ or ―classes‖ of jobs are predetermined based on certain criteria such as skill, knowledge,
responsibility etc. Even though, initially grading method is envisaged by civil service for administrative
and clerical jobs, later this concept became popular and extended to defence services, marketing, sales
and managerial cadre jobs.
This method is applicable for workers, supervisors and managerial jobs. In India, the following
classification methods are used.
Government Departments:
Class I, II, III… for officers in descending order.
Public Sector Units (PSU):
Grade 1, 2, 3… for officers in ascending orders.
Civil Services:
Group A, B, C… non-officers.
The steps involved in this method are as follows:
(i) Prefix the grade/classification.
(ii) Prepare job description.
(iii) Identify key jobs in each grade/class
(iv) Allocate all jobs in each grade/class based on criteria.
Advantages:
(i) This method is easy to understand and simple to operate.
(ii) It is more accurate and systematic than the ranking method.
(iii) It is economical and therefore suitable for small concerns.
(iv) It provides an opportunity to develop a systematic organisation structure.
(v) This method is used in government offices.
Disadvantages:
(i) It is very difficult to write accurate and precise description of job grades.
(ii) Some job may involve tasks which overlap more than one grade. It is difficult to classify such jobs in
a particular grade.
(iii) The system is rigid and personal judgment is involved in deciding job classes and assigning jobs to
specific classes.

9. Point Rating:
It is the most widely used method of job evaluation. Under it, jobs are divided into component factors.
Points or weightage are assigned to each factor depending on the degree of its importance in a particular
job. The total points for a job indicate its relative worth or value. The procedure involved is as follows:
Steps 1: Job Cluster:
Group jobs into similar families having common nature and characteristics. This arrangement assists
realistic assessment of factors and comparison of jobs.
Steps 2: Identification of Factors:
Based on the cluster of jobs, identify relevant factors which are common to these jobs. Unlike factors
comparison, there is no restriction on the number of factors. Normally number of factors does not exceed
15.
Step 3: Assigning Degrees to Factors:
For the purpose of fine tuning the edifices between jobs, each factor is subdivided into various degrees
like, ―illiterate‖, ―High school level‖, ―graduate‖, ―Post-graduate‖ etc.
Step 4: Fixing Relative Weightages:
All factors will not carry same weightages. This weightage varies from cluster to cluster, committee of
experts assign weightages. For e.g., a manual job carry higher weightage of ―physical ability‖ compared
to ―mental ability‖ and so on.
These weightages are then converted to percentages. These percentages are counted as points for first
degree. Points for higher degrees for the same factor are obtained by multiplying the first degree points by
the corresponding number 2, 3, 4 etc.
Step 5: Assign Money Value to Points:
Expert committee work out money values in terms of rupees per hour for a range of points having
grouped them into different classes/grades.
Step 6: Prepare Job Evaluation Manual:
Job evaluation manual is prepared by selecting a number of ―key jobs‖ in each Department/cluster. For
each key job, identify the relevant factors, their degrees and points.
Key jobs in job-evaluation manual serve an example for future evaluation of all other jobs. Job evaluation
manual become more effective if ―Job description‖ and Job specification can be redrafted in terms of
factors identified for each cluster.
Step 7: Rating Jobs:
With the help of job-evaluation manual and formula pre-determined for conversion of points to money
value, we can now prepare the rating for all jobs by comparing term with key jobs
Advantages:
(i) This method is the most comprehensive and accurate method of job evaluation. Factors are divided
into sub factors and different degrees of a factor are considered.
Wage and Salary Administration 137
(ii) Assignment of point scores and money values is consistent thereby minimizing bias and human
judgment.
(iii) Systematic wage differentials according to content of the job can be determined.
Disadvantages:
(i) It is expensive and time consuming.
(ii) Point method is complicated and an average worker cannot understand it easily.
(iii) Errors may occur if assigned point values are not realistic. It is difficult to determine factor levels and
assigns point values.
(iv) It is difficult to apply this method to managerial jobs wherein the work content is not measurable in
quantitative terms.

10. Factor Comparison:

Under this method, a few key jobs are selected and compared in terms of common factors. The procedure
involved is as follows.
(i) Select And Define The Factors:
The factors common to all jobs are selected and defined clearly. Skill, physical and mental effort,
responsibility and working conditions are the main factors used.
(ii) Select Key Jobs:
Key jobs serve as standards against which other jobs can be compared. A key job is one having
standardised contents and well accepted pay rate, key jobs should be a cross-section of all jobs in the
organisation representing all levels of pay.
(iii) Rank Key Jobs by Factors:
Job descriptions are carefully analysed and the key jobs are rated in terms of the selected factors.
(iv) Decide Rates For Key Job:
A fair and equitable wage rate (hourly and daily) is dimensioned for each key job.
(v) Apportion the Wage Rate:
The wage rate for a job is allocated among the identified and ranked factors. A specimen rating and
allocation scheme is given below.
(vi) Evaluate The Remaining Jobs:
The remaining jobs are compared with the key jobs in terms of each factor. Suppose, ‗carpenter job is to
be similar to tool maker in skill (Rs. 25), machinist in physical effort (Rs. -7), welder in mental
requirements (Rs. 14), painter in responsibility (Rs. 12), and painters in working condition (Rs. 18). Then,
the wage rate for this job would be Rs.76.
Advantages:
1. Method is scientific being analytical and quantifiable.
2. Limited of factors makes this method simple and easy.
3. Jobs are compared with each other to obtain relative value.
4. Job pricing is directly obtained without intermediary point‘s weightage.
Disadvantages:
1. Using just five factors are not realistic.
2. Direct determination of rating shift the focus of job evaluation from ―job worth‖ to ―job wage‖ in
money value. This creates bias.

11. Job analysis

Job analysis is primary tool in personnel management. In this method, a personnel manager tries to
gather, synthesize and implement the information available regarding the workforce in the concern. A
personnel manager has to undertake job analysis so as to put right man on right job.
There are two outcomes of job analysis :
• Job description
• Job specification
The information collected under job analysis is :
• Nature of jobs required in a concern.
• Nature/ size of organizational structure.
• Type of people required to fit that structure.
• The relationship of the job with other jobs in the concern.
• Kind of qualifications and academic background required for jobs.
• Provision of physical condition to support the activities of the concern. For example- separate cabins
for managers, special cabins for the supervisors, healthy condition for workers, adequate store room
for store keeper.

12. Advantages of Job Analysis

• Job analysis helps the personnel manager at the time of recruitment and selection of right man on
right job.
• It helps him to understand extent and scope of training required in that field.
• It helps in evaluating the job in which the worth of the job has to be evaluated.
• In those instances where smooth work force is required in concern.
• When he has to avoid overlapping of authority- responsibility relationship so that distortion in chain
of command doesn‘t exist.
• It also helps to chalk out the compensation plans for the employees.
• It also helps the personnel manager to undertake performance appraisal effectively in a concern.
 13. Job description:
Job description is an organized factual statement of job contents in the form of duties and responsibilities
of a specific job. The preparation of job description is very important before a vacancy is advertised. It
tells in brief the nature and type of job. This type of document is descriptive in nature and it constitutes all
those facts which are related to a job such as :
(a) Title/ Designation of job and location in the concern.
(b) The nature of duties and operations to be performed in that job.
(c) The nature of authority- responsibility relationships.
(d) Necessary qualifications that are required for job.
(e) Relationship of that job with other jobs in a concern.
(f) The provision of physical and working condition or the work environment required in performance
of that job.

14. Advantages of Job Description

(a) It helps the supervisors in assigning work to the subordinates so that he can guide and monitor their
performances.
(b) It helps in recruitment and selection procedures.
(c) It assists in manpower planning.
(d) It is also helpful in performance appraisal.
(e) It is helpful in job evaluation in order to decide about rate of remuneration for a specific job.
(f) It also helps in chalking out training and development programmes.

15. Job specification

Job specification is a statement which tells us minimum acceptable human qualities which helps to
perform a job. Job specification translates the job description into human qualifications so that a job can
be performed in a better manner. Job specification helps in hiring an appropriate person for an appropriate
position. The contents are :
• Job title and designation
• Educational qualifications for that title
• Physical and other related attributes
• Physique and mental health
• Special attributes and abilities
• Maturity and dependability
• Relationship of that job with other jobs in a concern.

16. Advantages of Job Specification

• It is helpful in preliminary screening in the selection procedure.
• It helps in giving due justification to each job.
• It also helps in designing training and development programmes.
• It helps the supervisors for counseling and monitoring performance of employees.
• It helps in job evaluation.
• It helps the management to take decisions regarding promotion, transfers and giving extra benefits to
the employees.
From the above advantages, we can justify the importance of job analysis and it‘s related products. Both
job description as well as job specification are important for personnel manager in personnel management
function. Therefore, job analysis is considered to be the primary tool of personnel management.
 17. Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and to understand
the abilities of a person for further growth and development. Performance appraisal is generally done in
systematic ways which are as follows:
(a) The supervisors measure the pay of employees and compare it with targets and plans.
(b) The supervisor analyses the factors behind work performances of employees.
(c) The employers are in position to guide the employees for a better performance.

18. Objectives of Performance Appraisal

Performance Appraisal can be done with following objectives in mind:
(a) To maintain records in order to determine compensation packages, wage structure, salaries raises,
etc.
(b) To identify the strengths and weaknesses of employees to place right men on right job.
(c) To maintain and assess the potential present in a person for further growth and development.
(d) To provide a feedback to employees regarding their performance and related status.
(e) To provide a feedback to employees regarding their performance and related status.
(f) It serves as a basis for influencing working habits of the employees.
(g) To review and retain the promotional and other training programmes.

19. Advantages of Performance Appraisal

1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for
efficient employees. In this regards, inefficient workers can be dismissed or demoted in case.
2. Compensation: Performance Appraisal helps in chalking out compensation packages for employees.
Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to
a performance. Compensation packages which includes bonus, high salary rates, extra benefits,
allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit
rather than seniority.
3. Employees Development: The systematic procedure of performance appraisal helps the supervisors
to frame training policies and programmes. It helps to analyse strengths and weaknesses of
employees so that new jobs can be designed for efficient employees. It also helps in framing future
development programmes.
4. Selection Validation: Performance Appraisal helps the supervisors to understand the validity and
importance of the selection procedure. The supervisors come to know the validity and thereby the
strengths and weaknesses of selection procedure. Future changes in selection methods can be made
in this regard.
5. Communication: For an organization, effective communication between employees and employers
is very important. Through performance appraisal, communication can be sought for in the following
ways:
a. Through performance appraisal, the employers can understand and accept skills of
subordinates.
b. The subordinates can also understand and create a trust and confidence in superiors.
c. It also helps in maintaining cordial and congenial labour management relationship.
d. It develops the spirit of work and boosts the morale of employees.
6. Motivation: Performance appraisal serves as a motivation tool. Through evaluating performance of
employees, a person‘s efficiency can be determined if the targets are achieved. This very well
motivates a person for better job and helps him to improve his performance in the future.

20. Performance Appraisal Tools and Techniques

Following are the tools used by the organizations for Performance Appraisals of their employees.
(a) Ranking
(b) Paired Comparison
(c) Forced Distribution
(d) Confidential Report
(e) Essay Evaluation
(f) Critical Incident
(g) Checklists
(h) Graphic Rating Scale
(i) BARS
(j) Forced Choice Method
(k) MBO
(l) Field Review Technique
(m) Performance Test
Ranking Method
The ranking system requires the rater to rank his subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method, the ranking of an employee in a work group is
done against that of another employee. The relative position of each employee is tested in terms of his
numerical rank. It may also be done by ranking a person on his job performance against another member
of the competitive group.
Forced Distribution method
This is a ranking technique where raters are required to allocate a certain percentage of rates to certain
categories (eg: superior, above average, average) or percentiles (eg: top 10 percent, bottom 20 percent
etc). Both the number of categories and percentage of employees to be allotted to each category are a
function of performance appraisal design and format. The workers of outstanding merit may be placed at
top 10 percent of the scale, the rest may be placed as 20 % good, 40 % outstanding, 20 % fair and 10 %
fair.
Critical Incident techniques
Under this method, the manager prepares lists of statements of very effective and ineffective behaviour of
an employee. These critical incidents or events represent the outstanding or poor behaviour of employees
or the job. The manager maintains logs of each employee, whereby he periodically records critical
incidents of the workers behaviour. At the end of the rating period, these recorded critical incidents are
used in the evaluation of the worker‘s performance. Example of a good critical incident of a Customer
Relations Officer is : March 12 - The Officer patiently attended to a customers complaint. He was very
polite and prompt in attending the customers problem.
Checklists and Weighted Checklists
In this system, a large number of statements that describe a specific job are given. Each statement has a
weight or scale value attached to it. While rating an employee the supervisor checks all those statements
that most closely describe the behaviour of the individual under assessment. The rating sheet is then
scored by averaging the weights of all the statements checked by the rater. A checklist is constructed for
each job by having persons who are quite familiar with the jobs. These statements are then categorized by
the judges and weights are assigned to the statements in accordance with the value attached by the judges.

21. Performance Appraisal Biases

Managers commit mistakes while evaluating employees and their performance. Biases and judgment
errors of various kinds may spoil the performance appraisal process. Bias here refers to inaccurate
distortion of a measurement. These are:

1. First Impression (primacy effect): Raters form an overall impression about the ratee on the
basis of some particluar characteristics of the ratee identified by them. The identified qualities and
features may not provide adequate base for appraisal.
2. Halo Effect: The individual‘s performance is completely appraised on the basis of a perceived
positive quality, feature or trait. In other words this is the tendency to rate a man uniformly high
or low in other traits if he is extra-ordinarily high or low in one particular trait. If a worker has
few absences, his supervisor might give him a high rating in all other areas of work.
3. Horn Effect: The individual‘s performance is completely appraised on the basis of a negative
quality or feature perceived. This results in an overall lower rating than may be warranted. ―He is
not formally dressed up in the office. He may be casual at work too!‖.
4. Excessive Stiffness or Lenience: Depending upon the raters own standards, values and physical
and mental makeup at the time of appraisal, ratees may be rated very strictly or leniently. Some of
the managers are likely to take the line of least resistance and rate people high, whereas others, by
nature, believe in the tyranny of exact assessment, considering more particularly the drawbacks of
the individual and thus making the assessment excessively severe. The leniency error can render a
system ineffective. If everyone is to be rated high, the system has not done anything to
differentiate among the employees.
5. Central Tendency: Appraisers rate all employees as average performers. That is, it is an attitude
to rate people as neither high nor low and follow the middle path. For example, a professor, with a
view to play it safe, might give a class grade near the equal to B, regardless of the differences in
individual performances.
6. Personal Biases: The way a supervisor feels about each of the individuals working under him -
whether he likes or dislikes them - as a tremendous effect on the rating of their performances.
Personal Bias can stem from various sources as a result of information obtained from colleagues,
considerations of faith and thinking, social and family background and so on.
7. Spillover Effect: The present performance is evaluated much on the basis of past performance.
―The person who was a good performer in distant past is assured to be okay at present also‖.
8. Recency Effect: Rating is influenced by the most recent behaviour ignoring the commonly
demonstrated behaviours during the entire appraisal period.
Therefore while appraising performances, all the above biases should be avoidd.
 Multiple Choice Questions (1 Marks & 2 Marks)
(1) Job evaluation is an orderly and systematic technique of determining the relative worth of the
various jobs within the organisation so as to develop an equitable wage and salary structure.
(a) Job evaluation
(b) Job analysis,
(c) Job description
(d) Job Specification
(2) According to International Labour Organisation (ILO) ― may be defined as an attempt to
determine and compare the demands which the normal performance of particular jobs makes on
normal workers without taking into account of the individual abilities or performance of the
workers concerned‖.
(a) Job evaluation
(b) Job analysis,
(c) Job description
(d) Job Specification
(3) Objectives of Job Evaluation are
(a) To determine equitable wage differentials between different jobs in the organisation.
(b) To eliminate wage inequities.
(c) To develop a consistent wage policy.
(d) All of the above
(4) Objectives of Job Evaluation are
(a) To establish a rational basis for incentive and bonus schemes.
(b) To provide a frame work for periodic review and revision of wage rates.
(c) To provide a basis for wage negotiation with Trade Unions.
(d) All of the above
(5) Objectives of Job Evaluation are
(a) To minimize wage discrimination on the basis of age, sex, caste, region etc.
(b) To enable management to gauge and control the pay roll costs.
(c) To determine equitable wage differentials between different jobs in the organisation.
(d) All of the above
(6) The process of job evaluation involves the following steps:
(a) Gaining acceptance
(b) Creating job evaluation committee:
(c) Finding the jobs to be evaluated:
(d) All of the above
(7) The process of job evaluation involves the following steps:
(a) Analysing and preparing job description:
(b) Selecting the method of evaluation:
(c) Evaluating jobs:
(d) All of the above
(8) is normally done by an ―expert committee‖ formed by the organisation. This
committee consists of representatives from management and employees.
(a) Ranking or job comparison
(b) Grading or job classification.
(c) Point rating
(d) Factor comparison.
(9) Which of the following are the techniques used for ranking jobs.
(a) Job Description:
(b) Paired Comparison:
(c) Ranking along a Number Line:
(d) All of the above
(10) In this technique a written jobs description is prepared for every job. The job descriptions are then
studied and analysed.
(a) Job Description:
(b) Paired Comparison:
(c) Ranking along a Number Line:
(d) All of the above
(11) In this technique each job is paired with every other job in the series. The more difficult job in each
pair is identified.
(a) Job Description:
(b) Paired Comparison:
(c) Ranking along a Number Line:
(d) All of the above
(12) In this technique ranks obtained through job descriptions and paired comparisons are spread along
a number line.
(a) Job Description:
(b) Paired Comparison:
(c) Ranking along a Number Line:
(d) All of the above
(13) This method is made popular by civil services used mostly for administrative jobs. Here different
―grades‖ or ―classes‖ of jobs are predetermined based on certain criteria such as skill, knowledge,
responsibility etc.
(a) Ranking or job comparison
(b) Grading or job classification.
(c) Point rating
(d) Factor comparison.
(14) The steps involved in Grading or job classification are
(a) Prefix the grade/classification.
(b) Prepare job description & Identify key jobs in each grade/class
(c) Allocate all jobs in each grade/class based on criteria.
(d) All of the above
(15) Advantages of Grading or job classification are
(a) This method is easy to understand and simple to operate.
(b) It is more accurate and systematic than the ranking method.
(c) It is economical and therefore suitable for small concerns.
(d) All of the above
(16) Disadvantages of Grading or job classification are
(a) It is very difficult to write accurate and precise description of job grades.
(b) Some job may involve tasks which overlap more than one grade. It is difficult to classify such
jobs in a particular grade.
(c) The system is rigid and personal judgment is involved in deciding job classes and assigning
jobs to specific classes.
(d) All of the above
(17) It is the most widely used method of job evaluation. Under it, jobs are divided into component
factors. Points or weightage are assigned to each factor depending on the degree of its importance
in a particular job.
(a) Ranking or job comparison
(b) Grading or job classification.
(c) Point rating
(d) Factor comparison.
(18) Which of the following are the steps of Point Rating?
(a) Job Cluster
(b) Identification of Factors
(c) Assigning Degrees to Factors
(d) All of the above
(19) Which of the following are the steps of Point Rating?
(a) Fixing Relative Weightages:
(b) Assign Money Value to Points:
(c) Prepare Job Evaluation Manual:
(d) All of the above
(20) Under this method, a few key jobs are selected and compared in terms of common factors.
(a) Ranking or job comparison
(b) Grading or job classification.
(c) Point rating
(d) Factor comparison.
(21) Which of the following are the steps of Factor comparison?
(a) Select And Define The Factors:
(b) Select Key Jobs:
(c) Rank Key Jobs by Factors:
(d) All of the above
(22) Which of the following are the steps of Factor comparison?
(a) Decide Rates For Key Job:
(b) Apportion the Wage Rate:
(c) Evaluate The Remaining Jobs:
(d) All of the above
(23) Which of the following are the Advantages of Factor comparison?
(a) Method is scientific being analytical and quantifiable.
(b) Limited of factors makes this method simple and easy.
(c) Jobs are compared with each other to obtain relative value.
(d) All of the above
(24) is primary tool in personnel management. In this method, a personnel manager tries to
gather, synthesize and implement the information available regarding the workforce in the concern.
(a) Job evaluation
(b) Job analysis
(c) Job description
(d) Job Specification
(25) The information collected under job analysis is :
(a) Nature of jobs required in a concern.
(b) Nature/ size of organizational structure.
(c) Type of people required to fit that structure.
(d) All of the above
(26) The information collected under job analysis is :
(a) The relationship of the job with other jobs in the concern.
(b) Kind of qualifications and academic background required for jobs.
(c) Provision of physical condition to support the activities of the concern.
(d) All of the above
(27) Which of the following are the Advantages of Job Analysis
(a) Job analysis helps the personnel manager at the time of recruitment and selection of right man
on right job.
(b) It helps him to understand extent and scope of training required in that field.
(c) It helps in evaluating the job in which the worth of the job has to be evaluated.
(d) All of the above
(28) Which of the following are the Advantages of Job Analysis
(a) In those instances where smooth work force is required in concern.
(b) It also helps to chalk out the compensation plans for the employees.
(c) It also helps the personnel manager to undertake performance appraisal effectively in a
concern.
(d) All of the above
(29) Job description is an organized factual statement of job contents in the form of duties and
responsibilities of a specific job.
(a) Job evaluation
(b) Job analysis
(c) Job description
(d) Job Specification
(30) Which of the following are the Advantages of Job Description
(a) It helps the supervisors in assigning work to the subordinates so that he can guide and monitor
their performances.
(b) It helps in recruitment and selection procedures.
(c) It assists in manpower planning.
(d) All of the above
(31) Which of the following are the Advantages of Job Description
(a) It is also helpful in performance appraisal.
(b) It is helpful in job evaluation in order to decide about rate of remuneration for a specific job.
(c) It also helps in chalking out training and development programmes.
(d) All of the above
(32) is a statement which tells us minimum acceptable human qualities which helps to
perform a job
(a) Job evaluation
(b) Job analysis
(c) Job description
(d) Job Specification
(33) translates the job description into human qualifications so that a job can be
performed in a better manner.
(a) Job evaluation
(b) Job analysis
(c) Job description
(d) Job Specification
(34) helps in hiring an appropriate person for an appropriate position.
(a) Job evaluation
(b) Job analysis
(c) Job description
(d) Job Specification
(35) Which of the following are the Advantages of Job Specification
(a) It is helpful in preliminary screening in the selection procedure.
(b) It helps in giving due justification to each job.
(c) It also helps in designing training and development programmes.
(d) All of the above
(36) Which of the following are the Advantages of Job Specification
(a) It helps the supervisors for counseling and monitoring performance of employees.
(b) It helps in job evaluation.
(c) It helps the management to take decisions regarding promotion, transfers and giving extra
benefits to the employees.
(d) All of the above
(37) is the systematic evaluation of the performance of employees and to understand the
abilities of a person for further growth and development.
(a) Performance Appraisal
(b) Job evaluation
(c) Job analysis
(d) Job description
(38) Performance appraisal is generally done in systematic ways which are
(a) The supervisors measure the pay of employees and compare it with targets and plans.
(b) The supervisor analyses the factors behind work performances of employees.
(c) The employers are in position to guide the employees for a better performance.
(d) All of the above
(39) Objectives of Performance Appraisal are
(a) To maintain records in order to determine compensation packages, wage structure, salaries
raises, etc.
(b) To identify the strengths and weaknesses of employees to place right men on right job.
(c) To maintain and assess the potential present in a person for further growth and development.
(d) All of the above
(40) Objectives of Performance Appraisal are
(a) To provide a feedback to employees regarding their performance and related status.
(b) To provide a feedback to employees regarding their performance and related status.
(c) It serves as a basis for influencing working habits of the employees.
(d) All of the above
(41) Advantages of Performance Appraisal are
(a) Promotion:
(b) Compensation:
(c) Employees Development:
(d) All of the above
(42) Advantages of Performance Appraisal are
(a) Selection Validation
(b) Communication:
(c) Motivation:
(d) All of the above
(43) Performance Appraisal Tools and Techniques are
(a) Ranking
(b) Paired Comparison
(c) Confidential Report
(d) All of the above
(44) This is a ranking technique where raters are required to allocate a certain percentage of rates to
certain categories (eg: superior, above average, average) or percentiles (eg: top 10 percent, bottom
20 percent etc).
(a) Ranking
(b) Paired Comparison
(c) Forced Distribution
(d) Confidential Report
(45) Under this method, the manager prepares lists of statements of very effective and ineffective
behaviour of an employee
(a) Ranking Method
(b) Forced Distribution method
(c) Critical Incident techniques
(d) Checklists and Weighted Checklists
(46) In this system, a large number of statements that describe a specific job are given
(a) Ranking Method
(b) Forced Distribution method
(c) Critical Incident techniques
(d) Checklists and Weighted Checklists
(47) Which of the following are the Performance Appraisal Biases
(a) First Impression (primacy effect):
(b) Halo Effect:
(c) Horn Effect:
(d) All of the above
(48) Which of the following are the Performance Appraisal Biases
(a) Excessive Stiffness or Lenience
(b) Personal Biases:
(c) Spillover Effect:
(d) All of the above
(49) The individual‘s performance is completely appraised on the basis of a perceived positive quality,
feature or trait under
(a) Halo Effect
(b) Horn Effect
(c) Spillover Effect
(d) Recency Effect
(50) The individual‘s performance is completely appraised on the basis of a negative quality or feature
perceived under
(a) Halo Effect
(b) Horn Effect
(c) Spillover Effect
(d) Recency Effect
(51) The present performance is evaluated much on the basis of past performance under
(a) Halo Effect
(b) Horn Effect
(c) Spillover Effect
(d) Recency Effect
(52) Rating is influenced by the most recent behaviour ignoring the commonly demonstrated behaviours
during the entire appraisal period.
(a) Halo Effect
(b) Horn Effect
(c) Spillover Effect
(d) Recency Effect
(53) Appraisers rate all employees as average performers. That is, it is an attitude to rate people as
neither high nor low and follow the middle path.
(a) Central Tendency:
(b) Halo Effect
(c) Horn Effect:
(d) Recency Effect:
(54) The way a supervisor feels about each of the individuals working under him - whether he likes or
dislikes them - as a tremendous effect on the rating of their performances is called
(a) Halo Effect
(b) Horn Effect
(c) Recency Effect
(d) Personal Biases