MANAGEMENT DEVELOPMENT INSTITUTE

PGDM-IB 2021-23

Principles of Marketing (Section A)

Mid Term Examination (Term I)

Date : August 28, 2021 Max Marks: 40

Time : 2 hours Weightage: 20%

Faculty: Dr. Ritu Srivastava

I. Since the 1970s, Nestlé and other companies have faced criticism about their marketing of
infant formula to families in under developed countries. Their marketing has positioned
formula as superior to breast milk and as a more modern way of feeding babies despite
emerging research findings that breast milk usually led to healthier outcomes for babies.
Third-world women grew dependent on infant formula to feed their babies but began
watering it down to make it last longer and save money, often with contaminated water.
This too often resulted in child malnourishment and other serious health problems and
even death in some cases. Nestlé has been accused by some child watchdog groups of
using overly aggressive marketing tactics to sell its infant formula products. Nestlé targeted
many new mothers with tactics such as providing samples, promoting products directly in
hospitals and communities, and giving gifts to health-care workers and new moms. Other
infant formula companies even hired salesgirls in nurses’ uniforms to drop by homes
unannounced and sell potential customers on using baby formula rather than
breastfeeding. In April 2012, Nestlé acquired Pfizer’s infant nutrition unit, making it the
biggest player in the infant formula market. According to The Guardian, this business unit
generates approximately 85 percent of its revenues from emerging markets, demonstrating
that Nestlé and other infant formula companies are still capitalizing on consumers in
emerging economies. An International Nestlé Boycott Committee was started in 1984 to
address this global issue and is still active today.

Q1. Is it wrong for marketers to create wants where none exist in the marketplace in order to make
profits? Support your answer. (10 marks)

II. In early 2014, Chipotle Mexican Grill announced that it would stop using genetically
modified ingredients (GMOs) in its restaurants. Many observers applauded this move.
However, critics of the fast-food chain cited a lack of evidence to support its anti-GMO
stance. They suspected that Chipotle’s anti-GMO claim was simply a ploy to distract
consumers from a larger issue: the company’s risky sanitation practices. Chipotle’s anti-

1
 GMO policies may have won the burrito chain some health-conscious customers, but at the
same time customers were becoming sick after eating at some Chipotle locations, calling
into question the firm’s food handling and safety practices.Steve Ells, founder and co-CEO
of Chipotle, said the GMO decision was “another step toward the visions we have of
changing the way people think about and eat fast food. Just because food is served fast
doesn’t mean it has to be made with cheap raw ingredients, highly processed with
preservatives and fillers and stabilizers and artificial colors and flavors.” However, ridding
Chipotle’s supply chain of genetically altered components proved difficult. The chain
discovered GMOs in basic ingredients such as baking powder, cornstarch, canola and soy
oils, corn meal, and sugar. And many non-GMO ingredients were in short supply. For
example, at one point, Chipotle found that it could not supply all its locations with enough
non-GMO pork to make carnitas. Given the supply chain challenges, Chipotle decided to
use non-GMO products in its food preparation but to continue to serve some soft drinks
with sweeteners derived from genetically engineered corn.

Q2. Has Chipotle’s focus on eliminating GMOs created value for its customers? Defend this market
strategy. (10 marks)

Q3. What are marketing intermediaries, and why are they important for marketers?

(10 marks)

Q4. Define strategic planning and briefly describe the four steps that lead managers and the firm
through the strategic planning process. Discuss the role marketing plays in this process.

(10 marks)