ANSWERS

1(A) Market Cannibalization: A Case Study in the Smartphone Industry

1. The factors contributing to market cannibalization in this case are:

 Product similarity: Model A and Model B are both smartphones that cater
to the same segment of consumers who value high-end features and
performance. Therefore, there is a high degree of substitution between the
two products, and consumers may prefer to buy the newer and more
advanced Model A over the older and less innovative Model B.
 Price difference: Model A is priced higher than Model B, reflecting its
superior quality and technology. However, this also creates a price gap
between the two products, which may induce some consumers to switch
from Model B to Model A, especially if they perceive the additional benefits
of Model A to be worth the extra cost. Alternatively, some consumers may
choose to wait for the price of Model A to drop before buying it, thus
delaying or reducing the sales of Model B.
 Marketing strategy: Company X has invested heavily in promoting and
advertising Model A, highlighting its unique features and advantages over
the competitors. This may have increased the awareness and demand for
Model A, but also reduced the attractiveness and relevance of Model B,
which may have been overshadowed by the new product launch. Moreover,
Company X may have neglected to maintain or update the marketing efforts
for Model B, which may have further eroded its brand image and customer
loyalty.

2. The potential consequences of market cannibalization on Company X’s

overall business strategy and financial performance are:

 Loss of market share and revenue: Market cannibalization may result in a

decline in the total sales volume and revenue of Company X, as the sales of
Model B are reduced by the sales of Model A. This may also affect the
market share and competitive position of Company X, as it may lose some
customers to other brands that offer similar or better products at lower
prices. Moreover, market cannibalization may reduce the profitability and
return on investment of Company X, as the higher costs of developing and
marketing Model A may not be offset by the higher revenues generated by
it.
 Loss of customer satisfaction and loyalty: Market cannibalization may
also damage the customer satisfaction and loyalty of Company X, as some
customers may feel dissatisfied or betrayed by the company for launching a
new product that makes their previous purchase obsolete or inferior. This
may reduce the customer retention and repeat purchase rates of Company X,
as well as the word-of-mouth and referral effects that enhance its brand
 reputation and customer base. Furthermore, market cannibalization may
create confusion and uncertainty among the customers, as they may not be
able to differentiate between the various products offered by Company X
and their relative value propositions.
 Loss of innovation and differentiation: Market cannibalization may also
hinder the innovation and differentiation of Company X, as it may
discourage the company from introducing new products or features that may
cannibalize its existing products or segments. This may limit the growth and
diversification opportunities of Company X, as well as its ability to respond
to the changing customer needs and preferences and the evolving market
trends and technologies. Additionally, market cannibalization may reduce
the incentive and motivation of the research and development team of
Company X, as they may feel that their efforts and creativity are not
rewarded or appreciated by the company or the customers.

3. The strategic recommendations for Company X to mitigate the effects of

market cannibalization and optimize its product portfolio are:

 Segment and target the market: Company X should segment and target
the market based on the different customer characteristics, needs,
preferences, and behaviors, and offer different products or versions that
cater to the specific needs and expectations of each segment. This would
help to reduce the overlap and competition between the products, and
increase the customer satisfaction and loyalty. For example, Company X
could target Model A to the premium segment of customers who value the
latest and most advanced features and technology, and are willing to pay a
higher price for it. On the other hand, Company X could target Model B to
the mass segment of customers who value the basic and reliable features and
performance, and are more price-sensitive and budget-conscious.
 Differentiate and position the products: Company X should differentiate
and position the products based on their unique features and benefits, and
communicate them clearly and consistently to the customers and the market.
This would help to create a distinct and positive brand image and identity
for each product, and increase the customer awareness and demand. For
example, Company X could position Model A as the most innovative and
cutting-edge smartphone in the market, and emphasize its superior quality
and technology. On the other hand, Company X could position Model B as
the most affordable and dependable smartphone in the market, and
emphasize its value for money and durability.
 Manage and balance the product life cycle: Company X should manage
and balance the product life cycle of each product, and align the product
development and marketing strategies with the product life cycle stages.
This would help to optimize the sales and profitability of each product, and
avoid premature or excessive cannibalization. For example, Company X
could launch Model A when Model B is in the maturity or decline stage of
 its life cycle, and reduce the production and marketing costs of Model B
accordingly. On the other hand, Company X could launch Model B when
Model A is in the introduction or growth stage of its life cycle, and increase
the production and marketing investments of Model A accordingly.

Q 1 B)

1. The factors influencing Company Y’s decision to adopt a collaboration

strategy are:

 Competition: The food and beverage industry is highly competitive, with

many players offering similar or substitute products at different price points
and quality levels. Company Y faces the threat of losing its market share
and profitability to its rivals, especially the new entrants and the low-cost
producers. By collaborating with other firms, Company Y can gain access to
new technologies, capabilities, and resources that can help it improve its
product quality, variety, and differentiation, and create a competitive
advantage over its competitors.
 Consumer preferences: The food and beverage industry is also dynamic,
with changing consumer preferences and demands. Consumers are
becoming more health-conscious, environmentally-aware, and socially-
responsible, and they seek products that meet their needs and values.
Company Y needs to adapt to these trends and offer products that are
healthy, natural, organic, sustainable, and ethical. By collaborating with
other firms, Company Y can benefit from their expertise, knowledge, and
reputation in these areas, and enhance its brand image and customer loyalty.
 Market expansion: The food and beverage industry is also global, with
opportunities and challenges in different regions and segments. Company Y
wants to expand its market presence and reach new customers in emerging
and untapped markets, such as Asia, Africa, and Latin America. By
collaborating with other firms, Company Y can leverage their local
networks, distribution channels, and market insights, and reduce the entry
barriers and risks associated with entering new markets.

2. The potential benefits and challenges associated with implementing a

collaboration strategy in the food and beverage industry are:

 Benefits:
o Synergy: Collaboration can create synergy, where the combined
value of the partners is greater than the sum of their individual values.
Collaboration can enable the partners to share and utilize their
complementary strengths, resources, and capabilities, and create
value-added products and services that satisfy the customer needs and
expectations better than the individual products and services.
 o Innovation: Collaboration can foster innovation, where the partners
can generate new ideas, solutions, and opportunities that enhance
their product quality, variety, and differentiation. Collaboration can
also facilitate the transfer and diffusion of knowledge, technology,
and best practices among the partners, and stimulate their learning
and improvement processes.
o Market access: Collaboration can increase market access, where the
partners can reach new customers, segments, and regions that they
could not access or serve effectively on their own. Collaboration can
also help the partners to overcome the entry barriers and risks
associated with entering new markets, such as regulatory, cultural,
and competitive challenges.
 Challenges:
o Conflict: Collaboration can cause conflict, where the partners may
have different or incompatible goals, interests, values, and
expectations, and may disagree or compete over the allocation of
resources, responsibilities, and benefits. Collaboration can also create
power imbalances, mistrust, and opportunism among the partners, and
affect their commitment and cooperation levels.
o Cost: Collaboration can incur cost, where the partners may have to
invest time, money, and effort to establish and maintain the
collaboration, and to coordinate and integrate their activities,
processes, and systems. Collaboration can also expose the partners to
the financial and operational risks and uncertainties of the
collaboration, such as the performance and reliability of the partners,
and the changes in the market and environmental conditions.
o Loss of control: Collaboration can result in loss of control, where the
partners may have to sacrifice some of their autonomy, flexibility,
and decision-making authority to the collaboration, and to comply
with the rules, norms, and standards of the collaboration.
Collaboration can also dilute the identity and distinctiveness of the
partners, and affect their brand image and reputation in the market.

3. The marketing strategies that leverage the collaboration to enhance

Company Y’s brand positioning and market share are:

 Co-branding: Company Y can use co-branding, where it can combine its

brand name and logo with the brand name and logo of its partner, and create
a new brand identity and image for the collaborative product or service. This
would help to communicate the value proposition and benefits of the
collaboration to the customers, and to increase the awareness and
recognition of the collaborative product or service in the market. For
example, Company Y can co-brand its products with a well-known health or
environmental organization, and highlight its health and sustainability
attributes.
  Cross-promotion: Company Y can use cross-promotion, where it can
promote its products or services along with the products or services of its
partner, and create a mutual endorsement and recommendation effect. This
would help to increase the exposure and visibility of the products or services
of both partners, and to generate cross-selling and up-selling opportunities.
For example, Company Y can cross-promote its products with a popular
restaurant or hotel chain, and offer discounts or coupons to the customers of
both partners.
 Joint distribution: Company Y can use joint distribution, where it can
distribute its products or services through the distribution channels of its
partner, and create a wider and deeper market coverage and penetration.
This would help to increase the availability and accessibility of the products
or services of both partners, and to reduce the distribution costs and risks.
For example, Company Y can distribute its products through the online
platforms or retail outlets of its partner, and reach new or existing customers
more conveniently and efficiently.

Q2

A) Customer power is the ability of customers to influence the decisions and

actions of businesses that offer products or services to them. As a customer, I have
experienced this shift in power in various ways, such as:

 I can access more information and reviews about the products or services I
want to buy, and compare them with other options available in the market.
This helps me to make more informed and rational choices that suit my
needs and preferences.
 I can use social media and other online platforms to share my opinions and
experiences with other customers, and to influence their purchase decisions.
I can also provide feedback and suggestions to the businesses, and expect
them to respond and improve accordingly.
 I can switch to other brands or providers more easily and quickly, if I am not
satisfied with the quality, price, or service of the current one. I can also
leverage my loyalty and bargaining power to get better deals and offers from
the businesses.

As a businessperson, I have also experienced this shift in power, and I have to

adapt to the changing customer expectations and behaviors. Some of the ways I
have to do this are:

 I have to invest more in digital marketing and customer relationship

management, to reach and engage with the customers more effectively and
efficiently. I have to use data and analytics to understand the customer needs
and preferences, and to tailor my products or services accordingly.
  I have to provide more value and benefits to the customers, and to
differentiate my products or services from the competitors. I have to offer
more variety, quality, convenience, and personalization to the customers,
and to create a unique and positive brand image and identity.
 I have to foster more trust and loyalty among the customers, and to
encourage them to become advocates and promoters of my products or
services. I have to solicit and act on the customer feedback and suggestions,
and to reward and appreciate the customer loyalty and referrals.

The power shift is not uniform across industries and markets, as different factors
may affect the degree and direction of the customer power. Some of these factors
are:

 The level of competition and differentiation in the industry or market. If the

industry or market is more competitive and less differentiated, the customer
power is likely to be higher, as the customers have more choices and
alternatives, and can exert more pressure on the businesses. On the other
hand, if the industry or market is less competitive and more differentiated,
the customer power is likely to be lower, as the customers have fewer
choices and alternatives, and are more dependent on the businesses.
 The level of information and transparency in the industry or market. If the
industry or market is more information-rich and transparent, the customer
power is likely to be higher, as the customers have more access and
awareness of the products or services, and can make more informed and
rational decisions. On the other hand, if the industry or market is less
information-rich and transparent, the customer power is likely to be lower,
as the customers have less access and awareness of the products or services,
and can be more influenced and manipulated by the businesses.
 The level of involvement and emotion in the industry or market. If the
industry or market is more involving and emotional, the customer power is
likely to be lower, as the customers have more attachment and loyalty to the
products or services, and are less likely to switch or bargain. On the other
hand, if the industry or market is less involving and emotional, the customer
power is likely to be higher, as the customers have less attachment and
loyalty to the products or services, and are more likely to switch or bargain.

Q2B) WHAT IS STRATEGY?

Strategy is the process of planning and executing actions to achieve a specific goal
or objective. In marketing, strategy is the overall plan to reach and satisfy the target
market, and to gain a competitive advantage over the rivals. A marketing strategy
consists of the following elements:

 Marketing goal: This is the desired outcome or result of the marketing

strategy, such as increasing sales, market share, brand awareness, customer
 loyalty, or profitability. The marketing goal should be SMART: specific,
measurable, attainable, relevant, and time-bound.
 Marketing segmentation: This is the process of dividing the market into
smaller and homogeneous groups of customers who share similar
characteristics, needs, preferences, or behaviors. The main criteria for
segmentation are geographic, demographic, psychographic, and behavioral.
 Marketing targeting: This is the process of selecting one or more segments
to focus on and serve with the marketing strategy. The main criteria for
targeting are segment size, growth, profitability, and compatibility with the
company’s resources and capabilities.
 Marketing positioning: This is the process of creating a distinctive and
favorable image and identity for the product or service in the minds of the
target customers, relative to the competitors. The main criteria for
positioning are value proposition, differentiation, and competitive
advantage.
 Marketing mix: This is the set of tactical decisions and actions that
implement the marketing strategy. The marketing mix consists of the four
Ps: product, price, place, and promotion. Each of these elements should be
aligned with the marketing goal, segmentation, targeting, and positioning.

Q2C) DIFFERENCE BETWEEN MISSION AND VISION

Feature Vision Mission

Focus Future-oriented Present-oriented

Purpose Inspire and motivate Guide and define actions

Bold, ambitious,
Characteristics Clear, concise, actionable
aspirational

To provide affordable and

To create a society where
accessible educational
everyone has access to
Example resources to underserved
quality education and
communities through innovative
equal opportunities.
technological solutions.

Q3 A) BENEFITS OF SWOT ANALYSIS

  Identifying strengths and weaknesses: SWOT analysis helps to identify the
internal factors that make the business or project strong or weak, such as the
skills, resources, capabilities, or reputation of the business or project. For
example, a strength of a restaurant may be its high-quality food and service,
while a weakness may be its limited menu or location. By identifying these
factors, the business or project can leverage or improve them accordingly,
such as by promoting its strengths or addressing its weaknesses.
 Identifying opportunities and threats: SWOT analysis helps to identify the
external factors that create opportunities or threats for the business or
project, such as the market trends, customer needs, competitor actions, or
environmental changes. For example, an opportunity for a restaurant may be
a growing demand for healthy or vegan food, while a threat may be a new
competitor or a food safety regulation. By identifying these factors, the
business or project can exploit or avoid them accordingly, such as by seizing
the opportunities or mitigating the threats.
 Formulating and implementing strategies: SWOT analysis helps to
formulate and implement effective strategies that match the internal and
external factors of the business or project, and that achieve the desired goal
or objective. For example, a strategy for a restaurant may be to expand its
menu or delivery options, to attract more customers and increase its sales.
By using SWOT analysis, the business or project can ensure that its
strategies are aligned with its strengths, weaknesses, opportunities, and
threats, and that they are realistic and feasible.

Q3B) I would contradict this statement, as I believe that there are some examples
of sustainable competitive advantages that can last over the long term, even in
today’s economy and business technology. Here are some of my arguments:

 Some competitive advantages are based on intangible assets, such as brand

reputation, customer loyalty, organizational culture, or intellectual property.
These assets are difficult to imitate or replicate by the competitors, and they
can create a lasting impression and preference among the customers. For
example, Apple has a strong brand reputation and customer loyalty, based
on its innovative and distinctive products and services, and its loyal fan
base. This gives Apple a sustainable competitive advantage over its rivals,
who may not be able to match its level of innovation and differentiation.
 Some competitive advantages are based on network effects, such as
economies of scale, scope, or learning. These effects occur when the value
or efficiency of a product or service increases with the number of users or
transactions. This creates a positive feedback loop, where more users or
transactions attract more users or transactions, and vice versa. This also
creates a barrier to entry for the competitors, who may not be able to achieve
the same level of scale, scope, or learning. For example, Amazon has a large
and diverse network of customers, suppliers, and partners, who benefit from
its low prices, wide selection, and fast delivery. This gives Amazon a
 sustainable competitive advantage over its rivals, who may not be able to
offer the same level of value and convenience.
 Some competitive advantages are based on strategic alliances, such as
partnerships, collaborations, or joint ventures. These alliances allow the
partners to share and leverage their complementary resources, capabilities,
and markets, and to create synergies and value-added products or services.
These alliances also create a competitive edge for the partners, who can
access new opportunities and markets, and reduce the risks and costs of
entering them. For example, MasterClass has a strategic alliance with
various celebrities and experts, who teach online classes on various topics
and skills. This gives MasterClass a sustainable competitive advantage over
its rivals, who may not be able to offer the same level of quality and variety
of content and instructors.

Q3C) Strengths, weaknesses, opportunities, and threats: Which is the most

important? Why?
Determining the "most important" aspect of a SWOT analysis (Strengths,
Weaknesses, Opportunities, and Threats) is difficult because each plays a crucial
role in understanding your current situation and future potential. It's often more
beneficial to view them as interdependent rather than prioritizing one over the others.
Here's why each element is important:
Strengths:

 Foundation for building upon: Identifying your strengths allows you to

leverage them and maximize your effectiveness.

 Competitive advantage: Understanding your unique strengths compared to

others helps you stand out and gain a competitive edge.

 Confidence builder: Recognizing your strengths can boost your morale and
empower you to take on new challenges.

Weaknesses:

 Areas for improvement: Identifying weaknesses allows you to address them

and prevent them from hindering your progress.

 Risk mitigation: Being aware of your weaknesses helps you anticipate

potential problems and develop strategies to minimize their impact.
  Growth catalyst: By addressing weaknesses, you create opportunities for
learning and improvement, leading to overall growth.

Opportunities:

 Future potential: Identifying opportunities helps you capitalize on external

factors that can contribute to your success.

 Innovation driver: Recognizing opportunities encourages creative thinking

and development of new ideas and approaches.

 Expansion possibilities: Exploring opportunities could lead to new markets,

partnerships, or ventures, fueling your growth potential.

Threats:

 Risk identification: Recognizing threats allows you to prepare for and

mitigate potential dangers that could harm your progress.

 Strategic planning: Understanding threats helps you develop contingency

plans and adjust your strategies to adapt to changing circumstances.

 Competitive awareness: Knowing potential threats from competitors allows

you to stay ahead of the curve and protect your position.

Interdependence:

However, the true power of SWOT lies in understanding how each element interacts
with the others:

 You can use your strengths to overcome weaknesses and capitalize on

opportunities.

 Addressing weaknesses can help you avoid threats and open up new
opportunities.

 Leveraging opportunities can strengthen your position and mitigate potential

threats.

 Being aware of threats can force you to innovate and develop new strengths.
Therefore, focusing on just one element of SWOT would be like only looking at one
piece of a puzzle. True understanding and strategic planning come from analyzing all
four elements together and seeing how they interweave to create a comprehensive
picture of your situation and potential.

Ultimately, the importance of each element depends on your specific context and
goals. It's crucial to analyze all four facets within your specific situation to make
informed decisions and chart a course for success.

Q4A) What do you understand from Diffusion-adoption curve?

A diffusion-adoption curve is a graphical model that shows how new products or

technologies spread and are adopted by different groups of people over time. It is
based on the diffusion of innovations theory, which explains how, why, and at
what rate innovations are communicated and accepted by a social system1

The diffusion-adoption curve divides the potential adopters of an innovation into

five categories, based on their willingness and readiness to adopt it. These
categories are:

 Innovators: These are the first people to adopt an innovation. They are
adventurous, risk-taking, and eager to try new things. They usually have
high income, education, and social status. They represent about 2.5% of the
total adopters2
 Early adopters: These are the second group of people to adopt an
innovation. They are opinion leaders, influential, and respected by others.
They usually have high income, education, and social status. They represent
about 13.5% of the total adopters2
 Early majority: These are the third group of people to adopt an innovation.
They are pragmatic, cautious, and deliberate. They usually have average
income, education, and social status. They represent about 34% of the total
adopters2
 Late majority: These are the fourth group of people to adopt an innovation.
They are skeptical, conservative, and resistant to change. They usually have
below-average income, education, and social status. They represent about
34% of the total adopters2
 Laggards: These are the last group of people to adopt an innovation. They
are traditional, isolated, and reluctant to change. They usually have low
 income, education, and social status. They represent about 16% of the total
adopters2

The diffusion-adoption curve is shaped like a bell curve, with a steep rise in the
middle and a gradual decline at the end. It shows that the adoption rate of an
innovation varies over time, depending on the characteristics and behaviors of the
different groups of adopters3

The diffusion-adoption curve can help businesses and marketers to understand and
predict the market potential and acceptance of their products or technologies, and
to design and implement effective strategies to reach and satisfy their target
customers45

Q4B) How to avoid pitfalls of collaborative innovations?

Collaborative innovations are the result of joint efforts and interactions among
different individuals or organizations to create new products, services, or solutions.
Collaborative innovations can offer many benefits, such as increased creativity,
diversity, learning, and market access. However, they can also pose many
challenges and pitfalls, such as conflicts, costs, loss of control, and over-
collaboration. To avoid these pitfalls, some possible strategies are:

 Establish clear goals and objectives: Collaborative innovations should

have a clear and shared purpose and direction, and the expected outcomes
and benefits should be defined and agreed upon by all the partners. This
would help to align the interests and expectations of the partners, and to
measure and evaluate the progress and performance of the collaboration.
 Define roles and responsibilities: Collaborative innovations should have a
clear and fair distribution of tasks and duties among the partners, and the
authority and accountability of each partner should be specified and
communicated. This would help to avoid confusion, duplication, or
omission of work, and to ensure the quality and efficiency of the
collaboration.
 Communicate and coordinate effectively: Collaborative innovations
should have a regular and transparent exchange of information and feedback
among the partners, and the methods and channels of communication should
be suitable and accessible for all the partners. This would help to build trust
and rapport among the partners, and to resolve any issues or conflicts that
may arise during the collaboration.
 Respect and value diversity: Collaborative innovations should
acknowledge and appreciate the different perspectives, backgrounds, and
experiences of the partners, and seek to learn from and leverage their
complementary strengths and capabilities. This would help to foster a
 culture of inclusion and innovation, and to generate more creative and
diverse ideas and solutions.
 Set boundaries and limits: Collaborative innovations should have a
realistic and manageable scope and scale, and the partners should be aware
of their own and each other’s resources and limitations. This would help to
prevent over-collaboration, which can lead to burnout, reduced productivity,
or compromised individual creativity.

Q4C) Without Adequate Market Knowledge, Marketing Decisions Are Likely To Be

Misguided. Please justify the statement by giving at least 4 reasons in the support of your
answer.

I agree with the statement that without adequate market knowledge, marketing
decisions are likely to be misguided. Market knowledge is the information and
insight that a business has about the market in which it operates or intends to
operate, such as the customers, competitors, trends, and opportunities. Having
adequate market knowledge can help a business make informed and effective
marketing decisions that align with its goals and strategies. Here are some reasons
why market knowledge is essential for marketing decisions:

 Market knowledge helps to identify and understand the needs and

preferences of the customers, and to design and deliver products or services
that satisfy them. Without market knowledge, a business may fail to meet
the customer expectations or create value for them, and lose their loyalty
and trust.
 Market knowledge helps to analyze and anticipate the actions and reactions
of the competitors, and to develop and implement competitive strategies that
differentiate the business from the rivals. Without market knowledge, a
business may not be able to cope with the competitive pressure or threats,
and lose its market share and profitability.
 Market knowledge helps to recognize and exploit the opportunities and
trends in the market, and to innovate and diversify the products or services
accordingly. Without market knowledge, a business may miss out on the
potential growth and development prospects, and lag behind the market
changes and demands.
 Market knowledge helps to evaluate and measure the performance and
outcomes of the marketing decisions, and to adjust and improve them as
needed. Without market knowledge, a business may not be able to monitor
and assess the effectiveness and efficiency of its marketing efforts, and to
identify and address any gaps or challenges.
Q5A) Explain the difference between Break-even point and payback period?

The break-even point and the payback period are two different concepts that
measure the profitability and feasibility of a business or a project. Here is the
difference between them:

 The break-even point is the level of sales or revenue that covers all the costs
and expenses of the business or project, resulting in zero net income or
profit. It indicates how much the business or project needs to sell to avoid
making a loss. The break-even point can be calculated by dividing the total
fixed costs by the contribution margin per unit or by the contribution margin
ratio.
 The payback period is the time it takes for the business or project to recover
its initial investment or cost, based on the expected cash flows. It indicates
how long the business or project needs to operate to break even on its initial
outlay. The payback period can be calculated by dividing the initial
investment by the annual cash flow, or by adding up the cumulative cash
flows until they equal the initial investment.

Q5B) Explain Net Promoter score in details and what do you understand from the
bad NPS score?

Net Promoter Score (NPS) is a metric that measures how likely customers are to
recommend a product, service, or company to others. It is based on a single
question: “On a scale of 0 to 10, how likely are you to recommend [our product or
company] to a friend or colleague?”

Customers who answer this question are classified into three categories:

 Promoters: Customers who give a score of 9 or 10. They are loyal,

enthusiastic, and likely to spread positive word-of-mouth about the product
or company.
 Passives: Customers who give a score of 7 or 8. They are satisfied, but not
impressed, and may switch to a competitor if offered a better deal or
experience.
 Detractors: Customers who give a score of 0 to 6. They are unhappy,
dissatisfied, and likely to spread negative word-of-mouth about the product
or company.

The NPS is calculated by subtracting the percentage of detractors from the

percentage of promoters. The result can range from -100 (all detractors) to +100
(all promoters). A positive NPS indicates that there are more promoters than
detractors, and a negative NPS indicates the opposite.
A bad NPS score means that the product or company has more detractors than
promoters, and that the customer satisfaction and loyalty are low. A bad NPS score
can have negative consequences for the business, such as:

 Reduced customer retention and repeat purchases

 Increased customer churn and acquisition costs
 Damaged brand reputation and image
 Decreased market share and revenue
 Lowered employee morale and engagement

To improve a bad NPS score, the product or company should take actions to
address the root causes of customer dissatisfaction and dissatisfaction, and to
increase the value and benefits that they offer to their customers. Some possible
actions are:

 Solicit and act on customer feedback and suggestions

 Improve the quality and reliability of the product or service
 Enhance the customer service and support
 Offer incentives and rewards for customer loyalty and referrals
 Segment and target the most profitable and loyal customers
 Innovate and differentiate the product or service from the competitors
 Communicate and demonstrate the value proposition and competitive
advantage of the product or company.

Q5C) ) What is the difference between Customer satisfaction and Willingness to

recommendation with the help of example?

Customer satisfaction and willingness to recommendation are two related but

distinct concepts that measure how happy and loyal customers are with a product,
service, or company.

Customer satisfaction is the degree to which customers’ expectations and needs are
met or exceeded by the product, service, or company. It is usually measured by
asking customers to rate their satisfaction level on a scale, such as 1 to 5 or 1 to 10.
Customer satisfaction reflects how well the product, service, or company delivers
value and benefits to the customers, and how satisfied they are with their overall
experience.

Willingness to recommendation is the likelihood that customers will recommend

the product, service, or company to others, such as their friends, family, or
colleagues. It is usually measured by asking customers to indicate their willingness
to recommend on a scale, such as 0 to 10 or yes or no. Willingness to
recommendation reflects how loyal and enthusiastic customers are about the
product, service, or company, and how willing they are to spread positive word-of-
mouth.
For example, suppose a customer buys a pair of shoes from an online store. The
customer may rate their satisfaction with the shoes as 4 out of 5, meaning that they
are fairly satisfied with the quality, fit, and design of the shoes. However, the
customer may rate their willingness to recommend the online store as 7 out of 10,
meaning that they are not very likely to recommend it to others. This may be
because the customer had a poor experience with the delivery, customer service, or
website of the online store, or because they do not think the online store is unique
or remarkable enough to recommend.

Q6 b) Psychological Pricing

Concept:

Psychological pricing is a strategy that involves setting prices to influence

consumer perceptions and behavior. This approach considers the psychological
factors that impact how consumers perceive prices, making them more likely to
make a purchase.

Strategies:

1. Odd Pricing: Setting prices just below a round number (e.g., $9.99 instead of
$10) is a common psychological pricing strategy. Consumers often perceive prices
ending in .99 as being significantly lower than the next whole number.

- Example: Retailers like $19.99 instead of $20. This strategy creates the
perception of a lower price and can stimulate impulse buying.

2. Prestige Pricing: Setting prices at a premium to convey a sense of exclusivity

and quality. Higher prices are associated with higher quality in the minds of some
consumers.

- Example: Luxury brands such as Rolex or Louis Vuitton use prestige pricing to
position their products as premium and exclusive.

3. Bundle Pricing: Offering multiple products or services for a lower combined

price compared to buying each item separately. This creates a perception of value
for the consumer.

- Example: Fast-food combos or software packages that offer a discount when

multiple items are purchased together.
c) Dynamic Pricing in E-commerce:

Concept:

Dynamic pricing involves adjusting prices in real-time based on various factors

such as demand, supply, and market conditions. In e-commerce, this strategy is
facilitated by algorithms and data analysis to optimize pricing for maximum
profitability.

Factors Influencing Implementation:

1. Market Demand: The level of demand for a product or service plays a crucial
role in dynamic pricing. Prices can be increased during high-demand periods and
decreased during low-demand periods.

2. Competitor Pricing: Monitoring and reacting to competitors' pricing strategies

are essential in dynamic pricing. Algorithms may adjust prices based on changes in
the pricing strategies of competitors.

3. Customer Behavior: Understanding and predicting customer behavior is critical.

Dynamic pricing algorithms often consider factors like browsing history, purchase
patterns, and the likelihood of a customer making a purchase.

Examples of Industries:

1. Airline Tickets: Airlines often adjust ticket prices based on factors like demand,
time until departure, and seat availability.

2. Online Retail: E-commerce platforms frequently use dynamic pricing to adjust

product prices based on real-time market conditions and customer behavior.

3. Ride-Sharing Services: Companies like Uber and Lyft use dynamic pricing
during peak hours or high demand to encourage more drivers to become available
and balance supply and demand.

Dynamic pricing allows companies to stay competitive and maximize revenue by

responding quickly to changing market dynamics. However, it also requires careful
monitoring and consideration of potential consumer backlash.