ICSE 2012 Commercial Applications Question Paper Solved for Class 10

Solving ICSE Class 10 Commercial Applications Previous Year Question Papers ICSE Class 10 Commercial Applications Question Paper 2012 is the best way to boost your preparation for the board exams.

ICSE Class 10 Commercial Applications Question Paper 2012 Solved

Section – A (40 Marks)
(Attempt ALL Questions)

Question 1.
Give one difference between each of the following:
(a) Multi-level marketing and Tele-shopping. [2]
(b) Implicit costs and Explicit costs. [2]
(c) Cash credit and Overdraft. [2]
(d) Book Keeping and Accounting. [2]
(e) Institutional and Informative advertising. [2]
Answer:
(a) Multi-level Marketing (MLM): Multi-level Marketing is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation.

They are awarded a commission based upon the volume of product sold through their own sales effort as well as that of their down line organization. Tele shopping : Teleshopping refers to the electronic retailing / home shopping channels industry which allow consumers to shop for goods and services from the privacy of their own home. For example, HSN, Shop NBC, Buy. com, Amazon.com, etc.

(b) Implicit Cost: Implicit costs are the costs of self-owned and self-supplied factors of production. For example, the owner of a firm may himself act as its manager. Implicit costs are generally not recorded in the firm’s books of accounts.

Explicit cost: Explicit costs are the contractual money payments actually made to the owners of various factors of production. For example, the firm obtains land on lease and pays rent to the landlord. Explicit costs are recorded in the firm’s books of accounts.

(c) Cash Credit: This is an arrangement where in a bank advances cash loans to the borrower against some tangible security or personal guarantee. The borrower can withdraw upto his cash credit limit according to his needs and can deposit back any surplus. Interest is charged on the amount actually withdrawn by the borrower and not on the whole amount granted.

Overdraft: This is an arrangement under which a current account holder is allowed to withdraw more than the balance to his credit upto the specified limit. Interest is charged on the money actually overdrawn during that period. Commercial banks provide overdraft facility on the security of some assets or on the personal security of the account holder.

(d) Book-keeping : Book-keeping is a narrow term. It is concerned with identifying financial transactions; measuring them in money terms; recording and classifying them.
Accounting : Accounting is a wide term. It is concerned with summarising and analysing the recorded transactions, interpreting them and communicating the results.

(e) Institutional Advertising: It is also known as corporate advertising, it is a tool available with institutions and corporate bodies for creating, promoting and sustaining the prestige or image of the organisation as a whole. For example, the corporate campaigns launched by the Tata, ITC, Reliance, Bata or Philips emphasize the quality and research behind their products.

Informative Advertising : Informative advertising contains information about a product/service or institution. It makes consumers aware of the existence, features, uses of goods and services.

Question 2.
(a) Give two conditions under which parity pricing is desirable. [2]
(b) Briefly describe how advertising sustains the press. [2]
(c) List any two uses of a Balance Sheet. [2]
(d) State any two merits of external recruitment. [2]
(e) Mention any two characteristics of public relations. [2]
Answer:
(a) Conditions under which parity pricing is desirable:

When costs measuring is difficult, parity pricing is done under rational pricing strategy.
When price charged by the market leader is well established. In an oligopolistic market, charging lower than market leader leads to price war.
When the competition is tough and products are homogeneous.

(b) Advertising serves as a great source of revenue for the press (newspapers and magazines). As a result, public can get newspapers and magazines at very low prices. Without advertisements, the cost of production of magazines, etc., will be very high and so sales will be low. This is how advertising sustains press.

It reveals the position of assets and liabilities of the organisation on a particular date.
It also discloses the proprietory interest of owner.
It reflects the financial position (short and long-run) of the enterprise.
It provides sufficient information for calculation of shortterm and long-term financial ratios.

(d) Merits of External Recruitment are as follows:

Wide Options : External sources bring in a large number of applicants. This will permit the enterprise to have a free hand in making the selection.
Infusion of New Blood : The enterprise can expect to get fresh, talented candidates from outside. This means infusion of new ideas into the enterprise.
Element of Competition : Internal candidates have to compete with outside candidates for the vacancies. This is a healthy feature from the point of view of the enterprise.

(e) Characteristics of public relations are as follows:

Public relations is a planned and sustained effort. It is a management function.
It builds good image of the organisation.
Public relations function seeks to ensure that the policies, procedures and actions of the organisations are in the public interest and socially responsible.
It creates and maintains harmonious relation between an organisation and the public.

Question 3.
(a) What is meant by premium offer as one of the Sales Promotion techniques? [2]
(b) Give two differences between the Production oriented stage and the Product oriented stage of marketing. [2]
(c) What are the components of Price Mix? [2]
(d) Explain any two themes or values of a good advertisement. [2]
(e) List any two circumstances under which a bank can refuse payment of a cheque. [2]
Answer:
(a) Premium or Bonus Offer: It implies an offer of a certain quantity of the product, free of cost, on the purchase of a specified quantity of the product. It also refers to a free gift on the purchase of specified products.
A premium offer can be of three types:

With-pack premium
A reusable container
A free-in-the-mail premium

(b) Marketing that we see today has not been the same from the very beginning. It has passed through various stages before reaching its modem stage. We discuss the difference between the two earlier stages, i.e., Production Oriented Stage and Product Oriented Stage as follows:
(i) Production Oriented Stage : During the period of 1869 to 1930, marketing was production oriented i.e., anything and everything that was produced was to be sold. This stage followed the rale that “supply creates its own demand”. So, the goods were produced and the market was enough to consume these goods and demand need not be created. Under this stage it was presumed that consumers prefer widely available and low-cost products. So, the higher the production capacity, the higher were the sales of the organisation.

(ii) Product Oriented Stage : In this stage more importance is attached to the product. During the span of 1930 to 1950 marketing was product oriented i.e., emphasis was given to product sales. The firms realised that the consumers now wanted to buy only well-advertised product. So, during this stage selling efforts were given huge importance. The consumers were given importance in the sense that they were just the buyers of the product.

(d) An advertisement can be based on various themes.
Some of these are discussed below:
(i) Fantasy: Certain advertisements create fantasy about the ownership of a particular product. Advertising air conditioners, credit cards, motor vehicles etc., create consumer fantasy about owning them. ‘Wish to own a credit card? Go Ahead, subscribe for Citi Bank Credit Card creates a fantasy around the product, credit card. Possession of products with fantasy provides a sense of pride and honour to the owners.

(ii) Cosmetic Appeal: Products such as cosmetics and soaps are advertised with beauty or cosmetic theme ‘Synergie’, for example, a wrinkle-free cream is sold because of its cosmetic appeal.

(iii) Technical Expertise: Products which are advertised through depiction of technical operations involved in manufacturing them are based on technical expertise theme. It shows the company’s expertise and experience in making the product. Electronic gadgets are generally advertised with this theme.

(e) Circumstances under which a bank can refuse payment of a cheque are:

When the amount or balance to the credit of the drawer is not sufficient to make payment of the cheque.
When the cheque is more than six months old i.e. it has expired.

Question 4.
Justify either for or against by giving two reasons for each of the following:
(a) Introduction stage in a Product Life Cycle is not very risky. [2]
(b) Scope of Public Relations is narrow. [2]
(c) Advertisements eliminate middlemen. [2]
(d) It is marketing which has converted yesterday s luxuries into today’s necessities. [2]
(e) A crossed cheque is a safer mode of payment as compared to an open cheque. [2]
Answer:
(a) Introduction stage in a product life cycle is very risky. It is the stage when product is launched for the first time in the market. It takes time for product to settle in the market and become readily acceptable to consumers. The sales and profit related to the product are, therefore, low. Competition is virtually absent, market is limited, prices are relatively high and little is known about the product innovation.

Growth in sales volume is at a low rate due to lack of knowledge on the part of consumers and limited distribution. Prices are usually high because of small scale of production and heavy promotional expenditure. There is high probable rate of product failure. Therefore, it is wrong to say that introduction stage in a Product Life Cycle is not very risky.

(b) Scope of public relations is very wide. It is an effort to satisfy different groups like consumers, distributors, suppliers, employees, local community and media. Public relation is the process of gaining public support for an activity, cause or organisation through information and persuasion. Therefore, it is wrong to say that scope of public relation is narrow.

(c) Advertisements eliminate middlemen. It identifies the manufacturer in relation to the product. This helps consumers to approach the manufacturers directly. It reduces channels of distribution and unwanted intermediaries. This also leads to lower overheads and costs. Therefore, it is right to say that advertisements eliminate middlemen.

(d) It is not marketing that has converted yesterday’s luxuries into today’s necessities, rather the main reason behind it is the substantial rise in income of the people. People were not able to afford things like refrigerator, T.V. washing machine, music system, etc., because of their low paying capacity, in the earlier times. Marketing and advertising have no doubt played a role in this change, but they are not the only reason behind the change.

(e) A crossed cheque is a safe mode of payment as compared to an open cheque due to the following reasons:

Open cheques are vulnerable to risk as these can be stolen and encashed at the bank counter. Whereas a crossed cheque can be encashed by the only person to whose account it is referred.
The bank is responsible if the payment, in case of a crossed cheque, is made to a wrong person. Whereas in case of open cheque, the issuer is responsible. Therefore, it is right to say that a crossed cheque is a safer mode of payment as compared to an open cheque.

Section – B (60 Marks)
(Attempt any FOUR Questions)

Question 5.
(a) What do you mean by endorsement of a cheque? Explain any three types of endorsements. [5]
(b) Explain the following with an example for each: [5]

marginal cost
opportunity cost.

(c) Mention the various stages of ‘Product Life Cycle ’. How is Product Life Cycle advantageous? [5]
Answer:
(a) Endorsement of a cheque means writing something on the back of the cheque with the intention of transferring the rights therein. Endorsement is required when the cheque is payable to order.
A bearer cheque can be transferred by mere delivery and no endorsement is required on it.

Endorsement may be of the following kinds:
(i) Blank or General Endorsement : If the endorser simply puts down his signature on the cheque without writing the name of the endorsee, it is called Blank or General Endorsement. The effect of such an endorsement is that the cheque becomes payable to bearer. The property in the cheque can now be transferred by mere delivery and no endorsement is required.

For example, a bill is made payable to the order of Mr. X who puts his signature on the back of the bill. This is an endorsement in blank by Mr. X and in such case, the property in the bill may pass by mere delivery as if the instrument is payable to the bearer.

(ii) Full or Special Endorsement: If the endorser specifies the name of the endorsee and signs the cheque, it is called Full or Special Endorsement. The , effect of such an endorsement is that the endorsee must endorse it again if he wants to transfer the property in the cheque to somebody else. For example, if an endorsement, “pay to Mr. Y” or order” followed by endorser’s signature, it is nothing but the endorsement in full.

(iii) Restrictive Endorsement : When the endorser restricts the further negotiation of a cheque, it is called Restrictive Endorsement. The effect of such an endorsement is that the endorsee gets all the rights to the endorser except the right of negotiation.
The following are the examples of restrictive endorsement.
(a) Pay to A only.
(b) Pay to A for my use.
(c) Pay to A for the account of B.

(b) (i) Marginal Cost: Marginal cost is the cost of producing one additional unit of a product. The concept of marginal cost is very useful in making managerial decisions concerning price fixation. For example, the cost of manufacturing 10 units of a product is ₹ 100, that is ₹ 10 per unit. If the company manufactures 11 units, cost becomes ₹ 112. Marginal cost = ₹ 112 – ₹ 100 =12(11th unit).

(ii) Opportunity Cost : Opportunity cost means the benefit sacrificed for selecting a particular course of action. It is the maximum advantage that could be obtained if the resource was put to an effective use. The opportunity cost of producing one commodity A is the amount of B that must be sacrificed in order to use resources to produce A rather than B.

For example, a firm buys a machine of ₹ 25,000. This amount could be invested in shares’ or debentures. The loss of dividend or interest that could be earned is the opportunity cost. Opportunity cost is not recorded in books of accounts. It is useful in comparing alternatives and in making decisions.

(c) Every product passes through a number of stages, namely, introduction, growth, maturity, decline and abandonment. These stages are collectively referred to as Product Life Cycle. It is represented as a curve that determines the course of a product’s life representing the sales and profits over its life time.
(i) Introduction Stage: This is the stage when product is launched for the first time in the market. It takes time for product to settle in the market and become readily acceptable to consumers. The sales and profits related to the product are, therefore, low.

(ii) Growth Stage : If the new product satisfies the market, it will enter a growth stage. This stage is characterised by an increase in the number of buyers who wish to buy the product.

(iii) Maturity Stage : The product enters into maturity stage as competition intensifies further and market gets saturated. Profits come down because of stiff competition, and marketing expenditures rise. The prices are decreased because of competition and innovations in technology.

This stage may last for a long period as in the case of many products with long-run demand characteristics. But sooner or later, demand of the product starts declining as new products are introduced in the market. Product differentiation, identification of new segments and product improvement are emphasised during this stage.

(iv) Decline Stage : This stage is characterised by either the product’s gradual displacement by some new products or change in consumer buying behaviour. The sales fall down sharply and the expenditure on promotion has to be cut down drastically.

(v) Abandonment Stage: Most firms abandon the product in order to put their resources to better use. Tastes of consumers may change and new innovations enter the market to take the place of the abandoned products. Some firms try to postpone abandonment by introducing new models with unique features. In case of heavy losses and no future, the firm may sell out and merge with a stronger enterprise.

The product life cycle offers the following advantages:
(a) When the product life cycle is known the firm can prepare an effective product plan.
(b) Management can take advance steps before the decline of the product.
(c) The maturity stage can be extended by finding new uses of the product.
(d) Technological innovations can be adopted to improve the quality, features and design of the product.

Question 6.
(a) Marketing is a wider term than selling. Explain. [5]
(b) Distinguish between Receipts and Payments Account and Income and Expenditure Account. [5]
(c) What pricing strategy will be used to launch. [5]
(i) a high end smart phone in the market
(ii) shampoo in the market.
Answer:
(a) Marketing is a wider term than selling, and it includes selling. It is a total system of interacting business activities designed to plan, promote and distribute goods and services to present and potential customers. It develops the product according to customer needs.

On the other hand, selling may be defined as the performance of those activities which lead to obtaining orders from customers and direct the flow of goods and services from the seller to the buyer. It bends the customer according to the product. Thus, it involves activities connected with the transfer of goods, already produced, to the customers.

Distinction Between Marketing and Selling

S.No.	Basis of Distinction	Marketing	Selling
1.	Scope	Marketing covers development of products according to the needs of customers, collection of goods and distribution of goods for satisfaction of customers. It involves product planning, sales promotion, market research, etc.	Selling is a part of marketing and it covers simply obtaining orders and delivering them to customers. It is concerned with sale of goods which are already produced.
2.	Emphasis	Marketing emphasises on the mission and goals of business which are long-term.	Selling has short-term objectives which are generating revenue and maximisation of profits.
3.	Orientation	Marketing is customer oriented. The objective is to satisfy the wants of customers.	Selling is product oriented. The objective is to convert the product into cash.
4.	Beginning	Marketing begins much before the goods are produced and continues ever after the sale.	Selling begins after goods are produced and ends with the sale.
5.	Concentration	Marketing concentrates on the need of the buyer.	Selling concentrates more on the need of the seller as compared to buyer.
6.	Aim	Marketing aims at earning profit through customer satisfaction.	Selling aims at earning profit through maximum sales.

(b) Following are the points of distinction between Receipts and Payments Account and Income and Expenditure Account:

	Points of Distinction	Receipts and Payment Account	Income and Expenditure Account
1.	Nature	It is a statement of cash transactions for a period.	It is another name for profit and loss account of the non-trading organisations.
2.	Type of Account	It is a real account.	It is a nominal account.
3.	Object	It shows merely the cash In hand/bank at the close.	It represents the net result of all the activities during the year resulting in surplus or deficit, as the case may be.
4.	Contents	It records both capital and revenue items of any period current, previous or succeeding years.	It contains only the items of revenue nature of the current accounting period only.
5.	Opening Balance	It commences with opening balance of cash in hand and at bank.	It does not begin with any opening balance.
6.	Closing Balance	Its balance at the end shows the cash in hand and at bank (or overdraft) at the end of the year.	Its balance at the end shows the surplus or deficit for the year.
7.	Form	Receipts are entered on the debit side and payments on the credit side.	Income is shown on the credit side and the expenses on the debit side.
8.	Period of Items	It may comprise not only receipts and payment for the current year but also for the previous or/and succeeding years.	It contains income and expenditure of the current accounting period only.
9.	Non-cash Items	It contains only cash items.	It contains non-cash items, e.g., depreciation, loss on sale of assets also.
10.	Balance Sheet	No balance sheet is prepared.	A balance sheet is usually prepared in this account.

(c) Different pricing strategies are adopted to launch different types of products :
(i) To launch a high end smart phone in the market, a suitable pricing strategy is Skimming Pricing. In this strategy, a very high price is set so that in the initial stages the cream of demand may be skimmed and the investment made in the product is quickly realised. The aim is to‘sell to classes’who don’t care how much they pay for a novel product. Later on, the price may be reduced to tap other segments of the market. This strategy is appropriate in case of a highly distinctive product such as a high end smart phone.

(ii) To launch a shampoo in the market, a suitable pricing strategy is Penetrating Pricing. This strategy involves setting a low price in the initial stage so as to make the brand quickly popular and to maximise the market share. The manufacturer seeks to sell to the masses. The policy results in high sales volume during the initial stages of a product’s life cycle. Penetrating pricing is an aggressive pricing strategy and it may be successfully used to launch a fast moving consumer good like shampoo.

Question 7.
Write short notes on :
(a) Matching Principles of Accounting. [5]
(b) Types of Business Assets. [5]
(c) Drawbacks of Sales Promotion. [5]
Answer:
(a) Matching Principle of Accounting : According to this principle, cost of a particular period should be charged from die revenue of same period only. Only such matching of cost and revenue can reveal the true profit or loss for a period. This principle provides the guidelines as to how the expenses are to be matched with revenue.

It requires that in determining the net profit, all costs which are applicable to revenue of that period should be charged against that revenue. For matching costs with revenue, first revenues should be recognised and then costs incurred for generating that revenue should be recognised. The matching of costs with revenue is based on the accrual system of accounting. While matching, costs with revenues, the following points must be considered.

For example, salary paid in January 1998 relating to December 1997 should be treated as the expenditure for the year 1997 and not 1998.
(i) When an item of revenue is included in the Profit and Loss Account, all expenses incurred on it whether paid or not, should be included in the Profit and Loss Account. Outstanding expenses are debited in the Profit and Loss Account on this basis.

(ii) If an amount is spent, but revenue from it will be earned in the next year, the amount should be carried down as an asset and should be shown as an expense next year. Prepaid expenses, (e.g., prepaid insurance) are shown as assets in the Balance Sheet on this basis.

(iii) Cost of goods remaining unsold at the end of the year together with expenses incurred on them must be carried forward to the next year. Therefore, closing stock is carried over to the next year as opening stock.

(iv) Incomes received in advance must be treated as a liability while income earned but not received should be recognised as revenue.

(b) Types of Business Assets : Business assets may be classified as follows:
(i) Fixed Assets: Fixed assets are those that are acquired and held in the business for permanent use with view to carry on the business, such as land and buildings, plant and machinery, furniture, tools, motor cars, etc. The benefit from fixed assets is derived over a long period.
Fixed assets may be further classified into:
(a) Tangible assets, and
(b) Intangible assets.

(a) Tangible assets are those which have a physical existence and can, therefore, be seen, touched and felt. These include movable assets like land and buildings, plant and machinery, furniture, etc.
(b) Intangible assets are the rights and privileges which will generate revenue in the future. They are called intangible because they cannot be touched and seen. Goodwill, patents, trademarks, copyrights and franchises are examples of intangible assets.

(ii) Wasting Assets: Some of the fixed assets are termed as wasting assets. Wasting assets are those assets which diminish in value by reason of the extraction or removal of natural products, such as minerals, timber, oil, gas, which they contain Mines, quarries, etc. are examples of wasting assets.

(iii) Current Assets : Current assets are also known as floating assets or circulating assets. These are those assets which are held in the form of cash. The usual current assets are cash, short-term investments, bills receivable, debtors and stock. The same asset may be a fixed asset to one business and a floating asset to another. Thus, machinery would be a fixed asset in a manufacturing business, but is a floating asset to a machinery dealer. So, whether a particular asset is a fixed or a floating one has to be decided with reference to the purpose for which it is acquired.

(iv) Liquid Assets : Liquid assets are a sub-division of current assets and consist of the items which are the equivalent of cash, or can quickly be converted into cash, e.g., cash in hand, cash at bank, bills receivable, gilt-edged securities, etc.

(v) Fictitious Assets : Fictitious assets are, as the name implies, really not assets. They do not have any physical form and have no realisable value. Preliminary expenses of a company, expenses on issue of shares and debentures, discount on issue of shares and debentures, debit balance of profit and loss account, are examples of fictitious assets.

Sales promotion activities have temporary and short life.
Too many sales promotion activities affect the brand image. Consumers are of the opinion that such activities are conducted due to the lack of popularity and overstocking of products of a company.
Sales promotion activities are only supplementary devices to supplement selling efforts of other tools of promotion.
Sales promotion is ineffective when there is a declining market for an established brand and when there is no product development.
Discounts or rebates are allowed by boosting the prices of products with a view to sell at a given gain, which is not real.

Question 8.
(a) Mention any five ways as to how ‘Good Public Relations ’ help business enterprises. [5]
(b) Human Resource Management is the management of people at work. With reference to the above statement, explain the role of Human Resource Management in an organization. [5]
(c) Explain the following elements of Public Relation: [5]

Dialogue
Persuasion

Answer:
(a) Good Public Relations help business enterprises in the following ways:
(i) Improving the image of the Organisation :
Public relations play a vital role in the achievement of specific objectives at all levels in an organisation’s work by communicating an effective message. It is an excellent and cost-effective method of improving the image of an organisation and its product.

(ii) Promoting a Positive Image:
Public relation helps to promote a positive image of the organisation. It protects an organisation by minimising the damage which occurs if something has become unfavourable.

(iii) Achieving Planned Objectives:
Public relation is the total communication activity of the organisation to achieve its planned objectives. It aims at winning the confidence and trust of various interested parties of an organisation by fulfilling its social obligations. Effective use of public relations can ensure the growth and development of an organisation.

(iv) Ensuring Effective Communication:
Now-a-days, it is essential to use public relations aggressively to ensure effective communication. Public relation helps an organisation to operate more successfully at different levels of business. The benefits of public relations can be realised in terms of increasing customers’ awareness, shareholders’ satisfaction, high morale of employees, wide business attention, etc. Public relations requires certain skills and expert knowledge, so that communications can be effective in reaching out to the targeted public.

(v) Drawing the Attention of the Public:
Public relation helps to draw the attention of the public towards the products and ideals of an organisation. An organisation should develop a two-way communication system through which it not only informs the public of its policies and programmes but also studies the reactions of the public towards the organisation.

(vi) Satisfying different groups :
Public relation is an effort to satisfy different groups like consumers, employees, shareholders etc. For example, with the help of public relation, the expectation of any particular group is acknowledged.

(b) Human Resource Management :
Human resource management is concerned with the management of people (human resources) at work. It aims at the efficient utilisation of human resources in an organisation. It is also essential to activate non-human resources through a fuller utilisation of the workers to achieve the goals of the organisation.
The role of human resource management in an organisation is summarised as follows:

Searching and retaining the talents required for an organisation through various ways like recruitment, selection, placement and orientation.
Maximum stress is laid upon individual development through training, performance appraisal and other development process.
Optimum utilisation of file available human resources and channelising them into best possible ways.
At the corporate level the human resource management is mostly required to build up a team spirit among the various groups of human resource.
Satisfaction of the employee’s interest is yet another role of HRM. It aims at providing job security to workers.

(c) Elements of Public Relation:
(i) Dialogue : This refers to conversation along with certain predefined and predetermined objectives. It may be written or spoken. It is a method of communication. Dialogue is very important or in other words it is the base of a message because a group of dialogues form a message.
Nature of dialogue:
(a) Method of Communication : Dialogue is one of the methods of communication where by one person converses with other or a group.
(b) Message: Message is must for every dialogue as dialogue tries to represent that message to the group.
(c) Objective: Dialogue is always done on the basis of achieving some pre-determined objectives.
(d) Enthusiasm : Dialogues are always done with enthusiasm so that receivers are fully aware of what is being said.

Importance of Dialogue:
Dialogue is essential for any concern because of the following reasons:
(a) Enthuses favourable responsory among the receive.
(b) Transmits the message in the most effective manner.
(c) Lightens the gap of communication.
(d) Helps in achieving the predetermined objectives.

(ii) Persuasion :
Persuasion is the art or method or ability to convince someone through effective communication. In other words, it means making the other party believe – without force – through an argument or reasoning. Persuasion is a reciprocal process.
Nature of Persuasion:
(a) Method : Persuasion is a method of influencing or convincing the behaviour of other persons towards company’s favour.
(b) Effective Communication: Persuasion is the result of effective communication and where there are no barriers.
(c) Reciprocal Process: Persuasion is a reciprocal process in which both the parties are dependent on one another.
(d) Goal Congruence: Persuasion helps in unifying the individual goals with that of the organization.

Importance of Persuasion : Persuasion is vital for any organisation because of the following reasons:
(a) It helps in gaining favourable responses.
(b) It is an outcome of effective communication.
(c) It helps in better understanding of the message to be communicated.
(d) It helps in achieving the objectivity of growth and expansion of any business organisation.

Question 9.
CASE STUDY
September 19, 2011, The Strategist Marketing is the largest selling instant noodle Maggi s 25th anniversary in the country, it invited diehards to write in about what the brand meant to them. The entries indicated “for a mother Maggi meant an ally; for a student in a hostel it meant a midnight snack. ” Some of these stories were picked up and splashed on Maggi’s packaging.
(a) Distinguish between brand loyalty and brandequity. [3]
(b) How does a brand become famous? Explain with the help of an example. [2]
(c) Examine the advantages of Branding. [5]
(d) “Brand name should be selected with utmost care.” List the essentials of a good brand name. [5]
Answer:
(a) Distinction between Brand Loyalty and Brand Equity:
(i) Brand Loyalty :
Brand loyalty is a customer’s favourable attitude towards a specific brand. Branding helps in creating and maintaining customers’ loyalty towards a brand. The likelihood of consistent purchase of a brand depends on the strength of brand loyalty. Brand loyalty varies from product to product.

(ii) Brand Equity:
The value of the brand is referred to as brand equity. It is the economic value associated with a brand’s strength in a market. A well managed brand is a valuable asset to an organisation. It provides stability to an organisation’s sales volume.

(b) A brand becomes famous by adopting the following ways: (i) Advertisement: To make a brand famous in the
market it is very essential to advertise it at regular intervals with all its positive points. So that it can capture the minds of the customers.
(it) Publicity: Good publicity can enhance the image of the organisation and ultimately the brand is promoted among the various users in the market.
(iii) Quality Control: Until and unless the quality of the product is maintained or enhanced the brand would not become popular among the customers.
(iv) Schemes: Various gift schemes, discount offers and free gifts can also make a brand famous among the users.

Example : It is due to repeated advertisements that Lux soap, Colgate toothpaste, Titan watch, Maruti car and other brands have become popular in the market. Also, when Samsung entered the mobile market in India, it achieved instant recognition because of its heavily advertised brand name for other products.

It helps to identify products and process orders.
It helps the seller in market segmentation.
It secures brand loyalty.
It points out the unique features of the products.
It ensures consumers about product availability and standard.
Brand helps to build a corporate image of the concern.
Branding improves decision making process.
Branding helps line extension of the product.
Branding helps the product to be legally registered.
Branding helps the consumer to identify the differences in the quality of the product.
The price of a branded product is fixed or uniform (written on packet). Thus, consumers are not scared of being cheated by unscrupulous sellers.
Branded products are invariably packed which prevents adulteration and helps to preserve the quality of the product.

(d) Brand Name :
A brand name is an identifying name of a product that can be spoken. It refers to a special word, symbol, letter or mixture of all these. Sometimes, a brand name becomes a product’s only distinguishing characteristic. It is as fundamental as the product itself, and thus, it should be selected with utmost care.
Some of the essentials of a good brand name are:

It should be able to identify the product.
It should suggest the product quality.
It should show all the benefits of the product.
It should be easily pronunciable.
It should be distinctive.
It should not carry any misinformation.
It should be attractive and appealing to eyes.
It should be simple and brief.
It should be capable of legal registration.
It should be self explanatory.

Question 10.
CASE STUDY
September 19, 2011, Mint
The Government wants to start specialised courses that will provide training in skills needed in the automobile industry, part of a wider effort to ensure the economy can take advantage ofthe expected influx of young people into the workforce.
The Indian auto industry’s annual sales rose 20% to ? 3.27 trillion in 2010-11 from the year before, according to the Society of Indian Automobile Manufacturers (Siam) an industry lobby. This is expected to rise fourfold by 2020, according to Siam.
The automotive service sector is facing a shortage ofabout 300,000 skilled workers, according to a recent survey.
Gujarat, for instance, may see at least 100,000 new job opportunities in the sector.
The backbone of India’s skill development system is the network of Industrial Training Institutes (ITIs) managed by the labour ministry. The polytechnics were set up by India s first Prime Minister Jawaharlal Nehru to create a pool of industrial foot-soldiers.
NSDC (National Skill Development Corporation) has a mandate to train about 150 million by 2022 in an array of sectors alreadyfacing manpower shortage. This is part of the larger national mandate to train 500 million in a decade to help staff manufacturing units.
(a) Describe the need or importance of skilled labour in
the Automobile Industry in India. [5]
(b) What is training? How is it different from education ? [5]
(c) Examine any two types of training towards develop
ment of human resources for the Automobile Industry. [5]
Answer:
(a) Importance of Skilled Labour in the Automobile Industry:
Automobile industry is different in nature from many other industries because of its safety and mass usage requirements. Skilled labour has a high importance in this industry because of many reasons. Some of these reasons are discussed below:

Better Safety : Skilled labour has a better job knowledge-theoretical as well as practical. It is thus essentially required for safety purpose so that machines and equipments are operated carefully.
Better Utilisation of Resources : Skilled labour makes better use of machinery and materials and thus reduces the wastage of resources, rather makes a better utilisation of them.
Reduced Cost of Supervision : Skilled labour is technically more capable and hence needs lesser supervision by senior staff. This reduces the cost of supervision.
Better Quality and Quantity of Production: Use of skilled labour leads to an improvement in quality and quantity of production which is essentially required for any industry, particularly automobile industry.

(b) Training :
Training is the act of improving or updating the knowledge and skill of an employee for performing a particular job. It is concerned with specific skills required for a particular type of activity. It is a process designed to maintain and improve current job performance. As an organised procedure, training is designed to create a change in the thinking and behaviour of employees. Training is a two-way and continuous process because there is not end to learning.

Training is different from education in many ways.
Following are the main points of difference between training and education:
Training

Training involves increasing knowledge and skills for a specific job.
Training has a specific and immediate purpose of making a person proficient in a particular job.
Training is often given on the job.
The burden of training falls mainly on the employer.
Training is practical and job oriented.

Education

Education involves improving general knowledge and intelligence.
The purpose of education is general.
Education is generally imparted in schools and colleges.
The burden of education falls mainly on the Government and the students.
Education is theoretical.

(c) Various types of training are required towards development of human resources for the automobile industry. We discuss two of them in the following paragraphs:
(i) On-the-Job Training: On-the-job training involves assignment of the new employee to a specific job at a machine or work place. The worker is trained while he is engaged in the work by utilising the actual work situation for the purpose. He is given the work straight away under the supervision of some senior employee and he leams the job at the hands of this experienced worker.

In this way, he is able to learn the work practically. Problems faced by him are immediately tackled; doubts if any removed and effective leadership offered. There is no problem of adjustment to the actual job after the training. With competent instructor, this type of training may be most effective for rapid training of large number of unskilled and semi-skilled workers in the automobile industry.

(ii) Apprenticeship Training : This method is used in those cases where long-term training is required to attain complete proficiency to perform a particular job. Apprenticeship training aims at providing necessary background; practical knowledge and necessary experience to the worker. Its purpose is to prepare employees for skilled occupations. It combines class room instructions, demonstrations and on- the-job training.

The method familiarizes with the complications and intricacies of the job. A trainee serving as an apprentice, has to work in direct association and under the direct supervision of his masters. Sometimes, workers are also placed as assistants to experienced workers to learn the process of work by imitation and experience. Because of its technical nature, the automobile industry makes a strong case for apprenticeship training.