PREVIOUS YEAR SOLVED PAPERS MCQ - November 2017

26 Which one of the following statements is true according to VALS framework of psychographic segmentation?

A
The consumers who are primarily motivated by ideals are guided by knowledge and principles.
B
The consumers who are motivated by achievement look for knowledge and principles.
C
The consumers who are motivated by self expression don’t desire social or physical activity, variety, and risk.
D
The consumers who are motivated by achievement desire social or physical activity, variety, and risk.

In the United States, lifestyle research has been dominated since 1978 by the VALS system, originally developed by SRI International and now owned and operated by SRI Consulting Business Intelligence (SRIBI). In 1989 VALS was revised to maximize its ability to predict consumer behaviour. The original system grouped consumers based on their attitudes toward social values such as military spending and abortion rights. Research conducted by SRI, Stanford University, and the University of California, Berkeley, found that psychological characteristics with several key demographics were better predictors of consumer behaviour than social values were. The new VALS system, called VALS 2 for a short time but now known again as VALS, has psychology at its core and is therefore known as a psychographic segmentation system. VALS systems for Japan and the United Kingdom have also been developed using the same methodology. The U.S. VALS system places U.S. adult consumers into one of eight segments. The two main dimensions of the framework are primary motivation (the horizontal dimension) and resources (the vertical dimension).
The SRI premise is that consumers are inspired by one of three primary motivations: ideals, achievements, and self-expression. Consumers who are primarily motivated by ideals are guided by knowledge and principles. Consumers who are primarily motivated by achievement look for products and services that demonstrate success to their peers. Consumers who are primarily motivated by self-expression desire social or physical activity, variety and risk.

27 From the following two statements of Assertion (A) and Reason (R), indicate the correct code:
Assertion (A) : A transformational appeal of communication elaborates on a non-product related benefit or image.
Reasoning (R) : Transformational appeals often do not attempt to stir up emotions that will motivate purchase.

Creative strategies, how marketers translate their messages into a specific communication, can be classified as either informational appeal or transformational appeal. An informational appeal elaborates on attributes or benefits. Examples in advertising are problem-solution ads (Excedrin stops headache pain quickly), product demonstration ads (Thompson Water Seal can withstand intense rain, snow, and heat), product comparison ads (Verizon offers better Internet access than Comcast), and testimonials from unknown or celebrity endorsers (basketball star LeBron James pitching Coca-Cola and Nike). Such appeals assume the consumer is processing the communication very rationally.
A transformational appeal elaborates on a non-product-related benefit or image. It might depict what kind of person uses a brand (as when VW advertised to active, youthful people with its “Drivers Wanted” campaign) or what kind of experience results from using the brand (Coast soap has been advertised as “The Eye Opener!”). Transformational appeals often attempt to stir up emotions that will motivate purchase. Many communicators use negative appeals such as fear, guilt, and shame to prompt action (get people to brush their teeth or stop smoking). Also, communicators can use positive emotional appeals such as humour, love, pride, and joy, sometimes employing “borrowed interest” devices such as frisky puppies or sex appeal to attract interest and raise involvement in the ad. The challenge here is to avoid detracting from comprehension and overshadowing the product.

28 Select the correct sequence for Hierarchy-of-effects model related to marketing communication:

Hierarchy-of-effects models assume mediating processes between the advertisement and the desired outcome on the part of the consumer. These processes are cognitive, affective and conative (behavioural) – in other words, consumers are assumed first to think about the ad, then to form some emotional response and then to act (e.g., purchase the product in the ad). One of the earliest models in this domain was the AIDA model, named as the acronym of its four components: attention, interest, desire, action. According to Fennis and Stroebe, this model dates back at least to the end of the nineteenth century. Later variations of this idea include the model by Lavidge and Steiner, who suggested a sequence of awareness, knowledge, liking, preference, conviction and purchase. In this model, awareness and knowledge refer to the cognitive aspect, focusing on information. Liking and preference, the second two stages, refer to the affective aspects, focusing on favourable attitudes or feelings about the product. Conviction and purchase refer to the conative aspect, focusing on action.

29 Match the items of List-I with the items of List-II and denote the code of correct matching:

List-I	List-II
(a) Basic Product	(i) Set of attributes and conditions buyers normally expect
(b) Expected Product	(ii) Possible augmentation and transformation the product might undergo in future
(c) Augmented Product	(iii) Exceed customer expectations
(d) Potential Product	(iv) Converting core benefits into product

CODES

	(a)	(b)	(c)	(d)
1	(iii)	(iv)	(i)	(ii)
2	(i)	(iii)	(iv)	(ii)
3	(i)	(iv)	(iii)	(ii)
4	(iv)	(i)	(iii)	(ii)

30 Which of the following statements is false?

Fixed capital refers to investment in longterm assets. Management of fixed capital involves around allocation of firm’s capital to different projects or assets with long-term implications for the business.
These decisions are called investment decisions or capital budgeting decisions and affect the growth, profitability and risk of the business in the long run.
The management of fixed capital or investment or capital budgeting decisions are important for the following reasons:
(i) Long-term growth and effects: These decisions have bearing on the long-term growth. The funds invested in long-term assets are likely to yield returns in the future. These affect future possibilities and prospects of the business.
(ii) Large amount of funds involved: These decisions result in a substantial portion of capital funds being blocked in long-term projects. Therefore, these investment programmes are planned after a detailed analysis is undertaken. This may involve decisions like where to procure funds from and at what rate of interest.
(iii) Risk involved: Fixed capital involves investment of huge amounts. It affects the returns of the firm as a whole in the longterm. Therefore, investment decisions involving fixed capital influence the overall business risk complexion of the firm.
(iv) Irreversible decisions: These decisions once taken, are not reversible without incurring heavy losses. Abandoning a project after heavy investment is made is quite costly in terms of waste of funds. Therefore, these decisions should be taken only after carefully evaluating each detail or else the adverse financial consequences may be very heavy.