ICSE Class 10 Commercial Applications Board Exam Question Paper 2018 with Solutions

ICSE Class 10 Commercial Applications Board Exam Question Paper with Solutions

SECTION A [40 Marks]

(Attempt all questions from this Section)

Question 1. State one difference between each of the following:

(a) Spot Market and Future Market [2 Marks]

Answer:

Teacher's Note:
a) Spot markets involve immediate delivery and payment, whereas future markets involve agreements to buy or sell at a predetermined future date.
b) Students must present differences in a clear tabular format with appropriate basis of distinction.

(b) Institutional Advertising and Product Advertising [2 Marks]

Answer:

Teacher's Note:
a) Institutional advertising promotes the enterprise as a whole, while product advertising promotes specific goods or services.
b) Ensure clarity in stating the primary objective of each type of advertising.

(c) Fixed Deposit Account and Recurring Deposit Account [2 Marks]

Answer:

Teacher's Note:
a) Fixed deposits require a one-time lump sum deposit, whereas recurring deposits involve regular monthly instalments.
b) Mentioning the withdrawal terms or deposit frequency secures full marks.

(d) Fixed Cost and Variable Cost [2 Marks]

Answer:

Teacher's Note:
a) Fixed costs remain constant regardless of the volume of production, while variable costs fluctuate directly with output levels.
b) Give relevant examples like rent for fixed cost and raw material cost for variable cost to make the answer comprehensive.

(e) Recruitment and Selection [2 Marks]

Answer:

Teacher's Note:
a) Recruitment is a positive process aimed at attracting a large number of applicants, whereas selection is a negative process involving the rejection of unsuitable candidates.
b) Clear distinction between the two HR concepts is essential for full credit.

Question 2.
(a) Mention any two essentials of a Brand. [2 Marks]

Answer:
1. The brand name should be brief and clear.
2. It should be suggestive of the utility of the product.

Teacher's Note:
a) A good brand name must be easy to pronounce, remember, and recognize.
b) Students can list any two valid characteristics such as distinctiveness, adaptability, or legal protectability.

(b) State any two uses of Income and Expenditure Account. [2 Marks]

Answer:
1. It is prepared with the object of finding out the surplus or deficit of current incomes over current expenses.
2. It serves as the basis for preparing the Balance Sheet of non-trading organisation.

Teacher's Note:
a) Income and Expenditure Account is a nominal account prepared by non-trading concerns on the accrual basis.
b) Clearly state that it determines the excess of income over expenditure or vice versa for an accounting period.

(c) Mention any four elements of Price Mix. [2 Marks]

Answer:
1. Discounts: A firm will increase the sales by giving discounts to the customers.
2. Price Policy: It is the standing answer of the firm to recurring problem of pricing.
3. Credit: It denotes confidence of the lender in the honesty and integrity of the borrower and his ability to repay his debt in time.
4. Terms of Payment: The conditions and timeline under which payment for goods or services is expected from the buyer.

Teacher's Note:
a) Price mix refers to decisions regarding pricing policies, discounts, allowances, credit terms, and payment periods.
b) Ensure all four requested elements are clearly enumerated.

(d) Mention any two harmful effects of global warming. [2 Marks]

Answer:
1. Global warming could have disastrous effects on the environment, e.g., sea level rise, polar ice melts etc.
2. It has serious impact on human lives by affecting freshwater availability, agriculture yield etc.

Teacher's Note:
a) Global warming leads to climate change, extreme weather events, and disruption of ecosystems.
b) Any two valid ecological or socio-economic consequences are acceptable.

(e) What is meant by Vestibule Training ? [2 Marks]

Answer:
Vestibule Training is also known as "Off the Job Training." New workers are trained with specialised machines and equipments under practical work situation. Trainees have an opportunity to get accustomed to the work routine and recover from their initial nervousness before going on the actual jobs.

Teacher's Note:
a) Vestibule training is conducted away from the actual workplace in a simulated environment replicating factory conditions.
b) Keywords such as 'simulated environment', 'specialised equipment', and 'off-the-job' must be included.

Question 3.
(a) Mention any two merits of external sources of recruitment. [2 Marks]

Answer:
1. Selection from external sources facilitates the choice of personnel from a large number of applicants.
2. The enterprise greatly benefits from the freshness of outlook and approach of personnel chosen from external sources.

Teacher's Note:
a) External recruitment brings in fresh talent, innovative ideas, and a wider choice of candidates.
b) Avoid spelling errors from typed text; ensure points highlight wider choice and qualified personnel.

(b) What is a Bank Draft ? [2 Marks]

Answer:
Bank draft is a type of cheque which is drawn by a bank either on its own branch or on another bank. In order to remit money through a bank draft, a person first obtains the bank draft from the bank. The draft commission is paid in advance by the sender of the bank draft. The payment of an uncrossed bank draft can be collected at the center of the bank on which it is drawn.

Teacher's Note:
a) A bank draft is a negotiable instrument guaranteed by a bank, ensuring that the payment will not bounce due to insufficient funds.
b) Emphasize that it is a safe mode of transferring money over long distances.

(c) What do you mean by business ethics ? [2 Marks]

Answer:
Business ethics is the written and unwritten code of principles and values that govern decisions and actions within a company. The purpose of business ethics is to guide the managers and employees in performing their jobs.

Teacher's Note:
a) Business ethics provides moral guidelines for conducting business fairly and honestly towards all stakeholders.
b) Keywords like 'moral principles', 'standards of conduct', and 'right or wrong behavior' are crucial.

(d) Give two reasons for the growing importance of Public Relations to business enterprises. [2 Marks]

Answer:
1. The development of an astoundingly vast and intricate network of mass communication media.
2. The increasingly keen competition in the world economy has imposed a regard for public opinion and an urgent need for public support.

Teacher's Note:
a) Public relations helps build a favorable corporate image and manages communication with stakeholders effectively.
b) Mentioning media growth and competitive pressures earns full credit.

(e) Give two General Utility functions of Commercial Banks. [2 Marks]

Answer:
1. Issuing letter of credit and standing as surety for customers.
2. Accepting and discounting bills of exchange of exporters.

Teacher's Note:
a) General utility functions refer to services provided by banks to the general public beyond traditional deposits and loans, such as locker facilities and underwriting.
b) Ensure distinction between agency functions, primary functions, and utility functions.

Question 4. Justify a reason either for or against each of the following:
(a) A Receipts and Payments Account is a nominal account. [2 Marks]

Answer:
No, Receipts and Payments Account is not a nominal account. It is a real account (debit what comes in, credit what goes out). The primary object of preparing this account is to find out the cash position and to show receipts and payments under different heads, as it is a summary of cash transactions appearing in the Cash Book.

Teacher's Note:
a) Students must first state whether the statement is true or false, followed by a valid justification.
b) Clarify that Receipts and Payments Account is essentially a classified summary of Cash Book transactions, making it a Real Account.

(b) Some costs are semi-variable in nature. [2 Marks]

Answer:
Yes, some costs are semi-variable costs in nature. These costs do not vary proportionately but do not remain constant with the change in the volume of output. For example, in telephone cost, basic rental cost is fixed but call rates vary.

Teacher's Note:
a) Semi-variable costs have both a fixed component and a variable component.
b) Providing an apt example like electricity or telephone bills strengthens the justification.

(c) Human Resource is the most valuable asset to business enterprises. [2 Marks]

Answer:
Yes, Human Resource is the most valuable asset. Human Resource Development is a system of developing in a continuous and planned way the competencies of individual employees, dynamic groups, teams and total organisation to achieve organisational goals. It also maintains high morale and better human relations.

Teacher's Note:
a) Unlike physical or financial assets, human resources appreciate in value and drive all other organizational resources.
b) Emphasize employee competency, morale, and goal alignment.

(d) A company needs to pay for its publicity to the media owners. [2 Marks]

Answer:
No, publicity is generally non-paid form of mass communication unlike advertising. However, the statement can be justified in terms of related promotional efforts where companies incur costs for organizing events or press conferences that generate publicity, but strictly speaking, media coverage obtained as publicity is free.

Teacher's Note:
a) Publicity differs from advertising because media space or time is not directly purchased by the company.
b)

(e) With reference to the concept of accounting only those transactions are recorded in accounts which can be expressed in terms of money. [2 Marks]

Answer:
Yes. Money is a common denominator. Money measurement concept helps to make accounting records homogeneous, relevant, simple and understandable. In other words, an event, howsoever important it may be to the business, will not be recorded unless its monetary effect can be measured with a fair degree of accuracy.

Teacher's Note:
a) The money measurement concept ensures that only quantifiable economic events are recorded in books of accounts.
b) Qualitative factors, however important, are excluded due to lack of a common monetary unit.

SECTION - B [60 MARKS]

Attempt any four questions from this Section

Question 5.
(a) Distinguish between 'Product' and 'Services'. [5 Marks]

Answer:

Teacher's Note:
a) Products are tangible items that can be touched and stored, while services are intangible and consumed at the point of production.
b) Students must present at least 4 to 5 valid points of distinction with a clear basis.

(b) Explain the strategies to be adopted during the Introduction Stage and the Growth Stage of Product Life Cycle. [5 Marks]

Answer:
The strategies adopted during Introduction stage are:
1. Selective distribution and attractive discount should be given.
2. Proper advertisement of product.
3. Removing technical and other deficiencies in the product.
4. Attractive gifts to customers as an introductory offer.

The strategies adopted during Growth stage are:
1. Keeping the price at competitive levels.
2. Expanding distribution channels to make the product available wherever demanded.
3. Greater emphasis on customer service.
4. More advertising to create brand image.

Teacher's Note:
a) During the introduction stage, focus is on creating awareness and trial, whereas during growth, market penetration and building brand loyalty are prioritized.
b) Clearly segregate the strategies for both stages to secure full marks.

(c) Explain 'Accounting Period Concept' with reference to concept of accounting. [5 Marks]

Answer:
Accounting statements are prepared at regular intervals, generally one year. This is called Accounting Period concept. The expenditure whose benefit will accrue over a long period should be apportioned suitably over each year. The users of financial statements need periodical reports on the performance of business. As such, the results of business can be ascertained only after the liquidation of business. But the measurement of net profit and financial position of the business after a very long period will be of little use to owners, managers, investors and others.

Teacher's Note:
a) The going concern assumption implies indefinite life, making the accounting period concept necessary for periodic performance measurement.
b) Explain why splitting the life of a business into uniform intervals (usually 12 months) is essential for tax and reporting purposes.

Question 6.
(a) What is direct selling ? Mention four circumstances where direct distribution is more suitable than indirect channels of distribution. [5 Marks]

Answer:
When producer or the manufacturer directly sells the goods to the customers without involving any middlemen, it is called direct selling. For example, McDonalds, Bata etc. The producer can sell their product or services to customers by mail order selling, door-to-door selling etc. There are some circumstances where direct distribution is more suitable than indirect channels of distribution:
1. In case of industrial goods like CT Scan machine, direct channel should be preferred because they are technical, expensive, made to order and purchased by few buyers.
2. Short channels are preferred for technically complex goods like industrial or engineering products like machinery etc.
3. Direct channels are used if management wants greater control on the channel members otherwise a company can go in for longer channels.
4. Perishable products like fruits, bread or vegetables are distributed through direct channels.

Teacher's Note:
a) Direct selling eliminates intermediaries, reducing distribution costs and ensuring direct contact with consumers.
b) Students must clearly define direct selling and list four distinct operating circumstances.

(b) Explain any five qualities of a good salesman. [5 Marks]

Answer:
The following are the qualities of a good salesman:
(i) Knowledge: Salesman should have adequate knowledge of his company, its product, rival products, consumer behavior etc. He should have knowledge about the price at which the competitor is offering goods or services.
(ii) Sociable: A good salesman always mixes up with people without any restraint. He should have the quality of adjusting with the customers of different nature. He should be a convincing conversationalist and should be able to present his proposition pleasantly.
(iii) Physical Attributes: A successful salesman must have sound health and pleasing personality. He should have capacity for hard work, a good stamina and sufficient tolerance. He should be mentally fit to understand what prospect says on one hand and on the other to make prospect understand what he says.
(iv) Initiative: Initiative is needed in prospecting, approaching and convincing the buyers even without prior direction. An effective salesman also needs to have presence of mind and good common sense.
(v) Personality: A good salesman should always have a neat and clean appearance and he should be dressed up in accordance with the particular working conditions. Personality is a composite of various features of a person - habits, appearance, way of dressing, posture, voice etc. He should not be casual.

Teacher's Note:
a) Personal selling effectiveness heavily depends on the interpersonal skills, product knowledge, and physical presentation of the salesperson.
b) Enumerate five clear headings with brief explanations as provided.

(c) Explain Matching Principle of Accounting. [5 Marks]

Answer:
According to this principle, cost of a particular period should be charged from the revenue of same period only. This principle provides the guidelines as to how the expenses are to be matched with revenue. For matching costs with revenue, first revenue should be recognized and then costs incurred for generating that revenue should be recognized. It requires that in determining the net profit, all costs which are applicable to revenue of that period should be charged against that revenue. The following points should be considered while matching costs with revenue:
1. 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.
2. 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.
3. Incomes received in advance must be treated as a liability, while income earned but not received should be recognized as revenue.
4. 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.

Teacher's Note:
a) The matching principle is vital for accurate determination of net profit under the accrual basis of accounting.
b) Ensure proper explanation linking revenues earned with expenses incurred during the same accounting period.

Question 7.
(a) Write short notes on: [5 Marks]
(i) Consumer Rights
(ii) Direct and Indirect Labour cost

Answer:
(i) Consumer Rights are now an integral part of our lives like a consumerist way of life. Market resources and influences are growing by the day and so is the awareness of one's consumer rights. The following are the consumer rights:
(A) Right to Safety
(B) Right to be Informed
(C) Right to Choose
(D) Right to be Heard
(E) Right to Seek Redressal
(F) Right to Consumer Education

(ii) Direct Labour Costs is that cost which is specifically and conveniently traceable to specific products. Labour takes an active and direct part in the production of goods.
Indirect Labour Costs is that cost which cannot be easily traced to specific units of output. Labour is employed for carrying out tasks incidental to goods produced.

Teacher's Note:
a) Both parts (i) and (ii) carry equal weightage and must be answered concisely.
b) Under consumer rights, list the six core rights under the Consumer Protection Act; under labour costs, highlight direct traceability versus indirect support.

(b) Explain any two functions of a central bank of a country. [5 Marks]

Answer:
The following are the two functions of a Central Bank:
(i) Banker's Bank: The central bank acts as a banker to all the commercial banks in the country. This means, the relation of the central bank with other banks of the country is almost akin to those of a bank with its customer. Commercial banks are required to keep a certain proportion of their deposits in the form of cash reserves with the central bank. These reserves facilitate the central bank to control the issue of credit by commercial banks.
(ii) Custodian of Foreign Currency: The central bank is the sole custodian of gold and foreign currency reserves of the country. It preserves the reserves of the country, in order to utilize them for making payments to foreign countries when the balance of payments is unfavorable, and foreign exchange resources are reduced. The central bank, therefore, advises the government to impose restrictions on exports and encourage imports or vice-versa in such a way that the balance of payments may be favorable to the country.

Teacher's Note:
a) The central bank is the apex monetary institution controlling the country's banking and monetary system.
b) Clearly explain both functions with banking terminology such as cash reserves and foreign exchange custody.

(c) Explain any two methods of On-The-Job Training. [5 Marks]

Answer:
The two methods of On-The-Job Training are:
(i) Apprenticeship Training: In this method, the trainees learn by working with those who are already skilled in their jobs. It aims at providing necessary background, practical knowledge and necessary experience to the worker. The Government of India has set up Industrial Training Institutes (ITIs) for the purpose of apprenticeship training. During this training, trainee may be given a stipend.
(ii) Job Rotation: In this method, the trainee is periodically rotated from job-to-job. The trainee gets job knowledge and gains experience in different assignments. Few persons have the capacity to move from one job to another. So, the persons to be trained and the jobs to which they are to be rotated should be selected carefully.

Teacher's Note:
a) On-the-job training methods involve learning while actually performing work duties at the workplace.
b) Clearly explain apprenticeship and job rotation as two distinct practical training techniques.

Question 8.
(a) Briefly explain the elements of public relations. [5 Marks]

Answer:
Public Relations is a philosophy and function of management expressed in policies and practices which serve the public to secure its understanding and goodwill.
The following are the various elements of public relations:
1. Target group Orientation: The target group to be reached must be clearly identified for any campaign. The definition of the target group should be in demographic and psychographic terms.
2. Adequate Resources: To be effective, and to make the desired impact, advertising, publicity and public relations programmes must be sustained and backed with adequate financial resources.
3. Media Selection: The media to be used must be those which reach the right target group at the right time, and at the minimum cost.
4. Objective Orientation: All advertising, publicity and public relations programmes must have pre-defined short-term and long-term objectives as a prerequisite.
5. Creativity and Innovations: The more creative and innovative you can be, the better your message will be noticed and the better will be the chance of your being able to achieve your goals.

Teacher's Note:
a) Public relations aims at establishing and maintaining mutual understanding between an organization and its publics.
b) Enumerate and explain at least four to five core elements clearly.

(b) Explain:
(i) Campus Recruitment [5 Marks]
(ii) Placement agencies as external sources of recruitment.

Answer:
(i) Campus Recruitment: Jobs in business have become highly technical and require well-educated persons. The employer gets help from the placement cell of the educational institute in recruitment and selection. Companies send their managers to such institutions where there are suitable candidates recommended by institutes. For example, students passing out from IIMs and IITs are recruited every year at the campus itself.
(ii) Placement Agencies: Placement agencies consist of private agencies and professional bodies. These agencies keep bio-data of a large number of candidates and provide a nationwide service of recommending suitable names to their clients. They also keep a complete record of skills and qualification of the candidates and sometimes even advertise the jobs on behalf of their clients in order to recruit the most potential candidate. This source of recruitment is employed for recruitment of senior managers and technicians.

Teacher's Note:
a) Both are prominent external sources of recruitment used to tap fresh talent or specialized personnel.
b) Distinguish clearly between educational institution tie-ups (campus recruitment) and professional intermediary services (placement agencies).

(c) What is energy crisis ? Discuss any two renewable energy sources that would help meet this crisis. [5 Marks]

Answer:
An energy crisis is any great bottleneck in the supply of energy sources to an economy. It is also the gap between demand and supply. It usually refers to the shortage of oil, or the shortage of electricity or other natural resources. Renewable energy is energy generated from natural resources which can be generated continuously in nature and are inexhaustible. The various renewable sources of energy are:
(i) Solar Energy: Solar energy is the energy received by the earth from the sun. The solar energy can be converted into other forms of energy mainly by two methods:
1. Thermal Method: In this method, solar radiation in the form of heat is converted into mechanical, electrical and chemical energy by using solar thermal devices.
2. Photovoltaic Method: The sun's energy is directly converted into electricity using a photovoltaic cell.
(ii) Biomass Energy: Biomass includes firewood, crop and timber wastes, aquatic plants, animal wastes and organic matter from household, municipal and certain types of industrial wastes. India produces about 300 million tonnes of crop residue every year from which it generates about 40,000 MW of electricity.

Teacher's Note:
a) Energy crisis highlights the imbalance between depleting fossil fuels and rising energy demands.
b) Define energy crisis and explain renewable sources like solar and biomass with specific details.

Question 9. Flipkart, a Bengaluru based company, which started in the year 2007 as an online book store is now India's largest e-retailer. It is popular in the books and electronics segment but it now sells products across categories including fashion, consumer durables, home decor and furniture. Flipkart is doing very good business and it acquired 100% of Myntra, but Myntra will operate as an independent entity. Mobile Brand 'Motorola' is selling their new launches in India through Flipkart. The company aims at becoming leader in every segment. India's e-commerce market has seen growth in the past few years as more people log on to the Internet to shop online. Goods can be bought on 'cash on delivery'. Various banks like HDFC, Axis and ICICI tied up with the reputed e-sellers, so as to convert online purchases into convenient equated monthly installments. Amazon, the world's largest e-retailer entered India and in a few months the company has aggressively gained market share by expanding its product range and introducing the one day delivery system. Soon after Flipkart also introduced one day delivery and the same day delivery in selected towns and cities. With reference to the above:
(a) What is online shopping ? Name any three companies do online trading in India. [5 Marks]

Answer:
Online shopping is very convenient and hasslefree and customers can order goods or products 24 hours a day. They can access information on the internet about competing brands. The sellers or producers sell products across all over the world and sell across various categories including fashion, consumer durables, home decor, furniture etc. It is the place where seller can quickly add products and change prices and descriptions also. The companies who do online trading in India are Flipkart, Amazon, Myntra etc.

Teacher's Note:
a) Online shopping allows consumers to directly buy goods and services over the internet using digital payment mechanisms or cash on delivery.
b) Ensure both definition and three company names from the case/general knowledge are provided.

(b) What are the reasons for the increase in online shopping in India ? [5 Marks]

Answer:
The various reasons for the increase in online shopping in India are:
1. Consumers can easily compare prices and review online before making a purchase.
2. Customers increasingly prefer the flexibility of online shopping as it offers the convenience to shop when they want and from wherever they happen to be.
3. Online shopping offers a much easier way for customers to search for exactly what they want at the click of a button.
4. An online store allows customers the option to shop from further afield as they are not restricted by geographical location.
5. Customers can buy things at competitive or cheaper prices.

Teacher's Note:
a) Growth of e-commerce is driven by internet penetration, smartphone usage, and convenience.
b) List at least four to five clear reasons supporting the expansion of online retail.

(c) Identify the distribution channel adopted by Motorola in selling its new launches. Briefly explain few other distribution channels adopted by marketers. [5 Marks]

Answer:
Motorola adopted a direct or online distribution channel (partnering with e-retailers like Flipkart) in selling its new launches.
There are various distribution channels adopted by marketers:
1. Telemarketing: The products are heavily advertised on T.V. The consumers who watch advertisements and feel interested can place their orders.
2. One Level Channel: This channel involves the use of one middleman who in turn sells them to the ultimate customers. This channel is often used for the distribution of consumer durables and products of high value.
3. Two Level Channel: This channel is suitable where producer has limited finance and narrow product line or where the wholesalers are specialised. Under this, wholesaler and retailer act as a link between the manufacturer and the customers.
4. Three Level Channel: This is the longest channel of distribution. The producer hands over his entire output to the selling agent who distributes it among a few wholesalers. This level is usually used when a manufacturer deals in limited products and wants to cover a wide market.

Teacher's Note:
a) Case analysis shows Motorola sells through Flipkart, representing an online/direct or short channel.
b) Clearly identify the channel from the case and describe other standard distribution channels (One-level, Two-level, Three-level, Telemarketing).

Question 10. The oldest Indian confectionery company wants people to know that their cookies and biscuits are from the "House of Parle". The company finds it important to reinstate the credibility and familiarity of the brand. From now onwards, the company will advertise its products under the tagline "From the House of Parle". Parle is sitting on a strong pedigree of many individual brands, with reference to brand equity, while the flagship Parle-G is worth Rs. 5000 Crore plus and by far the biggest brand in the portfolio combining nearly 30% of overall share, others like Parle 20-20 and Parle Magix Cream are among Rs. 1000 Crore and Crackjack, Monaco and Hide & Seek around Rs. 500 Crore. The fact that Parle is strongly associated with Parle-G, the world's largest biscuit brand, is both a strength and a weakness. The company today suffers an image deficit compared to Britannia and ITC's Sunfeast. With this latest campaign, Parle is careful enough not to take either of the two extreme routes - harping multiple brands or shifting focus on the corporate brand alone. Instead, it has opted for a more judicious mix. Researchers are comparing the current Parle strategy to the Titan strategy. The watch brand, in its early days, used the tagline "From the house of Tatas". However, when it became a big brand itself, various sub-brands like Raga, Nebula, Edge, etc. all started using the tagline "From Titan". In the same way, Parle is trying to bring forth the main brand in the mindspace of consumers and make the sub-brands its subordinate. With reference to the above:
(a) Explain the brand policy Parle has taken to advertise its products. [5 Marks]

Answer:
Parle adopted the familiarity brand policy. The company advertises its product under the tagline "From the House of Parle". It is a formal plan used by a business to create a particular image of itself in the mind of current and potential customers. Parle is sitting on a strong pedigree of many individual brands. They can build its prestige and goodwill by offering quality brands at reasonable prices.

Teacher's Note:
a) Brand policy refers to the strategic approach adopted by a firm regarding umbrella branding versus individual product branding.
b) Explain how Parle links its sub-brands back to the parent corporate brand for enhanced trust and recognition.

(b) What is brand equity ? Explain the brand equity Parle products are measured in and mention the sub-brand which has the highest brand equity. [5 Marks]

Answer:
Brand equity means the marketing effect of a brand. High brand equity provides a company with many competitive advantages. Brands have equity because they create high awareness, loyal customers and high reputation for perceived quality. It also refers to the result from the marketing of a particular product or service because of its brand name and that would not occur if product did not have a brand name.
With reference to brand equity, the flagship Parle-G is worth Rs. 5,000 Crore plus and by far the biggest brand in the portfolio combining nearly 30% of overall shares. Thus, Parle-G is the sub-brand which has the highest brand equity.

Teacher's Note:
a) Brand equity represents the commercial value and consumer perception derived from a brand name.
b) Students must quote the valuation figures from the case and identify Parle-G as the top sub-brand.

(c) What is brand promotion ? Explain two methods of brand promotion. [5 Marks]

Answer:
Brand promotion is that element of marketing mix that aims at informing, reminding, persuading and influencing the customers so that they purchase the brand. It is applied and persuasive communication used for informing and reminding the customers. Its aim is to persuade the customers to buy more and more products so that it will increase the company's sale. Brand promotion efforts seek to stabilize sales by minimising the impact of fluctuations. It facilitates mass production which leads to economies of scale and lower costs.
The two methods of brand promotion are given below:
(i) Publicity: Publicity refers to the non-personal stimulation of demand for a brand by placing important news about it in published medium. Public relations activities are typically designed by the firm to build image for the firm. For example, Reliance World Cup Cricket Tournament, ITC Sangeet Sammelan, etc. Good or bad remarks or reviews appearing in newspapers or magazines about a film, book, a policy etc. are also called publicity.
(ii) Sales Promotion: It refers to the use of short term incentives to persuade the people to purchase the goods or services immediately. The basic purpose of sales promotion is to stimulate on-the-spot buying through short-term and non-recurring incentives which helps to increase the sales and profits. Techniques of sales promotion include rebate, discount, product combination, refunds, lucky draw, sampling etc.

Teacher's Note:
a) Brand promotion encompasses all communication tools designed to build brand awareness and stimulate demand.
b) Define brand promotion clearly and explain two valid promotional methods (such as Publicity and Sales Promotion).