31. Which of the following characteristics are related to relationship marketing?
(a) Product feature orientation
(b) Product benefit orientation
(c) Frequent consumer contact
(d) High concern for quality
Choose the correct answer from the following:

  • Option : A
  • Explanation : Relationship marketing (RM) refers to all marketing activities directed toward establishing, developing and maintaining successful relational exchanges. It is widely held that the majority of marketers are in the transactional, and not in the relationship, mode. Transactional marketing (TM) fundamentally aims at viewing sales as a discrete terminating activity. Relationship marketing on the other hand, treats sales as a continuous relationship that goes beyond the sale. Experts share that TM’s orientation is on product features over a short-term period, while RM’s orientation is on product benefits over a long-term period. The transactional mode pays little attention to customer service and offers limited commitment to the customers. On the other hand, the relationship mode pays greater attention to customer service and commitment. Quality is primarily a concern for production in the former, whereas, quality is the concern of all in the latter. Table below provides the differences between Transactional and Relationship Marketing.

    Table : Difference between Transactional and Relationship Marketing

    Transactional MarketingRelationship Marketing
    ∎  Focus is on single sales∎ Focus is on customer retention
    ∎ Orientation on product features∎ Orientation on product benefits
    ∎ Short-time scale∎ Long-time scale
    ∎ Little emphasis on customer service∎ High customer service emphasis
    ∎ Limited customer commitment∎ High customer commitment
    ∎ Moderate customer contact∎ High customer contact
    ∎ Quality is practically a concern of production∎ Quality is the concern of all
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32. Miller-Orr model is used in the management of:

  • Option : D
  • Explanation : The Miller-Orr Model (Miller and Orr, 1966), for cash management improves on Baumol’s economic order quantity model (EOQ) methodology in significant ways. Miller and Orr start with the assumption that the firm has only two forms of assets: cash and marketable securities. The model allows for cash balance movement in both positive and negative directions and it can state the optimal cash balance as a range of values, rather than a single-point estimate. This makes the model especially useful for firms with unpredictable day-to-day cash inflows and outflows.
    While the Miller-Orr model is an improvement over the EOQ model, it too makes some assumptions. The most important is the assumption that cash flows are random, which in many cases is not completely valid. Under certain circumstances and at particular times of the year, consecutive periods’ cash flows may be dependent upon one another, the volatility of net cash flow may sharply increase, or cash balances may demonstrate a definite trend. The frequency and extent of these events will affect the Miller-Orr model’s effectiveness. Actual tests using daily cash flow for various firms indicate that the model minimizes cash holding costs as well as or better than the intuitive decisions of these firms’ financial managers. However, others studies have shown that simple rules of thumb have performed just as well. Still, the Miller- Orr model is valuable because of the insight it offers concerning the forces that influence a firm’s optimal cash balance.
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33. Match List-I with List-II:

(a) 80 TTA(i) Deduction in respect of  payment of interest on loan taken for higher education
(b) 80 CCD(ii) Deduction in respect of interest on loan taken for residential house property
(c) 80 E(iii) Deduction in respect of interest on deposits in savings account
(d) 80 EE (iv) Deduction in respect of contribution to  national pension system
Choose the correct code from those given below:



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34. Product A requires 10 kg of material at the rate of Rs.5 per kg. The actual consumption of material for the manufacturing of product A comes to 12 kg of material at the rate of Rs.6 per kg. Direct material cost variance is:

  • Option : B
  • Explanation : Material Cost Variance = Standard Cost for Actual Output – Actual Cost
    = (SP × SQ) – (AP × AQ)
    = (5 × 10) – (6 × 12) = 50 – 72
    = Rs.22 (Unfavourable or Adverse).
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35. ‘Doctrine of Caveat Emptor’ means:

  • Option : B
  • Explanation : In case of sale of goods, the doctrine ‘caveat emptor’ means ‘let the buyer beware’. When sellers display their goods in the open market, it is for the buyers to make a proper selection of the goods. If the goods turn out to be defective, the buyer cannot hold the seller liable. The seller is in no way responsible for the bad selection of the buyer. The seller is not bound to disclose the defects in the goods which he is selling. It is the duty of the buyer to satisfy himself before buying the goods that the goods will serve the purpose for which they are being bought. If the goods turn out to be defective or do not serve his (buyer) purpose or if he depends on his own skill or judgement, the buyer cannot hold the seller responsible. It is contained in Section 16 of the Sale of Goods Acts, 1930 which reads as under: “Subject to the provisions of this Act and any other law for the time being in force, there is no implied warranty on condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale.”
    Birds’s Eye View: Doctrine of caveat emptor [Section 16(1)]
    ∎ Caveat emptor is a Latin word which means ‘let the buyer beware’.
    ∎ The buyer must take care of his own purpose while purchasing the goods.
    ∎ If the buyer makes a wrong choice of goods, he cannot make the seller responsible and ask compensation.
    ∎ Exceptions to the rule ‘caveat emptor’ are:
    – Fitness for buyer’s purpose.
    – Sale under patent or trade name.
    – Merchantable quality. – Usage of trade.
    – Misrepresentation or fraud.
    – Goods by sample.
    – Goods by sample as well as description.
    – Goods by quality or fitness.
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