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passage 2 of 25

WHEN it came to promoting its new video-game console, the Wii, in America, Nintendo recruited a handful of carefully chosen suburban mothers in the hope that they would spread the word among their friends that the Wii was a gaming console the whole family could enjoy together. Nintendo thus became the latest company to use “word-of-mouth” marketing. Nestlé, Sony and Philips have all launched similar campaigns in recent months to promote everything from bottled water to electric toothbrushes. As the power of traditional advertising declines, what was once an experimental marketing approach is becoming more popular.

After all, no form of advertising carries as much weight as an endorsement from a friend. “Amway and Tupperware know you can blend the social and economic to business advantage,” says Walter Carl, a marketing guru at Northeastern University. The difference now, he says, is that the internet can magnify the effect of such endorsements.

The difficulty for marketers is creating the right kind of buzz and learning to control it. Negative views spread just as quickly as positive ones, so if a product has flaws, people will soon find out. And Peter Kim of Forrester, a consultancy, points out that when Microsoft sent laptops loaded with its new Windows Vista software to influential bloggers in an effort to get them to write about it, the resulting online discussion ignored Vista and focused instead on the morality of accepting gifts and the ethics of word-of-mouth marketing. Bad buzz, in short.

BzzAgent, a controversial company based in Boston that is one of the leading exponents of word-of-mouth marketing, operates a network of volunteer “agents” who receive free samples of products in the post. They talk to their friends about them and send back their thoughts. In return, they receive rewards through a points program—an arrangement they are supposed to make clear. This allows a firm to create buzz around a product and to see what kind of word-of-mouth response it generates, which can be useful for subsequent product development and marketing. Last week BzzAgent launched its service in Britain. Dave Balter, BzzAgent's founder, thinks word-of-mouth marketing will become a multi-billion dollar industry. No doubt he tells that to everyone he meets.

Questions

1.     What is the experimental approach being discussed in the first paragraph?

a. Word of mouth Marketing  b. Selling of video-game consoles, bottled water and electric toothbrushes                    c. Traditional Advertising          d. None of these

2.     What is the tone of the passage?

a.Neutral               b. Biased                c. Celebratory                  d. Critical

3.     What can we infer from Walter Carl's statement?

a. Amway and Tupperware are products where word of mouth marketing could be used.

b. Amway and Tupperware are consumers who appreciated word of mouth marketing.

c.  Amway and Tupperware are companies who use word of mouth marketing.

d. None of these

4.     What is the effect of internet on Word-of-mouth marketing?

a.  It is impeded by the internet.         B. It is encouraged by the internet.

c. Internet magnifies the moral issues of this marketing technique.

D.Internet has made it obsolete.

5.     According to the passage, in what order did different companies use word of mouth marketing?

a.  Nintendo before Sony, Nestle and Philips.       b.  Nintendo after Sony, Nestle and Philips.

c. Nintendo, Sony, Nestle and Philips: all at the same time.  d. None of these

6.     According to Peter Kim, what happened to Microsoft's marketing campaign for Vista?

a. It succeeded     b. It succeeded with some hiccups                 c.It failed    d.None of these

7.     Where does BzzAgent operate?

a. USA and India              b.USA and UK       c.USA only d. None of these

8.     What is the author most likely to agree to in the following?

a.  There is not enough evidence to state that word-of-mouth marketing is useful.

b.  There is enough evidence to state that word-of-mouth marketing is useful.

c.  Evidence shows that word of mouth marketing is a failed technique.

d. Word of mouth marketing is unethical.

Passage 1 of 25

The impressive recent growth of certain sectors of the Indian economy is a necessary but insufficient condition for the elimination of extreme poverty.

In order to ensure that the poorest benefit from this growth, and also contribute to it, the expansion and improvement of the microfinance sector should be a national priority. Studies suggest that the impact of microfinance on the poorest is greater than on the poor, and yet another that non-participating members of communities where microfinance operates experience socio-economic gains — suggesting strong spillover effects. Moreover, well-managed microfinance institutions (MFIs) have shown a capacity to wean themselves off of subsidies and become sustainable within a few years.

Microfinance is powerful, but it is clearly no panacea. Microfinance does not directly address some structural problems facing Indian society and the economy, and it is not yet as efficient as it will be when economies of scale are realized and a more supportive policy environment is created.

Loan products are still too inflexible, and savings and insurance services that the poor also need are not widely available due to regulatory barriers.

Still, microfinance is one of the few market-based, scalable anti-poverty solutions that is in place in India today, and the argument to scale it up to meet the overwhelming need is compelling. According to Sa-Dhan, the overall outreach is 6.5 million families and the sector-wide loan portfolio is Rs 2,500 crore.

However, this is meeting only 10% of the estimated demand. Importantly, new initiatives are expanding this success story to the some of the country's poorest regions, such as eastern and central Uttar Pradesh.

The local and national governments have an important role to play in ensuring the growth and improvement of microfinance. First and foremost, the market should be left to set interest rates, not the state. Ensuring transparency and full disclosure of rates including fees is something the government should ensure, and something that new technologies as well as reporting and data standards are already enabling.

Furthermore, government regulators should set clear criteria for allowing MFIs to mobilize savings for on-lending to the poor; this would allow for a large measure of financial independence amongst well-managed MFIs. Each Indian state could consider forming a multi-party working group to meet with microfinance leaders and have a dialogue with them about how the policy environment could be made more supportive and to clear up misperceptions.

There is an opportunity to make a real dent in hard-core poverty through microfinance. By unleashing the entrepreneurial talent of the poor, we will slowly but surely transform India in ways we can only begin to imagine today.

Questions

1.     What could be the meaning of the word panacea in the passage?

Solution                 Problem                    Solution to all problems            Sustainable solution

2.     Why, according to the author, should microfinance be scaled up in India?

a. The demand for microfinance is high.  b. It is a market-based anti-poverty solution.

c. It is sustainable.   D. Both 1 and 2.       E.  : 1, 2 and 3.

3.     Why are saving products not available?

a. Due to inflexibility of loan products.        B. Due to regulatory restrictions.

c. Since insurance services are not available. D. Saving products are not available.

4.     Why does the author talk about the 'entrepreneurial talent of poor' in the concluding paragraph?

a. Entrepreneurship among poor is encouraged by microfinance.

b. Entrepreneurship among poor is an alternate to microfinance.

c. Entrepreneurship among poor is discouraged by microfinance.                  D. None of these

5.     Which of the following is not a challenge faced by microfinance in India?

a. Does not help the poorest.                          B.Efficient when economy of scale is achieved.

c. Non-conducive policy environment.         D. Structural problems of Indian society.

6.     Which of the following is correct with regard to microfinance?

a. The supply is more than demand.                         B. The demand is more than supply.

c. The supply and demand are well balanced.  d.None of these can be inferred from  passage.

7.     What is the author's view about interest rates?

a. The government should set them. B.There should be transparency with regard to them.

c. The market forces should set them.   D. Both 1 and 2. E. Both 2 and 3.

8.     Which of the following will the author agree to?

a. Indian economy growth will solve the problem of poverty.

B. Indian economy growth is not enough to solve the problem of poverty.

C. Indian economy growth aggravates the problem of poverty.         

D. None of these