MANIPAL UNIVERSITY JAIPUR

SET-1

1. Markets are complex entities that can be segmented in a variety of ways. Explain in
detail with relevant examples.

Answer -Markets can be segmented in various ways depending on the characteristics of the
target market. These segments can be based on demographic, geographic, psychographic, and
behavioural factors. Each segment has its own unique set of needs, preferences, and buying
behaviours that marketers can leverage to tailor their marketing strategies and offerings. In
this answer, we will discuss these market segmentation variables in detail with relevant
examples.

1. Demographic Segmentation: Demographic variables include age, gender, income,

education, occupation, and marital status. For example, a company that sells luxury
watches may target high-income individuals who are over 40 years old and have a
high level of education. Another example would be a company that sells children's
toys targeting parents with young children.

2. Geographic Segmentation: Geographic variables include region, climate, population

density, and urban or rural areas. For example, a company that sells winter clothing
may target consumers living in colder regions, while a company that sells beachwear
may target consumers living in warmer regions. Another example would be a
company targeting urban areas where there is a higher population density.

3. Psychographic Segmentation: Psychographic variables include personality, lifestyle,

and values. For example, a company that sells organic food products may target
consumers who prioritize healthy living and environmentally sustainable practices.
Another example would be a company that sells adventure sports equipment targeting
consumers who value excitement and adventure.

4. Behavioural Segmentation: Behavioural variables include purchase behaviour, brand

loyalty, and usage rate. For example, a company that sells luxury cars may target
consumers who have a high purchase frequency and high brand loyalty. Another
example would be a company that sells gym equipment targeting consumers who are
regular gym-goers.

In addition to these four primary segmentation variables, there are several other segmentation
variables that companies may use. These include:

1. Occasion segmentation: This involves targeting consumers based on specific events or

occasions such as weddings, holidays, or birthdays.

2. Benefit segmentation: This involves targeting consumers based on the benefits they
seek from a product or service such as convenience, affordability, or quality.

3. User status segmentation: This involves targeting consumers based on their usage rate
and loyalty such as non-users, potential users, first-time users, or loyal users.

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In conclusion, market segmentation is a critical process that enables companies to tailor their
marketing strategies and offerings to specific consumer groups. By understanding the
characteristics and needs of their target audience, companies can develop targeted campaigns
that resonate with consumers and drive sales. Companies that effectively segment their
markets can gain a competitive advantage and increase their revenue and profitability.

2. Store layout can be managed in variety of ways to entice and enhance customers’
shopping experience. With reference to this statement, detail the different forms of
store layout with stated advantages and disadvantages.

Answer - Store layout refers to the way in which merchandise and other store fixtures are
arranged within a retail space to enhance the shopping experience of customers. Store layout
can be managed in a variety of ways, with each form having its own unique advantages and

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disadvantages. Some of the different forms of store layout include the grid layout, the free-
flow layout, the racetrack layout, and the boutique layout.

 The grid layout is a very common and traditional form of store layout, where the store is
organized into long aisles that run parallel and perpendicular to each other, forming a
grid-like pattern.

Advantages of this layout include easy navigation for customers, efficient use of floor
space, and the ability to display a large amount of merchandise. However, this layout can
also become monotonous and uninspiring for customers, and there is a risk of customers
becoming overwhelmed and lost in the large number of products on display.

 The free-flow layout is the opposite of the grid layout, where merchandise is arranged in
a more organic and fluid way, without strict aisles and sections. This layout is often used
in boutique stores or high-end shops where the focus is on the aesthetic appeal of the
merchandise.

Advantages of this layout include the ability to create an immersive shopping experience
and to highlight individual products. However, this layout can also make it difficult for
customers to navigate and find specific products.

 The racetrack layout, also known as the loop layout, is where the store is organized into
a circular or oval-shaped path that customers follow, with merchandise displayed on
either side. This layout is commonly used in large department stores and supermarkets.

Advantages of this layout include easy navigation for customers, the ability to create
impulse purchases, and the ability to showcase a wide variety of products. However, this
layout can also become congested during peak shopping periods, and customers may feel
rushed and overwhelmed.

 Dead block format is mostly used and adopted in the small kirana shops having less than
150 square feet. This format makes the customer shop without entering the store. The
major differentiator is clearly personalised selling to the customer at the store front and
also taking the shopping list in hand and picking the products off the shelf.

The major advantage of this format is maximum utilisation of the floor space and easy to
maintain and cost effective from the retailer perspective.

In short, store layout can have a significant impact on the shopping experience of customers,
and it is important for retailers to choose a layout that is appropriate for their store type and
target customer demographics. Each form of store layout has its own unique advantages and

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disadvantages, and retailers must carefully consider their options before deciding on a
particular layout.

3. Define retail merchandising. Explain the steps followed in merchandise management

process.

Answer - Retail merchandising refers to the process of selecting, purchasing, displaying, and
selling products to consumers in a retail environment. It involves a range of activities aimed
at optimizing the profitability of a retailer by ensuring that the right products are available to
meet customer needs and preferences at the right time, in the right quantities, and at the right
prices.

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 The merchandise management process involves several steps, each of which is critical to
the success of the overall process. Here are the typical steps followed in merchandise
management:

i. Planning and Analysis: The first step in the merchandise management process is to
plan and analyze the merchandise requirements based on the target audience and
market trends. This step involves analyzing past sales data, forecasting demand, and
identifying the merchandise mix that is likely to generate the highest sales and profits.
Retailers also consider factors such as inventory levels, product pricing, and
promotions during this phase.

ii. Sourcing and Procurement: Once the merchandise requirements have been identified,
the retailer needs to source and procure the merchandise. This step involves
negotiating with suppliers, placing orders, and managing the logistics of transporting
the products to the retail location.

iii. Receiving and Inspection: After the merchandise has been procured, it is received at
the retail location and inspected to ensure that it is of the required quality and
quantity. Any discrepancies are identified and resolved during this step.

iv. Inventory Management: The retailer needs to manage inventory levels effectively to
ensure that there is enough stock to meet customer demand without tying up too much
capital. This step involves tracking inventory levels, forecasting demand, and
determining the appropriate reorder points and order quantities.

v. Merchandising and Display: Once the inventory has been managed, it is time to
merchandise and display the products in the store. This step involves creating visually
appealing displays that attract customers and encourage them to make a purchase.
Effective merchandising involves careful consideration of factors such as product
placement, signage, and lighting.

vi. Sales Analysis and Performance: Finally, the retailer needs to analyze the sales data
and assess the performance of the merchandise. This step involves tracking sales,
monitoring inventory levels, and identifying areas for improvement. Retailers may use
this information to adjust the merchandise mix, pricing, or promotions to optimize
sales and profitability.

Therefore, merchandise management is a complex and ongoing process that requires careful
planning, analysis, and execution. By following these steps, retailers can optimize their
inventory levels, create effective displays, and deliver the right products to meet customer
needs and preferences.

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SET – 2

4. Differentiate between private label and national brand. Explain the growth drivers
of private label.

Answer - Private label and national brands are two different types of products found in the
market. National brands are the products that are owned, manufactured and marketed by a
well-known brand company. These brands have established their name in the market and are
known for their quality, reliability, and trustworthiness. On the other hand, private label
brands are the products that are produced and marketed under the name of a specific retailer,
and they are usually less expensive than national brands.

One of the key differences between private label and national brands is that national brands
have a higher level of recognition among consumers, whereas private label brands have a
lower level of recognition. National brands spend a lot of money on advertising, marketing
and promoting their products, and as a result, they have a higher level of awareness and
consumer loyalty.

 Private label brands have seen significant growth in recent years. Some of the growth
drivers of private label include:

1. Market Share: The second driver is the market share. The greater the Private Label’s
market share, the smaller the discount that is needed versus the leading national
brand. Conversely, the smaller the market share the greater the discount is needed.
Keeping in mind the majority of supermarkets do not have an objective to become
totally a Private Label store.

2. Transformed Image: There was a time when private labels were confined to the value
section of a retail store. Viewed as the poor cousin to national brands, consumers
perceived these products as generics with low quality This consumer perception has
undergone a change and private labels are steadily gaining acceptance in the eyes of
consumers.

3. Rising Middle Class: The Indian middle class can be categorised as seekers and
strivers, and they look at private labels as products, which provide them value for
money. The Indian middle class is more open to buying private labels provided by the
retailers whom they trust.

4. Changing Shopping Behaviour: The swift technological, economic and social changes
of the last decade have had considerable implications on the buying and consumption
behaviour of the customers. The shopping attitude of Indian consumers and this is
reflected in their changing preferences, tastes and shopping behaviour. Indian
consumers are more aware of brands and shops for lifestyle, and value brands
according to their need and occasion.

5. Value propositions: The value proposition is the way by which consumers make their
purchasing decisions. The better the quality and lower the price, the greatest is the
value. Product quality claims were that they were equivalent to the national brand.
Private label products are priced anywhere from 20 to 70 percent cheaper than the

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national brand. Even after giving heavy discounts, private label products still achieve
a higher gross margin percent than the branded competition.

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5. List the various methods adopted by retailers to enter global market. Describe all
with suitable examples.

Answer –

 Retailers adopt various methods to enter the global market. Some of these methods
are:

1. Franchising: Franchising is a method where a retailer enters a foreign market by

granting the right to another party to use its brand name, operating system, and
products. The franchisee pays a fee to the franchisor to use the brand and operating
system.

Examples of retailers that have used franchising to enter the global market include
McDonald's, KFC, and Subway.

2. Joint venture: A joint venture is a partnership between two or more companies to

operate a business. It is a popular method for retailers to enter the global market
because it allows them to share risks and costs with a local partner.

Examples of retailers that have used joint ventures to enter the global market include
Walmart, which has a joint venture with Bharti Enterprises in India, and Carrefour,
which has a joint venture with Majid Al Futtaim in the Middle East.

3. Direct investment: Direct investment is a method where a retailer invests in a foreign

country to establish its own operations. This method requires significant capital
investment but provides the retailer with complete control over its operations.

Examples of retailers that have used direct investment to enter the global market
include IKEA, which has established its own stores in over 50 countries, and Tesco,
which has established its own stores in Asia and Europe

4. Licensing: Licensing is a method where a retailer allows another party to use its brand
name or products in exchange for a fee.

Examples of retailers that have used licensing to enter the global market include
Ralph Lauren, which licenses its brand to partners in Asia and Europe, and Levi's,
which licenses its brand to partners in South America.

5. E-commerce: E-commerce is a method where a retailer sells its products online to

customers in a foreign country.

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Examples of retailers that have used e-commerce to enter the global market include
Amazon, which sells its products in multiple countries, and Alibaba, which sells its
products in China and other Asian countries.

6. Acquisition An acquisition, also known as a takeover, is the buying of one company

(the 'target') by another. An acquisition may be friendly or hostile. In the former case,
the companies cooperate in negotiations; in the latter case, the takeover target is
unwilling to be bought or the target's board has no prior knowledge of the offer.
Acquisition usually refers to a purchase of a smaller firm by a larger one.

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6. Discuss the concept of retail pricing. Explain in detail the factors influencing retail
prices.

Answer - Retail pricing is the process of determining the price at which a retailer will sell a
product or service to its customers. It is an essential aspect of any retail business as it directly
affects the profit margin and revenue generation of the company. Retail pricing involves
analyzing various factors that influence the price of a product or service, including the cost of
production, competition, target audience, demand and supply, and external factors such as
economic conditions and government policies.

 The following are the factors that influence retail pricing:

i. Cost of Production: The cost of production is one of the primary factors that influence
the retail price of a product or service. The price of raw materials, labour, and
manufacturing costs impact the overall cost of production. Retailers need to ensure
that they set prices high enough to cover the cost of production and make a profit.

ii. Competition: Competition is another significant factor that influences retail pricing.
Retailers need to consider the prices set by their competitors when setting their prices.
In a highly competitive market, retailers may need to set their prices lower to remain
competitive.

iii. Demand and Supply: The law of demand and supply is a crucial factor that affects
retail pricing. When demand for a product is high and supply is low, retailers can set
higher prices. Conversely, when supply exceeds demand, retailers may need to lower
their prices to encourage customers to buy.

iv. External Factors: External factors such as economic conditions and government
policies can also influence retail pricing. For example, during an economic recession,
retailers may need to lower prices to encourage customers to buy. Similarly,
government policies such as taxes and regulations can impact the cost of production
and retail pricing.

v. Store factors: Different retail chains may follow different retail strategies based on
differences in chain size, location, layout structure and chain positioning, consistent
with their corporate missions and policies. Large and small retail chains may be
different in terms of economies of scale, printing and holding costs, and power with
suppliers so, they may price and promote the product differently.

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vi. Product and promotional policies of the firm: Pricing is one of the aspects of
marketing strategy and a firm must consider it along with its product and promotional
policies. Thus, before changing the price of a product, the firm must ensure that the
price is at fault and not its sales promotion programme or the quality of the product or
some other element.

In conclusion, retail pricing is a complex process that involves analyzing various factors that
influence the price of a product or service. By considering these factors, retailers can set
prices that are competitive, profitable, and attractive to their target audience.

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