D-MART DEPARTMENT STORE

Isha Dey, the newly appointed General Manager of D-MART Department store, wanted to make
a good first impression in front of the Board. She had initiated the review of D-MART marketing
strategies, in part to gain familiarity with the store's marketing practices, but also to look for
ways to enhance both sales and market share.

D-MART is one of the department store in Mumbai city. The store had been founded more than
14 years ago and still controlled by the family of the founder. D-MART conducted broad range
of marketing activities, but the immediate centre of attention had become newspaper advertising.
D-MART regularly placed advertising in local newspaper aimed at producing immediate sales
impact. This advertising offered merchandize at a price below its normal selling price, or drew
attention to medium or low, priced merchandize that was available at normal prices.

The newspaper advertisements usually produced immediate results and often the increased sales
could be observed directly in the specific departments that had advertised. Departments were,
therefore, eager to place newspaper advertisements, since the increase in sales resulted in
improved staff commissions and bonuses for the specific department.

Isha Dey, however, had raised the point that the apparent increase in sales was not the true
increase in sales, since such advertising transferred sales from one department to another and
from one point in time to another. Each department was competing for the consumer's euro with
equivalent departments in competitor's stores, other departments of D-MART, and also with
itself in the weeks and the months that followed. Consumers only had so much money to spend.
If they were attracted to buying a new refrigerator this week, as a result of newspaper
advertising, they are unlikely to also buy new carpeting this week. The sales of refrigerator
might, therefore, represent transfer of sales from carpeting to appliances. Further, offering
customers a € 1000 refrigerator for €750 this week would attract buyers who would have paid
the €1000 next week or next month. That is, the advertising attracted sales from the other point
in time, and so cost the store profits.

The first step in developing the policy for newspaper advertising was to attempt to understand
the issues. Particularly, did D-MART as a whole gain or lose form such advertising?

Investigation of the issue began with collection of some data. D-MART had its own weekly total
sales, and knew on which week it had run newspaper advertisements and how much had been
spent on advertisements (Annexure 1).Estimates of total retail sales for major stores( including
D-MART) in the metropolitan area were also available in the government statistics. Finally, staff
at D-MART followed all newspaper advertising by major stores over 26 week period and used
the size and the scale of competitor's advertising and their own knowledge of advertising costs to
estimate cost of competitor's advertising. The data are summarized in the Annexure 1.

Could these data reveal the true benefits of D-MART newspaper advertisement?
 Annexure -1

Sales and newspaper advertising expenditures for D-MART and Competitors

D-MART All
Total Stores Other Stores
Total Advertising Sales Advertisement
Week Sales Cost Total Cost
1 2170786 11900 3710113 2000
2 1994291 14900 3369873 0
3 2166222 46700 3432998 0
4 1938123 450 340440 500
5 2053371 38900 3260872 2500
6 2119078 900 3608784 0
7 2305125 13200 3977783 6000
8 2100002 1700 3756040 15000
9 2168744 3800 3743732 0

10 2409430 32200 3930555 0

0
11 2485483 6800 4307596

12 1829660 3000 3146449 0

13 2197068 950 3967259 18000

14 2484308 2200 4246680 0
15 1899743 17600 3186419 5000
16 2440601 24400 4042738 0
17 2362137 15700 3943467 0
18 1898388 31900 3079799 0
19 1810179 28600 2923416 2000
20 2356949 13000 3961925 0
21 2255798 29000 3683537 0
22 2168937 12200 3818551 22000
23 2282578 19000 3801129 0
24 2061262 8000 3454436 0
25 1680685 10900 2819941 0
26 2266506 9800 3897689 2500

**Note: This case for class discussion was modified and prepared solely inspired by the ‘Alfonso’s
Department Store’ case written by Professor Peter Bell.