Answer Booklet

BUS115: Entrepreneurship and small business

Management

Personal Information
Student Name Abdul Hussain Syed
Student ID 190599

Registration Information
Branch Kuwait
Section Number 102 Assessment type Final-THE
Academic Year 2020/2021 Semester First
Earned Grade out of 100 marks

General Note

Below, you can start your answer…

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Answer 1:

Merchandising can be termed as planning, buying or selling of goods and services. It basically means
to promote and sell the products to the potential customers in the store. Promoting or selling here
means products that are available for sale. To attract the customers some stores shift their sales items
from one place to another in order to get their full attention of the store. Merchandising use strategies
like window shopping, banners to promote their sales, product packaging etc. However, it depends
upon a variety of factors like quality of the particular product, sector and available space for the
display, by doing this, stores benefits from quick stock turnover, higher prices, customer’s loyalty
towards the store, more satisfied customers.

Zara is one of the best examples when it comes to promoting their products to attract the customers
and also is rated as the best clothing brand world-wide. Zara opens their stores in areas where it can
cozy up to high-fashion brands. Zara designs its products in a more affordable way that appears
somewhat similar to its competitors which motivates shoppers to buy from Zara. To boost their sales,
Zara uses strategies like bringing a fear in the customers desire to buy the items immediately rather
than taking risk of coming back later and finding their size is gone. Zara stores its items in such a way
that you always find something new in the store, and clothes are never stacked too high, which
influences the customers to pay the price right away. Zara has the best interior designs which
automatically pulls the customers attention to enter the store and purchase variety of items. Zara
offers variety of discounts or sales when it comes to window shopping. Moreover, Zara has social
platforms like Instagram and twitter where they advertise their products, the main motive is to not get
followers but to get the audience.

Answer 2:

The importance of pricing is to determine the profit and position of the business. It also determines
the value of the product through customers. Pricing can make the difference between success and
failure for any business, but it is especially crucial for small businesses. The price which the business
sets may affect the profit scale, if the prices are set high then the profit will be higher but the higher
prices may lead to lower the sales or decrease the profits. The price the business sets makes them
more or less competitive in the market which may affect the shares. Some small businesses decrease
the prices temporarily to gain the attention of the customers. This would automatically bring the
customers attention towards the store. Later when consumers builds that loyalty then they would
increase their prices level and this won’t cause them to leave them. This is why pricing is really
important for small businesses if they want to maintain their position and profit in the business.

The five business strategies used in small businesses are penetration pricing, skimming pricing, cost
orientation pricing, competition pricing and psychological pricing. Firstly, Penetration pricing mainly
aims at selling the items at cheaper prices than everyone else in the market but increases in the future.
For example Netflix, people often tend to complain about their subscription prices going high all of a
sudden. Secondly, Skimming Pricing involves in setting a high price before anyone else in the
market. This pricing strategy often is used when a company launches new products into market where
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there is a little or no competition. For example Playstation 3 which was in the beginning sold at $599
in the market, but now it has been reduced to below $200. Thirdly, Cost orientation pricing strategy
involves calculating overall costs which can be added to the product. For example, Shoes costing
KWD 14.50 and is sold for KWD 25.23. The markup is KWD 10.73. Fourthly, Competitive Pricing is
to set the prices same as their competitors. For example a coffee shop who has less customers,
supposedly sells their coffee at a rate which is higher than their competitors then in order to attract the
customers, he would set the same price as its competitors. Lastly comes psychological pricing, where
the Prices are set lower than the actual cost to get attention of the customers. For example, Zara
setting a price of a product rounding to 15.999 KWD where as they could have directly displayed
16.000 KWD.

Answer 3:

There are mainly 4 stages of Product life cycle namely Introduction, growth, maturity and decline. In
Introduction stage of the product, for a business launching a new product, this stage of the cycle may
be the most costly. The size of the product market is small because the profits are poor, which they
may increase. However, the cost of items can be very high if it's a competitive sector. In the growth
stage, it is marked by high growth in revenue and earnings, and since the business will continue to
benefit from economies of scale in manufacturing, the profit can increase, as well as the total amount
of profit. This enables companies to spend more cash in advertising to optimize the value of this stage
of growth. In the maturity stage, during this stage the product is developed and the goal for the
manufacturer is now to retain the market share they have acquired. For most of the companies, this is
the most competitive period so they need to spend wisely. They will need to consider any product
changes or changes to the manufacturing process that might give them a competition. In the Decline
stage, the demand for a commodity will gradually begin to reduce which is known as the period of
decline. This reduction may be because it has already been bought by all buyers, or because
consumers are going to a new form of product. While this decline could not be avoided.

In the feature phone decline stage, Nokia, once a pioneer in the cell phone industry, lost the fight. In
the feature phone market, Nokia had a market share of 50 percent. In 2008, the first smartphone
powered by Android was released by HTC. Samsung has tied up and launched its smartphones with
Google for Android. The demand for Android smartphones began to boom exponentially as Android
became the most popular and accepted platforms. Nokia understood this, but for its Android platform,
it did not react rapidly or was able to reach an agreement with Google. They launched smartphones
based on windows, but they crashed. Nokia's sales fell and the mobile industry ultimately lost the
fight.

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