DR.

HARISINGH GOUR
VISHWAVIDYALAYA,SAGAR

DEPARTMENT OF BUSINESS MANAGEMENT

OF
Masters of Business Administration

A PROJECT ASSINMENT ON
“Retail Management and Product Management”
YEAR - 2020 -21
SUBMITTED TO: SUBMITTED BY:
DR. ANIL KASHYAP MAYUR SAINI

(Assistant Professor) (Y19282024)

(MBA 4rd Semester)

 “Section – A”
1. What do you mean by product recall? Why it becomes necessary to recall
the product? Write the strategic approach to avoid product recall. Also
highlight the recently happened product recall.

Answer- A product recall is a public request by a company or government agency

to return a product due to a defect.

Most product recalls are voluntarily issued by the manufacturer of a company. If,
however, a product defect causes a significant risk to the product’s user, a
government agency may issue a mandatory recall.

Safety violations are the main reason for product recalls, and Field Corrective
Actions. Product recalls are very expensive, and expose manufacturers to lawsuits
and potentially large fines, settlement costs, and legal fees. Moreover, the
reputation of a manufacturer may become tarnished and future sales hampered.

Good risk management practices can reduce the probability of harming people or
the environment, and thus avoiding recalls.

A product recall is tantamount to a kiss of death in certain segments of the

economy, especially for food and other agricultural products. Not so much in other
areas such as in the automotive market where manufacturers, led by General
Motors, have this year recalled millions of vehicles. The electronics industry falls
somewhere in between these two economic sectors but the impact of a recall due to
defects in performance or other reasons can be equally severe, leading to
significant decline in market share and huge losses.

Recalls aren’t common in the electronics industry and even when OEMs,
especially in the consumer and white goods segment, issue a defect notice many
people don’t directly associate the incident with specific technology in the product.
The component supplier may have caused the incident leading to the recall but it’s
the OEM that takes the public beating. In other words, the OEM gets blamed as it
has happened with General Motors, Toyota Motor Corp., and Chrysler, which on
Oct. 29 announced the recall of more than 300,000 vehicles due to faulty
“electrical connectors of the diesel fuel heater, which may overheat, causing a leak
in the fuel heater,” according to a statement issued by the National Highway
Traffic Safety Administration (NHTSA).

While OEMs may be blamed by regulatory authorities and endure a public

drubbing for any recalls, the suppliers hardly get off free. In fact, a supplier whose
faulty component or subsystem results in a product recall not only faces high
financial losses but may lose major contracts not only with the impacted OEMs but
also other customers. This is why the electronics industry puts a great deal of
importance on product reliability both at the components and finished equipment
levels. It also means the supplier and the OEM are joined at the hips and must
work closely together to ensure the integrity of the finished goods.

So, what do best-in-class companies recommend to avoid costly product recalls?

We boiled their suggestions down to the following 10 critical points:

1.Design Integrity: From the conception stage all through the initial design phase,
make sure the product at its embryo stage is as fault-free as possible. It’s better to
take ample time to ensure the design is good than endure repeated redesign during
which additional problems can be injected into the product.

2.Don’t Skip or Skimp on the Test Phase: This may seem very obvious but
failure to sufficiently test a design can result in greater problems down the road.
Additionally, the prototype must be subjected to necessary failure analysis and
repeatedly to eliminate potential problems. Faults identified during this phase can
be more easily corrected than if the issue was kicked down the road.

3.Design for Manufacturability: DfM is today considered an integral part of the

design and production process but many companies still equate this with design
testing. It’s not the same. “Effective product development must go beyond the
traditional steps of acquiring and implementing product and process design
technology as the solution,” wrote Kenneth Crow in a paper written for DRM
Associates. “It must address management practices to consider customer needs,
designing those requirements into the product, and then ensuring that both the
factory and the virtual factory (the company’s suppliers) have the capability to
effectively produce the product.” Crow noted that decisions made during the
design phase can account for up to “70 percent of the product’s costs while
decisions made during production only account for 20 percent of the product’s
costs,” which means assuring design for manufacturability can yield great results.

4.Check and Double-check all Parts of the Supply Chain: A great design can
fail if the supply chain does not provide the necessary support to guarantee
success. In addition to securing a viable design a manufacturer must have an
excellent support system with suppliers, contractors, software developers and a
sales outreach that on their own double-check their systems to make sure these are
optimized to support the product.

5.Verify History and Record of the Supplier: A supply chain is only as good as
its components. In the electronics industry this is a cardinal principle of an
effective and efficient product management system. A single OEM product can
have components from dozens of suppliers and an effective failure monitoring
system must look deep into the supply chain. Each layer must be closely
scrutinized and processes put into place to ensure accuracy of reports. Many OEMs
rely on a core group of suppliers to assure the integrity of their products. These
suppliers are often listed on the Approved Vendors’ Lost (AVL), which can be
shared with and sometimes managed by an electronics manufacturing services
(EMS) provider. This list must continually be evaluated with new players added
and some older ones removed as necessary. It must never become a static list.

6.Stay Abreast of Rules and Regulations: Environmental and other compliance

requirements have ballooned in recent years and across multiple geographies. The
acronyms alone tell a story of an industry being closely monitored. In the last two
decades regulators in Europe, Asia and North America have asked manufacturers
to comply with REACH, RoHS and WEEE. If you don’t know what they mean
that’s already a problem. Failure to comply with these three regulations or the US-
driven rule on “Conflict Minerals” is guaranteed to result in product recall.

7.Ensure Tighter Collaboration between Distributors, Suppliers, EMS

Providers and OEM: All segments of the supply chain must work tightly together
to avoid product recalls but harmonizing the relationship is the main task of the
OEM. The equipment vendor must bring all members of its supply chain together
early in the product design stage and ensure they work as a team. Oftentimes, that
duty is delegated to the EMS provider but in recent years some distributors have
stepped up to provide this service. Digi-Key Corp., for example, is helping some of
its customers with their volume purchase requirements even while keeping its
focus on servicing design engineers, according to Dave Doherty, executive vice
president of operations.

8.Secure the Manufacturing Floor: Even if you are using a contract

manufacturer who owns the assembly plant you are still entitled to efficient, fault-
free production environment. While the OEM may not own the property, it has the
right to inspect the production facility and ensure the contractor complies with
regulatory requirements. Failure to do this could result in a product recall that may
be forced upon the manufacturer by regulators not because of a problem with the
product itself but for failing to comply with the law.

9.Secure the Shipment: Assume the product is not safe until delivered intact and
unspoiled to the end-customer. Some product recalls occur because of damages
suffered after production rather than as a result of defects in parts or problems on
the manufacturing floor. This week, for instance, Toyota announced the recall of
170,000 Camry sedans in the United States and Europe “over faulty ball joints that
may have been damaged during shipment” and which could make drivers lose
control of the vehicle.

10.Have a Crisis Response Team: Product failure may occur despite all efforts by
a manufacturer to avoid it. Beyond the actions above, manufacturers must have a
plan in place to deal with identified problems in order to determine the appropriate
response. A software update can resolve some problems, for example, eliminating
the need for a more expensive product recall. The crisis response team should also
be charged with closely monitoring the product through the design and production
stages and also oversee post-production activities to identify problems and deal
promptly with them.

1. JUNE 10, 2021

BRP Recalls All-Terrain Vehicles (ATVs) Due to Crash Hazard (Recall Alert)

The steering knuckle can detach from the lower arm, resulting in a loss of control
of the vehicle, posing a crash hazard.
Remedy: Consumers should immediately stop using the recalled vehicles and
contact a Can-Am dealer for a free repair. BRP is contacting all known purchasers
directly.

Units:About 4,600

2. JUNE 10, 2021

Blue Star Trading Recalls Children’s Fishing Toy Games Due to Violation of
Federal Lead Content Ban; Lead Poisoning Hazard; Sold Exclusively on
Amazon.com (Recall Alert)

The metal rollers on the bottom of the flying dinosaur figures contain levels of lead
that exceed the federal lead content ban. Lead is toxic if ingested by young
children and can cause adverse health issues.

Remedy: Consumers should immediately take the recalled toys away from children
and contact Blue Star Trading for a full refund. Blue Star Trading is contacting all
purchasers directly.

Units: About 300

3. JUNE 9, 2021

Non-Contact Voltage Testers Recalled by Klein Tools Due to Shock Hazard

The on/off button can remain depressed during the power on or power off cycle,
causing the tester to work improperly. Consumers testing electrical sources could
fail to be warned of the presence of live voltage if the tester is not properly
operating, posing a shock hazard to the users.

Remedy: Consumers should immediately stop using the recalled non-contact

voltage testers and contact Klein Tools for instructions on receiving a free
replacement tool.

Units: About 1,690,000 (In addition, about 67,800 were sold in Canada.)
2. Define brand equity and explain its elements? What do you mean by
valuation of a brand? Discuss the techniques of brand valuation.

Answer- Brand equity is a marketing term that refers to the total value of the brand
as a distinct asset. It can be rendered as the aggregate of assets and liabilities that
are associated with the brand name and symbol which brings about the relationship
customers tend to create with the brand. Brand equity is reflected in a way how
consumers think, feel, and act towards a particular brand.

Additionally, the impact of these intangible assets is quite visible with the books of
records in terms of market prices, shares, profitability, and demand.

Components of Brand Equity

Brand equity includes fulfilling the business promise towards its customers along
with maintaining the business-customer relationship well. Components of brand
equity include:

1.Brand Awareness

The first step of the brand building process is creating awareness of the brand
name in the mind of consumers. This means that customers are aware of the brand
and able to associate it with a particular category. Building brand awareness can
help marketers to increase brand visibility to the target audience through different
advertisement campaigns.

2.Brand Association

Brand association is anything that a customer relates to their preferred brand.

Getting in interaction with brands allows such associations. Having a good brand
association is important as it leads to repetitive sales and provides the business
word of mouth marketing. Such associations are leveraging the brand and give a
tough time to new entrants into the market.

3.Brand Experience

This is the aggregation of customer experience with the overall brand. When
customers have the good brand experience they will consider the brand as superior
and will start preferring it over others.
For example, how you feel when eating at McDonald’s? How is the overall inner
environment, how the staff behaves and what is the quality of the food? To provide
the same experience, the company have to maintain uniform standards all over the
outlets in the world.

4.Perceived Quality

Fulfilling brand promise is the key to strong brand equity. Customer tends to assess
brands with other similar brands on the basis of various quantitative and qualitative
parameters. Quality perception also impacts the pricing decision of a company. If a
company produce quality products, it can avail the luxury of premium pricing.

5.Brand Loyalty

Brand loyalty is the preference of a brand by the customer over similar products in
the market. This results in repetitive sales and is the best way to spread word of
mouth. If a company has a higher brand loyalty, it can help to reduce marketing
cost. The company can also introduce new products targeting the same customer
base.

6.Brand Preference

This is another component of brand equity and can charge additionally for the
same product. However, this requires organizations to assure that customers have
good experiences and associations with the brand.

Brand Valuation and Brand Equity:

Brand Valuation can be defined as the process used to calculate the value of a
brand or the amount of money another party is willing to pay for it or the financial
value of the brand.

The concept of Brand Value, although similarly constructed to that of Brand

Equity, is distinct. To put it simply, while brand equity deals with a consumer
based perspective, brand value is more of a company based perspective. As early
as 1991, Srivastava and Shocker identified brand equity as a multidimensional
construct composed of brand strength and brand value. This indicates that brand
equity is a concept a lot broader than brand value.
In order to further this discussion of the distinction between the two, let us consider
an example. This specific case concerns the $1.7 billion purchase of Snapple by
Quaker Oats in 1994. Quaker Oats' primary distribution strength was confined to
supermarkets and drugstores whereas smaller convenience stores and gas stations
constituted more than half of Snapple's sales. But despite the purchase, Quaker
Oats was unable to increase supermarket and drugstore sales enough to compensate
for lost convenience and gas station sales and was forced to sell Snapple for $ 300
million just three years later. As seen in this case, Snapple's Brand Value decreased
enormously over the three years that Quaker Oats owned it, but this had nothing to
do with it brand equity, which could have been constant or increased owing to the
additional exposure in supermarkets and drug stores. What can be concluded from
this example is that neither a brand's purchase price nor a dramatic change in its
selling price provides information about the magnitude or movement of a brand's
equity. This also means that while a company may have the highest brand value, it
is not necessary that it also has high brand equity. For example, Apple's Brand
Value ID ranked #1 is worth $185 billion whereas its equity is #11 and Coca Cola
has the highest Brand Equity.

Evaluating Brands:

Before evaluating brands, two essential questions need to be answered i.e. what is
being valued, the trademarks, the brand or the branded business and secondly, the
purpose for such valuation. This brings us to the answering what the utility of
undertaking brand valuation is. The process of brand valuation is of primal
importance not only for the brand and the respective owning company to improve
upon the same but also for the purposes to increase the market value and ascertain
accuracy in instances of mergers and acquisitions. In other words, brand valuation
would comprise of technical valuation which can be utilized for balance sheet
reporting, tax planning, litigation, securitization, licensing, mergers and
acquisitions and investor relations purposes and commercial valuation which is
operational for the purpose of brand architecture, portfolio management, market
strategy, budget allocation and brand scorecards. Thus, the application of brand
valuation would be for strategic brand management and financial transactions.
Prior Approach:

Earlier research with respect to Brand Valuation was limited to two areas:
Marketing measurement of brand equity and financial treatment of brands. The
former was used by Keller and included subsequent studies by Lassar et al on the
measure of brand strength, by Park and Srinivasan on the evaluation of the equity
of brand extension, Kamakura and Russell on single source scanner panel data to
estimate brand equity and Aaker and Montameni and Shahrokhi on the issue of
valuing brand equity across local and global markets. The financial treatment of
brands has traditionally stemmed from the recognition of brands on the balance
sheet (Barwise et.al., 1989, Oldroyd, 1994, 1998), which presents problems to the
accounting profession due to the uncertainty of dealing with the future nature of
the benefits associated with brands, and hence the reliability of the information
presented. Tollington (1989) has debated the distinction between goodwill and
intangible brand assets. Further studies investigated the impact on the stock price
of customer perceptions of perceived quality, a component of brand equity (Aaker
and Jacobson, 1994), and on the linkage between shareholder value and the
financial value of a company's brands (Kerin and Sethuraman, 1998).

Current Trend/Practices in Brand Evaluation:

However, Brand Valuation is no longer limited to these two areas anymore.

International Organization for Standardization (ISO) came up with ISO 10668 –
Monetary Brand Valuation in 2010, which laid down principles which should be
adopted when valuing any brand and is popularly followed by most firms
indulging in valuation of brands like Interbrand, Finance World and Brand Equity
Ten. ISO 10668 is a 'meta standard' which succinctly specifies the principles to be
followed and the types of work to be conducted in any brand valuation. It is a
summary of existing best practice and intentionally avoids detailed methodological
work steps and requirements. As per ISO 10668, each brand is subjected to an
analysis on three levels – Legal analysis, Behavioral analysis and Financial
Analysis. Keeping in mind that the nature and concept of value is difficult to grasp
on account of being subjective in nature, these three methods of analysis objectify
the valuing of brands.
Legal Analysis is the method that draws a distinction between the trademarks, the
brands and the intangible assets involved and defines them as separate entities.
After the brand valuer has clearly determined the intangible assets and Intellectual
Property rights included in the definition of the 'brand' in concern, (s)he is required
to assess the legal protection afforded to the brand by identifying each of the legal
rights that protect it, the legal owner of each relevant legal right and the legal
parameters influencing negatively or positively the value of the brand. Extensive
Risk analysis and due diligence is required in the legal analysis and the analysis
must be segmented by type of IPR, territory and business category. In other words,
the valuer needs to observe and assess the legal protection afforded to the brand by
identifying each of the legal rights that protect the brand, the legal owner of each
of those legal rights and the legal parameters positively or negatively influencing
the value of the brand.

Behavioral analysis involves understanding and forming an opinion on likely

stakeholder behavior specific to geography, product and customer segments where
the brand is operational. For perusal using this method, it is necessary to
understand the market size and trends, contribution of the brand to the purchase
decision, attitude of all stakeholder groups to the brand and all economic benefits
conferred on the branded business by the brand. Here, the brand valuer must also
look into why a possible stakeholder would prefer the brand in comparison to that
of the competitors' and the concept of brand strength which is comprised of future
sales volumes, revenues and risks.

Financial Analysis is the most frequently used brand valuation method and uses
four approaches – Cost, Market, Economic and Formulary approach. Often, a fifth
approach is also considered. Special situation approach recognizes that in some
instances brand valuation can be related to particular circumstances that are not
necessarily consistent with external or internal valuations. Each case has to be
evaluated on individual merit, based on how much value the strategic buyer can
extract from the market as a result of this purchase, and how much of this value the
seller will be able to obtain from this strategic buyer.
COST BASED APPROACH:

Cost Based approach is the approach more often used by Aaker and Keller and is
primarily concerned with the cost in creating or replacing the brand. The cost
approach can be further divided into the following methods:

Accumulated Cost or Historical cost method:

It aggregates all the historical marketing costs as the value (Keller 1998). In other
words, the method involves historical cost of creating the brand as the actual brand
value. It is often used at the initial stages of brand creation when specific market
application and benefits cannot yet be identified. However, the shortfalls of this
method are that there exists difficulties as to what would classify as marketing
costs and subsequent amortization of marketing cost as percentage of sales over the
brand's expected life. In addition to that, it is sometimes difficult to recapture all
the historical development costs and this method does not consider long term
investments that do not involve cash outlay such as quality controls, specific
expertise and involvement of personnel, opportunity costs of launching the
upgraded products without any price premium over competitors' prices. The cost of
creating the brand might actually have little to do with its present value. Most
alternatives suggested suffer from the same shortcomings but there is one as
proposed by Reilly and Schweihs which may be effective. They propose to adjust
the actual cost of launching the brand by inflation every year where this inflation
adjusted launch cost would be the brand's value.

Replacement Cost Method:

The Replacement Cost Method values the brand considering the expenditures and
investments necessary to replace the brand with a new one that has an equivalent
utility to the company. Aaker (1991) proposes that the cost of launching a new
brand is divided by its probability of success. Although this method is easy in
terms of calculation, it neglects the success of an established brand. The first brand
in the market has a natural advantage over the other brands as they avoid clutter
and with each new attempt, the probability of success diminishes.
Use of Conversion Model:

Using the method here, one estimates the amount of awareness that needs to be
generated in order to achieve the current level of sales. This approach would be
based on conversion models, i.e., taking the level of awareness that induces trial
that further induces regular repurchase (Aaker, 1991). The output so generated can
be used for two purposes: to determine the cost of acquiring new customers and
would be the replacement cost of brand equity. The major flaw in this system is
that the differential in the purchase patterns of a generic and a branded product is
needed and the conversion ratio between awareness and purchase is higher for an
unbranded generic than the branded product and this indicates that awareness is not
a key driver of sales.

Customer Preference Model:

Aaker (1991) proposed that the value of the brand can be calculated by observing
the increase in awareness and comparing it to the corresponding increase in the
market share. But he had identified the problem with this being how much of the
increased market share is attributable to the brand's awareness increase and how
much to other factors. A further issue is that one would not expect a linear function
between awareness and market share.

In alternative, another method is the Recreation method which is similar to the

replacement method but involves costs involved in creating the brand again, rather
than simply the costs of replacement. Another distinction that exists between the
two is that the value computed through the replacement cost method excludes
obsolescent intangible assets. Another method is the residual value method states
that the value of the brand is the discounted residual value obtained subtracting the
cumulative brand costs from cumulative revenues attributable to the brand.

MARKET BASED APPROACH:

Market based approach basically deals with the amount at which a brand is sold
and is related to highest value that a "willing buyer & seller" are prepared to pay
for an asset. This approach is most commonly used when one wishes to sell the
brand and consists of methods herein stated:
Comparable Approach or the Brand Sale Comparison Method

This method involves valuation of the brand by looking at recent transactions

involving similar brands in the same industry and referring to comparable
multiples. In other words, this method takes the premium (or some other measure)
that has been paid for similar brands and applies this to brands that the company
owns. The advantage of this approach is that it looks at a third party perspective
that is, what the third party is willing to pay and is easy to calculate but the flaw in
this method is that the data for comparable brands is rare and the price paid for a
similar brand includes the synergies and the specific objectives of the buyer and it
may not be applicable to the value of the brand at issue.

Brand Equity based on Equity Evaluation method

Simon and Sullivan (1993) believe that brand equity can be divided into two parts:

The "demand-enhancing" component, which includes advertising and results in

price premium profits,

The cost advantage component, which is obtained due to the brand during new
product introductions and through economies of scale in distribution.

Hence, they basically estimated the value of brand equity using the financial
market value and the advantage of this approach is that it is based on empirical
evidence but shortfalls of this approach is that it assumes a very strong state of
efficient market hypothesis and that all information is included in the share price.

Residual Method

Keller has proposed the valuation of the brand by means of residual value which
would be when the market capitalization is subtracted from the net asset value. It
would be the value of the "intangibles" one of which is the brand.

Another alternative approach that is suggested is that of usage of real options as

proposed by Damodaran (1996). The variables that need to be calculated are: risk
free interest rate, implied volatility (variance) of the underlying asset, the current
exercise price, the value of the underlying asset and the time of expiration of the
option. This method is useful in calculating the potential value of line extensions
but the inherent assumptions in this approach make any practical application
difficult.

Income Based Approach:

Income Based or Economic Use approach is the valuation of future net earnings
directly attributable to the brand to determine the value of the brand in its current
use (Keller, 1998; Reilly and Schweihs, 1999; Cravens and Guilding, 1999). This
method is extremely effective as it shows the future potential of a brand that the
owner currently enjoys and the value is useful when compared to the open market
valuation as the owner can determine the benefit foregone by pursuing the current
course of action.

The methods used under the approach are as follows:

Royalty Relief Method:

The Royalty Relief method is the most popular in practice. It is premised on the
royalty that a company would have to pay for the use of the trademark if they had
to license it (Aaker 1991).

The methodology that needs to be followed here is that the valuer must firstly
determine the underlining base for the calculation (percentage of turnover, net
sales or another base, or number of units), determine the appropriate royalty rate
and determine a growth rate, expected life and discount rate for the brand. Valuers
usually rely on databases that publish international royalty rates for the specific
industry and the product. This investigation results in a variety and range of
appropriate royalty rates and the final royalty rate is decided after looking at the
qualitative aspects around the brand, like strength of the brand team and
management. This method has an edge of being industry specific and accepted by
tax authorities but this method loses out as there are really few brands that are truly
comparable and usually the royalty rate encompasses more than just the brand.

Differential of Price to sale ratios method:

The Differential of Price to Sale ratios Method calculates brand value as the
difference between the estimated price to sales ratio for a branded company and the
price to sales ratio for an unbranded company and multiplies it by the sales of the
branded company. Why this method can be used is because information is readily
available and it is easy to conceptualize but the drawback is that the comparable
firms are a limited few and there exists no distinction between the brand and other
intangible assets such as good customer relationships.

Price Premium Method

The premise of the price premium approach is that a branded product should sell
for a premium over a generic product (Aaker, 1991). The Price Premium Method
calculates the brand value by multiplying the price differential of the branded
product with respect to a generic product by the total volume of branded sales. It
assumes that the brand generates an additional benefit for consumers, for which
they are willing to pay a little extra. The fault in this method is that where a
branded product does not command a price premium, the benefit arises on the cost
and market share dimensions.

Brand Equity based on discounted cash flow:

The problem faced by this method is the same as when trying to determine the cash
flows(profit) attributable to the brand. From a pure finance perspective, it is better
to use Free Cash Flows as this is not affected by accounting anomalies; cash flow
is ultimately the key variable in determining the value of any asset (Reilly and
Schweihs, 1999). Furthermore, Discounted Cash Flow do not adequately consider
assets that do not produce cash flows currently (an option pricing approach will
need to be followed) (Damodaran, 1996). The advantage of this model is that it
takes increased working capital and fixed asset investments into account.

Brand Equity based on differences in return on investment, return on assets and

economic value added.

These models are based on the premise that branded products deliver superior
returns, therefore if we value the "excess" returns into the future we would derive a
value for the brand (Aaker, 1991). This method is easy to apply and the
information is readily available, but there is no separation between brand and other
intangible assets and does not adjust, by their volatility, the earnings of the two
companies compared, including discount rate.
Other methods also include conjoint analysis, income split method, brand value
based on future earnings, competitive equilibrium analysis model, etc. The very
fact that there are so many methods worth discussing under the income or
economic approach show how accurate and sought after this approach is.

FORMULARY APPROACH:

The Formulary approaches are those that are extensively used commercially by
consulting other organizations. This approach is similar to the income or economic
use approach differing in the magnitude of commercial usage and employing
multiple criteria to determine the value of the brand. Within formulary approaches
are the following approaches:

Interbrand Approach

Interbrand is a brand consultancy firm, specializing in areas such as brand strategy,

brand analytics, brand valuation, etc. It determines the earning from the brand and
capitalizes them by making suitable adjustments. (Keller, 1998) The firm bases its
brand valuation on financial analysis, role of the brand and brand strength.The firm
attempts at determination of brand earnings by means of using a brand index which
is based on 7 factors namely –leadership, internationalization/geography, stability,
market, trend, support and protection in the descending order of weightage. This
approach is popular and widely appreciated because of its ability to take all aspects
of branding into account. The difficulty in this approach is that it is difficult to
determine the appropriate discount rate because parts of the risks usually included
in the discount rate factored into the Brand Index score. In addition to that, even
the capital charge is difficult to ascertain. Aaker reveals that "...the Interbrand
system does not consider the potential of the brand to support extensions into other
product classes. Brand support may be ineffective; spending money on advertising
does not necessarily indicate effective brand building. Trademark protection,
although necessary, does not of itself create brand value."

Finance World Method

The Financial World magazine method utilizes the "brand index", comprising the
same seven factors and weightings. The premium profit attributable to the brand is
calculated differently. This premium is determined by estimating the operating
profit attributable to a brand, and then deducting the earnings of a comparable
unbranded product from this. This latter value could be determined, for example,
by assuming that a generic version of the product would generate a 5% net return
on capital employed (Keller, 1998). The resulting premium profit is adjusted for
taxes, and multiplied by the brand strength multiplier.

Brand Equity Ten

As stated by Aaker, the Brand Equity Ten Method measures brand equity through
5 dimensions – loyalty, perceived quality or leadership measures, other customer-
oriented association or differentiation measure like brand personality, awareness
measures and market behavior measures like market share, market price and
distribution coverage. Brand Equity ten, thus, looks at the customer loyalty
dimension of brand equity and the measures to create a measurement instrument.

Brand Finance Ltd.

Brand Finance Ltd. is a UK based consulting organization which undertakes brand

valuation bymeans of identifying the position of the brand in the competitive
marketplace, the total business earnings from the brand, the added value of total
earnings attributed specifically to the brand and beta risk factor associated with the
earnings. On the value so obtained, it discounts the brand added value after tax at a
rate that reflects the brandrisk profile.
3. How the concept testing is done in the process of new product development?
Also explain the concept of product testing.

Answer- Concept testing (to be distinguished from pre-test markets and test
markets which may be used at a later stage of product development research) [1] is
the process of using surveys (and sometimes qualitative methods) to evaluate
consumer acceptance of a new product idea prior to the introduction of a product to
the market.[2] It is important not to confuse concept testing with advertising
testing, brand testing and packaging testing, as is sometimes done. Concept testing
focuses on the basic product idea, without the embellishments and puffery inherent
in advertising.

It is important that the instruments (questionnaires) to test the product have a high
quality themselves. Otherwise, results from data gathered surveys may be biased
by measurement error. That makes the design of the testing procedure more
complex. Empirical tests provide insight into the quality of the questionnaire. This
can be done by conducting cognitive interviewing. By asking a faction of potential-
respondents about their interpretation of the questions and use of the questionnaire,
a researcher can verify the viability of the cognitive interviewing. carrying out a
small pretest of the questionnaire, using a small subset of target respondents.
Results can inform a researcher of errors such as missing questions, or logical and
procedural errors. estimating the measurement quality of the questions. This can be
done for instance using test-retest,quasi-simplex, or mutlitrait-multimethod
models. predicting the measurement quality of the question. This can be done
using the software Survey Quality Predictor (SQP).

Concept testing in the new product development (NPD) process is the concept
generation stage. The concept generation stage of concept testing can take on many
forms. Sometimes concepts are generated incidentally, as the result of
technological advances. At other times concept generation is deliberate: examples
include brain-storming sessions, problem detection surveys and qualitative
research. While qualitative research can provide insights into the range of reactions
consumers may have, it cannot provide an indication of the likely success of the
new concept; this is better left to quantitative concept-test surveys.
In the early stages of concept testing, a large field of alternative concepts might
exist, requiring concept-screening surveys. Concept-screening surveys provide a
quick means to narrow the field of options; however they provide little depth of
insight and cannot be compared to a normative database due to interactions
between concepts. For greater insight and to reach decisions on whether or not
pursue further product development, monadic concept-testing surveys must be
conducted.

Frequently concept testing surveys are described as either monadic,

sequentialmonadic or comparative. The terms mainly refer to how the
concepts are displayed:

1.) Monadic. The concept is evaluated in isolation.

2.) Sequential monadic. Multiple concepts are evaluated in sequence (often

randomized order).

3.) Comparative. Concepts are shown next to each other.

4.) Proto-monadic. Concepts are first shown in sequence, and then next to each
other.

"Monadic testing is the recommended method for most concept testing. Interaction
effects and biases are avoided. Results from one test can be compared to results
from previous monadic tests. A normative database can be constructed." However,
each has its specific uses and it depends on the research objectives. The decision as
to which method to use is best left to experience research professionals to decide,
as there are numerous implications in terms of how the results are interpreted.

Product Testing, also called consumer testing or comparative testing, is a process

of measuring the properties or performance of products. Product testing is any
process by means of which a researcher measures a product's performance, safety,
quality, and compliance with established standards. The primary element which
constitutes an objective comparative test program is the extent to which the
researchers can perform tests with independence from the manufacturers, suppliers,
and marketers of the products.
Product testing seeks to ensure that consumers can understand what products will
do for them and which products are the best values. Product testing is a strategy to
increase consumer protection by checking the claims made during marketing
strategies such as advertising, which by their nature are in the interest of the entity
distributing the service and not necessarily in the interest of the consumer.

Product testing might be accomplished by a supplier such as Ipsos, manufacturer,

an independent laboratory, a government agency, etc. Often an existing formal test
method is used as a basis for testing. Other times engineers develop methods of test
which are suited to the specific purpose. Comparative testing subjects several
replicate samples of similar products to identical test conditions.

Product testing might have a variety of purposes, such as:

▪ Decide if a new product development program is on track: Demonstrate

proof of concept

▪ Provide standard data for other R&D, engineering, and quality assurance
functions

▪ Provide a technical means of comparison of several options

▪ Provide evidence in legal proceedings: product liability, product claims, etc.

▪ Help solve problems with current product

▪ Help identify potential cost savings in products.

▪ Product tests can be used for:

▪ Subjecting products to stresses and dynamics expected in use

▪ Reproducing the types of damage to products found from consumer usage

▪ Controlling the uniformity of production of products or components.

 “Section - B”
1. Define brand positioning and the tools to improve the positioning of a
brand.

Answer- Brand positioning is defined as the conceptual place you want to own in
the target consumer’s mind — the benefits you want them to think of when they
think of your brand. An effective brand positioning strategy will maximize
customer relevancy and competitive distinctiveness, in maximizing brand value.

In defining a brand’s positioning, it’s useful to think of the following four key
components of a positioning statement:

Category frame of reference: What is the competitive context? With which

product category should the brand be associated?

Definition of target market(s): Who is the brand being built for (i.e. the center of
the targeting bulls-eye.) Learn more here.

Statement of the key point of difference: What benefits should the brand stand
for and deliver on?

Reason(s) to believe: What proof points need to be demonstrated?

In crafting a positioning statement, the following positioning statement framework

is often used:

To (target audience) Product X is the only (frame of reference) that (benefits

delivered) because (reasons to believe) You can use this positioning template to
ensure discipline in making these important choices.

Brand Positioning Strategy Objectives

Key objectives of brand positioning include relevance, differentiation and

credibility/attainability, as described here:

Strategic PositoningRelevance is priority #1.Customers must find the brand

appealing. If not, the brand won’t make it into the consideration set, regardless of
how differentiated or credible it is. Differentiation is critical and the key driver of
positioning success. The brand must be unique vs. competitive offerings. Credible
and attainable is the final measure. If you cannot credibly provide the offering, the
customer is left with an empty promise. It’s critically important when developing a
brand positioning strategy to deliver on all three positioning objectives at the same
time. This is because brands that are highly relevant though not differentiated run
the risk of being commoditized. Similarly, brands that are highly differentiated,
though not particularly relevant, become niche providers. Practically speaking,
concept optimization research is a great way to develop and evaluate alternative
positioning concepts, as demonstrated here.

1. Determine Your Brand’s Personality

The first thing you need to do is determine your brand’s personality. Your brand
already has a voice, whether you have made an effort with this or not. Customers
will encounter this whenever they land on your website, see your social updates, or
click your ads. You should start by deciding what you want this voice to be.
Should it be funny, strict, youthful, serious? Your voice will play a large role in
your brand’s personality and how your brand is perceived by your customers. If
you do not have a clear brand personality, you are increasing the chances that you
will be forgotten all too easily by your customers. Your personality is determined
by the words you use, the design of your website, the types of social updates you
post, the ads you run—everything that you do. So decide what you want your
brand personality to be. Create a firm idea of your brand voice, then write down
exactly what you are going for and share it with all the stakeholders so they can
use this to influence their activities.

2. Decide What Makes You Special

Why is your business different? Why would people want to choose you over your
competitors? You need to know this if you want to stand out, and that means you
need to know your unique selling proposition (USP).This will help you to
differentiate yourself in a competitive environment. Once you know what makes
you special, you can communicate this to your customers.This can be surprisingly
tricky, but one good way to start is to look at your competitors and see what they
are doing. As you look over their products, can you pinpoint ways in which your
products or services are better? Perhaps your products have something special
about them, or maybe the way you do things is superior. If you were trying to
convince someone to choose you, what negative aspects would you highlight about
your competition? Do they take too long to deliver orders? Do they charge too
much? A fine example can be seen in the chocolate brand M&Ms. Claiming to
melt in your mouth rather than your hand is a simple USP that appeals to a
consumer desire that they might not have acknowledged themselves. The chocolate
market is one that is heavily saturated, and yet this USP lifts M&Ms above the
fray. Create a list of the strengths and weaknesses of your competitors and
determine what it is about your business that would make your customers want to
choose you. Once you know, you can start making sure your customers know
about it.

3. Know Who Your Customer Is

You also need to know exactly who your customer is. You may think you know,
but do you really? You cannot position your brand properly until you know this;
you have to position it at someone. Create a marketing persona, or a few of them,
and determine everything about your target customer. This should include their
interests, dislikes, hopes, fears, the movies they watch, and more. See what they do
on social media and work out what is important to them. This can have a huge
impact on improving your brand positioning. If you know who they are, what they
want, and what matters to them, you can position your brand more effectively.

4. Tell Your Brand Story

Tell your brand story based around how you came into being, the problem you
solved, and how your product or service was the solution. You will probably have
one main product or product line that determines who you are and how your
business came into being. Perhaps this is the product that you started your business
around. Telling your story can help to form a bond with your customers and
highlight your shared values, which makes you come across as more trustworthy.
You see this all the time with nascent ecommerce businesses looking to get ahead
of competitors in the digital space. For example, electronics websites are a great
investment for entrepreneurs. There will always be a market for the latest gadgets
and tech, but in such a saturated market it can be tough to stand out. By creating a
unique brand story that resonates with customers, brands can position themselves
as more than simply a business. Brands can become relatable, friendly, and human.
5. Create a Positioning Statement

When you have done all of the above, you’ll be ready to create your positioning
statement. This is a short statement, just a sentence or two, that communicates your
value. It should include details of who your business is targeted at, why it is
special, how you meet their expectations and how you fulfill their wishes. This is
an internal state for your business, so don’t worry about how snappy it is. Simply
use it to influence your decisions, especially when it comes to marketing. Your
tagline is a shorter version of this that is more customer-focused. This is an
external statement that you can use on your website or packaging. It’s usually
punchier than a positioning statement and more memorable, and it can help you to
quickly communicate your brand value.

6. Connect Emotionally with Your Customers

Finally, focus on connecting with your customers emotionally. You will only reach
your customers and have an impact on them with an emotional connection. One of
the best ways to do this is with content, which provides you with an opportunity to
go more in depth. Use content on your blog, for example, to engage. Don’t just
promote, and instead use your content to educate and inform to connect on an
emotional level. These six tips will help you improve your brand positioning in no
time at all. But don’t forget one of the most important things of all: consistency.
You need to be consistent with your brand positioning if you want to maximize its
effect. Once you have determined your voice and your values, ensure you remain
consistent everywhere, including your blog, advertising, social media, customer
support, design, use of words, images—everywhere. This way, you will help to
make your brand more memorable and avoid confusion, creating a stronger
connection with your customers that will last.
2. Write a note on pre product launch activities.

Answer- Launching a new product is not a piece of cake. It requires careful

planning and timely implementation of strategies to make your product launch a
success. Although it’s understood that you are super excited to launch your new
product, you should never rush the launch process. Why? Because 95% of new
products fail and don’t convert into a super selling product. It’s a well-known fact
that making people buy your product is the most challenging job. To maximize
your chances of product success, you should plan your launch and avoid the
common blunders that most businesses make during a new product launch.

Common Pitfalls to Avoid on New Product Launch

Here are some common mistakes you should avoid when launching your product:

1- Not Defining Your Target Audience

Unless you know who to target, you can’t create an effective product launch
strategy. Defining your target audience helps create personalized marketing copies
that best serve the needs of your prospects and builds a stronger referral base.

2- Failing to Soft-Launch the Product

Soft-launch is all about offering a beta version of your product to select customers.
Soft-launching the product has two significant benefits. First, it helps identify
major bugs/issues in the product before launch, enabling you to make new
customers happy and avert bad reviews. Second, it builds interest in your product
and increases the chances of word-of-mouth marketing. Therefore, make sure to
conduct usability tests with impartial beta testers before you launch the product.

3- Not Preparing to Market the Product Until It’s Too Late

Simply creating a product is not enough. You need to create a buzz for your
product in the market for people to start buying your product. It is essential to
build a marketing plan that covers pretty much everything from generating hype
about your product to converting prospects and retaining customers.

How to Craft a Pre-Launch Marketing Strategy: 8 Actionable Steps

Most big brands follow pre-launch strategies to build curiosity around their new
product. From creating buyer personas to building the hype about the product, a lot
goes into successful pre-launch strategies. Let’s have a look at eight actionable pre-
launch marketing tactics that can help you achieve your sales goals.

1- Identify Your Target Audience

Identifying your target audience is the base of all your marketing strategies. The
more clearly you determine your target group, the better you can understand how
and where to reach your prospects.

Follow these three steps to identify your target audience:

1. Market segmentation.

2. Preparing a customer profile.

3. Creating a buyer persona.

Now, let’s understand these steps in detail.

2- Conduct Thorough Market Analysis

You have created a great product, but how does it compare to similar products in
the market? What are the gaps in the current market? What will actually sell?

To get answers to these questions, a comprehensive market analysis is essential.

The three steps to perform a market analysis are:

1. Competitor Analysis

2. Identification of Trigger Points

3. Product Trend Analysis

3- Note-down Positioning Statement

A positioning statement describes how your product fills a specific need of your
target audience in a way that your competitors don’t. When writing your
positioning statement, consider the following. The Unique Selling Point of the
Product
Why do you want customers to choose you over your competitors? What makes
your product unique/better? It could be an additional feature or something that
reflects your product. However, make sure that your USP is meaningful to
consumers.

4- Ways to Reach Your Audience

This step determines how you plan to reach your audience. Content marketing is
one of the best ways to create a buzz about your product before its launch. Content
marketing will help you reach people at every stage of the buyer journey. The best
part about content marketing is that it will continue to help you acquire and nurture
leads even after the launch of your product. The content marketing funnel is
divided into four stages.
The Awareness Stage

In this stage, people are not aware of your product, and they come across it for the
first time. You should publish articles that provide answers to the questions asked
by your target audience. The awareness stage is all about educating the customers
about your product so that they remember it.

Some examples of content you should publish in the awareness stage are:

▪ Infographics

▪ Blog posts

▪ Educational videos

▪ Documentaries

▪ Research papers, etc. You should reach out to your target audience on social
media to spread the word about your new product.
The Consideration Stage

At this stage, a prospect decides whether your product is the right fit for them by
comparing it with other competitors in the market.

Some examples of content you should publish at the consideration stage are:
They also have a separate landing page for customer stories (the reviews stage) that
indicates their product delivers results. Comparison articles

▪ Checklists

▪ Ebooks

▪ Product demo videos

▪ Product webinars, etc.

The Decision Stage

At the decision stage, the prospects have made their decision to purchase your
product and are looking for reasons to buy your product. You should create content
that makes them stick to your product, thereby reducing the churn rate.

Some examples of content you should publish at the decision stage are:

▪ Case studies

▪ FAQ’s

▪ Whitepapers

▪ Reports
Video Testimonials

Slack is a great example of a brand that publishes great content in the decision
stage. They publish content that trains users on how to use Slack. They also have a
separate landing page for customer stories (the reviews stage) that indicates their
product delivers results.
Customer Feedback and Reviews Stage

At this stage, your prospects have already become your customers. Now, you
should reach every customer to collect feedback and encourage them to leave
reviews on your site. Feedbacks help you to improve your product, while reviews
will motivate potential customers to purchase it. Outreach Plus, an email outreach
software, encourages its customers to provide reviews. It then publishes the
reviews on the website to entice prospects into trying their product.
Another way to reach your audience is through social media. Publish content about
your product and how it solves your target audience’s problems. Make sure to use
relevant, industry-specific hashtags to broaden the reach of your content.

5- Conduct Sensational Marketing Campaign

Your marketing campaign is responsible for attracting, engaging, and converting

potential customers. Your product might be exceptional, but if your marketing
campaign isn’t great, you’ll struggle to acquire customers. Here are three tactics to
help you create a sensational marketing campaign.
Include Customer Emotion

95% of purchasing decisions are driven by emotion. It could be fear, frustration,

anger, FOMO, or the desire to be first. Emotions can be tied to almost every
product. For example, AWeber, an email marketing tool, knows how stressful it
can be to send emails to each subscriber and generate remarkable results. Hence,
they created a copy that triggers human emotions to increase the chances of
conversion. Their homepage banner reads, “stress-free email marketing software
designed to help your small business grow.” Look how they focused on the words
“stress-free,” “help,” and “grow” while highlighting their target audience, i.e.,
“small business.”
Build the Hype Everywhere

It’s essential to get your target audience excited about your product. Here are a few
ways to build hype for your product.

▪ Conduct special events

▪ Tell a story

▪ Give a sneak peek into your product

Collaborate with social media influencers Create a feature video of your

productApple is a good example of a brand that builds hype for its product before
its launch. Not only they publish high-quality photos and videos, but they also
conduct special events.
Take Preorders

Preorders help you determine how successful your product will be. Besides, you
get funds to build your product without taking loans or going through investor
rounds. Preorders also build hype and excitement among your customers. They are
more likely to start telling their friends and family about how excited and eager
they are to buy your product. Tesla Cybertruck, for instance, has received more
than 600,000 preorders. Besides, their customers are talking about it all over social
media. This helped them generate the much needed hype about the product. There
are around 90,270 posts on Instagram alone with the hashtag cybertruck.
Impressive! Isn’t it?

6- New Product Launch: Activities for The Big Day

The day has come. You’re preparing for the big day. Remember, product launch
day isn’t only about marketing, but it is also about closing deals. Begin with
choosing the right channels for your launch. While creating buyer personas, you
have already listed the channels your target audience spends most of their time on.
For example, if you’re launching a tech product, you would like to explore Product
Hunt as it already has a massive audience looking for new products. Here are some
activities you should be doing on the product launch day.

▪ Personalize the attendee experience by providing them with a customized

template/t-shirt or one-on-one access to your product.

▪ Invite major news outlets to cover your launch.

▪ Request industry leaders to talk about your product.

▪ Distribute flyers with your website’s address and contact information, so that
attendees can connect with you after the launch.

▪ Align your marketing and sales teams together. The marketing team will
drive traffic to your new product launch event while the sales team will
make efforts to convert them.
7- Post-Launch Guidance

Now that you’ve launched your product, you would want to check if everything
went as planned. This comes down to your personal goals, but here are a few
metrics to focus on.

▪ Affiliates and partnerships: Who brought the best results? Can you figure out
why they brought the desired results while others failed?

▪ Top referring domains: Did the publications you expected covered your
launch? Were there any surprising sources of traffic?

▪ Email open and click-through rates: What campaigns worked well and what
didn’t? Out of the ones who clicked on the link, how many converted?

▪ Views and conversions from blogs: How many people read your blog?
Which post outperformed other articles? Why?

▪ Audience metrics: Look at how much time people spent on your product
pages, examine the bounce and exit rates, and identify the sites they went
after landing on your site. This will help you analyze if your product pages
need a revamp.

8- Increase Customer Retention Rate and Reduce Churn

Now that you’ve acquired customers, shift your focus to retention. 80% of your
future profits will come from only 20% of your customers.

Use the following strategies to retain customers and reduce churn rate:

▪ Provide 24/7 support.

▪ Check on your customers regularly via emails or call.

▪ Conduct post-launch webinars.

▪ Collect customer feedback via surveys and use the results to enhance the
user experience.
5. What are the various categories of new products? Explain.

Answer- The term new product can mean different things. Six different categories
of new products can be identified that are all quite different from each other. Still,
they are all called new products. Let’s investigate the different categories of new
products and what the term new product may actually mean.

The six categories of new products range from new-to-the-world products

(sometimes called really new products), as well as a range of minor repositionings
and cost reductions. The list containing the six categories of new products may
include things you would exclude. For instance, can we have a new item just by
repositioning an old one (telling customer it is something else)? Yes, we can have a
new product then. You might consider this to be only a new use, but the firm still
went through a process of discovery and development. And a new use may occur
in a completely separate division. For example, the Dove soap name has, by now,
been extended to almost two dozen box soaps and almost as many liquid body
washes.

The Six Categories of New Products

As you see, we have to broaden our definition of new products to include the
following six categories of new products.

1. New-to-the-world Products (really new Products)

The alternative expression for new-to-the-world products (really new products)

already indicates that this is what most people would define as a new product.
These products are inventions that create a whole new market. Examples: Polaroid
camera, the iPod and iPad, the laser printer and so on.

2. New-to-the-firm Products (new Product Lines)

Products that take a firm into a category new to it. The products are not new to the
world, but are new to the firm. The new product line raises the issue of the
imitation product: a “me-too”. Examples: P&G’s first shampoo or coffee,
Hallmark gift items, AT&T’s Universal credit card and so on.

3. Additions to existing Product Lines

These are simple line extensions, designed to flesh out the product line as offered
to the firm’s current markets. Examples: P&G’s Tide Liquid detergent, Bud Light,
Special K line extensions (drinks, snack bars, and cereals).

4. Improvements and Revisions to existing Products

Current products made better. Examples: P&G’s Ivory Soap and Tide power
laundry detergent have been revised numerous times throughout their history, and
there are countless other examples.

5. Repositionings

As we already discussed before, you may have an argument about whether

repositions are actually new products. Yet, they can be considered as new products,
as the firm undertakes a new products process. Repositionings are products that are
retargeted for a new use or application. Examples: Arm & Hammer baking soda
repositioned as a drain or refrigerator deodorant; aspirin repositioned as a
safeguard against heart attacks. Also includes products retargeted to new users or
new target markets.

6. Cost Reductions

Finally, cost reductions complete the six categories of new products. Cost
reductions refer to new products that simply replace existing products in the line,
providing the customer similar performance but at a lower cost. May be more of a
“new product” in terms of design or production than marketing.

Differences between the Categories of New Products

All the categories of new products are considered new products, but it is clear to
see that the risks and uncertainties greatly differ, and the categories need to be
managed differently. In general, if a product is new to the world or new to the firm
(the first two categories of new products), the risks and uncertainties faced by the
firm are higher, as are the associated costs of development and launch. For
instance, it costs Gillette far more to launch its newest shaving system than to do
upgrades to the earlier Mach 3 system A greater commitment of human and
financial resources is clearly often required to bring the most innovative new
products to market successfully.
6. Discuss the types of retail pricing? What determine the retail price of a
product?

Answer- The sale of goods from fixed points (malls, department stores,
supermarkets and so on) to the consumer in small quantities for his own
consumption is called as retail. According to the concept of retailing, a retailer
doesn’t sell products in bulk; instead sells the merchandise in small units to the
end-users.

• Retail Pricing

• Cost Plus Pricing Mechanism

Every organization runs to earn profits and so is the retail industry.

Cost plus pricing works on the following principle:

Cost Price of the product + Profit (Decided by the retailer) = Final price of the
merchandise.

According to cost plus pricing strategy the retailer adds some extra amount to the
actual cost price of the product to earn his share of profits. The final price of the
merchandise includes the profit as decided by the retailer.

Cost Plus Pricing

Cost plus pricing strategy takes into account the profit of the retailer.

Cost plus pricing is an easy way to calculate the price of the merchandise.

The increase in the retailer price of the merchandise is directly proportional to the
increase in the cost price.

The customers however do not have a say in cost plus pricing.

Manufacturer Suggested Retail Price (Also called List Price or Recommended

retail price)

According to manufacturer suggested retail pricing strategy the retailer sets the
final price of the merchandise as suggested by the manufacturer.
MSRP

The retailer sells his merchandise at a price suggested by the manufacturer.

Condition 1

The retailer sells the product at the same price as suggested by the manufacturer.

Condition 2

The retailer sells the merchandise at a price less than what was suggested by the
manufacturer - Such a condition arises when the retailer offers “Sale” on his
merchandise.

Condition 3

Retailers initially quote an unreasonably high price and then reduce the price on
the customer’s request to make him realize that a favour has been done to him. A
condition of Bargain - where the customer negotiates with the retailer to reduce the
price of the merchandise.

Competitive Pricing

The cut throat competition in the current retail scenario has prompted the retailers
to guarantee excellent customer service to the buyers for them to prefer them over
their competitors.

The price of the merchandise is more or less similar to the competitor’s but the
retailers add on certain attractive benefits for the customers. (Longer payment
term, gifts etc.)

The retailers ensure that the customers leave their store with a smile to have an
edge over the competitors.

He tries his level best to offer better services to the customers for a better business
in future.

Pricing Below Competition

According to pricing below competition policy

The price of the merchandise is kept lesser than what is being offered by the
competitors.

Prestige Pricing (Pricing above competition)

According to prestige pricing mechanism, the price of the merchandise is set

slightly above the competitors.

The retailer can charge higher price than the competitors only under the following
circumstances:

• Exclusive Brands at the store.

• Brand image of the store
• Prime location of the retail store
• Excellent customer service
• Merchandise not available at any other store
• Latest Trends

Psychological Pricing

Certain price of a product at which the consumer willingly purchases it is called

psychological price.

The consumer perceives such prices to be correct.

A retailer sets a psychological price which he feels would meet the expectations of
the buyers and they would easily buy the merchandise.

Multiple Pricing

According to multiple pricing, the retailer sells multiple products (more than one)
for a single price.

The retailers combine few products to be sold for a single fixed price.

3 Shirts for $100/- or 3 Perfumes for $20/- and so on.

Discount Pricing

According to discount pricing, the retailer sells his merchandise at a discounted

price during off seasons or to clear out his stock.
After buying your products at wholesale pricing, you must decide on what type of
retail prices to set. Your retail price can be determined using three pricing models:
cost-based pricing, competition-based pricing or customer-based pricing. Cost-
based pricing sets your price based on product and operating costs. Competition-
based pricing uses local competitors' prices to decide on retail charges. Customer-
based pricing sets retail prices based on how much the products is in demand.

1. Review the manufacturer suggested retail price as a starting point. This gives
you an idea of the value of the product from the manufacturer's perspective.

2. Choose a markup percentage using the product cost. For instance, if you
purchased a product for $1.50 and you want to use a 20 percent markup, the retail
price would be $1.80. Markup percentage should be able to cover all operating
costs and earn you a profit from selling the product.

3. Set prices close to your competitors. Charging too much or too little for your
product hurts your business. Very low pricing makes the quality of your product
suspect while charging too much is likely to drive customers to your competitors.

4. Compare the quality of your product with competitors. Increase the amount you
are charging for your products if you are offering additional services or are selling
a better-quality product. For instance, raise the retail price of windows you are
selling if you include free measurements with purchases.

5. Allow prices to reflect the image you are trying to project for your company.
Budget retailers want prices to show that customers are receiving the best possible
deal. Businesses with higher prices may appeal to customers looking to own
prestigious merchandise.

6. Lower the retail price on slowmoving inventory.Draw in new customers and

reduce inventory by choosing a low price on your worstsellingproducts.
8. What do you mean by visual merchandising?

Answer- Visual merchandising is presenting or displaying products in a way that

makes them visually appealing and desirable. Things like themed window displays,
dressed mannequins, the arrangement of running shoes on a wall, and fresh fruits
organized by color are all examples of visual merchandising. It can also be as
simple as stacking toilet paper into a pyramid or as elaborate as recreating a scene
from a fairytale. The point here is, visual merchandising is all about using artistic
product displays to capture the attention and interest of shoppers.

Anyone who has ever walked into a retail store has seen visual merchandising at
work. Visual merchandising is a marketing practice that uses floor plans, color,
lighting, displays, technology, and other elements to attract customer attention. Its
ultimate purpose is to use the retail space to generate more sales.

A visual merchandiser is the person behind the magic. They combine marketing
principles, retail merchandising knowledge, and creativity to use the space and
layout of the store to present the store’s inventory in a positive way. They are
professionally trained and may be tasked to manage the following:

• Window installations

• In-store displays

• Interactive displays

• Shelving

• Point-of-sale displays

• Posters

• Price tickets

• Promotional / seasonal displays

• Mannequin styling
Benefits of Visual Merchandising

All types of retail stores can benefit from visual merchandising. Some of the key
benefits include:

1. Reflects your brand – A good visual merchandising display stays in-line

with the company’s overall brand. For example, a franchise business might
want all its franchisees to have the same promotional displays. It gives a
business a sense of identity and brand consistency.

2. Engages the shoppers – An attractive and welcoming store creates a positive

first impression. It encourages people to come into the store, and can help
guide them in finding the right product for their needs. Visual merchandising
helps create a positive shopping experience for customers so that they will
be more likely to return for future visits.

3. Grow sales – When done effectively, visual merchandising can increase

sales by directing people to the products they want or need. It can also help
them discover new products and solutions. A nicely dressed mannequin can
encourage a person to seek out an outfit and accessories that they may not
have originally been looking for.

Whether you are selling clothes, hardware, electronics, food, or anything

else, a professional visual merchandiser can be an important asset to your
team. They can help your retail business get the results you want.
 References
1. McDuffee, B. (2018, May 22). www.mmmatters.com. Retrieved
January07, 2021, from mmmatters:
https://www.mmmatters.com/blog/salesmanagement

2.Simplilearn. (2020, December 17). Simplilearn. Retrieved January 07,

2021, from
www.simplilearn.com:https://www.simplilearn.com/productmanagement

3. Marketingnotes. (2019, May 09). Marketingnotes. Retrieved May

09,2019, from
www.marketingnotes.com:https://www.marketingnotes.com/retailandproduc
tmanagement