International University - VNUHCM

School of Industrial and Engineering Management

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Answer Paper Midterm Examination

Date: 12/11/2021; Duration: 120 minutes
 This is an open book examination
 Online examination
 Discussion and materials transfer are not allowed

SUBJECT: Retail Management (ID: IS0821IU)

Approval by the School of Industrial and Lecturer: MSc. Nguyễn Hoàng Huy
Engineering Management MSc. Ngô Thị Thảo Uyên
Signature Signature

Full name: Assoc. Prof. Hồ Thị Thu Hoà Full name:

Proctor 1 Proctor 2
Signature Signature

Full name: Full name:

STUDENT INFO
Student name: Lê Ân

Student ID: IEIEIU18002

INSTRUCTIONS: the total of point is 100 (equivalent to 30% of the course)

1. Purpose:
 Understand basic retailing principles and the scope of retailing activities involved in the retail industry
(CLO 1.1)
 Apply consumer and shopper behavior concepts to store design, merchandising private label branding,
loyalty programs and other customer touch points. (CLO 1.2)
 Understand new and diverse retail formats (CLO 2.1)
 Understand terminology, components, and emerging promotional strategies in the retail environment
(CLO 2.2)
HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
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2. Requirement:
 Read carefully each question and answer it following the requirements
 Submit your exam including this paper via Blackboard Portal.

ANSWERS
Q1. (20 marks)
Describe four differences between services and merchandise retailers that create challenges for
retailers. Explain these challenges, and give examples to show how services retailers overcome
those challenges associated with them.
Answer:

- There are four significant differences in the nature of the offerings provided by service and
merchandise retailers:

a. Intangibility.

Explain:
1. In general, services are intangible; customers cannot see, touch, or feel them. Services, as
opposed to objects, are acts or performances.
2. Intangibility creates a number of difficulties for service retailers. Customers find it difficult to
evaluate services before purchasing them, or even after purchasing and consuming them.
Customers are frequently informed about the quality of services provided by service retailers
through the use of tangible symbols.

3. Service retailers also struggle to assess the quality of the services they offer. Services retailers
place a premium on soliciting customer feedback and complaints in order to assess the quality of
their offerings.
Example: You purchase an online ticket but have no idea how your journey will unfold. At best,
you can rely on the airline's assurance that your trip will be memorable. But, once again, there is
nothing concrete in that promise.

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HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
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b. Simultaneous production and consumption
Explain:
1. Service providers develop and deliver services as the customer consumes them. The
simultaneous production and consumption of goods and services poses some unique challenges
for service retailers.

2. Next, customers are present when the service is produced, may be able to see it being produced,
and in some cases, may be a part of the production process.
3. Other customers using the service at the same time can have an impact on the quality of service
provided.
4. Lastly, the services retailer frequently does not get a second chance to meet their customers'
needs. Customers who are dissatisfied with services have few options. While they can return
damaged merchandise to a store, they have few options if they are dissatisfied with services. As
a result, service retailers must get it right the first time.
5. Since services are manufactured as well as consumed simultaneously, cost reduction through
mass production is challenging.

Example:
In the case of barbering, health care, for example 30 Shine, production and consumption are at
the same time, the customer is present in the production process and can participate in the
production process. At the same time, customers will interact with each other during service
production and can affect service quality.

c. Perishability
Explain:
1. Because the production and use of services are inextricably linked, services are perishable.
They cannot be kept, stored, or resold in any way. In contrast, product can be stored in inventory
until a client is ready to purchase it.
2. Furthermore, the demand for a service changes greatly over time. As a result, service retailers
frequently have periods when their services are underused and others when they must turn clients
away because they are unable to accommodate them.

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HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
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3. To balance demand and supply, service merchants utilize a range of programs. They also make
an effort to make client wait times more pleasurable.

Example:
- Close to the flight date, an airline may reduce the price of seats on its itineraries. The chairs will
deteriorate over time. If they are empty when the airplane takes off, they are worth nothing.

- Hotels may give steep discounts on "perishable" rooms in order to maintain occupancy and
income even during periods of low demand.

d. Inconsistency in customer offerings

Explain:

1. Merchandise is frequently created by machines with strict quality control. Because services
are provided by individuals, no two services will be exactly the same.

2. As a result, offering consistently high-quality services is a significant issue for service retailers.
Example:

Q2. (20 marks)

What are the needs that motivate customers to go shopping for both online and offline? List some
examples of these needs and propose ways for retailers to satisfy the needs.

Answer:
The needs that motivate customers to go shopping for both online and offline:
1. The wide range of fashion items. For example, there are many store shelves for offline
purchasing and several large categories for internet shopping.

2. Discount. Example: In online shopping, there are many special dates such as the anniversary
of Tiki, Lazada, or Featured days that are discounted like: 11/11, 10/10, etc.. which drives
customers to shop online. On the other hand, on some special days such as Valentine, Tet
Holidays, Black Friday, etc … many stores in departments, supermarkets, etc… have many
discount programs, discount coupons, which make customers go directly to that store and buy
it.

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HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
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3. Customer satisfaction:
For example: When you shop offline, you have one-on-one engagement with specialists. For
example, you may be purchasing medical supplies and would prefer the pharmacy attendant to
explain everything to you. He will provide you with a detailed description of what you need to
obtain. You will be pleased if you can find a product that completely meets your requirements.
Shopping offline might solve all of your problems right now. On the other hand, during Covid -
19, consumers are more confidence when purchasing from a direct e-store than from an indirect
e-store since the gap between consumer perception and real experience varies.

Q3. (20 marks)

What do supermarkets need to do to compete against other formats in the future? Give an example
for each activity.

Answer:
A supermarket is divided into several sections, the most important of which being dairy products,
meat, fresh vegetables and fruits, and baked and canned goods. Other home areas include
clothing, board games, medication, alcohol (if authorized), household cleansers, pharmacy
supplies, kitchenware, and so on.
Despite having poor margins, it has a high turnover since it sells a large quantity of items. As a
result, it has a high or increasing turnover. Its running expenses are modest. Buyers find these
convenient as well because they are located near their homes and offer a large choice of things
under one roof at cheap pricing.
Customers enjoy supermarkets because they are free to buy anything they need and desire without
feeling pressured because salespeople are not employed. Because the entire transaction is done
in cash, the supermarkets do not have to worry about bad debts. There is no space for negotiation
because the pricing of the commodities are established.
In the future, customers' smartphones may display personalized prices. This would allow
supermarkets to make tailor-made offers that take into account a customer's profile, shopping
history, and current location in the store. Interaction with customers will become highly
individual, both in stores and online.

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HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
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Q4. (20 marks)

Why is store location such an important decision for a retailer? What advanatges and
disadvantages are the Central Business District (CBD) needed consider carefully by retailers?

Answer:
The reasons why store location is such an important decision for retailer are:
1)Location is generally one of the most key determinants in a customer's store selection
2)Location decisions are strategic in nature because they can be used to create a long-term
competitive advantage.
3)Location decisions are dangerous.

Advantages:
1. The focal point of action:- You will be at the focal point of everything on the off chance that
you decide to work out of the Central Business District. An organization of transport will as of
now be there, so clients, providers, and other people who need to get to your office will see it
extremely advantageous.

2. Mindfulness:- Since you are in the bustling place, you will know about what is happening
around you, on the lookout. Contenders' moves, in addition to other things, become clear.
Working out of the vitally business operational hub of the city implies you are fully informed
regarding everything in the business world around you.

3. Prestige:- Being situated in the Central Business District has an entirely good effect on those
your firm arrangements with consistently. Workers will feel pleased with the way that they are
arranged in a particularly significant piece of the city.

4. Infrastructure:- The foundation in the workplaces situated in the Central Business District
will more often than not be of somewhat better quality. You will presumably appreciate tall
structures offering the best of conveniences and highlights to make your worker's and clients'
office experience an ideal one.

Disadvantages:
1. Expenses:- Anticipate significant expenses. Leasing office space around the Focal Business
Area surely isn't modest. The everyday running costs will consequently increment, via harmless
costs. For instance, in case you're purchasing printer paper, anticipate that it should cost
somewhat more in the Focal Business Area than in suburbia.

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HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
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2. Contamination:- The ideal spot frequently implies ceaseless commotion and air
contamination. Traffic growls on clogged streets lead to vehicular heap ups. The resultant
blaring and exhaust vapor from fixed vehicles will all gather to make a somewhat boisterous,
disagreeable climate.

Q5. (20 marks)

A retailer chain V is considering to open a new shop (X) with the size of 2500 square meters in
the new trading area of Ho Chi Minh City where they can easily attract more potential customers.
There are three existing shops (A, B, C) which will provide the competion. The main customers
come from district 10 and 3 of the city. Based on the collected historical data, we find that λ=2.
Using information in table below:

Travelling distance
Location Size (square meters)
(Km)
District 10
Shop X 2500 2
Shop A 1500 4
Shop B 500 5
Shop C 1200 3
District 3
Shop X 2500 5
Shop A 1500 2
Shop B 500 4
Shop C 1200 3

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HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
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The market sizes of Distrrict 10 and 3 are estimated 500 millions VNĐ/ month, 450 millions
VNĐ/month, respectively.
a) Calculate the expected sales of the new store. (15 marks)
b) If the average monthly sale is XXX millions VNĐ (Replace XXX by any 3-digit number
that you like), will you decide to open the shop X in proposed location? Explain your
decision? (5 marks)
Answer:
a)
We have the formula:
2500
( 2 )
2
P(X10) = 2500 1500 500 1200 = 0.717
( 2 + 2 + 2+ 2 )
2 4 3 3

2500
( 2 )
5
P(X3) = 2500 1500 500 1200 = 0.156
( 2 + 2 + 2+ 2 )
5 2 4 3

The expected sales of the new store:

P(X10) * estimated value of district 10+ P(X3) * estimated value of district 3
= 0.717 * 500,000,0000 + 0.156 * 450,000,000 = 428,695,621.05 VNĐ/month

b) Assume that the average monthly sale is 450 millions VNĐ (Replace XXX by any 3-digit
number that you like)
Therefore, the shop X should not be opened in proposed location due to the expected sales of
Shop X is lower than the average monthly sale (428,695,621.05 < 450,000,000)

- END –

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