International University - VNUHCM

School of Industrial and Engineering Management

------------------------

Answer Paper Final Examination

Date: 15/1/2022; 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 40% 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:…………………………….
------------
2. Requirement:
 Read carefully each question and answer it following the requirements
 Submit your exam including this paper via Blackboard Portal.

ANSWERS
Question 1:
What are methods to identify budget for a retail communication program? Briefly describe each of them. The
owner of Excited-Gym wants to estimate its budget for new communication program and he decided to follow
Competitive parity method. Within his target market, there are 5 Gym centers with corresponding market shares
as below:

After investigation, the owner knows that total communication expenses of all stores within his target market
area is $11,025. How many dollars he should set his communication budget?
Solution:
Methods to identify budget for a retail communications program:
 Limit analysis methods. Marginal analysis is based on the economic principle that a business should increase
its telecom spending if every dollar of additional spending generates more than one dollar of additional
investment. In most cases, it is very difficult to perform marginal analysis because managers do not know
the relationship between telecom costs and revenue. Sometimes retailers conduct experiments to better
understand the relationship between telecom costs and sales.
 Goals and Goal Methods: Goals and Goal Methods determine the budget required to complete specific tasks
to achieve communication goals. To use this method, the retailer first establishes a set of communication
goals, and then determines the tasks and costs required. Your communications budget is the sum of all costs
incurred to get the job done.
 Rule of Thumb method. The Rule of Thumb method described in this section uses the opposite logic. They
use past sales and communications activities to determine their current communications budget:
+ Appropriate budgeting method: Distributors first predict sales and expenditures excluding
telecommunication expenses during the budgeting period. In other words, the available method is a method of
setting the communication budget by judging the available amount after deducting operating costs and profits.
The main problem with the approach is that it assumes that telecom costs do not stimulate sales and profits.
Telecommunication costs are just business costs, such as commodity costs. When using cheaper methods,
retailers typically cut "unnecessary" telecommunication costs when sales fall below expectations rather than
increasing telecommunication costs to increase sales.

2 /7
HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
------------
+ Percentage of Sales method: The Percentage of Sales method sets the telecom budget as a fixed percentage
of projected sales. Retailers use this method to determine their telecom budget by forecasting sales over a
budget period and then setting the budget by applying a predetermined percentage. Percentages can be
historical percentages for retailers or average percentages used by similar retailers. The problem with
percentage selling is that it assumes that the same percentages used in the past or used by competitors will be
appropriate in the future. Consider a retailer that hasn't opened new stores in the past but plans to open many
this year. This will increase customer awareness of these new stores, which means that this year's
communications budget should be significantly larger than last year's. It may also be inappropriate to use the
same proportions as competitors.
+ Competitive Parity Method: In the competitive parity method, the telecom budget is set so that the retailer's
share of telecom spending equals its market share. For example, consider a sporting goods store in a small
town. To use the competitive parity method, the owner-manager must first estimate the total amount of money
spent on communications by all sporting goods retailers in the city. The owner-manager then estimated their
store's sporting goods market share and multiplied this market share percentage by the sporting goods store's
total advertising spend to establish a budget.

After invesigation, the amount of money he should set his communication budget:
120
Excited-Gym market share: =21.98%
80+145+105+120+96
So that he should set his communication budget equal to: 21.98%*$11,025 = $2423.08

Question 3:
Q3.1. A clothing store buys a black leather belt for $85 and sets the retail price at $155. What is the markup
percentage for black leather belts?
Solution:
We have:
Purchased price = $85
Sales price = $155
=> Markup = $155 - $85 = $70
$70
=> Markup percentage on the belts = ( ) ∗ 100 = 45,16%
$155
Q3.2. In sale season, a brown type of belt which was bought with $125, reductions is $50, and actual sale price
is $200.
a. What is maintained markup percentage that the company gets?
b. What’s the initial markup percentage and initial retail price ?
Solution:
a) We have:

3 /7
HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
------------
Purchase price = $125
Sales price = $200
=> Markup = $200 - $125 = $75
The maintained markup percentage that the company gets:
$75
% Markup = ∗ 100% = 37,5%
$200

b) The initial markup percentage:

50
37,5% +( )
200
IM = 50 * 100% = 50%
100%+(200)

Initial retail price = $200 + $50 = $250

Question 2:
Q2. (15 marks) Describing ideas that these retail formats could use each of these feature areas listed to enhance
the store’s image and atmosphere.

Area Drugstore Clothing Store Supermarket

Entrance a wide and comfortableentr

ance
Walls more often than not light s
trong colored to provide a
beam of trust encounter to
the customers/patients
Windows a pane of glass
Merchandise
displays Depending on the type of
drug, the drug code and th
The door is beautifully and
creatively decorated,with
mannequins wearing popul
ar styles to attract custome
rs to shop
strong color with heaps of
lighting
Non-window
Rack and display by Cloth
es type
Spacious doors, automatic doors,
eye-catching decorations with b
ig brand advertising or seasonal
themes
A power and attractive one to th
e right side
There are few windows, mainly
due to lack of space and cost. S
ome experts say that a space wit
hout natural light helps stores be
tter control the shopping experie
nce.
Frequent changing screens bring
attraction to customers

4 /7
HCMC National University
Name:………...……………………….
Student ID:…………………………….
------------
e use of the drug will hav
e different displays
Cash Wrap counter along the edge, so
as the medication charging
don't get missed
Student
International University
4 to 5 dedicated counters a 10 to 12 dedicated counters, whi
t every single floor, which ch are divided into counters acc
can optimize payment and ording to customers' payment ne
decrease waiting time of c eds: cash, card, etc.
ustomers.

Question 4: A retailer plans to open a new store near a university. It will specialize in collegiate
merchandise such as apparel, accessories, and school supplies. Please provide the at least two pros and
cons of each of the following media: university newspaper, website, Facebook and event sponsorship for
this retailer to capture the university market.
Answer:
 University newspaper:
- Pros: many students will access information from university newspapers. Besides, many discounts coupon
can be printed in the newspaper, which can attract students to come to store.
- Cons: Although student will buy newspaper, a high rate that students do not read the advertisement due to
the fact that they not really care. Additionally, this newspaper is only provided in the school, so it can only
reach students, and others will not be able to access it.
 Website:
- Pros: People can directly order and purchase order at their home. Moreover, Product information will be
provided on the website in the most complete and detailed way, as well as the amount of remaining goods in
the store, which helps customers to shop conveniently.
- Cons: Customers cannot see or experience the product they want to buy, especially jewerly. Moreover, In
addition, there are currently a number of stores that are not reputable, provide false information or sell
incorrect products when delivering goods to customers.

 Facebook:
- Pros: Many target customers can reach because the number of facebook users is extremely large.
Moreover, store can monitor and improve its service quality. In many of posts on Facebook, based on data
gathered from Facebook Insight, they can understand what content is good and plan for future content.
- Cons: Fast post lapse: posting on personal page will show up on the faces of 10% of their friends. Not only
that, articles, videos from ads, and continuously posted fanpages and groups will make individual posts go
away very quickly.. Besides, When personal information is incomplete, it will affect the level of trust of
customers towards store.

5 /7
HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
------------
 Event Sponsorship:
- Pros: Lots of customers attend the event will attract the store’s brand and products. Moreover, after a
succesfull events, store’s credibility and popularity will increase day by day.
- Cons: The store has to pay a large amount of money to sponsor an event. For example, cost of rent for
singers, event crews, space for events, etc… Besides, the store will not have a guaranteed revenue.

Question 5: What differences are between knowledge gap and communication gap in the gaps model for
improving retail customer service quality? What activities that retailers take to close those gaps between
customer expectations and perceptions of the actual service delivered to improve the customer service?
Knowlede gap:
A knowledge gap is the difference between a customer's expectations for a service and the company's offering
for that service.
Essentially, this gap arises because management does not know exactly what customers expect. This can
happen for a number of reasons, including:
- Lack of communication and management with customers.
- Lack of communication between service workers and management.
- Insufficient market research.
- Lack of focus on relationships.
- Not listening to customer complaints

Example:
If Netflix is struggling with this gap, it may be because it isn't offering its customers the right amount of new
games. If Pizza Hut is experiencing this gap, it's probably because it doesn't serve pecan pie. In either case, the
customer expects these things, but it just doesn't come.

Communication gap:
The communication gap is the difference between what a customer promises in an advertisement and what the
customer receives.
This can happen for a number of reasons:
- Appointment.
- Consider external communication independent of what is happening inside.
- Lack of communication between the operations team and the advertising team.
A lack of communication leads to customer dissatisfaction. This is because they do not receive what they
promise. Worst of all, you can turn to other vendors.

Actions taken by retailers to bridge the gap between customers' expectations and perceptions of the actual
services provided to improve the customer experience:

6 /7
HCMC National University Student
Name:………...………………………. International University
Student ID:…………………………….
------------
 Listen to your customers to find out what they really want.
 Find out what our team knows about the intent behind each step of their interactions with them and the
responsibilities assigned to them.
 Directly study the customer journey to identify potential issues in current processes.
 Change your business to better understand your products/services and help your customers more
effectively.
 Please understand that this is an ongoing process. As customer needs evolve, existing systems and tools
that help fill gaps should be reviewed regularly to ensure that they keep up with time.
 Effective employee training: As the team you interact with most often, your support team has a huge
impact on whether your company meets customer expectations.

- END –

7 /7