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PES INSTITUTE OF TECHNOLOGY – BANGALORE SOUTH CAMPUS
Hosur Road (1Km before Electronic City), Bangalore -560100
INTERNAL TEST # 1
Answer key for Sales and Retail Management – 12MBAMM312
Course: MBA Semester III
Faculty: Ravi urs/ Nagabhushana
Date: 27/08/2014
Time Allowed: 90 Minutes
Max. Marks: 50 (Fifty Marks)
Time: 11.30 AM – 1.00 PM
Note: Answer all the Questions.
1 (a) Define sales management.
Sales management is a business discipline which is focused on the practical application of sales techniques
and the management of a firm's sales operations. It is an important business function as net sales through
the sale of products and services and resulting profit drive most commercial business.
(3 marks)
(b) What is prospecting? Explain the basic steps involved.
(7 marks)
(c) Describe selling process. How could a sales representative differ in the
(10 marks)
Prospecting is the method or system by which salespeople learn the names of people who need the product
and can afford it. There are two steps in successful prospecting. The first step is identifying leads-generating
potential customers. The second step is qualifying leads according to who is most likely to buy.
following casesa. Selling a life insurance policy
b. Selling office computers to an institution
Selling process
1)
Prospecting
2)
Initial contact
3)
Sales presentation
4)
Handling objections
5)
Closing the sale
6)
Follow-up
Selling a life insurance policy to a consumer requires better understanding of customer, his family, earnings,
and savings. This would require more of emotional and little bit of rational approach. Selling office computers
to an institution requires good knowledge of institution, its promoters, purchase procedure, competition, and
the institution credibility. It is going to be an organized purchase approach and requires highly rational
approach.
2(a)
What is retailing?
 According to Kotler: “Retailing includes all the activities involved in selling goods or service t final
consumers for personal, non-business use. A retailer or retail store is any business enterprise
whose sales volume comes primarily from retailing”
 The word retail is derived from the French word retaillier, meaning 'to cut a piece of' or ' to break
bulk'.
 A retailer may be defined as a “dealer or trader who sells goods in small quantities” or “one who
repeats or relates”
(b) What are the different functions of retailing?
(3 marks)
(7 marks)
1. Sorting:
The manufacturers usually make one or a variety of products and would like to sell their entire
inventory to a few buyers to reduce costs
Consumers prefer a large variety of goods and services to choose from and usually buy them in
small quantities
Sorting is the process where the retailer is able to balance the demands of both manufacturers and
consumers by collecting an assortment of goods from different sources, buying them sufficiently
large quantities, and selling them to consumers in small units.
Sorting helps retailers to undertake activities and perform functions that add to the value of the
products and services sold to the consumer
Customers are able to choose from a wide range of designs, sizes, and brands from just one
location. If retail units would not be available, they would have to visit several stores to complete
their shopping.
Retailers specialize in the types of assortments they offer and market to which the offering is made
2. Breaking Bulk
Manufacturers and wholesalers, to reduce transportation cost, will ship large cartoons of the
product, which are then tailored by the retailers into small quantities to meet individual consumption
needs. This is breaking the bulk.
This act also gives the word retailing, which is derived from the French word retailer meaning ‘to cut
a piece off’
3. Holding stock
Retailers hold stock for the manufacturers
The inventory held by the retailer helps him to allow for instant availability of the product to the
consumers
It helps in keeping the price stable and also enables manufacturer to regulate production
It also helps consumers to keep lesser inventory at their homes as they are sure od replenishing
their products from the retailer inventory
4. Additional services
Retailers make it convenient to buy and use products
Providing product guarantees, after-sales service, and dealing with consumer complaints are some
value added services by the retailers
They also fill orders, promptly process, deliver and install products
Sales persons employed by retailers help customers by answering their queries and provide
additional information about products
Display of products allows consumers to see and test products before actual purchase
Retail essentially completes transactions with customers
5. Channels of communication
Retailers act as the channel of communication and information between the suppliers and
consumers
Consumers learn about the characteristics and features of a product or service offered through
advertisements, sales people and displays
Manufacturers learn about sales forecast, delivery delays, and customer complaints. It helps them
to modify defective or unsatisfactory merchandise and services
6. Transport and advertising functions
Small manufacturers can use retailers to provide assistance with transport, storage, advertising and
pre-payment of merchandise
(c) Explain the steps involved in retail strategic planning.
1. Define the mission or purpose of the organization
A mission statement is the long-term purpose of the organization
(10 marks)
It describes what the retailer wishes to accomplish in the markets in which it chooses to compete
It highlights:
The products and services that will be offered
The customers who will be served
The geographic area that will be chosen to operate
The manner in which the firm intends to compete in its chosen market
2. Conduct a situational analysis
It involves organization looking inwards for strengths and weaknesses and outside for opportunities
and threats
Models like PEST analysis, SWOT analysis, Porter’s five force model and BCG Matrix may be used
3. Identifying options/ Strategic alternatives
The alternatives should enable a retailer to tap the market opportunities
Existing
Market Segments
Existing
Market Penetration
• Increase
basket size
• Increase in
customers
• Increase in
purchase
frequency
Retail Formats
New
Retail Format
Development
• New format to
existing
customers
New
Market
Development /
Expansion
• New
market
segments
with
existing
format
• New
customer
base
Diversification
• New retail
formats
directed
at new
market
segments
4. Set Objectives
Objectives are a translation of the mission statement into operational terms
It gives direction and set standards for measurement of performance
It may be both long-term and short-term
Good objectives are measurable, specific about time, and indicate the priorities for the organization
There may be both strategic and financial objectives
5. Obtain and allocate the resources needed to compete
Resources may be human or financial
6. Develop the strategic plan
Here the target market is defined and the retail mix that will serve this audience is finalized
Target segments are those segments which holds the most promise for the firm
A number of variables like the growth potential of each likely target market, the investment needed
to compete and the strength of the competition, etc. are normally evaluated for each segment to
choose a target segment which best matches an organization’s resources and skills
The target segment must be:
I.
Measurable
II.
Accessible
III.
Economically viable
IV.
Stable
After the target segment is chosen, the retail mix is decided
The retail mix consists of merchandising mix, the pricing policy, the types of location where the shop
will be located, the services that will be offered at the store and communication platform that will be
adopted
After the retail mix the positioning strategy is decided
7. Implement the strategy, evaluate and control
For effective implementation, every aspect of the store must be focused on the target market
All elements of the plan are chosen for feedback
Any change if necessary are decided based on feedback
3
Case Study - (Compulsory)
Wal-Mart is an extremely successful business model. Indeed, in 2003 the company had revenue of US $245
billion, more than four times the revenue of Home Depot, the retailer with the next-largest revenue that year.
But more and more individuals and organizations are starting to say that the company’s growth comes with
major costs – to workers, to communities, and to governments. The company is facing accusations about its
employment of illegal aliens. It has been taken to task for paying extraordinary low wages – only 38% of fulltime employees can afford to purchase a Wal-Mart health insurance plan. The US Equal Employment
Opportunity has filed more disability discrimination lawsuits against Wal-Mart than any other corporation. It is
the target of the largest class-action suit for sexual discrimination ever filed against a private employer. It has
been accused by many of radically changing the communities it enters, by pushing smaller retailers that
have deep ties with the community out of business and by putting downward pressure on wages in the
community. Already loud, the outcry against Wal-Mart is getting louder.
Questions:
1. What are the possible reasons for Wal-Mart to follow the strategy leading to its negative
branding as mentioned in the case?
 Competition in the industry
 Desire to cut cost
 Unethical behavior of the company
 Desire to improve efficiency
 Focus on Profit generation
2. Do you foresee other retailers also adopting such strategies in future? Give reasons.
No, other retailers may not adopt the Wal-Mart strategy for the following reasons:
 Wal-Mart strategy has created negative effect on its brand image
 Government’s will impose penalty on such behavior
 Employees may not prefer to work for companies with such strategies
(5 marks)
(5 marks)






Matured and self-conscious customers may avoid shopping at such retail outlets
Suppliers will be vary about getting associated with such companies
Investors will be vary about investing in such companies
There will be public pressure on such companies to discontinue such practices
Courts will deal strictly with such companies
Human rights NGOs will put pressure on such companies to stop such practices