Examination Paper of Marketing Management
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Subject Code- B104 Marketing Management
Section A: Objective Type & Short Questions (30 marks)
•This section consists of multiple choices & short answer type questions.
•Answer all the questions.
•Part One carries I mark each & Part II carries 5 marks each.
Part One
Multiple Choices:
1. It is a concept where goods are produced without taking into consideration the choices or tastes of
customers.
a. Marketing mix
b. Production concept
c. Marketing concept
d. Relationship marketing
2. It involves individuals who buys products or services for personal use and not for manufacture or
resale.
a. Environment analysis
b. Macro environment
c. Micro environment
d. Consumer
3. It is the groups of people who interact formally or informally influencing each other‟s attitudes&
behavior.
a. Consumer behavior
b. Culture
c. Reference groups
d. Primary groups
4. The concept of the product that passes through various changes in its total life known as:
a. Product life cycle
b. Line stretching
c. Consumer adoption
d. Product
5. It refers to unique set of brand associations that brand strategist aspires to create or maintain:
a. Branding
b. Packaging
c. Brand identity
Examination Paper of Marketing Management
2
IIBM Institute of Business Management
d. Brand image
6. It involves a pricing strategy that charges customers different prices for the same product or
service.
a. Promotional pricing
b. Price discrimination
c. Non price competition
d. None of the above
7. It refers to an arrangement where another company through its own marketing channel sells the
products of one producers.
a. End customer
b. Wholesaler
c. Retailing
d. Strategic channel alliance
8. It involves facility consisting of the means & equipments necessary for the movement of
passengers of goods.
a. Logistics
b. Warehousing
c. Transportation
d. None of the above
9. The advertising which is used to inform consumers about a new product or feature & to build
primary demands is known as:
a. Advertising
b. Informative advertising
c. Persuasive advertising
d. Advertising strategy
10. An art that predicts the likelihood of economic activity on the basis of certain assumptions:
a. Compensation
b. Sales forecasting
c. Sales budgeting
d. Selling policy
Part Two:
1. Define Marketing Mix.
2. Discuss the concept of Benchmarking.
3. Write a short note on Target Marketing.
4. What do you understand by Pricing Strategy?
END OF SECTION A
Examination Paper of Marketing Management
3
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Ask the company top brass what „almost there‟ means. The answer: a premier Indian retail company
that has come to be known as a specialty chain of apparel and accessories. With 52 product categories
under one roof, Shoppers‟ Stop has a line-up of 350 brands. Set up and headed by former Corona
employee, B. S. Nagesh, Shoppers‟ Stop is India‟s answer to Selfridges and Printemps. As it proudly
announces, „We don‟t sell, we help you buy.‟ Back in 1991, there was the question of what to retail.
Should it be a supermarket or a departmental store? Even an electronics store was considered. Finally,
common sense and understanding won out. The safest bet, for the all-male team was to retail men‟s
wear. They knew the male psyche and felt that they had discerning taste in men‟s clothing. The
concept would be that of a lifestyle store in a luxurious space, which would make for a great shopping
experience. The first Shoppers‟ Stop store took shape in Andheri, Mumbai, in October 1991, with an
investment of nearly Rs. 20 lakh. The original concept that formed the basis of a successful marketing
campaign for seven years is here to stay. And the result is an annual turnover of Rs. 160 crores and
five stores, nine years later. Everything went right from the beginning, except for one strange
happening. More than 60 per cent of the customers who walked into Shoppers‟ Stop in Mumbai were
women. This gave rise to ideas. Soon, the store set up its women‟s section. Later, it expanded to
include children‟s wear and then, household accessories. The second store in Bangalore came in
1995. The store at Hyderabad followed in 1998 with the largest area of 60,000 sq. ft. The New Delhi
and Jaipur stores were inaugurated in 1999. All this while, the product range kept increasing to suit
customer needs. The most recent experiment was home furnishings. Secure in the knowledge that
organized retailing in global brands was still in its infancy in India, Shoppers‟ Stop laid the ground
rules which the competition followed. The biggest advantage for Shoppers‟ Stop is that it knows how
the Indian consumer thinks and feels while shopping. Yes, feeling – for in India, shopping remains an
outing. And how does it compare itself to foreign stores? While it is not modeled on any one foreign
retailer, the „basic construct‟ is taken from the experience of a number of successfully managed retail
companies. It has leveraged expertise for a critical component like technology from all over the
world, going as far as hiring expatriates from Littlewoods and using state-of-the-art ERP models.
Shoppers‟ Stop went a step further by even integrating its financial system with the ERP model.
Expertise was imported wherever it felt that expertise available in-house was inadequate. But the
store felt there was one acute problem. A shortage of the most important resource of them all was
trained humans. Since Indian business institutes did not have professional courses in retail
management, people were hired from different walks of life and the training programme was
internalized. By 1994, the senior executives at Shoppers‟ Stop were taking lectures at management
institutes in Mumbai. The Narsee Monjee Institute of Management Studies (NMIMS) even
restructured its course to include retail management as a subject. Getting the company access to the
latest global retail trends and exchange of information with business greats was an exclusive
membership to the Intercontinental Group of Department Stores (IGDS). It allows membership by
invitation to one company from a country and Shoppers‟ Stop rubs shoulders with 29 of the hottest
names in retailing – Selfridges from the UK, C.K. Tang from Singapore, Lamcy Plaza from Dubai
and the like. With logistics I in place, the accent moved to the customer. Shoppers‟ Stop conducted
Examination Paper of Marketing Management
4
IIBM Institute of Business Management
surveys with ORG-MARG and Indian Market Research Bureau (IMRB) and undertook in-house
wardrobe audits. The studies confirmed what it already knew. The Indian customer is still evolving
and is very different from, say, a European customer, who knows exactly what he wants to purchase,
walks up to a shelf, picks up the merchandise, pays and walks out. In India, customers like to touch
and feel the merchandise, and scout for options. Also, the majority of Indian shoppers still prefer to
pay in cash. So, transactions must be in cash as against plastic money used the world over.
Additionally, the Indian customer likes being served – whether it is food, or otherwise. The
company‟s customer profile includes people who want the same salesperson each time they came to
the store to walk them through the shop floors and assist in the purchase. Others came with families,
kids and maids in tow and expected to be suitably attended to. Still others wanted someone to carry
the bags. So, the shops have self-help counters, with an assistant at hand for queries or help. The inhouse
wardrobe audit also helped with another facet of the business. It enabled Shoppers‟ Stop to
work out which brands to stock, based on customer preferences. In fact, the USP of Shoppers‟ Stop
lies in judiciously selected global brands, displayed alongside an in-house range of affordable
designer wear. The line-up includes Levi‟s, Louis Philippe, Allen Solly, Walt Disney, Ray Ban and
Reebok, besides in-house labels STOP and I. Brand selection is the same across the five locations,
though the product mix may be somewhat city-based to accommodate cuts and styles in women‟s
wear, as well as allowing for seasonal variations (winter in Delhi, for instance, is a case in point).
Stocking of brands is based on popular demand – recently, Provogue, MTV Style, and Benetton have
been added. In-house labels are available at competitive prices and target the value-for-money
customer and make up around 12 per cent of Shoppers‟ Stop‟s business. Sometimes in-house brands
plug the price gap in certain product categories. To cash in on this, the company has big plans for its
in-house brands: from re-branding to repositioning, to homing in on product categories where existing
brands are not strong. Competition between brands is not an issue, because being a trading house, all
brands get equal emphasis. The in-house brand shopper is one who places immense trust in the
company and the quality of its goods and returns for repeat buys. And the company reposed its faith
in regular customers by including them in a concept called the First Citizen‟s Club (FCC). With
60,000 odd members, FCC customers account for 10 per cent of entries and for 34 per cent of the
turnover. It was the sheer appeal of the experience that kept pulling these people back. Not one to let
such an opportunity pass, the company ran a successful ad campaign (that talks about just this factor)
in print for more than eight years. The theme is still the same. In 1999, a TV spot, which liked the
shopping experience to the slowing down of one‟s internal clock and the beauty of the whole
experience, was aired. More recently, ads that spell out the store‟s benefits (in a highly oblique
manner) are being aired.
The campaign is based on entries entered in the Visitors‟ Book. None of the ads has a visual or text –
or any heavy handedly direct reference to the store or the merchandise. The ads only show shoppers
having the time of their lives in calm and serene locales, or elements that make shopping at the store a
pleasure – quite the perfect getaway for a cosmopolitan shopper aged between 25 and 45. The brief to
the agency, Contract, ensured that brand recall came in terms of the shopping experience, not the
product. And it has worked wonders. Value-addition at each store also comes in the form of special
care with car parks, power backup, customer paging, alteration service and gift-wrapping. To top it
all, cafes and coffee bars make sure that the customer does not step out of the store. In Hyderabad, it
has even created a Food Court. Although the food counter was not planned, it came about as there
was extra space of 67,000 sq. ft. Carrying the perfect experience to the shop floor is an attempt to
stack goods in vast open spaces neatly. Every store has a generic structure, though regional customer
variances are accounted for. Each store is on lease, and this is clearly Shoppers‟ Stop‟s most
expensive resource proposition – renting huge spaces in prime properties across metros, so far
totaling 210,000 sq. ft of retail space. Getting that space was easy enough for Shoppers‟ Stop, since
its promoter is the Mumbai-based Raheja Group, which also owns 62 per cent of the share capital.
Examination Paper of Marketing Management
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IIBM Institute of Business Management
Questions:
1. What are the significant factors that have led to the success of Shoppers‟ Stop?
2. How should Shoppers‟ Stop develop its demand forecasts?
Caselet 2
The rise of personal computers in the mid 1980s spurred interest in computer games. This caused a
crash in home Video game market. Interest in Video games was rekindled when a number of different
companies developed hardware consoles that provided graphics superior to the capabilities of
computer games. By 1990, the Nintendo Entertainment System dominated the product category. Sega
surpassed Nintendo when it introduced its Genesis System. By 1993, Sega commanded almost 60 per
cent of Video game market and was one of the most recognized brand names among the children.
Sega‟s success was short lived. In 1995, Saturn (a division of General Motors) launched a new 32-bit
system. The product was a miserable failure for a number of reasons. Sega was the primary software
developer for Saturn and it did not support efforts by outside game developers to design compatible
games. In addition, Sega‟s games were often delivered quite late to retailers. Finally, the price of the
Saturn system was greater than other comparable game consoles. This situation of Saturn‟s misstep
benefited Nintendo and Sony greatly. Sony‟s Play Station was unveiled in 1994 and was available in
70 million homes worldwide by the end of 1999. Its “Open design” encouraged the efforts of outside
developers, resulting in almost 3,000 different games that were compatible with the PlayStation. It too
featured 32-bit graphics that appealed to older audience. As a result, at one time, more than 30 per
cent of PlayStation owners were over 30 years old. Nintendo 64 was introduced in 1996 and had eyepopping
64-bit graphics and entered in more than 28 million homes by 1999. Its primary users were
between the age of 6 and 13 as a result of Nintendo‟s efforts to limit the amount of violent and adultoriented
material featured on games that can be played on its systems. Because the company
exercised considerable control over software development, Nintendo 64 had only one-tenth the
number of compatible games as Sony‟s PlayStation did. By 1999, Sony had captured 56 per cent of
the video game market, followed by Nintendo with 42 per cent. Sega‟s share had fallen to a low of
1%. Hence, Sega had two options, either to concede defeat or introduce an innovative video machine
that would bring in huge sales. And Sega had to do so before either Nintendo or Sony could bring
their next-generation console to market. The Sega Dreamcast arrived in stores in September 1999
with an initial price tag of $199. Anxious gamers placed 300,000 advance orders, and initial sales
were quite encouraging. A total of 1.5 million Dreamcast machines were bought within the first four
months, and initial reviews were positive. The 128-bit system was capable of generating 3-D visuals,
and 40 different games were available within three months of Dream cast‟s introduction. By the end
of the year, Sega had captured a market share to 15 per cent. But the Dreamcast could not sustain its
momentum. Although its game capabilities were impressive, the system did not deliver all the
functionality Sega had promised. A 56K modem (which used a home phone line) and a Web browser
were meant to allow access to the Internet so that gamers could play each other online, surf the Web,
and visit the Dreamcast Network for product information and playing tips. Unfortunately, these
features either were not immediately available or were disappointing in their execution. Sega was not
the only one in having the strategy of adding functionality beyond games. Sony and Nintendo
followed the same approach for their machines introduced in 1999. Both Nintendo‟s Neptune and
Sony‟s PlayStation 2 (PS2) were built on a DVD platform and featured a 128-bit processor. Analysts
applauded the move to DVD because it is less expensive to produce and allows more storage than
CDs. It also gives buyers the ability to use the machine as CD music player and DVD movie player.
As Sony marketing director commented, “The full entertainment offering from Play Station 2
definitely appeals to a much broader audience. I have friends in their 30s who bought it not only
Examination Paper of Marketing Management
6
IIBM Institute of Business Management
because it‟s a gaming system for their kids, but also a DVD for them.” In addition, PlayStation 2 is
able to play games developed for its earlier model that was CD-based. This gives the PS2 an
enormous advantage in the number of compatible game titles that were immediately available to
gamers. Further enhancing the PS2‟s appeal is its high-speed modem and allows the user‟s easy
access to the Internet through digital cable as well as over telephone lines. This gives Sony the ability
to distribute movies, music, and games directly to PS2 consoles. “We are positioning this as an allround
entertainment player,” commented Ken Kutaragi, the head of Sony Computer Entertainment.
However, some prospective customers were put off by the console‟s initial price of $360. Shortly
after the introduction of Neptune, Nintendo changed its strategies and announced the impending
release of its newest game console, The GameCube. However, unlike the Neptune, the GameCube
would not run on a DVD platform and also would not initially offer any online capabilities. It would
be more attractively priced at $199. A marketing vice president for Nintendo explained the
company‟s change in direction, “We are the only competitor whose business is video games. We want
to create the best gaming system.” Nintendo also made the GameCube friendly for outside developers
and started adding games that included sports titles to attract an older audience. Best known for its
extra ordinary successes with games aimed at the younger set, such as Donkey Kong, Super Mario
Bros, and Pokemon, Nintendo sought to attract older users, especially because the average video
game player is 28. Youthful Nintendo users were particularly pleased to hear that they could use their
handheld Game Boy Advance systems as controllers for the GameCube. Nintendo scrambled to
ensure there would be an adequate supply of Game Cubes on the date in November 2001, when they
were scheduled to be available to customers. It also budgeted $450 million to market its new product,
as it anticipated stiff competition during the holiday shopping season. With more than 20 million
PlayStation 2 sold worldwide, the GameCube as a new entry in the video game market would make
the battle for market share even more intense. For almost a decade, the video game industry had only
Sega, Nintendo, and Sony; just three players. Because of strong brand loyalty and high product
development costs, newcomers faced a daunting task in entering this race and being competitive. In
November 2001, Microsoft began selling its new Xbox, just three days before the GameCube made
its debut. Some observers felt the Xbox was aimed to rival PlayStation 2, which has similar functions
that rival Microsoft‟s Web TV system and even some lower level PCs. Like the Sony‟s PlayStation 2,
Xbox was also built using a DVD platform, but it used an Intel processor in its construction. This
open design allowed Microsoft to develop the Xbox in just two years, and gave developers the option
of using standard PC tool for creating compatible games. In addition, Microsoft also sought the
advice of successful game developers and even incorporated some of their feedback into the design of
the console and its controllers. As a result of developers‟ efforts, Microsoft had about 20 games ready
when the Xbox became available. By contrast, the GameCube had only eight games available.
Microsoft online strategy was another feature that differentiated of the Xbox from the GameCube.
Whereas Nintendo had no immediate plans for Web-based play, the Xbox came equipped with an
Ethernet port for broadband access to Internet. Microsoft also announced its own Web-based network
on which gamers can come together for online head-to head play and for organized online matches
and tournaments. Subscribers to this service were to pay a small monthly fee and must have highspeed
access to the Internet. This is a potential drawback considering that a very low percentage of
households world over currently have broadband connections. By contrast Sony promoted an open
network, which allows software developers to manage their own games, including associated fees
charged to users. However, interested players must purchase a network adapter for an additional
$39.99. Although game companies are not keen on the prospect of submitting to the control of a
Microsoft-controlled network, it would require a significant investment for them to manage their own
service on the Sony-based network. Initially the price of Microsoft‟s Xbox was $299. Prior to the
introduction of Xbox, in a competitive move Sony dropped the price of the PlayStation 2 to $299.
Nintendo‟s GameCube already enjoyed a significant price advantage, as it was selling for $100 less
than either Microsoft or Sony products. Gamers eagerly snapped up the new consoles and made 2001
Examination Paper of Marketing Management
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IIBM Institute of Business Management
the best year ever for video game sales. For the first time, consumers spent $9.4 billion on video
game equipment, which was more than they did at the box office. By the end of 2001 holiday season,
6.6 million PlayStation 2 consoles had been sold in North America alone, followed by 1.5 million
Xbox units and 1.2 million Game Cubes. What ensued was an all out price war. This started when
Sony decided to put even more pressure on the Microsoft‟s Xbox by cutting the PlayStation 2 price to
$199. Microsoft quickly matched that price.
Wanting to maintain its low-price status, Nintendo in turn responded by reducing the price of its the
GameCube by $50, to $149. By mid 2002, Microsoft Xbox had sold between 3.5 and 4 million units
worldwide. However, Nintendo had surpassed Xbox sales by selling 4.5 million Game Cubes. Sony
had the benefit of healthy head start, and had shipped 32 million PlayStation 2s. However, seven
years after the introduction of original PlayStation, it was being sold in retail outlets for a mere $49. It
had a significant lead in terms of numbers of units in homes around the world with a 43 per cent
share. Nintendo 64 was second with 30 per cent, followed by Sony PlayStation 2 with 14 per cent.
The Xbox and GameCube each claimed about 3 per cent of the market, with Sega Dreamcast
comprising the last and least market share of 4.7 per cent. Sega, once an industry leader, announced in
2001 that it had decided to stop producing the Dreamcast and other video game hardware
components. The company said it would develop games for its competitors‟ consoles. Thus Sega
slashed the price of the Dreamcast to just $99 in an effort to liquidate its piled up inventory of more
than 2 million units and immediately began developing 11 new games for the Xbox, four for
PlayStation 2, and three for Nintendo‟s Game Boy Advance. As the prices of video game consoles
have dropped, consoles and games have become the equivalent of razors and blades. This means the
consoles generate little if any profit, but the games are a highly profitable proposition. The profit
margins on games are highly attractive, affected to some degree by whether the content is developed
by the console maker (such as Sony) or by an independent game publisher (such as Electronic Arts).
Thus, the competition to develop appealing, or perhaps even addictive, games may be even more
intense than the battle among players to produce the best console. In particular, Nintendo, Sony, and
Microsoft want games that are exclusive to their own systems. With that in mind, they not only rely
on large in-house staffs that design games but they also pay added fees to independent publishers for
exclusive rights to new games. The sales of video games in 2001 rose to 43 per cent, compared to just
4 per cent increase for computer-based games. But computer game players are believed to be a loyal
bunch, as they see many advantages in playing games on their computers rather than consoles. For
one thing, they have a big advantage of having access to a mouse and a keyboard that allow them to
play far more sophisticated games. In addition, they have been utilizing the Internet for years to
receive game updates and modifications and to play each other over the Web. Sony and Microsoft are
intent on capturing a portion of the online gaming opportunity. Even Nintendo has decided to make
available a modem that will allow GameCube users to play online. As prices continue to fall and
technology becomes increasingly more sophisticated, it remains to be seen whether these three
companies can keep their names on the industry‟s list of “high scorers”.
Questions:
1. Considering the concept of product life cycle, where would you put video games in their life cycle?
2. Should video game companies continue to alter their products to include other functions, such as
email?
END OF SECTION B
Examination Paper of Marketing Management
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IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200-250 words).
1. What do you understand by product life cycle? Discuss implications and limitations of product
life cycle concept.
2. Describe role of marketing channels. List the different types of marketing channels.
END OF SECTION C
S-2-250613
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Subject Code- B104 Marketing Management
Section A: Objective Type & Short Questions (30 marks)
•This section consists of multiple choices & short answer type questions.
•Answer all the questions.
•Part One carries I mark each & Part II carries 5 marks each.
Part One
Multiple Choices:
1. It is a concept where goods are produced without taking into consideration the choices or tastes of
customers.
a. Marketing mix
b. Production concept
c. Marketing concept
d. Relationship marketing
2. It involves individuals who buys products or services for personal use and not for manufacture or
resale.
a. Environment analysis
b. Macro environment
c. Micro environment
d. Consumer
3. It is the groups of people who interact formally or informally influencing each other‟s attitudes&
behavior.
a. Consumer behavior
b. Culture
c. Reference groups
d. Primary groups
4. The concept of the product that passes through various changes in its total life known as:
a. Product life cycle
b. Line stretching
c. Consumer adoption
d. Product
5. It refers to unique set of brand associations that brand strategist aspires to create or maintain:
a. Branding
b. Packaging
c. Brand identity
Examination Paper of Marketing Management
2
IIBM Institute of Business Management
d. Brand image
6. It involves a pricing strategy that charges customers different prices for the same product or
service.
a. Promotional pricing
b. Price discrimination
c. Non price competition
d. None of the above
7. It refers to an arrangement where another company through its own marketing channel sells the
products of one producers.
a. End customer
b. Wholesaler
c. Retailing
d. Strategic channel alliance
8. It involves facility consisting of the means & equipments necessary for the movement of
passengers of goods.
a. Logistics
b. Warehousing
c. Transportation
d. None of the above
9. The advertising which is used to inform consumers about a new product or feature & to build
primary demands is known as:
a. Advertising
b. Informative advertising
c. Persuasive advertising
d. Advertising strategy
10. An art that predicts the likelihood of economic activity on the basis of certain assumptions:
a. Compensation
b. Sales forecasting
c. Sales budgeting
d. Selling policy
Part Two:
1. Define Marketing Mix.
2. Discuss the concept of Benchmarking.
3. Write a short note on Target Marketing.
4. What do you understand by Pricing Strategy?
END OF SECTION A
Examination Paper of Marketing Management
3
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Ask the company top brass what „almost there‟ means. The answer: a premier Indian retail company
that has come to be known as a specialty chain of apparel and accessories. With 52 product categories
under one roof, Shoppers‟ Stop has a line-up of 350 brands. Set up and headed by former Corona
employee, B. S. Nagesh, Shoppers‟ Stop is India‟s answer to Selfridges and Printemps. As it proudly
announces, „We don‟t sell, we help you buy.‟ Back in 1991, there was the question of what to retail.
Should it be a supermarket or a departmental store? Even an electronics store was considered. Finally,
common sense and understanding won out. The safest bet, for the all-male team was to retail men‟s
wear. They knew the male psyche and felt that they had discerning taste in men‟s clothing. The
concept would be that of a lifestyle store in a luxurious space, which would make for a great shopping
experience. The first Shoppers‟ Stop store took shape in Andheri, Mumbai, in October 1991, with an
investment of nearly Rs. 20 lakh. The original concept that formed the basis of a successful marketing
campaign for seven years is here to stay. And the result is an annual turnover of Rs. 160 crores and
five stores, nine years later. Everything went right from the beginning, except for one strange
happening. More than 60 per cent of the customers who walked into Shoppers‟ Stop in Mumbai were
women. This gave rise to ideas. Soon, the store set up its women‟s section. Later, it expanded to
include children‟s wear and then, household accessories. The second store in Bangalore came in
1995. The store at Hyderabad followed in 1998 with the largest area of 60,000 sq. ft. The New Delhi
and Jaipur stores were inaugurated in 1999. All this while, the product range kept increasing to suit
customer needs. The most recent experiment was home furnishings. Secure in the knowledge that
organized retailing in global brands was still in its infancy in India, Shoppers‟ Stop laid the ground
rules which the competition followed. The biggest advantage for Shoppers‟ Stop is that it knows how
the Indian consumer thinks and feels while shopping. Yes, feeling – for in India, shopping remains an
outing. And how does it compare itself to foreign stores? While it is not modeled on any one foreign
retailer, the „basic construct‟ is taken from the experience of a number of successfully managed retail
companies. It has leveraged expertise for a critical component like technology from all over the
world, going as far as hiring expatriates from Littlewoods and using state-of-the-art ERP models.
Shoppers‟ Stop went a step further by even integrating its financial system with the ERP model.
Expertise was imported wherever it felt that expertise available in-house was inadequate. But the
store felt there was one acute problem. A shortage of the most important resource of them all was
trained humans. Since Indian business institutes did not have professional courses in retail
management, people were hired from different walks of life and the training programme was
internalized. By 1994, the senior executives at Shoppers‟ Stop were taking lectures at management
institutes in Mumbai. The Narsee Monjee Institute of Management Studies (NMIMS) even
restructured its course to include retail management as a subject. Getting the company access to the
latest global retail trends and exchange of information with business greats was an exclusive
membership to the Intercontinental Group of Department Stores (IGDS). It allows membership by
invitation to one company from a country and Shoppers‟ Stop rubs shoulders with 29 of the hottest
names in retailing – Selfridges from the UK, C.K. Tang from Singapore, Lamcy Plaza from Dubai
and the like. With logistics I in place, the accent moved to the customer. Shoppers‟ Stop conducted
Examination Paper of Marketing Management
4
IIBM Institute of Business Management
surveys with ORG-MARG and Indian Market Research Bureau (IMRB) and undertook in-house
wardrobe audits. The studies confirmed what it already knew. The Indian customer is still evolving
and is very different from, say, a European customer, who knows exactly what he wants to purchase,
walks up to a shelf, picks up the merchandise, pays and walks out. In India, customers like to touch
and feel the merchandise, and scout for options. Also, the majority of Indian shoppers still prefer to
pay in cash. So, transactions must be in cash as against plastic money used the world over.
Additionally, the Indian customer likes being served – whether it is food, or otherwise. The
company‟s customer profile includes people who want the same salesperson each time they came to
the store to walk them through the shop floors and assist in the purchase. Others came with families,
kids and maids in tow and expected to be suitably attended to. Still others wanted someone to carry
the bags. So, the shops have self-help counters, with an assistant at hand for queries or help. The inhouse
wardrobe audit also helped with another facet of the business. It enabled Shoppers‟ Stop to
work out which brands to stock, based on customer preferences. In fact, the USP of Shoppers‟ Stop
lies in judiciously selected global brands, displayed alongside an in-house range of affordable
designer wear. The line-up includes Levi‟s, Louis Philippe, Allen Solly, Walt Disney, Ray Ban and
Reebok, besides in-house labels STOP and I. Brand selection is the same across the five locations,
though the product mix may be somewhat city-based to accommodate cuts and styles in women‟s
wear, as well as allowing for seasonal variations (winter in Delhi, for instance, is a case in point).
Stocking of brands is based on popular demand – recently, Provogue, MTV Style, and Benetton have
been added. In-house labels are available at competitive prices and target the value-for-money
customer and make up around 12 per cent of Shoppers‟ Stop‟s business. Sometimes in-house brands
plug the price gap in certain product categories. To cash in on this, the company has big plans for its
in-house brands: from re-branding to repositioning, to homing in on product categories where existing
brands are not strong. Competition between brands is not an issue, because being a trading house, all
brands get equal emphasis. The in-house brand shopper is one who places immense trust in the
company and the quality of its goods and returns for repeat buys. And the company reposed its faith
in regular customers by including them in a concept called the First Citizen‟s Club (FCC). With
60,000 odd members, FCC customers account for 10 per cent of entries and for 34 per cent of the
turnover. It was the sheer appeal of the experience that kept pulling these people back. Not one to let
such an opportunity pass, the company ran a successful ad campaign (that talks about just this factor)
in print for more than eight years. The theme is still the same. In 1999, a TV spot, which liked the
shopping experience to the slowing down of one‟s internal clock and the beauty of the whole
experience, was aired. More recently, ads that spell out the store‟s benefits (in a highly oblique
manner) are being aired.
The campaign is based on entries entered in the Visitors‟ Book. None of the ads has a visual or text –
or any heavy handedly direct reference to the store or the merchandise. The ads only show shoppers
having the time of their lives in calm and serene locales, or elements that make shopping at the store a
pleasure – quite the perfect getaway for a cosmopolitan shopper aged between 25 and 45. The brief to
the agency, Contract, ensured that brand recall came in terms of the shopping experience, not the
product. And it has worked wonders. Value-addition at each store also comes in the form of special
care with car parks, power backup, customer paging, alteration service and gift-wrapping. To top it
all, cafes and coffee bars make sure that the customer does not step out of the store. In Hyderabad, it
has even created a Food Court. Although the food counter was not planned, it came about as there
was extra space of 67,000 sq. ft. Carrying the perfect experience to the shop floor is an attempt to
stack goods in vast open spaces neatly. Every store has a generic structure, though regional customer
variances are accounted for. Each store is on lease, and this is clearly Shoppers‟ Stop‟s most
expensive resource proposition – renting huge spaces in prime properties across metros, so far
totaling 210,000 sq. ft of retail space. Getting that space was easy enough for Shoppers‟ Stop, since
its promoter is the Mumbai-based Raheja Group, which also owns 62 per cent of the share capital.
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Questions:
1. What are the significant factors that have led to the success of Shoppers‟ Stop?
2. How should Shoppers‟ Stop develop its demand forecasts?
Caselet 2
The rise of personal computers in the mid 1980s spurred interest in computer games. This caused a
crash in home Video game market. Interest in Video games was rekindled when a number of different
companies developed hardware consoles that provided graphics superior to the capabilities of
computer games. By 1990, the Nintendo Entertainment System dominated the product category. Sega
surpassed Nintendo when it introduced its Genesis System. By 1993, Sega commanded almost 60 per
cent of Video game market and was one of the most recognized brand names among the children.
Sega‟s success was short lived. In 1995, Saturn (a division of General Motors) launched a new 32-bit
system. The product was a miserable failure for a number of reasons. Sega was the primary software
developer for Saturn and it did not support efforts by outside game developers to design compatible
games. In addition, Sega‟s games were often delivered quite late to retailers. Finally, the price of the
Saturn system was greater than other comparable game consoles. This situation of Saturn‟s misstep
benefited Nintendo and Sony greatly. Sony‟s Play Station was unveiled in 1994 and was available in
70 million homes worldwide by the end of 1999. Its “Open design” encouraged the efforts of outside
developers, resulting in almost 3,000 different games that were compatible with the PlayStation. It too
featured 32-bit graphics that appealed to older audience. As a result, at one time, more than 30 per
cent of PlayStation owners were over 30 years old. Nintendo 64 was introduced in 1996 and had eyepopping
64-bit graphics and entered in more than 28 million homes by 1999. Its primary users were
between the age of 6 and 13 as a result of Nintendo‟s efforts to limit the amount of violent and adultoriented
material featured on games that can be played on its systems. Because the company
exercised considerable control over software development, Nintendo 64 had only one-tenth the
number of compatible games as Sony‟s PlayStation did. By 1999, Sony had captured 56 per cent of
the video game market, followed by Nintendo with 42 per cent. Sega‟s share had fallen to a low of
1%. Hence, Sega had two options, either to concede defeat or introduce an innovative video machine
that would bring in huge sales. And Sega had to do so before either Nintendo or Sony could bring
their next-generation console to market. The Sega Dreamcast arrived in stores in September 1999
with an initial price tag of $199. Anxious gamers placed 300,000 advance orders, and initial sales
were quite encouraging. A total of 1.5 million Dreamcast machines were bought within the first four
months, and initial reviews were positive. The 128-bit system was capable of generating 3-D visuals,
and 40 different games were available within three months of Dream cast‟s introduction. By the end
of the year, Sega had captured a market share to 15 per cent. But the Dreamcast could not sustain its
momentum. Although its game capabilities were impressive, the system did not deliver all the
functionality Sega had promised. A 56K modem (which used a home phone line) and a Web browser
were meant to allow access to the Internet so that gamers could play each other online, surf the Web,
and visit the Dreamcast Network for product information and playing tips. Unfortunately, these
features either were not immediately available or were disappointing in their execution. Sega was not
the only one in having the strategy of adding functionality beyond games. Sony and Nintendo
followed the same approach for their machines introduced in 1999. Both Nintendo‟s Neptune and
Sony‟s PlayStation 2 (PS2) were built on a DVD platform and featured a 128-bit processor. Analysts
applauded the move to DVD because it is less expensive to produce and allows more storage than
CDs. It also gives buyers the ability to use the machine as CD music player and DVD movie player.
As Sony marketing director commented, “The full entertainment offering from Play Station 2
definitely appeals to a much broader audience. I have friends in their 30s who bought it not only
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IIBM Institute of Business Management
because it‟s a gaming system for their kids, but also a DVD for them.” In addition, PlayStation 2 is
able to play games developed for its earlier model that was CD-based. This gives the PS2 an
enormous advantage in the number of compatible game titles that were immediately available to
gamers. Further enhancing the PS2‟s appeal is its high-speed modem and allows the user‟s easy
access to the Internet through digital cable as well as over telephone lines. This gives Sony the ability
to distribute movies, music, and games directly to PS2 consoles. “We are positioning this as an allround
entertainment player,” commented Ken Kutaragi, the head of Sony Computer Entertainment.
However, some prospective customers were put off by the console‟s initial price of $360. Shortly
after the introduction of Neptune, Nintendo changed its strategies and announced the impending
release of its newest game console, The GameCube. However, unlike the Neptune, the GameCube
would not run on a DVD platform and also would not initially offer any online capabilities. It would
be more attractively priced at $199. A marketing vice president for Nintendo explained the
company‟s change in direction, “We are the only competitor whose business is video games. We want
to create the best gaming system.” Nintendo also made the GameCube friendly for outside developers
and started adding games that included sports titles to attract an older audience. Best known for its
extra ordinary successes with games aimed at the younger set, such as Donkey Kong, Super Mario
Bros, and Pokemon, Nintendo sought to attract older users, especially because the average video
game player is 28. Youthful Nintendo users were particularly pleased to hear that they could use their
handheld Game Boy Advance systems as controllers for the GameCube. Nintendo scrambled to
ensure there would be an adequate supply of Game Cubes on the date in November 2001, when they
were scheduled to be available to customers. It also budgeted $450 million to market its new product,
as it anticipated stiff competition during the holiday shopping season. With more than 20 million
PlayStation 2 sold worldwide, the GameCube as a new entry in the video game market would make
the battle for market share even more intense. For almost a decade, the video game industry had only
Sega, Nintendo, and Sony; just three players. Because of strong brand loyalty and high product
development costs, newcomers faced a daunting task in entering this race and being competitive. In
November 2001, Microsoft began selling its new Xbox, just three days before the GameCube made
its debut. Some observers felt the Xbox was aimed to rival PlayStation 2, which has similar functions
that rival Microsoft‟s Web TV system and even some lower level PCs. Like the Sony‟s PlayStation 2,
Xbox was also built using a DVD platform, but it used an Intel processor in its construction. This
open design allowed Microsoft to develop the Xbox in just two years, and gave developers the option
of using standard PC tool for creating compatible games. In addition, Microsoft also sought the
advice of successful game developers and even incorporated some of their feedback into the design of
the console and its controllers. As a result of developers‟ efforts, Microsoft had about 20 games ready
when the Xbox became available. By contrast, the GameCube had only eight games available.
Microsoft online strategy was another feature that differentiated of the Xbox from the GameCube.
Whereas Nintendo had no immediate plans for Web-based play, the Xbox came equipped with an
Ethernet port for broadband access to Internet. Microsoft also announced its own Web-based network
on which gamers can come together for online head-to head play and for organized online matches
and tournaments. Subscribers to this service were to pay a small monthly fee and must have highspeed
access to the Internet. This is a potential drawback considering that a very low percentage of
households world over currently have broadband connections. By contrast Sony promoted an open
network, which allows software developers to manage their own games, including associated fees
charged to users. However, interested players must purchase a network adapter for an additional
$39.99. Although game companies are not keen on the prospect of submitting to the control of a
Microsoft-controlled network, it would require a significant investment for them to manage their own
service on the Sony-based network. Initially the price of Microsoft‟s Xbox was $299. Prior to the
introduction of Xbox, in a competitive move Sony dropped the price of the PlayStation 2 to $299.
Nintendo‟s GameCube already enjoyed a significant price advantage, as it was selling for $100 less
than either Microsoft or Sony products. Gamers eagerly snapped up the new consoles and made 2001
Examination Paper of Marketing Management
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IIBM Institute of Business Management
the best year ever for video game sales. For the first time, consumers spent $9.4 billion on video
game equipment, which was more than they did at the box office. By the end of 2001 holiday season,
6.6 million PlayStation 2 consoles had been sold in North America alone, followed by 1.5 million
Xbox units and 1.2 million Game Cubes. What ensued was an all out price war. This started when
Sony decided to put even more pressure on the Microsoft‟s Xbox by cutting the PlayStation 2 price to
$199. Microsoft quickly matched that price.
Wanting to maintain its low-price status, Nintendo in turn responded by reducing the price of its the
GameCube by $50, to $149. By mid 2002, Microsoft Xbox had sold between 3.5 and 4 million units
worldwide. However, Nintendo had surpassed Xbox sales by selling 4.5 million Game Cubes. Sony
had the benefit of healthy head start, and had shipped 32 million PlayStation 2s. However, seven
years after the introduction of original PlayStation, it was being sold in retail outlets for a mere $49. It
had a significant lead in terms of numbers of units in homes around the world with a 43 per cent
share. Nintendo 64 was second with 30 per cent, followed by Sony PlayStation 2 with 14 per cent.
The Xbox and GameCube each claimed about 3 per cent of the market, with Sega Dreamcast
comprising the last and least market share of 4.7 per cent. Sega, once an industry leader, announced in
2001 that it had decided to stop producing the Dreamcast and other video game hardware
components. The company said it would develop games for its competitors‟ consoles. Thus Sega
slashed the price of the Dreamcast to just $99 in an effort to liquidate its piled up inventory of more
than 2 million units and immediately began developing 11 new games for the Xbox, four for
PlayStation 2, and three for Nintendo‟s Game Boy Advance. As the prices of video game consoles
have dropped, consoles and games have become the equivalent of razors and blades. This means the
consoles generate little if any profit, but the games are a highly profitable proposition. The profit
margins on games are highly attractive, affected to some degree by whether the content is developed
by the console maker (such as Sony) or by an independent game publisher (such as Electronic Arts).
Thus, the competition to develop appealing, or perhaps even addictive, games may be even more
intense than the battle among players to produce the best console. In particular, Nintendo, Sony, and
Microsoft want games that are exclusive to their own systems. With that in mind, they not only rely
on large in-house staffs that design games but they also pay added fees to independent publishers for
exclusive rights to new games. The sales of video games in 2001 rose to 43 per cent, compared to just
4 per cent increase for computer-based games. But computer game players are believed to be a loyal
bunch, as they see many advantages in playing games on their computers rather than consoles. For
one thing, they have a big advantage of having access to a mouse and a keyboard that allow them to
play far more sophisticated games. In addition, they have been utilizing the Internet for years to
receive game updates and modifications and to play each other over the Web. Sony and Microsoft are
intent on capturing a portion of the online gaming opportunity. Even Nintendo has decided to make
available a modem that will allow GameCube users to play online. As prices continue to fall and
technology becomes increasingly more sophisticated, it remains to be seen whether these three
companies can keep their names on the industry‟s list of “high scorers”.
Questions:
1. Considering the concept of product life cycle, where would you put video games in their life cycle?
2. Should video game companies continue to alter their products to include other functions, such as
email?
END OF SECTION B
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Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200-250 words).
1. What do you understand by product life cycle? Discuss implications and limitations of product
life cycle concept.
2. Describe role of marketing channels. List the different types of marketing channels.
END OF SECTION C
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