QUESTION ONE $[40]$

Mr Price confident that value$-$focused model will help it weather volatility

Mr Price Group has reported a $20\mathrm{.}1\%$ jump in full$-$year earnings, as consumers coming out of the

Covid$-19$ lockdowns revamped their wardrobes and homes, with acquisitions adding a boost.

Total revenue increased $23\%$ to R$28\mathrm{.}1$bn$,$ with retail sales up $26\%$ to R$26\mathrm{.}7$bn$,$ while headline

earnings per share rose to $1,282\mathrm{.}1$ cents in the $52$ weeks ended $2$ April.

The group attributed its revenue performance to a "highly sought$-$after merchandise assortment

offering strong value$$ and pointed to the two separate Kantar BrandZ and Brand Finance reports,

which both ranked Mr Price as the most valuable fashion apparel brand in South Africa. Additionally,

it noted that Mr Price Apparel was the most shopped fashion retailer in South Africa over the last

three months according to the Maps $2022$ report.

"This strong brand affinity coupled with the disciplined execution of $[$our$]$ fashion$-$value business

model, enabled the group to deliver differentiated merchandise at everyday low prices," the company

said in its results announcement.

Minimising impact of rising costs

Mr Price Group said it expects ongoing volatility moving forward. "Global supply chain challenges,

rising inflation and interest rate hikes are expected to continue, placing pressure on forecasting

efforts and the cost of doing business. These knock$-$on effects will be felt domestically, amidst other

previously communicated local challenges, exerting pressure on businesses and households. A

constrained consumer environment is anticipated to persist for most of $2022$ as post year end trade

has reflected."

The group said it will continue to strive for its operating model to be supportive of its value roots and

it aims to minimise the impact of rising input costs on its customers and operations. It mentioned that

adequate cover has been taken to protect the group against elevated exchange rate, freight rate and

other key cost pressures. To ensure price leadership, Mr Price said it has invested in "key defensive

departments" and is "holding certain price points" while striving to preserve overall margins.

Despite the expected challenges, Mr Price said that opportunity exists for organisations who

embrace uncertainty and pursue growth.

"The group$$s vision is clear, and it is focused on executing its strategic plans which include exciting

organic and inorganic prospects. The group$$s business model is well positioned to navigate an

adverse economic climate. It will continue to differentiate itself by delivering its brand promise

through fashion and value at everyday low prices. This gives it the advantage of attracting customers

trading down from higher price points as well as aspirational value shoppers, supported by its

convenient omnichannel store footprint," the company said. $($Source: Retailers New, June $2022)$

$2$

$1\mathrm{.}1$ "The group$$s vision is clear, and it is focused on executing its strategic plans which include

exciting organic and inorganic prospects. The group$$s business model is well positioned to

navigate an adverse economic climate. It will continue to differentiate itself by delivering its

brand promise through fashion and value at everyday low prices. This gives it the

advantage of attracting customers trading down from higher price points as well as

aspirational value shoppers, supported by its convenient omnichannel store footprint," the

company said. $(30)$

$1\mathrm{.}1\mathrm{.}1$ Product strategy often focuses on developing a competitive advantage through product

differentiation, low cost, rapid response, flexibility or a combination of these.

Describe the objectives of product and service design $(12)$

$1\mathrm{.}1\mathrm{.}2$ Discuss the factors that can influence market opportunities. Use examples to support your

answer $(18)$

$1\mathrm{.}2$ Discuss the five modes of transport that can be used to distribute materials