Retail marketing 2

The Indian environment

• Increased urbanization

• Urban-rural ratio

• Purchasing power is increasing

• 25more cities with more than 10lakh population coming up

• Piramal group have opened outlets

• Tatas have started Westside in 1998 .

• Kasliwal group has Landmark citi which includes apparel, consumer goods and food articles.

• Shopper’s stop

• Pantaloon have outlets in garments, household and leisure products

• Itc has plans to have about one hundred outlets in country

• Organized retailing – scope• 100 crore population• Almost 20 crore households including urban &rural ones.• The NCAER has given some patterns which state that-• 0.10 – very rich• 3.40-the consuming class• 5.25- the climbers• 5.25- the aspirants• 6.00-the poorer section of society• Thus around top 3.5 crores of households are the

consuming classes• 5.25 crore climbers will have more purchasing power in

years to come

• Also marketers have started concentrating on rural areas that have population over 500.

• An estimate suggest that out of 33 lakh retail outlets, just 12 lakh are urban & rest are in rural areas.

• And still according to NCAER marketers have not yet effectively touched even 25 percent of rural households.

• The retailers thus have a large scope in reaching the other 75% of rural households .

• The wholesalers and semi wholesalers are vital in SCM to reach secondary, tertiary &end user point. thus retailers would play imp role in reaching mass markets.

• The NCAER has given some information about consumption of some products in rural areas.

• By 2005, organized retailing or OR will be nearing 1,60,000 crores.

• Will provide employment to more than one lakh ppl.

Limitations of small scale retailing The small scale retailing has following limitations- 1. fragmented supply base 2.Improper supply chain infrastructure. 3.Relationship between price & operating cost Thus ,• fragmented supply base results in lower

efficiency• In distant areas the supply chain infrastructure

proves to be more costly for retailers• Operating costs are low for small retail shop. But

since supply is not at a lower price hence margins are on lower side.

Need for retailing on large scale• Providing value for money• Developing the retail store as a brand which

conveys TRUST• Offering one-stop shop with a variety of products

&services.

retail store name has developed as a brand in many parts of the world. This helps in building trust.

consumers can get a variety of products under one roof . This saves them time &energy.

Definitions &Nature of retailing• Retailing is concerned with sale of goods and

services to consumers.• Retailing is an intermediate step between

consumer &manufacturer.• Retailing consists of activities involved in selling

goods & services to ultimate consumers.• Retail sale is one in which buyer is consumer, as

opposed to a business purchaser• Retailing activities are those in marketing which

provide satisfaction to consumers.• Retailing is link in distribution system

Main characteristics that differentiate in retail transactions

• Buying motive

• Trade discount

• Quantity purchased

• Stocking requirements

• Taxes

• Price differentials

Nature of Retailing • Value added- the value may be related to- Quality Convenience Exclusivity Service response perception of the consumer about the importance which he

attaches for getting the product influences the value of product.

the system of distribution , with the retailer at the end which is nearest to consumer adds valure to the product. The concept is thus termed as “value added”.

The “value added resellers (VAR)” is another concept – like in computer companies, many timers they work with VARs who customize the hardware &software for individual clients or customer segments & earn a price premium in this process

The concept of utility Utility is attribute of an item that gives consumer, the satisfaction of

wants. The something that makes a product capable of satisfying wants is its utility. Marketing and especially Retailing creates utility for product

• Form utility- related to production. Form of raw material is changed as per needs. Marketing contributes as style, size & color.

• Place utility- when product made available to potential consumer. • Time utility- means making a product available at the time when

consumer needs it.• Information utility- informing the potential buyers that a particular

product exists. till then the product has no value.• Image utility- special type of information utility- it is emotional value

that a person attaches to product . Its associated with image or social standing. Expensive car or designer clothes.

• Possession utility- when consumer buys product. Ownership is transferred to buyers. this is the most important of all utilities.

The Retailer- role &functions• Role – retailers link producers & consumers. That is major role of

retailers. Perform valuable service for both-producers &consumers. Sale of goods to the ultimate consumers .• Functions- Customer service- retailers act as service agent to consumer. Also

after sales service is essential. Creating a place in market- retailers demonstrates product to consumer. The consumer can satisfy all

queries about product. Building the image- this function of building image is important. For this

retailer should be convinced himself about the product before selling. Delivery of product- retailer arranges physical delivery of the product

to consumer. The delivery can be taken at point of purchase or customer can ask to deliver at any other place.

Arranging credit- two wheelers, TVs, electronic goods, cars are bought on credit. The retailer arranges for the credit facilities through a bank or finance co.

Solution of any problem of consumer- this function of retailer stems from the fact that consumer purchases product from retailer . For any problem , he contacts the retailer & retailer has to exert & arrange for solutions.

Importance Importance of retailing can be discussed as importance

from point of view of1.Consumer- he gets goods needed by him at any time &

place that he wants & gets is from retailing. Eg . An air traveler needs a gift for friend can use in flight catalogue & get delivered at friends place. e-commerce has increased importance of retailing from consumers point of view.

2. Retailer –able to interpret needs of consumer. Convey to the manufacturer.

3. Social point of view- reaching various goods to a diversified population can be done through retailing. No of ppl involved in distribution help total economy. Economic activity expands- society gets benefits.

Retail planning • Identifying needs & customer database1. Why planning2. The market opportunities3. Customer database• Operational planning1. Developing a market plan2. Implementing plan3. Evaluation• Networking –1. Network &networking2. Business networks3. Relevance in retailing.

Identifying needs & customer database1.Why planning ---- retailer must have knowledge of marketing &selling. Must have details of purchases &financial accounting Planning is most important in mgmt. same is true for

retail mgmt. Must know how to make best use of limited resources. Planning helps to deal with future more efficiently Can give vision to managers to focus on main objectives Can help in unifying & coordinating activities of everyone

who is involved in total process. Correct planning can minimize costs Periodic evaluation is possible Progress can be measured Determines course for action

2.The market opportunities

• Step -1 identifying the needs: the retailers must always look for market opportunities. Opportunities arrive & disappear at great speed. So, retailer must scan continuously for the environment.

GAP ANALYSIS is word which is used to identify these opportunities. A retailer has to analyze situation where there is a gap between desires, needs & wants of consumers. SWOT ANALYSIS can be used by retailer to analyze business.

The market opportunities• Step -2 determining the position in the market- this can

be done by 1. Being innovative2. Being aggressive3. Giving quality products & services Differential advantage can be achieved using:1. Adoption of new technology2. Lower cost due to better financial mgmt and

techniques3. New organizational design4. More efficient distribution system5. New & better products offered to consumes6. Better inventory mgmt.

3. Customer database• The customer database should be cost effective. The

retailer should get info about availability, accuracy &time. The data can be updated in a computer which is called as database. In India, data collected about consumers is about-

1. Family demographics2. Geo-demographics3. Socio-economic information4. Store user/non user5. Purpose for which a visit to a store is necessary6. Time availability7. Number of visits in a week or a month8. Stores usually visited9. Features in a store which are expected by customer or

preferred.

Operational planning1. Developing a market plan: a retailers business play should be • giving details• Be specific• In written format The major elements of a good plan are• Specific objective should be set up• Use of all resources should be planned• Various alternatives are to be considered• Plan should be simple &flexible• Specific strategies should be suggested for achieving objectives• Periodic evaluation & updating. The retailer should have a “mission statement ”which

should answer• In which business the retailer is?• What is scope of business?• What is vision & direction of growth? And then a “budget ”should be

developed.

2.Implementing the plan

• No good plan can be successful if poorly executed. In some cases, whether it is product related planning or price related planning or promotion related planning , the retailer must do implementation very systematically.

3. The evaluation: period evaluation should be there and it will inform us about the shortcomings. It will also help to correct wherever needed. Thus it is an ongoing process. It has to be worked out on individual circumstances .

Networking 1. Network & networking: it is a system of selling

in which an individual organizes others & receives a commission on their sales/ the sales then increase thru networking.

it is also described as a system of developing & maintaining professional contact with ppl in the same business or field. companies are encouraging more teamwork centered around core business processes

in supply chain mgmt , the concept of network & networking have one more term called as network marketing. This concept is also described as multi-level marketing (MLM)

2.Business network : many companies have strategic alliances with foreign firms who serve as suppliers , distributors, joint venture partners, technological partners or even competitors . They build “global business networks” to extend their global reach. Here , time scheduling &adhering to schedule for effective completion of project is very crucial.

3. Relevance in retailing: networking is considered as network marketing for purpose of understanding relevance in retailing. The sales officer gives product to those who are known to him. They in turn motivate their friends to purchase. Thus it is different from direct marketing and thus networking can be understood.

Types of retailinga. Store retailing• Departmental store• Independent store• Super marketb. Non store retailing: • Mail order/direct mail• Catalogue retailing• Telemarketing/ teleshoppping• Online retailing/ web retailing• Direct selling /inhome selling• Automatic vending machines.c. Organized retailing• Corporate retail chain• Consumer co-operatives• Franchisee arrangements

Retailing can also be classified

1.On basis of ownership

2. On basis of types of products dealt with

3. On basis of size turnover

Store retailing• Retail stores with specific locations where consumers

reach.• The relevant thing here is- who the consumer is. the

product is sold for consumer’s personal use.• Retail life cycle- just like product, retail shops grow and

then decline. the stores retailing can be discussed as-1. Departmental stores: has product lines-clothing, home

furnishings, household. Each line is operated as separate dept. eg. in Pune we have “super Shoppe”.

“Discount departmental stores” are shops which have limited customer service and low mark ups, carrying diversified product lines.e.g. Wal-mart,k-mart. they keep operating costs low by hiring minimum of personnel. Service is kept at minimum & price is most used promotional component. they vary in size,operations&mgmt. many consumers opt for these shops as they pay lower in exchange for ‘bulk purchases’.

2.independent retailer: this is a store mostly a single entrepreneur-a proprietary shop. it has limited merchandize. A shoe shop, vegetable shop, florist shop, men’s clothing's or children dresses etc.

sometimes these are ‘speciality stores’. e.,g. A crockery shop, stainless steel shop etc. in urban areas, another type called –a boutique is coming up. They appeal to a limited target audience. They are located in fashionable localities and mostly sell fashionable products. They are small in size and mostly have a unique product. “convenience store ”is word used for independent shops

3. Super markets. it is a large, low cost, low margin, high volume self service operation designed to serve consumers total needs for food, laundry & household maintenance products. They generally earn an operating profit of only one percent of their sales turnover.

The main features area. Several related product linesb. A high degree of self servicec. Centralized checkoutd. Competitive pricese. Emphasis on low pricesf. These stores have different types of goods like sports

goods, books and electronic goods etc. “off price retailers” buy at less than regular wholesale

prices and charge consumers less than usual retailers.

Non store retailing• The transactions occur away from a retail store are

called nonstore retailing1. Mail order/direct mail- letters, brochures &product

samples are sent to consumers via mail or email. Credit cards & club memberships are very popular.

2. Catalogue retailing-it allows retailer to “carry” item that cannot be easily accommodated within store because of individual size, price or assortment. Done thru phone, mail or computer. Maintenance of database for catalogue is necessary. So the costs are on higher side.

3. Telemarketing/ teleshoppping- the seller gets contacts on telephone. Promoted on TV channels. Viewers are given nos . They can contact and order.

4. Online retailing/ web retailing- consumers use computers to see products on screen and make purchases. Its still in infancy in India. Amazon.com,etc.

5. Direct selling /inhome selling- personal contact between a sales person and consumers. Called as in home selling. Product can be seen in reality. A demonstration can also be received. Drawback is cost of selling-sale commissions are as high as 40%. This is used for household cleaning products.

6.Automatic vending machines- it is sale of product thru machine where there is no personal contact between buyer and seller. The merit is convenient purchase. Used for coffee, cold drinks, candy, cigarette etc

Organized retailing• Primarily related to ownership1. Corporate retail chain- org of two or more

centrally owned and managed stores that handle same line of products. They have advantages over independent individual retail stores. They can buy at lower prices since their purchase is high. They can hire specialists for pricing, promotion, merchandising and sales etc. major disadvantage is inflexibility which does not allow on spot decisions at unit level.

2. Consumer co operatives3. Franchisee arrangements

• Corporate R chain-an org of 2or more centrally managed stores, mostly handles same product lines, individual stores have very little autonomy, have advantage of large purchase at a time compared to independent store, also can employ management specialists for scm,merchndising, accounting, category, forecasting, inventory and cost controls etc.major disadvantage-inflexibility as centralized controls, competitive spot decisions at store unit level not allowed.

• Consumer cooperatives-shareholders r primarily consumers of store so price advantages and also dividends as per purchase volumes-grahak peth.These stores help checking and managing price lines thru authorities and ngo,s

• Franchise arrangement- a contractual association. Could • be between manufacture or wholesaler or service

organization and independent business people or firm. who buy the rights to own operate one or more units in this system.

• Services retailing-3 types-1-rental goods –car rental,2-owned goods-car repair,3-non-goods ,home delivery, wrapping services, providing credit.

• Retailing of financial services, atm retailing,• Industrial retailing- engineering tools needed by sme units. • Food items retaling-spencers-daily,dial a meal, pizza chains

etc• Factory outlets-prices r mostly at wholesale level or slightly

more, near the factory. C prefers fresh fruits near the garden.

• Retail micromarketing-need based, niche, local markets and customizing efforts for the same.

• International retailing-related to globalization, cross cultures. Habits, needs , wants , business environments etc