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Apr 08, 2018



Harish Kumar
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    In today's world of endless choice and prolific product options, brands are

    confronted with the challenge of gaining mindshare and market penetration. Most

    imaging and document product segments are extremely competitive, with multiple brands

    competing for share of mind in the battle for overall market share. In many cases, the

    competing products and services have very similar feature sets and price points that are

    available through comparable channels.

    Brand can often be the key discriminating factor in a customers decision to select one

    product over another. Today, Companies trying to create a strong brand image for their

    products to survive and face the competitions in the market.

    1.1.1 Brand

    Brand is essentially the sum of all experiences related to the product, service, and

    companies that make and deliver the product. Brand perceptions are shaped by functional

    experiences (i.e. speed, quality, reliability, ease of use) as well as emotional experiences

    (i.e. make me feel better, improve my performance, make my life/job more gratifying or

    easier) the customer associates with the product and company.

    It is essential for all companies today to create a good perception and perceived value

    about their brands. Customers having variety of choices and thus every company should

    strive to make their customers loyal to their brands by being strong brand in the market.


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    1.1.2Characteristics of Strong brands

    Strong brands are

    Valuable to the extent that enable firms to explore opportunities (through line and

    brand extension) and neutralize the competitive threats ( due to high customer

    retention and loyalty rate)

    Rare among a manufacturers / marketers current and potential competitors

    Costly to imitate and

    Without strategic substitutes.

    1.1.3 Brand Loyalty

    Brands perform valuable functions in enabling customers to adopt a differentiated

    product. Great brands have a distinctive memorable identity brands therefore, give

    identity. Identity in turn creates trust, which in turn creates loyalty. Ultimately, the

    loyalty ensures continuous usage of brands. To ensure continuous loyalty, the company is

    forced to maintain quality, which in turn ensures continuous usage so it is a full circle!


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    Perceived quality lies at the heart of what customers are buying and in that sense, it is the

    ultimate measure of the impact of a brand. A brands value to the company is largely

    created by the customer loyalty it commands. Since a company considers loyalty as a

    major asset, it encourages and justified loyalty-building programmes, which in turn help

    create and enhance brand equity. In a way, the loyal customer gets emotionally attached

    to the brand.

    1.1.4 Levels of Brand Loyalty

    Brand awareness: It is an important way of promoting commodity-related products. This

    is because for these products, there are very few factors that differentiate one product

    from its competitors. Therefore, the product that maintains the highest brand awareness

    compared to its competitors will usually get the most sales.

    Brand Associations: A particular brand is associated with the general product category

    in the mind of the consumer (share of mind) to the degree. Often a consumer will ask for

    a product by the specific brand name rather than the general name-for example, a person

    wanting facial tissues may ask for Kleenex. When this happens, the consumer is making a

    brand association.


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    Brand Familiarity: The awareness consumers have of a particular brand.

    Brand Attitudes: Opinion of consumers toward a product determined through market

    research. The brand attitude will tell what people think about a product or service,

    whether the product answers a consumer need, and just how much the product the

    consumer wants. Knowledge of brand attitude is very helpful in planning an advertising


    Brand Identity : Visible elements of a brand (such as colors, design, logotype, name,

    symbol) that together identify and distinguish the brand in the consumers' mind.

    Brand Personality The attribution of human personality traits (seriousness, warmth,

    imagination, etc.) to a brand as a way to achieve differentiation. Usually done through

    long-term above-the-line advertising and appropriate packaging and graphics.

    Brand Image: Impression in the consumers' mind of a brand's total personality (real and

    imaginary qualities and shortcomings). Brand image is developed over time through

    advertising campaigns with a consistent theme, and is authenticated through the

    consumers' direct experience.

    Brand positioning: It refers to target consumers reason to buy your brand in

    preference to others. It is ensures that all brand activity has a common aim; is guided,

    directed and delivered by the brands benefits/reasons to buy; and it focuses at all points

    of contact with the consumer.

    Brand preference: It isselective demand for a company's brand rather than a product;

    the degree to which consumers prefer one brand to another. In an attempt to build brand

    preference advertising, the advertising must persuade a target audience to consider the

    advantages of a brand, often by building its reputation as a long-established and trusted

    name in the industry. If the advertising is successful, the target customer will choose the

    brand over other brands in anycategory.

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    Brand Loyalty :Extent of the faithfulness ofconsumersto a particular brand, expressed

    through their repeat purchases, irrespective of the marketingpressure generated by the


    Brand Equity :Brand's power derived from the goodwill and name recognition it has

    earned over time, and which translates into highersales volume and higherprofit margins

    against competing brands.

    1.1.5 Loyalty programmes in India:

    Loyalty programs have been active in India since 1995, when British Airways launched

    the South Asia version of its Executive Club frequent-flyer program in India. That year,

    Shoppers Stop, launched its First Citizen Club (which has reached a headcount of

    644,500 at the end of Q1-2007, one of Indias best-known loyalty programs.)

    Today, loyalty efforts have penetrated every major vertical: hospitality, travel, retail,

    telecoms, media outlets, and consumables.

    The biggest challenge facing Indian marketers is the one facing marketers the world over:

    deriving actionable insight from customer data. While the more established sectors of

    fuel retail, travel are fairly established, most marketers still exist in a patchwork of

    segments with little knowledge of how to construct, administer and use loyalty programs.

    The Indian loyalty industry is still in its infancy as most programs are very much

    standalone, points-driven or discounting schemes. They have not matured to the extent of

    providing differential treatment at all customer interface points. Without segmented

    databases, its difficult to benefit from a CRM program.

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    1.2.1 FMCG Industry

    Products, which have a quick turnover, and relatively low cost, are known as Fast

    Moving Consumer Goods (FMCG). FMCG products are those that are replaced within a

    year. Examples of FMCG generally include a wide range of frequently purchased

    consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving

    products and detergents, as well as other non-durables such as glassware, bulbs, batteries,

    paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer

    electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.

    Indias FMCG sector is the fourth largest sector in the economy and creates employment

    for more than three million people in downstream activities. Its principal constituents are

    Household Care, Personal Care and Food & Beverages. The total FMCG market is in

    excess of Rs. 85,000 Crores. It is currently growing at double-digit growth rate and is

    expected to maintain a high growth rate. A well-established distribution network, low

    penetration levels, low operating cost, lower per capita consumption and intense

    competition between the organized and unorganized segments characterize FMCG


    The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in

    the third quarter of 2008-09 despite the economic downturn. The industry is expected to

    register a 15% growth in Q3 2008-09 as compared to the corresponding period last year.

    Unlike other sectors, the FMCG industry did not slow down since Q2 2008. the industry

    is doing pretty well, bucking the trend. As it is meeting the every-day demands ofconsumers, it will continue to grow. In the last two months, input costs have come down

    and this will reflect in Q3 and Q4 results.

    Market share movements indicate that companies such as Marico Ltd and Nestle India

    Ltd, with domination in their key categories, have improved their market shares and


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    outperformed peers in the FMCG sector. This has been also aided by the lack of

    competition in the respective categories. Single product leaders such as Colgate

    Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their

    respective categories, aided by innovations and strong distribution. Strong players in the

    economy segment like Godrej Consumer Products Ltd in soaps and Dabur in toothpastes

    have also posted market share improvement, with revived growth in semi-urban and rural


    1.2.2 Swot Analysis


    Low operational costs

    Presence of established distribution networks in both urban and rural areas

    Presence of well-known brands in FMCG sector


    Lower scope of investing in technology and achieving economies of scale, especially in

    small sectors

    Low exports levels

    "Me-too products, which illegally mimic the labels of the established brands. These

    products narrow the scope of FMCG products in rural and semi-urban market.


    Untapped rural market

    Rising income levels, i.e. increase in purchasing power of consumers

    Large domestic market- a population of over one billion.

    Export potential

    High consumer goods spending


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    Removal of import restrictions resulting in replacing of domestic brands

    Slowdown in rural demand

    Tax and regulatory structure

    1.2.3 Industry Category and Products

    The industry includes the following important category in it.

    Household Care

    Personal Care

    Food & Beverages

    1.2.4 Growth Prospect

    Large Market

    India has a population of more than 1.150 Billions, which is just behind China.

    According to the estimates, by 2030 India population will be around 1.450 Billion and

    will surpass China to become the World largest in terms of population. FMCG Industry,

    which is directly related to the population, is expected to maintain a robust growth rate.

    Source: UN Population Division: Medium variant


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    Spending Pattern

    An increase is spending pattern has been witnessed in Indian FMCG market. There is an

    upward trend in urban as well as rural market and an increase in spending in organized

    retail sector. An increase in disposable income, of household mainly because of in-crease

    in nuclear family where both the husband and wife are earning, has leads to growth rate

    in FMCG goods.

    Changing Profile and Mind Set of Consumer

    People are becoming conscious about health and hygienic. There is a change in the mind

    set of the Consumer and now looking at Money for Value rather than Value for

    Money. We have seen willingness in consumers to move to evolved products/ brands,

    because of changing lifestyles, rising disposable income etc. Consumers are switching

    from economy to premium product even we have witnessed a sharp increase in the sales

    of packaged water and water purifier. Findings according to a recent survey by A. C.

    Nielsen shows about 71 per cent of Indian take notice of packaged goods labels

    containing nutritional information compared to two years ago which was only 59 per


    1.2.5 Market Opportunities

    Vast Rural Market

    Rural India accounts for more than 700 Million consumers, or 70 per cent of the Indian

    population and accounts for 50 per cent of the total FMCG market. The working rural

    population is approximately 400 Millions. In addition, an average citizen in rural India

    has less then half of the purchasing power as compare to his urban counterpart. Still there

    is an untapped market and most of the FMCG Companies are taking different steps to

    capture rural market share. The market for FMCG products in rural India is estimated ~

    52 per cent and is projected to touch ~ 60 per cent within a year. Hindustan Unilever Ltd

    is the largest player in the industry and has the widest market coverage.


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    Export - Leveraging the Cost Advantage

    Cheap labor and quality product & services have helped India to represent as a cost ad-

    vantage over other Countries. Even the Government has offered zero import duty on

    capital goods and raw material for 100% export oriented units. Multi National Companies

    out-source its product requirements from its Indian company to have a cost advantage.

    India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew

    apart from being the second largest producer of rice, wheat, fruits & vegetables. It adds a

    cost advantage as well as easily available raw materials.

    1.2.6 Sectoral Opportunities

    Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below:

    Dairy-Based Products

    India is the largest milk producer in the world, yet only around 15 per cent of the milk is

    processed. The organized liquid milk business is in its infancy and has large long-term

    growth potential. Even investment opportunities exist in value-added products like

    desserts, puddings etc.

    Packaged Food

    Only about 10-12 per cent of output is processed and consumed in packaged form, thus

    highlighting the huge potential for expansion of this industry.

    Oral Care

    The oral care industry, especially toothpastes, remains under penetrated in India with

    penetration rates around 50 per cent. With rise in per capital incomes and awareness of

    oral hygiene, the growth potential is huge. Lower price and smaller packs are also likely

    to drive potential up trading.


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    Unorganized players dominate Indian tea market. More than 50% of the market share is

    capture by unorganized players highlighting high potential for organized players.


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    ITC is one of India's foremost private sector companies with a market capitalization of

    over US $ 22 billion and a turnover of US $ 6 billion.* ITC is rated among the World's

    Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by

    Forbes magazine, among India's Most Respected Companies by Business World and

    among India's Most Valuable Companies by Business Today. ITC ranks among India's

    `10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and

    published by the Economic Times. ITC also ranks among Asia's 50 best performing

    companies compiled by Business Week.

    ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,

    Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,

    Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products.

    While ITC is an outstanding market leader in its traditional businesses of Cigarettes,

    Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even

    in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal

    Care and Stationery.

    ITC employs over 26,000 people at more than 60 locations across India. The Company

    continuously endeavors to enhance its wealth generating capabilities in a globalizing

    environment to consistently reward more than 3,46,000 shareholders, fulfill the

    aspirations of its stakeholders and meet societal expectations. This over-arching vision of

    the company is expressively captured in its corporate positioning statement: "EnduringValue. For the nation. For the Shareholder."

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    1.3.1 History and evolution

    ITC ltd is celebrating its 100 Inspiring years as on Aug 24 2010. ITC was incorporated

    on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the

    Company's ownership progressively Indianised, the name of the Company was changed

    from Imperial Tobacco Company of India Limited to India.

    Though the first six decades of the Company's existence were primarily devoted to the

    growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies

    witnessed the beginnings of a corporate transformation that would usher in momentous

    changes in the life of the Company.

    ITC's Packaging & Printing Business was set up in 1925 as a strategic backward

    integration for ITC's Cigarettes business. It is today India's most sophisticated packaging


    In 1975 the Company launched its Hotels business with the acquisition of a hotel in

    Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of

    ITC's entry into the hotels business was rooted in the concept of creating value for the

    nation. ITC chose the hotels business for its potential to earn high levels of foreign

    exchange, create tourism infrastructure and generate large scale direct and indirect

    employment. Since then ITC's Hotels business has grown to occupy a position of

    leadership, with over 100 owned and managed properties spread across India.

    In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam

    Paperboards Limited, which today has become the market leader in India. Bhadrachalam

    Paperboards amalgamated with the Company effective March 13, 2002 and became a

    Division of the Company, Bhadrachalam Paperboards Division. In November 2002, thisdivision merged with the Company's Tribeni Tissues Division to form the Paperboards &

    Specialty Papers Division. ITC's paperboards' technology, productivity, quality and

    manufacturing processes are comparable to the best in the world. It has also made an

    immense contribution to the development of Sarapaka, an economically backward area in

    the state of Andhra Pradesh. It is directly involved in education, environmental protection


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    and community development. In 2004, ITC acquired the paperboard manufacturing

    facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu.

    The Kovai Unit allows ITC to improve customer service with reduced lead time and a

    wider product range.

    In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint

    venture. Since inception, its shares have been held by ITC, British American Tobacco

    and various independent shareholders in Nepal. In August 2002, Surya Tobacco became a

    subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited

    (Surya Nepal).

    In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing

    company and a major supplier of tissue paper to the cigarette industry. The merged entity

    was named the Tribeni Tissues Division (TTD). To harness strategic and operational

    synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the

    Paperboards & Specialty Papers Division in November 2002.

    Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business

    Division for export of agri-commodities. The Division is today one of India's largest

    exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4

    million farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in

    August 2004 at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operatonal

    in the 3 states of Madhya Pradesh, Maharashtra and Uttar Pradesh.

    In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the

    launch of Expressions range of greeting cards. A line of premium range of notebooks

    under brand Paperkraft was launched in 2002. To augment its offering and to reach a

    wider student population, the popular range of notebooks was launched under brand

    Classmate in 2003. Classmate over the years has grown to become Indias largest

    notebook brand and has also increased its portfolio to occupy a greater share of the

    school bag. Years 2007- 2009 saw the launch of Children Books, Slam Books, Geometry


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    2003 witnessed the introduction of Sunfeast as the Company entered the biscuits

    segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007. In

    eight years, the Foods business has grown to a significant size with over 200

    differentiated products under six distinctive brands, with an enviable distribution reach, a

    rapidly growing market share and a solid market standing.

    In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire

    value chain found yet another expression in the Safety Matches initiative. ITC now

    markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and

    Aim Metro.

    ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the

    manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands

    include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine,

    Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa.

    ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body

    care products for men and women in July 2005. Inizio, the signature range under

    Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for

    men (Inizio Homme) and women (Inizio Femme). Continuing with its tradition ofbringing world class products to Indian consumers the Company launched 'Fiama Di

    Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October

    and December 2007 respectively. The Company also launched the 'Superia' range of

    Soaps and Shampoos in the mass-market segment at select markets in October 2007 and

    Vivel De Wills & Vivel range of soaps in February and Vivel range of shampoos in June



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    1.3.2 Different Brands in ITC

    1.3.3 Corporate strategy

    ITC is a board-managed professional company, committed to creating enduring value for

    the shareholder and for the nation. It has a rich organizational culture rooted in its core

    values of respect for people and belief in empowerment. Its philosophy of all-round value

    creation is backed by strong corporate governance policies and systems.

    ITCs corporate strategies are :

    Create multiple drivers of growth by developing a portfolio of world class

    businesses that best matches organisational capability with opportunities in

    domestic and export markets.

    Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards

    & Packaging, Agri Business and Information Technology.

    Benchmark the health of each business comprehensively across the criteria of

    Market Standing, Profitability and Internal Vitality.


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    Ensure that each of its businesses is world class and internationally competitive.

    Enhance the competitive power of the portfolio through synergies derived by

    blending the diverse skills and capabilities residing in ITCs various businesses.

    Create distributed leadership within the organisation by nurturing talented and

    focused top management teams for each of the businesses.

    Continuously strengthen and refine Corporate Governance processes and systems

    to catalyse the entrepreneurial energies of management by striking the golden

    balance between executive freedom and the need for effective control and


    1.3.4 Accreditations andAwards

    ISO 14001 Certification

    All ITC factories and hotels are ISO 14001 certified, except the two new hotel

    properties, ITC Hotel Grand Maratha Sheraton & Towers and ITC Hotel Sonar

    Bangla Sheraton & Towers, which are in the process of seeking accreditation.

    ITCs cigarette factory in Kolkata was the first of its kind in the world to be


    The Green Leaf Threshing (GLT) plants at Chirala and Anaparti were the first in

    the world in their category to get accreditation.

    ITC Hotel Maurya Sheraton & Towers was the first to be certified in the Indian

    hotel industry.

    The specialty papers Unit at Tribeni, the Paperboards Unit at Bhadrachalam,

    Hotel Mughal Sheraton at Agra and ITC WelcomHotel Chola Sheraton at

    Chennai were certified in 2002-03.

    OHSAS 18001

    The Chirala and Anaparti Units were conferred the Occupational Health and Safety Audit

    Systems 18001 accreditation by Messrs. DNV Certification B.V., The Netherlands.


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    Swords of Honour from the BritishSafety Council

    The Chirala and Anaparti GLTs were conferred in 2002.

    The Saharanpur and Munger cigarette factories and the Tiruvottiyur and Munger

    packaging Units received five star audit grading in 2002

    Environmental Champion Award

    The ITC Hotel Maurya Sheraton was conferred this award by the Federation of Hotel &

    Restaurant Associations of India (FHRAI) for 2002. It was also the runner-up in the

    Environmental Excellence award given by the International Hotels & Restaurants

    Association, Paris.

    National Energy Conservation Award

    ITCs paperboards Unit at Bhadrachalam, Andhra Pradesh won the award for the Pulp

    and Paper sector, given by the Ministry of Power, Government of India. The Unit also

    received the National Energy Management Award from the CII in 2002.

    Leader in EHS

    The Tiruvottiyur packaging unit was recognised by CII (Southern Region) for

    Leadership and Excellence in Safety, Health and Environment.


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    Retailers are the main source for any business so their expectation and demand

    should be known.

    Retailers demand keeps on changing due to advancement in technology so their

    expectation should be tracked on regularly.

    Retailers expectation is useful to improve the features of product.

    On fulfilling the expectation of the retailers, retailers satisfaction can be derived



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    The scope is wide because it is based on the retailers expectation so that products

    can be improved.

    Since there is intense competition meeting the retailers expectation it becomes a


    The study reveals retailers perception towards the product.

    It also reveals the expectation about the frequent supplies and discounts offered to

    the retailers and their satisfaction towards it.


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    Primary Objective :

    To study the influence of merchandising activities of retailers in promoting the

    products ITC brand.

    Secondary Objective:

    To study the effectiveness of promotion strategies in various supermarkets and

    departmental stores which the company currently follows.

    To ascertain how point of purchase, in shop display and unique selling

    proposition play a role in consumers buying decision.

    To study the retailers expectation regarding the merchandising activities of ITC.

    To find out the impact of sales promotion measures among the retailers

    To identify the market potential of the firms product.


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    Every research undertaken has certain elements of limitations. There were a few

    limitations and constraints during the course of study as follows:

    Due to time constraints the survey could be conducted only in Chennai thus the

    result obtained cannot be generalized for the entire country

    Some of the respondent found difficult to understand some questions in


    Lack of interest disposed by a few respondents leading to unauthentic response


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    To ensure sales, companies go to great lengths to make sure that their products

    are visible in stores and are presented in an appealing, 'sellable' way. This is called

    merchandising, which includes product packaging, placement, promotions and pricing to

    appeal to the target market.

    Merchandising is the methods, practices, and operations used to promote and

    sustain certain categories ofcommercial activity. In the broadest sense, merchandising is

    any practice which contributes to the sale of products to a retail consumer. At a retail in-

    store level, merchandising refers to the variety of products available for sale and the

    display of those products in such a way that it stimulates interest and entices customers to

    make a purchase.

    Merchandising, as commonly used in Marketing also means the promotion of

    merchandise sales, as by coordinating production and marketing and developing

    advertising, display, and sales strategies to increase retail sales. This includes disciplines

    in pricing and discounting, physical presentation of products and displays, and the

    decisions about which products should be presented to which customers at what time.

    Retail merchandising is the process used in order to conduct retail sales. As

    part of the process, the merchandiser pays close attention to the types of products offered

    for sale, how to best present those products to consumers, and determining what is a

    reasonable retail price for each unit sold. While retailers have traditionally engaged in the

    task of retail merchandising in a physical location, the Internet has now made it possible

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    Promotional merchandising

    In retail commerce, visual display merchandising means maximizing

    merchandise sales using product design, selection, packaging, pricing, and display that

    stimulates consumers to spend more. This includes disciplines in pricing and discounting,physical presentation of products and displays, and the decisions about which products

    should be presented to which customers at what time.

    Promotional Products are about long term brand building

    A brand can most clearly be defined as "What customers say about you when you're not

    there". You don't build a brand because you have low prices. You don't build brand

    because you have high prices. You build your brand based on EVERY activity that yourcompany does: The product you sell, how your customer service rep answer the phone,

    the design of your brochures,

    You don't build a brand overnight. It takes time and takes lot of patience to nurture what

    you want "the customers to say about you when you're not there".

    Promotional items and merchandise significantly increases your presence and brand


    If you are in the business of building, establishing or maintaining a brand in the market

    place, you cannot ignore promotional items - it is a part of the marketing mix.

    Promotional Products are about competing for visibility

    Let's face it - everybody is doing it! Every competitor you face in the market place have

    aggressive Promotional Product program in place and if you don't arm yourself with a

    great, up to date Promotional program, your brand will suffer.

    You need to start thinking about your brand fighting as if fighting for retail space and that

    retail space is always being taken up by something or somebody else. The bottom line is -

    if you don't take the retail space and build your brand - somebody else will.

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    Promotional items are a Price Competitive Alternative to costly marketing

    When you are considering Cash Rewards and Gift Cards for promotional activities and

    sales campaigns, by including Promotional Merchandise, you will not only drive down

    cost and increase brand penetration, but you will be able to measure campaign

    performance based on the merchandise selected. If your campaign success can be traced

    back to the merchandise, there is your starting grid for measuring ROI!

    Promotional Products should take 5 % of your Marketing Budget

    A good rule of thumb among marketing executives is to dedicate 5% of your budget to

    Promotional Products. You will need to consider filling your stock levels so that you can

    support the Sales Force, the Trade Shows and HR, who can benefit from using

    promotional products as gifts in employee recognition programs.

    One definition of Merchandising is a marketing practice in which the brand or image

    from one product or service is used to sell another. It is most prominently seen in

    connection with films, usually those in current release and with television shows oriented

    towards children.

    Trademarked brand names, logos, or character images are licensed to manufacturers of

    products such as toys or clothing, who then make items in or emblazoned with the image

    of the license, hoping they'll sell better than the same item with no such image.

    Merchandising, especially in connection with child-oriented films and TV shows, often

    consists of toys made in the likeness of the show's characters or items which they use.

    However, sometimes it can be the other way around, with the show written to include the

    toys, as advertising for the merchandise. The first major example of this was the TV

    show "He-man and the Masters of the Universe," in the early 1980s, but this practice has

    been common in children's broadcasting ever since.

    Sometimes merchandising from a television show can grow far beyond the original show,

    even lasting decades after the show has largely disappeared from popularity (Hello


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    Kitty). In other cases, huge amounts of merchandise can be generated from a pitifully

    small amount of source material (Mashimaro).

    A smaller niche in merchandising is the marketing of more adult-oriented products in

    connection with similarly adult-oriented films and TV shows. This is common especially

    with the science fiction and horror genres. (Examples: Star Trek, McFarlane Toys)

    Occasionally shows which were intended more for children find a following among

    adults, and you can see a bit of a crossover, with products from that show oriented

    towards both adults and children. (Gundam model kits)

    The most common adult-oriented merchandising, however, is that related to professional

    sports teams (and their players).

    Sometimes a brand of non-media products can achieve enough recognition and respect

    that simply putting its name or images on a completely unrelated item can sell that item.

    (An example would be Harley-Davidson branded clothing.)

    Retail supply chain

    Merchandising at a Walgreens in Chicago

    In the supply chain, merchandising is the practice of making products in retail outlets

    available to consumers, primarily by stocking shelves and displays. While this used to be

    done exclusively by the stores' employees, many retailers have found substantial savings

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    in requiring it to be done by the manufacturer, vendor, or wholesaler that provides the

    products to the retail store. In the United Kingdom there are a number of organizations

    that supply merchandising services to support retail outlets with general stock

    replenishment and merchandising support in new stores. By doing this, retail stores have

    been able to substantially reduce the number of employees needed to run the store.

    While stocking shelves and building displays is often done when the product is delivered,

    it is increasingly a separate activity from delivering the product. In grocery stores, for

    example, almost all products delivered directly to the store from a manufacturer or

    wholesaler will be stocked by the manufacturer's/wholesaler's employee who is a full

    time merchandiser. Product categories where this is common are Beverage (all types,

    alcoholic and non-alcoholic), packaged baked goods (bread and pastries), magazines and

    books, and health and beauty products. For major food manufacturers in the beverage and

    baked goods industries, their merchandisers are often the single largest employee group

    within the company. For nationwide branded goods manufacturers such as The Coca-

    Cola Company and PepsiCo, their respective merchandiser work forces number in the


    Effective merchandising

    Merchandising is an extension of the selling process whereby the manufacturer seeks to

    ensure that the retailer sells his products as quickly and profitably as possible.

    Convenience and availability of merchandise is provided by the retail market which are

    expensive to achieve by direct selling. The manufacturer gives the retailer assistance to

    stimulate demand for his wholesale merchandise and encourage its purchase by the

    consumers. Visual merchandising involves the display of stock so that they can easily be

    viewed by the consumers. When the retailer sells his varied merchandise fast after it has

    been delivered to him by the manufacturer, he will buy another one. Fast moving

    merchandise means that both the manufacturer and the retailer are making profits and the

    products are meeting consumer needs and satisfaction.

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    3.1.1 RESEARCH

    According to REDMAN AND MORY research is defined as a systemized

    effort to gain new knowledge.


    Research methodology is a way to systematically solve the research problem.

    Researchers not only need to know how to develop test, how to calculate chi-square,

    coefficient of correlation, weighted average ,analysis of variance , how to apply

    research techniques , but they also need to know which of these methods or

    techniques are relevant and which are not, and what would they mean and indicate

    and why. Researchers also need to understand the assumptions underlying various

    techniques and they need to know the criteria by which they can decide that certain

    techniques and procedure will be applicable to certain problems and others will not.

    All this means that it is necessary for the researcher to design his methodology for his

    problem as the same may differ from problem to problem


    A research design is the arrangement of condition for collection and analysis of

    data in a manner that aims to combine relevance to the research purpose with

    economy in procedure.


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    While deciding about the method of data collection to be used for the study, theresearchers should keep in mind two types of data.

    Primary Data are those, which are collected afresh and for the first time, and

    thus happened to be original in character

    Secondary Data are those which have already been collected by someone else

    and which have already been passed through the statistical process.

    The type of data collection adopted for this research was primary data. The

    methodology adopted to collect the primary data was survey method. Thus, a

    sample survey was conducted among those 75 retailers of ITC ltd using the


    The period of survey is June 2010 August 2010.

    3.1.5 PILOT STUDY

    The data gathering exercise was begun with a survey pretest analysis. Samples of

    35 retailers of ITC ltd were investigated to assess the suitability of the questionnaire

    design. Based on the response entertained by them and analysis of the same questionnaire

    was found to be suitable for the study.


    Under this method, the investigator has to meet the retailers personally to get

    information. The data obtained by this method are reliable with greater degree of




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    Inthis project, the researcher has used questionnaire for collecting the primary data. The

    questionnaire consists of a number of questions typed in a definite order on a form or set

    of forms relating to certain specific aspects regarding which the researcher collects the

    data. The types of questions used in the questionnaire for the project are


    Open-ended questions

    Open-ended questions are the type of questions used to get suggestion from

    the respondent in order to give feed back to the organization.

    Close-ended questions

    Close-ended questions are the type of questions with a clear declined set of

    alternatives that confine the respondent to choose one of them. It is of two types

    a) Multiple-choice questions

    In this type of questions, the respondents are given 4-5 choices in which the

    respondents has to select one. For this type of questions, we can apply statistical

    tools like Chi-square and weighted average method.

    b) Dichotomous questions

    In this type of questions, the respondents are given two choices in which

    the respondents has to select one. For this type of questions, we can apply

    statistical tools like internal estimate method.


    In ranking, questions will have the ranking skill, where the respondents are free to

    rank them according to their preference.

    3.1.9SAMPLE SIZE:


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    A sample size of 75 retailers has been considered in order to study the

    merchandising effectiveness of the retailers towards the ITC ltd.

    3.1.10 STATISTICAL TOOLS USED. Analysis

    Percentage method helps to find out the most preferred choice of attributes by

    having 100 as the percentage value. It is the simplest form of calculation that can be used

    for comparison of various attributes. Chart

    The tables and charts are used mainly for the multiple choice questions. Andthese tables and charts are used to frame the findings. Graphical method is used in order

    to represent the factor in various graphical methods like pie chart, column chart, tubes,

    cone and cylinder. Chi-square:

    Chi-square is a test statistic used to test the significant relationship between the

    observed frequencies ant the expected frequencies. Chi-square is a non-parametric test

    developed by Karl Pearson. Goodness of fit implies perfect tallying of the observed and

    estimated values. In Chi-square, if the observe data and the estimated data do not have

    significant difference, that is, the calculated value of 2 is less than the table value of 2

    at a given degree of freedom), then the estimate is said to be a good fit. If the calculated


    Number of respondents

    Percentage = ----------------------------------- * 100

    Total respondents

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    value of 2 is greater than the table value of 2 at a given degree of freedom, then the

    estimate is not considered a good fit.

    In this method, we test if two attributes considered are dependent or not.

    Null Hypothesis Ho : Attributes are independent

    Alternative Hypothesis H1: Attributes are not independent

    Degrees of Freedom : (Number of rows 1) (Number of columns-1)

    Where, O i = Observed Frequency and Ei = Expected Frequency Interval estimation:

    An estimation of a population parameter given by two numbers between which

    the parameter may be considered to lie is called as interval estimation of the parameter.

    Where, p is the sample proportion of success, q is the sample proportion of failure, n is

    the sample size & z is the standard variants for a given confidence level. Weighted average:

    Weighted Average Method is used when the relative importance of the different

    items is not the same. The formula for computing weighted average method is,




    2( )







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    Net Score = (Weighted average for the column * No of Respondents in the column)

    Total weight Analysis of Variance

    It is a statistical technique specially designed to test whether the means of more

    than two quantitative populations are equal . It consists of classifying and cross

    classifying statistical result and testing whether the means of a specified result

    classification differ significantly. The analysis of variance is studied by:

    1. Correction factor (CF) = T 2


    2. Total sum of squares(TSS) = X12 + X 2

    2+ X 32 + X4

    2 + + X n2


    3. Sum of squares of columns (SSC ) =

    ( X1 )2 + ( X 2 )

    2+ ( X 3 )2 + + (X n)

    2 CF


    4. Sum of squares of rows (SSR) =

    ( Y1 )2 + ( Y 2 )

    2+ ( Y 3 )2 + + (Y n)

    2 CF


    5. Sum of squares of error (SSE) = TSS (SSC + SSR )

    6. Construct ANOVA table

    7. Calculate the values of F

    F1 (for variance between the rows) = Variance between the rows

    Residual Variance


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    F2 (for variance between the columns) = Variance between the columns

    Residual Variance


    3.2.1 Table showing the duration of the Respondents associated with

    ITC ltd.

    SL.No No of years

    No of


    Percentage of


    1 Less than 1 Year 5 7

    2 1-2 years 6 8

    3 2-3 years 6 8

    4 3-4 years 15 20

    5 More than 5 years 43 57

    Total 75 100

    (Source: Primary Data)


    7 % of the respondents have been associated with ITC for the period of less than 1


    8 % of the respondents have been associated with ITC for the period of 1-2 Years.

    8% of the respondents have been associated with ITC for the period of 2-3 Years.

    20% of the respondents have been associated with ITC for the period of 3-4


    57% of the respondents have been associated with ITC for the period of more

    than 5 Years



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    The majority of the retailers have been associated with ITC for more than 5 years

    and this shows that the company is maintaining good relationship to retain their


    3.2.1 Chart showing the duration of the Respondents associated with

    ITC ltd.

    Chart showing the duration of respondents

    associated with ITC Ltd

    0 20 40 60 80 100 120

    Less than 1 Year

    1-2 years

    2-3 years

    3-4 years

    More than 4 years


    Percentage of


    No of respondents


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    3.2.2 Table showing retailers dealing with all the products available

    with ITC Ltd

    SL.No Retailers opinion

    No of


    Percentage of


    1 Yes 25 33

    2 No 50 67

    Total 75 100

    (Source: Primary Data)


    33% of the retailers are dealing with all products of ITC.

    67% of the retailers are not dealing with all products of ITC.


    It is inferred that majority of the retailers are not dealing with all products of ITC.


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    Chart showing retailers dealership

    with ITC

    0 50 100 150




    Percentage of


    No of respondents

    3.2.3 Table showing the satisfaction level of Retailers in Terms of


    SL.No Retailers opinion

    No of


    Percentage of


    1 Highly satisfied 14 16

    2 Satisfied 19 22

    3 Nether not 44 52

    4 Dissatisfied 8 9

    5 Highly Dissatisfied 1 1

    Total 75 100

    (Source: Primary Data)


    16% of the retailers expect Credit terms from ITC ltd.

    22% of the retailers expect Frequent supply from ITC ltd.

    52% of the retailers expect discounts and margins from ITC ltd.

    9% of the retailers expect variety of products from ITC ltd.


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    1% of the retailers expect Financial advisory from ITC ltd.


    It is inferred that majority of retailers expect discounts and margins from ITC ltd in terms

    of dealership.

    3.2.4 Table showing the promotional measures offered to Retailers Promotional


















    Weights 5 4 3 2 1

    1 Occasional


    10 13 21 18 13 214 14.26 R

    2 Free samples 27 15 12 12 9 264 17.6 R2

    3 Tradediscounts

    43 15 7 6 4 312 20.8 R

    4 Gift coupons 8 6 8 20 33 161 10.73 R

    5 Trade



    11 7 15 17 25 187 12.46 R4

    (Source: Primary Data)

    W1 as 5, W2 as 4, W3 as 3, W4 as 2, W5 as 1


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    Weighted average =Weightage total / total weight.

    Weightage total = [(R1*W1) + (R2*W2) + (R3*W3) + (R4*W4) + (R5*W5)]


    Retailers have ranked as 1 for trade discounts

    Retailers have ranked as 2 for free samples.

    Retailers have ranked as 3 for occasional gifts.

    Retailers have ranked as 4 for promotional products.

    Retailers have ranked as 4 for gift coupons.


    It is inferred that majority of retailers have ranked as 1 for trade discounts


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    3.2.5 Table showing the reason for customer purchase level

    SL.No ReasonsNo of





    You suggest tocustomers 16 21


    They decide andask for 35 47

    3 Point of purchase 24 32

    Total 75 100

    (Source: Primary Data)


    21 % of the reason is the retailers suggest to customers.

    47% of the reason is customers decide and ask for the product.

    32 % of the reason is point pf purchase.


    It is inferred that majority of the reason is customers decide and ask for the product.


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    Chart showing reasons for custome


    You suggest to


    They decide and

    ask for

    Point of purchas



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    3.2.6 Table showing retailers expectation in terms of dealership

    SL.No Factors

    No of


    Percentage of


    1 Credit terms 14 19

    2 Frequent Supply 13 17

    3 Discounts/ Margins 33 44

    4 Variety of Products 11 15

    5 Financial advisory 4 5

    Total 75 100

    (Source: Primary Data)


    19% of the retailers expect Credit terms from ITC ltd.

    17% of the retailers expect Frequent supply from ITC ltd.

    44% of the retailers expect discounts and margins from ITC ltd.

    15% of the retailers expect variety of products from ITC ltd.

    5% of the retailers expect Financial advisory from ITC ltd.


    It is inferred that majority of retailers expect discounts and margins from ITC ltd in terms

    of dealership.


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    3.2.7 Table showing the satisfaction level of retailers towards the Credit

    terms allowed by ITC ltd.

    SL.No Satisfaction level

    No of


    1 Yes 61

    2 No 14

    Total 75

    (Source: Primary Data)


    81% of the retailers are satisfied with the credit terms offered by ITC ltd.

    19% of the retailers are not satisfied with the credit terms offered by ITC ltd


    n = Sample Size = 75





    19.081.011 === pq




    at 95% confidence level

    Standard error 045.075




    Interval Estimation[ ( ) ] == StdErrorp


    0.811.96*0.045 = [0.72, 0.89]



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    It is inferred that satisfaction level of retailers with respect to credit terms lies between

    72% and 89%

    Chart showing the satisfaction level for

    credit terms allowed by ITC

    Satisfaction level





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    3.2. 8 Table showing the time taken for the delivery of the goods to the


    SL.No Days for delivery

    No of


    Percentage of


    1 Less than a week 47 63

    2 1-2 Weeks 21 28

    3 More than 2 weeks 7 9

    Total 75 100

    (Source: Primary Data)


    63% of the retailers feel that it takes less than 1 week for the delivery of the goods

    for the consumers.

    28% of the retailers feel that it takes 1-2 week for the delivery of the goods for the


    9% of the retailers feel that it takes more than 2 weeks for the delivery of the

    goods for the consumers.


    It is inferred that majority of the retailers feel that there is frequent supply of the ordered



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    No of responde

    C ha rt sho w ing the time taken f

    de livery o f goo ds to the retail

    Day s for delivery

    Less than a wee

    1-2 W eek s

    M ore than 2 wee



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    3.2.9 Table showing the satisfaction level for the delivery of the goods to

    the retailers on time.

    SL.No Retailers opinion

    No of


    Percentage of


    1 Strongly agree 9 122 Agree 47 61

    3 Neither not 14 194 Disagree 5 7

    5 Strongly Disagree 1 1

    (Source: Primary Data)


    12% of the retailers strongly agree that delivery is on time.

    61% of the retailers agree that delivery is on time.

    19% of the retailers neither agree nor disagree.

    7% of the retailers disagree that delivery is on time.

    1% of the retailers strongly disagree that delivery is on time.


    It is inferred that majority of the retailers agree that delivery is on time.


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    0% 20%40%60%80%100%

    Retailers opinion






    Chart showing satisfaction for deliv

    of products on time


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    3.2.10 Table showing the factors affecting the distribution network

    SL.No Factors

    No of


    Percentage of


    1 Packaging 9 122 Transportaion 18 24

    3 Distance 22 294 Time 14 19

    5 Communication 12 16

    Total 75 100

    (Source: Primary Data)


    12% of the retailers feel that packaging affects distribution network.

    24% of the retailers feel that transportation affects distribution network.

    29% of the retailers feel that distance affects distribution network.

    19% of the retailers feel that time affects distribution network.

    16% of the retailers feel that communication affects distribution network.


    It is inferred that majority of the retailers feel that distance affects distribution network.


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    Chart showing the factors that affe

    distribution network









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    3.2.11 Table showing the retailers opinion towards the

    improvement in their business by selling ITC products

    Ho: The retailers opinion about the improvement in their business by selling ITC products

    is uniformly distributed.

    H1: The retailers opinion about the improvement in their business by selling ITC products

    is not uniformly distributed

    Oi Ei (Oi-Ei)2 (Oi-Ei)

    2/Ei11 15 16 1.06

    29 15 196 13.06

    22 15 49 3.26

    7 15 64 4.26

    6 15 81 5.40


    Cal 27.040


    cal = ( )




    iii EEO1



    05.0 Cal = 27.040


    05.0 With 4 =9.49


    05.0 Cal >


    05.0 table value

    Therefore, we reject HO


    Hence, we conclude that retailers opinion about the improvement in their business byselling ITC products is not uniformly distributed.


    3.2.12 Table showing the overall satisfaction level of retailers of ITC ltd.


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    Sl.NoSatisfaction level

    No of retailersPercentage ofretailers

    1 Yes 70 93

    2 No 5 7

    Total 75 100

    (Source: Primary Data)


    93% of retailers are satisfied by dealing with ITC ltd.

    7% of retailers are not satisfied by dealing with ITC ltd.


    It is inferred that majority of the retailers are satisfied by dealing with ITC ltd.










    Chart showing overall satisfaction level of

    retailers of ITC ltd

    3.2.13 Table showing the brand status of ITC Ltd


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    Chart showing the brand status of IRetailers opinion

    Strongly agree


    Neither not


    Strongly Disagree



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    3.2.15 Table showing the features of ITC ltd

    Factors Very high High Medium Low Very low

    Reliable 3 16 5 0 0

    Competent 5 11 8 0 0

    Efficient 4 10 10 0 0

    Creative 6 5 10 3 0

    Reasonable 1 7 13 2 1

    (Source: Primary Data)


    Calculation showing that the features of ITC ltd

    Ho: There is no difference between different attributes contributing to brand Image.

    H1: There is a difference between different attributes contributing to brand Image. X1 X2 X3 X4 X51 3 5 4 6 1

    2 16 11 10 5 7

    3 5 8 10 10 13

    4 - - - 3 2

    5 - - - - 1Total 24 24 24 24 24 X12 X2

    2 X32 X4

    2 X52

    1 9 25 16 36 1

    2 256 121 100 25 49

    3 25 64 100 100 169

    4 - - - 9 4

    5 - - - - 1

    Total 290 210 216 270 224

    STEP: 1

    Correction factor = (T) 2/n

    T=120 n=18



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    = 800

    STEP: 2

    Total sum of squares



    2+X52) - (CF)

    (1110) (800)


    STEP: 3

    Total sum of squares between the columns

    [(X1)2/n1+ (X2)

    2/n2+ (X3)2/n3+ (X4)

    2/n4+ (X5)2/n5] (CF)

    [(24)2/3 + (24)2/3 + (24)2/3 + (24)2/4 +(24)2/5] - (800)

    = 35.2

    STEP: 4

    Total sum of squares within thecolumns

    [Total sum of squares total sum of square between the columns]

    = 274.8


    Source of


    Sum of


    Degrees of


    Mean sum of



    Between the


    35.2 4 8.8


    Within the


    274.8 13 21.14

    Fcal = 2.40

    Table value at 5% level of significance = 3.185

    Fcal < F0.05 table value

    Therefore, we accept Ho.



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    There is no difference between different attributes contributing to brand Image.


    The majority of the retailers have been associated with ITC for more than 5 years

    and this shows that the company is maintaining good relationship to retain their



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    It is inferred that majority of the retailers are not dealing with all products of ITC.

    It is inferred that majority of retailers expect discounts and margins from ITC ltd

    in terms of dealership.

    It is inferred that majority of retailers have ranked as 1 for trade discounts.

    It is inferred that majority of the reason is customers decide and ask for the


    It is inferred that majority of retailers expect discounts and margins from ITC ltd

    in terms of dealership.

    It is inferred that satisfaction level of retailers with respect to credit terms lies

    between 72% and 89%.

    It is inferred that majority of the retailers feel that there is frequent supply of the

    ordered goods.

    It is inferred that majority of the retailers agree that delivery is on time.

    It is inferred that majority of the retailers feel that distance affects distribution


    Hence, we conclude that retailers opinion about the improvement in their business

    by selling ITC products is not uniformly distributed.

    It is inferred that majority of the retailers are satisfied by dealing with ITC ltd.

    It is inferred that majority of the retailers agree that ITC enjoys a brand status.

    It is inferred that majority of the retailers would suggest ITC products to other


    There is no difference between different attributes contributing to brand Image.


    All products can be made available to the retailers.

    Other trade promotion gifts can be given.


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    The credit terms can be increased.

    Distance factor affects distribution system.

    Packaging can be changed.

    A Study on Influence of MerchandisingActivities in Promoting ITC Brands

    Name of the store:


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    Name of the Retailer:Place:

    1. How long you have been associated with ITC Ltd?

    Less than 1 year 1-2 years 2-3 years 3-4 years More than 5 years

    2. Are you dealing with all the products available with ITC Ltd?

    Yes No

    3. To what extend are you satisfied?

    To a very great extent To a great extent To some extent

    4. Rank the promotional measures offered to you by ITC quite often?

    Occasional gifts Free samples Trade discounts

    Gift coupons Trade promotion products

    5. Customer purchase ITC products mainly because

    You suggest to customers They decide & ask for Point of purchase & display

    6. What do you expect from ITC in terms of dealership?

    Credit terms Frequent supply Discounts /Margins

    Variety of products Financial advisory

    7. Are you satisfied with the credit terms allowed by ITC?

    Yes No


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    8. How many days does it take to get the ordered goods ?Less than a week 1-2 weeks More than 2 weeks

    9. Delivery of ITC products are always on time

    Strongly agree Agree Neither agree nor agree

    Disagree Strongly disagree

    10. Factor that is mostly affecting the distribution network of ITC products is?

    Packaging Transportation Distance Time Communication

    11. Your total business is improved by selling ITC products

    Strongly agree Agree Neither agree nor agree

    Disagree Strongly disagree

    12. Rank the various brands dealt by you as per your order of preference

    SunfeastAshirvaadFiama Di WillsWillsOthers

    13. Overall, are you satisfied in dealing with ITC?

    Yes No

    14. ITC enjoys a brand status when compared to other brands

    Strongly agree Agree Neither agree nor agree

    Disagree Strongly disagree


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    15. Rank the following according to the features of ITC Ltd.

    Factors Very High High Medium Low Very LowReliability





    16. Would you suggest other retailers to purchase ITC products?

    Yes No

    17. Suggestions, if any _________________________________