Professional Documents
Culture Documents
MODULE-1
RETAILER-CHARACTERISTICS
Retailer is a person who specializes in selling certain types of goods and/or services to consumers
for their personal use
Connecting link between wholesalers and consumers
A merchant middleman
Sells directly to consumers
Deals in small quantity
Deals in variety of goods
FUNCTIONS OF RETAILER
Collection and assembling of variety of goods
Undertakes risk
Give credit facility to customers
Collect market information
Undertake promotion
Attracts consumers
Gives guidance to consumers
Buyers need not hold stock
Convenience
Creates time, place and possession utility
RETAILING-Retailing includes all activities involved in selling goods or services to the final
consumers for their personal, non-business use- Kotler
“The set of activities that markets products or services to final consumers for their own personal
or household use. It does this by organizing their availability on a relatively large scale and
supplying them to consumers on a relatively small scale”
The word ‘Retail’ is derived from the French word with the prefix ‘Re’& the verb ‘tailer’
meaning to cut again.
Retailing includes all the activities involved in selling services directly to final consumers for
personal, non-business use.
A retailer or retail store is any business enterprise whose sales volume comes primarily from
retailing.
NATURE OF RETAILING
It is that part of marketing which creates time, place and possession utility
A legal activity, social activity and economic activity
A system and goal oriented activity
It includes services also
Buy products from distant places
Sell to many different consumers
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SCOPE OF RETAILING
All activities involved in the sale of goods or services to final consumer
It includes
Predominantly food stores(non-specialized and specialized)
Predominantly non-food stores( non specialized non-food stores, textiles and leather ,household
items, some other etc)
Other types(mail order, door-to-door, vending machine, repairing, multi level marketing )
RETAIL MANAGEMENT
Scope
Strategic planning
Organizing
Staffing
Implementing
Controlling
Two important developments of the 18th Century-: the provision of Railroads & Telegraphs
. Wholesale business developed
In1852 the first departmental store: Bon Marche was set up in Paris with Money back guarantee
on purchases.
Montgomery ward launched the world’s first mail order catalogues.
The Industrial Revolution.
Self-Service Retail stores started in 1916.
The development of Super-Markets & Convenience Markets.
Specialty Stores, Malls & other formats.
The rise of the Web
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SERVICES TO CONSUMERS:
SERVICES TO MANUFACTURERS/WHOLESALERS:
The retailer looks after the entire process of distribution, which enables manufacturers to concentrate
on production.
By advertising & displaying goods, the retailer creates demand for the product.
As the retailer is in close touch with customers, he collects the necessary market information &
supplies the same to manufacturer through wholesaler.
He finds customers for the new products introduced in the market.
CLASSIFICATION OF RETAILERS
INDEPENDENT RETAILER:
One who owns & operates only one retail outlet, which is managed by the owner & a few other
local hands or family members.
The ease of entry into retail market.
Has an advantage of having a one to one rapport with most of his customers.
FRANCHISE:
A right to market a product or provide a service in a specified area. Such a right is provided by a
manufacturer to a wholesaler or a retailer through some form of written agreement.
The exclusive right to sell the product or use of trade name in certain areas is ussually in exchange
for an initial fee.
The individual or group (wholesaler or retailer) to whom the company (franchiser) grants an
exclusive right to market its product or service or use of its name in a certain territory is known as
franchisee.
Advantages to Franchiser-
He is able to expand his business through franchised outlets.
He receives regular income from franchises who pay a percentage of their Gross revenue.
He can have a control over the pricing, advertising & selling of his products by their franchisee.
Advantages to Franchisee-
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The risk is reasonably low.
He can capitalize the good names of the franchiser with comparatively small investment.
He gets support of all kinds from the franchiser including promotional assistance & marketing
guidance.
As he invests money, he automatically gets an incentive & takes interest & also enjoys independence
in operations.
With the booking of a large manufacturer he can secure funds from banks & financial institution.
Disadvantages to Franchiser-
- For day-to-day operation, the franchiser has to rely on the ability & efficiency of the franchisee.
- The effectiveness of franchising is much less than direct retailing by the manufacturer himself.
Disadvantages to Franchisee-
- Owning a franchisee is no guarantee of wealth. It is not necessarily the cheapest. According to some
analysts, it costs
10 – 30 % more to buy a franchise than to open a business independently.
- All franchisees are not largely profitable. Some franchisees barely survive.
- The franchiser utilize franchisees in early stages to undertake sale of his products but when
distribution channel is set up the franchiser pushes franchisee & takes over the outlet.
- Franchisers may take important decisions without consulting franchisees.
- Most franchise agreements are one sided - in favor of the franchiser.
LEASED DEPARTMENTS:
They are also called shop-in-shops, as a section of a dept in Retail store is leased/rented to an
outside party.
It is a good method for expanding his product offering to the customers.
A new trend in India by setting up small retail outlets in high traffic areas like Malls.
The main aim is to be available to consumer near his place of work/home.
- The stores display only a fraction of the merchandise/products sold in the anchor stores.
CONSUMER CO-OPERATIVES:
A retail institution owned by its member customers. The co-operative may also arise largely
because of dissatisfied consumers whose needs are not being fulfilled by the existing retailers.
- As the members of the co-operative largely run these co-operatives, there is a limitation on their
growth opportunities.
This deals with the Target Market that they cater to.
CONVENIENCE STORES:
These are relatively small stores located near residential areas & offer a limited line of
convenience products like eggs.
The Food Marketing Institute defines this retail format “ as a small local store selling mainly
groceries, open until late at night or even 24hrs/day & is abbreviated to c-store.
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They are not so popular in India, but has started to come up at petrol pumps like H.P Speed mart
and In & Out can be termed as convenience stores.
They target customers who want to make their purchase quickly.
SUPERMARKETS:
These are large, low margin, high volume, self-service operations designed to meet the needs for
food, groceries & other non-food items. 30% of grocery market is in this form.
Supermarkets in India are growing fast.
Variations of this business model have emerged-:
1) A superstore-: which is larger than a conventional supermarket with at least 25,000
items & more non- foods.
2) A combination store-: which is a superstore & full-line pharmacy with GM/HBC
products accounting for at least 15% of Sales.
Characteristics of supermarket
It is a large store with enough moving space & parking ground.
Located in the main shopping area.
Deals in good items & household items.
Similar goods are kept together in separate department.
Self-service is the basis.
Credit facility is not available.
Advantages:
Its operating expenses are low, due to self- service, it is profitable also.
The consumers get goods of standard quality at lower price.
Well- to- do customers can park their cars in the space provided.
Disadvantages:
It cannot keep those articles which require the assistance of salesman to sell.
A customer cannot buy all products he needs from a supermarket as he is provided with a limited
range of products.
Customers do not get credit facilities & customer services are absent.
HYPERMARKET :
The word “hypermarket” is derived from the French word ‘hypermarche’, which is a
combination of a supermarket & a department store.
The cheapest prices will be for the articles.
Hypermarkets are designed to attract customers from a significantly large area with their low price
offers, unique range & offers
A wide range of products including food & non-food products.
SPECIALTY STORES
A store specializing in a particular type of merchandise or single product of durable goods (i.e.,
Home furniture, household goods, consumer electronics/domestic appliances).
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These are characterized by a narrow product line with deep assortments in that product line.
They concentrate on apparel, jewellery, fabrics sporting goods etc..
They have a clearly defined target market & their success lies in serving their needs.
E.g.: Proline fitness station & Gautier furniture.
DEPARTMENTAL STORES:
Aristide Boucicaut, son of a successful hat maker founded the first department store
”Bonmarche” in Saint-Germain, Paris in 1838.
The store lured shoppers by selling different types of goods all under one roof.
The General stores eventually became department store as small towns became cities.
The store layouts made shopping easier for consumers, irrespective of their social/economic
background.
They offered new customer services never seen before such as restaurants, reading rooms, wrapping
services, rest rooms, new types of merchandise & so forth.
E.g.: Shopper’s stop, Westside & Lifestyle.
The merchandise is sold at less than retail prices. They buy manufacturer’s seconds, overruns &
off season at a deep discount. The merchandise may be in odd sizes, unpopular colors or with minor
defects.
These stores may be manufacturer owned or departmental store.
These outlets are usually seen by the parent company as a means of increasing the business.
- The factory outlets in case are owned by manufacturer, and then it will stock only company
merchandise.
- This format largely depends on volume sales to make money.
CATALOGUE SHOWROOMS:
They usually specialize in hard goods such as house ware, jewellery etc.
A customer walks into the retail showroom & goes through the catalogue of the products that he
would like to purchase.
Some stores require the customer to write out the product code number & hand it over to the clerk
who arranges for the product from warehouse for inspection & purchase.
The sizes of retail outlets have changed to large & are called Big Box.
Discount department stores- Ranging from 80,000sq.ft. to 130,000sq.ft. .They offers a wide variety
of merchandise including automotive parts & services etc.
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Category killers- Ranging from 20,000sq.ft. to 120,000sq.ft. They are specialty retailer who offers a
very large selection in the chosen product category & economical prices. They focus only on one
category. E.g.: Toys R Us
Outlet stores- Ranging from 20,000sq.ft. to 80,000sq.ft. They are typically the discount arms of
major department stores such as Nordstorm Rack & J.C. Penny Outlet.
Warehouse clubs- Ranging from 104,000sq.ft. to 170,000sq.ft. offer a variety of goods in bulk, at
wholesale prices. They provide a limited number of product items. E.g: Costco Wholesale, Sam’s
Club.
OTHER FORMATS:
Super warehouse store- A hybrid warehouse /superstore with 50,000-plus items & the full range of
service departments, featuring high- quality perishable & reduced prices.
Limited assortment store- A low- price outlet with minimal service & fewer than 2,000 items. It
features numerous private label- products & is popular among food stamp recipients, seeking to
stretch their limited dollars.
Supercenter- A large food-drug combination store & mass- merchandiser. These average more than
170,000sq.ft. & typically devote up to 40% of the store to grocery items, which are often sold at
loss-leader prices.
Wholesale club- A retail/wholesale hybrid that offers consumers & small businesses, a limited &
economical selection of food & non- food products. These measure about 120,000sq.ft; 60-70% of
the space is devoted to bulk sizes of both Grocery and GM/HBC products.
Direct marketing
Mail Order Business
Tele Marketing
Automated vending
Internet marketing
Direct selling
DIRECT SELLING
Direct selling refers to sale of products to ultimate consumers through face to face sale presentations
at home or in the work place. it is traditionally called door to door selling.
Better ware and Avon cosmetics
Merits
Shortest and time saving method.
Saving of middlemen profit.
Personal touch with customers.
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Direct touch with market feelings.
Limitations
Limited market coverage
Increased administration burden and costs
Large investments for showroom and for maintaining sales force.
More risks.
DIRECT MARKETING
Direct marketing refers to the techniques used to get consumers to make a purchase from their home
,office or other non retail setting.
Direct marketing is an attempt to approach consumers directly. It is a personal approach to
consumers.it is much more personal than mass advertising.so it is a key part of the development of
relationships with customers.
Disadvantages
Television home shopping: This was developed with the advent of cable tv. tv viewers tuning in to a
cable shopping channel see a ‘show’ where products are demonstrated by a ‘host’.
Consumers can call the host while the show is in tv to ask questions about the product or purchase it.
Kiosk marketing: Kiosks marketing simply refers to marketing through kiosks. Kiosks are
information and ordering machines placed in stores, airport and in other location. These machines
provide information about the product and customers can order any product or item through it.
Eg:Car Max the used car superstore in USA uses a kiosk with a touch screen computer to guide
consumers through the vast inventory of as many as 1000 cars and trucks.
TELE MARKETING
The use of the telephone as an interactive medium for promotion and sales.
Telemarketing will grow to become a $480 billion+ business by 2009? Business to business
telemarketing sales will leap to $268.3 billion from $220.3 billion in 2005. The Direct Marketing
Association, www.the-dma.org’s most recent report forecasts business to consumer telemarketing
revenues will climb to $212.9 billion from $182.3 billion in 2005.
Inbound telemarketing
Publish, display and mention your phone numbers in catalogs, direct mail, emails, faxes, print ads,
on websites and in DRTV/radio spots to generate orders and leads. Cross-sell/up-sell callers to boost
revenues. Make your CRM strategy gain results by presenting targeted offers on inbound
telemarketing calls.
Outbound telemarketing
Call customers and prospects to sell products and services, generate and qualify leads, prompt them
to visit stores and showrooms and set appointments. Give existing buyers heads-up on hot deals.
Turn outbound customer care calls into outbound telemarketing calls by cross-selling/upselling
targeted offers.
Automated Telemarketing
Automated telemarketing, using interactive voice response (IVR) is an effective, inexpensive way to
process large numbers of inbound telemarketing calls. Outbound telemarketing using IVR delivers
offers quickly at low cost, generating inbound telemarketing leads and sales.
VENDING MACHINES
During the early 1880s, the first commercial coin-operated vending machines were introduced in
London, England and dispensed post cards. English publisher and bookshop owner, Richard Carlisle
invented a vending machine for selling books, around the same time.
In 1888, the Thomas Adams Gum Company introduced the very first vending machines to the
United States. The machines were installed on the elevated subway platforms in New York City and
sold Tutti-Fruiti gum. In 1897, the Pulver Manufacturing Company added animated figures to its
gum machines as an added attraction.
Coin-operated Restaurants
Vending machines soon offered everything including; cigars, postcards, stamps, etc. In Philadelphia,
a completely coin-operated restaurant called Horn & Hardart was opened in 1902 and stayed opened
until 1962.
The machine does not get tired but provides faithful services round the clock.
The machine is best suited for selling small sized products,having low unit value and low unit value
and low margin of profit, which it is inconvenient and expensive to sell through regular stores.
Disadvantages
Separate vending machines are required for each product.the machines are costly .hence huge capital
investment is needed.
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The product should be standardized.
The machines require feeding from time to time.
They do n t take back the products once sold.
There is no scope for bargaining.
The machine may stop running due to mechanical faults and cause nuisance to consumers.
The customer has to procure the specific type of coin for inserting into the machine. This may not
always be convenient
ONLINE MARKETING
On line marketing is conducted through interactive online computer system which link consumers
with sellers electronically. Many retailers are setting up home page on the internets World Wide Web to
disseminate information about their companies and products.
Internet marketing
(E-Commerce)
E- commerce simply refers to buying and selling of goods and services through internet. It is a process
of making business transactions by two or more parties through computer and some type of network.
Types
B 2 B – Business to Business (whole sale & retail)
C 2 B – Consumer to Business
B 2 G – Business to Government
G 2 C – Government to Consumer
Positives:
Ease of Entry.
Low overhead
Geographic Flexibility
You can be almost any where in the world as long as you have an internet connection. Your business
is open 24 hours a day and seven days a week.
You do not have to deal with a boss
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Almost of us have dealt with some pretty arrogant, mean, and stupid bosses but when you in the
internet marketing business you call the shots.
You do not have to deal with co. workers
You can set your own hours
When you have a regular job you have to work 9-5 or when your employer tells you to come to
work. In internet marketing you have more flexibility in your schedule.
You do not have to deal with employees
Employees can be a pain. Employees can be very demanding and you have to worry if they are
going to come to work on time and it cost you more money because you have to pay your employees
those benefits
Negatives:
It is a kind of trade where business is done through post or mail. Customers do not visit the seller’s
shop. The seller advertises his goods through press and by sending cards and catalogs. Orders are
received from customers through post and the goods also are sold through post.
Characteristics
It’s a large scale Retailing
Business is done through post
It can be started with moderate amount of capital
There is no need to store a large stock of goods
There is no personal contact between buyer and seller
Advantages
To the seller
It can cover a wide market
There is no expense for sales men
As no credit sales were allowed, there is no fear of bad debts
It can be started with a limited amount of a capital. Hence risk is considerably less
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To the customer (Buyer)
Consumers get article at their doors
Consumers who are residing in remote areas are greatly benefited
They get products at lower price because of selling expense
Disadvantages
To the seller
The expenditure in advertisement in publicity is high
There is no personal contact with the buyers
The seller is not in a position to clear the objections raised by customers
To the Buyer
Buyer cannot inspect the goods before buying
Customers do not get credit facilities
Price of articles are high due to increased advertising
There is no opportunities for customers to select goods according to their tastes
SERVICE MARKETING
Service marketing can be defined as the process of identifying ,pricing,promoting and providing of
the right services in the right time to the customers with a view to satisfy their requirements and
objectives of the service provider.
TYPES
Bank marketing
Insurance marketing
Transport marketing
Tourism marketing
Hotel marketing
Education marketing
Hospital marketing and others
BANK MARKETING
INSURANCE MARKETING
It is the application of marketing principles by the insurance organizations and to professionalize the
process of marketing in such a way that the organizations start believing in the principles of making
things happen.
Characteristics
It is a managerial process.
It is a process of formulating the marketing mix.
It is a device to make possible customer orientation.
It is an attempt to help profit maximization.
TRANSPORT MARKETING
Transport marketing focuses our attention on practising modern marketing principles in the
transportatrion services so that the transportat generating organisations succeed in satisfying the
users and maintaining the commercial viability.
TOURISM MARKETING
Tourism marketing is an integral effort to satisfy tourists and more so it is a device to transform the
potential tourists inti the actual tourists.
Tourism marketing is a managerial process to promote business.
Advantages
HOTEL MARKETING
It is the application of marketing princioles in the hotel industry so that the hotel services are made
internationally competitive
Users
The different categories of users availing the service of hotel industry are,
Pilgrims
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Students
Officials
Intellects& sportsmen
OPPORTUNITIES IN INDIA
• % of organized retailing
• Consumption Rate
• Retail Space
• Increase in supermarket sales
• Prediction-by 2010
THE THREATS
• Shortage of real estate
• Obsolete rental laws
• Lack of finance option
• Unplanned cities
• Corruption
• Increasing energy cost
• Lack of skilled manpower
• Lack of adequate infrastructure
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Wheel of retailing
But it also refers to changes in the structure of retail institutions over time
eg. Super centers are in the introduction stage, on-line shopping is in the growth stage,supermarkets are
in the maturity stage and conventional store are in the decline stage
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Vertical Marketing System-VMS is an organized form of channel control involving any number of
intermediaries.
The channels are manufactures , wholesalers and retailers
A channel may be completely or partially integrated.
A fully integrated channel has all stages of production and distribution under one ownership or control.
It is more common to have partial integration (forward or backward), such as producer-wholesaler,
producer-retailer, or wholesaler-retailer.
ADVANTAGES OF VMS
1. More cost-effective
4. Economies of scale
6. Guaranteed supply
The three major forms of VMS are Corporate, Administered and Contractual.
Corporate backward integration occurs when retailers own producers or wholesalers that
precede them in the channel (e.g., Kroger own processing facilities).
In corporate forward integration, manufacture own their own retail or wholesale outlets
This VMS is useful where product is of high price and the product is not of frequent use.
A Contractual VMS consist of independently owned firms at different levels of production and
distribution that integrate their programs through a formal contract. e.g., franchises.