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Retailing VTU Notes
Retailing VTU Notes
Characteristics of Retailing:
Ø Average amount of sales transaction is much less than manufacturer,
so there is need for tightly controlling the costs, maximizing the no. of
customers, emphasizing more on special promotion etc.
Ø Survey shows that large number of buyers make impulse purchasing,
this behaviour indicates the value of instore displays- the ability to
forecast is difficult.
Ø All retailiers offer assortment of products, but they also specialize in the
assortment they offer
Ø The bulk items shipped by manufacturer is offered in smaller quantities
tailored to individual customers.
Ø Holding inventory – products are available at the disposal of consumers
so they can keep small inventory at home
Ø There is direct end user interaction and retailing increases the value of
products and services.
Ø Location is critical factor in retailing.
Trends in Retailing:
The Retail Industry is changind rapidly due to various reasons
1. Spatial convenience: Number of working women have fueled an intense
demand for convenience. The quest for convenience on the part of
consumers is shown by
v frantic growth of convenience store fueled by the entry of Petroleum
marketers AM/PM store
v Exploding Popularity of online shopping operators
v Diversification of vending machine into food /clothing and videotapes
2. Increased power of retailer : At one time, colgate dominated retailers.
Now the retailers tend to dominate them.The reasons for this reversal are
many. Retailers have many new products from which to choose when
deciding what to stock on their sheleves. Further the IT has diffused
throughout retailing to such an extent that virtually all major retailer can
capture item-by-item data via scanning devices at that electronic point of
sale terminal. This knowledge of information has permitted retailers to
calculate the (DPP) Direct Portfolio of Individual Items, track what moves
and what does not move well in their stores. So the Manufacturers
struggled to get space in the shelves of retailers. They offer Pricing
concession, slotting allowance etc., to promote products.
3. Growing Diversity of Retail formats:
Consumers can now purchase same merchandise from wide variety of
retailers. they are Dept. store, specality store, convenience store,
category killer, Mass merchandiser, Hypermarket.
v Mom and Pop Stores and Traditional Kirana stores: small independent
stores across product categories is very common retail format in India.
Partiucularly in small townships
v E- commerce: The amount of retail business conducted on the Internet
is growing everyyear. Companies like Amazon. com and First and
second.com which helped pioneer th retail e-commerce. Fabmart.com
v Department store with varied merchandising operations.
v Franchise : Territory rights are also sold to franchisees. Various
distribution and other services are provided by contract to franchisees for
fee. Ex. McDonalds, Blockbuster Video
v Warehouse club- wholesale club: Appeal is to price conscious shopper.
size is 60000 sq. ft. or more. Product selection is limited and products are
usually sole in bulk size.
v Mail order catalog: Non-store selling through the use of literature sent
to potential customer. Usually has a central distribution centre for
receving and shipping direct to the customer.
v Specality Discounter –Category killer:
Offers merchandise in one line ( eg. sporting goods, office supplies;
children merchandise ) with great depth of product selection at discounted
prices. Stores usually range in size from 50,000 to 75000 square feet.
( refer article Xerox material for other Popular formats)
Emergence of region specific formats: In deptl store format, while most A
class ciites and metros have larger stores of 50000 sq ft sizes, stores in B
Class towns have stabilized in the 25000- 35,000 sq. feet range. Most
players have started operating these 2 formats across various cities,
which has helped them to standadise the merchandise offering across the
chain.
Entry of International Players: A large no. of international players have
evinced interest in India despite the absence of favourable government
policies.
Mall Devlopment: Modern malls made their entry into India in the late
1990s with the establishment of cross roads in Mumbai and Ansal Plaza in
Delhi. According to a market estimates,close to 10mn sq. feet of mall
space is being developed across several cities in the country.
Chennai has experienced the organized retail boom. This is despite its
perception of being a traditional, conservative and cost conscious market.
Food world, Music world, Health and Glow, subhiksha a nd the like are a
fe of the successful names in the retail business that started their chin of
stores from chennnai. Factors such as reasonable retail prices, strong
presence of MNC, healthy industrial growth, increase in the number of
double-income households, growth of middle class have all led to the
growth ans sustenance of this Industry in Chennai
--------------------
Retail Location:
Location is the most important ingredient for any business that relies on
customers. It is also one of the most difficult to plan for completely.
Location decisions can be complex, costs can be quite high, there is often
little flexibility once a location has been chosen and the attribute of
location have a strong impance on retailers overall strategy.
Importance of Location Decision:
Location is a major cost factor because it :
Involves large capital investment
Affects transportation cost
Affects human resources
Location is majore revenue factor because it
Affects the amount of customer traffic
Affect the volume of business
A location decision is influenced by the flow of pedestrian and vehicular
traffic, which determine the footfalls in a retail store. Footfalls refers to
the no. of customers who visit a store in a defined time period.
Levels of Location Decision and its Determining Factors:
level of location Decision
city
Area within city
site selection
1. Selection of a city:
Factors to be considered for selection of a city:
- Size of the city’s trading area: A city’s trading are is the geographic
region from which customers come to the city for shopping. A city’s
trading area would comprise it suburbs as well as neighbouring cities and
towns. Cities like Mumbai and Delhi have a large trading are as they draw
customers from far off cities and towns.
- Population or population growth in the trding are: A high growth in
population in the trading area can also increase the retail potential.
- Total purchasing power and its distribution: Cities with a large
population of affluent and upper middle class customers can be a
attractive location for stores selling high priced purchasing power and its
distribution among a large base of middle class is contribution to a
retailing boom around major cities in India.
- Total retail trade potential for different lines of trade: A city may
become specalise in certain lines of trade. Moradabad has become
important location for brassware products, mysore-silks.
- The retailer also consider, number, size, quality of competition before
selecting a city.
- Development cost
Margin Free Market, the kerala based retail chain(grocery and toilertry
product targeted middle and lower class) located 250 stores in small
towns in kerala.
II. Selection of an Area or Type of Location within a city.
Evaluation of the following factors required:
- Customer attraction power of a shopping district or a particular
store(commercial street-Bangalore, Chandni Chowk in Delhi)
- Product lines carried by other stores, number of stores in the area.
- Avaiablity of access routes- There should not be traffic jam and
congestion
- Nature of zoning regulations: Retailers should examing the plans of
zoning commissions and municipal corporations regarding the
development of shopping centres, residential areas, flyovers.
- Direction of the spread of the city. For ex. Mumbai’s suburabs and Navi
Mumbai are growing at a fast rate
PLANNED SHOPPING
A planned shopping centre consists of a group of architecturally owned or
managed stores, designed and operated as a unit, based on balanced
tenancy and surrounded by parking facilities.
Regional shopping centre malls:
Regional shopping centres or malls are the largest planned shopping
centered; often they are anchored by two or more major department
stores, have enclosed malls, serve a large trading area and have high
rents.( cross roads in Mumbai, Ansal Plaza in Delhi, Spencer Plaza in
Chennai, Metropolitan Mall in Gurgaon.
Neighbourhood/community Shopping centre:
-usally have a balanced mix of stores including a few grocery stores a
chemist, a variety store, and a few other stores.
Specialized Markets: In India most of the cities have specialized market
famous for a particular product category. For ex: Chennai-Godown street
is famous for clothes, Usman street for jewellery, T. Nagar for ready
made garments.
Periodic Markets: Another peculiar type of market found in India is the
periodic market, which is established at particular places on a particular
day in a week. Most of these markets operate in evening hours. These
market are mostly associated with the name of the day it is held on.
Trading Area:
A trade area is a contiguous geographic area from whicha retailer draws
customers that account fro the majority of a stores sales. A trade are a
may a part of a city, or it can extend beyond the city’s boundaries. A
trade area can be divided into 2 or 3 zones.
Trade Area Analysis: It is necessary to estimate market potential,
understand consumer profile, competition etc. GIS ( Geographical
Information System – combine digitized mapping with key locational
data )used for this purpose. A saturated trade area offers customers a
wide variety of merchandise, which also ensures impressive profits for
retailers in the market.
Site Selection Analysis: A retailer has to consider the following factors
while selecting a site.
1. kind of products sold:
*conveinece goods – quality of traffic most important – large window
display area is usually a better site.
* Shopping Goods – quality of traffic most important-The emergence of
several apparel factory outlet within a short stretch on the on the Delhi
jaipur highway is driven by this factor
* Specality Goods- may desire to locate close to the shopping goods
store.
2. Cost Factor in Location Decision: Traditionally retail community own
the place. Space cost (comibination of rent, utilities, leasehold
improvements, general decoration, security, insurance, and all the related
cost of having a place to conduct business operation) is important factor.
3. Competitor location: Intense competition in the area shows that new
businesses will have to divide the market with existing business.
4. Ease of traffic flow and accessibility ( studying flow of traffice,noting
one way street, street widths, parking lots)
5. parking and Major Thoroughfares : the way parking lot is laid out, the
direction of the travel lanes and spaces,landscaping. The ideal ratio for
food stroes is in the magnitude of 7-8 cars per 1000 sqare feet of food
store.
6. Market Trends: Discussions with the business owners and officials are a
good source of information. Make use of information available through the
chamber of commerece.
7. Visibility: It is important when a shopper is trying to find the store for
the first or second time. The questions relevant to this factor is : who will
be the store’s neighbour, what will be their effect on store sales, how
much space is needed.
LAYOUT
l Tells potential customers who you are and what you’re selling.
l Must comply with local sign ordinances.
l Should be visible, simple, and clear.
l Should be changed periodically to avoid becoming part of the
background.
l Should be legible both day and night.
l Must be maintained properly.
BUILDING INTERIORS
l Grid
l Rectangular with parallel aisles; formal; controls traffic flow; uses selling
space efficiently.
l Supermarkets and self-service discount stores.
l Free-Form
l Free-flowing; informal; creates “friendly” environment; flexible.
l Small specialty shops.
l Boutique
l Divides store into a series of individual shopping areas, each with its own
theme; unique shopping environment.
l Small department stores.
LAYOUT GUIDELINES
l Know your customers’ buying habits and plan your layout accordingly.
l Display merchandise as attractively as your budget will allow.
l Display complementary items together.
l Recognize the value of floor space; never waste valuable selling space
with non-selling functions.
DIMENSIONS OF SEGMENATION:
In segmenting the total market, the retailer must first decide which
combination of segmenting dimension to use. A few dimensions are
demographic; others are geographic, psychographical and behvaioural.
1. Geographic Segmentaion:
-market is divided into geographical units such as nations, regions
countries, cities or neighbourhoods.
- Retailers in India have often segmented markets by cities and focused
on metro and large cities.
Globus – Chennai and Indore ( metropolitan and Mid sized city)
Suhiksha – Chennai at short distances , serving the nearby colonies
A study done by Technopak in India among segments SEC A and SEC B
revealed that while the four regions – north, south, east and west – had
consensus on top – spending priorites , their preference order (table).
West
North
South
East
Grocery
Eating out
Books and Music
Personal care
savings
Grocery
Personal care
Eating out
Books and music
Savings
Grocery
Eating out
Apparel
Books and Music
Savings
Grocery
Apparel
Savings
Personal Care
Eating out
2.Demographic Segmentaion:
- market is divided into groups based on demographic variables such as
age, religion, gender, income, social class, family size, occupation,
educational level and marital status.
- retailer segment the market on variables which relflect interest, need
and abilty of the customer
- In India, ,most markete Research agencies prefer to segment on the
basis of socio-ecnomic class(SEC A , SEC B, SEC C) rather than incomer
per se.
a) age: The KSA Technopack study states that youth 15-24 years in India
is emerging as a core target customers for lifestyle products (personal
care, music, book and magazines)
b) Occupation: Employed women has more spending habits than
housewives.
c)Family income: McDonalds, shoppers stop, Reebok , marks and specer
etc sell an extensive range of premium brands can segment market on
demographic basis focusing on family income. They can target
professionals, married aged between 30-45 years old with young children,
and with incomes more than Rs. 4,00,000.
d)Retailers can target bachelors or families. McDonald’s has positioned
itself as a family joint which provides a relaibale and safe dining
experience while Nirula’s position itself as providing pleasant experience
and fun.
Social class and preferences
Psychographic Segmentation:
Behavioural segmentation:
customers are divided into groups based on the way they respond to, use
or know a product. Products and services are purchased for a variety of
reasons. Marketers can compile information on behavioural variables such
as occasions, benefits, user status, usage rate etc.
CUSTOMER PROFILE:
After deciding on target segments, a retailer must develop detailed
profiles of customers in the identified target segments. Market research
may be necessary to develop profile.
Customer Demographics:
Data about the target segment may be collected on demographic
characteristics such as age, sex, income levels, educational background
and professional background.
Family Decision making:
In such situations, different family members can play different roles as
initiators, influencers, deciders, buyers, consumers and evaluators.
Pshychographics:
The retailer has to profile consumers’ lifestyle and values. The various
activities pursued by target segments such as sports, adventure, worship
etc., as well as their interest, hobbies,opinions and values may be profiled
to get a better understanding of the target segment.
The customers of café coffee Day are youngsters who like to move around
in groups, live a fast active life, and entertain friends
Purchasing Behaviour of the Target Population:
The retailer should also develop a detailed understanding of the
purchasing behaviour of the selected target segment. It should compile
information regarding purchase motivation,the cultural influences on
purchasing beahviour.
Purchase Motivation:
The decision to buy or not to buy often comes from what one anticipates
as the consequences of one’s decision. The retailer should understand the
purchase motivation of the target segment. For example, a young man
may buy a fashionable brand of shirt from shoppers’stop to announce to
his collegeues and friends that has come of age.
Purchasing Process:
-many people buy grocery items from shops located near their house on a
rotating credit facility.
- consumer durabales and jewellery many consumers depend on retailers
with whom their family may be dealing for generation.
source of purchase:
Customers’ choice of shopping locations depends on time utility and place
utility. Time utility refers to availability of products and services at
convenient hours or in case of urgent requirements. Place utility refers to
the benefits of shopping at particular shopping locations due to availability
of a wide range of products, low prices, shopping ambience or
entertainment option(variety, price range, parking, quality, entertainment
options,services provided)
Such a research will help the retail organisation understand whether its
target segment is price sensitive, it is looking for good quality or location
of store is most important. It will help identify primary segments that
offer the most promising opportunities in accordance with the retatiler’s
strengths and situational constraints.
MARKET SEGMENTATION IN INDIA:
Today most marketers in India use segmentation models based on
demographics, geo demographics, SEC data, and benefits and usage.
eg:1McDonalds focuses on middle and upper class families in the uraban
market. McDonalds also introduced the vegetarian product to target the
large population of vegetarian in India who avoid non vegetarian diet on
account of religious and health beliefs.
eg2: Nescafe launched its own retail outlets offering various variants of
coffee in the North Indian market to develop the taste of the consumers
who are habitual tea consumers . By providing coffee at low price in an
attractive setting, it attempted to convert them into consumers of coffee.
Malls like city centre and Metropolitan mall in Gurgaon have introduced
the cineplexes to attract customer segments which view shopping as an
entertainment. The growth of concept stores is highly seen in foreing
countries. eg. Marks and spencer operates food-only stores in UK.
However in India, there is a reverse trend of brands moving out of their
concept store to large formats. (In the year 2002, DCM Benneton India
repositioned itself from a casual wear brand to wardrope option. Also
launched ‘Baby- on-Board’store, which targets mothers-to be and kids.)
The launch of concept stores did raise questions of feasibility consider the
nascent stage of retail industry in India. Madura Garment’s brands Van
Heusen, Louis Philippe and Allen solly which have had their conept stores
for sometime, are now coming together under the planet Fashion
Umbrella.
The growth and development of multiplex theatres in India represent an
interesting experience in segmentation. Multiplexes in India have
capitalized on an inclusive tendency to motivate and assemble diverse
audiences in terms of their motive and assemble diverse audiences in
terms of their movie preferences.
Segmentation has also caught the fancy of cyber café owners in India. A
study by KSA Technopak states that the players in India have started
segmenting the cyber cafes primarily into two categories: one for utility
oriented customers- the middle and junior level business executives and
the other the experiential kind which will offer allied service for non-
business users.
An extremely effective segmentation and targeting experience in India
has occurred in case of the petrol retail sector. The product offering has
widened to include blended fuels, branded fuels, lubes, groceries and
more. The outlet itself is expanding to include grocery stores, cafes, bank,
ATM and internet kiosks. These changes gave the customer reasons to
build preferences among the three companies (IOCL, BPCL, and HPCL)
MODULE-7
PRODUCT AND MERCHANDISE MANAGEMENT
Introduction:
Product and merchandise management is the key activity in the
management of retail business. It has immense cost and profit
implications. A related issue is the management of retail brands and the
decision to offer retailers private labels along with or instead of national
and local brands.
While product management deals with issues related to the kind of
products sold by the retailer, merchandise management concerns itself
with the selection of the right quantity of the product and ensuring its
availability at the right place and time. Merchandise plan is drawn in keep
in mind that influence shopping behaviour and the strategic and cost
concern of the retailer.
Own Branding:
Own branding occurs when a retailer sells products under the retail
organisations house brand name. Own branding can be of two types,
integranted own branding(occurs when the retailer also manufactures the
branded retail products eg.Raymonds, Bose, sony retai outlets) and
Independent Brand(occurs when the retailer procures the products from
other suppliers though, they are sold under the label of the retail house
eg. grocery, garments, shoes ).
Significance of Own Branding:
Private labels have showed an increase interm of both value and volume
across countries. Private label share of the product categories such as
ffod, drink, personal care ranged between 5% and 20% in value terms in
most countries. A well run private label brand enhances store profitability
by increasing pressure on branded manufactures.
MERCHANDISE MANAGEMENT:
The primary function of retailing is to sell merchandise. One of the most
strategic aspects of the retail business is to decide the merchandise mix
and quantity to dbe purchases.
Merchandise management is the process by which a retailer attempts to
offer the right quantity of the right product at the right place and time
while meeting the retail firms financial goals. Merchandise management is
the analysis, planning, procurement, handling and control of the
merchandise investment of a retail operation
Constraining Factores;
While introducing new offering, manufacturers, undertake greater risk,
and reatailers also develop merchandise mix under limitation on account
of space,resources etc. There are four constraining factors that influence
the design of the optimal merchandise mix:
1. Budgetory constraint : Retail format guide the adjustments to be made
on account of budget. The retailer has to work out the optimal
merchandise mix for his customer on the basis of the resourcse available.
2. Space constrain: Space available to a retailer is relatively fixed and
must return a profit. If a retailer goes for a depth or bredth, space
requirement will increase. If variety is to be stressed, enough space
requirement is needed to separte the distinct merchandise line.
3. Turnover Constraint: Turnover is an extremeldy important factor in
buying and selling merchandise profitably. Pantaloon pushes for a stock
turn of 40-50 times a year for its food and once a month for ready-to-
wear. Retailers are required to understand the sensitivity of their sales
turnover to merchandise mix they are developing. For instance, its private
labels such as top, kashish, Life and carrot cotributre 20% to the turnover
of shopper’s stop.
4. Market Environment Costraint:
It refers to the limitation on account of the target market residing in the
area within walking 0or short itme distance to the store. Retailers have to
consider the competitive environment and competitive dimension
prevailing in the trading areas. For ex: Fab India, the ethnic cotton
garment store, maintain extensive merchandise lines along with depth
and breadth for both males and females. However, the W store deal in
working women fashion based on cotton with extensive depth and
bredth.This has provided distinguished position to the 2 stores selling the
same material.
RETAILING CHANNEL:
A retailer can depend on one supplier or a combination of suppliers. There
are number of alternatives that a retailer might consider as a suitable
source of supply:
1. Manufacturers and Prmary producers:
This category sells cars, two wheelers, gasoline and other products and
consumer duarable from company owned stores. Large retailers regulary
deal directly with a product manufacturer. Manufacturers will
normallyhava sales office or a showroom either atatached to a production
unit or in a location convenient for retail custmers.
Lifestyle has focused on building direct relationship with manufacturers
rather than buying products from middlemen.This reduces margins and
enables the store to quickly pick up the products that it wants. Again it
enables it to have lower inventories.
2.Wholsalers:
Wholesalers accept small orders form retailers. They actually take
ownership of the goods between the prouducers and the retailer. They
supply the retailers from their own stocks rather than from the producers
stock, acting as agents. They usually make attractive profits from the
merchandise they selld to the retailers.
3. Agents: Provide purchasing and delivering facility to the retailers
against a negotiated commissions on the percentage to the total value of
the goods purchased. This is a very common source to retailers in the
semi-urban areas or in and around major trading centers. Retailers
depend on agents for weekly or fortnightly purchases form the major
trading centres.
4. Other Retailers: This category comprises who operate on a larger
scale.They cater to the needs of the immediate consumers along with the
small retaiers form contiguous areas, running their stores in interior
locatlities of urban areas or in the rural areas.
5. Government and semi-government source:
Public distribution system acquires its entire stock of goods from the
central government of India through various official state bodies such as
the Food Corporation of India, Mother dairy and safal.
RETAIL PRICING:
Setting the right price will result in increased revnue to the retail firm.The
prime objective of retail pricing is to achive profitability which is influnecd
by two factors. They are Profit margin of the offering and cost of
merchandising.
Factors Influencing Pricing:
The porters model can help to understand the influences of retail pricing.
1. customer:
Customer’s price sensitivity is influenced by many factors. For ex: Café
coffee day offer the coffee at the same price of Rs.35(minimum) in all its
branches of urban and semi urban areas, though it is a general
assumption that semi urban customers wont go for highest prices. But
inorder to maintain, its positioning strategy, coffee day maintained the
same price and attracting its target customers through its ambience.
Segmentsation of the customers can also be useful for fixing the
appropriate price. There are some customers look for the benefit of
owning the brand rather than the price. Situations also affect the pricing
policy of the firm. A store located in hill station may fix high price and the
same may be accepted by customers.
2. Suppliers:
In order to maintain image of the brand and to achieve the goal of the
firm, sometimes the manufactures direct the pricing policy of the retail
firm. The conflict between the retailer and manufacturer may arise when
the manufactuers decides to introduce a new model and that hampers the
movement of retailers old stock. Reputed Retailers have more bargaining
power when they buy bulk items from the manufacturer. Also sometimes
retailers seek, for price guaranteed ie if the prices of sold items to retailer
goes down.
3. Competitor: It affects the freedom to fix price.The range varies from
being perfect to monopoly. Retailers generally avoid price based strategy
because it may end up in price war.
4. Government: There are legal issues relating to price discrimination.
The retailer can charge different price to different customer only when the
distance is the justifying factor.
Vertical Price Fixing: The retailer to set price at manufacturer suggested
price.
Horizontal agreement: - agreement between retailer competitiors
Predatory pricing- This pricing is considerd as illegal as it intends to drive
away the competiton.
RETAIL PROMOTION:
Retail promotion is broadly defined as all communication that informs
persuades, and or reminds the target market or other prospective
segment about marketing mix of the retail firm. The retailer seek to
communicate with customers to achieve a number of objectives.
a)increasing store traffic by encouraging new shoppers to visit store
b) increasing the share of wallet for all shoppers
c) increasing the sale of a given product category
The promotional elements include:
Advertising, sales promotion, Publicity, personal selling, Direct marketing,
Public relations.
Selection of Promotion Mix:
Retailers usually employ a combination of the above. The degree and
nature of usuage of each promotion method depends on the objectives of
the retail firm. For ex. McDonald’s extensively relies on advertising in
national and local newspaper. Haldiram , the Delhi centric food chain,
primarily relies on point of purchase (POP) material. Retail banking
Industry makes extensive use of all promotional methods including
television, print media. Various retail promotion methods can be
compared on the basis of the degree of control, flexibility, credibility and
cost associated with them.
Retail Advertising:
The American Marketing Association defines Advertising as any paid form
of, non personal presentation of ideas, goods, services by an identified
sponsor” Advertising is recognized as an indispensable tool of promotion.
Based on the conceptualization, advertising can be understood as follows:
1. paid form of communication
2. Non personal presentation of message (face to face direct contact with
customer)
3. issued by an identified sponsor.
OBJECTIVES OF ADVERTISING:
To prmote new product, to support personal selling programme
To reach out to people not accessible to salesperson
To enter new market, to manage competiton
To enhance goodwill of the retail firm and to improve dealer relation
to warn the public against imitation of the retailers products.
SIGNIFICANCE OF ADVERTISING IN RETAIL SECTOR:
Its imperativeness has increased in this era of globalization and
liberalization around the worlds. Raymonds, the apparel retail chain,
primarily used television and print ad to promote expereiential aspect
associated with shopping at its stores.
TYPES OF ADVERTISING:
a) consumer oriented or persuasive Advertising: The major objective of
consumer oriented advertising is to inform consumers about the new
products,holding consumer patronage against intensified campaign by
rivals, promoting a contest or a premium offer. It helps in maintaining a
regular demand and attracts a lot of attention and preferences of the
customers. eg: Wills Lifestyle, the ITC owned apparel retail chain
b) Informative Advertising: Purchase of durable products are often too
expensive to buy, so the buyer requires elaborate information about
them. Hence the retailer and manufacturer spend a huge amount of
informative advertising.
c) Institutional or corporate Advertising: Its main motive is to build
corporate image. An attempt is made to highlight the achievements and
objectives of retail organisation. eg: HDFC bank has tied up with Business
Today the leading business magazine to sponsor 10000 copies of the
Magazine in each metro. The cover of the sponsored copies of December
2003 rated HDFC bank as the best bank in the country.Financial
Advertising: advertisement by various financial institutions like standard
chartered Bank, ICICI etc. Recently HDFC bank has evoloved a mix of
sales promotion and advertising to attract new customers.
d) Classified Ad: which are placed under specific headings and columns in
various magazines.
ADVERTISING CAMPAIGN:
An advertising campaign comprises of series of advertisements, with the
same theme over a period of time and across ads. There are different ad
copies of campaigns. They are self contained, and independent but
thematically related.
Vertical co-operative Advertising: This type is planned when the retailers
and other channel members share the advertising budget. Manufacturer
may pay upto 40% of the ad expenses. Manufacturers support most
mom- and –pop stores and independent retailers since the latter lack the
professional expertise and financial resources. eg: Cadbury India limited
has rolled out a portfolio of customized marketing and communication
intiative at the retail end. Huge retail exercise is being undertaken
especially near schools as to pentrate into the markets.
Horizontal Cooperative Advertising: This type is launched when two or
more retailers come together to share the cost of advertising leading to a
joint promoition of evens or sales that benefit both parties.
Measuring AD effectiveness
Selecting Advertisement Objective: It should be compliance with the
retailers objectives. It could focus on age of the store, location, type of
goods sold, level of competition,market size.
Advertising Budget: A well designed retail ad campaign requies proper
budgetary allocation advertising. There are four methods: Affordable,
percentage of sales, objective or task method and competitive parity
method.
Designing Ad Message: The Ad must be appeal to target audience and is
conveyed through the advertisement copy. Certain factors should be
considered while designing ad copy;(Attention value, Memorising recall
value, suggestion value and conviction value) eg: McDonalds initially tried
to position its stores as a special place to visit, whth the baseline “
McDonald’s mein hain Kuch baat’ in their ad. The objective of the ad was
to attract the customers to try the McDonald’s Experinece. However over
the years, with the increased acceptance of McDonalds by customers, the
company realized there was a need to evolove comprehensive
communication strategy- to make customers a regular experience.
Selecting Media:
Media selection involoves finding the most cost-effective media to deliver
the desired number of exposure to the target audience. The effect of
exposure on audience depends on reach, frequency, and impact.
Reach: (R): It includes the different persons that are exposed to a
particular media schedule.
Frequency(F) : The no. of times within the specified time period that an
avg. person is exposed to the message
Impact(I): The qualitative value of an exposure through a given medium.
Total number of Exposure(E) : It is the reach times the average frequency
ie E=R*F. This measuere is referred as gross rating point.
Weighted number of Exposures(WE): It is the reach times frequency
times average impact ie :WE=R*F*I.
The Media planner has to figure out, with a given budget, the most cost-
effectie combination or reach, frequency, and impact.
They usually make a choice from alternative media categories by taking
into account factors like target audience, media habits, product profile,
message compatibilyt and costs. Retailers or marketers need to review
periodically the impact and cost of various media type available. In recent
years, retailers in India started using different media channels.
Popular Media Vehicles used in the Indian Retail sector:
Leaflets or flyers: They have short shelf life; so they are most useful for
marketing specific activities such as opening a new outlet.
posters and calendars:
Booklets: It is effective incase of products or services which are intense
on information, such as banking , real estate.
Direct Mail: Retailers can opt to send out regular, targeted letters as part
of their communications strategy.
Magazines: Retailers selling baby products, home fashion products can
use this medium.
Local cable channels;
Billboards: Most of the leading retailers of the city place their billboards at
railway stations or bus stands at the entrance of the city road. Eg:
Banagloare central shopping Mall bill board at the cantonment railway
station road.
Wall Paintings: It is the most traditional medial by small retailers in the
villages and townships in India.
Banners: Retailers use this for immediate benefits such as to make the
customers aware about the new arrivals, promotional schemes.
Deciding on Media Time: Advertisers face macro schedule problem and
micro schedule problem. Macro schedule problem involves scheduling the
ad in relation to seasons and business cycle whereas micro scheduling
problem deals twith allocation of ad expenditure within a short period to
obtain maximum impact.
Deciding on Geographic Allocation: The company can make a ‘National
buy’when the ad is placed in nationally circulated magazine. “local buy’
refers to radio, newspaper or outdoor sites.
Running an Ad campaign: It involves the execution of advertising
progamme which should be in accordance with the ad goals and the
budget. It is advisable to run pre-test.
Measuring Ad Effectiveness: The retailers are interested to know the
result of advertising due to the considerable amount of money, time and
resource spend on them in order to know whether the advertisement has
been successful in meeting the objectives. The test can be of two types:
pre test and post test. The following methods can be adopted: Readabilty
studies; Eye movement analysis; Recall test, Concurrent test, Response
test, Attitude change test.
SALES PROMOTION:
Sales promotion refers to communication strategies designed to act as a
direct inducement, an added value or incentive for the product to
customers.
Salespromotion provides extensive tactical measures to mareketors to
manage internal or external impediments to sales or profits. Internal
impediment(unsold stock); External impediment( competition)
Objective of Sales Promotion:
- assist the other communication activities undertaken by the store.
- to encourage new triers by offering free trial
- to encourage repeat purchase
SUPPLIER ORIGINATED SALES PROMOTIONS:
Sales promotion can originate from two sources – suppliers or retail store
itself.
In-store Activities:
Price –off Pack : The product is sold at reduced price form its normal
selling price.This is in the form of a discount.
Premiums: These are in the form of small gifts that a customer gets on
purchasing a product. Its attached to the pack or inside the pack.
Self-liqudating Premiums: Customer has to write to the supplier for the
gift, enclosing empty packets, bottle crowns etc. of the product plus some
money. Basically the customer provide some proof of the purchase. For
eg: Rin gift hunt, Rs. 5 lack worth of educational gift to children(requies
customer has to fill the form and submit to the nearby store)
personality promotions: Many companies use show –business
personalities to endorse their products.The suppliers tend to associate the
charisma associated with these personalities. For ex: T.N Shesan the
former election commissioner , was used by Safal Vegetables since he did
not appear for any other product and he had an honest and upright
image.
co-operative promotions: two or more products share and fund in joint
store promotion. Shaving foam and after shave lotion.
Sampling: Free sample, and sometimes the demonstrator may also be
present to explain the product. The product may be entirely new and
customers may have little knowledge about them.
Multipack: two or more packs are attached and sold for a better and
attractive price than the price of the items singly. Maggi noodles packet
free with the purchase of four or one gets three soaps at the price of two.
Buy one Get one free:The customer can get two units of the product at
the price of one.
Point of purchase (POP)Display Material:
Leaflets,
special fittings: Products are kept in the special racks ro stands provided
by the suppliers. For ex: racks provided by the toothbrush suppliers, dry
battery stands, glass case for watches.
Demonstrators: sometimes demonstrators used in this context. For ex: a
children’s product may use a person dressed as their logo ( eg: teddy
bear)
PUBLICITY:
Publicity entails any communication that fosters a favourable image for
the retailer among its public. It can be personal or non personal, paid or
non-paid and sponsor controlled or non-sponsor controlled. Publicity is a
non personal form of promotion where messages are transmitted through
mass media, the time or spance provided by the media is not paid for,
and there is no identified commercial sponsor.
TYPES OF PUBLICITY:
1) PLANNED PUBLICITY: A retailer outlines its activities in advance,
strives to have media report on them, and anticipated that certain events
will result in media coverage. Community services like donations, and
social sales, and introduction of new goods or services of the activities
which lead to media coverage.
2) Unepected Publicity: It takes place when the media reports on a firm
without any advance notice about the media coverage. TV and newspaper
reporter may anonymously visit stores and rate their performance for
their coverage.
3) Complementary publicity: Sometimes media reports about a firm in a
complimentary manner with regard to the excellence of its retailing
practices. eg: HDFC
MODULE-8
RELATIONSHIP MARKETING IN RETAILING
Loyalty Programme:
The use of loyalty proramme is evident from the fact that the corporate
expenditure on loyalty programme are booming The following are the
bases for loyalty programme.
1. Loyal customers are cheaper to serve: Retailers may not be required to
invest , maintain and communicate with customer(loyals) as they are
already predisposed to search for information ( new arrivals and services)
2. Loyal customers are willing to pay more for a given bundle of offering:
Customers normally stick into one business entity because of high
switching cost and psychological stress. They therefore willing to pay
higher prices.
3. They act as Effective marketer for the service offering: The word of
mouth marketing is very effective, and many stores justify their
investment in loyalty programme by seeking profits not so much from the
loyal customer but from the new customer the loyal one brings.
Use of Loyalty Card Data:- greater help to gather data about customer
- provides extensive understanding about the customer( cost insights,
customer retention rate at different spending levels.
- Used on a very selective basis in a category management
- gives information about the customer base and card holder behvaiour in
a store.
Relationship reward as part of Loyalty programme:
- Reward drives behaviour, reward that behaiour you want. So warning is
clear: Never let your best customer feel that you are withdrawing
privilege from them . Hence the reward should be desirable and
affordable.
eg: Northwest and Delta are offering bonus points if you check in for you
flight before you get to the airport. The process is simple: You log on,
plug in your flight information & reward programme PIN, and print out a
boarding pass. The bonus is 1000 points.
A prorgamme needs to have visibility, simplicity, value , trust and
communicative.
RETAIL AUDIT:
It helps to ascertain the sales personnel’s efficiency at the point of sale or
to find out the average time taken on a normal day or duing the weekend.
Retail Process Audit: Such retail process audit helps to examine a store’
efficiencs in terms of operating processes or reduce the cycle time. For
instance with the help of retail process audit, the retailer can work out
ways to improve customer service delivery and to improve performance.
Retail Store Aduit: While visiting the store , the retail auditor will collect
observable information such as the shelf prices, display space, the
presence of special display and instore promotion activities.The retailers
can use retail store audit results to project and arrive at nationwide and
regional estimate of total sales, inventories etc.,.