MBA Semester 3 MK0012±Retail Marketing ASSIGNMENT- Set 1 Q 1. List the different stages involved in retail environment analysis.


The Stages in analysing retail environment include analysing market size, competitors, rules, industry attractiveness and industry structure. These stages are explained below.-

Market Size/Age: Is the market relatively small or large, and can it be broadly classified by its stage of development (Start-up, emerging, growth, maturing, declining)

Number of competitors: What is the level of competition for the market? Are there many small rivals or few large? How easy is it for new players to enter the industry?

Rule of the game: How do firms compete in this market? Do they compete on price, quality, technology, service etc? What is the average level of profitability? Is it a profitable market or is it a high-volume, low margin field?

Industry Trends/driving forces: What are the industry trends and how rapidly they change? Is the industry growing and innovative or stable or slow to change? The rate of market growth is critical factor because it influences the equilibrium between demand and supply.

Industry Attractiveness: The overall attractiveness of an industry is determined by the interaction of these key structural forces. The higher the rate of growth and the weaker the competition, the more attractive the industry.

Industry Structure analysis: The initial analysis of industry structure provides a snap of the competitive environment. The strategists also need to anticipate future trends, new development that may change the existing structure.

Q 2. Briefly explain GAP model of service quality

Answer Gap theory, or the Service Quality Gap model was proposed by Parasuraman, Zeithaml, and Berry in 1985.

This models identifies the different sources of gaps or differences between the service quality that a customer expect to receive from a service provider and the customer perception of of the service actually received.

The model identifies 5 different types of gaps. The first four gaps are called company gaps, and the last or fifth gap is called customer gap - that is, the gap as perceived by customer. The customer gap is the resultant effect of the four company gaps. The description of these five quality gaps is given below.

Gap 1:The difference between the the service actually desired by the customer and company's perception of what the customer desires.

Gap 2: The difference between company's understanding of the service desired by customer and the service as designed to be delivered by the company, and the performance standards set for the same.

Gap 3:The difference between the service design and actual service delivered.

Gap 4: The difference between actual service delivered and the service as perceived by customer.

Gap 5: The difference between service as perceived by customer and service expected by company.

Q 3. Discuss are the various types of retail store locations. What are their pros and cons?

Answer: Following are various types of retail store locations.Mall Space The mall has many retailers competing with each other under one roof. It hosts a variety of stores and retail formats, from anchor stores to kiosks. There are generally 3 to 5 anchor stores, or large chain stores, and then dozens of smaller retail shops. Typically the rent in a mall location is much higher than other retail locations. This is due to the high amount of customer traffic a mall generates.

Free standing locations This type of retail location is basically any stand-alone building. It can be located in a neighbourhood or right off a busy highway. Depending on the landlord, there are generally no restrictions on how a retailer should operate his business. It will probably have ample parking and the cost per square foot will be reasonable

Downtown area This type of store location may be another premium choice, just like malls. However, there may be fewer rules and more freedom for the business owner. Many communities are hard at work to revitalize their downtown areas and retailers can greatly benefit from this effort. However, the lack of parking is generally a big issue for downtown retailers.

Shopping centre Strip malls and other attached, adjoining retail locations also have some guidelines or rules for their tenants directing their conduct of business, these rules are probably more lenient than a mall, but make sure you can live with them before signing a lease.

Home based Home based businesses or stores are an inexpensive option but in such a business, growth may be restricted. It, may a times, becomes really hard to separate business and personal life in this setup and the retailer may run into problems if there is not a separate address and/or phone number for the business

Office Building The business park or office building may be another option for a retailer, especially when they cater to other businesses. Tenants share maintenance costs and the image of the building is usually upscale and professional.

Q 4. List the factors influence retail store image.Discuss the elements of an interior store design


The factors affecting the image of retail store can be classified into primary and complimentary factors. The primary factors are.-

y y y y y

The products itself/the merchandise features The place where it is sold or the location of store The pricing of the product. The manner in which it is presented to the customers The advertising and promotion for the store

Perhaps the most important factor that affects the store image is the product features or the merchandise itself. For example, if the garments sold by an apparel store lose shape or run colour, it creates a bad image in the mind of the customer. The location of the store and the price of the merchandise sold also communicate the image of the store. For example, stores at breach candy or Nepeansea Road are considered upmarket, as compared to those in suburbs like kandivali or Borivali. Similarily, a store at South extension communicate a different image as compared to a store in chandni chowk or Karol Bagh. The manner in which the merchandise is displayed and presented is an integral part of communication of the image. The price of the product plays an important role in creating the image. Expensive products are generally perceived to be good. Advertising also helps create image.

The shopping experience provided in the store, customer service, sales staff and the brand associations that the store provides also affect the store image. These are hence termed as complimentary factors.

Store design has always been used to reinforce other elements of a retail store strategy. For example, plush carpeting and marble used in a store denotes highquality merchandise and may suggest high-price positioning. Strip lighting and dump bins for merchandise brings the word µbargains¶ to mind. However, as retail markets mature, the design of retail space are increasingly being used as a means by which strategic aims are reached. For example, in 2001 safeway introduced a new store design to reinforce their position as a good-value fresh and quality grocery retailer. Wood paneling, slate tiling and pendent lighting were used in the wines and beers sections to create the impression of up-market wine cellar; baskets and barrels were used in the fruit and vegetable section to give the impression of µmarket freshness¶ and chalkboard signage to foster the impression of good prices. It is these small details that help to refocus the attention of the stopper on to revised core values, providing a struggling grocery chain with a new lease of life to compete against other forceful players in the market (Atkinson, 2001) Store design elements include: y Exterior elements like marquee, entrances, windows, banners, planters, awnings and lighting y y y y y Display Areas Corner Shops Shelves Ledges Merchandise walls

y y

Colour and lighting Sound and aroma

Q 5. Write short note on visual merchandising. Answer: Visual merchandising is concerned with presenting products to customers within the retail space. It is a term sometimes used as an alternative to merchandise display, but these days is generally understood to have a wider definition encompassing all activities concerned with the

presentation of the product within the retail outlet, including the choice of store layout, the method of product presentation, the choice of fixtures and fittings, the construction of displays, and the use of point-of-sale material. It also has a very close connection with the allocation of space within the outlet. Visual merchandising is more important in some retail sectors than others. For Example, fashion and home furnishing retailers have always devoted considerable resources to displaying products in a visually appealing way, whilst discount grocery retailers are much more concerned with space efficiency. However, the need to adapt to styleconscious twenty-first-century is as relevant to the way products are presented as the way a store environment is designed.

Q 6. Briefly discuss the strategic retail planning process Answer: The strategic planning process, after considering the HR potential and the unique Selling preposition (USP) of a particular store, takes proper shape. Strategic retail planning process divided into the four steps as discussed in subsequent subheads Deciding the store¶s mission and objectives The retail strategic process starts with the identification of a store¶s mission for its existence, and hence the scope of retail store. The mission of a store is, identifying the goods and services that will be offered to customers. It also deals with the issue of how the resources and capabilities of a store will be used to provide satisfaction to customers and how the store can competitors. The mission also involves the way of store¶s functioning. How a store will work and accomplish its day to day functioning. Once the organisation mission has been determined, its objectives the desired future positions that it wishes to reach, should be identified. A store¶s objectives are defined as ends that the store seeks to achieve by its USP and operations. The store¶s objectives may be classified into two parts.External Store objectives: Those objectives that define the impact of store on its environment, e.g. to develop high degree of customer confidence by providing quality goods at affordable price. Internal Store objectives: Those objectives that define how much is expected to be achieved with the available resources, e. g. To raise the store turnover by 20% in the coming year Situational Analysis. The objective of doing the store¶s situational analysis is to determine where the store is at present and to forecast where it will be if the compete in the target market vis-a-vis its

formulated strategies are implemented. The difference between current and future position is known as planning. As the objective of conducting store¶s situational analysis, normally study in the context of external environment and internal environment. External Analysis: The purpose of examining the store¶s external environment is to study the opportunities and threats in the retailing environment. The external analysis studies factors that affect the macro-environment of the retailing industry and the task environment. Under external analysis retailer study these parameters.Economic environment of retailing Inflation Employment Disposal income Business cycle Energy Availability and cost Others Political/legal environment of retailing Monopolies legislation Environmental protection laws Taxation policy Employment laws Government Policy Legislation Others Socio-cultural environment of retailing Demographics Distribution of Income

Social Mobility Lifestyle changes Consumerism Levels of education Others

Technological environment of retailing New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology Others Internal environment of retailing Growth Opportunities Others Internal Analysis: The objective of studying the internal environment of its own store is to identify the store¶s capabilities and weakness. The store will try to increase its capabilities and overcome the weakness that deters the business profit. While doing the internal analysis, the store examines the quality and quantity of its available resources and critically analyse how effectively these resources are used. The resources for the purpose of examining are normally grouped into human resource, financial resources, physical resources and intangible resources. Formulation of retail strategy

After analysing the store¶s capabilities in terms of HR, finance, physical and intangible resources, a store manager formulates a retail strategy with regards to marketing retail positioning and retail mix. Retail positioning is a plan of the store¶s action for how the retailer will enter target market and will compete with its main competitors. Retail positioning from a retail store¶s point of view is a step by step plan to create and maintain a unique and everlasting image of store in the consumers mind. Retail positioning is made possible under three circumstances.By differentiation of store¶s merchandise from that of its competitors By offering a high level of service after sales at nominal cost By adopting low pricing policies Strategy implementation and Control It is concerned with the designing and management of retail system to achieve the best possible combination of human, financial, physical and service resources of a retail store; to achieve the formulated objectives, without timely and efficient implementation also requires scheduling and coordination of various retail activities.

The implementation of new retailing strategies sometimes require changes in the way of functioning and duties that can lead to resistance from employees. Therefore, stores should take positive steps to reduce this resistance to change and to convince the employees that it in the long term will be beneficial for both the store and the employees.

MBA Semester 3 MK0012 ± Retail Marketing ASSIGNMENT- Set 2

1. What is positioning? Discuss various positioning approaches Answer: In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization.

Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.

De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.

The original work on Positioning was consumer marketing oriented, and was not as much focused on the question relative to competitive products as much as it was focused on cutting through the ambient "noise" and establishing a moment of real contact with the intended recipient. In the classic example of Avis claiming "No.2, We Try Harder", the point was to say something so shocking (it was by the standards of the day) that it cleared space in your brain and made you forget all about who was #1, and not to make some philosophical point about being "hungry" for business.

The growth of high-tech marketing may have had much to do with the shift in definition towards competitive positioning. An important component of hi-tech marketing in the age of the world wide web is positioning in major search engines such as Google, Yahoo and Bing, which can be accomplished through Search Engine Optimization , also known as SEO. This is an especially important component when attempting to improve competitive positioning among a younger demographic, which tends to be web oriented in their shopping and purchasing habits as a result of being highly connected and involved in social media in general. Effective Brand Positioning is contingent upon identifying and communicating a brand's uniqueness, differentiation and verifiable value. It is important to note that "me too" brand positioning contradicts the notion of differentiation and should be avoided at all costs. This type of copycat brand positioning only works if the business offers its solutions at a significant discount over the other competitor(s).

Generally, the brand positioning process involves: Identifying the business's direct competition (could include players that offer your product/service amongst a larger portfolio of solutions) Understanding how each competitor is positioning their business today (e.g. claiming to be the fastest, cheapest, largest, the #1 provider, etc.) Documenting the provider's own positioning as it exists today (may not exist if startup business) Comparing the company's positioning to its competitors' to identify viable areas for differentiation Developing a distinctive, differentiating and value-based brand positioning statement, key messages and customer value propositions.

Product positioning process

Generally, the product positioning process involves: Defining the market in which the product or brand will compete (who the relevant buyers are) Identifying the attributes (also called dimensions) that define the product 'space' Collecting information from a sample of customers about their perceptions of each product on the relevant attributes Determine each product's share of mind Determine each product's current location in the product space Determine the target market's preferred combination of attributes (referred to as an ideal vector) Examine the fit between: The position of your product The position of the ideal vector

Positioning concepts

More generally, there are three types of positioning concepts: Functional positions Solve problems Provide benefits to customers Get favorable perception by investors (stock profile) and lenders Symbolic positions Self-image enhancement Ego identification

Belongingness and social meaningfulness Affective fulfillment Experiential positions Provide sensory stimulation Provide cognitive stimulation

2. Write a short note on- psychographic segmentation.

In the fields of marketing, demographics, opinion research, and social research in general, psychographic variables are any attributes relating to personality, values, attitudes, interests, or lifestyles. They are also called IAO variables (for Interests, Activities, and Opinions). They can be contrasted with demographic variables (such as age and gender), behavioral variables (such as usage rate or loyalty), and firmographic variables (such as industry, seniority and functional area).

Psychographics should not be confused with demographics. For example, historical generations are defined by psychographic variables like attitudes, personality formation, and cultural touchstones. The traditional definition of the "Baby Boom Generation" has been the subject of much criticism because it is based on demographic variables where it should be based on psychographic variables. While all other generations are defined by psychographic variables, the Boomer definition is based on a demographic variable: the fertility rates of its members' parents.

When a relatively complete profile of a person or group's psychographic make-up is constructed, this is called a "psychographic profile". Psychographic profiles are used in market segmentation as well as in advertising. It is possible to find other definitions of the field in academic literature and even online blogs. Some categories of psychographic factors used in market segmentation include:

Activity, Interest, Opinion (AIOs) y Attitudes y Values

Psychographics can also be seen as an equivalent of the concept of "culture" as used most commonly in national segmentation. "Psychographics is the study of personality, values, attitudes, interests, and lifestyles"

3. Briefly describe the criteria for effective segmentation. Answer:

Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts for the services. The people in a given segment are supposed to be similar in terms of criteria by which they are segmented and different from other segments in terms of these criteria. These can be broadly viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups.

Examples: Gender Price Interests Location Religion

Income Size of Household

While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop different ways of imagining market segments, and create Product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation advantage. strategy can give a firm a temporary commercial

"Positive" market segmentation

Market segmenting is dividing the market into groups of individual markets with similar wants or needs that a company divides into distinct groups which have distinct needs, wants, behavior or which might want different products & services. Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private. Although industrial market segmentation is quite different from consumer market

segmentation, both have similar objectives. All of these methods of segmentation are merely proxies for true segments, which don't always fit into convenient demographic boundaries.

Consumer-based market segmentation can be performed on a product specific basis, to provide a close match between specific

products and individuals. However, a number of generic market segment systems also exist, e.g. the system provides a broad segmentation of the population of the United States based on the statistical analysis of household and geodemographic data.

The process of segmentation is distinct from positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behavior; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are thus improved.

Improved segmentation can lead to significantly improved marketing effectiveness. Distinct segments can have different industry structures and thus have higher or lower attractiveness

Once a market segment has been identified (via segmentation), and targeted (in which the viability of servicing the market intended), the segment is then subject to positioning. Positioning involves ascertaining how a product or a company is perceived in the minds of consumers.

This part of the segmentation process consists of drawing up a perceptual map, which highlights rival goods within one's industry according to perceived quality and price. After the perceptual map has been devised, a

firm would consider the marketing communications mix best suited to the product in question

How and when can demographic and benefit segmentation be used to maximum efficiency?

The basic approach to retention-based segmentation is that a company tags each of its active customers with 3 values:

Tag #1: Is this customer at high risk of canceling the company's service? One of the most common indicators of high-risk customers is a drop off in usage of the company's service. For example, in the credit card industry this could be signaled through a customer's decline in spending on his or her card.

Tag #2: Is this customer worth retaining? This determination boils down to whether the post-retention profit generated from the customer is predicted to be greater than the cost incurred to retain the customer. Managing Customers as Investments.

Tag #3: What retention tactics should be used to retain this customer? For customers who are deemed ³save-worthy´, it¶s essential for the company to know which save tactics are most likely to be successful. Tactics commonly used range from providing ³special´ customer discounts

to sending customers communications that reinforce the value proposition of the given service. Process for tagging customers

The basic approach to tagging customers is to utilize historical retention data to make predictions about active customers regarding: Whether they are at high risk of canceling their service Whether they are profitable to retain What retention tactics are likely to be most effective

The idea is to match up active customers with customers from historic retention data who share similar attributes. Using the theory that ³birds of a feather flock together´, the approach is based on the assumption that active customers will have similar retention outcomes as those of their comparable predecessor.

Niche Marketing

A niche is a more narrowly defined customer group who seek a distinct set of benefits. dentified by dividing a segment into subsegments,distinct and unique set of needs,requires speciallization, and is not likely to attract too many competitors.

4. Briefly discuss the channel strategies adopted by the retailers. Answer:

The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order. Many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if they have any aspirations to be marketoriented, their job should really be extended to managing all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier: Channel membership Channel motivation Monitoring and managing channels

Type of marketing channel Intensive distribution - Where the majority of resellers stock the 'product' with convenience products, for example, and particularly the brand leaders in consumer goods markets (price competition may be evident).

Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product. In this case retailers can keep the competitors products in their outlets e.g. furniture etc. Exclusive distribution - Only lam-bard specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.

In this retailers are restricted to keep only one manufacturers products e.g. exclusive outlets of cars, apparels and jewellery etc. Marketing plans Channel motivation

It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and

employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a compensation is offered to the distributors' sales personnel, so that they are tempted to push the product. Julian Dent defines this incentive as a Channel Value Proposition or business case, with which the supplier sells the channel member on the commercial merits of doing business together. He describes this as selling business models not products.

Monitoring and managing channels

In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain.

In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales-force, calling on the larger accounts, with agents, covering the smaller customers and prospects. These channels show marketing strategies of an organization. Effective management of distribution channel requires making and implementing decision in these areas

5. Differentiate between relationship marketing and transactional marketing Answer: Relationship Marketing vs Transactional Marketing

Transactional marketing is a business strategy that focuses on ³single point of sale´ transactions. The emphasis is on maximizing the efficiency and volume of individual sales rather than developing a relationship with buyer. On the other hand relationship marketing is a business strategy that seeks to establish long term relationship with its customers rather than focusing on single transaction, not only does it focus on individual customers but on all the stakeholders in order to manage a relationship that adds value to each person.

Varey and Lewis in their book ³Internal Marketing Directions for Management´ describe in detail how transactional marketing differs from relationship marketing.

- Focus: The transactional marketing focus on recruitment of customers for single sale; Relationship marketing focus on customer retention

- Orientation: Transactional marketing is oriented on product features; Relationship Marketing orientation is on product benefits and system solutions

- Time Horizon: Transactional marketing has short time horizon: Relationship marketing has long term horizon

- Customer Focus: Transactional Marketing has little customer focus: Relationship Marketing has high customer focus

- Information: Transactional Marketing information is content of communication; Relationship Marketing information is product of communication.

- Contact: In Transactional Marketing there is low contact with customers; In Relationship marketing there is high contact with customers

Egan in his book ³Relationship Marketing 3rd Edition´ says that relationship marketing has a dual focus both on customer retention and acquisition strategies. It has become underpinning conviction of relationship marketing that it encourages retention marketing first and acquisition marketing later on. The academics are of the view that customer retention offers significant advantage than customer acquisition, particularly in saturated markets.

Benefits of Relationship marketing over transactional marketing

Relationship Marketing is rooted in the idea that it is cheaper to retain an existing customer than to recruit a new one. There are many benefits of relationship marketing. The first and foremost is that it focuses on providing value to its customers and places a great emphasis on customer retention. Secondly relationship marketing approach is an integrated approach to marketing, service and quality and therefore it helps in gaining competitive advantage. The long term customer may do the word of mouth promotions and referrals and many studies have revealed that cost to retain existing customer is just fraction of the cost to acquire new customers. Mudie and

Perrie in their third edition of their book ³Services Marketing Management´ assert that relational customer also tend to increase their purchases overtime either because they are consolidating their purchasing onto preferred supplier due to grown business/ family and it has also been found that there is less need to offer price promotions to this group as these customers are likely to be less price sensitive than others.

Trend towards Relationship Marketing

Nowadays more and more organizations are adapting relationship marketing approach. The big examples in this case are Club Card by Tesco and Nectar Card by Sainsbury and other partner organisation. The points scored are not only tempting to customers for repeat buying but the data collected also gives the organizations an insight into the buying habits of their customers. It helps in making a more customised marketing strategy directed at individual customers and time to time customers are sent information on promotions and new products. Some organizations go even further and send gifts and cards on birthdays or other such special occasion of customers.

With time organizations have realized that the cost of attracting new customers is very high and retaining customer results not only in increased profits but word of mouth marketing and positive referrals also help in generating more business leads. Relationship marketing has become the approach for 21st century and soon enough longevity of relationship with customers will be key in determining success of businesses in today¶s highly competitive environment.

6. Discuss the components of CRM Answer:

CRM consists of three components: ‡ customer, ‡ relationship, and ‡ management (Figure 1). CRM tries to achieve a µsingle integrated view of customers¶ and a µcustomer-centric approach¶ [Roberts-Witt, 2000].

Customer: The customer is the only source of the company¶s present profit and future growth. However, a good customer, who provides more profit with less resource, is always scarce because customers are knowledgeable and the competition is fierce. Sometimes it is difficult to distinguish who is the real customer because the buying decision is frequently a collaborative activity among participants of the decision-making process [Wyner, 1999]. Information technologies can provide the abilities to distinguish and manage customers.

CRM can be thought of as a marketing approach that is based on customer information [Wyner, 1999]

Relationship: The relationship between a company and its customers involves continuous bi-directional communication and interaction. The relationship can be short-term or long-term, continuous or discrete, and repeating or one-time.

Relationship can be attitudinal or behavioral. Even though customers have a positive attitude towards the company and its products, their buying behavior is highly situational [Wyner, 1999]. For example, the buying pattern for airline tickets depends on whether a person buys the ticket for their family vacation or a business trip. CRM involves managing this relationship so it is profitable and mutually beneficial. Customer lifetime value (CLV), , is a tool for measuring this relationship.

Management. CRM is not an activity only within a marketing department. Rather it involves continuous corporate change in culture and processes. The customer information collected is transformed into corporate knowledge that leads to activities that take advantage of the information and of market opportunities. CRM required a comprehensive change in the organization and its people.

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