Name: Varun Raju B

Roll Number: 2414101246

Q. Explain the various functions of retailing.

Functions of Retailing
Retailers act as critical intermediaries between manufacturers, wholesalers, suppliers, and
consumers. They perform various functions that significantly add value for all involved. The
functions of Retailing are:
1. Offering a Variety of Products and Services: Retailers provide a diverse selection
of products from different companies, allowing customers to choose from a wide
array of brands, designs, sizes, colours, and prices, all in one place. This extensive
assortment means consumers don't need to visit multiple stores to meet their shopping
needs. For instance, supermarkets offer a variety of food, health, and household
products, while specialty stores might focus on clothing and accessories.
2. Breaking Bulk: To reduce transportation costs, manufacturers and wholesalers ship
products in large quantities. Retailers then break these bulk shipments into smaller,
consumer-friendly quantities. This process, known as breaking bulk, is crucial for
both manufacturers and consumers. It enables manufacturers to package and ship
merchandise cost-effectively, while consumers benefit from purchasing products in
manageable amounts that suit their usage patterns.
3. Maintaining Inventory: Retailers stock products in sizes suitable for consumers,
ensuring availability when needed and reducing the need for consumers to store large
quantities at home, especially for perishable items. By maintaining inventory, retailers
offer a significant benefit to consumers, particularly those with limited storage space,
by reducing the cost and inconvenience of storing products.
4. Providing Services: Retailers offer various services that enhance the shopping
experience. These services include credit facilities, allowing consumers to use
products immediately and pay later, and product displays that enable customers to see
and test items before purchasing. Some retailers employ knowledgeable sales staff to
answer questions and provide detailed product information. Multi-channel retailers
offer the flexibility of buying products anytime, either in-store or online, with options
for home delivery or store pickup. Retailers also provide product guarantees, after-
sales services, and handle consumer complaints, adding further value to the shopping
experience.
 5. Communication Channel: Retailers serve as a vital communication link between
suppliers and consumers. Through interactions with salespeople and in-store
advertisements, shoppers learn about the features and benefits of products and
services. Retailers relay valuable information back to manufacturers, including sales
forecasts, delivery delays, and customer feedback, helping manufacturers improve
their products and services.
6. Transporting and Advertising: Retailers assist small manufacturers with
transportation, storage, advertising, and pre-payment of merchandise. This support is
crucial for manufacturers who may lack the resources to handle these tasks
independently. In cases where the number of retailers is limited, manufacturers may
support retailers. The extent of functions performed by a retailer is directly related to
the percentage and volume of sales needed to cover costs and achieve profitability.
7. Enhancing Product Value: Retailers increase the value of products and services from
the consumer's perspective by offering the right assortment at the right place and time.
By meeting customers' needs for variety, convenience, and availability, retailers
enhance the overall shopping experience and satisfaction.
8. Promotional Support: Retailers support small manufacturers with logistics,
marketing, and financial services, ensuring efficient distribution and recommending
products where brand loyalty is weak or for unbranded items.

Q. What are the key stages of the consumer decision-making process? Explain with
suitable examples.

The consumer decision-making process involves the way individuals gather, evaluate
information, and make choices among various goods, services, organizations, people, places,
and ideas. This process includes five essential stages, with each stage influenced by multiple
factors:
1. Problem Recognition: The process begins when a consumer identifies a need or
problem. This awareness can stem from a shortage or an unfulfilled desire. For
instance, realizing the need for a new smartphone to replace an old one.
2. Information Search: Next, the consumer seeks information on how to address the
problem. This search can be internal (recalling past experiences) or external (asking
friends, family, consulting online reviews, etc.). The more significant the perceived
risk, the more information the consumer tends to seek. For example, researching the
latest smartphone models and their features.
3. Evaluation of Alternatives: The consumer then evaluates different products or
services based on personal criteria and the importance of each. This stage involves
 comparing alternatives to identify the best fit for their needs. For example, comparing
various smartphone brands based on price, features, and reviews.
4. Purchase Decision: After evaluating the options, the consumer makes the purchase
decision. This involves deciding where to buy, the terms of the purchase, and the
availability of the product. If all factors are satisfactory, the consumer proceeds to buy
the chosen product. For instance, choosing to buy a specific smartphone from an
online retailer due to better pricing and availability.
5. Post-Purchase Evaluation: Following the purchase, consumers often reassess their
decision. They evaluate the product's performance against their expectations, which
can lead to satisfaction or cognitive dissonance (doubt about the purchase decision).
To reduce dissonance, businesses may follow up with calls, offer warranties, or
provide post-purchase support. For example, a consumer evaluating their new
smartphone's performance and possibly using customer support for any issues.

Q. Describe the benefits of market segmentation and also outline the various strategies for
effective market segmentation.

Market segmentation helps tailor marketing efforts to suit specific groups. Here are some key
benefits and strategies for effective segmentation:
Benefits of Market Segmentation
1. Implementing Campaign Strategies: Segmentation helps in crafting marketing
strategies that effectively reach target customers. Techniques like promotions,
discounts, and events are better tailored to audience needs.
2. Boosting Participation: Marketing campaigns that speak directly to target audiences,
both visually and verbally, improve engagement and attention. Segmentation
enhances campaign effectiveness and efficiency.
3. Strategic Planning: Market segmentation aids in aligning marketing campaigns with
broader business goals. It helps evaluate investment opportunities that can enhance
campaign outcomes.
4. Flexibility: Segmentation allows the creation of services that meet market demands. It
differentiates products and services to target potential customers more directly.
5. Pricing Reference: Segmentation helps determine ideal market pricing for goods and
services, maximizing investment returns. It improves brand loyalty and prevents
brand switching.
6. Resource Allocation: By focusing on specific segments, companies can allocate
resources more efficiently, reducing marketing costs and avoiding the proliferation of
products.
Strategies for Effective Market Segmentation
1. Behavioural Segmentation: This is based on how consumers respond or use
products. Variables include:
o Occasion: Buying for specific events (e.g., increased paint sales during
Diwali).
o Frequency: Regular purchasing habits (e.g., weekly grocery shopping).
o Usage: Heavy vs. occasional use (e.g., beer drinkers).
o Loyalty: Customer loyalty to brands (e.g., regular shoppers at certain stores).
o Readiness: Stages of buyer readiness (e.g., innovators, early adopters).
o Source of Purchase: Preferred shopping locations (e.g., local stores vs.
malls).
2. Demographic Segmentation: Based on characteristics like age, gender, income,
education, family size, occupation, and cultural background. This helps tailor products
to specific customer groups.
3. Psychographic Segmentation: Focuses on lifestyle, values, and personality traits.
Understanding these factors helps in designing marketing messages that resonate with
different consumer groups.
4. Geographical Segmentation: Based on location, such as regions, states, or countries.
It helps understand what products are likely to succeed in specific areas, tailoring
marketing efforts accordingly.

Q. Enumerate the stages of merchandise planning.

Merchandise planning involves several key stages to ensure the right products are available at
the right time. Here’s an overview of the main stages:
Stage 1: Developing Sales Forecast
Sales Forecasting is done based on targets set by top management. It helps determine the
inventory needs for products or categories. A good sales forecast address:
1. How much of each product is needed?
2. Should new products be added?
3. What price should be set?
Process of Developing Sales Forecast:
1. Review Past Sales: Analysing previous sales helps identify trends and predict future
sales. Last year's sales give insights into current and future sales expectations.
2. Economic Conditions: Consider changes in the economy, like consumer spending
patterns, economic slowdowns, and employment levels. These factors impact
business.
3. Sales Potential: Relate demographic changes in the market to store products.
4. Marketing Strategies and Competition: Evaluate your marketing strategies and
those of competitors. Consider factors like new merchandise lines, store openings, and
renovations.
5. Creating the Sales Forecast: Combine all these factors to estimate projected sales for
various products or categories.
Stage 2: Determining Merchandise Requirements
Levels of Planning Merchandise:
1. Merchandise Budget: This financial plan outlines how much to invest in product
inventories, usually in rupees per month. Budgets are vital for planning and typically
allocate amounts for each product based on profitability or performance measures.
2. Assortment Plan: Describes items a retailer wants in a specific merchandise
category. It’s a significant part of a retailer's financial success. Start by defining
financial objectives, then decide what products to buy, which is a major daily
challenge for retailers.
Stage 3: Merchandise Inventory Planning
Methods for Planning Inventory:
1. Basic Stock Method: Maintain a minimum amount of stock for each product or
category, even during low sales periods.
2. Percentage Variation Method: Align inventory with actual sales, used when stock
turnover is more than six times a year. Good stock valuation means inventory moves
in line with sales.
3. Stock to Sales Ratio Method: Maintain inventory levels at a specific ratio to sales.
This ratio tells retailers how much stock is needed at the beginning of the month to
support estimated sales.
4. Stock Turnover Rate: Measure how quickly stock moves in and out of the store over
a period, usually six months or a year. It assesses the efficiency of stock management.

Q. Write a short note on:

a. Receipt Management:
Receipt management is a crucial aspect of store operations. It defines how retailers handle
payments for sales. The most common payment methods are cash and credit cards. Large
retail stores usually accept both, while smaller shops might only take cash. Other options
include cheques, debit cards, and co-branded cards. In India, credit card payments are more
prevalent in urban areas, and many large stores have adopted this payment method. It's
important for staff to understand the procedures for accepting credit card payments and
collecting funds from banks. Proper receipt management ensures smooth transactions and
accurate accounting, which are essential for maintaining customer trust and operational
efficiency.
b. Elements of Retail Price:
Setting the retail price involves considering two key elements: the cost of goods and
operating expenses. The cost of goods includes the purchase price plus any additional
expenses such as shipping and handling. Operating expenses cover a range of costs including
overhead, payroll, marketing, and office supplies. Retailers must also evaluate their
distribution channels and the market potential.
 Fixed Costs: These are expenses that remain constant regardless of production levels.
Examples include rent, utilities, and office equipment like phones and computers.
Fixed costs are essential for maintaining basic operations and infrastructure.
 Variable Costs: These expenses change with the level of service provided or goods
produced. They include costs such as hourly wages for employees, raw materials, and
promotional expenses. Variable costs can fluctuate based on business activity and
sales volume. The cost of a product is the total of the fixed and variable expenses to
manufacturer or offers to product or service. Price on the other hand is the
selling price per unit customers pay for product or service. The price of a
product may be taken as financial expression of the value of that product.
For a consumer, price is the monetary expression of the value to be
enjoyed/benefits of purchasing product and hence there is need to get
product pricing right

By effectively managing receipts and understanding the elements that contribute to retail
pricing, retailers can enhance their operational efficiency and customer satisfaction.
Proper receipt management helps maintain accurate financial records, while thoughtful
pricing strategies ensure competitiveness and profitability in the market.
Q. Elucidate the various tools related to the presentation of merchandise.

a) Point of Purchase (POP): The point of purchase is where the customer decides to buy the
product. It’s crucial because it's the final chance to influence the customer's decision.
Companies spend a lot on POP materials, but there's no standard way to measure their
effectiveness. In-store communication uses POP displays in visible spots to inform customers
about brands or offers. Effective displays attract attention through contrast, repetition,
motion, and size.
b) Fixtures: Fixtures are important for the store's function and look. They highlight
merchandise and can be workspaces for employees. Choosing specific fixture styles can
create a unique look for the store. Fixtures need to hold and display products efficiently and
define store areas to guide customer flow. Common types include:
 Straight Rack: A long pipe on supports, holds a lot of clothes but only shows sleeves
or pant legs.
 Four-Way Fixture: Cross bars on a pedestal, displays clothes fully and holds a lot.
 Rounder: A round fixture on a pedestal, holds maximum clothes and is easy to move.
 Wall Fixtures: Vertical columns fitted to walls for various display hardware.
c) Lighting: Lighting is vital for visual merchandising. It increases product visibility and
creates excitement in the store. The store should be well-lit and ventilated, avoiding harsh
lighting that blinds customers.
d) Colour: The colour of the store's paint can set the customer's mood. It should match the
store’s décor, like carpets and furniture. Light colours make spaces feel bigger, while dark
colours can make them feel cramped.
e) Display: Merchandise should be arranged on racks or shelves by size and gender, with
clear labels to help customers find products easily. Ensuring products don’t fall off shelves
maintains a neat appearance.
f) Music: Music can enhance or detract from the store atmosphere. It should not be too loud,
as it can interfere with communication. Unlike other elements, music can be easily changed
to suit the environment.
g) Smell: A pleasant store smell improves the shopping experience. Using room fresheners or
aromatic sticks can create a welcoming environment and prevent customers from leaving due
to bad Odors.