Retail marketing 2

The Indian environment
• Increased urbanization
• Urban-rural ratio
• Purchasing power is increasing
• 25more cities with more than 10lakh
population coming up

• Piramal group have opened outlets
• Tatas have started Westside in 1998 .
• Kasliwal group has Landmark citi which
includes apparel, consumer goods and
food articles.
• Shopper’s stop
• Pantaloon have outlets in garments,
household and leisure products
• Itc has plans to have about one hundred
outlets in country

• Organized retailing – scope
• 100 crore population
• Almost 20 crore households including urban &rural ones.
• The NCAER has given some patterns which state that-
• 0.10 – very rich
• 3.40-the consuming class
• 5.25- the climbers
• 5.25- the aspirants
• 6.00-the poorer section of society
• Thus around top 3.5 crores of households are the
consuming classes
• 5.25 crore climbers will have more purchasing power in
years to come

• Also marketers have started concentrating on
rural areas that have population over 500.
• An estimate suggest that out of 33 lakh retail
outlets, just 12 lakh are urban & rest are in rural
areas.
• And still according to NCAER marketers have
not yet effectively touched even 25 percent of
rural households.
• The retailers thus have a large scope in reaching
the other 75% of rural households .
• The wholesalers and semi wholesalers are vital
in SCM to reach secondary, tertiary &end user
point. thus retailers would play imp role in
reaching mass markets.

• The NCAER has given some information
about consumption of some products in
rural areas.
• By 2005, organized retailing or OR will be
nearing 1,60,000 crores.
• Will provide employment to more than
one lakh ppl.

Limitations of small scale retailing
The small scale retailing has following limitations-
1. fragmented supply base
2.Improper supply chain infrastructure.
3.Relationship between price & operating cost
Thus ,
• fragmented supply base results in lower
efficiency
• In distant areas the supply chain infrastructure
proves to be more costly for retailers
• Operating costs are low for small retail shop. But
since supply is not at a lower price hence
margins are on lower side.

Need for retailing on large scale
• Providing value for money
• Developing the retail store as a brand which
conveys TRUST
• Offering one-stop shop with a variety of products
&services.
retail store name has developed as a
brand in many parts of the world. This helps in
building trust.
consumers can get a variety of products
under one roof . This saves them time &energy.

Definitions &Nature of retailing
• Retailing is concerned with sale of goods and
services to consumers.
• Retailing is an intermediate step between
consumer &manufacturer.
• Retailing consists of activities involved in selling
goods & services to ultimate consumers.
• Retail sale is one in which buyer is consumer, as
opposed to a business purchaser
• Retailing activities are those in marketing which
provide satisfaction to consumers.
• Retailing is link in distribution system

Main characteristics that differentiate in
retail transactions
• Buying motive
• Trade discount
• Quantity purchased
• Stocking requirements
• Taxes
• Price differentials

Nature of Retailing
• Value added- the value may be related to-
 Quality
 Convenience
 Exclusivity
 Service response
perception of the consumer about the importance which he
attaches for getting the product influences the value of
product.
the system of distribution , with the retailer at the end
which is nearest to consumer adds valure to the product.
The concept is thus termed as “value added”.
The “value added resellers (VAR)” is another concept – like
in computer companies, many timers they work with
VARs who customize the hardware &software for
individual clients or customer segments & earn a price
premium in this process

The concept of utility
Utility is attribute of an item that gives consumer, the satisfaction of
wants. The something that makes a product capable of satisfying
wants is its utility. Marketing and especially Retailing creates utility
for product
• Form utility- related to production. Form of raw material is changed
as per needs. Marketing contributes as style, size & color.
• Place utility- when product made available to potential consumer.
• Time utility- means making a product available at the time when
consumer needs it.
• Information utility- informing the potential buyers that a particular
product exists. till then the product has no value.
• Image utility- special type of information utility- it is emotional value
that a person attaches to product . Its associated with image or
social standing. Expensive car or designer clothes.
• Possession utility- when consumer buys product. Ownership is
transferred to buyers. this is the most important of all utilities.

The Retailer- role &functions
• Role – retailers link producers & consumers. That is major role of
retailers.
 Perform valuable service for both-producers &consumers.
 Sale of goods to the ultimate consumers .
• Functions-
 Customer service- retailers act as service agent to consumer. Also
after sales service is essential.
 Creating a place in market- retailers
 demonstrates product to consumer. The consumer can satisfy all
queries about product.
 Building the image- this function of building image is important. For this
retailer should be convinced himself about the product before selling.
 Delivery of product- retailer arranges physical delivery of the product
to consumer. The delivery can be taken at point of purchase or
customer can ask to deliver at any other place.
 Arranging credit- two wheelers, TVs, electronic goods, cars are bought
on credit. The retailer arranges for the credit facilities through a bank
or finance co.
 Solution of any problem of consumer- this function of retailer stems
from the fact that consumer purchases product from retailer . For any
problem , he contacts the retailer & retailer has to exert & arrange for
solutions.

Importance
Importance of retailing can be discussed as importance
from point of view of
1.Consumer- he gets goods needed by him at any time &
place that he wants & gets is from retailing. Eg . An air
traveler needs a gift for friend can use in flight catalogue
& get delivered at friends place. e-commerce has
increased importance of retailing from consumers point
of view.
2. Retailer –able to interpret needs of consumer. Convey to
the manufacturer.
3. Social point of view- reaching various goods to a
diversified population can be done through retailing. No
of ppl involved in distribution help total economy.
Economic activity expands- society gets benefits.

Retail planning
• Identifying needs & customer database
1. Why planning
2. The market opportunities
3. Customer database
• Operational planning
1. Developing a market plan
2. Implementing plan
3. Evaluation
• Networking –
1. Network &networking
2. Business networks
3. Relevance in retailing.

Identifying needs & customer database
1.Why planning ----
 retailer must have knowledge of marketing &selling.
 Must have details of purchases &financial accounting
 Planning is most important in mgmt. same is true for
retail mgmt.
 Must know how to make best use of limited resources.
Planning
 helps to deal with future more efficiently
 Can give vision to managers to focus on main objectives
 Can help in unifying & coordinating activities of everyone
who is involved in total process.
 Correct planning can minimize costs
 Periodic evaluation is possible
 Progress can be measured
 Determines course for action

2.The market opportunities

• Step -1 identifying the needs: the retailers must
always look for market opportunities.
Opportunities arrive & disappear at great speed.
So, retailer must scan continuously for the
environment.
GAP ANALYSIS is word which is used to identify
these opportunities. A retailer has to analyze
situation where there is a gap between desires,
needs & wants of consumers. SWOT ANALYSIS
can be used by retailer to analyze business.

The market opportunities
• Step -2 determining the position in the market- this can
be done by
1. Being innovative
2. Being aggressive
3. Giving quality products & services
Differential advantage can be achieved using:
1. Adoption of new technology
2. Lower cost due to better financial mgmt and
techniques
3. New organizational design
4. More efficient distribution system
5. New & better products offered to consumes
6. Better inventory mgmt.

3. Customer database
• The customer database should be cost effective. The
retailer should get info about availability, accuracy
&time. The data can be updated in a computer which
is called as database. In India, data collected about
consumers is about-
1. Family demographics
2. Geo-demographics
3. Socio-economic information
4. Store user/non user
5. Purpose for which a visit to a store is necessary
6. Time availability
7. Number of visits in a week or a month
8. Stores usually visited
9. Features in a store which are expected by customer or
preferred.

Operational planning
1. Developing a market plan: a retailers business play should be
• giving details
• Be specific
• In written format
The major elements of a good plan are
• Specific objective should be set up
• Use of all resources should be planned
• Various alternatives are to be considered
• Plan should be simple &flexible
• Specific strategies should be suggested for achieving objectives
• Periodic evaluation & updating.
The retailer should have a “mission statement ”which
should answer
• In which business the retailer is?
• What is scope of business?
• What is vision & direction of growth? And then a “budget ”should be
developed.

2.Implementing the plan
• No good plan can be successful if poorly
executed. In some cases, whether it is product
related planning or price related planning or
promotion related planning , the retailer must do
implementation very systematically.
3. The evaluation: period evaluation should be
there and it will inform us about the
shortcomings. It will also help to correct
wherever needed. Thus it is an ongoing process.
It has to be worked out on individual
circumstances .

Networking
1. Network & networking: it is a system of selling
in which an individual organizes others &
receives a commission on their sales/ the
sales then increase thru networking.
it is also described as a system of
developing & maintaining professional contact
with ppl in the same business or field.
companies are encouraging more teamwork
centered around core business processes
in supply chain mgmt , the concept
of network & networking have one more term
called as network marketing. This concept is
also described as multi-level marketing (MLM)

2.Business network : many companies have
strategic alliances with foreign firms who serve
as suppliers , distributors, joint venture partners,
technological partners or even competitors .
They build “global business networks” to extend
their global reach. Here , time scheduling
&adhering to schedule for effective completion of
project is very crucial.
3. Relevance in retailing: networking is considered
as network marketing for purpose of
understanding relevance in retailing. The sales
officer gives product to those who are known to
him. They in turn motivate their friends to
purchase. Thus it is different from direct
marketing and thus networking can be
understood.

Types of retailing
a. Store retailing
• Departmental store
• Independent store
• Super market
b. Non store retailing:
• Mail order/direct mail
• Catalogue retailing
• Telemarketing/ teleshoppping
• Online retailing/ web retailing
• Direct selling /inhome selling
• Automatic vending machines.
c. Organized retailing
• Corporate retail chain
• Consumer co-operatives
• Franchisee arrangements

Retailing can also be classified
1.On basis of ownership
2. On basis of types of products dealt with
3. On basis of size turnover

Store retailing
• Retail stores with specific locations where consumers
reach.
• The relevant thing here is- who the consumer is. the
product is sold for consumer’s personal use.
• Retail life cycle- just like product, retail shops grow and
then decline. the stores retailing can be discussed as-
1. Departmental stores: has product lines-clothing, home
furnishings, household. Each line is operated as
separate dept. eg. in Pune we have “super Shoppe”.
“Discount departmental stores” are shops which
have limited customer service and low mark ups,
carrying diversified product lines.e.g. Wal-mart,k-mart.
they keep operating costs low by hiring minimum of
personnel. Service is kept at minimum & price is most
used promotional component. they vary in
size,operations&mgmt. many consumers opt for these
shops as they pay lower in exchange for ‘bulk
purchases’.

2.independent retailer: this is a store mostly a
single entrepreneur-a proprietary shop. it has
limited merchandize. A shoe shop, vegetable
shop, florist shop, men’s clothing's or children
dresses etc.
sometimes these are ‘speciality stores’.
e.,g. A crockery shop, stainless steel shop etc. in
urban areas, another type called –a boutique is
coming up. They appeal to a limited target
audience. They are located in fashionable
localities and mostly sell fashionable products.
They are small in size and mostly have a unique
product. “convenience store ”is word used for
independent shops

3. Super markets. it is a large, low cost, low margin, high
volume self service operation designed to serve
consumers total needs for food, laundry & household
maintenance products. They generally earn an
operating profit of only one percent of their sales
turnover.
The main features are
a. Several related product lines
b. A high degree of self service
c. Centralized checkout
d. Competitive prices
e. Emphasis on low prices
f. These stores have different types of goods like sports
goods, books and electronic goods etc.
“off price retailers” buy at less than regular wholesale
prices and charge consumers less than usual retailers.

Non store retailing
• The transactions occur away from a retail store are
called nonstore retailing
1. Mail order/direct mail- letters, brochures &product
samples are sent to consumers via mail or email.
Credit cards & club memberships are very popular.
2. Catalogue retailing-it allows retailer to “carry” item
that cannot be easily accommodated within store
because of individual size, price or assortment. Done
thru phone, mail or computer. Maintenance of
database for catalogue is necessary. So the costs are
on higher side.
3. Telemarketing/ teleshoppping- the seller gets contacts
on telephone. Promoted on TV channels. Viewers are
given nos . They can contact and order.
4. Online retailing/ web retailing- consumers use
computers to see products on screen and make
purchases. Its still in infancy in India. Amazon.com,etc.

5. Direct selling /inhome selling- personal contact
between a sales person and consumers.
Called as in home selling. Product can be seen
in reality. A demonstration can also be
received. Drawback is cost of selling-sale
commissions are as high as 40%. This is used
for household cleaning products.
6.Automatic vending machines- it is sale of
product thru machine where there is no
personal contact between buyer and seller.
The merit is convenient purchase. Used for
coffee, cold drinks, candy, cigarette etc

Organized retailing
• Primarily related to ownership
1. Corporate retail chain- org of two or more
centrally owned and managed stores that
handle same line of products. They have
advantages over independent individual retail
stores. They can buy at lower prices since their
purchase is high. They can hire specialists for
pricing, promotion, merchandising and sales
etc. major disadvantage is inflexibility which
does not allow on spot decisions at unit level.
2. Consumer co operatives
3. Franchisee arrangements

• Corporate R chain-an org of 2or more centrally
managed stores, mostly handles same product
lines, individual stores have very little autonomy,
have advantage of large purchase at a time
compared to independent store, also can
employ management specialists for
scm,merchndising, accounting, category,
forecasting, inventory and cost controls
etc.major disadvantage-inflexibility as
centralized controls, competitive spot decisions
at store unit level not allowed.
• Consumer cooperatives-shareholders r primarily
consumers of store so price advantages and
also dividends as per purchase volumes-grahak
peth.These stores help checking and managing
price lines thru authorities and ngo,s

• Franchise arrangement- a contractual association. Could
• be between manufacture or wholesaler or service
organization and independent business people or firm. who
buy the rights to own operate one or more units in this
system.
• Services retailing-3 types-1-rental goods –car rental,2-
owned goods-car repair,3-non-goods ,home delivery,
wrapping services, providing credit.
• Retailing of financial services, atm retailing,
• Industrial retailing- engineering tools needed by sme units.
• Food items retaling-spencers-daily,dial a meal, pizza chains
etc
• Factory outlets-prices r mostly at wholesale level or slightly
more, near the factory. C prefers fresh fruits near the
garden.
• Retail micromarketing-need based, niche, local markets
and customizing efforts for the same.
• International retailing-related to globalization, cross
cultures. Habits, needs , wants , business environments etc

Retail marketing 2

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