UNIT 1 CHAPTER 1

RETAILING IN INDIA ROLE, RELEVENCE AND TRENDS

WHAT IS RETAILING
It is defined as a conclusive set of activities used to sell a product or a service to consumers for their personal or family use. It is responsible for matching individual demands of the consumer with supplies of all the manufacturers. Word RETAIL was derived from the French word retaillier meaning to cut a piece off. A Retailer is a person, agent, agency, company or organization which is instrumental in reaching the goods to the ultimate consumer. RETAIL also involves selling of services and any channel could be used like internet, door to door etc.

DRIVERS OF CHANGE IN RETAILING

Changing demographics and Industry structure. Expanding computer technology. Emphasis on lower costs and prices. Emphasis on convenience and service. Focus on productivity. Added Experimentation. Continuing growth of Non store retailing.

RETAIL INDUSTRY AND ECONOMY

Retail business is the largest private industry, ahead even of finance and engineering It contributes over 8% to the GDP in the West. Over 50 of the Fortune 500 companies and about 25 of the Asian Top 200 companies are retailers. In some developed countries retail business houses have shares as large as 40% of the market. In contrast India has very less organized retail business. The significance of the retail business has increased with the fast growth in the service sector. Much of the rapid growth in organized retail business in the developing countries is due to the entry of global retailers.

RETAIL INDUSTRY IN INDIA

In India the retail sector is the second largest employer after agriculture. In India the retail sector is highly fragmented and consists predominantly of small, independent and owner managed shops. There has been a boon in the retail trade in India owing to a gradual increase in the disposable income. More and More players are venturing into the retail business to introduce new and attractive retail formats like malls, super markets, department stores etc.

CHARACTERISTICS OF RETAILING
There is direct end user interaction It is the only point to provide a platform for promotions. Sales at the retail level are generally in smaller unit sizes. Location is a critical factor in retail business. In retail services are as important as the core product.

FUNCTIONS OF RETAILING
SortingRetailers balance the demand of customers by collecting an assortment of goods from different sources in large quantities and selling them to consumers in small quantities. Retailers specialize in the types of assortment offered and the market to which the offering is made e.g. Westside provides clothing and accessories, Shoppers Stop targets the elite urban class and Pantaloons is targeted at the middle class. Breaking BulkTo reduce transportation costs manufacturers typically ship large cartons of the product which are then tailored by the retailers into smaller quantities to meet individual needs.

FUNCTIONS.
Holding StockRetailers maintain an inventory that allows for instant availability of the product to the consumers. It helps to keep the prices stable and enables to regulate production. Additional ServicesProviding product guarantee, after sales service and dealing with consumer demands complaints are some of the services that add value to the actual product. They also offer credit and hire purchase facilities to the customers. Sales people are also hired by the retailers to answer queries about the displayed products. Channels of CommunicationThey act as a channel between the wholesaler and the consumer. From Ads Salespersons and display shoppers learn about the product/service offered.

FUNCTIONS.
Transport and Advertising FunctionsSmall manufacturers can use retailers to provide assistance with transport, storage advertising and prepayment of merchandise. This also works the other way round in case the number of retailers is small.

ACTIVITIES PERFORMED BY RETAILERS

Arranging an assortment of offerings Breaking quantity Holding stock Extending services

STRUCTURE AND NATURE OF RETAILING CHANNELS

Retailing is the last stage in the distribution process, which involves all processes in movement of goods from producer to consumer. A typical channel consists of a manufacturer, a wholesaler, a retailer and the final consumer. Most distribution channels have a degree of vertical integration, performing more than one activity. U.S has a retail density ie concentration of large retail firms some of them even eliminate wholesalers. In India traditionally the small retailers played a major role in various sectors until recently.

CLASSIFICATION OF RETAILERS
Retailers can be classified into the following categories: Products or ServicesRetailers of goods deal with tangible products. While retailers of services deal with intangible goods, e.g. banks, consultants, garages maintenance services etc. By OwnershipA retailer could be an(a) Independent retailer where he or his family members own one or multiple stores. E.g. any general store, grocery shop (b) Chain storeIs a part of a group of retail stores owned and operated by a single corporate organization. E.g. Kamath Restaurant is managed by a single owner but has many outlets in various cities.

CLASSIFICATION..
(c)Factory OutletThey are owned and managed by the manufacturer eg branded products like Bata, Nike, Sony etc are sold through factory outlets only. (d)Franchise OutletManufacturer gives franchise to a number of independent retailers who are bound to follow certain rules laid by the manufacturer. E.g. McDonalds, Benetton, VLCC etc By Number of Outlets Retailers can operate through a single shop or it can be a part of a chain having multiple outlets. By Variety of Products SoldHere they could be (a) Department Stores which offers a wide variety of general products. (b) Specialty StoreThis offers only specific category of the product but in depth.

CLASSIFICATION
Variety StoreHere the focus is on variety i.e. width of the product mix and less on the depth of the product line. By Number of Product Lines CarriedHere they can be divided into General Merchandise, Limited line and Single line stores. By Level of ServiceHere they could be either Self service stores or Limited service retailers-here they provide more information and assist the customers in their purchase. They could also be Full service retailers where they even offer home delivery, free wrapping etc. By Pricing StrategyHere they could be Discount stores which regularly offer lesser prices and sell in bulk.

CLASSIFICATION
Off price shops here the products sold are generally at low prices and are of high quality but outdated, odd lots export rejected etc. Fixed Price shopsThey fix a price range which sounds attractive to the customers each product has a fixed price tag and they are arranged according to the prices. By Size of shopHere they could be small shops or large shops By LocationHere they are classified as Fixed shop retailers where they have fixed place of operation. Next they could be Mobile retailers e.g. hawkers peddlers exhibitions stalls etc.

CLASSIFICATION.
By Method of operationHere they are classified as Store retailers which are all retailers of different sizes performing their functions in the physical store are store retailers. Non Store retailersIt includes Direct selling, online retailing, telemarketing, teleshopping, direct mail marketing and automatic vending machines. By Location of Facilities or a clusterhere they are classified on the basis of their location it could be standing alone or be a part of a cluster of shops.(a) freestanding storesThese are stores which are stand alone and unattached to other retailers. Fixed location storeshere they can be one of the outlets in the shopping malls centers arcades etc. Temporary stores These are in fairs exhibitions shopping festivals etc.

TYPES OF RETAILING
Retailing is divided into foll types: Store retailing Non store retailing These have been discussed under methods of operation previously. Organized retailingThey are divided into corporate chains voluntary chains franchising, consumer cooperatives merchandising conglomeratesthese are similar to alliances from the same sector share their resources and integrate their management function.

TRENDS IN RETAIL FORMATS

Retail Industry is continuously going through changes on account of liberalization, globalization and customer preferences. Consumers are not only looking for the core products or functional benefits but also non functional benefits which need to be compatible to their lifestyles. Mon and Pop Stores and Traditional Kirana storesThe retail sector is changing as new stores categories have dominated the market and developed successful retail models, thereby the small mom and pop stores and kirana stores are facing intense competition.

TRENDS.
E-CommerceThe amount of retail business being conducted on the Internet is growing rapidly. Many major retail organizations have online retail stores . Department storesA few years ago names like J.C.Penney, Sears, Macys dominated malls all over America however they have suffered badly due to changing shopping patterns and increased competition from discount stores. Discount storesThese are giants like the Wal-Mart, Target etc have changed the retail industry drastically. Category killersThese are giant retailers that dominate one area of merchandise eg Office-Depots, Sports Authority etc.

Trends..
Specialty storesThey include The Body Shop, Victoria's Secret etc they concentrate on one type of merchandise and offer it in a way that makes it special. Some are very high end like Louis Vuitton and some cater to price conscious masses e.g. Old Navy. E-TailersThese are those retailers which are strictly online. They have given their competitors a run for their money.

RELATIONSHIP BETWEEN RETAILERS AND THEIR SUPPLIERS

Retailers SuppliersEffective Operation Profitability.
The manufacturer chooses the distribution channels after considering factors like production, capability target market etc. The producer then selects the middlemen the retailer being one of them. Intensive distribution is the use of all the available outlets for a product. Selective distribution uses only a portion of the outlets available in that area. Exclusive distribution is the usage of only one single outlet in that large area. Luxury goods are an example of this category.

RETAIL STRATEGY
It indicates how the firm plans to focus its resources to accomplish its objectives They include: Defining the business of the firm Setting short term and long term objectives with regard to profitability. Identifying the target market. Deciding the broad direction the company must take in future. Implementing and integrated plan that covers all aspects of retailing. Evaluating and revising the plan depending on the nature of the environment.

THE CHANGING FACE OF RETAILING

The role of InternetIt offers a way to grow and an existing retail business and increase exposure in the market. It is a means of communication about the retail organization, its products and services. It also helps as a proactive marketing tool. Invites consumers interactively to access the website and facilitates their buying process. It also provides valuable consumer data to retailers to enable greater targeting. Internet retailing offers an experience that is totally different from fixed store retailing. But those retailers with strong and established brand presence effective physical distribution channels are less inclined towards internet retailing.

DRIVERS OF SUCCESS IN THE RETAIL SECTOR

Customers are the driving force in changeExcellent customer service and convenience shopping. Retailers must know what the customers want and provide exactly what they want. Re-Evaluating the marketing planRetailers will stand out as leaders in their markets by focusing their advertising efforts on the benefits of a changing customer base. Advanced education for retailers is critical for growthThey must become innovative in their approach and do study and research. Strong visual recognitionThey must adapt a new approach as visual marketing has become very important. They must be aware of their customers needs.

DRIVERS OF SUCCESS..
The workplace challengeEmployees will become difficult to retain but the retailers have to become flexible with working hours, greater appreciation and motivation for retention. They must accept inputs and let them have independent thinking. Planning for successRetailers must plan for the evolution and shifts in the retail industry. Strategic planning is the key to planning for success.

UNIT 1 CHAPTER 2 RETAIL ORGANIZATION

The term Retail Organization refers to the basic format or structure of a retail business designed to cater to the needs of the end customer. A Large portion of consumer expenditure in India is incurred on basic necessities, especially food related items. Retails firms may be independently owned, parts of a retail chain, operated as a franchisee, owned by manufacturers or wholesalers or cooperative societies. Organized retail stores are generally characterized by large professionally managed store formats providing goods and services that appeal to customers.

CHANGING STRUCTURE OF RETAILING

Changing environments have caused changes in the nature of retailing with emergence of hypermarkets, warehouse clubs, internet buying etc. Technological advances, changing consumer demands, intense competition have brought about immense changes in the structure of this industry. A Key impact of technology has been provision of greater information to the customer. Hence the opportunities for price differentiation have nearly vanished.

CLASSIFICATION OF RETAIL UNITS

Retail units have been classified into the following types: Nature of ownershipsole proprietorship, partnership, limited liability company. Operational structureindependent trader, chain or multiple store, franchising or consumer cooperative. Length and depth of merchandise Nature of service Full service providers, home delivery, self service etc. Type of pricing policy Type of retail location Method of customer interactiontelephone selling, vending machines , mobile vendors etc.

CLASSIFICATION IN DETAIL
On the basis of Ownership Sole proprietorshipThese firms are owned by one person who owns all the assets of the business and the profits generated by the firm. He assumes complete responsibility for the liabilities of the business. PartnershipIn this two or more people share ownership of a single business. They should have a legal agreement as to how profits will be shared, decisions will be made, new partners will be entered etc. There are three types of partnerships General partnershipPartners divide responsibility for management and liability. Equal shares are assumed unless there is a written agreement. Limited liability partnershipIt means that most partners have limited liability only to the extent of their investment. Joint venture It acts like general partnership but for a limited period or a single project.

CLASSIFICATION.
On the basis of operational structure; Independent retail unitIt owns one retail unit. There is a great deal of flexibility of choosing location, strategy, they can act as specialists in niche goods. They have independence of operation, are in full control of their business. Retail chain they operate multiple outlets. It has centralized purchasing and decision making. They have the bargaining power with the suppliers due to volume purchases. They can achieve cost efficiency by doing wholesaling.

CLASSIFICATION.
FranchisingIt involves contractual arrangement. Here the franchisee pays an initial deposit and a monthly percentage of gross sales in exchange to the exclusive rights to sell the goods. They must adhere to certain operating rules set store timings choose locations displays. There are two types of franchisees Product based and business format based. In business format there is more interactive relationship between the franchisee and the franchisers. Leased departmentIt refers to the department in a retail store that are rented to an outside party. Usually this is done in specialty stores. They are usually used by existing stores based retailers to broaden their merchandise.

CLASSIFICATION.
Cooperative outletsThey are generally owned and managed by cooperative societies. In this context the Kendriya Bhandar is the best example. It is the Central Government employees consumer cooperative society ltd operated by the name of Kendriya Bhandar. It is a network of 112 stores and 42 fair price shops. It provides essential commodities of daily needs to the customers at reasonable price range. To assist the government in holding the price line and ensure distribution of scarce commodities.

CLASSIFICATION..
On the basis of retail locationRetailers can locate their stores in an isolated location and attract their customers on their own strategies. They could also choose a busy market area. They are as follows: Free standing retailersThey are not connected to other retailers and are stand alone stores. Retailers in business associated locationLocated where a group of retail outlets offering a variety of products are attracting the same type of customers. They also compete for the same customers. Retailers in specialized marketsThey set up their stores in specialized market areas in the city. Airport retailingHere the duty free shops and news stands are included.

VARIETY OF MERCHANDISE MIX

There are many different retail stores in India and the customer can choose from these for different needs: Department stores Discount stores Specialty stores Hypermarkets.

UNIT 1 CHAPTER 3 RETAIL CUSTOMER

CHAPTER HIGHLIGHTS CONSUMER BEHAVIOR WHY DO PEOPLE SHOP? FACTORS AFFECTING CONSUMER DECISION MAKING TYPES OF DECISION MAKING CONSUMER DECISION RULES INFLUENCES ON SHOPPING BEHAVIOUR CONSUMER IMAGES OF RETAIL STORES INDIAN SHOPPERS

CONSUMER BEHAVIOUR
It is the understanding of how consumers make decisions to use their time, money, resources and efforts for buying, using disposing goods and services. Retailers need to consider the decision making variables and understand them efficiently. E.G. in case of Pickles marketers will be interested in finding out the type of pickle customers intend to buy, the brand preference, reason for using, the place of purchase and frequency of purchase. On the basis of the above findings the marketers evolve the best marketing mix to attract the target market.

WHY DO PEOPLE SHOP?

Personal Motives It includes role playing means shopping activities are learned behaviors and expected and accepted as part of ones position e.g. mother, housewife, father etc. DiversionIt can offer a diversion from the daily routine. Self gratificationShopping may be motivated not by the utility of consumption of the product but by the buying process itself. Learning about new trends. Physical activity.

WHY DO
Social MotivesIt involves social experience outside home, seeking new acquaintances, encounters with friends etc. Communication with other similar interests. Peer group attractions certain stores provide a meeting place where peer groups gather. Status and authority. Pleasure bargaining--

FACTORS AFFECTING CONSUMER DECISION MAKING

There are four major factors: Demographicit includes gender, age, occupation, education, family size, income. PsychologicalIt includes motives, perception, learning, attitude, personality. Environmental factorsPhysical, social environment. LifestyleActivities and interests, nature of occupation, availability of leisure.

DEMOGRAPHIC FACTORS
They are unique to a particular person. They are objective, quantifiable and easily identifiable population data like income, age, marital status, family size etc. It also involves identification of who is responsible for the decision making and buying.

PSCYCHOLOGICAL FACTORS
It shows that consumers respond differently towards the same marketing mix due to their respective motives, personality, perception etc. Motives are internal energizing forces that orient a persons activities satisfying a need or achieving a goal. PerceptionIt is the process of selecting, organizing and interpreting information to produce meaning. The same stimulus may be perceived differently by different set of consumers. E.G. Mc Donalds outlets were initially perceived as costly, to overcome this perception among prospective consumers the management introduced a ten rupees softy ice cream to attract shoppers.

PSYCHOLOGICAL FACTORS.
Learning- It is the process through which a relatively permanent change in behavior results from the consequences of a past behavior. Various reasons cause a permanent change in behavior through information and experience. AttitudeIt is the customers predisposition to respond favorably or unfavorably to an element of retail mix. It comprises knowledge and positive and negative feelings about an object or activity. Consumers attitude towards a store and its products greatly influences the success or failure of a retail outlet. PersonalityIt refers to all the internal traits and behaviors that makes a person unique. Traits affect the way people behave. E.G. Indian consumers give due importance to retailers image to a great extent while selecting the store.

ENVIRONMENTAL FACTORS
They cover all physical and social characteristics of a consumers external world including physical objects, spatial relationships ( i.e. location of the store) and social factors. The environmental factors influence consumers wants, needs learning motives which affect the shopping behavior of the consumer. The social environment includes all social interactions among people. Consumers interact with friends, relatives regarding prospective buying or past purchases and sometimes observe others using the product. Customers are classified into upper elite class, lower upper class, upper middle class, middle class, working class, lower class.

ENVIRONMENTAL FACTORS..
Lifestyle-It refers to an individuals mode of living as identified by their activities, interests opinions etc. It is highly co-related with consumers values and personality. E.g. Indian working women have to balance their wardrobe collection based on requirements on different occasions related to professional workplace, family gatherings outings with friends etc.

STAGES OF THE CONSUMER DECISION MAKING PROCESS

It is the process which the consumers go through when they decide to make a purchase. Consumers compare options and finally decide to purchase what seems to be the best alternative based on a set of criteria. Need RecognitionIt occurs when the consumer realizes a significant gap between his or her present state and some desired level of state. Information searchOnce the individual has acknowledged a need or problem then he or she looks for information to resolve the need. Here the prospective buyers examine their environment for appropriate information to make decision.

STAGES..
Evaluation of AlternativesAfter information search the customer is expected to take a final decision on one of the choices. The alternatives which are actively considered during the decision making process constitute the individuals evoked set. This includes those retail outlets which the consumer is exposed to and remembers and is compatible with. Purchase decisionAfter evaluating various alternatives an individual is in a position to focus on the preferred product category, retail outlet or branch. This is then followed by a purchase decision by the consumer. In retailing the purchase stage plays a significant role in consumers decision making process.

STAGES.
Post purchase dissonanceAfter purchasing a particular good or service consumers evaluate its performance against their expected level of satisfaction. Either the performance meets expectations or it exceeds the expectations or it is below the expectations.

TYPES OF CONSUMER DECISION MAKING

Purchases are classified into: Routine buy Modified rebuy New product purchase Extensive decision makingIt happens for unfamiliar products or extremely unique or expensive products.

INFLUENCE OF VARIABLES ON SHOPPING BEHAVIOR

It refers to all those factors particular to a time or place of observation which do not follow from a knowledge of personal and stimulus attributes. It includes Physical settingLocation, environment. Social settingInvolves presence or absence of others while shopping. Temporal aspectsTime of the day and time constraints. Task definitionIt is more individual specific it includes motivational indications of the shopping behavior.

RETAIL IMAGE DIMENSIONS

It includes: Locational convenience Merchandise suitability. Value for price Sales effort and store services Congeniality Post transaction satisfaction.

UNIT 1 CHAPTER 4 RETAIL MARKET SEGMENTATION

Highlights of the chapter Market segmentation Benefits Stages of the consumer decision process Segmenting targeting positioning Criteria for effective market segmentation Kinds of markets Dimensions for segmentation Market targeting, customer profile Survey of buyers intentions

MARKET SEGMENTATION
Market Segmentation is the process of dividing the heterogeneous total market into small groups of customers who share a similar set of wants. Each of these possess some heterogeneous characteristics. Segmenting is an aggregating process clustering people with similar needs into a market segment. Different groups or segments require different promotional strategies and marketing mixes because they have different wants and needs. Segmentation helps the retailer to customize the product and tailor its promotional campaigns.

BENEFITS OF MARKET SEGMENTATION

Development of Marketing mix. Store location decisions. Understand customer behavior. Merchandising decisions. Promotional campaigns. PositioningIt helps a retailer in positioning itself in the market. E.g. Westside targets middle and upper middle class consumers.

SEGMENTING, TARGETING, POSITIONING.

There are three stages of Market segmentationsegmenting, targeting and positioning. The segmentation process begins with the aggregation of customers into groups to maximize homogeneity within the segments. Once the market segments are identified then detailed profiles of customers in each segment should be developed. Customer profiles help the retailers in understanding the behavior of target markets. After the markets are segmented and profiled the retailers have to decide which segments to target and focus on. After selecting the target segments they have to develop the positioning strategy. For effective positioning a detailed understanding of the needs of the target segments is necessary.

CRITERIA FOR EFFECTIVE MARKET SEGMENTATION

For Market segmentation to be effective the identified segments must satisfy the following criteria: Homogeneous withinThe customers in a same segment should have similar needs and wants. Heterogeneous betweenThe customers in different segments should be as different as possible with respect to their needs and buying behavior. SubstantialThe market segment that a retailer plans to target must be large enough and have enough discretionary income to help the retailer to be profitable. ActionableE.g. Barista targets youngsters who seek to enjoy coffee in a fashionable outlet. Accessible-The target market segment must be reachable. MeasurableThe size, purchasing power and the characteristics of the market segment must be measurable.

TYPES OF MARKETS
There are three types of markets ConsumerIncludes individuals who buy goods for their own use. Industrial marketincludes groups or organizations that purchase products for use in production of other products. Re-seller markets Includes middlemen like wholesalers or retailers who buy finished goods and resell them for a profit.

DIMENSIONS FOR SEGMENTATION

Dimensions for Segmentation are Geographic, Demographic, psychographic and behavioral. GeographicHere the market is divided into geographical units like nations, states, regions, countries, cities etc.Retailers in India have often segmented markets by cities and focuses on metros and large cities. DemographicIn this the market is divided into groups based on demographic variables such as age, religion, gender, income etc.The retailer should segment the market on variables which reflect interest, need and ability of the customer to patronize a particular retail outlet.

DIMENSIONS FOR SEGMENTATION

Psychographic segmentationHere the buyers are divided into different groups based on their lifestyle, personality, or values. Values refer to belief systems that go beyond behavior. Values are stable and occupy a central position in a persons cognitive system. Behavioral SegmentationHere the customers are divided into groups based on the way they respond to use, or know a product. Marketers can compile information variables such as occasions, benefits user status, frequency of purchase, quantity, product usage, loyalty status, source of purchase.

CUSTOMER PROFILE
It may contain the following information: Customer demographics Family decision makingWhen families are the target customers the retailer needs to understand the decision making process in the family. PsychographicsThe retailer has to profile its consumers lifestyles and values. E.g. the typical customer at Westside may be a sophisticated middle class lady who values her independence, shops for best products and is looking for good value for her money.

SURVEY OF BUYERS INTENTIONS

The retailer can develop an effective marketing plan and other elements of a marketing mix if he has detailed information on the requirements of its target segments regarding choice of products, price they are willing to pay, type of packaging they prefer, their purchasing behavior. They can collect this information by the following: Frequency of customer visits to the store Weekday weekend shopping patterns Spending per visit Planned Vs unplanned shopping Store loyalty.

MARKET SEGMENTATION IN INDIA

The Indian consumer market with its large demographic, psychological and other strategic variables presents an ideal arena for segmentation. E.g. McDonalds introduced Vegetarian products to target the large population of vegetarians in India who avoid non veg diet on account of health and religious beliefs.

UNIT 1 CHAPTER 5 RETAIL LOCATION STRATEGY

Chapter highlights: Importance of location decision Levels of location decision and its determining factors Types of retail location Types of consumer goods and location decision Trading area Site selection analysis Selection of a particular shopping centre How to make a traffic count Retail location theories.

IMPORTANCE OF LOCATION DECISION

Importance of Location is due to the following factors: Location is a major cost factor because it involves large capital investment, affects transportation costs, affects human resource costs. Location is a major revenue factor because it affects the amount of customer traffic, affects 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.

LEVELS OF LOCATION DECISION AND ITS DETERMINING FACTORS

A Retailer has to take the location decision on the basis of three aspects: Selection of a city-Which includes size of the citys trading area, population growth in the trading area, total purchasing power, total retail trade potential, number size and quality of competition, development cost. Selection of an Area or type of location within a cityIt includes adequacy and potential of traffic passing the site, ability of the site to intercept the traffic flowing past the site, complementary nature of adjacent stores, adequacy of parking.

LEVELS OF LOCATION.
Types of Retail locationIt could either be a free standing location, or located in residential neighborhood, highway stores, business associated locationwhich could be an unplanned business district or a central business district. Planned shopping centers are group of stores which operate as a unit. The best e.g. of planned shopping centers are Malls. Then there are the specialized markets famous for a particular product category. And there are Periodic markets which operates on a specific day in a week or a month.

TYPES OF CONSUMER GOODS AND LOCATION DECISION

The types of goods sold by a retailer also affect the location decision: Convenience goodsThey imply products that carry a low unit price, are purchased frequently, are bought by habit and are sold in numerous outlets. E.g. candy bars, cigarettes, milk etc. Shopping goodsThey imply products with a high unit price. They are purchased infrequently and involve more intensive selling effort. E.g. men's suits, furniture, automobiles etc.The buyers like to compare the items in several stores.

TYPES OF CONSUMER GOODS.

Speciality goodsThey imply products with high unit price which are bought infrequently, which require a special effort on the part of the customer to make purchase, and which are generally sold in exclusive franchised outlets. E.g. precious jewellery, expensive perfumes, fine furs etc. These goods are often sought by customers who are already sold on the product, brand or both etc.

TRADING AREA
A Trade area is a geographic area from which a retailer draws customers that account for the majority of the stores sales. The trade area can be divided into two or more zones. The dimensions of these zones depend on the size of the store, its location and nature of the merchandise it deals in. The zones are primary, secondary and tertiary zones.

SITE SELECTION ANALYSIS

Keeping in view the product mix, customer profile, and overall business model the retailer has to consider the following factors while selecting a site: Kinds of products sold Cost factor in location decision Competitors location Ease of traffic flow and accessibility Parking and major thoroughfares Market trends Visibility

SELECTION OF A PARTICULAR SHOPPING CENTRE

The following factors affect the selection of a particular shopping centre: Merchants associationIts presence helps in strengthening business and save money through group ad plans. Responsiveness of the landlord Zoning and planningWill construction or changes in city traffic affect your store and business. LeasesIt is directly related to zoning as retailers should collect information on future zoning plan and decide how long it will be viable to run the business at a particular location.

HOW TO MAKE A TRAFFIC COUNT

It is divided into Pedestrian traffic count and Automobile traffic count. Pedestrian traffic countOne must decide here who is to be counted, e.g. all men between sixteen and sixty. The directions should be clear as to the individuals to be counted so the counters will be consistent. Automobile traffic countMany retail firms depend on drive in traffic for their sales. Thereby this data needs to be collected and suitably modified.

RETAIL LOCATION THEORIES

Central Place theoryIt states that a central space and market area best express pattern of settlement. Retailers prefer to serve consumers who live within a range where cheaper delivery prices can be possible. Spatial Interaction TheorySpatial interaction is defined as the flow of goods, people, or information among places in response to localized supply and demand. This theory is based on the attractiveness of alternate shopping areas against the deterrent effect of distance.

THEORIES
Land Value theoryIt is used for analyzing and explaining the arrangement of urban land uses and the location of economic activities within cities. The price which a bidder is likely to pay will depend on the use which will be made of the site. Generally the more central the location the more desirable will be the plot, and higher will be the price as more bidders will bid to purchase the land.

UNIT 1 CHAPTER 6 PRODUCT AND MERCHANDISE MGMT

CHAPTER HIGHLIGHTS Product Management Brand Management and Retailing Merchandise Management Model Stock Plan Constraining Factors Types of suppliers Criteria for the selection of suppliers Category Management Merchandise management planning in various retail segments

PRODUCT MANAGEMENT
Products in a retailing context mean anything sold and purchased in a retail transaction. It could constitute goods or services, places, events ideas etc. Product management may be defined as a set of decisions related to the selection and removal of products from the retailers portfolio, along with related market analysis. Product is critical to the success of a retail business. Product management by the retail firm is critical to the satisfaction of the consumer needs. Selection of the product is designed to meet some unmet needs of the consumer. Product management is also an implementation of the segmentation strategy of the retailer who attempts to attract the target segment through product profile and pricing strategies.

THE PRODUCT SELECTION PROCESS

It involves a review of the performance of the existing product range. A retailer is required to consider various issues related to the selection of the product to be retailed. These relate to the type of products to be retailed, life cycle of the products, trends in the product category etc. Product performance review utilizes information collected from various sources like sales reports, quality reports, consumer research etc. These tools are used regularly by retailers as they possess most of such information about each product.

BRAND MANAGEMENT AND RETAILING

Of the top ten strongest brands in the world, five are retail brands. The key issues in retail branding are: Brand management of the retail outlet, Deciding whether or not to opt for the strategy of self own branding. A strong retail brand and a strong private label strategy can be an effective tool to differentiate the stores and the shopping experience. A retailers brand is valuable since it enhances reach and endurance with the consumer. In many cases STORE as a brand is stronger than the BRANDS within the store. Location contributes to the brand perception in terms of the brand image of the shopping centre itself.

MERCHANDISE MANAGEMENT
The primary function of retailing is to sell merchandise thereby it is very important to decide the merchandise mix and quantity to be purchased. 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 firms financial goals. It is the analysis, planning, procurement, handling, and control of merchandise investments of a retail operation. Merchandise planning involves obtaining the merchandise well in advance of the selling season. Merchandise control involves designing the policies and procedures in order to determine whether the stated goals have been achieved.

MERCHANDISE MGMT
The Merchandise mix represents the full range of mixtures of products which a retailer offers to its target customers. Merchandise mix management covers the decisions like merchandise variety, assortment and support. It leads to an appropriate combination of product lines, product items, and product units. Merchandise assortment refers to the number of different product items the retailer stocks within a particular product line. Merchandise support deals with planning and control of the number of units the retailer should have on hand to meet the expected sales for a particular product. Merchandise budget is the financial tool for controlling a retailers inventory investment.

MERCHANDISE PLANNING IN UNITS

The most important component of merchandise planning is stock keeping unit plan. Customers categorize retail businesses according to their merchandise mix offered. Merchandise must be in season, the right model, the right style, the right size, the right color, right fabric, right brand and so on. From the point of view of the shopping centre it is the tenant mix which drives the merchandise mix of that particular retail area.

CONSTRAINING FACTORS
There are four constraining factors that influence the design of the optimal merchandise mix: Budgetary constraintThe retailer has to balance the resources and the optimal merchandise mix. There rarely will be enough financial resources to incorporate all three dimensions of variety, breadth and depth. Retail outlets in today organized sector avail of an effective bargaining position against suppliers and enjoy liberal support in making payments. Most local brands just place their products with small retailers, this provides them with free space and goodwill of the retailers.

CONSTRAINTS
Selling space constraintSpace available to a retailer is relatively fixed and must return a profit. If variety is to be stressed enough empty space is needed to separate the distinct merchandise lines. A retailer has to consider about the warehouse space, along with the shelf space, while deciding about the merchandise order. Most of the small grocery and durable retailers do not have warehouse support, they have to stock in the store only.

CONSTRAINTS
Turnover constraintTurnover is an extremely important factor in buying and selling merchandise profitably. Turnover is the result of intelligent buying based on sound assortment planning and realistic estimation. Improving turnover is one of the key ways to improve profit. Therefore the retailers merchandise mix should have the potential to generate high sales turnover.

CONSTRAINTS
Market environment constraintsIt refers to the limitation on account of the target market residing in the area within the walking or short time distance to the store. Target market preferences and taste directs the development of optimal merchandise mix. Retailers have to consider the competitive environment and competitive dimensions prevailing in the trading area.

TYPES OF SUPPLIERS
Manufacturers and primary producersThis category sells cars, two wheelers, gasoline and consumer durables from company owned stores. Manufacturers normally have a sales office attached to a production unit or in a convenient location for the retail customers. In semi urban towns the manufacturers approach the retailers to provide the required merchandise at their shops directly, such as bread, local made soaps, handicrafts etc.

TYPES..
WholesalersThey accept small orders from retailers. They take ownership of the goods between the producers and the retailers. They usually make profit from the merchandise they sell to the retailers. In the Indian context the retailers prefer to deal with the wholesalers dealing in a variety of products as they can purchase most of their merchandise from one shop.

TYPES.
AgentsThey provide the purchasing and delivery facility to the retailers against negotiated comm issions on the percentage of the total value. This is a very common source to the retailers in the semiurban areas or in major trading areas. Agents are responsible for the safe transport and delivery of goods. Other retailersHere the category comprises of those retailers who operate on a larger scale. They cater to the needs of the immediate consumer along with the small retailers.

CRITERIA FOR SELECTION OF SUPPLIERS

A suppliers initial assessment is made according to his ability to satisfy retailers in four main areas i.e. Delivery, service, price, product range and quality. A. deliveryIn order to avoid sales loss, a retailer is generally interested in the assessment of a suppliers capacity to deliver ordered goods in time as per the specifications. B. serviceThis encompasses all those facilities and support extended by the supplier to add value to the goods or services. It includes pre and post sales services by the supplier.

CRITERIA FOR SELECTION.

Product range and qualityRetailers will assess the product range available with the supplier and the quality standard maintained while manufacturing and delivering. Certain parameters like technical capability design expertise, benchmarks etc will be considered. PriceRetailers will always have relative assessment of the different suppliers while deciding the purchase. Retailers will also evaluate the offer from the perspective of a consumer in terms of value for money and consistent price policy.

CATEGORY MANAGEMENT
A Category is the basic unit of analysis for making merchandising decisions. Products are naturally grouped into similar consumer taste preferences and product characteristics like salty snacks, cakes, pastry and cookies etc. As they enjoy similar characteristics retail marketing mix is designed on similar lines to a great extent. Category management is the process of managing a retail business with the objective of maximizing the sales and profits of a category rather than the performance of individuals brands or models. It systematizes grouping of products into small units so as to meet consumer needs. Today the relevance of category management is driven by the emergence of multiple number of brands in each product category.

CATEGORY MANAGEMENT.
Advantages of category management: Increased salesUse of top selling products increases sales per transaction. Reduced Inventory InvestmentMenu based purchasing reduces the inventory and handling costs. Improved Route and Warehouse efficiencyRoute merchandising and product selection is simpler and comparatively more efficient.

MERCHANDISE MGMT PLANNING IN VARIOUS RETAIL SEGMENTS

Specialty RetailersThese goods are those for which customers have a preconceived need and for which they make an effort to come to the specialty store to purchase. In the case of specialty retailers the merchandise planning system requires high degree of synergy with the ordering system in place. These have led the retailers to rethink Grocery and food retailersThey are basically known as convenience goods. It has been observed that consumers put a minimum amount of thought into the purchase of these goods. E.g. toothpaste, bread, eggs.

FINANCIAL OBJECTIVES OF MERCHANDISING

Merchandise planning consists of establishing objectives and devising plans for obtaining these objectives. The objectives range from the corporate strategic objectives to the micro level objectives regarding the merchandise assortment, stocking, and re-order. Merchandise management involves decisions related to inventory, which in turn is the largest investment for any retailer. Here the best merchandise performance measure is gross margin return on inventory(GMROI).It is used to evaluate and control the performances of the merchandise, category, vendor, lines etc.

EVALUATING MERCHANDISE PERFORMANCE

Retailers usually confront situations where they have to revise various vendors, departments during merchandise management. These decisions may be because of changes in consumer preferences, relationship with vendor, new arrivals and poor performance of a particular merchandise.

UNIT 1 CHAPTER 7 RELATIONSHIP MARKETING IN RETAILING

CHAPTER HIGHLIGHTS: Introduction Drivers of relational strategies in retailing The evolution of relationship marketing Relationship marketing strategies in retailing Relationship marketing in the organized Vs Unorganized retail sector. Customer service in Retailing Customer serviceManaging gaps between expectation and performance Loyalty Programmes Classification of Loyalty Programmes Sector specific loyalty Programmes Managing Loyalty Programmes

INTRODUCTION
Relationship marketing includes all marketing activities directed towards establishing developing, maintaining successful relational exchanges. Relationship marketing includes service quality, services marketing, customer retention, issues related to interpersonal and social interaction. Relationship marketing is implemented through various components like rewards, customer services and involving of customers in planning and execution of retail strategy. The intimate nature of the relationship the industry shares with the ultimate customer suggests that the closer the retailers get to the customers the better they can provide the services to them.

EVOLUTION OF RELATIONSHIP MARKETING

Customer relationship marketing CRM had its origin in two unrelated places. One was U.S. where it was driven by technology. Under the direction of marketers information technology was developed to increase the efficiency of selling what the company makes. This came to be known as database marketing. Systems like call centers, websites, customer service support teams came up to manage relations with customers. The second place where the CRM concept developed was in business to business marketing in Scandinavia and northern Europe. Here the emphasis is on understanding customer needs and then solving problems.

RELATIONSHIP MARKETING STRATEGIES IN RETAILING

These strategies refer to any effort that is actively made by the seller towards a buyer and is intended to contribute to the buyers customer value above and beyond the core product. These include the following strategies: Personalization benefits Special treatment benefits Rewards Communication benefits.

RELATIONSHIP MARKETING IN THE ORGANIZED Vs UNORGANIZED SECTOR

Broadly the organized sector is divided into two categories in store retailers and non store retailers. Both these provide various standardized services to their customers. In most cases they have a wide range of merchandise stocked with them so that the customers can have their pick. These retailers have a wide reach and cater to customers of a wide area. The unorganized retailers comprise the kirana stores located in neighborhood areas. These stores have a limited reach in the sense that people living in a particular locality visit stores in their own area only. The USP of these stores is the locational convenience they provide to their customers. They provide customized services to their customers.

CUSTOMER SERVICE IN RETAILING

Quality and customer service are the key elements in this relationship. This will ensure that the customers strongly believe that the retailer offers good value for money. Relationship marketing believes in bringing marketing, customer service, and quality into closer alignment. Quality of the product or service is a must as customers will not accept inferior quality product. With poor quality core products good relationship marketing cannot be exercised. Customer service refers to the rightful blend of activities involving all areas of retail business. It provides time and place utility for the customer. The provision of quality customer service involves an understanding of what a customer wants and eventually buys and determining how additional value can be added to the product being offered.

CUSTOMER SERVICEMANAGING GAPS

The retailers need to reduce the gap between the expectation of the customer and the performance of the product. The four methods which customers imply to rate the product are: Knowledge Standards Delivery Communication

LOYALTY PROGRAMMES
Retailers focus on loyalty programmes since it is believed that : Loyalty customers are cheaper to serveHere retailers are not required to invest, to attract, maintain, and communicate with loyal customers. Loyal customers are willing to pay more for a given bundle of offeringsCustomers who stick to one retailer do so because the cost of switching to another supplier is too high. They are therefore willing to pay a higher price up to a point to avoid making a switch. Here the customers expect and get some tangible benefits for their loyalty.

LOYALTY PROGRAMMES
They act as effective marketers for the stores offeringsThe word of mouth marketing is very effective and loyal customers are the strongest advocates for patronization of a particular retail store. The word of mouth marketing is very effective and many stores justify their investments in loyalty programmes by seeking profits not so much from the loyalty customers as from the new customers the loyal ones bring.

CLASSIFICATION OF LOYALTY PROGRAMMES

They are classified as follows: Multi sector programmesThere are unpartnered and partnered loyalty programmes. Single operator, Multi partner ProgrammesTescos club card is an example of a single operator programme. However the club card holders can collect when they buy from various partners like Marriott, National Tyres, Alders etc. True Coalition programmesThe programme management is independent of any of the partners. The partners have contracts with the operators of the programme to redeem the currency of the programme. They have access to data harvested by the programme through its operator.

SECTOR SPECIFIC LOYALTY PROGRAMMES

Supermarkets and General RetailSupermarkets face intense competition not only from other supermarkets but also from supercentres and convenience stores. Most retailers accept that they need to know more about their customers and that the knowledge should be centrally recorded so that it is available to employees when they need it. TelecomThe overall telecom market around the world has been very volatile with non telecom firms joining the battle for consumers. Firms in the mobile telecom sectors have been diverting beyond communications into the financial services sector through mobile payments, and mobile cash systems.

SECTOR SPECIFIC LOYALTY PROGRAMMES

Travel and EntertainmentAirlines, hotels and even car rental firms have focused on improving customer service and offering more relevant options to encourage customers to buy more. Hospitality IndustryA hospitality chain must have a mix of both kinds of properties i.e. business and leisure, small as well as large, and priced in different ranges to allow their customers to redeem the points as per their disposition. An important factor to be considered is the user friendliness and communication of the programme. It should be accessible and well administered.

LOYALTY PROGRAMMES IN THE FRANCHISE RETAIL FORMAT

It faces a distinct set of challenges in the successful launch and operation of a loyalty programme. Funding issues relating specifically to loyalty programmes become a challenge and a constraint for their successful implementation. In most franchise agreements franchisees pay a fee to the franchisor. This fee supports mass marketing activities. In the same manner the efficient management of the loyalty programme depends on the franchisor.