INTRODUCTION:

With the growing realization that branches are one of a firm’s most

valuable intangible assets, branding has emerged as a top management

priority in the last decade. Given its highly competitive nature, branding

can be especially important in the retailing industry to influence customer

perceptions and drive store choice and loyalty.

Although many important branding principles apply, retailer brands are

sufficiently different from product brands that the actual application of

those branding principles can vary. Retailer brands are typically more

multi-sensory in nature than product brands and can rely on rich

consumer experiences to impact their equity. Retailers are create their

brand images in different ways, such as by attaching unique associations

to the quality of their service, their product assortment and

merchandising, pricing and credit policy, etc.

In most consumer industries, the image and equity of retailer brands also

depends on the manufacturer brands they carry and the equity of those

brands, Retailers use manufacturer brands to generate consumer

interest, patronage, and loyalty in a store. Manufacturer brands operate

almost as “ingredient brands” that wield significant consumer pull often

more than the retailer brand does. To the extent “you are what you sell,”

manufacturer brands help to create and image and establish a position for

the store. Understanding how a retailer should be positioned and how the

brand assortment sold by the retailer is related to its image are thus of

critical importance.

Researchers have studied a multitude of retailer attributes that influence

overall image. For example, the variety and quality of products, services,

and brands sold; the physical store appearance; the appearance,

behaviour and service quality of employees; the price levels, depth and

frequency of promotions; and so on.

Creating and maintaining a retail image is complex, multi-step, ongoing

process. With so many people have little time for shopping and others

having less interest in it, retailers must work hard to entertain shoppers.

The Major components of retail image are:

1. Store location and ease of access

2. Atomosphere

3. Price and Promotion

4. Merchandise attributes (cross-category product/service assortment

& within-category brand/item assortment)

5. Customer services

6. Community service

7. Shopping experiences

This is not an exhaustive list of factors that influence the retail image. In

addition to these, the following also contribute”

Characteristics of the target market of the retailer

Positioning of the firm/retail organization

Advertising and other promotional activities.

LOCATIONS AND EASE OF ACCESS:

The location of a store and the distance that the consumer must travel to

shop there are basic criteria in their store choice decisions. Today,

suburban sprawl, greater driving distances, the appearance of new

warehouse retail formats that are often located in large spaces away from

residential areas, and online retailing have made location somewhat less

central as a store choice criterion.

It has been found that location no longer explains most of the variance in

store choice decisions. Rather, store choice decisions seem to be

consistent with a model where consumers optimize their total shopping

costs, effort to access the store location being one component of their

fixed cost of shopping. That is not to say, however, that location is

unimportant. Consumers’ store choice may be based on different criteria

depending upon the nature of the trip. For instance, small basket, fill-in-

trips are very unlikely to be made to distant or inconvenient locations.

And, retailers in some formats, like convenience, drug, or supermarket

have less flexibility in their location decision than mass merchandisers or

warehouse clubs.

In summary, although location on longer explains a major portion of the

variance in consumers’ choice of stores, it is a key component in

consumer’s assessment of total shopping costs and is still important for

retailers who wish to get a substantial share of wallet from fill-in-trips and

small basket shoppers.

CASE STUDY

Tesco was the first major UK supermarket group to try Internet shopping

in December 1996. It did not roll out the service nationally however until

mid-1999 and the long testing period is one of the major factors in its

success.

Tesco now has more than 750,000 registered online customers with

60,000 a week placing online orders totaling more than 5 million ponds.

Whilst online sales of just over 250 million pounds account for less than

1.5% of its total annual sales of nearly 18,000 million pounds, they’re

expected to double every 12 months. The company regards online

retailing as a core part of its future strategy and expects it to become

profitable. In the interim, it gives the company access to the most detailed

information about its customers.

Tesco believes that a key component in success has been the decision to

fulfill orders direct from store rather than warehouses, as Sainsbury’s

does.

In the early days ‘pickers’ would go ground the store collecting ordered

goods and then have them scanned at the check-out.

Now the use of hand held scanners has reduced collection time

considerably. However, when orders start of exceed above 500 per week

from a store, the ability to service the orders may be stretched. This has

an impact on the operations of the store servicing the orders.

For non-grocery items such as electricals even Tesco employs dedicated

warehouses, as many Tesco stores are not large enough to stock the full

range of electrical items.

Tesco claims to be able to deliver to 90% of the UK population, far more

than any of its rivals, Its nearest rival, Sainsbury’s covers 45% of the UK.

Whilst safeway has closed down its online operation and ASDA is only

just beginning to roll out its own online service, Tesco’s wide coverage

means that it is able to attract some of the highest spending and most

profitable customers from its main rivals.

Evidence shows that online grocery shoppers tend to opened on average

a quarter more than the average of those shopping in stores. The delivery

presumably acts as an incentive for bulk shopping.

MARKETING MANAGEMENT

Marketing Management which is also the title of this course refers to all

the activities which the marketing managers, executives and personnel

have to undertake to carry out the marketing function of the firm. It

involves (i) analyzing the market opportunities by under taking consumer

needs and changes taking place in the marketing environment, (ii)

planning the marketing activities, and (iii) implementing marketing plans

and settings control mechanism to ensure smooth and successful

accomplishment of the organizations goals. Marketing Management is a

critical function, especially in highly competititve markets. It provides

competitive edge to an organization through strategic analysis and

planning.

VALUES AND SATISFACTION

In developed and developing economies, consumers have several

products or brands to choose to satisfy his/her need. Consumers’

perceptions about value that they can expect from different products or

services depend upon several factors. Sources that build the customers

expectations include own experience with products, friends, family

members, consumers’ reports and marketing communications. Customer

value is the difference between total benefits received and total costs

incurred by him in acquiring the product or services. The types of benefits

could be product’s functional value, or its brand related image value and

any accompanying service value. The types of costs a customer can incur

may be monetary cost and energy cost.

Value is primarily a function of quality, service and cost. Value increases

with increase in quality and service and deceases with increase in cost.

Value is an important marketing concept and the task of marketing is to

identify, create, communicate, deliver and monitor customer value.

Customers generally experience satisfaction when the performance level

meets minimum performance expectations of a product or service. When

the performance as perceived exceeds the expected performance level,

the customer will be not just satisfied, but delighted. Thus customer

satisfaction or delightment with respect to a product or service enourages

customers to come back and repurchase the product or service in futre.

Satisfied customers can be an asset to the marketing company over a

period of time, as they will spread favourable word-of-mouth information

or opinions.

IMPORTANCE OF MARKETING:

Peter Drucker, the famous management thinker in one of this classic

articles has said “Marketing is everything”. All other activities in the

organization are support services to the marketing strategy that the

company pursues. Marketing is important not only to the company but to

the consumers and society and to the economy.

Cunsumer stands to benefit from marketing activities. He has more

alternatives to choose from, improved and better quality products are

available and he is able to buy goods at convenient locations. Thanks to

much improved customer service, a consumer is able to complain and

expects his complaint to be attended in reasonable time. He can now buy

with credit or debit card or cash or on installments.

For the society as a whole, marketing is important because it acts as a

change agent making people use latest products and improves the

standard of living of the people. As we know, the main objective of

marketing is to produce products and services for the society as per their

needs and tastes, and while doing so it creates demand for these goods

and services, encourages to use them, thus leading to higher demand

and sales. This higher demand allows the company to achieve economies

of scale in both production and distribution resulting in crease in

production and distribution costs which can be used to reduce prices to

consumers.

For a company in any business, marketing is considered to be the most

important activity. It helps an organization to keep abreast of changes

taking place in the market and consumer tastes and preferences through

market research. Based on this reliable data, it responds to these

changes by rectifying any drawbacks in its products or changing its

competitive strategy. Thus the company’s decision- making and planning

are not based on just hunches but on sound market information. The firm

that follows such practices is sure to prosper under all conditions.

Marketing provides an effective channel of communication to the

company with its consumers by way of advertising an sales promotion.

Marketing thus brings revenue and earns goodwill for the company.

Successful operation of marketing activities creates, maintains and

increases the demand for goods and services in the economy. It results in

the increased level of production. This, in turn, increases the national

income, which is beneficial to the economy. Marketing operations require

the services of intermediaries such as wholesalers, retailers, transporters

and service provides for storage, finance, insurance and advertising.

Theses services provide employment in large numbers.

STRATEGIC PLANNING

Strategic planning is the process of defining the company mission, setting

the long term and short term objectives, designing an appropriate

business portfolio and coordinating functional strategies of the company.

Looking at the definition, you will be able to identify four important factors

the strategic planning. They are –

1. Defining the company mission

2. Formulating the objectives

3. Designing an appropriate business portfolio

4. Coordination at business levels.

DEFINING THE COMPANY MISSION

An organization mission explains who its customers are, how it satisfies

their needs and what type of products it offers.

FORMULATING THE OBJECTIVES:

Mission statement provides a general view of the company’s products and

its method of satisfying the customer. Mission statement is once again

divided into specific objectives which are stated in writing, can be

measured quantitatively and fixed for particular time. Objectives may be

business oriented or market oriented. They help marketers to develop

strategies and programs. You will come to know how organization deduce

their mission into different objectives form the following example of Bharat

Electronics Limited (BEL), a public sector enterprise in the electronics

field.

Mission: To be a customer focused globally competitive company

defense electronics and in other chosen areas of professional electronics

through quality, technology and innovation.

Objections:

1. To be a customer focused company providing state-of-the art

products & solutions at competitive prices, meeting the demands of

Quality, delivery & service.

2. To generate internal resources for profitable growth.

3. To attain technological leadership in defense electronics through in

house R&D, partnership with defense/research laboratories &

Academic institutions.

4. To give thrust to exports.

5. To create a facilitating environment for people to realize their full

potential through continuous learning & team work.

6. To give value for money to customers & create wealth for

shareholders.

7. To constantly benchmark company’s performance with best-in-class

internationally.

8. To raise marketing abilities to global standards.

9. To strive for self-reliance through indigenization.

Designing an appropriate business portfolio.

After setting mission and objectives, management will develop its

business portfolio.

Business portfolio is the right mix of businesses that company operates

and products that offers to customers.

Portfolio analysis is the process by which company which company

analyzes its products and businesses.

Company develops its business portfolio in two steps.

a. Analyze the existing business portfolio and decide which business

should receive more, less or no investment.

b. Development the new business portfolio for future to meet growth

opportunities and eliminating the unprofitable portfolios.

Analyzing the existing business portfolio

The current business portfolio of the company is analyzed by the

businesses in which it operates. To make it clearer, let me take an

example of ITC group. The company operates in FMCG, hotels, paper

boards, specialty papers and packaging and agribusiness. These

businesses are independent from each other and have their mission and

objectives separately. These subsidiaries of organization are called as

Strategic business units (SBU)

Strateqic business unit: The unit of the company that has separate

mission and objectives and that can be planned independently from other

business.

Characteristics of SBU:

1. It may be brand, or a product line or separate division of the

company.

2. It is having distinct mission and objectives.

3. It is managed by separate executive team.

Strategic planning models used in assessing the existing businesses:

1. BCG martrix (Boston Consultancy Group)

2. GE matrix (General electric)

BCG matrix: This model is used to identify company’s SBU’s position in

the market. This model identifies the SBU’s strength, weaknesses,

opportunities and threats on the basis of market growth rate and relative

market share. This model is also known as growth share matrix.

BCG matrix for ITC

1. SBU: FMCG

Industry growth rate: 24% (AC Nelson retail audit report 2007)

Company growth rate: 50% (the Hindu business line 19 th Januly,

2008.

Company’s market share: 8% (outlook business)

Largest competitor share: HUL: 54% (outlook business)

2. SBU: Paper board

Industry growth rate: 7.2% (the Hindu business line 27th May 2007)

Company growth rate: 11%(the Hindu business line 19 th Januly,

2008.

Company’s market share: 55%

Largest competitors share: BILT 35%

ITC’s FMCG segment analysis shows that though it is market leader in

some categories their overall relative market share is 0.14, Company is in

the high growth low relative market share area i.e. question mark position.

ITC should invest heavily to convert its SBU position into star.

ITC’s Paperboard industry is in low growth and high market share

category i.e. in cash cow segment. It should plan for investing the cash

generated from this position into other business.

Matrix:

1. Management can use the GE business matrix to classify SBU’s on

the basis of two factors.

a. Market attractiveness: Market size, entry barriers, competitors,

technology and profit margin are some factors used to analyze

the market attractiveness.

b. Business position can be determined on the basis of market

share, SBU size, R&*D capabilities and cost controls.

Each cell in the model represented by the particular strategy namely,

invest strategy, protect strategy, harvest strategy and divest

strategy.

2. Invest strategy: In this position SBU

a. Should receive ample resources

b. Should be supported by well financed marketing efforts.

3. Protect strategy: SBU in this position should

a. Allocate the resources selectively.

b. Develop strategies which help in maintain its market position.

c. Generate cash needed by other SBU’s.

4. Harvest strategy: SBUs should not receive substantial new resources

and if required, sell them.

5. Divest strategy: SBUs which falls into this category should not receive

any resources and sell I or shut it as early as possible.

a. Market penetration: A strategy used in increasing the sales of

company’s existing products without modifying it in the existing

market.

Characteristics of market penetration

1. Serve customer with existing products by opening new stores.

2. Increase the promotion activities to increase the consumption.

3. Improve the service offerings.

Café- coffee day a reputed coffee chain in south India, started its

operation in brigade road, Bangalore, in the year 1996. It offers different

varieties of the coffee to its existing customers. Today it is having 100

stores in Bangalore.

b. Market development: In this strategy company identifies the new

markets to sell their existing products.

In case market development company identifies and develops new

markets for its existing products.

Product development: In this strategy, company identifies new productgs

and sells them in existing markets.

Diversification: A strategy for company growth through starting up or

acquiring business outside the company’s current products and markets.

Coordination at business levels:

Organization’s strategies exist in three different levels. They are corporate

level, business and operation level.

Corporate level

a. High risk and greater profit

b. Greater need for flexibility exists

c. Long term planning

d. Choice of business, dividend policies, sources of long term

financing, and priorities for growth.

Operation level strategies

a. Implement the overall strategy formulated at the corporate and

business levels.

b. Involve action-oriented and operational issues

c. Relatively short range and low risk.

d. Modest costs: depend upon available resources.

e. Relatively concrete and quantifiable.

Business level strategies

a. Acts as a bridge between decisions at the corporate and functional

levels

b. Less costly, risky, and potentially profitable than corporate-level

decisions.

c. More costly, risky and potentially profitable than functional-level

decisions.

d. Include decisions on plant location, marketing segmentation and

distribution.

In the strategic plan, company brings the synergy between all the three

levels. To make it more clearer, company’s marketing strategy are

different from HR strategies but it should bring coordination between both

to meet organization’s objectives. Company should bring the coordination

between its growth plans and segmentation then only the operation

strategy works well.

Marketing implementation: The process in which marketing strategies and

plans are converted in to proper marketing actions to achieve the

objectives.

Marketing implementation depends on the following factors:

1. Organization structure

2. Organization culture

Marketing control: The process of evaluating marketing performance and

taking corrective actions.

Marketing control involves four steps. They are-

a. Set specific marketing goals.

b. Measure the marketing performance

c. Evaluate the market performance against objectives.

d. Take corrective actions.

Marketing control is divided into two parts. They are operation contro and

strategic control. Operation control involves assessing the current

activities against annual plan and taking corrective actions. Strategic

control is used to assess whether existing strategic plans of the company

meets the opportunities exist for it. Marketing audit is used as a strategic

control tool. According to Philip Kotler ‘marketing audit is comprehensive,

systematic, independent and periodic examination of a company’s

environment, objectives, strategies and activities to determine problem

areas and opportunities and to recommend a plan of action to improve the

company’s marketing performance”.

Characteristics of marketing audit:

1. Comprehensive

2. Systematic

3. Independent

4. periodic

Components of marketing audit:

1. Marketing environment audit

2. Marketing strategy audit

3. Marketing organization audit

4. Marketing systems audit

5. Marketing productivity audit

6. Marketing function audit

Characteristics of MIS

Philip Kotler defines MIS as “a system that consists of people, equipment

and procedures to gather, sort, analyze, evaluate and distribute needed,

timely and accurate information to marketing decision makers.

It characteristics are as follows:

1. It is a planned system developed to facilitate smooth and continuous

flow of information.

2. It provides pertinent information, collected from sources both internal

and external to the company, use as the basis of marketing decision

making.

3. It provides right information at the right time to the right person.

A well designed MIS serves as a company’s nerve centre, continuously

monitoring the market environment both inside and outside the

organization. In the process, it collects lot of data and stores in the form of

a data base which is maintained in an organized manner. Marketers

classify and analyze this data from the database as needed.

Benefits of MIS

Various benefits of having a MIS and resultant flow of marketing

information are given below:

1. It allows marketing managers to carry out their analysis, planning

implementation and control responsibilities more effectively.

2. It ensures effective tapping of marketing opportunities and enables

the company to develop effective safeguard against emerging

marketing treats.

3. It provides marketing intelligence to the firm and helps in early

spotting of changing trends.

4. It helps the firm adapt its products and services to the needs and

tastes of the customers.

5. By providing quality marketing information to the decision maker, MIS

helps in improving the quality of decision making.

Marketing Research Process

Every marketing research problem is different requiring a special

approach or emphasis. Still there is a sequence of steps, called the

research process which can be followed in all the marketing research

studies and projects. Each step in this research process in independent

but it is closely related to other steps, because the result of the preceding

steps in the basis for the succeeding step.

Define the problem & research objectives

|

Step 1- Define the problem and research objectives

It is said that ‘a problem well- defined is a problem half – solved’. A

careful and precise definition of the marketing problem will lead to useful

and relevant result which can solve the marketing problem.

Each research project should have one or more objectives which form the

broad frame within which research has to be conducted.

It is very important to formulate the problem properly as being the first

step in the process; any error in this can mislead the entire study towards

incorrect and erroneous results.

Step II- Develop the Research Plan and Design

A Research plan is simply the framework within which collection and

analysis of data is undertaken. This step involves decisions on the date

Develop the Research Plan & Design

Collect the information

Analyze the information

Present the findings

sources, research approaches, research instruments, sampling plan and

contact methods.

Step III- Collect the Information- After designing the research

instrument, the researcher should now actually contact the respondent

and collect the information. At this stage, it is very important to keep the

quality of the data under control by ensuring accurate unbiased answers

and by seeking the entire respondent’s co-operation. In case the

researcher has to appoint data collectors to collect the information from

respondents, they must be well trained and motivated.

Step IV- Analyze the Information – In this stage researcher collects the

data and codify it. Nowadays, many questionnaires are pre coded which

makes the task of data entry very easy. The coded data is then tabulated

to provide frequency distributions. Tabulated data is now analyzed.

Averages and measures of dispersion are computed for the major

variables. Advanced Statistical Techniques are used to discover findings.

Here the data is converted to information which may be used in decision-

making.

Step V- Present the finding – At this last step, the researcher should

present findings to the decision makers or users of the information.

Normally, the findings are presented in the form of a report which should

present the following aspects of the research undertaking.

Importance of Marketing Research

With the increase in customer orientation, it has become necessary to

acquire information on consumers’ needs, preferences and opinions. This

will help the marketers to make changes in the marketing mix. Thus

marketing research is a very important and useful tool in enhancing the

decision- making ability of the marketer in today’s dynamic environment.

On line marketing: Marketing the organization’s product on the virtual

medium

In this format buyers and sellers exchange the products on the internet.

Organizations sell their products directly to consumers (colled B2C), use

trading networks or auction sites to reach new customers and serve

current customers (called B2B) and encourage one customer to sell the

product to the another customer (called C2C).

To do the business on the internet, organizations create an effective

website, place the ads and promote it online, create web communities,

and use e-mail. The other sides of e- Commerce are problems of

profitability and legal and ethical issues.

DEFINITION AND SCOPE OF RETAILING

Retailing can be defined as the last stage in channel of distribution of

goods and services to end users. So retailers are the final businesses in

distribution channel that link manufacturers, wholesalers, other suppliers

and the final consumers. A typical distribution channel is shown in

Often it is through that retailing deals with the sale of tangible goods in

stores. However retailing also involves sales of services. Retailing does

not have to involve a store. Services like stay in a hotel, a doctor’s exam,

haircut, a videotape rental, car rental, airline travel etc. where service

becomes a shopper’s primary purchase falls under the purview of retail.

Web transactions and vending machine sales also come under the scope

of retail. Examples of non-store retailing can be sales through internet,

direct sales and catalog sales. Moreover retailing does not have to involve

an exclusive retailer. Manufacturers, importers, wholesalers can act as

retailers if they directly sell the goods or services to the final consumer.

However purchases made by manufacturers, wholesalers for their use

inside the organization or further resale is not a part of the retailing.

Manufacturer WholesalerFinal Consumer

THE SPECIAL CHARACTERISTICS OF RETAILING:

There are some special characteristics of retailers that distinguishes

retailing from all other type of business. These can be small average sale,

more impulse purchases and maintaining store image that together

influence the retailer’s strategy

The average average sales transaction for a retailer is much less than for

manufacturers. The final consumers make many unplanned purchases

compared to those who buy for resale (wholesalers) or use in

manufacturing products or running a business are much more systematic

and planned. The customers for a retailer are mostly drawn from a

particular are (trade area) that is comparatively much smaller than the

trade area of a wholesaler or a brand owner.

Small average saleper transaction

Impulse purchase

Retailer’sstragety

Store Image

The average sale per transaction (per trip of a particular customer) is

much smaller. These low amounts create a need for tight control on all

sorts of cost associated with each transaction like credit verification, sales

personnel, personnel, bagging etc. Moreover it becomes more important

for a retailer to entice the customers to visit the outlet more and more and

more. To maximize the number of customers drawn to the outlet, the

retailer puts special emphasis on ads and special promotions and tries to

increase impulse sales by more aggressive selling. Demand forecasting

and Inventory management is often difficult for retailers because of many

small scale transitions to large number of customers and rapidly hanging

life style per week and this makes harder for retailers to monitor the

existing stock and determine the popularity of various brands, sizes and

prices of merchandise. This also necessitates computerized inventory and

demand forecasting systems.

OPPORTUNITIES IN RETAILING

Retailing is a labour-intensive industry. Retailers hire people with a wide

range of skills and interests. Sometimes retailing is viewed as a part of

marketing as management of distribution is a part of the manufacturers’s

marketing function. In fact retailers carry out various business activities

that make them a complete business unit. Retailers have to raise capital

from financial institutions, purchase goods and services, develop

accounting and management information systems, purchase goods and

services, develop accounting and management information systems,

undertake marketing activities like advertising, promotions, sales force

management, demand forecasting, market research etc. so retail sector

demands people with expertise in finance, accounting, human resource

management, logistics, information technology and marketing.

Retailing also provides opportunities for people who are set to start their

own business. Many retail entrepreneurs have managed to get place in

Forbes 400 richest persons.

DECISION PROCESS IN RETAIL MANAGEMENT

The very first step in retail decision process is to understand the retailing

concept. Retailing concept is a management orientation that focuses a

retailer on determining its target market’s needs and satisfying those

needs more effectively and efficiently than its competitors. The retail

strategy indicates how the retailer plans to focus its resources to

accomplish its objectives that start with the indentification of the

opportunities and deciding the market to enter. It defines:

1. The target market towards which the retailer should direct its efforts

(understanding the shoppers’ profile and their expectation and the

competition in the said category).

2. The nature of the merchandise and services the retailer will provide

considering the needs of the target market.

3. How to build a long term advantage over all competitors?

(sustainable value proposition).

The retail value proposition consists of

Merchandise you offer (category of merchandise, items, brands etc.)

Supply chain strategy to make logistics costs lower and transfer the

value add to the customer in reducing prices, quick delivery etc.

Retail location, proper site selection

Having the optimum Layout to help customers shop in favoured

ambience.

Promotion

Competitive Pricing

HR: managing the store employee to provide the best customer

service.

The key strategic decision areas in retailing strategy are:

1. Retail market strategy.

2. Retail Financial strategy.

3. Retail location.

4. Site selection.

5. Organizational structure and Human resource management.

6. Supply chain management.

7. Handling information systems.

To implement the retail strategy, the retailer develops a retail mix that

satisfies the needs of the target market better than the competitors. The

various elements in retail mix include the type of merchandise and

services offered, merchandising pricing, advertising and promotional

programmes, store designing, merchandise display, assistance to

customers and convenience of the store location.

The retail strategy boils down to Merchandise management and Store

management.

Merchandise management consists of:

Planning merchandise assortments

Organizing Buying systems

Buying merchandise

Pricing

Retail Communication Mix

Store management consists of:

Managing the store

Store layout, design and visual merchandise

Providing Customer services

Competition in retailing:

Competitors in the retailing industry aren’t quite clearly defined. The

competition can be grouped into two:

1. Intertype competition

2. Intratype competition

In intratype competition retailers having the same type of format and

merchandise compete with each other. For example, a departmental store

competes with other departmental stores, or a supermarket competes

with other supermarkets.

In order to appeal to a broader group of customers and provide one-stop

shoping, retailers tend to increase the variety of their merchandise.

Variety refers to the number of different merchandise categories offered in

a department. By offering greater variety in a store, retailer try to create

one-stop shopping experience for the target customers. This is why

clothing is being available in supermarkets and drug stores. Cosmetics

are also available in kirana stores as well as in drug stores. Cosmetics are

also available in kirana stores as well as in drug stores. The offering of a

merchandise not typically associated with the store type is called

scrambled merchandising. Scrambled merchandising leads to intertype

competition i.e. competition among retailers selling similar merchandise in

different formats, such as supermarket and drug store.

INTRODUCTION:

Retail strategy provides the retailer with a framework for present and

future actions and how to achieve objectives. The strategy flows from the

retailer’s vision and mission. Before we go further, let’s study the retail

internal environment and then define various strategic areas.

RETAIL MARKET STRATEGIES:

A retail strategy is the statement indentifying:

1. The retailer’s target market.

2. The format that the retailer plans to use to satisfy the target marker’s

needs.

3. Building a sustainable advantage cover competitors.

A target market is the market segment at which a retailer wants to focus

all its effort and retail mix. In the last unit we studied consumer behaviour

and how retail consumers behave in purchasing or shopping. Moreover,

Target Marketing requires marketers to take three major steps:

1. Market segmentation: Dividing a market into distinct groups with

distinct needs, characteristics, or behaviour that might require

separate products or marketing mixes.

2. Market targeting: Selecting one or more market segments to enter.

3. Market positioning: Establishing and communicating the key

distinctive benefit(s) of the company’s market offering to each target.

RETAIL GROWTH STRATEGY:

A retailer may pursue any of the following growth strategies:

1. Market Penetration

2. Market Expansion

3. Retail Format Development

4. Diversification.

Market Penetration:

A market penetration growth opportunity refers to investment for the

existing customers using the present retailing format.

The involves attracting customers in the target market segment only, who

rarely visit the store or don’t visit at all.

Increasing sales by inducing current customers to visit more often or buy

more merchandise in each visit.

Approaches in Market Penetration:

1. Opening more stores in the target market area.

2. Keeping existing store open for longer hours.

3. Aggressive display of merchandise to increase impulse purchase.

4. Training sales people to cross sell. Cross selling means the sales

associates in one department attempt to sell complementary merchandise

of another department to the same customer. For example, a sales

associate who has sold a dress to a customer may take the same

customer to the accessories department to sell a matching handbag.

Market Expansion:

Here the retailer tries the existing retail format to target new segments of

customers.

The retailers selling premium suits for men may try to lure the younger

segment by introducing fashion wear also.

Retail Format Development:

This entails offering a completely new retail format to the customers such

as a format involving a different retail mix (retail mix-covered in Unit-3) but

targeting the same target segment.

Amazon.com added new merchandise for the same book customers.

Amazon.com started selling CDs, Videos and gifts in addition to books.

Diversification:

A diversification retail growth strategy involves developing a new retail

format to serve a market segment that is not presently served by the

retailer. It can be of two types.

Related diversification

Unrelated diversification.

I related diversification, the present retail format or target market shares

something in common with the new format. This may be purchasing from

the same vendor, using the same distribution set up or management

information system or advertising in the same or similar newspapers.

In unrelated diversification, there is no commonality between the current

business and new business. For example, a consumer durable retailer

may diversify into food products that require a different type of structure,

different supply chain, different type of location and the merchandise is

completely different in terms of frequency of customer purchase and

value per transaction.

STRATEGIC RETAIL PLANNING PROCESS:

The various steps in the development of retail strategy are shown in

Factors to be considered at every step:

Step 1:a) Kind of business being catered to.

b) Future of the business.

c) Customers targeted

d) Capabilities of the retailer.

e) Goals to be accomplished in long term.

Step 2: Complete situation audita) Market Factors:

i. Size of the market

ii. Growth

iii. Seasonality

iv. Business Cycle

b) Competitor Factors:

i. Barriers to entry

ii. Bargaining power of vendor

iii. Competitor rivarly

iv. Threat of superior new formats

v. Scale Economies (if achievable)

c) Enviromental factors:

i. Technology

ii. Economic

iii. Regulatory

iv. Social

d) Analysis of strengths and weaknesses:

i. Management Capabilities

ii. Financial Resources

iii. Locations

iv. Operatios

v. Merchandise

vi. Store Management

vii. Customer Loyalty

Step 3: Finalizing the growth strategya) Market penetration

b) Market Expansion

c) Retail Format Development

d) Diversification

Step 4: a) Evaluate Strategic Opportunities

b) Establish Competitive Advantage

c) Explore Feasibility of venturing in outlets

Step 5: a) Performance sought, including a numerical index against which

progress may be measured.

b) A timeframe within which the goal is to be achieved

c) The level of investment needed to achieve the objective

Step 6: a) Establish strategic buying mix

b) Establish Pricing Strategies

c) Establish Communication Strategies

d) Plan merchandise assortment

c) The level of investment needed to achieve the objective

Step 7: a) Store Layout

b) Store Location

c) Product Assortment

d) Product Width

e) Product Depth

f) Promotion, etc.

RETAIL STORES OPERATIONS PROCEDURESThis section talks about summary of all the activities required to be

carried out by the stores operations in the retail outlet. It is sometimes

very difficult to segregate operations activities, SCM activities and selling

activities in a retail scenario. Here we give those activities which are

related primarily to the stores operations. This includes:

1. Store staffing and scheduling:

Human resources planning and management at the store level and

scheduling the work timetable ensure efficient attending on the

customer and service. It will mainly include Job analysis, Employee

Recruitment & Selection, Socializing and Training, Motivating,

Evaluating Compensating.

2. Retail floor and shelf management:

It is the process of planning and managing merchandise within

the store, stocking and replenishing shelves and arranging products

in a visually appealing manner to maximum sales.

3. Store administration and facilities management:

In involves proper planning to run the store besides ensuring

compliance with laws such as Shops and Establishment Act, Labour

Act, etc. This process also includes the security aspects of the store,

housekeeping and maintenance ad its facilities such as parking,

toilets etc.

4. Warehousing and supply chain management:

The process of merchandise reorders, planning and organizing

merchandise receipts, storage, transportation, information

management in the supply chain, etc.

5. Loss [shrinkage] prevention:

In ensures better margins for the store. Electronic article

surveillance [EAS] systems such as closed circuit cameras, EAS

tags, RFID etc. deter pilferage and shoplifting.

6. POS/Cashiering process:

Both front-end cashiering and back-end cash management,

including banking form an important part of the store operation.

7. Visual merchandising and displays:

These could be done at either store of central level. Usually big

retail chains have a central VM team who decides the VM for all their

stores with a single or common theme.