11 Retail Marketing Management. 22 Retailing The word ‘retail’ is derived from the old French...

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Retail Marketing Management

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Retailing• The word ‘retail’ is derived from the old French word

‘retailler’ which means ‘to cut a piece off’ or ‘to break bulk’.

• Retailing includes all the activities involved in selling goods or services directly to the final consumer for personal or non-business use.

• In other words, Retailing is the sale of goods and services to the ultimate consumer for personal , family or household use.

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Retailing involves

• Identifying target market(customers)• Interpreting needs of the targeted customers• Developing good assortments(A collection of varying but

related items) of merchandise• Presenting them in an effective manner so that

consumers find it easy and attractive to buy.

Retailers wants to provide better range of products at better prices in a better ambience .

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An Introduction…….

• Retailers have grown into some of the world’s largest companies, eg Wal-mart

• Forbes Annual List of Billionaires has the largest number (45/497) from the retail business.

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Top Retailers WorldwideRank Retailer Home Country

1 Wal-Mart Stores, Inc. U.S.A.

2 Carrefour Group France

3 The Kroger Co. U.S.A.

4. The Home Depot, Inc

U.S.A.

5 Metro Germany

(Source: STORES / Deloitte Touche Tomahatsu)

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Unorganized retailing

• Run locally by the owner or caretaker of a shop• Lacks technical & accounting standardization.• Supply chain & sourcing are also done locally to

meet local needs.• Limited Profit• Limited customers• Limited Investment

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Organized retailing• Customers interacted with professionals and not with just one

single person - the owner. • An important point here is that customers' requirements are

catered to by trained staff. • Organised retailing is characterised by comfort, style and

speed.• Has a accounting transparency (with proper usage of MIS

and accounting standards)• Organised Supply Chain Management with centralised

quality control and sourcing (certain parts can be locally made)

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Retailing in India

• After 50 years of unorganised retailing and fragmented kirana store with very basic offerings, fixed prices, zero usage of technology & little or no ambience the industry has finally begun to move towards modernisation, systematisation and consolidation(Also called central buying, an approach in chain stores whereby all purchasing is done through a central or main office)..

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Size of the retail opportunity in India

• India shows US$330 billion retail market that is expected to grow 10% a year, with modern retailing just beginning.

• In India, the retail business contributes around 11 percent of GDP(GDP is the value of total production of goods and services in a country over a specified period, typically a year. How much GDP grows from one period to the next is an indication of a country's economic health).

• Of this, the organized retail sector accounts only for about 3 percent share, and the remaining share is contributed by the unorganized sector.

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Size of the retail opportunity in India

• Organised Retailing will show good prospects in cities like Mumbai, Delhi, Chennai, Kolkata, Banglore and Kanpur.

• After Dubai, Singapore and Hong Kong, In India Delhi will be the next big retail destination.

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Growth in this sector likely to happen at a rapid pace…..

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Growth drivers in India for retail sector

• Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes.

• Liberalization of the Indian economy

• Increase in spending Per capita Income.

• Advent of dual income families also helps in the growth of retail sector.

• Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

• Consumer preference for shopping in new environs

• Foreign companies' attraction to India is the billion-plus population

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Growth drivers in India for retail sector

• The Internet revolution is making the Indian consumer more accessible to the growing influences of domestic and foreign retail chains. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets.

• About 47% of India's population is under the age of 20;

and this will increase to 55% by 2015. This young population, which is technology-savvy, watch more than 50 TV satellite channels, and display the highest propensity to spend, will immensely contribute to the growth of the retail sector in the country.

• Availability of quality real estate and mall

management practices

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As a result, various categories are likely to shape up in thefuture as follows…

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Employment opportunities in retail sector in India

• India's retail industry is the second largest sector, after agriculture, which provides employment.

• According to Associated Chambers of Commerce and Industry of India (ASSOCHAM), the retail sector will create 50,000 jobs in next few years.

• Retail companies are starting retail management courses in partnership with management institutes, roping in talent from other sectors and developing comprehensive career growth and loyalty plans for existing employees.

• Since, the job market is hugely receptive to this with more and more business schools focusing on the sector and large retailers setting up retail academics

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Challenges of Retailing in India

In India the Retailing industry has a long way to go,and to become a truly flourishing industry, retailing needs to cross the following hurdles:

• The first challenge facing the organized retail sector is the competition from unorganized sector.

• In retail sector, Automatic approval is not allowed for foreign investment.

• Taxation, which favors small retail businesses.

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Challenges of Retailing in India

• Lack of trained work force.

• Low skill level for retailing management.

• Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence and low margins.

• Organized retail sector has to pay huge taxes, which is negligible for small retail business.

• Developed supply chain and integrated IT management is absent in retail sector.

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•Understanding customer needs

and wants.

•Providing information to suppliers.

•Holding inventory.•Providing services

to consumers.

•Breaking bulk.

Providing an assortment of

product or services to consumers

Functions Of Retailers

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An example of Breaking Bulk

25 Kg

1 Kg 1 Kg 1 Kg

2 Kg 2 Kg 2 Kg

5 Kg 5 Kg 5 Kg

1 Kg

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A Typical Example of Assortment

ManufactureBrand - A

ManufactureBrand - B

ManufactureBrand - C

ManufactureBrand - D

ManufactureBrand - E

ManufactureBrand - F

RETAILER

Brand A

Brand B

Brand C

Brand D

Brand E

Brand F

CUSTOMER

Wholesaler

Wholesaler

Wholesaler

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Retailers offer number of services to the consumers:-

• Providing credit facilities(Automobile & consumer durable retail outlets)

• Providing facilities like home delivery (supermarkets, Dommino’s Pizza)

• Providing product guarantees, after-sales service and dealing with customer complaints(Automobile dealers)

• Providing information and answering customer queries.

• Helping customer to choose a product.• Displaying products in such a manner so that customer

can see and test them before making their purchase.

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Classification of retailers

• Classification based on Legal Form

• Classification based on Operational Structure

• Classification based on Range of Merchandise

• Classification based on Degree of Services.

• Classification based on Pricing

• Classification based on Location

• Classification based on Size of Outlet

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Classification based on Legal Form

Proprietorship PartnershipLimited Company(Private or Public)

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Classification based on Operational Structure

Independent tradersChain Stores(Multiples)

Co-operatives

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Classification based on Range of Merchandise

Variety Stores(Departmental Store)

Specialty Stores(Niche Retailers)

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Classification based on Degree of Services

[LOW]Self service & Self selection

[HIGH]Home delivery, high credit,

High involvement of sales staff

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Classification based on Pricing

LOWER PRICE[Discount stores]

HIGH PRICE[Convenience stores]

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Classification based on Location

Stand alone store

Shopping centres

or Complex

Destination stores

Convenience stores

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Classification based on Size of Outlet

Small stores[0-25,000 sq ft]

Super stores[25,000-50,000 sq ft]

Hyper store[over 50,000 sq ft]

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Classification of Retail Formats

Classification of Retail Formats

Store Based Retailing

Non Store Retailing

Service Retailing

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1 Store Based Retailing

Store Based Retailing

Form of Ownership•Independent Retailer•Chain Retailer•Franchise

Merchandise Offered•Convenience Stores•Supermarkets•Hypermarkets•Speciality Stores•Departmental Stores•Factory Outlets

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2 Non- Store Retailing

• Mail Order Mail order catalogues Direct Response Advertising Direct Mall ( Reader’s Digest)

• Direct Selling Door -to -Door Trading

( Avon) Mobile shops Haats

• Automatic Vending ATMs

• Electronic Retailing Retailing through TV like Asian

sky shop, Telebrands Retailing through Internet like

Amazon.com Indiainfo.com

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3 Service Retailing• Many organizations that offer services to customers such as

banks, hospitals, doctors, lawyers & other consultants do not consider themselves to be retailer.

• Due to increased competition , these organizations are adopting retailing principles to attract customers & satisfy their needs.

• Service Retailing• Banks• Car-rentals• Service contracts• Medical services• Providers of various services

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Characteristics of General Merchandise Retailers

Retail Formats

Location Space/Layout

Merchandise Customer Profile

Example

Supermarket Market place Large Multiple, food & household goods

Family profile, mostly loyal

Apna Bazaar, Foodworld

Speciality Store

Strategic Medium Size Focussed single category

Individuals, groups & clusters of same class

Footwear store BATA,Planet M

Department Store

Destination towns, metros

Large category cluster/ brands

Family high loyalty & involved

Shopper’s Stop

The Plaza Market place in metros

Large Independent categories

Family,individuals, youngsters, fun loving

Heera Panna in Mumbai

The Mall Destination , mega metros

Huge Independent but profiled & defined category

Family,individuals, youngsters, fun loving

Crossroads I Mumbai, Eternity

The Emporium

Market place Medium / small size

Single group category

Needs based spenders

Silk Emporium

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Retail Formats

Location Space/Layout

Merchandise Customer Profile

Example

The Bazaar Strategic large Multiple categories at reduced price

Price conscious individuals,families

Bigbazaar

Stop over Piggy back location

Small to Medium

Multiple, brands

Impulsive buyers

The store inside petrol pump,”In-Out” of BPCL

Single Price Denomination

Busy Market Place

Medium sized, small

Multiple, categories, scrambled

Bargain seekers

Dollar Store

Kiosk(A small enclosed structure, often freestanding, open on one side or with a window, used as a booth to sell newspapers, tobacco, etc; A similar ...

Busy Market Place

Very small Fast moving consumables

Impulsive individuals satisfying nick-of-the-time need

Pepsi Fountain

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Type Variety Assortment

Service Price Size (sq.ft)

Department Stores

Broad Deep to average

Average to low Average to high 100,000-200,000

Discount Store

Broad Average to shallow

Low Low 60,000-80,000

Specialty store Narrow Deep High High 4100-12000

Hypermarket Broad Average Low Low 2,00,000

TV Home Shopping

Average Shallow Average Average -----------------

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Hypermarkets now and ahead …

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Supermarkets likely to increase…

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Factors Influencing Retail Business

Customers

Environment Trends

Competition

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1 Customers• To be successful, retailer must know its

customers.• Why customer shop, how they select a shop and

how they select among stores merchandise.These can be:-

Convenience- of hours, of location, of shopping ease. Assortment of merchandise – whether a wide or narrow Quality of fashion level of goods Price Services- such as credit , delivery, courteous sales staff, assistance in

selection, After sales services, return-good priviledges. Excitements such as promotional efforts

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2 Competition

• A retailers competition is from those who are using same retail formats (intra-type competition)as well as from those who are coming up with new format(inter-type competition).

• To provide one stop shopping & to attract a broader group of consumers, retailers offer a broader variety of merchandise. This is called Scrambled Merchandising

• For example: grocery shop keeping clothes, sports goods in drug store,etc.

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Strategies to achieve competitive advantage

Operational Excellence

Customer IntimacyProduct Differentiation

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3 Environmental Trends/ Factors

• Economic factors:- increment in buying power & disposable income

• Demographic factors:- rising prosperity & population

• Social factors:- Nuclear family, more working women

• Psychological factors:- Consumerism, More Awareness

• Brand profusion:-

• Psychographic change:-more emphasis on health & Hygiene

• Technological changes:-

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Consumer Needs and Desires

• How far will customers travel to get to the retailer?

• How important is convenience?

• What store hours are desired?

• What level of customer services are desired?

• How extensive a goods / service assortment is desired?

• What level of goods/ service quality is preferred?

• How important is price?

• Do different market segments have special needs? If so what are they?

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Attitudes Towards Shopping

• Shopping enjoyment• Retailers whose lay out is simple to follow• Retailers with no stuff in the aisles• Best employee attitudes• Clean, neat & tidy

• Attitudes towards shopping time• Women place shopping 3rd after dining out and vacations• Men place it last

• Why do people buy or not buy on a shopping trip?• Attitudes towards private brands

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Where People Shop

• Where apparel is purchased?» Traditional department store» Specialty store» Full-line discount store» Factory outlet» Others

• Where books are purchased?» Large chain bookstore» Independent bookstore» Discount stores» Internet

• Are the customers cross - shoppers?

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The Consumer Decision Process

Demographics Life-style

a

b

(a) Shows the impact of lifestyle on certain demographics such as family size, marital status.

(b) shows the impact of a purchase on elements of life style such as social class, reference groups etc.

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Stages Involved in the Buying Process

Stages Selecting Retailer Selecting Merchandise

Need Recognition Need Recognition Need Recognition

Information Search Involved in Information Search for retailers

Involved in Information Search for merchandise

Evaluation Evaluation of retailers

Evaluating merchandise

Choice Selecting a retailer Selecting the merchandise

Visit Visit store or surf internet or look through catalogues

Purchase merchandise

Loyalty Repeat store patronage Post Purchase Evaluation

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Stages In Buying Process1. Need Recognition Stage:- Retailers use a variety of ways to

stimulate problem recognition & motivate customers to visit their outlets & purchase merchandise. These could be in the form of direct mails, publicity, special discounted prices, effective displays,etc.

2. Information search:- The role of the retailer at this stage is to use visual appeal, attractive store design, broad assortment of competing brands, colors, sizes, attractive promotional offers, reasonable prices etc such that the customer get confident to get all information they need to make purchase decision from this one outlet only.

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Stages In Buying Process

3. Evaluation of Alternatives:- retailers through market research must identify on what basis customer evaluates the various retail outlets & then they must develop programmes which increases the likelihood of customers remembering the particular retail outlet.

4. Purchasing the Merchandise:-in this stage when customers are planning to purchase the merchandise, retailers could adopt following steps:-

• Keep a complete stock of popular merchandise in the right assortment & sizes available.

• Offer a liberal policy regarding merchandise returns & refunds, if the same merchandise is easily available at competitors outlets.

• Offer credit facilities, less time gap between perceived & actual waiting time & convenient checkout terminals.

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The Consumer Decision Process• What goods or service the consumer is thinking of

buying?• Where the consumer is going to make the purchase

of that item?

manufacturer Retailer

Wants the customer to buy it's brand (what) at any location

(where)

Wants the customer to buy the product, (not necessarily the

manufacturer’s brand ) (What) at it’s store (where)

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Types of Consumer Decision Making

• Extended decision making• House, car, life insurance policy• Higher cognitive dissonance

• Retailer needs to provide personal selling, printed material etc to provide as much information as possible

• Limited decision making• Clothing, vacation, furniture, gifts• Less perceived risk

• The shopping experience and assortment at the retailers will play an important role

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Types of Consumer Decision Making

• Routine decision making• Supermarkets, drycleaners and fast-food items

• Problem awareness leads to purchase

• A good location. Long hours, clear product displays, product availability are the strategic elements

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Impulse Purchase

• Completely unplanned• Partially unplanned• Unplanned substitution

• In-store browsing is positively affected by the time a person has to shop

• Some individuals are more predisposed toward making impulse purchases than others

• Those who enjoy shopping are more apt to make in-store purchase decisions

• Impulse purchases are greater when a person has discretionary income to spend

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Customer loyalty

• Customer satisfaction

• Retailer’s value Proposition(sum total of benefits which a retailer promises that a customer will receive..).

• Ability to communicate a caring attitude

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Target Market Strategy

• Mass Marketing Startegies• Big bazaar, Wal-Mart, Target stores

• Concentrated Marketing strategies• Dollar store, Benzer, Seasons, Millionaire

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Devising a Target Market Strategy

Determine target market

approach

Select a specific target

market

Characteristics, needs & attitudes of the target market

How consumers make decisions by product category

Develop and implement

appropriate retail strategy mix

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Retail MarketingRetail Marketing is the process by which a retailer

tries to:-• identify the target market,• Work out the mix in terms of nature of

merchandise & services offered,• Pricing policy,• Promotion & advertising,• Location, store design & visual merchandising(is

the activity of promoting the sale of goods, especially by their

presentation …) in order to satisfy the target market’s needs and build sustainable competitive advantage

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The Retail marketing Mix

Product Price Promotion Place

The marketing Mix

The target market

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1 The Product

• Service

• Quality

• Merchandise

• Brand name• Store Layout(The interior layout of the store for the ease of

user movement through the store to provide maximum exposure of good and attractive display.)

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1 Product• In designing the retail mix retailer must decide:-• Breadth of merchandise:-Number of different merchandise

categories he wants to offer.

• Depth of merchandise:-i.e. variety of colors, styles, sizes, & prices that a retailer offers in a given line.Each different item of merchandise is called an SKU(Stock Keeping Unit)Ex:- ‘girls ‘ Levy jeans Size 5 stone washed, straight leg’

• Quality & fashion level of goods:-high quality, newest fashion & exclusivity are major consideration for high income, fashion conscious customers. Opposite is true for low end.

• Example:- a high fashion store offers the newest fashions before they have become popular.At the opposite end of the scale, discount stores offer distress merchandise & other low-end merchandise.

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2 Price

• Customers often make judgment on products or indeed on the store as a result of his or her response to the prices of merchandise.

• Thus retailer could adopt a strategy of offering goods at relatively high prices in order to be consistent with a general strategy of appealing to consumers who want exclusivity.eg Lifestyle,Metro

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Factors Affecting Retail Pricing

• The perishable nature of some products• High fashion items

• Competitive nature of the industry• Market volatility

• Fluctuations in international costs

• The need to stock saleable items

• Problems of supply

• Seasonal demand• Influence of intermediaries.

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Approaches to Pricing the Retail Product

• Cost-oriented pricing• Cost plus pricing

• Rate of return pricing

• Demand oriented pricing

• Discrimination pricing

• Skimming pricing

• Competitive pricing

• Market Penetration

• Psychological pricing

• Everyday low pricing

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3 Promotion• The retailer has to communicate with customers,

initially to make them aware of his or her offerings & then to stimulate interest & desire. This is done using AIDA theory.

• The Basic purpose of communication programme is:-• Inform customers about the store,• Inform customers about the merchandise & services it offers,• Attract customers to stores,• Encourage them to buy merchandise &• Develop a band of loyal customers.

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Retail Promotion Mix

Broad objective being Bring traffic into the store Move the traffic to various selling areas of the store Entice customers into purchasing.

Advertising; sales promotion; store

atmosphere; visual merchandising

Personal selling

Publicity W.O.M

Impersonal Personal

Unpaid

Paid

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Retail Promotion

• Advertising• Product advertising

• Markdown event advertising

• Institutional advertising

• Co-operative advertising

• Sales Promotion• Pop / pos

• Contests / sweepstakes

• Coupons/frequent shopper

• Prizes / referral gifts

• Branded giveaways

• Samples

• Special events

• Loyalty programs

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Types of Advertising

Product Advertising Is used to promote merchandise which is new , exclusive & superior in certain specific aspects of quality, design & its benefits.

Markdown Event Advertising

Is done to create excitement about a particular period during which the products are being offered at lower prices by the retailer.

Institutional Advertising

Is used to highlight about the benefits of the shopping centre or mall as a pleasurable place to visit & shop.

Cooperative Advertising

It involves sharing of the costs of an advertising campaign either between the manufacturer & retailer.

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Types of Sales Promotion

Points to purchase Window, floor,& counter displays that allow a retailer to remind customers & stimulate impulse purchase.

Contests Customers compete for prizes by completing a game like crossword puzzle, a slogan or a lottery.

Sweepstakes Participants merely fill out application forms & the winner is picked at random. No skills involved.

Coupons Retailers advertise special discounts for customers who redeem advertised coupons.

Frequent Shopper programmes

Customers are given points or discounts based on the value of their purchases . The points are accumulated to acquire goods or services.

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Types of Sales PromotionPrizes Gives prizes like glasses, silverware

others

Samples Free tastes or smell.

Demonstrations Products are shown cleaning floors, mixing foods & so on.

Referral Gifts-pens, calendars, shopping bags

Presents are given to current customers when they bring in new customers. Items that contain the retailers name are given to customers.

Special events Include fashion shows, autograph sessions with book authors, art exhibition and more.

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Factors Influencing Advertising Age of store

- New stores or those seeking to be re-build image need advertising.

Store location- Stores that are poorly located need more advertising.

Merchandise- Those selling high-image / fashion goods need advertising than a discount / convenience store

Supplier support- The more support a retailer is able to get from suppliers, the more it can advertise.

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Sales Promotion in Retailing

Sales promotion has been found to be a tried and trusted ally of retailers.

What does it do? Excellent demand generator Build traffic Can play an important role in loyalty programs Generate in-store excitement Assist in introducing new products

Type of sales promotion : Sponsors. Self sponsored Joint with supplier

Promotion formats for retail Announce special sales – end of season / regular Organise demos / samples – initiate trial & build traffic Value-added gifts / premiums to build brand loyalty in specific categories Coupons & contest – to retain interest / repeat

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Sales Promotion in Retailing (contd…)

What sales promotion can’t do Change buyers preference for un-desired product Compensate for poorly trained sales force Provide long-term support in sales Permanently stop a products declining trend push a non-seasonal item in

off-season.

Factors to consider Cost of additional inventory carried, if buying more Potential in sales from promotion Margin / profitability Any potential loss due to shift in demand in favour of promoted item vs

un-promoted item Effect on future sales, if any Promotion budget for advertising & in-store activity

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4 Place

• The categories from the point of view of Retailing are:-

• Convenience of shopping

• Store’s Décor

• Store Location

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Convenience of ShoppingTimings Location Effort Facilities

How long store remains open?

Does it remain open on Sundays & holidays?

Is it conveniently located for the customer?

Does it offer assistance in selection & shopping to the customers?

What facilities does it offer?, such as:-

Car parking space,

ATMs,

Credit cards acceptance,

Free home delivery,

Ordering by phone,

Availability of all products under one roof etc

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Store’ Decor Two important criteria for store’s décor are:-

• It should be compatible with the products , for instance , for home furnishings & decorative items would require

an attractive & elegant interior & décor; whereas a store selling items would require visibility & hygiene rather than an elegant décor.

• It should be compatible with the target customer’s & retailers image,

for example, target customer of a five star hotel would like to have a good interior & décor whereas a small restaurant may not pay much attention to its interior & décor.

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Store Location

Two important criteria for store’s location are:-

• Target customers, and

• The type of retailer or retailer’s image.

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What is a Retail Strategy?

• The Retail Market Strategy is a statement worked out to identify :-

• The retailer’s target market

• The specific format planned to be used by the retailer to satisfy the target market’s needs &

• Work out the bases upon which to build up sustainable competitive advantage.

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Trading Area Analysis• Three critical elements of success in retailing business

are –• Location

• Location &

• Location

• A trading area is a geographical area containing the customers of a particular firm or a group of firms for specific goods and services

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Choosing a Store Location

• Evaluate alternate geographic (trading) areas in terms of residents and existing retailers

• Determine whether to be an isolated store or part of a planned shopping center

• Select the site• Analyze alternate sites in the specified retail

locations

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Steps in Selection of location

Evaluate AlternateTrading Areas

Determine Type of Location

Select General Location

AnalyseAlternate sites

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I }Evaluation of Alternate Trading Areas

Costs

Regulations

Closeness to

source of

supply

Availability of staff Trading

area overlap

Competitor's plan

The number

of stores

Geographic

weaknesses

Promotional

activities

Demographic & socioeconomic

Evaluation of

trading areas

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II} Determine The Type of Location

A careful retailer seeking a location considers following aspects of a prospective area:-

• Population factor• Literacy factor• Trading performance factor• Accessibility factor• Facility/ Amenities factor

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Factors in Determining The Type of Location

Population factor Population of the area, number of household

Density of population

Characteristics of population distribution

Social & cultural mix

Occupation distribution level

Literacy Factor Literacy level of average population

Level of education

Distribution of population by religion

Distribution of population by language

Trading Factor Type of major stores existing

Size of trading areas

Type & kind of merchandise offered

Type of stock & availability of stock area

Type of area such as residential / commercial

Type of trading undertaken

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Factors in Determining The Type of Location

Accessibility Factor Lines & level of transportation availability

Availability of parking area

Pedestrian passage and comfort

Travel distances

Amenities Factor Banking services like 24 hours banking, ATM

Delivery, credit and other retail services

Social and amusement facilities

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Location Planning- Types of Location

• High Street Location:-• Very busy with high customer traffic.• Has an array of retail stores in small sizes• High real estate rentals• Linking road in Bandra,Mumbai

• Destination / Freestanding Location• Does not have high footfall rate• May have large parking area• May not be a commercial retail area at all• Shoppers’ Stop in Mumbai

• Shopping Centre / Mall Location• Has existing mall trafic• Has a clean environment• Has a designated parking area• Medium to high rental rate• Crossroad in Mumbai

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Site Selection

• Pedestrian Traffic• Number of people• Type of people

• Vehicular Traffic• Number• Type• Congestion

• Parking Facilities• Transportation• Store Composition

• No. & size• Affinity• Retail Balance

• Specific Site• Visibility• Placement

• Terms of Occupancy• Overall rating

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Merchandising

• Merchandise or Product:- is anything that can be offered to a market or to customers that might satisfy a need but also services. For example: a haircut, a dry cleaning service,etc

• Merchandising:- is to have the right merchandise at the right time,in the right place, in the right quantity,at the right price.

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Six Rights of Merchandise

Type

Quantity

Price

Quality

Time

Place

RightMerchandise

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Retail Merchandise Management• Merchandise Management can be termed as

the analysis, planning, acquisition, handling and control of the merchandise investments of a retail operation.

– The Breadth of assortment (narrow or wide)– The depth of assortment (shallow or deep)– Quality of Brands– National, Store or International– Pricing Policies

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Retail Merchandise Management

• Merchandising consists of all activities involved in– acquiring particular goods and /or– services and

making them available at the – places, – times, and – prices and– in the quantity

that enable a retailer to reach it’s goals

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Retail Merchandise Management

• Micro merchandising• Shelf space is adjusted to respond to the local

demographics preferences and weather conditions.

• Cross-merchandising• Complementary goods and services are carried to

encourage the shoppers to buy more.

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Implementing Merchandise Plans

Gatheringinformation

Evaluation

Negotiation

Selecting and interacting with merchandise sources

Receiving and stocking merchandise

Concluding purchase

Re-ordering

Re-evaluation

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1 Implementing Merchandise Plan

• Information about the customers and the suppliers

• Govt. sources

• Market research agencies

• Maintenance of a want book

• Comparison shopping

• Trade shows

• Trade publications

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2 Selecting the Merchandise Sources

• Reliability• Price-quality• Order-processing time• Exclusive rights• Functions provided• Ethics• Guarantee• Credit• Reorders• Local advertising• Investment• Risk

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Implementing Merchandise Plan

3• Evaluating merchandise

• Inspection• Sampling• Description

4• Negotiating the

purchase– Purchase Price

– Payment options

– Permissible discounts

– Form of delivery

– Shipping charges & so on..

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5

• Concluding purchase– Consignment purchase

6• Receiving & Stocking

Merchandise– Receiving and storing – Checking and paying

invoices– Price & inventory marking– Setting up displays– Figuring on-floor amounts

and assortment– Processing returns and

damaged goods

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7

• Reordering merchandise– Order and delivery

time

– Inventory turnover

– Financial outlays

– Inventory vs. ordering costs

8

• Re-evaluating

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Category Management

• A distinct manageable group of products / services that consumers perceive to be interrelated and / or substitutable in meeting a consumer need.

• Category is an assortment of items which the consumer may perceive as substitute for each other.

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Logistics

• The total process of planning, implementing and co-coordinating the physical movement of merchandise from manufacturer (wholesaler) to retailer to customer in the most timely, effective and cost efficient manner

Order processing and fulfillment

Transportation

WarehousingCustomer service

Inventory management

Value Delivery Chain

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Class AssignmentQ1:- You desire to start a retail outlet in a specific locality .the locality possess

the following features:Total population:- 2.5 lacs;

Division:- upto 14 years—15%; 15-45 years--------48%; above 45 years –30%; women to men ration:- 1.1 to 1(1.1/1)

Income statistics:- below poverty line – 155; low income group 15%; lower middle class- 25%; upper middle class- 30%; High income group- 15%

Competition:- Kirana shops-20; cloth & clothing shops- 20; medicine shops- 10; Fast food counters-6; restaurants for middle / low income groups-3; Department store( food, clothing , household items.)- 1

This locality is a developed suburb, at a far distance from the other parts of town. There is only one link road, which is not in a very good condition.

Given the conditions, the nature of goods / merchandise to be stocked in the retail outlet of various target groups is to decided by you, with priorities 7 preferences.

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Class Assignment

Q2:- Promotional strategy is important for any store . Do you agree with the statement ? If yes, justify your answer with the suitable examples. If no, explain the reasons with suitable examples.

Q3:- A super market Grocery chain opens up a new store in suburb with 80 % population belonging to middle class / lower class residents. What kind of promotional efforts will be required to launch the store? Explain your justifications.

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Final words……..

Message to Retailers:•Evolve your all strategies around customers.•Focus on building brands to reap the fruits in future.•Keep growing.•“Customers is king of Past and now the Emperor of Future.”

Message to Customers:“Enjoy the Kingdom of Retailers”

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Thank You!

11 Retail Marketing Management. 22 Retailing The word ‘retail’ is derived from the old French...

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