Retail Marketin Assignment-3rd Sem

7/28/2019 Retail Marketin Assignment-3rd Sem

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Q.1

Who are channel partners? What are different types of channel partners?What role do they play?

A.1

Channel participants are defined as businesses that acknowledge their dependence upon oneanother in a channel arrangement and assume risk during the value addition distributionprocess.Manufacturers

A manufacturer is one who produces the product. Manufacturing activity creates form utility.Manufacturing in combination with agriculture and mining serves to generate a flow of products,services, commodities and materials that ultimately become the local concern of the marketingchannels. Manufacturer takes significant risk with creation of their products like manufacturersof automobiles, appliances, food, pharmaceuticals etc.

WholesalersIt is important to understand that there are many different kinds of wholesalers, all of which differin product categories handled as well as in specific marketing functions performed. There arethree basic types of wholesale institutions, namely merchant wholesalers, agent wholesalersand manufacturers sales branches and offices.Merchant wholesalersMerchant wholesalers are independently owned; separate from suppliers, on the one hand andfrom the retailers on the other hand. The distinguish feature of merchant wholesalers is that theytake ownership and associated risks related to the goods in which they trade. Merchantwholesalers are of two general classes: full function or service wholesalers and limited functionwholesalers.

Agent wholesalers

Agent wholesalers are primarily involved in the buying and selling of goods and services. Theytypically negotiate sales as representatives of other firms and do not take title to merchandise.They also participate in the collection of market information. Agents receive a commission forperforming these functions. Among different types of agents are manufacturers agents,brokers, commission merchants, selling agents and auction companies. On the other hand,these agent wholesalers are largely involved in domestic trade; on the other hand, agentwholesalers also play an integral role in international trade.Manufacturers sales branches and sales officesBranches, sometimes called captive distributors, are wholesaling operations owned andoperated by a manufacturer and maintain separately from the producing plant to sell and marketits products. The sales branches include a warehouse with consumers and individual users areclassified within retail trade.

Consumer channelsManufacturers may reach out to consumer either directly, i.e., without using distributionchannels, or by using one or more distribution channel members.

Manufacturer to consumer: Company contacts customers directly through salespersons, mail,telephone, or Internet and make sales. The products are sending directly to customers by themanufacturers. Avon Cosmetics and Eureka Forbes use this type of channel.Manufacturer to retailer to consumer: The growth in retailer size means that it has becomeeconomic for manufacturers to supply directly to retailers rather than through wholesalers,


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supermarkets chains and corporate retailers exercise considerable power over manufacturersbecause of their enormous buying capabilities.Manufacturer to wholesaler to retailer to consumer: Retailers have the power to buy directlyfrom manufacturers and thus cut out the wholesalers, these big retailers are also able to sell ata cheaper rate to consumers than retailers who buy from the wholesaler. Wholesalers dominatewhere retail oligopolies are not dominant.

Manufacturer to agent to wholesaler to retailer to consumers: The agents contactwholesalers and receive commission on sales. A company product may be found in a company-owned store, an exclusive store, a multi-brand store and a discount store simultaneously.Companies have realized that all customers of a product do not buy form the same retail.

Q.2

Discuss the components of CRM. What are the benefits of maintaininggood relationship with customers?A.2

Components of CRM

PersonalisationPersonalization describes the social interaction between service employees and theircustomers. It refers to the way in which employees relate to customers as people - cold andimpersonal at one end, and warm and personal at the other. Consequently, personalization canbe regarded as a means of showing recognition and respect for the other party. Some of thecommon examples of social relationship benefits include feelings of familiarity, personalrecognition, friendship, and social support. Such an interaction afforded by shopping sometimesworks as a prime motivator for some consumers to visit retail establishments.

CommunicationCommunication is without a doubt, an essential condition in the existence of any relationship. A

retailer's communication with a buyer conveys his interest in them and serves to strengthen

their relationship. So, efforts to stay in touch with the customers have been identified as the

key determinants of relationship enhancement in retailer-customer relationship. It is generally

observed that buyer-seller relationships become stronger when the ease and volume of

exchange between buyers and sellers increase.

RewardsProviding customers with tangible rewards is often referred to as level one relationshipmarketing'. This level of CRM relies primarily on pricing incentives and money savings to secure

customers' loyalty. Rewards should be designed to promote long-term behaviour anddiscourage short-term deal-seeking behaviour. Rewarding efforts refer to structured andplanned marketing efforts that should encourage loyal behaviour, distinguishing it from short-term oriented sales promotions.Special treatment benefits

A key aspect of relationship marketing is that all consumers do not need to be served in thesame way. If a consumer receives personalized, customized service from retailer A, but notfrom Retailer B, and if this service is valued, then the consumer will be less likely to leave


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Retailer A for B. The retailers can distinguish between at least two identifiable customerssegments: loyal customers and non-loyal customers.The next few sub-sections discuss the other important aspects CRM in the retail sector.

Benefits of Relationship MarketingRetaining customers for the long-term offers many benefits. The aim of the company is to obtain

life time customers. Some of the benefits of relationship marketing include:1. Loyal customers are willing to try some of your new products, because they trust you.2. Loyal customers will recommend your business to others, thus expanding your business foryou.3. Loyal customers will tell you about problems with your products/services enabling to improveyour products/services.4. Customers will be willing to pay more for your services/products if there are adjustments inpricing because they are loyal to you and trust your services/products.5. The ultimate benefit will be an increase sales, market share and dominance.

Q.3

What is e-tailing? What are different categories of online retailing?A.3

Electronic RetailersAs a sophisticated and interactive medium, the internet accessed by personal computer isshowing every sign of being accepted as a mainstream shopping mode by an increasinglycomputer-literate society. Using the internet to access information has been accepted as part ofeveryday life for many sectors of society, and in the process of shopping it has become veryuseful to customers as a way of accumulating information about retailers' product and serviceofferings in a relatively fast and convenient manner. As a way of accessing specialist retailersthat might be geographically remote from consumers, the internet provides a channel ofdiscovery for the consumer, and a way of providing home shopping services for a wider targetmarket for the retailer. The internet is also an efficient home-shopping device, enabling time-poor or less mobile consumers to order and take delivery of routinely purchased items such asbasic groceries and household items.

Irrespective of the way we access the e-retailer, whether it is via the PC, the mobile phone

or the hand-held personal organizer, consumers increasingly expect retail organizations to

be able to offer flexibility in terms of information gathering (to supplement pre-sale

shopping), purchase transaction, and taking delivery of the product or service (post-sale

activity). By using a number of different retail formats, retail businesses are better able to

allow consumers this flexibility. Most large retailers in the UK now fall into the category of the

'multi-channel' retailer, which is a term used to describe the strategy of using more than one

'route' to consumer markets.


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Typically, the multi-channel retailer runs stores and has a transactional website (the so called 'clicks-

and-mortar', or 'clicks-and-bricks'approach), but other combinations might be stores/catalogue,

stores/catalogue/website, stores/website/direct mail. Offering alternative ways to shop may encourage

customers to remain loyal to a favoured retail brand as lifestyles change, but it can also present

retailers with new operational and competitive challenges.

E-tailing is becoming popular day by day. Internet retailing can be classified into three maincategories:Click Retailing: This category of retailers operate only through online channels. Somepopular companies that fall under this category are Dell, Amazon.com and e-Bay.

Click and Brick Retailing: This category of retailers operate through both the online as wellas the offline channels. Common example includes: Barnes and Noble's.

Brick and Mortar Retailing: This category of retailers use conservative modes of retailingThey do not rely upon modern techniques of retailing.

Q.4

What do you mean by acquisition? What are the types of acquisitions?.

A.4

An acquisition, also known as a takeover, is the buying of one company (the 'target') by another.An acquisition may be friendly or hostile. In the former case, the companies cooperate innegotiations; in the latter case, the takeover target is unwilling to be bought or the target's boardhas no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm bya larger one. Sometimes, however, a smaller firm will acquire management control of a larger orlonger established company and keep its name for the combined entity. This is known as areverse takeover.Types of acquisitionThe first type is in which the buyer buys the shares, and therefore control, of the target companybeing purchased. Ownership control of the company means that there is control over the assetsof the company. Since the company is acquired intact as a going business, this form oftransaction carries with it all of the liabilities accrued by that business over its past and all of the

risks that company faces in its commercial environment.The second type is in which the buyer buys the assets of the target company. The cash thetarget receives from the sell-off is paid back to its shareholders by dividend or throughliquidation. This type of transaction leaves the target company as an empty shell, if the buyerbuys out the entire assets. A buyer often structures the transaction as an asset purchase to"cherry-pick" the assets that it wants and leave out the assets and liabilities that it does not. Thiscan be particularly important where foreseeable liabilities may include future, un-quantifieddamage awards such as those that could arise from litigation over defective products, employee


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benefits or terminations, or environmental damage. A disadvantage of this structure is the taxthat many jurisdictions, particularly outside the United States, impose on transfers of theindividual assets, whereas stock transactions can frequently be structured as like-kindexchanges or other arrangements that are tax-free or tax-neutral, both to the buyer and to theseller's shareholders.The terms "demerger", "spin-off" and "spin-out" are sometimes used to indicate a situation

where one company splits into two, generating a second company separately listed on a stockexchange.

Q.5

Explain retailing & its features. How has the growth of retail sector helpedthe Indian economy?

A.5

Retailing in simple term can be defined as Retailing is the business activity of sellinggoods and services to the final consumer.Retailing can be defined as the business products and services to consumers for their own use.It has its origin in the French word, retailer meaning to cut a piece off.

According to Kotler, Retailing includes all the activities involved in selling goods orservices to the final consumers for personal, non business use.The definition of retailing is actually breaking the bulk.Retailing is the activity of selling goods and services to last level consumers for their use. It isconcerned with getting goods in their finished state into the hands of customers who areprepared to pay for the pleasure of eating, wearing or experiencing particular product items.

Retailing is all about the distribution of goods and services because retailers play a key role inthe route that products take after originating from a manufacturer, grower or service-provider toreach the person who consumes.Retailers provide a collection of service benefits to their customers such as being located inconvenient places, editing product ranges according to shopping tasks, and selling goods inquantities that match personal consumption levels.The term retailing applies not only to the selling of tangible products like loaves of bread or pairsof shoes, but also to the selling of service products. Companies who provide meals out, haircutsand aromatherapy sessions are all essentially retailers, as they sell to the final consumer, andyet customers do not take goods away from these retailers in a carrier bag. The consumption ofthe service product coincides with the retailing activity itself.Retailing consists of the sale of goods or merchandise from a fixed location, such as a

department store or kiosk, or by post, in small or individual lots for direct consumption by thepurchaser. Retailing may include subordinated services, such as delivery.The term "retailer" is also applied where a service provider services the needs of a largenumber of individuals, such as a public utility like electric power.

The following points show how significant this sector is for the Indian economy.As of now, retail sector in India employs around 17% of population and promises to employmore in the near future


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As per to PricewaterhouseCoopers (PWC), retail sector will create additional eight millionjobs though retailing in India and will benefit population by employing local (Urban) youth andothers directly or indirectly.

A new development in organized retailing in India is Contract Farming. It is a mutualagreement between the farmers and the retailers, in which both the parties benefit. Retailersassist the farmers with the latest technology and equipments to do scientific farming, whichincreases productivity in agriculture. The entire produce is bought by the retailers and thefarmers get a uniform payment for their produce irrespective of fluctuations in market price.

Retailing also provides adequate management training and entrepreneurialopportunities. The extraordinary role played by retail sector throughout the world inincreasing productivity of consumer goods and services are commendable. And it isalso becoming a major industry by creating millions of employment opportunities topeople directly and indirectly is greatly admired. Retailing industry becoming one of themost dynamic sectors in India with numerous players jumping into this market makes itcompetitive and lucrative. Though organized retail sector is serving the needs andaspirations of high end and middle classcustomers but ignoring the common man's needs and aspirations are lamentable. So, theorganized sector should look at the common mans needs, and his ability, affordability and goahead, then only the aim of giving world class quality products at affordable prices to commonman dream will come true, thereby contribution to the economic growth and up lifting thestandard of living there by serving humanity.

Q.6

Discuss the concept of price sensitivity and its relevance for retailers.

A.6

We have already discussed the demand factor that affects pricing. Demand is based on theconsumption patterns of the consumers.Sensitivity to price change will vary from consumer to consumer. In a particular situation, thebehavior of one individual may not be the same as that of the other, and may not follow the 'lawof demand'. In fact, the pricing decision ought to rest on a more incisive rationale than simpleelasticity. Some important characteristics of consumer behavior are detailed below: From the point of view of consumers, prices are quantitative and unambiguous, whereasproduct quality, brand image, customer service, promotion and similar factors are qualitative

and ambiguous.

Price constitutes a barrier to demand when it is too low just as much as when it is too high.Above a particular price, the product is regarded as too expensive and, below another price, asconstituting a risk of not giving adequate value or being perceived as a low quality product. If theprice is too low, consumers will tend to think that a product of inferior quality is being offered.

Price inevitably enters into the consumer's assessment of quality. There are two reasons forthis. First, it needs expert knowledge and appropriate equipment to test the quality or durability


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of some particular products (to say nothing of the time and cost involved in carrying out a propertest), and second, customers tend to look upon price itself as a reasonably reliable indicator ofquality. What is costly is thought to be of a high quality. A higher price is ordinarily taken to be asymbol of extra quality, or extra value or extra prestige.

Consumers may be persuaded to pay more for heavily advertised goods. Consumersperceive a firm's size, financial power and age as measures of quality. Well-known firms veryoften assert that by virtue of their reputation they are able to charge 5 to 10 per cent higher thanother firms.

Whether the price is considered a bargain or not would depend upon the average marketprice of the item, the gender of the potential consumer, and the value of the item to thepurchaser. Price reductions tend to be perceived absolutely rather than relatively. This meansthat the percentage reduction decreases for the item to be considered a bargain as the usualprice increases.

In a comprehensive survey of consumer consciousness, it was revealed that the basicpostulate of the demand theory, i.e. the consumer has appropriate knowledge of market prices,is not fundamentally wrong.


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Q.1Why should retailers choose to go global? What are the benefits?A.1

A.T. Kearneys Global Retail Development Index ranks 30 emerging countries on the urgencyand willingness of retail organisations to enter thecountry. The scores are based on 25variables across four primary categories: Economic and political risk

Market attractiveness

Market saturation

Time pressure

As per the seventh annual Global Retail Development Index (GRDI), India has beenreplaced by Vietnam as the most attractive emerging market destination for retailinvestment.

Other findings are as follows: Vietnam tops list of most attractive countries

Seven Middle Eastern and North African countries are among Top 20

India and China face speed bumps on the retail highway

Latin American retail, led by Brazil, grows stronger

Vietnam's jump from fourth place in the 2007 GRDI to first rank in 2008 has been driven bystrong GDP growth, changes to the country's regulatory structure favoring foreign investors, andincreasing consumer demand for modern retail concepts. India, Russia and China, the top threecountries as per 2007s GRDI, fell to second, third and fourth, respectively, in the 2008 GRDI.These countries still remain important retail investment destinations but due to high real estate

costs in large cities and growing competition, their attractiveness relative to prior years havedeclined and retailers are forced retailers to look for opportunities in tier II and III cities.Ever since it was published (2001), the GRDI has been helping the retailers in prioritize theirglobal development strategies by ranking the retail expansion attractiveness of emergingcountries based on a set of 25 variables based on earlier discussed categories. The GRDIfocuses on opportunities for mass merchant and food retailers, which are typically thebellwether for modern retailing concepts in a country.Vietnams retail market is valued at $20 billion which is very small in comparison toIndia or China, but lesser competition and 8 percent GDP growth, make it an attractive


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destination for retailers looking for expansion. Vietnamese consumers are among theyoungest in Asia, with 79 million below the age of 65, and increased their consumerspending by more than 75 percent between 2000 and 2007. The country is urbanizing at agood pace and more and more people are migrating to the two large cities of Ho Chi Minh andHanoi.The Vietnamese government is expected to remove controls foreign ownership of retailers in thecountry and establish a new program to develop wholesale and retail real estate by 2010. Theentire region, covering Thailand, Philippines and Malaysia, is going through an exciting phase ofdevelopment of modern retail.Middle Easts and North Africas StoryThe North African and Middle Eastern region is clearly the hottest region as far as retailexpansion is concerned as seven countries belonging to these regions are among the top 20 inthe 2008 GRDI. Some of the reasons that are responsible for making these regions, soughtafter are the strong Euro supporting investment in the region, consumer familiarity with modernretail concepts and petrodollar wealth are the primary factors making the region an attractiveretail destination. With more than $9 trillion flowing into the region by 2020, infrastructureinvestments will spur consumer and retail growth over the next decade, according to A.T.Kearney.

Among the Middle East countries, Saudi Arabia, with a high 9 percent growth rate and low retailconsolidation is among the most attractive global retail destinations. In Saudi Arabia, less than 7percent of the market is held by the top 5 retail playersMorocco, Algeria and Tunisia are three North Africa countries in the top 15 rankings. Thesecountries, on average, grew by more than 6 percent in 2008 and have benefited from tourism,trade with Europe and periods of political and economic stability.The Indian and Chinese StoryIndia still is, one of the most attractive destinations for retailers. The retail market opportunity is

larger than ever at $510 billion. There has been a rapid growth in spending patterns and

consumer maturity, more than what the global retailers had forecast. But recently several

challenges have popped up which can slow down the pace of growth for global retailers.

Foreign players entering India today face stifling regulations, a clouded political atmosphere,soaring real estate costs and a fiercely competitive domestic retailer group.

Even though China has gone down to number 4 in GRDI rankings, it still remains one of the,fastest-growing economies and hottest retail destination in the world. Despite the per capitaGDP being low in China, the consumer spending has more than doubled from the mid-1990sbecause of its large population and it is growing rapidly, especially in the large southern andeastern cities.Latin American StoryLatin America is fast emerging as a preferred retail destination as political and economic

stability return to the region. The region has seen increase in GDP and purchasing power and

as a result an increase in retail sales. There are five countries from the region that appear in the

GRDI top 20 rankings, up from only one country in 2005. The countries being talked about areChile, Brazil, Mexico, Peru and Colombia. As per A.T. Kearney's Apparel Retail Index, an

analysis of the 30 most attractive emerging market retail destinations for apparel retailers, Brazil

is the most preferred destination for apparel retailing.


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Q.2.How do you the future of e-tailing? Discuss the possible barriers in thegrowth of e-tailing.

Future of Electronic Retailing

The investment and improvements in the communication infrastructure will lead to the massoffering of electronic services in the home from several appliances. Established appliances,including the television and telephone will be equipped to provide simple access to electronicproducts and services. Furthermore, the increased power and portability of computers willfacilitate easy, carefree, and daily use of electronic shopping options.Consumers

As e-shopping becomes the most sensible alternative of procuring goods and services,consumers are likely to abandon their traditional views of shopping. No longer will a routine tripto a supermarket or mass retailer, suchas Wal-Mart, satisfy the e-consumers expectations.The effort of the trip will require an experience that appeals to ones social needs, entertainmentneeds, creativity, and curiosity.Brick and mortar retail

This new shopping experience segues into the changes required by suppliers. As stated above,retailers and manufactures will have to rethink their physical selling strategies. Shoppers willuse the Internet to quickly gather product information, including price, to save time incomparison shopping and unsuccessful outings due to lack of stock. Once a product andlocation decision has been made, the consumer will load up the kids into the SUV and venturein the brick-and-mortar world of shopping.

E-marketingIn time, however, the dominance of electronic purchasing is inevitable. Suppliers should bettheir lives on it, especially if the product is not particularly differentiated or unique. Marketersmust rethink their strategies and target audience. Mass marketing will not have the same appealto the individual consumer. Marketers must utilize the massive databases that will be built

through consumer clicks on the Internet, to personalize company advertising efforts.SuppliersManufactures and retailers must also evaluate their relationships. Manufactures have spent thepast twenty years dominated by their retail customers. The chain of products to consumers hasbeen drastically altered already. Manufactures are no longer separate from their consumers.They have new opportunity to establish a direct link with the end-consumer companies, such asDell Computers, have proven that direct selling to the consumer is more efficient and satisfyingto the customer. The only advantage of a retail electronic shopping site is the collection andconvenience of many products in one location or site.VisionThe future of electronic retail is indeed the future of retail. However, electronic shopping willtranscend the mere transaction and become a pillar of daily virtual activities. On-line purchasing

activities will be only a part of a new e-lifestyle.Issues in e-tailingSome of major issues in e-tailing have been discussed below.Customer Service, Distribution and Logistics related issues: it is evident that e-tailingfacilitates business transactions but care should be taken to ensure that the products aredelivered on time. Most of the e-tailers adopt fancy techniques to attract customers but fail toacknowledge one of the most important aspects of customer satisfaction, which is achievedthrough a flawless delivery. It is important to follow through and ensure a smooth delivery to the


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customer. E-tailers should provide prompt and smooth delivery to enhance customerexperience.Mode of Payment related issues: credit cards are fast becoming the preferred mode ofpayment for all online purchases. There is always a possibility of misuse of the card details asthe e-tailers cannot capture any signatures of the cardholder.Some alternative modes of payment include: Smart Cards: they are a more accepted form of payment across Europe, but have had alimited global impact. They are used for small purchases and do not require the consumers todisclose their personal information. American Express is working on a smart card that wouldcome with a chip inside, to allow the storage of transaction history and other important datarelated to transactions. To use Smart Cards, consumers need to install a "reader" on theirmachines (whether a PC or a mobile device).

VeriSign: it provides a secure online payment option that helps customers overcome the fearof misuse of information. It has purchased Cybercash that offered multiple payment solutions toits customers.

PayPal: this tool is owned by E-bay. This tool allows the e-tailing sites who do not acceptcredit cards to process online payments in an effective and efficient manner. It facilitates

person-to-person transactions. It has acquired all the VeriSigns payment services includingCybercash.

Personalization vs. Privacy related Issues: In e-tailing, there is a disagreement between thee-tailers need to be able to personalize the offerings in order to provide a better experience tothe consumers and consumers need for privacy, of their identity and financial information.There is an urgent need to address both the issues and strike a balance. This will surely affectthe growth of online retailing in a positive way. There is an urgency to acknowledge the rulesgoverning the use of personal information.

Q.3Discuss the stages in retail environment analysis

A.3

External analysisThe purpose of examining the stores external environment is to study the opportunities andthreats in the retailing environment. The external analysis studies factors that affect the macro-environment of the retailing industry and the task environment. Under external analysis retailerstudies these parameters:Economic environment of retailing Inflation

Employment

Disposal income

Business cycle

Energy availability and cost


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OthersPolitical/Legal environment of retailing Monopolies legislation

Environmental protection laws

Taxation policy

Employment laws Government policy

Legislation

Others

Socio-cultural environment of retailing Demographics

Distribution of income

Social mobility

Lifestyle changes

Consumerism

Levels of education

Others

Technological environment of retailing New discoveries and innovations

Speed of technology transfer

Rates of obsolescence

Internet

Information technology

Others

International environment of retailing Growth

Opportunities

Others

Internal analysisThe objective of studying the internal environment of its own store is to identify the storescapabilities and weakness. The store will try to increase its capabilities, and overcome theweakness that deters the business profit. While doing the internal analysis, the store examines

the quality and quantity of its available resources and critically analysis how effectively theseresources are used. These resources for the purpose of examining are normally grouped intohuman resource, financial resources, physical resources and intangible resources.

Q.4Discuss the channel strategies adopted by the retailers, in brief.


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A.4

Developing a viable marketing channel strategy involves some important decisions. These arediscussed in subsequent sub-sections.9.4.1 Channel designDesigning of the distribution channels deals with the decisions that are associated with forming

a new distribution channel or modifying an existing. In designing marketing channels,manufacturers have to decide what is ideal, what is feasible, and what is available. A new firmtypically starts as a local operation selling in a limited market. Since it has limited capital, itusually uses existing intermediates. The number of intermediaries in any local market is apt tobe limited.Designing a channel system calls for analyzing customer needs, establishing channelobjectives, and identifying and evaluating the major channel alternatives.

Analyzing customers desired service output levels Lot Size: Lot size refers to the total number of units of products that a customer acquiresduring a transaction period.

Waiting Time: Waiting time is the average time that customers of that channel wait forreceipt of the goods. Customer normally prefers fast delivery channels. For example, Withdrawthe money from ATM, Sending money to other stations. You need not step into the bank and fallinto the line to with draw for above-mentioned things.

Spatial Convenience: It represents the degree to which the marketing channel makes iteasy for customer to purchase the Product. For example, Booking the Product through E-Commerce

Selection Utility: The selection utility of a marketing channel refers to the likelihoodthat the needs of customers will be exactly satisfied. Marketing channels like supermarkets ensure that they not only carry awider assortment of products but also a greater variety or breadth of product assortment.

Service Backup: Service back represents the bundle of services offered by the marketer.

Services such as credit facility, free home delivery, Installation free, repairs and so on enhancethe image of the marketer which can facilitate to the marketer to acquaint a certain percentageof market shares in the market.9.4.2 Establishing the channel objectives

According to Bucklin, under competitive conditions, channel institutions should arrange theirfunctional tasks so as to minimize total channel cost with respect to desired levels of service outputs.Effective channel planning requires determining which market segment to serve and the bestchannels to use in each case. Channel objectives vary with product characteristics perishableproducts require more direct marketing because of the dangers associated with delays andrepeated handling. High unit value products such as generators and turbines are often soldthrough a company sales force rather than through intermediaries. A manufacturer, whether bigor small, has to conduct a SWOT analysis of the intermediaries in terms of their strengths andweaknesses in the internal environment and opportunities and threats in the externalenvironments.9.4.3 Terms and responsibilities of channel membersThe producer must determine the rights and responsibilities of the participating channelmembers make sure that each channel member is treated respectfully and given the opportunityto be profitable.Distributor territorial rights


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Distributors territorial rights are another element in the trade-relations mix distributors want toknow where and under what terms the producer will enfranchise other distributors. They wouldalso like to receive full credit for all sales taking places to their territory, whether or not they didthe selling.9.4.4 Motivating channel membersIntermediaries must be continuously motivated to do their best job. The terms that lead them to

join the channel provide some motivation, but these must be supplemented by training,supervision, and encouragement.9.4.5 Evaluating channel membersThe producer must periodically evaluate intermediaries performance against such standardsas sales-quota attainment, average inventory levels, customer delivery time, treatment ofdamaged and lost goods, and cooperation in promotional and training programs.9.4.6 Types of intermediariesCompany sales forceThe sales force the assets of the organization. Taking the more no of sales force, train them tofit for the needs of the organization and assign the each territory to them to contribute thebusiness.Manufacturers agency

Hire manufacturer agents in different regions or end-use industries to sell the new testequipment.Industrial distributorsFind the potential distributors in all regions and endorse the entire fished goods on to them.Give them the exclusive distribution, adequate margins, Product training to draw he attention ofthe customer and promotional support.9.4.7 Evaluating channel alternativesEach alternative needs to be evaluated against economic, control and adaptive criteria.Economic criteriaMost marketing managers believe that a company sales force will sell more. Company salesrepresentatives concentrate entirely on the companys products. The simple reason can becustomers willingness to deal with sales representatives dealing in several brands of the same

product rather than a specialized sales representative dealing in only a single brand.Finally, sales and cost are compared. There is one sales level at which selling costs are samefor the two channels. The fixed cost incurred in using a sales agency is lower than that ofdeveloping a companys sales force. However these costs go up as the sales increase owing tothe higher commissions of the sales agency.Control criteria

A sales agency is an independent business firm seeking to maximize its profits. The companydepends on external services, the less it can control its product and resources. There fore, whileselecting an intermediary, a company has to strike a balance between its desire to controlimportant functions of the firm, and the need to market coverage with the help of externalagencies.

Adaptive criteria

To develop a channel there should be some agreement on the commitment levels from both thesides before the actual start of the business. These commitments invariably lead to a decreasein the producers ability to respond to a changing market place. Channel members who operatein a highly turbulent atmosphere will try to structure the channel in a way that will allow them toadapt to the changes by altering their channel strategy.9.4.8 Modifying channel arrangementsModification becomes necessary when the original distribution channel is not working asplanned, consumer buying patterns change, the market expands, new competition arises,


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innovative distribution channels emerge, and the product moves into later stages in the productlife cycle.

A channel alternative is described by three elements: (1) The types of available businessintermediaries (2) The number of intermediaries needed (3) Terms and responsibilities of eachchannel participant.

Q.5Explain the concept of social marketing. Discuss the Ps under socialmarketingA.5

Social marketing in retailingSocial marketing was "born" as a discipline in the 1970s, when Philip Kotler and Gerald Zaltmanrealized that the same marketing principles that were being used to sell products to consumers

could be used to "sell" ideas, attitudes and behaviors.In social marketing also, the main focus is on the consumers. The main aim is to learn what

people want and need rather than trying to persuade them to buy whatever we produce.

Marketing talks to the consumer, not about the product. The planning process takes this

consumer focus into account by addressing the elements of the "marketing mix." This refers to

decisions about (1) the conception of a Product, (2) Price, (3) distribution (Place), and (4)

Promotion. These are often called the "Four Ps" of marketing. Social marketing also adds a few

more "P's."

ProductThe product offered under social marketing may not always be a tangible offering. A continuum

of products exists, ranging from tangible, physical products (e.g., condoms), to services (e.g.,medical exams), practices (e.g., breastfeeding, ORT or eating a heart-healthy diet) and finally,more intangible ideas (e.g., environmental protection). In order to have a viable product, peoplemust first perceive that they have a genuine problem, and that the product offering is a goodsolution for that problem. The role of research here is to discover the consumers' perceptions ofthe problem and the product, and to determine how important they feel it is to take actionagainst the problem.PriceTo obtain the social marketing product, customers must give up a number of things. This isknown as the "Price" of the product. This price may be monetary, and/ or efforts and time put inby the consumers. If the costs outweigh the benefits for an individual, the perceived value of theoffering will be low and it will be unlikely to be adopted. However, if the benefits are perceived

as greater than their costs, chances of trial and adoption of the product is much greater.There are many factors that must be considered while deciding the price of a physical product,such as contraceptives, there are many issues to consider. If the product is priced too low, orprovided free of charge, the consumer may perceive it as being low in quality. On the otherhand, if the price is too high, some will not be able to afford it. Social marketers must balancethese considerations, and often end up charging at least a nominal fee to increase perceptionsof quality and to confer a sense of "dignity" to the transaction. These perceptions of costs andbenefits can be determined through research, and used in positioning the product.Place


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The decisions regarding the channels through which the product will reach the consumers are

put under "Place" decisions. For a physical product, this refers to the distribution system

including the warehouse, trucks, sales force, retail outlets where it is sold, or places where it is

given out for free. For an intangible product, place is less clear-cut, but refers to decisions about

the channels through which consumers are reached with information or training.

This may include doctors' offices, shopping malls, mass media vehicles or in-homedemonstrations. Another element of place is deciding how to ensure accessibility of the offeringand quality of the service delivery. By determining the activities and habits of the targetaudience, as well as their experience and satisfaction with the existing delivery system,researchers can pinpoint the most ideal means of distribution for the offering.PromotionSocial marketing is only a part of promotions. Promotion consists of the integrated use ofadvertising, public relations, promotions, media advocacy, personal selling and entertainmentvehicles. The main aim of these activities is to attract people, and create and sustain demand.Public service announcements or paid ads are one way, but there are other methods such ascoupons, media events, editorials, "Tupperware"-style parties or in-store displays. Research is

crucial to determine the most effective and efficient vehicles to reach the target audience andincrease demand. The primary research findings themselves can also be used to gain publicityfor the program at media events and in news stories.

Additional social marketing "P's"Publics: in order to be successful, social marketing target different groups. "Publics" includeboth the external and internal groups involved in the program. Target audience, secondaryaudiences, policymakers, and gatekeepers are all a part of external audience. On the otherhand, internal public are those who are involved in some way with either approval orimplementation of the program.Partnership: The complex nature of the social and health issues makes it really difficult for oneagency to handle them effectively. A willing support of other organizations is required. You needto figure out which organizations have similar goals to yours not necessarily the same goals and identify ways you can work together.Policy: Social marketing programs can be good motivators in inducing change in individual

behavior, but that is difficult to sustain unless the environment they're in supports that change

for the long run. Often, policy change is needed, and media advocacy programs can be an

effective complement to a social marketing program.

Purse Strings: this is a major concern as these programs require good amount of

funds. Most organizations that develop social marketing programs operate through

funds provided by sources such as foundations, governmental grants or donations.

Q.6Why has segmentation gained importance in recent years? Discuss thecriteria for effective segmentation.


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A.6

Importance of Market Segmentation in RetailA market segment is a portion of a larger market in which the individuals, groups, or

organisations share one or more characteristics that cause them to have relatively similarproduct needs.Segmentation studies are used to uncover needs and wants of specific groups of consumers forwhom the marketer develops especially suitable products and services to satisfy their needs.Marketers also use these studies to guide them in redesigning, repositioning, or targeting newsegments for the existing product. For example, the heavy user adult market has been targetedfor Johnson baby shampoo. For sensitive skins, Dove has come out with a variant, Dove GentleExfoliating Bar (it has a pH range of 6.5 - 7.5, almost neutral, neither acidic nor alkaline).Segmentation studies help in identifying the most appropriate media for promotional messages.

Almost all media vehicles use segmentation studies to determine the characteristics of theiraudience and publish their findings to attract marketers seeking a similar audience.Segmentation is an important input to marketing planning because it can be used to formulate

company "product-market" objectives, by which the enterprise may: define its markets, positionranges of brands and product varieties, identify gaps which offer significant opportunities forexpansion or new product positioning and rationalize policies for existing brands, products andmixes.Market segmentation plays a dual role, namely as a marketing tool, and as a basic input tobusiness planning. There are three main reasons for the importance of market segmentation.These are: Market fragmentation: it is caused by demographic and lifestyle changes, new product andprocess developments and intense market competition/some markets, which once had ahomogeneous character, has now split into a variety of consumer groups, each with differenttastes and preferences.

The development of retailer power: with this, the relative advantage obtained from bulkbuying, the use of retailers' brands, and policy limitations on the merchandise stocked, allcombined to put the manufacturer or supplier at a disadvantage. At the same time concentrationhas occurred amongst retail companies, leaving a small number of very large companies as wellas a large number of smaller retailers.

The volume trap: this situation occurs when suppliers who are capable of volume productionand distribution to retail multiple chains dominate the markets for commodity type products (likeplant-baked bread). But to avoid this situation, marketers can use segmentation. For example,value-added or non-standard items are now frequently targeted on customer segments whichseek to avoid the purchase of standardized products, whether these are foodstuffs, clothes,computers or industrial machinery. Alternatively, production arrangements may be designed to

be flexible enough to supply target markets in a large number of relatively small and specializedniches, such as in the market for industrial or aviation control systems.8.2.1 Marketing complexMarketing departments use segmentation so they can target their products more accurately. Itaffects each of the 4Ps in their marketing mix. If the product is effectively segmented a companywill be able to promote the right product, at the right price and use the right distribution to reachthe place where the consumers are. Now look at the way the 4Ps are used in marketsegmentation.Product


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Companies produce a wide range of products or variations that is meant for different groups orsegments. For example, a car manufacturer will often have a range that includes a familymodel, an executive model and a sports model. Lifestyle segmentation will be used to developtheir product line and to target their products.PriceThere are obvoius linkages between price and quality, but not all customers can afford to buy

the most expensive goods. There is a large range of televisions on the market, for example,each with slightly different features.

Within this range of products, there will also be a range of prices to cater for varying disposableincomes.PromotionStudying how a product is advertised can reveal its target market. Recently Nokia, a leadingmobile phone company, used advertising campaigns that varied for men and women. The malephone was pictured in black and white, and all its features and business applications described.The female phone was in bright colors, and was pictured as a matching accessory to go with awoman's lipstick and handbag. You may not agree with this stereotyping, but it is a goodexample of gender segmentation.PlaceIt is very important for firm to know where its target market is. A producer of automobile parts

needs to identify areas where automobile companies are located. The firm would have to

consider how best to get its product to these areas.

Criteria for Effective SegmentationMarketing managers should ensure that the segmentation passes through six criteria basedacid tests. As a student of marketing, you need to understand what makes a good segmentationso that in the event of doing segmentation in your workplace, you can test your decisions onthese grounds. These six criteria include identity; accessibility, responsiveness, size,measurability and nature of demand.

1. Identity: The marketing manager must have some means of identifying members of the

segment i.e. some basis for classifying an individual as being or not being a member

of the segment. There must be clear differences between segments. Members of such

segments can be readily identified by common characteristics, and display similar

behavior.

2.Accessibility: It must be possible to reach the different segments in regard to both promotionand distribution. In other words, the organization must be able to focus its marketing efforts onthe chosen segment. Segments must be accessible in two senses. First, firms must be able tomake them aware of products or services. Second, they must get these products to them

through the distribution system at a reasonable cost.3. Responsiveness:A clearly defined segment must react to changes in any of the elements ofthe marketing mix. For example, if a particular segment is defined as being cost-conscious, itshould react negatively to price rises. If it does not, this is an indication that the segment needsto be redefined.4. Size: The segment must be reasonably large to be a profitable target. It depends upon thenumber of people in it and their purchasing power. For example, makers of luxury goods mayappeal to small but wealthy target markets whereas makers of cheap consumption goods maysell to the large number of persons who are relatively poor. The idea is that enough potential


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buyers must exist to cover the costs of production and marketing required in that segment. Thisis often called as substantiality.5. Nature of Demand: It refers to the different quantities demanded by various segments.Segmentation is required only if there are market differentiation in terms of demand. Themarketing manager should not only be able to find out the total demand but also the differencesin demand patterns in each of these segments.

6. Measurability: The purpose of segmentation is to measure the changing behavioral patternof consumers. For example, the segment of a market for a car is determined by a number ofconsiderations, such as economy, status, quality, safety, comforts etc.

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