SIKKIM MANIPAL UNIVERSITY, DE Student Name: Registration No: Subject Name: RM Course: MBA LC Code: 00918 Subject Code:

MK0012

Question1. Explain the Classification of retail formats in details with Indian examples. Ans: Classification of Retail Formats: The major classification of retail units are store based retailing, operational structure based, location based. Further to this, store based retiling is classified on the basis of ownership and on the basis of variety of merchandise mix. Store based retailing: In store based retailing, you can see and touch the products since it deals with tangible products. Accordingly, it is classified on the basis of ownership and on the basis of merchandise mix. Based on ownership: One of the first decisions that the retailer has to make as a business owner is how the company should be structured. This decision is likely to have long-term implications. There are four basic legal forms of ownership for retailers: 1. Sole proprietorship 2. Partnership 3. Joint venture 4. Limited Liability Company (LLC) Based on the variety of merchandise mix: On the basis of the merchandise offerings and its variety, retailers are classified into the following types: 1. Convenience stores 2. Supermarkets 3. Discount stores 4. Specialty stores 5. Department stores 6. Hypermarkets Based on operational structure: Operational structure refers to the arrangement or organisation of day-to-day activities as well as strategic retail activities like hiring employees according to customer walk-ins, co-coordinating with dealers and deciding on outlets, etc.

SIKKIM MANIPAL UNIVERSITY, DE 1. Independent retail unit 2. Retail chain 3. Franchising 4. Leased department or shop-in-shop 5. Co-operative outlets Based on retail location: Retail location is an important factor which plays a crucial role in accessibility and popularity. On the basis of retail location, retail units are classified as listed below. 1. Free-standing location 2. Business-associated location 3. Retailers in specialized markets Examples: 1. For example, convenience goods like paste, milk, bread can be purchased from a kirana shop (convenience stores) near your house. 2.For example, if you slip and get injured on company property, you can file a law suit which may bankrupt the business, but it cannot touch the personal assets of the LLC's members. 3. For example, if your friend is investing 3 lakhs in the grocery business along with your 5 lakh investment, the ownership form is called partnership.

Question 2. Define e-tailing. Explain the future of electronic retailing. Ans: Definition: Electronic retailing, also known as e-tailing, deals with selling products and services online via the Worldwide Web. Internet retailing or e -tailing, as it is usually referred to, covers retailing using a variety of different technologies or media. It may be broadly a combination of two elements. One is combining new technologies with elements of traditional stores and direct mail models and the second is using new technologies to replace elements of store or direct mail retail.

SIKKIM MANIPAL UNIVERSITY, DE Future of electronic retailing: Online retail is emerging and this year it is predicted to scale new heights. The future trends to watch are as follows: In-store pick up. In-store pick up refers to that you can order it online and pick up in store. We have seen that Wal-Mart implemented in-store pick up for orders which are placed online. Sears and Kmart are going a step further and bringing online purchases to your car. Mobile Applications. Different applications are on the rise and smart phones are the dominant cell phone these days. This trend is very new but some applications for price comparisons or send out coupons are already among the commonly used with good reviews. Uploading Videos. Retailers allow customers upload their video clips in new clothes and using new products. This is definitely going to pick up. Social networking. Social networking sites, like Facebook and Twitter give enough opportunity to the consumers who can like or follow a favourite retailer and get discounts or tips on deals. For example JC Penney who sells goods through Facebook and Victorias Secret is liked by more than 12 million consumers on Facebook, making it the most popular retailer on the site. International retailing. International or cross border e commerce provides an option for retailers to sell their products to consumers outside their own country. Theres been an accelerating trend of small niche online retailers are now doing 10-20% of their sales. Look at online shops like Zara and Top Shop who are building their online business to reach shoppers in the US, even as the store base is growing slowly. E 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 trip to a supermarket or mass retailer, such as Wal-Mart, satisfy the e-consumers expectations. The effort of the trip will require an experience that appeals to ones social needs, entertainment needs, creativity, and curiosity.

Question3. Discuss the retail pricing strategies. Ans: Explanation: Price is a highly sensitive and visible part of retail marketing mix and has a bearing on the retailers overall profitability. Furth er, pricing itself is an essential part of marketing mix and has its own place in the strategic decision-making process. Retails Pricing Strategies:

SIKKIM MANIPAL UNIVERSITY, DE As with the pricing objectives, numerous pricing strategies are available from which to choose. Certain strategies work well with certain objectives. So, retailers have to make a careful selection of a pricing objective. Following are the various pricing strategies followed by the retailers to meet their short- and long-term objectives: Every Day Low Pricing (EDLP): This strategy entails continuity of retail prices below the MRP mentioned on the goods at a level somewhere between the regular price at which the goods are sold and the deep discount price offered when a sale is held. These low prices are stable and not subject to a one-time sale, for example Wal-Mart stores. Loss leader pricing: Retailers sometimes price particular fast-moving products at a lower price to attract customers to the store. Once the customers are in the store, they can be persuaded to buy more profitable products. Those items are priced higher whose prices cannot be easily compared by the customers. Skimming pricing: The pricing is similar to premium pricing, calling for a high price to be placed on the product you are selling when the product is new. However, with this strategy the price eventually will be lowered as competitors enter the market. This strategy is mostly used on products that are new and have few, if any, direct competitors when first entering the market. It allows the firm to recover its sunk costs quickly before competition steps in and lowers the market price. This method is successful when a firm is able to establish superior features or better quality for which consumers are willing to pay a higher price, e.g. most of the electronics products especially Nokia mobile phones, Apple products Penetration pricing: This strategy deliberately chooses a low price for a product in order to gain a higher market share or to attract new customers who are priceconscious or to gain entry into a new market. The objective for employing penetration pricing is to attract and grow market share. Once the desired levels for these objectives are reached, product prices are typically increased. Penetration prices will not garner the profit that retailers may want; therefore, this pricing strategy must be used sparingly. The expectation is that the initial low price will secure market acceptance by breaking down existing brand loyalties. It is more often used to reduce the attractiveness of a market to prospective new entrants. Price lining: It refers to the offering of merchandise at a number of specific but predetermined prices. Once set, the prices may be held constant over a period of time and changes in market conditions are adapted to by changing the quality of the merchandise. A limited number of predetermined price points are set at which merchandise may be offered for sale. Example: My Dollar Store, which is a retailing concept, where everything sells for a single price. It caters to consumers who want the

SIKKIM MANIPAL UNIVERSITY, DE most for their money. In India, this concept has been adapted to offer prices fixed at specific levels like $49, $99, $149, etc. Psychological pricing: It is a method of setting prices intended to have special appeal to consumers. There are different types of psychological pricing & it is typically introduced by Bata in India. In psychological pricing, prices are set at a certain level where the consumer perceives the price to be fair. The most common method is oddpricing using figures that end in 5, 7 or 9. It is believed that consumers tend to round down a price of $5.95 to 5, rather than 6. Ultimately, you must take into consideration the consumer's perception of your price, figuring things like: Positioning: If you want to be the "low-cost leader", you must be priced lower than your competition. If you want to signal high quality, you should probably be priced higher than most of your competition. Popular price points: There are certain prices at which the customers become more willing to buy a specific product, referred to as "price points". For example "under Rs. 100" is a popular price point. While a drop in your price to a popular price point might mean a lower margin, but this is offset by more than enough increase in sales. Fair pricing: There are times when the value delivered by the products doesnt matter, even if you don't have any direct competition. There is simply a limit to what consumers perceive as "fair". If the customers perceive that a shirt should cost Rs. 500, then they would not even care what value the shirt is offering. A sufficient amount of market testing can help the retailers estimate the fair price.

Question4. Describe the Retails Buying Process in brief. Ans: Definition of Retailing: Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers are part of an integrated system called the supply chain. A retailer purchases goods or products in large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets, door-to-door or by delivery. Retailing includes subordinated services, such as delivery. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as for the public. Shops may be on residential streets, streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing.
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SIKKIM MANIPAL UNIVERSITY, DE Retail Buying Process: These basic psychological processes play an important role in understanding how consumers actually make their buying decisions. Marketers must understand every facet of consumer behaviour. Marketing scholars have developed a stage model of the buying-decision process. Problem recognition A) The buying process starts when the buyer recognises a problem or need. B) The need can be triggered by internal or external stimuli. C) Marketers need to identify the circumstances that trigger a particular need so that they can develop marketing strategies that trigger consumer interest. Information search A prospective consumer will be inclined to search for more information. Consumer information sources fall into four groups: Personal sources: Family, neighbours, and acquaintances. Commercial sources: Advertising, sales persons, dealers, packaging, displays. Public sources: Mass media, consumer-rating organisation. Experimental sources: Experimenting with samples, handling, examining using the product. Evaluation process How does the consumer process competitive brand information and make a final value judgment? Here, there is no single evaluation process used by all consumers or by one consumer in all buying situations. An important determinant of the extent of evaluation is whether the customer feels involved in the product. Alternatives No single process is used by all consumers or by one consumer in all buying situations. The most current models see the process as cognitively-oriented. Consumer outlet selection Retail evolution and consumer choice: Consumers frequently have numerous choices for many products regarding where they are going to actually obtain the product. Although we are used to thinking of buying automobiles only from dealerships, it is possible to buy them these days through brokers or fleet sales organisations that may both (1) offer a lower price and/or
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SIKKIM MANIPAL UNIVERSITY, DE (2) provide the help of a neutral third party which does not have a vested interest in the sales of one make over the other. At home shopping and electronic commerce: During the last several decades, the incidence of at home shopping has increased. A more recent development is internet based marketing. Certain products specifically aimed at heavy internet users (e.g., records, software) and products/services that require a high level of customisation (e.g., airline tickets, electronic accessories) may find good opportunities. Store positioning: Positioning of retail stores is essential. In general, stores which excel on a significant dimension seem to perform better. For example, Big Bazar excels through its low pricing and more discounts, while Shoppers Stop excels through its customer service. Purchase decision In the evaluation stage, the consumer forms preferences among the brands in the choice set. The consumer may also form an intention to buy the most preferred brand. In executing a purchase intention, the consumer may have to make five sub-decisions which may follow the following pattern: A. Brand (eg: Brand A). B. Dealer (eg: Dealer 2). C. Quantity (eg: One). D. Timing (eg: Weekend). E. Payment method (eg: Credit card). Post-purchase evaluation After the purchase, the consumer might experience dissonance about their purchase and be alert to information that supports their decision. Marketing communications should supply beliefs and evaluations that reinforce the consumers choice and help him or her to feel good about the brand. Question5. Write short notes: A. Types of retail store Location: Ans: Retail store locations are classified into seven basic types: free standing sites city or town locations inner city main street shopping centres strip shopping centres
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SIKKIM MANIPAL UNIVERSITY, DE shopping malls other location opportunities. Examples: 1. Freestanding sites: A freestanding site is a retail location that is not connected to other retailers. However they might be near other freestanding retailers. Retailers with large space requirements, such as warehouse clubs and hypermarkets, are often freestanding. Example: Big Bazar, More, Mega Mart, etc.

2. City or town locations: Some retailers find urban locations attractive, particularly in cities that are redeveloping their downtowns and surrounding urban areas. In general, urban areas have low occupancy costs, and locations in the central business districts often have high pedestrian traffic. Central Business Districts (CBD) is the traditional business area in a city or town. 3. Inner-city locations: The inner city is typically a high-density urban area consisting of apartment buildings populated primarily by ethnic groups. Some examples are locations such as Nariman point in Mumbai which is the sixth expensive location globally and shopping destinations in Bangalore such as commercial street, MG road and Brigade road 4. Main street locations: Main street is the CBD located in the traditional shopping areas of smaller towns, or a secondary business district in a suburb or within a larger city. Their occupancy costs are lower than that of the primary CBD. They do not draw as many people and offer lesser selection through fewer stores. Main streets typically don't offer the entertainment and recreational activities available in the more successful primary CBDs. 5.Shopping centres: From the 1950s through the 1980s, suburban shopping centres grew as populations shifted to the suburbs. A shopping centre is a group of retail and other commercial establishments that is planned, developed, owned, and managed as a single property. Most shopping centres have at least one or two major retailers, referred to as anchors as they act as crowd pullers into the shopping centres leading to increase in the number of customer walk-ins. B. Classification of retails consumers based on shopping:

Ans: A marketplace is a location where goods and services are exchanged. The traditional market square is a city square where traders set up stalls and buyers browse
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SIKKIM MANIPAL UNIVERSITY, DE the stores. This kind of market is very old, and countless such markets are still in operation around the whole world. In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over by large retail chains. Retail is usually classified by type of products as follows: Food products typically require cold storage facilities. Hard goods or durable goods ("hardline retailers") appliances, electronics, furniture, sporting goods, etc. Goods that do not quickly wear out and provide utility over time. Soft goods or consumables clothing, apparel, and other fabrics. Goods that are consumed after one use or have a limited period (typically under three years) in which you may use them. Some stores take a no frills approach, while others are "mid-range" or "high end", depending on what income level they target.

Question 6. Explain the Retails Merchandising Management in brief. Ans: Law of Return to scale: Retail merchandising refers to the process used to conduct retail sales. As part of the process, the merchandiser pays close attention to the different types of products offered for sale, how to present those products to consumers in a best way, and determine a reasonable retail price for each unit sold. Earlier, the retailers were engaged in the task of retail merchandising in a physical location, but nowadays the Internet has made possible to apply these same basic principles in a virtual setting. Step 1: Define Merchandise Policy For a retail strategy to be successful, it has to be better than the competition in one of the following three key areas: Price, Service and Product. Simultaneously, you must also remain competitive in the other two. Every retail organisation must have a vision so as to provide its buyers with some insight into the following business components: Demographics of current and potential customers. Image of the store. Quality levels of merchandise. Price point policy. Marketing approach.
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SIKKIM MANIPAL UNIVERSITY, DE Customer service levels. Desired profit margins. Step 2: Gather Historical Information In building a six-month plan, the objective is to prepare a total monthly purchasing schedule for the company. Then, repeat this process for the next level of detail, i.e. the departmental level. Depending on the sophistication of company information systems, each department can then be broken down into smaller segment, i.e. "classes", for which a similar sales plan is prepared. Step 3: Perform Qualitative Analysis Most professionals will agree that the buying process is 90% analytical and 10% intuitive. In other words, retailers must do the homework to achieve any level of success. As the most critical aspect of a successful operation, buying/ merchandise management is what retail is all about. Qualitative Analysis refers to identifying the proper components in a mixture. In this case, the mixture is the merchandise plan and the components that affect this plan are as follows: (a) Customer Profile Analysis (b) Department Analysis (c) Key department trends (d) Major vendor analysis (e) Advertising review (f) Visual presentation analysis Step 4: merchandise planning The merchandise planning process helps the retail buyer in forecasting, with some degree of accuracy, what to purchase and when to get it delivered. This will greatly help the company to attain its sales and gross margin goals. Buyers must heavily rely on past sales data, along with personal experience and their own intuition about the trends in the market. Purchasing on time to ensure availability of merchandise during season refers to the methods, practices and operations carried out to promote and sustain certain categories of commercial activity.

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SIKKIM MANIPAL UNIVERSITY, DE Step 5: Identifying the vendors or sources of supply Retailers often handle thousands of brands, and the bigger the retailer, the broader his vendor base. Retailers have to constantly move inventory to keep pace with the everchanging marketplace that thrives on change. Top retailers know that to stay on top, they must get the right merchandise at the right price point, and get it on the shelf as quickly as possible. However, there are a number of hurdles that retailers must overcome before an item gets sold. To get merchandise efficiently, there is a complex dependency between retailers and their vendors. An inordinate amount of documentation and approval processes is accompanied with each vendor and his merchandise. Step 6: Merchandise analysis and control Merchandise management involves decisions related to inventory, which, in turn, is the largest investment for any retailer. In this context, the best merchandise performance measure is Gross Margin Return on Inventory (GMROI). GMROI comprises a single measure for both inventory productivity and profit. The formula is as follows: (Gross margin/Net sales (Net sales /Average Inventory at cost = (Gross margin / Average inventory at cost Examples: Description: Retail Store Manager Retail Store Manager Job Purpose: Serves customers by providing merchandise; supervising staff. Retail Store Manager Job Duties: Completes store operational requirements by scheduling and assigning employees; following up on work results.

Maintains store staff by recruiting, selecting, orienting, and training employees. Maintains store staff job results by coaching, counseling, and disciplining employees; planning, monitoring, and appraising job results. Achieves financial objectives by preparing an annual budget; expenditures; analyzing variances; initiating corrective actions. scheduling

Identifies current and future customer requirements by establishing rapport with potential and actual customers and other persons in a position to understand service requirements. Ensures availability of merchandise and services by approving contracts; maintaining inventories. Formulates pricing policies by reviewing merchandising activities; determining additional needed sales promotion; authorizing clearance sales; studying trends.
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SIKKIM MANIPAL UNIVERSITY, DE

Markets merchandise by studying advertising, sales promotion, and display plans; analyzing operating and financial statements for profitability ratios. Secures merchandise by implementing security systems and measures. Protects employees and customers by providing a safe and clean store environment. Maintains the stability and reputation of the store by complying with legal requirements. Determines marketing strategy changes by reviewing operating and financial statements and departmental sales records. Maintains professional and technical knowledge by attending educational workshops; reviewing professional publications; establishing personal networks; participating in professional societies. Maintains operations by initiating, coordinating, and enforcing program, operational, and personnel policies and procedures. Contributes to team effort by accomplishing related results as needed.

Skills/Qualifications: Customer Focus, Tracking Budget Expenses, Pricing, Vendor Relationships, Market Knowledge, Staffing, Results Driven, Strategic Planning, Management Proficiency, Client Relationships, Verbal Communication

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