Master of Business Administration MBA Semester 3 Subject: Marketing Management Subject code: MK0012 Retail Marketing Assignment Set-

- 1 Q.1 a. What is retailing? What is its importance? Ans.: Retailing is not only an important aspect of the economic structure but very much a part of our lies. Although trading of goods has been in existence since human civilization days, it is only in the recent past that the buying and selling of goods have become more of a formal and brand dominated activity. In fact, today retailing is evolving into a global, high-tech business. Nevertheless, the traditional forms of independently owned small businesses co-exist along with the organized retailers like department stores, specialty stores, shopping malls etc. Organized retailing has emerged in a big way since 2000 onwards and with it; we are witnessing the emergence of new forms of retailing. The retailers market can be segmented ion the basis of various retail formats and led to the development of a very complex retail environment. Importance of Retailing The word RETAIL is derived from French word retailer, meaning to cut a piece off or to break bulk. Retail trade may be defined as, A trade, which consist of selling to ultimate consumers of a variety of products in small lots. It is exactly and literally so and is meaningful that retail trade is that cuts off smaller portions from large lump of goods. From the bulk of products procured by the wholesaler, small lots are cut and distributed through retailers. Retailers are the last link in the channel of distribution between the manufacture and the ultimate consumer. The retail shop is one of the oldest and most widely used business establishments in any country. Retailing is defined as a conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use. It includes all activities directly and indirectly related to the sale of goods or services to the ultimate consumer. Irrespective of who sells, the distinction of retailing is normally made on the basis of to whom the products are sold. Retailing is subject to constant and dramatic changes. Many forces like Social, Economical, Technological, Government policies etc. influence it. Following points highlights the importance of retailing. Key member in the channel of distribution: Retailer as the link in the chain of distribution performs good many functions of marketing. The channel of distribution goes incomplete without his contributions to make the final consumers buy the products. He acts as a catalyst agent to both the manufacturers as well as to the customers. Buying & Assembling: Retailer assembles products from different manufactures and wholesalers and stock wide variety of products to meet the varied and small requirements of large number of customers. This assembling is possible through the process of buying variety of products from different sellers. Warehousing: Retailer is a safety valve for releasing the goods in quantities of different varieties and price ranges according to the consumer needs. Warehousing makes possible holding the stocks to match between the consumer demand and supply conditions. Selling: The final aim of a retailer is to sell the products so bought and held by him. Retailer is rightly called as the buying agent of consumers. He is the means

to dispose the goods to the consumers. Successful retailing needs good deal of salesmanship tactics. Risk-shouldering: Risk shouldering is the basic responsibility of a retailer arising out of physical deteriorations and changes in prices. These are unavoidable as he holds sufficient and variety of inventories from the time they are bought till they sell. Grading & Packing: Retailers undertake second round grading and packing activities left by the manufactures and wholesalers. As he sells in loose packs and very odd lots, packing assumes a particular importance. Financing: In successful marketing, the contribution of retailers is really worth emphasizing with consumer financing. His financing consists of credit granted on liberal terms to the consumers, investment in stocks, salaries & wages and other trade expenses. Advertising: Retailers are the best agents to advertise the products and ideas. In collaboration with the wholesaler and producer, retailers do undertake shop display, distribution of sales literature, introduction of new product etc., Supply of Market Information: As being in close and constant touch with consumers, he clearly keenly observes, studies the consumer behaviour, changes in tastes and fashions and therefore demands. This collected information is passed on to the wholesalers & manufacturers for their perusal. Offer Opportunity: Retailers give the manufacturers and producers the opportunity of presenting their products to the consumers by providing the necessary vent and access. Big Relief: Manufacturers and the wholesalers are really relieved of the head braking odd jub of retailing to the individuals in pretty small quantities.

 Provision of Information: Retailers do provide the wholesalers and manufactures the information about the latest consumer movements and consumer demand. Produce the risks of loss: Being the spokesmen of consumers, they warn the producers as to what goods to produce and in what quantity at what price. This makes the wholesalers to stock only those goods needed by the consumers. Largest Choice: Retailers assemble products of different varieties from good many producers enabling the consumers to have largest choice as the cost, quality, and varieties and so on. Relief from storage: In fact, retailers hold goods on behalf of the consumers. Being at their convenient place, consumers can have ready access suitable stock at suitable lot. By this he helps them in reducing their capital lock-up. Extra service: Many retailers grant extra concessions and facilities such as door delivery, telephone orders, credit sales, return or replacement of goods not found suitable by consumers etc., Supply of Information: Retailer is an expert adviser to consumer as help them in deciding about the product choice. He introduces new products that are superior to earlier models thus improving customer satisfaction. Retailing as one of the important sectors for the growth of economy plays a key role in building a nation to self-sufficiency state. Following key elements explains the importance of retailing to the nation. Rapid economic growth: Indias GDP growth of 9.4 per cent in 2006-07 is the highest posted for over 18 years, reflecting the booming economy of the country. Growing in tandem with the economy is the Indian retail sector. Retail is one of Indias largest industries, contributing to about 10 per cent of the GDP and providing employment to 8 per cent of the nations workforce. The sector is on a high growth trajectory and is expected to grow by more than 27 per cent over the next 5 to 6 years. Generates employment opportunities: It offers maximum employment opportunities for people living in a nation. In India, the youth population is more interested pursuing their career in this field. Survey shows in India that 60% of population of age group (15-60) are engaged in this activity. Potential untapped Markets: Growing trend of consumerism in has led to the emergence of cities and small towns add to the market attractiveness. Pantaloon Retail India Limited, one of Indias retail giants captures a mere 0.3 per cent of total market; compared to Tesco Plc, which captures 14.3per cent of Englands market and Wal-Mart which captures 20 per cent of USAs market; giving an insight into the large untapped market potential. Cash & Carry wholesale trading: Big retail outlets also perform the functions of a wholesaler by selling products both in bulk and in small quantities. This leads to larger sales transactions which results in large money flow into the economy. Since these giant retailers have wider assortment and variety, they can cater to the needs of every customer who visit their shop and also influence them on impulsive buying.

Indian Retail Sector: Indian retail business promises to be one of the core sectors of the Indian economy, with organized retail sector estimated to grow by 400 per cent of its current size by 2007-08. India is expected to be among the top 5 retail markets in the world in 10 years. The growth and potential of the sector is being widely acknowledged both in the domestic as well as international forums. India topped AT Kearneys Global Retail Development Index 2007 for the third consecutive year, retaining its position in the global market as the most preferred retail destination amongst emerging markets. For the fifth time, India also topped the Global Consumer Confidence Index June 2007 conducted twice a year by The Nielsen Company. Indians were judged the worlds most optimistic consumers, with large sections of the population considering now a good time to spend. Total estimated investment opportunity of US$ 5-6 billion in next five yrs. b. Identify some of the general characteristics of a retail consumer. Ans.: Consumer buying behaviour refers to the buying behaviour of the ultimate consumer. Consumer behaviour is the study of how consumers make decisions to use their respective resources such as time, money and effort for buying, suing and disposing goods and services. The behaviour of humans is very complex in nature. Marketers understanding of he drivers of consumers buying behaviour will help them to serve their customers effectively and efficiently and attract new customers. In the retailing context, marketers are required to understand customers shopping behavior which includes decision variables regarding among other things, brand selection, shopping timing, and choice of retail format and store. Consumers shopping behaviour is understood by analyzing the factors that affect behaviour. These factors could be demographic, psychological, environmental or related to the lifestyle of the customer. It is equally important for the retailer to identify the various stages in the consumer decision-making process and the major influences at each stage. This would make possible an effective retail marketing strategy. In the retail context, marketers would be specifically be more interested to know about the consumers shopping behaviour, which involves an understanding of decision variables regarding when, where and what to shop i.e. shopping timing, choice of retail format and store etc. such decision variables are the factors to be considered by the retailer while taking decisions regarding the understanding consumer behaviour. For instance, in case of pickle, marketers will be interested in finding out the type of pickle consumers intend to buy (single vegetable/fruit or mixed, spicy or not, oily or dry, veg. or non-veg), the brand preference (national, private, generic), the reason for using (to add taste, for food preparation, to eat along with snacks), the place of purchase (Super bazaar, convenience store, vendors, home made), and frequency of purchase (weekly, fortnightly, monthly). On the basis of various alternatives to consumer needs, marketers evolve the best possible marketing mix to attract the target market. Therefore, shoppers response to retail marketing mix has a great impact on the forms success in the long run. Individual consumers consider each element of retail marketing mix in relation to their culture, attitude, previous learning and personal perception.

Many a times consumers patronize more than one retail outlet for the same product. The consumer is influenced by both the intrinsic and extrinsic factors. With the understanding of these elements retailers would be well placed to devise their retail marketing mix in accordance with their respective target segments. Q.2 a. Explain the types of store locations and the factors influencing the store location. Ans.: Site Selection, approaches to site selection Site selection in retailing refers to the type of building the retailer needs and its affordability. Retailers should decide whether they should own the property, lease the premises on rent or have a joint venture with the landlord. Site selection depends on the nature of the building, faade requirements, size requirements and costs. The site selection format is furnished below as a specimen. Address of the company Details of adjacent occupants-North, east, west and south Can the site be used commercially? Name & address of the title holder Is the site free of encumbrance? Are all relevant taxes paid and currently up to date? Is the site free of any civil suit? When was the building constructed? Total number of floors Other prominent facilities nearby Details of facilities space / parking space Revenue details / rate per sq.ft etc Site Selection analysis / Approaches to site selection: With the advent of new retail formats, such as planned shopping centres and malls, emergence of free-standing department stores, hypermarkets etc., and further development of traditional business districts and other unplanned shopping locations, a retailer is presented with a wider choice of locations. Consideration of all the options keeping in view the product mix, customer profile and overall business model presents an enormous challenge. A retailer has to consider the following factors while selecting a site: 1. Kind of products sold: For stores dealing in convenience goods, the quantity of traffic is most important. The corner of an intersection, which offers two distinct traffic streams and a large window display area, is usually a better site than the middle of a block. Convenience goods are often purchased on impulse from easily accessible stores. For stores dealing in shopping

goods, the quality of the traffic is more important. Stores carrying specialty goods that are complementary to certain other kinds of shopping goods may desire to locate close to the shopping goods stores. In general, the specialty goods retailer should locate in the type of neighborhood where the adjacent stores and other establishments are compatible with retailers operations. 2. Cost factor: Location decision on cost considerations alone is risky. Space cost is a combination of rent or mortgage payment, utilities, leasehold improvements, general decoration, security, insurance and all related costs of having a place to conduct business operations. Traditionally, the retail community placed great importance on owning the place since this was considered prestigious in the business community. With the emergence of new forms of retail formats such as franchising, malls and department stores, the dependence on rent or lease is increasing. 3. Competitors location: The type and number of competitors is another important factor. The presence of major retail centers, industrial parks, franchisee chains, and department stores should be noted. Intense competition in the area shows that new businesses will have to divide the market with existing businesses. An excellent location may be next or close to parallel or complementary businesses that will help to attract customers. 4. Ease of traffic flow and accessibility: These two are the more important factors to some businesses than others. Retailers selling convenience goods must attract business from the existing flow of traffic. Studying the flow of traffic, noting one-way streets, street widths and parking lots, is hence important. The flowing factors like parking availability, distance from residential areas, side of the street, part of the block etc is to be considered. 5. Parking and major thoroughfares: Parking is another site characteristic that is especially a cause for concern in densely populated areas. When evaluating the parking that exists at a retail site, there are two considerations i.e. parking capacity and parking configuration. The ideal parking ratio for a food store is about 3:1 or 3 sq.ft of the parking space for every square ft of store. 6. Market trends: Evaluate the community from a broad, futuristic perspective. Local newspapers are a good source of information. Discussions with business owners and officials in the area can also help. 7. Visibility: Visibility has a varied impact on a stores sales potential. It is important when a shopper is trying to find the store for the first or second time. Once the shopper has become a regular customer, visibility no longer matters. It follows that of a store cannot readily be seen, new residents of an area probably will not choose it. Factors influencing retailers choice of location: Decisions regarding the location of a store are very critical not only to the future performance of that outlet but also the retailers long-term prosperity. Following questions need to be answered first before selecting the site: 11. Is there a need to be in the middle of traffic flow of customers as they pass between the stores with the greatest customer pull?

22. Who will be the stores neighbors? 33. What will be their effect on stores sales? 44. How much space is needed? Based on experience of the retailer, the amount of space required can be determined to run the expected level of operations. The amount of space will determine rent and other related expenses. Many retailers need to rethink their space requirements when locating in a shopping center. Rents are generally much higher and therefore, space must be used efficiently. This is compounded by the consideration of certain specific issues such as: 11.Consumers choice or preference of a location: The consumer behaviour is most often guided by their consideration of the ideal location to shop. 22.To gain competitive advantage: the decision on where to locate the retail outlet will be of strategic importance because if they develop the best location, it will earn them a long-term competitive advantage. 33.Understanding of structural and social changes or trends: any decision on location will definitely have to take into consideration the exiting trends and likely social changes. For instance, the importance of out-of-town shopping centers, the rise in multiple retailers and so on is an eye opener for retailers to select an ideal location to match the consumer shopping trends. 44.High investment involving long-term financial implications: the retailer has to consider the investment cost, lead times and long-term financial implications involved in the development of a retail location and site. 55.Select the final property asset carefully: the retailing firm has to exercise care while selecting the final property assets for its value can be very high almost as high s the firms annual turnover. 6.Government formalities: there could be many government policy decisions having a binding on the development of new retail outlets. This implies there could be restrictions on selection of new location sites for retailing purposes. The retailing firm has to consider the various dimensions of location decision making right from planning the location site through to the financial analysis and long term progress of the retailer. Location decisions and analysis involve examination of different disciplines of strategic marketing, the geography of retailing, town planning, operations research, consumer behaviour and economics.

b. What do you mean by electronic retailers? Ans.: Electronic retailers: Many organizations that offer services to consumers such as banks, hospitals, health spas, doctors, legal clinics, entertainment firms and universities traditionally havent considered themselves as retailers. Due to increased competition, these organizations are adopting retailing principles to attract customers and satisfy their needs. All retailers provide goods and services for their customers. Some firms, such as dry cleaners primarily provide services. Optical centers and restaurants lie somewhere in

the middle of the merchandise/services continuum. Supermarket and warehouse clubs primarily provide goods.

Q.3 How will you advice a retailer regarding different aspects considered in internal and external store layout design? Do you think a good store layout and design will help in gaining more customers? Ans.: Store Layout Store layout is the term used to refer the interiors and the allocation or the plan in which the products are displayed in the store .It is quite imperative for the retailers to understand the customer and prepare a customer friendly layout. A customer friendly layout gives an impetus to the shopper to spend more time in the store hence increasing the chances of shoppers buying more merchandise. In the case of India many of the independent retailers do not have or have limited spaces for customer movement. Especially in smaller stores, one would find cash counter located at the store entrance. This treatment is common with so called 'Kinara Stores'. But on the other hand, many organized retailers provide adequate space within the store for shoppers and create layouts that facilitate a definite pattern of customer traffic .In other words the layout creates 'Aisles' so that the shopper can move on a predefined path inside the store. Layout planning caters to decisions about nature of traffic flow, kinds of product, space available and maintenance of the space on a daily basis. Store layout is one of the many facets of Retail Atmospherics and hence it is significant. Store layout plays a very important part in the cost analysis by the retail firm and also the general brand communication of the store. Store layouts generally show the size and location of each department, any permanent structures, fixture locations and customer traffic patterns. Each floor plan and store layout will depend on the type of products sold, the building location and how much the business can afford to put into the overall store design. Below are a few basic store layouts. 1. Straight Floor plan:

The straight floor plan is an excellent store layout for most any type of retail store. It makes use of the walls and fixtures to create small spaces within the retail store. The straight floor plan is one of the most economical store designs. 2. Diagonal Floor plan:

The diagonal floor plan is a good store layout for self-service types of retail stores. It offers excellent visibility for cashiers and customers. The diagonal floor plan invites movement and traffic flow to the retail store. 3.Angular Floor plan:

The angular floor plan is best used for high-end specialty stores. The curves and angles of fixtures and walls make for it a more expensive store design. However, the soft angles create better traffic flow throughout the retail store. 4. Geometric Floor plan:

The geometric floor plan is a suitable store design for clothing and apparel shops. It uses racks and fixtures to create an interesting and out-of-the-ordinary type of store design without a high cost. 5. Mixed Floor plan:

The mixed floor plan incorporates the straight, diagonal and angular floor plans to create the most functional store design. The layout moves traffic towards the walls and back of the store. Store Design The store can be said to be a product in its won right. The type of planned store layout can influence the customers product decisions. Typically the store should be designed to facilitate the free movement of customers, create a planned store experience and also help to make an optimum presentation of merchandise. The retailers goal while

designing the store should be on a proactive basis- reflecting the brand position of the store and also ensuring the most effective usage of the space. The main objectives of a good store design should be: 1. It must complement the customers needs i.e. be consistent with the image and strategy. 2. It should act positively on consumer behaviour. 3. It must consider the costs associated versus the value received in terms of higher sales and profits. 4. It should be flexible to adopt any changes in the merchandise with its stores image. Thus, a proactive planning and atmospherics used in the store layout can act upon the emotional state of the customers and are more likely to influence them to enter and purchase merchandise at the stores. Proactive planning is based upon the manipulation of the in-store experience by acting upon and responding to the data on store layout in order to influence the consumers shopping behaviour and experience. The consumers are more likely to enter stores which are made attractive by use of space, color, walls, pillars, floor coverings, lightings, music etc. this planned combination of physical messages are known as Atmospherics. Atmospherics is referred to as a stores physical characteristics that are used to develop the retail unit image and draw customers. It describes the physical elements inn a stores design that appeals to consumers and encourages them to buy. Atmospherics are created by the combination of a whole series of cues and stimulus i.e. the type of merchandise offered and the way it is displayed can produce the desired store ambience and emotional response from the target customers. Retailers have realized that background music can be used as a new tool to reach out to shoppers and encourage them to spend more. According to Adrian North, a psychology professor at the University of Leicester, England, there is a quite a lot of evidence that music can influence the speed with which people shop, their willingness to spend, their perceptions of value and more. In India also, retailers have realized that the right kind of music at the right time. Q.4 Advise Mr. Robin on how to evaluate and select a site for his retail store location. Robin should consider what factors in making a final decision regarding the store location? Ans.: Site Selection, approaches to site selection Site selection in retailing refers to the type of building the retailer needs and its affordability. Retailers should decide whether they should own the property, lease the premises on rent or have a joint venture with the landlord. Site selection depends on the nature of the building, faade requirements, size requirements and costs. The site selection format is furnished below as a specimen. Address of the company Details of adjacent occupants-North, east, west and south

Can the site be used commercially? Name & address of the title holder Is the site free of encumbrance? Are all relevant taxes paid and currently up to date? Is the site free of any civil suit? When was the building constructed? Total number of floors Other prominent facilities nearby Details of facilities space / parking space Revenue details / rate per sq.ft etc Site Selection analysis / Approaches to site selection: With the advent of new retail formats, such as planned shopping centers and malls, emergence of free-standing department stores, hypermarkets etc., and further development of traditional business districts and other unplanned shopping locations, a retailer is presented with a wider choice of locations. Consideration of all the options keeping in view the product mix, customer profile and overall business model presents an enormous challenge. A retailer has to consider the following factors while selecting a site: 1. Kind of products sold: For stores dealing in convenience goods, the quantity of traffic is most important. The corner of an intersection, which offers two distinct traffic streams and a large window display area, is usually a better site than the middle of a block. Convenience goods are often purchased on impulse from easily accessible stores. For stores dealing in shopping goods, the quality of the traffic is more important. Stores carrying specialty goods that are complementary to certain other kinds of shopping goods may desire to locate close to the shopping goods stores. In general, the specialty goods retailer should locate in the type of neighborhood where the adjacent stores and other establishments are compatible with retailers operations. 2. Cost factor: Location decision on cost considerations alone is risky. Space cost is a combination of rent or mortgage payment, utilities, leasehold improvements, general decoration, security, insurance and all related costs of having a place to conduct business operations. Traditionally, the retail community placed great importance on owning the place since this was considered prestigious in the business community. With the emergence of new forms of retail formats such as franchising, malls and department stores, the dependence on rent or lease is increasing. 3. Competitors location: The type and number of competitors is another important factor. The presence of major retail centers, industrial parks, franchisee chains, and department stores should be noted. Intense competition in the area shows that new businesses will have to divide the market with existing businesses. An excellent location may be next or close to parallel or complementary businesses that will help to attract customers. 4. Ease of traffic flow and accessibility:

These two are the more important factors to some businesses than others. Retailers selling convenience goods must attract business from the existing flow of traffic. Studying the flow of traffic, noting one-way streets, street widths and parking lots, is hence important. The flowing factors like parking availability, distance from residential areas, side of the street, part of the block etc is to be considered. 5. Parking and major thoroughfares: Parking is another site characteristic that is especially a cause for concern in densely populated areas. When evaluating the parking that exists at a retail site, there are two considerations i.e. parking capacity and parking configuration. The ideal parking ratio for a food store is about 3:1 or 3 sq.ft of the parking space for every square ft of store. 6. Market trends: Evaluate the community from a broad, futuristic perspective. Local newspapers are a good source of information. Discussions with business owners and officials in the area can also help. 7. Visibility: Visibility has a varied impact on a stores sales potential. It is important when a shopper is trying to find the store for the first or second time. Once the shopper has become a regular customer, visibility no longer matters. It follows that of a store cannot readily be seen, new residents of an area probably will not choose it. Factors influencing retailers choice of location: Decisions regarding the location of a store are very critical not only to the future performance of that outlet but also the retailers long-term prosperity. Following questions need to be answered first before selecting the site: 51. Is there a need to be in the middle of traffic flow of customers as they pass between the stores with the greatest customer pull? 62. Who will be the stores neighbors? 73. What will be their effect on stores sales? 84. How much space is needed? Based on experience of the retailer, the amount of space required can be determined to run the expected level of operations. The amount of space will determine rent and other related expenses. Many retailers need to rethink their space requirements when locating in a shopping center. Rents are generally much higher and therefore, space must be used efficiently. This is compounded by the consideration of certain specific issues such as: 61.Consumers choice or preference of a location: The consumer behaviour is most often guided by their consideration of the ideal location to shop. 72.To gain competitive advantage: the decision on where to locate the retail outlet will be of strategic importance because if they develop the best location, it will earn them a long-term competitive advantage. 83.Understanding of structural and social changes or trends: any decision on location will definitely have to take into consideration the exiting trends and likely social changes. For instance, the importance of out-of-town shopping centers, the rise in multiple retailers and so on is an eye opener for retailers to select an ideal location to match the consumer shopping trends.

94.High investment involving long-term financial implications: the retailer has to consider the investment cost, lead times and long-term financial implications involved in the development of a retail location and site. 105.Select the final property asset carefully: the retailing firm has to exercise care while selecting the final property assets for its value can be very high almost as high s the firms annual turnover. 6.Government formalities: there could be many government policy decisions having a binding on the development of new retail outlets. This implies there could be restrictions on selection of new location sites for retailing purposes. The retailing firm has to consider the various dimensions of location decision making right from planning the location site through to the financial analysis and long term progress of the retailer. Location decisions and analysis involve examination of different disciplines of strategic marketing, the geography of retailing, town planning, operations research, consumer behaviour and economics. Q.5 a. Explain the different gaps in Service quality model. Ans.: Service Quality Model: Service quality is a concept that has aroused considerable interest and debate in the research literature because of the difficulties in both defining it and measuring it with no overall consensus emerging on either. There are a number of different "definitions" as to what is meant by service quality. One that is commonly used defines service quality as the extent to which a service meets Customers needs or expectations Asubonteng et al., 1996; Service quality can thus be defined as the difference between customer expectations of service and perceived service. If expectations are greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs. Always there exists an important question: why should service quality be measured? Measurement allows for comparison before and after changes, for the location of quality related problems and for the establishment of clear standards for service delivery. Edvardsen et al. (1994) state that, in their experience, the starting point in developing quality in services is analysis and measurement. The SERVQUAL approach, which is studied in this paper, is the most common method for measuring service quality. Different Gaps in Service Quality Model: Gap1: Customers expectations versus management perceptions: as a result of the lack of a marketing research orientation, inadequate upward communication and too many layers of management. Gap2: Management perceptions versus service specifications: as a result of inadequate

commitment to service quality, a perception of unfeasibility, inadequate tasks standardization and an absence of goal setting. Gap3: Service specifications versus service delivery: as a result of role ambiguity and conflict, poor employee-job fit and poor technology-job fit, inappropriate supervisory control systems, lack of perceived control and lack of teamwork. Gap4: Service delivery versus external communication: as a result of inadequate horizontal communications and propensity to over-promise. Gap5: The discrepancy between customer expectations and their perceptions of the service delivered: as a result of the influences exerted from the customer side and the shortfalls (gaps) on the part of the service provider. In this case, customer expectations are influenced by the extent of personal needs, word of mouth recommendation and past service experiences. Gap6: The discrepancy between customer expectations and employees perceptions: as a result of the differences in the understanding of customer expectations by front-line service providers. Gap7: The discrepancy between employees perceptions and management perceptions: as a result of the differences in the understanding of customer expectations between managers and service providers. b. Mention the 5 differentiation dimensions in retail differentiation strategies. Ans.: Differentiation strategies: A retailers pricing strategy has to reflect its overall goals and be related to sales and profits. There must also be specific pricing goals to be achieved with the integration of total retail mix. Following are the strategies and the most commonly applied practices for retail pricing: 1 Demand oriented pricing 2 Cost oriented pricing 3 Competition oriented pricing 1. Demand oriented pricing: Under this strategy a retailer sets prices based on consumer desires. It determines the range of prices acceptable to the target market. Retailer use demand oriented pricing to estimate the quantities that customers would buy at various prices. In this method seller attempts to set price at a level intended and buyers willing to pay. This approach studies customer interests and the psychological implication of pricing. Two aspects of psychological pricing are the Price quality association and Prestige pricing. According to Price quality association concept, many consumers feel high prices connote high quality and low prices connote low quality. This association is especially important if competing firms or products are hard to judge on the bases other than price,

consumer experience, brand name etc. on the other hand, Prestige pricing assumes that the consumers will not buy goods and services at prices deemed too low. Consumers may feel too low price means low quality and status. For example, Shoppers Stop does not keep any low-end items because their customers may feel they are inferior. 2. Cost oriented pricing: It refers to setting prices based on the costs incurred by the retailer while purchasing a product or service for sale to its customers. This could take the form of Cost Plus pricing. Cost plus pricing method will be in relation to either marginal costs or total costs including overheads. This approach can be used for selecting the target market, ascertaining the costs of the goods in the store i.e. storage costs, overheads, selling costs etc, determining the maximum ceiling price when compared to competitors and determining the initial mark-up from maintained mark-up and gross margin. Here, initial mark up is the difference between the retail-selling price initially placed on the merchandise and the cost of goods sold. Maintained mark up is the difference between the amount obtained from actual sales of the merchandise and the cost of goods sold. Gross margin is the net sales minus cost of goods sold. 3.Competition oriented pricing: A retailer can use competitors price as a guide. The firm might not alter prices in reaction to changes in demand or costs unless competitors alter theirs. Similarly, it might change prices when competitors do, even if demand or costs remain the same. A competition-oriented retailer can price below at or above the market. A firm with a strong location, superior service, good assortment, favorable image and exclusive brands can set prices above competitors. However, above market pricing is not suitable for a retailer that has an inconvenient location, relies on self-service, is not innovative and offers no real product distinctiveness. Pricing at the market level does not disrupt competition and therefore does not usually lead to retaliation. Q.6 Discuss the process of strategic retail planning. Ans.: Situational Analysis: A firm needs to spot trends early enough to satisfy customers and stay ahead of competitors, yet not so early that shoppers are not ready for changes or that false trends are perceived. Merchandising shifts like stocking fad items are more quickly enacted than changes in a firms location, price, or promotion strategy. A new retailer can adapt to trends easier than existing firms with established images, ongoing leases, and space limitations. Small firms that prepare well can compete in a market with large retailers. During situation analysis, especially for a new retailer or one thinking about making a major strategic change, an honest, in-depth self-assessment is vital. It is all right for a person or company to be ambitious and aggressive, but overestimating ones abilities and prospects may be harmful if the results are entry into the wrong retail business, inadequate resources, or misjudgment of competitors. 1. Organizational mission An organizational mission is a retailers commitment to a type of business and to a distinctive role in the marketplace. It is reflected in the firms attitude toward consumers, employees, suppliers, competitors, government, and others. A clear mission lets a firm gain a customer following and distinguish it from competitors.

2. Ownership and management alternatives An essential aspect of situation analysis is assessing ownership and management alternatives, including whether to form a sole proprietorship, partnership, or corporation and whether to start a new business, buy an existing business, or become a franchisee. Management options include owner-manager versus professional manager and centralized versus decentralized structures. Consider that There is not single best form of ownership. Thats partly because the limitations of a particular form of ownership can often be compensated for. For instance, a sole proprietor can often buy insurance coverage to reduce liability exposure, rather than form a limited liability entity. Even after you have established your business as a particular entity, you may need to reevaluate your choice of entity as the business evolves. Objectives 1. Sales Sales objectives are related to the volume of goods and services a retailer sells. Growth, stability, and market share are the sales goals most often sought. Some retailers set sales growth as a top priority. They want to expand their business. There may be less emphasis on short-run profits. The assumption is that investments in the present will yield future profits. A firm that does well often becomes interested in opening new units and enlarging revenues. However, management skills and the personal touch are sometimes lost with overly fast expansion. 2.Profit With profitability objectives, retailers seek at least a minimum profit level during a designated period, usually a year. Profit may be expressed in dollars or as a percentage of sales. For a firm with yearly sales of $5 million and total costs of $4.2 million, pre-tax dollar profit is $800,000 and profits as a percentage of sales are 16 percent. If the profit goal is equal to or less than $800,000, or 16 percent, the retailer is satisfied. If the goal is higher, the firm has not attained the minimum desired profit and is dissatisfied. 3.Satisfaction of Publics Retailers typically strive to satisfy their publics: stockholders, customers, suppliers, employees, and government. Stockholder satisfaction is a goal for any publicly owned retailer. Some firms set policies leading to small annual increases in sales and profits (because these goals can be sustained over the long run and indicate good management) rather than ones based on innovative ideas that may lead to peaks and valleys in sales and profits (indicating poor management). Stable earnings lead to stable dividends. Image (Positioning) An image represents how consumers and others perceive a given retailer. A firm may be seen as innovative or conservative, specialized or broad-based discount-oriented or upscale. The key to successful image is that consumers view the retailer in the manner the firm intends. Through positioning, a retailer devises its strategy in a way that projects an image relative to its retail category and its competitors and that elicits a positive consumer response. A firm selling womens apparel could generally position itself as an upscale or mid-priced specialty retailer, a department store, a discount department store, or a discount specialty retailer, and it could specifically position itself with regard to other retailers carrying womens apparel. 4.Identification of consumer characteristics and needs

The customer group sought by a retailer is called target market. In selecting its target market, a firm may use one of three techniques: mass marketing, selling goods and services to a broad spectrum of consumers; concentrated marketing, zeroing in on one specific group; or differentiated marketing, aiming at two or more distinct consumer groups, with different retailing approaches for each group. 4. Overall Strategy: A. Controllable Variables: a. Store location b. Managing business c. Merchandise management and pricing d. Communicating with the customer B. Uncontrollable Variables: a. Consumers b. Competition c. Technology d. Economic conditions e. Seasonality f. Legal restrictions 5.Specific Activities Short-run decisions are now made and enacted for each controllable part of the strategy. These actions are known as tactics and encompass a retailers daily and short-term operations. They must be responsive to the uncontrollable environment. 6.Control In the control phase, a review takes place, as the strategy and tactics are assessed against the business mission, objectives, and target market. This procedure is called a retail audit, which is a systematic process for analyzing the performance of a retailer. The strengths and weaknesses of a retailer are revealed as performance is reviewed. The aspects of a strategy that have gone well are continued; those that have gone poorly are revised, consistent with the mission, goals, and target market. The adjustments are reviewed in the firms next retail audit.

Assignment Set- 2 Q.1 a. Examine the role of sales promotions in retail. Ans.: Role of Sales promotions: Through the years retailing has evolved, competition has gotten stiff and therefore marketing has become more integral in the direct selling of wares. From specialty mom-and-pop shop to mass-merchants, the methods by which stores are getting their products into the hands of customers are evolving. Because customers have more choices, stores have to reach them with advertising, entice them with promotions, and secure them with brandinghence the ever growing need for marketing in retail outlets. 1.Advertising: There are two main functions of advertisements: to sell more products, and to inform the customer. Through newspaper, TV, radio and Internet advertisements, retailers can inform their customers of the sales, promotions and in-store events. Moreover, since the media is flooded with advertisements, the ability to create a more eye-catching or attention-grabbing ad directly influences sales. Stores that advertise--as opposed to those that dont--are kept at the top of their potential shoppers mind, which can produce sales in the short and long term. 2.In-Store Promotions: Stores use promotions to prompt impulse buying behavior. A shopper may not intend to buy a product, but if there is a promotion, there is an incentive for immediate action. For example, a shopper may not need another dress shirt, but might still buy one if it is on sale. Additionally, promotions can prompt consumers to recall a product and thus instigate a purchase. Retailers also use promotional periods-corresponding with national holidays or well-know sales times--to sell off the previous seasons merchandise. Promotional periods spike sales, and are a way retailers can reduce the loss of unsold inventory 3.In-Store Atmosphere and Customer Relations: Store design and consumer relationship marketing (CRM) directly affected the way customers purchase and retain goods. Things like the atmosphere, music, and store layout, sales help, and post-purchase support can influence things like shopping time (the longer they shop, the more likely they are to buy), and how gratified they feel with their purchase. The more content a buyer is with their shopping experience, the more likely they are to buy merchandise, and the less likely they are to return it. 4.Branding Retail Outlets: It is necessary for retailers to develop their brand in order to stand out amongst the many other stores. With local boutiques, specialty stores, department stores, mass-merchants and Internet stores, customers have more choices when it comes to buying. There is competition within each category, and competition between categories. For example, a local boutique selling dress shirts is competing with other local boutiques, and also with the mass merchant who might be selling dress shirts at a cheaper price. It is therefore necessary for the boutique to create a brand position that a customer can identify with, to keep them loyal. 5.Private Labeling: Solidifying a retail brands private label is the apex of the retail marketing evolution--and the most recent trend in high-end retailing. This is not a new concept for low- to mid-priced retail outlets, as everything from food to raincoats have been put under their brand's name. But what are new are stores that build their brand to the point where they can sell merchandise at a premium price. Doing so is more cost

effective: they can reduce the costs associated with buying other brand names, source cheaper goods from private manufacturers and reap higher profits. As an added bonus, stores benefit from consumer loyalty to their stores and their products. b. What do you mean by brand rejuvenation? Ans.: Brand Rejuvenation: Established brands are resilient, elastic and vital. However, continued good health is not a guaranteed condition. Commonly, when brands suffer, three key factors are to blame. They are especially lethal when combined. 1.Declining emotional benefits: Customers seek meaning in their choices. They need their brands to enable them to sleep better at night' and to broadcast something favourable' about themselves. When emotional benefits are lacking, customers are forced to expand their consideration set. 2.Reduced functional benefits: Customers seek relevancy in their choices. They need their brands to solve a problem and/or to satisfy an immediate need. When the functional benefits are missing, customers are forced to expand their consideration set. 3.Aggressive competition: Customers are relentlessly introduced to - and tempted by "new and improved" brands. When a new brand repositions or replaces an existing brand, customers are forced to expand their consideration set. Rejuvenating a declining brand often requires a cohesive "SWAT team" approach. The following methodology provides a three-dimensional view of a brand's current equity and, if required, a resuscitation strategy. Q.2 a. Discuss the importance of segmentation and its limitations. Ans.: Market segmentation is the process of dividing the heterogeneous total market into small groups of customers who share a similar set of wants. Each of these small groups possesses somewhat homogeneous characteristics. As in case of marketers in other businesses, marketers in the business of retiling may also seek the benefits of market segmentation depending on his unique market and business context. A retailer may divide women customers into two segments, working woman and housewife. Segmentation is thus an aggregating process. A segment is a relatively homogenous group and hence responds to a marketing mix in a similar way. Different groups or segments require different promotional strategies and marketing mixes because they have different wants and needs. A niche is a more narrowly defined group seeking a distinctive mix of benefits. Retailers segment the market to identify specific groups of customers in their trade area on whom their selling efforts can be concentrated. Such focused selling efforts are aimed at making the retailer the preferred destination for such identified

segments for the products or services it deals in and to develop a dominant position in the target segments. Following are the benefits of market segmentation: 1. Development of marketing mix: Segmentation helps a retailer in identifying the target population and developing a customized marketing program in terms of products and service offerings, pricing strategy and promotional program. 2.Store location decision: It also helps a retail chain in deciding locations for its new stores. The retail outlets can be located where there is a concentration of the target population. 3. Understand customer behaviors: Segmentation also helps a retailer to gain insight into why the target group acts the way it does. The buying behavior of the target segment can be understood once the market is segmented. This can help the development of an effective marketing strategy. 4.Merchandising decisions: Segmentation helps a retailer in merchandising decisions. Merchandising is essentially the skill that decides which items will go on the shelves. An understanding of preferences of target segments is essential for successful merchandising program. 5. Promotional campaigns: Segmentation helps the retailer on developing more effective and accurate promotional campaigns. 6. Positioning: Segmentation helps a retailer on positioning itself in the market. Thus, Shoppers Stop has targeted the upper income while Westside has targeted the larger base of middle and upper middle consumers. In order to achieve the above-mentioned benefits, a retailer can segment his total market on the basis of the following criteria: 1 Geographic segmentation 2 Psychographics segmentation 3 Lifestyle 4 Demographic segmentation Following table illustrates the dimensions in Demographic segmentation Serial No. 1 2 3 4 5 6 7 8 9 10 Segmentation dimensions GENDER AGE MARITAL STATUS INCOME OCCUPATION EDUCATION TYPE OF FAMILY FAMILY SIZE FAMILY LIFE CYCLE RELIGION

11 SOCIAL CLASS Limitations of Market Segmentation: 1. More expensive than using a non-segmented approach. 2. Difficult to select the best base for segmenting a market. 3. Difficult to know how finely or broadly to segment. 4. Tendency to appeal to markets that are not viable. b. What is relationship marketing? Ans.: Relationship Marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions. With the growth of the internet and mobile platforms, Relationship Marketing has continued to evolve and move forward as technology opens more collaborative and social communication channels. This includes tools for managing relationships with customers that goes beyond simple demographic and customer service data. Relationship Marketing extends to include Inbound Marketing efforts (a combination of search optimization and Strategic Content), PR, Social Media and Application Development. Just like Customer relationship management(CRM), Relationship Marketing is a broadly recognized, widely-implemented strategy for managing and nurturing a companys interactions with clients and sales prospects. It also involves using technology to, organize, synchronize business processes (principally sales and marketing activities) and most importantly, automate those marketing and communication activities on concrete marketing sequences that could run in autopilot (also known as marketing sequences). The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service.Once simply a label for a category of software tools, today, it generally denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to increase profitability, and reduce operational costs. Q.3 Mr. Surya has a conservative business attitude. His son Chandrashekar wants to adopt new styles in their family retail business. But, both of them are a little confused over the topic of ethics. They would like to be educated on different issues such as ethical codes, consumerism, profitability and unethical practices in retail business. How will you help them? Ans.: Business ethics is a form of the art of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicism) is increasing.

Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporations have redefined their core values in the light of business ethical considerations (e.g. BP's "beyond petroleum" environmental tilt). Marketing ethics is the area of applied ethics, which deals with the moral principles behind the operation, and regulation of marketing. Some areas of marketing ethics (ethics of advertising and promotion) overlap with media ethics. Some of the specific issues in marketing ethics are discussed in the following paragraphs: Market research Ethical danger points in market research include: * Invasion of privacy: Invasion of privacy is a legal term essentially defined as a violation of the right to be left alone. The right to privacy is the right to control property against search and seizure, and to control information about oneself. The right to privacy refers to your right to be left alone. There are several different ways a person's right to privacy can be invaded. The most common privacy invasions recognized by law are as follows: 1 Intrusion of solitude physical or electronic intrusion into one's private quarters. 2 Public disclosure of private facts the dissemination of truthful private information which a reasonable person would find objectionable 3 False light the publication of facts, which place a person in a false light, even though the facts themselves may not be defamatory. 4 Appropriation the unauthorized use of a person's name or likeness to obtain some benefit. * Stereotyping: Stereotyping occurs because any analysis of real populations needs to make approximations and place individuals into groups. Stereotypes are seen by many as undesirable beliefs imposed to justify the acts of discrimination and oppression. Other effects are: Justification of ill-founded prejudices or ignorance Unwillingness to rethink one's attitudes and behaviour towards stereotyped group There's usually more than one stereotype for the same group. For example, according to stereotypes about Black Americans, black men are generally supposed to be good musicians and basketball players, but at the same time seen as aggressive, prone to lives of crime, and likely to be on drugs. The effects of stereotypes can have positive and negative effects: In some market research studies, students who were implicitly made aware of their gender behaved as the stereotype suggested. Asian-American women performed better in math tests when being aware of being Asian, and did worse when being reminded of being women.

The media, showing an incorrect judgment of a culture or place, can also create stereotyping. Target Market Ethical danger points include: * Targeting the vulnerable (e.g. children, the elderly) and * Excluding potential customers from the market: Selective marketing is used to discourage demand from undesirable market sectors or disenfranchise them altogether. Examples of unethical market exclusion or selective marketing are past industry attitudes to the gay, ethnic minority and obese ("plus-size") markets. Contrary to the popular myth that ethics and profits do not mix, the tapping of these markets has proved highly profitable. For example, 20% of US clothing sales are now plus size. Another example is the selective marketing of health care, so that unprofitable sectors (i.e. the elderly) will not attempt to take benefits to which they are entitled. A further example of market exclusion is the pharmaceutical industry's exclusion of developing countries from AIDS drugs. In the case of children, the main products are unhealthy food, fashion ware and entertainment goods. Children are a lucrative market; but are not capable of resisting or understanding marketing tactics at younger ages. At older ages competitive feelings towards other children are stronger than financial sense. The practice of extending children's marketing from television to the school ground is also controversial. Other vulnerable audiences include emerging markets in developing countries, where the public may not be sufficiently aware of skilled marketing ploys transferred from developed countries, and where, conversely, marketers may not be aware how excessively powerful their tactics may be. For example nestle infant milk formula scandal, which discouraged breast-feeding. Ethics in RETAILING Auto Dealers and Ethics: Not an oxymoron Ethical behavior by auto dealers is increasingly important as consumers become more knowledgeable due to information on the Web-and as auto retailing becomes a more popular target of regulators and attorneys. Two ways for car dealers to instill ethical behavior among their sales personnel involve rethinking sales force compensation and reexamining how car dealers operate as business leaders. Traditionally, many salespeople have been paid on the basis of the gross margin of each sale. That encourages a salesperson to inflate the sales price to an unsuspecting consumer or to push high-profit, dealer-installed options. Alternative methods are to place fixed prices on cars, to provide bonuses to sales staff based on customer satisfaction scores, or to link bonuses to referral and repeat business. As the leader-manager, the owner of a dealership should set an example for the practices of his or her employees. The firms code of ethics needs to reflect what behavior is unacceptable, including high-pressure tactics and misrepresentation of price or credit. Salespeople who continually violate the ethical code should be terminated regardless of their profitability. Consumerism: "Consumerism" is likely to dominate the Indian market in the current Millennium, thanks to the economic reforms ushered in and the several agreements

signed under the World Trade Organisation. The transition is from a predominantly "sellers market" to a "buyers market" where the choice exercised by the consumer will be influenced by the level of consumer awareness achieved. By "consumerism" we mean the process of realizing the rights of the consumer as envisaged in the Consumer Protection Act (1986) and ensuring right standards for the goods and services for which one makes a payment. This objective can be achieved in a reasonable time frame only when all concerned act together and play their role. The players are the consumers represented by different voluntary non-government consumer organizations, the government, the regulatory authorities for goods and services in a competitive economy, the consumer courts, Organisations representing trade, industry and service providers, the law-makers and those in charge of implementation of the laws and rules. Q.4 Critically evaluates the different pricing strategies in retail. Ans.: Pricing strategies and Practices A retailers pricing strategy has to reflect its overall goals and be related to sales and profits. There must also be specific pricing goals to be achieved with the integration of total retail mix. Following are the strategies and the most commonly applied practices for retail pricing: Demand oriented pricing Cost oriented pricing Competition oriented pricing. 1. Demand oriented pricing: Under this strategy a retailer sets prices based on consumer desires. It determines the range of prices acceptable to the target market. Retailer use demand oriented pricing to estimate the quantities that customers would buy at various prices. In this method seller attempts to set price at a level intended and buyers willing to pay. This approach studies customer interests and the psychological implication of pricing. Two aspects of psychological pricing are the Price quality association and Prestige pricing. According to Price quality association concept, many consumers feel high prices connote high quality and low prices connote low quality. This association is especially important if competing firms or products are hard to judge on the bases other than price, consumer experience, brand name etc. on the other hand, Prestige pricing assumes that the consumers will not buy goods and services at prices deemed too low. Consumers may feel too low price means low quality and status. For example, Shoppers Stop does not keep any low-end items because their customers may feel they are inferior. 2. Cost oriented pricing: It refers to setting prices based on the costs incurred by the retailer while purchasing a product or service for sale to its customers. This could take the form of Cost Plus pricing. Cost plus pricing method will be in relation to either marginal costs or total costs including overheads. This approach can be used for selecting the target market, ascertaining the costs of the goods in the store i.e. storage costs, overheads, selling costs etc, determining the maximum ceiling price when compared to competitors and determining the initial mark-up from maintained mark-up and gross margin. Here, initial mark up is the difference between the retail-selling price initially placed on the merchandise and the cost of goods sold. Maintained mark up is the difference between the amount obtained from actual sales of the merchandise and the cost of goods sold. Gross margin is the net sales minus cost of goods sold. EHIBIT 1

AIR DECCAN TO HIKE NUMBER OF FLIGHTS After having slashed fares when his competitors increased them, low-cost carrier Air Deccans chief G R Gopinath said on Monday the airline would increase the number of flights instead of fares to meet the passenger demand. Our pricing is not in relation to competition. If the demand is more, we will not increase the fares but the number of flights. He told a two-day conference on synergizing of air traffic control (ATC), airports and airlines, organized by the ATC Guild (India). He said the airline, which recently slashed fares when other carriers raised them were getting rich dividends from operations on trunk routes where it dropped fares. This was primarily due to the very high load factor, ranging between 90 and 100 per cent, on most of the days, he said, adding such load factor had led to case positive results leading the airline to report profits. Gopinath made a strong case for urgent revamp and expansion of airport infrastructure in the country saying, for low cost operations to succeed, a faster turnaround for each aircraft was required. WE need to turn around the aircraft from landing to take off with a quick span of 25 minutes he said while pointing out the unprecedented increase in passenger traffic in the next few years would prove a disaster if speedy action was not taken to expand and improve airport and all related infrastructure including moir parking bays for aircraft and additional runways. Another major initiative taken by Air Deccan was to introduce dedicated automated machines at airports. (Source: The Times of India, Bangalore, and 2nd November 2004) 3. Competition oriented pricing: A retailer can use competitors price as a guide. The firm might not alter prices in reaction to changes in demand or costs unless competitors alter theirs. Similarly, it might change prices when competitors do, even if demand or costs remain the same. A competition-oriented retailer can price below at or above the market. A firm with a strong location, superior service, good assortment, favorable image and exclusive brands can set prices above competitors. However, above market pricing is not suitable for a retailer that has an inconvenient location, relies on self-service, is not innovative and offers no real product distinctiveness. Pricing at the market level does not disrupt competition and therefore does not usually lead to retaliation. Q.5 The top management of Alpha Retail is seriously considering about changing the existing distribution channel and the channel intermediaries. Assuming you are a management consultant, on what specific aspects will you advise Alpha Retail to design and select an appropriate channel for distribution? Ans.: Structure and Nature of Retailing Channels: Retailing is the last stage in the distribution process, which comprises all the business operations and the people involved in the physical movement and transfer of ownership of goods and services from the producer to the consumer. A typical distribution channel consists of a manufacturer, a wholesaler, a retailer and the final consumer. Wholesaling is

the intermediate stage-during which goods are sold not to the final consumers but to the business customers for resale. In some distribution channels, independent firms perform different activities. But most distribution channels have a degree of vertical integration- performing more than one activity. For example, Food World carries out both wholesaling and retailing activities. It buys directly from the manufacturers, has merchandise shipped to its warehouses and them distributes it to their stores. Some retailers, especially in the clothing business, even design the merchandise they sell and contract its production to manufacturers. The nature of retailing channels offers in various parts of the world. The US has a retail density that is greater than that of all other countries. A feature of US system is the concentration of large retail forms- 10% of its food and general merchandise retail firms account for over 40% of all retail sales. Some firms are even able to eliminate wholesalers, as they are large enough to operate their own warehouses. Large stores-of over 20,000 sq. ft- is popular mediums of sale. This combination of large retailers and large stores makes the US one of the most efficient users of the distribution channel. In Japan, on the other hand, small firms and stores govern the retail sector. The wholesale channel is relatively much larger and independent. To reach all the stores, almost daily, often requires the merchandise to pass through as many as three channels of distribution. Therefore, this reduced efficiency means that in contrast to the 10% of the total labour force employed in this sector in the US, the Japanese use 20% of their workforce. The European system falls in between that of the US and Japan. Northern Europe is the closet to the US in terms of concentration levels-in some national markets, fewer than five firms account for 80% of the retail sales ion food. In southern Europe, the market is more fragmented with the traditional farmers market retailing still dominant in some sectors along with big-box formats. Central Europe has seen an increase in retail floor space after the privatization of the retail trade. Privatization has also resulted in transition from an extremely structured system to one that is highly fragmented, with kiosks rapidly gaining popularity. In Indian context, traditionally the small retailers have played a major role in the various sectors with the unorganized players outnumbering the organized ones. However, the past decade has witnesses the rise of chains of supermarkets at both regional and national levels. Some of these stores also have their own line of merchandise, be it clothes, food items, or household articles. The price consciousness among the large middle class also means that large stores that are able to offer discounts on bulk purchases have become more important. The growing place of lifestyle of the urban consumers and the proliferation of technology has helped popularize online shopping. In these countries the variance is primarily due to three factors: 1 Social and political objectives 2 Geography 3 Market size. The primary objective of Japanese or Indian economy is to reduce unemployment- the large labour force that is available is employed by small labour intensive businesses. Secondly, the population density in Japan and Europe is much higher than in US. Thus, these countries have less low cost real estate available for development of large stores. Thirdly, the US market is the largest in the world and is able to leverage on economies of

scale. Indian is still a growing market and has yet to develop a system as efficient as that of the US. Store Design : The store can be said to be a product in its won right. The type of planned store layout can influence the customers product decisions. Typically the store should be designed to facilitate the free movement of customers, create a planned store experience and also help to make an optimum presentation of merchandise. The retailers goal while designing the store should be on a proactive basis- reflecting the brand position of the store and also ensuring the most effective usage of the space. The main objectives of a good store design should be: 11. It must complement the customers needs i.e. be consistent with the image and strategy. 22. It should act positively on consumer behaviour. 33. It must consider the costs associated versus the value received in terms of higher sales and profits. 44. It should be flexible to adopt any changes in the merchandise with its stores image. Thus, a proactive planning and atmospherics used in the store layout can act upon the emotional state of the customers and are more likely to influence them to enter and purchase merchandise at the stores. Proactive planning is based upon the manipulation of the in-store experience by acting upon and responding to the data on store layout in order to influence the consumers shopping behaviour and experience. The consumers are more likely to enter stores which are made attractive by use of space, color, walls, pillars, floor coverings, lightings, music etc. this planned combination of physical messages are known as Atmospherics. Atmospherics is referred to as a stores physical characteristics that are used to develop the retail unit image and draw customers. It describes the physical elements inn a stores design that appeals to consumers and encourages them to buy. Atmospherics are created by the combination of a whole series of cues and stimulus i.e. the type of merchandise offered and the way it is displayed can produce the desired store ambience and emotional response from the target customers. Retailers have realized that background music can be used as a new tool to reach out to shoppers and encourage them to spend more. According to Adrian North, a psychology professor at the University of Leicester, England, there is a quite a lot of evidence that music can influence the speed with which people shop, their willingness to spend, their perceptions of value and more. In India also, retailers have realized that the right kind of music at the right time. Q.6 a. Briefly explain the assortment planning process. Ans.: Assortment Planning Process: Several types of displays are described here. Most retailers use a combination of them. An assortment display exhibits a wide range of merchandise. With an open assortment,

the customer is encouraged to feel, look at, and /or tries on products. Greeting cards, books magazines, and apparel are the kinds of products for which retailers use open assortments. In addition, food stores have expanded their open displays for fruit, vegetables, and some department stores have opened up their cosmetics and perfume displays. With a closed assortment, the customer is encouraged to look at merchandise but not touch it or try it on. Computer software and CDs are pre-packaged items that cannot be opened before buying. Jewelry is usually kept in closed glass cases that employees must unlock. A theme-setting display depicts a product offering in a thematic manner and sets a specific mood. Retailers often vary their displays to reflect seasons or special events; some even have employees dress for the occasion. All or part of a store may be adapted to a theme, such as Columbus Day, Valentines Day, or another concept. Each special theme seeks to attract attention and make shopping more fun. With an ensemble display, a complete product bundle (ensemble) is presented-rather than showing merchandise in separate categories (such as a shoe department, sock department, plants department, shirt department, and sports jacket department). Thus, a mannequin may be dressed in a matching combination of shoes, sock, pants shirt, and sports jacket, and these items would be available in one department or adjacent departments. Customers like the ease of a purchase and envisioning an entire product bundle. A rack display has a primarily functional use: to neatly hang or present products. It is often used by apparel retailers; house wares retailers, and others this display must be carefully maintained because it may lead to product cutter and shoppers returning items to the wrong place. Current technology enables retailers to use sliding, disconnecting, contracting/ expanding, lightweight, attractive rack displays. A case display exhibits heavier, bulkier items than racks hold. Records, books, pre-packaged goods, and sweaters typically appear in case displays. A cut case is an inexpensive display that leaves merchandise in the original carton. Supermarkets and discount stores frequently use cut cases, which do not create a warm atmosphere. Neither does a dump bin-a case that holds piles of sale clothing, marked-down books, or other products. Dump bins have open assortments of roughly handled items. Both cut cases and dump bins reduce display costs and project a low-price image. Poster, sign, and cards can dress up all types of displays, including cut cases and dump bins. They provide information about product locations and stimulate customers to shop. A mobile, a hanging display with parts that move in response to air currents, serves the same purpose-but stands out more. Electronic displays are also widely used today. They can be interactive, be tailored to individual stores, provide product demonstrations, answer customer questions, and incorporate the latest in multi-media capabilities. These displays are much easier to reprogram than traditional displays are to remodel. b. What is ABC analysis? Ans.: ABC Analysis: Here, each product line is rank ordered based on performance levels The goal of Retail merchandise controlling is To ensure that product choice meets targeted consumer needs

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To carefully plan the number of units to have on hand to meet the expected sales for the brand, size, color combinations To develop merchandise lists in the form of 1. Basic Stock List (staple items) 2. Model Stock List (fashion items) 3. Never Out List (key items and best sellers)