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Retail
Management
14MBAMM302
According to VTU syllabus

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

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Module 1: Introduction and


Perspectives of retailing.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Retail Management
Introduction
Meaning
Retailing consists of activities involved in selling
goods and services to ultimate consumers for
personal consumption cuoghan , Aderson, louis
Retailing is a set of business activities that add
value to the products and services sold to
consumer for their family or personal use.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Characteristics
1. Average amount of sales transaction is much
less than manufacturer, so there is need for
tightly controlling the costs, maximizing the no.
of customers, emphasizing more on special
promotion etc.
2. Survey shows that large number of buyers
make impulse purchasing, this behavior
indicates the value of in store displays- the
ability to forecast is difficult.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Contd..
All retailers offer assortment of products, but they also
specialize in the assortment they offer
The bulk items shipped by manufacturer is offered in
smaller quantities tailored to individual customers.
Holding inventory products are available at the
disposal of consumers so they can keep small
inventory at home
There is direct end user interaction and retailing
increases the value of products and services.
Location is critical factor in retailing.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Trends in Retailing.
1. Spatial convenience
2. Increased power of retailer
3. Growing Diversity of Retail formats
4. Emergence of region specific formats
5. Entry of International Players
6. Mall Development

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Emergence of organizations of retailing,

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Module 2: Theories of
retailing
14MBA MM302
According to VTU new
syllabus
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

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Module 3: Retailing strategy


for Setting up Retail
organization and planning
14MBA MM302
According to VTU new
syllabus
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

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Retail Location and Layout plan.


Location decisions can be complex, costs can be
quite high, there is often little flexibility once a
location has been chosen and the attribute of
location have a strong importance on retailers
overall strategy.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Importance of Location Decision:


1. Location is a major cost factor because it :
.
Involves large capital investment
.
Affects transportation cost
.
Affects human resources
2. Location is major revenue factor because it
.
Affects the amount of customer traffic
.
Affect the volume of business
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Levels of Location Decision and its Determining Factors:

level of
location
Decision
city

Area within
city

site
selection

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Selection of a city:

Factors to be considered for selection of a city


1. Size of the citys trading area
2. Population or population growth in the trading are
3. Total purchasing power and its distribution
4. Total retail trade potential for different lines of
trade
5. The retailer also consider, number, size, quality of
competition before selecting a city.
6. Development cost
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Selection of an Area or Type of Location within a city.

Evaluation of the following factors required


Customer attraction power of a shopping district or a
particular store(commercial street-Bangalore,
Chandni Chowk in Delhi)
Product lines carried by other stores, number of stores
in the area.
Availability of access routes- There should not be
traffic jam and congestion
Nature of zoning regulations
Direction of the spread of the city
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Selection of a specific Site


1. Adequacy and potential of traffic passing the
site:.
2. Ability of the site to intercept the traffic
following past the site.
3. Complementary nature of adjacent stores:

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Type of Retail Location:

1. Free standing location :


2. Neighborhood stores.
3. Highway stores.
4. Business associated location:
This can further be classified into two:
a) PLANNED SHOPPING
b) Unplanned business districts

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Unplanned
Unplanned business
business districts
districts

An unplanned business district is a type of retail location where


two or more retail stores locate together on individual
consideration rather than on the basis on any long-rang
collective planning. we may find 4-5 shoe stores, 3-4 medical
stores in a cluster, but no grocery store. Connaught place in
New Delhi
i) Downtown or central Business District:
ii)Secondary Business District:.
iii) Neighborhood Business District:)
iv) Suburban business District:
b) Planned Shopping centres.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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PLANNED
PLANNED SHOPPING
SHOPPING

A planned shopping centre consists of a group of


architecturally owned or managed stores,
designed and operated as a unit, based on
balanced tenancy and surrounded by parking
facilities.
1. Regional shopping centre malls:.
2. Neighborhood/community Shopping centre:.
3. Specialized Markets.
4. Periodic Markets
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Trading
Trading Area:
Area:

A trade area is a contiguous geographic area from which a


retailer draws customers that account fro the majority of a
stores sales. A trade are a may a part of a city, or it can
extend beyond the citys boundaries. A trade area can be
divided into 2 or 3 zones.
Trade Area Analysis: It is necessary to estimate market
potential, understand consumer profile, competition etc.
GIS ( Geographical Information System combine
digitized mapping with key location data )used for this
purpose. A saturated trade area offers customers a wide
variety of merchandise, which also ensures impressive
profits for retailers in the market.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Site Selection Analysis


A retailer has to consider the following factors
while selecting a site.
1. kind of products sold
2. Cost Factor in Location Decision.
3. Competitor location
4. Ease of traffic flow and accessibility
5. parking and Major Thoroughfares
6. Market Trends
7. Visibility
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Selection
Selection of
of aa particular
particular shopping
shopping centre
centre or
or Market
Market Area
Area

1.
2.
3.
4.
5.

Merchants Association
Responsiveness of the landlord
Zoning and planning
Leases
Building Layout

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Location
Location Assessment
Assessment Procedures
Procedures

1.
2.
3.
4.
5.

Checklist Analysis
Analogue Analysis.
Financial analysis.
Regression Modeling
Retail Area Development

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Layout
the logical arrangement of the physical facilities of
a business that contributes to efficient
operations, increased productivity, and higher
sales.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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LAYOUT:
LAYOUT: EXTERNAL
EXTERNAL FACTORS
FACTORS

1. Size must be adequate to accommodate business needs.


2. Appearance must create the proper image or
personality for the business in the customers eyes.
3. Entrances must invite customers to come in.
4. Create effective window displays and change them
often; they can be powerful sales tools.
5. Must comply with Americans with Disabilities Act
(ADA).
6. Pay attention to the business sign, the most direct
method of reaching potential customers.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

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A
A BUSINESS
BUSINESS SIGN
SIGN

1. Tells potential customers who you are and


what youre selling.
2. Must comply with local sign ordinances.
3. Should be visible, simple, and clear.
4. Should be changed periodically to avoid
becoming part of the background.
5. Should be legible both day and night.
6. Must be maintained properly.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

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BUILDING
BUILDING INTERIORS
INTERIORS

1. Ergonomics is an integral part of any design.


2. Proper layout and design pays off in higher
productivity, efficiency, or sales.
3. Proper lighting is measured by what is ideal for
the job being done.
4. Careful selection of colors can create the desired
impressions among customers and employees.
5. Appealing to all of the customers senses can
boost sales.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

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THREE
THREE RETAIL
RETAIL LAYOUT
LAYOUT PATTERNS
PATTERNS

Grid
Rectangular with parallel aisles; formal; controls traffic flow;
uses selling space efficiently.
Supermarkets and self-service discount stores.

Free-Form
Free-flowing; informal; creates friendly environment;
flexible.
Small specialty shops.

Boutique
Divides store into a series of individual shopping areas, each
with its own theme; unique shopping environment.
Small department stores.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Layout guidelines
Know your customers buying habits and plan your
layout accordingly.
Display merchandise as attractively as your budget
will allow.
Display complementary items together.
Recognize the value of floor space; never waste
valuable selling space with non-selling
functions.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

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Module 6

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

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Retail Market segmentation


Introduction to Market segment.
Market Segmentation is the process
of dividing the heterogeneous total
market into small groups of customers
who share a similar set of wants

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Criteria
Criteria for
for effective
effective segmentation.
segmentation.

Homogenous within
Heterogeneous within
Substantial
Actionable
Accessible
Measurable

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Dimensions
Dimensions of
of segmentation
segmentation

1. Geographic Segmentation
-market is divided into geographical units such as nations,
regions countries, cities or neighborhoods.
- Retailers in India have often segmented markets by cities
and focused on metro and large cities.
Globus Chennai and Indore ( metropolitan and Mid
sized city)
A study done by Technopak in India among segments SEC
A and SEC B revealed that while the four regions
north, south, east and west had consensus on top
spending priorities , their preference order (table).
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

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2.Demographic Segmentaion:
- market is divided into groups based on demographic variables such as
age, religion, gender, income, social class, family size, occupation,
educational level and marital status.
- retailer segment the market on variables which relflect interest, need and
abilty of the customer
- In India, ,most markete Research agencies prefer to segment on the basis
of socio-ecnomic class(SEC A , SEC B, SEC C) rather than incomer
per se.
a) age: The KSA Technopack study states that youth 15-24 years in India
is emerging as a core target customers for lifestyle products (personal
care, music, book and magazines)
b) Occupation: Employed women has more spending habits than
housewives.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
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c)Family income: McDonalds, shoppers stop, Reebok ,


marks and specer etc sell an extensive range of
premium brands can segment market on demographic
basis focusing on family income. They can target
professionals, married aged between 30-45 years old
with young children, and with incomes more than Rs.
4,00,000.
d)Retailers can target bachelors or families. McDonalds
has positioned itself as a family joint which provides a
relaibale and safe dining experience while Nirulas
position itself as providing pleasant experience and fun.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

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Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

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Psychographic
Psychographic Segmentation:
Segmentation:

divides buyers into different groups based on their lifestyle,


personality, or values
Life style is a distinct mode of living . It gets reflected by various
activities performed( work, social, and hobbies) interest( family,
job, and fashion) and opinion(politics, education and social issues)
Indian coffee house provides good quality coffee at a very modest
price. It targets customers above 40years interested in discussing
politics, intellectual issues or business matters while sipping coffee.
On the other hand, caf coffee Day and Barista target youngsters
from high income families looking for fun, with their up-market
dcor and attractive layout.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Values
Values are determinants of attitudes and behaviour, and
provide a stable and inner oriented understanding of
consumers. For example, an individual may value ambition
and honesty, which in turn determines his attitude and
lifestyle.
eg1: Benetton, the apparel retailer, has targeted customers
who value protection of environment.It encourages
recyclable packaging and re-fill services. Benetton also
contributes a fraction of its profits to environment related
issues
eg2: Retailers like Plane M encourage their staff to greet the
customers and suggest support in product selection.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
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The self driven materialists:


people who are ambitious
they are not reciprocative to disounts and and do nto
indulge in excessive buying
14% of the population of SEC A and B lies in this group

The Passive Traditionalist:


People who are the epitome of tradition and
conservatism define this group.
prefer to buy brands that their families bought and are
not open to purchasing any foreign brands. (age
group 35-49)

The Opinionated Realists:


self centred and consider no one else but themselves
do not experiment much but believe that branded
products do offer better quality than unbranded ones
large group of 21% very evenly spread out in the age
groups 18-49

The Independent Explorer:


-compriece fiercely independent group
- They believe that branded products offer more benefits than
unbranded products
- 24% of the population lies in this group. (18-24 and 25-34 age
group)

The Enthusiastic Experiments


enthusiastic in nature
These people are ardent followers of fashion, trends and fad.
They are the consumers who are ever ready to try out new
brands.
14.1% of the population belong to this category

The Mature sensibles


Believes in traditional values and systems like joint families and
are religious, though they do not follow rites and rituals
regularly
polite and well mannered people
not easily influenced and as a result are not reciproacative to
discount and sales.
cautious and logical in their approach

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Behavioral
Behavioral segmentation
segmentation

Reasons /occasions for purchase


Quantity of purchase
Product Usage
Loyalty status
Buyer readiness stage
Source of Purchase

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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customer
customer profiles.
profiles.

Customer Demographics
Family Decision making
Psychographic
Purchasing Behavior of the Target Population
Purchase Motivation
Purchasing Process
source of purchase

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Module

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

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Products
Products and
and merchandise
merchandise management
management

Merchandise management is the process by which


a retailer attempts to offer the right quantity of
the right product at the right place and time
while meeting the retail firms financial goals.
Merchandise management is the analysis, planning,
procurement, handling and control of the
merchandise investment of a retail operation

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Component of merchandise management:


1. Analysis,
2. Planning
3. control,
4. Acquisition,
5. Handling.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


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The merchandise Mix


Merchandise variety number of different of product lines
that a retailer stocks in the store.
Merchandise assortment refers to the number of different
product items the retailers stocks within a particular
prouduct line.
Merchandise support deals with the planning and control
of the number of units the retailer should have on hand
to meet the expected sales for a particular period.
Merchandise Budget is a financial tool for planning and
controlling a retailers merchandise inventory
investment.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Merchandise
Merchandise Budge
Budge plan
plan

The four important components of the merchandise


budget plan:
1. Projected sales- Expected or projected rupees
volume of sales for each merchandise.
2. Inventory plan
beginning of the month ratio:

BOM=planned monthly sales*desired stock/sales ratio.


The week supply method is for determining stock
percentage variation Method
Basic stock method
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
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Estimated reduction
1. Markdowns
2. Discounts
3. Shortages
Estimated purchase levels
Planned purchases are calculated as follows

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


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Merchandise
Merchandise Planning
Planning in
in Units
Units

The impact of external factors on merchandise unit


plans is as follows:
1. Target market analysis:
2. Competition Analysis
3. Breadth
4. Depth
5. Consistency.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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Model
Model Stock
Stock plan:
plan:

Model stock plan is a plan for maintaining adequate


merchandise on hand. It characterize the decisive items and
their respective quantities that should be on hand for each
merchandise line the retail business is dealing in and is
developed after the retailer decides what relative importance
will be placed on each dimension of the merchandise mix.
Model stock plan is a quantitative method, which provides
guidelines on the size, color, brand dand composition of
stock that specify the exact nature of merchandise. Model
stock planning comprises the following steps:
1 . Identify the consumer drive product service attribute
2. Identify the number of levels in each attribute identified
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Constraining
Constraining Factors
Factors

Budgetary constraint
Space constrain
Turnover Constraint:
Market Environment Constraint:

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Retail channel
1.
2.
3.
4.

Manufacturers and Primary producers


Wholesalers
Agents:.
Government and semi-government source

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


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CRITERIA
CRITERIA FOR
FOR THE
THE SELECTION
SELECTION OF
OF SUPPLIERS:
SUPPLIERS:

1.Product Range and quality


2.Price
3.Delivery
4.service

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


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CATEGORY
CATEGORY MANAGEMENT
MANAGEMENT

Category management is the process of


managing a retail business with the objective of
maximizing the sales and profits of a category
rather than the performance of individual brands
or models.
A category is an assortment of items that the
customer sees as reasonable substitutes for each
other. For example, retailers in ready to wear
segment consider female and male clothing as
one category.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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Advantages
Advantages of
of Category
Category Mangement
Mangement

Increased sales
Reduced Inventory management
Improved route and warehouse efficiency.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

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The
The Essential
Essential Elements
Elements of
of Effective
Effective Category
Category Mangement
Mangement

1. Category should be arranged as if consumers could stock


the shelf themselves
2. Category composition should be on the basis of time, space
and product benefit
3. Category management should drive multiple item purchase
4. Category management is a dynamic, proprietary set of
decision, not a standard, universal practice.
5. It is directed to create value for the consumer rather than
facilitating relations between supplier and retailer.
6. Category management plan should be based on the overall
competitive environment in a specific trading area.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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VARIOUS
VARIOUS REPLENISHMENT
REPLENISHMENT POLICIES
POLICIES

Fixed cycle of Replenishment: Replenishment takes place at


predetermined time intervals, which are decided jointly by
the retailers and suppliers.
It is useful when:
-predictable demand and sales pattern, high transportation cost,
Batch production with large batch size.
Continuous Replenishment: It is decided by the supplier and
retailer. Whenever inventory dips below the required level
of purchase order is automatically generated leading to
fulfillment. It is useful when
-unpredictable sales pattern, goods for which historical sales is
not available
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

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EVALUATING
EVALUATING MERCHANDISE
MERCHANDISE PERFORMANCE
PERFORMANCE

ABC Analysis:
Self through Analysis

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


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RETAIL
RETAIL LOGISTICS
LOGISTICS OR
OR PRODUCT
PRODUCT MOVEMENT
MOVEMENT

Retail logistics is the organized process or managing the flow


of merchandise from the source of supply to the consumer
from the producer/manufacturer, wholesaler/intermediary
through to the warehouse, transport to the retail units until
the merchandise is sold and delivered to the customer.
The retail logistics system will include the following:
-Physical movement of goods
-Holding of those goods at SKU(stock keeping units)
-Holding of stock in sufficient quantities to meet the demand
-Management and administration of the distribution system

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Storing or transmitting information


EDI
Data warehouse
CPFR

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Merchandise
Merchandise Flows(Movement)
Flows(Movement)

When we talk of the physical flow of merchandise it could flow form


vendor to distribution centre(DC) to stores or alternatively the
merchandise flows from vendor directly to stores.
Flow: 1 Vendor to DC-function:
1. Management of Transportation to facilitate flow from vendor to DC
2. Recording receipt of merchandise at the DC & Checking to ensure
its order
3. storing
4. Getting merchandise floor ready, ie, ticketing, marking, labeling
showing price and Identification Marks etca)
The retailer can use push(Merchandise is allocated to stores on the
basis of historical demand) strategy or Pull strategy( on the basis of
demand information obtained at the point of sale)
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Flow2:
The merchandise is transported from distribution
centers to the stores . If the retailer has a chain of
stores, management of such outbound
transportation may become complex . DC may
have to use sophisticated routing and scheduling
computer system.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Module 5: Retail Pricing


According to VTU Syllabus

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Retail Pricing
Setting the right price will result in increased revenue
to the retail firm. The prime objective of retail
pricing is to achieve profitability which is
influenced by two factors. They are Profit margin of
the offering and cost of merchandising.
Factors Influencing Pricing
1. Customer
2. Suppliers
3. Competitor
4. Government
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

RETAIL PRICING STRATEGIES:

EDLP- Every Day Low Pricing


High Low Pricing
Loss Leader Pricing
Skimming
Penetration Pricing
Price Lining

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Psychological pricing

prestige pricing
Reference Pricing
Traditional Pricing
Odd-Even Pricing
Multiple Unit pricing
Bundles Pricing.
Pre-emptive Pricing
Extinction pricing

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Retail
Retail promotion.
promotion.

Retail promotion is broadly defined as all


communication that informs persuades, and or
reminds the target market or other prospective
segment about marketing mix of the retail firm.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

objectives.
objectives.

a)increasing store traffic by encouraging new


shoppers to visit store
b) increasing the share of wallet for all shoppers
c) increasing the sale of a given product category

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Retail Advertising:
The American Marketing Association defines Advertising as any paid
form of, non personal presentation of ideas, goods, services by an
identified sponsor Advertising is recognized as an indispensable tool
of promotion. Based on the conceptualization, advertising can be
understood as follows:
paid form of communication
Non personal presentation of message (face to face direct contact with
customer)issued by an identified sponsor.
OBJECTIVES OF ADVERTISING:

To promote new product, to support personal selling programme


To reach out to people not accessible to salesperson
To enter new market, to manage competition
To enhance goodwill of the retail firm and to improve dealer relation

- to warn the public against imitation of the retailers products


Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

TYPES
TYPES OF
OF ADVERTISING:
ADVERTISING:

consumer oriented or persuasive Advertising


Informative Advertising
Institutional or corporate Advertising
Classified Ad

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Selecting
Selecting Media
Media

1.
2.
3.
4.

5.

Reach: (R): It includes the different persons that are


exposed to a particular media schedule.
Frequency(F) : The no. of times within the specified
time period that an avg. person is exposed to the message
Impact(I): The qualitative value of an exposure
through a given medium.
Total number of Exposure(E) : It is the reach times
the average frequency ie E=R*F. This measuere is
referred as gross rating point.
Weighted number of Exposures(WE): It is the reach
times frequency times average impact ie :WE=R*F*I.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Popular
Popular Media
Media Vehicles
Vehicles used
used in
in the
the Indian
Indian Retail
Retail sector:
sector:

Leaflets or flyers:
posters and calendars
Booklets.
Direct Mail:.
Magazines:.
Local cable channels
Billboards:
Wall Paintings
Banners:
Deciding on Media Time
Deciding on Geographic Allocation
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

SALES PROMOTION

Sales promotion refers to communication strategies


designed to act as a direct inducement, an added value or
incentive for the product to customers.
Sales promotion provides extensive tactical measures to
marketers to manage internal or external impediments to
sales or profits. Internal impediment(unsold stock);
External impediment( competition)
Objective of Sales Promotion:
assist the other communication activities undertaken by the
store.
to encourage new trials by offering free trial
to encourage repeat purchase
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

SUPPLIER
SUPPLIER ORIGINATED
ORIGINATED SALES
SALES PROMOTIONS:
PROMOTIONS:

In-store Activities:
1. Price off Pack :
2. Premiums
3. Self-liqudating Premiums:
4. personality promotions.
5. co-operative promotions:
6. Buy one Get one free:
7. Point of purchase (POP)Display Material
8. Leaflets,
9. Demonstrators
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

STEPS
STEPS IN
IN RETAIL
RETAIL PROMOTION
PROMOTION

Set Goals: It should be determined by the particular need of


a specific promotion scheme and contextual factors like
time of the year-Diwali, Christmas, wedding season
Analyze Benefits
Design the offer- The sales promotion can be designed
around one or combination of the following:
Premium or value Adding /Experience(dinner with
celebrity)/Discount involves price reduction
Identify the source of sales promotion(Inserts, flyer
Distribution, Displays, Joint promotions, Events)
Designing the Response and Follow up
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

PUBLICITY:
PUBLICITY:

Publicity entails any communication that fosters a favorable


image for the retailer among its public. It can be personal or
non personal, paid or non-paid and sponsor controlled or
non-sponsor controlled. Publicity is a non personal form of
promotion where messages are transmitted through mass
media, the time or space provided by the media is not paid
for, and there is no identified commercial sponsor.
TYPES OF PUBLICITY
1. PLANNED PUBLICITY
2. Unexpected Publicity
3. Complementary publicity
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Module 6
Relationship Marketing in
retailing.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Relationship Marketing in Retailing


Management of Relationship.
1. Relationship marketing refers to all marketing activities
directed towards establishing, developing and maintaining
successful relational exchanges.
2. Relationship marketing draws upon number of
areas(customer quality, customer service, social interaction)
3. Relationship marketing implemented through various
components(rewards, customer services and involvement of
customers in planning and execution of retail strategy)
4. Customer service is the vital part of Relationship Marketing

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.
THE EVOLUTION OF RELATIONSHIP
MARKETING

Customer Relationship Management(CRM) originated in two


unrelated places.
USA- Database Marketing was used when the marketers
directed their efforts to increase selling effectiveness.
Information Technology and Statistical analog was also used
for this purpose.
Scandinavia and Northern Europe The Relationship
marketing was emphasized in B2B marketing.
In the later half of 1990, there was a shift from Database
marketing to Relationship Marketing. Marketers and
Retailers started using IT to communicate with customers
and that helped them to base their product offering.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Relationship Marketing emerged out of 2 major consideration


Macro level( At the macro level there was an increased necessity to maintain
relationship with employees, customers, suppliers and government)
1. Micro level(At the micro level there was a shift from Transaction focus to
Relationship marketing
2. Transaction Marketing:- focuses on single sale, product features, little
emphasis on customer service and moderate customer contact.
3. Relationship Marketing:-focuses on customer orientation, high emphasis
on customer service, High commitment.
4. Related to this is Paretos Law which states that 80 % of the company
revenue comes from the 20% of the loyal customers. The fact is that
acquiring a new customer cost 5 times of retaining an existing customer.
Relationship Marketing attempts to optmise the resources for the retailing
by retaining customers.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Relationship Strategies in Relationship


Marketing

Personalization
Special Treatment Benefit:
Communication Benefits:
Rewards

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Customer
Customer service
service in
in retailing:
retailing:

-Quality and Customer service are the key elements in


relationship marketing
- The challenge is to bring 3 critical areas together
( Marketing, customer service and quality)
- Marketers with poor quality cannot exercise Relationship
- Customer service implies timeliness and reliability of
getting products and services as per expectation.
-A small retailers provide all services which supermarket
normally do not. This has increased competitiveness in Trade(
Telephone order system, Credit facilities, home delivery).
Small retailer owner himself present to offer personalized
service.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Loyalty
Loyalty Programme
Programme

1. Loyal customers are cheaper to serve:)


2. Loyal customers are willing to pay more for a
given bundle of offering
3. They act as Effective marketer for the service
offering: brings.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Identifying
Identifying the
the Loyal
Loyal Customer
Customer

Identifying the loyal customer is done by scoring them


according to how often they make purchases and how much
they spend. The RFM method is used for identifying the
Loyal customer.
RFM = Recency*Frequency * Monetary
R= Recency-If the buyer bought anything in the last 6 months /
1year or so. Assigning higher score to the more recent
purchase.
F=Frequency- How frequently they bought it. High frequent
customer gets high score.
M=Monetary- it indicates the amount of purhase made by the
customer.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Classification of Loyalty Programme:


I single operator , multi partner programme:)
2.True coalition programme:.
3. Multi sector loyalty programme:

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Sector
Sector Specific
Specific loyalty
loyalty programme
programme
supermarkets and General retail: supermarket face intense competition from
warehouse clubs, supercentres, convenient stores. They lead most other
sectors in customer data collection, analysis and level of customer service
and innovation. General retail strive a lot to know what customers actually
prefer. They try to know more about their customers. In the unorganized
sector, there is no formal reward system, it focuses on personalized service
and preferential treatment.
Telecom: Non telecom also join the Telecom Battle. Internet Telephone. eg1.
Airtel prepaid recharge reward programme provides extra talk time to the
prepaid subscriber.eg2: MTNLs reward for loyal customers with bonus
points for loyalty, usage, early payment of bills and for using unified service.
Travel and entertainment: A great deal has happened in the travel and
entertainment sector, with the particular emphasis on increasing both the
visit frequency and gifts to encourage loyalty. eg.PVR(Priya village Road
show) online booking and delivery only for the members.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Financial services: Industry at the peculiar stage.


Credit and Debit card are loyalty building tools.
A co-branded card(partnership between issuing
bank and any commercial organisation) platinum
card issued by HDFC; Air sahara andVisa.
Fuel Retailing: Fuel retailing undergoes
tremendous change in its service offering.
BPCLs High performance fuel speed in 2002.
Petromiles for fueling with speed.
Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.
pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Retail research
Retail research can help retailers to take important
decisions such as market positioning, which
retail format will be most suitable for the
particular target market,how best to display
merchandise and so on.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Module 7
Retail Audit.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

RETAIL AUDIT
Retail Process Audit
Retail Store Audit

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.

MBA@GIT

http://www.mba.git.edu.

Nielson Retail Index:


cover 4 major groups( grocery product, drug, merchandise and alcoholic
Beverages) It usually include the following variable:
1. sales on the basis of retail rupees, Distribution in terms of % of all stores
2. selling prices, retailer support interms of shelf spacing, special displays , in
store advertising.
Consumer Purchase Panel Audit:
3. It helps to understand how much product is moving through the distribution
channel. Two method for collecting this data:
4. Home audit approach: panel member aggress to permit an auditor to check the
household stock of certain product categories at regular intervals
5. Mail Dairy Method: the panel member records details of every purchase made
in certain categories and returns the completed dairy by mail at regular
intervals.

Prof. Prasad Kulkarni, Gogte Institute of Technology, Belgaum.


pvkulkarni@git.edu.