MODULE:5

Relationship Marketing in Retailing

& International retailing

-PROF.RAKESH NAGARAJ
Dept.OF MBA
CITECH
 HIGHLIGHTS
Relationship Marketing & International Retailing:
Management & Evaluation of Relationships in
Retailing, Retail Research in Retailing:
Importance of Research in Retailing, Trends in
Retail Research, Areas of Retail Research.
Customer Audits, Brand Management in
retailing, Internationalization of Retailing and
Evolution of International Retailing, Motives of
International Retailing, International Retail
Environment – Socio-Cultural, Economic,
Political, Legal, Technological and issues in
international retailing
Relationship Marketing
 It refers to all marketing activities
directed towards establishing,
developing and maintaining
successful relational exchanges.
 Relationship marketing refers to all
marketing activities directed towards
establishing, developing and
maintaining successful relational
exchanges.
- Relationship marketing draws upon
number of areas(customer quality,
customer service, social interaction)
- Relationship marketing implemented
through various components(rewards,
customer services and involvement of
customers in planning and execution of
retail strategy)
-
CUSTOMER SERVICE
 Customer service is the vital part of
Relationship Marketing
 HIGH QUALITY SERVICE
Customer Relationship
Management (CRM)

 A business philosophy and set of

strategies, programs, and systems
that focus on identifying and
building loyalty with a retailer’s
most valuable customers.

11-6
Indicators of effective relationship
marketing in retailing
 High level of trust
 High level of commitment
 Long time horizon (length of relation)
 Open communication channels
 Retailer having the customer interest at
heart
 A commitment to quality
 An attempt by the retailer to favorably lock-
in or retain the customer
 Difference between Transactional &
Relationship Marketing
Transactional
•Focus on single sale
•Orientation on product features
•Short-time scale
•Little emphasis on customer
service
•Limited customer commitment
•Moderate customer contact
•Quality is a concern of
production
Relationship
•Focus on customer orientation
•Orientation on product benefits
•Long-time scale
•High customer service emphasis
•High customer commitment
•High customer contact
•Quality is the concern of all
The CRM Process
CRM is an iterative process that turns
customer data into customer loyalty
through four activities:
1. Collecting customer data
2. Analyzing the customer data and
identifying target customers
3. Developing CRM programs
4. Implementing CRM programs
11-9
CRM Process Cycle

11-10
Major consideration of Relationship
Marketing in Retailing
 At macro level, the recognition that
marketing influence a wide range of areas
including customer, employee, supply,
internal referral and influencer such as
government & financial markets.
 At micro level, the recognition that the
nature of interrelations with customers is
changing. The emphasis is on moving from
a transaction process to a relationship
focus.
Relationship Marketing Strategies
 Personalization Benefits
 Special Treatment Benefits
 Communication Benefits
 Rewards
1. Personalisation

It describes the social content of the

interaction between service employees
and their customers. It can be regarded
as a means of showing recognition and
respect ex: Feeling of familiarity,
personal recognition, friendship and
social support by retailier. Some times
retailers recognize customers calling by
their name.
2. Special Treatment Benefit

Relationship marketing does not tell to

maintain relationship with all customers.
Customer focus and selectivity is the
key aspect of Relationship marketing. It
emphasizes relationship with the loyal
customers. Differentiation required
between loyal and the non-loyal one.
Upgradation and service augmentation
are the ways to provide special
Treatment benefit to the loyal
customers.
3. Communication Benefits

Efforts must be taken to “Stay in touch”

with customers- is the key determinants
of Relationship Marketing. Companies
use Direct mail, e-mail and telephone
and SMS service to keep in touch with
the customers.
4. Rewards

Pricing incentives, money savings, Free

gift are the ways to reward loyal
customers
Rewarding efforts must be more
functional and economical.
Relationship Marketing Efforts
 Customer Service
 Loyalty Programmes
RELATIONSHIP MARKETING
 IN ORGANISED SECTOR
 IN UNORGANISED SECTOR
Customer service: Managing gaps between
expectation and performance:

4 important dimension are need to

increase the effectiveness of customer
service:
1. Understand the level of customer
service expectation
2. set standards for customer service
3. Implement program for delivery
service
4. Undertake communication
programme to inform consumers about
the service offered.
LOYALTY PROGRAMMES
1. Loyal customers are cheaper to serve:
Retailers may not be required to invest ,
maintain and communicate with
customer(loyals) as they are already
predisposed to search for information (
new arrivals and services)
2. Loyal customers are willing to pay more
for a given bundle of offering: Customers
normally stick into one business entity
because of high switching cost and
psychological stress. They therefore willing
to pay higher prices.
 3. They act as Effective marketer for
the service offering: The word of
mouth marketing is very effective,
and many stores justify their
investment in loyalty programme by
seeking profits not so much from the
loyal customer but from the new
customer the loyal one brings.
Examples of Retail Relationship Marketing
Programmes:

 Shoppers' Stop, one of the leading apparel

retailer in India, had net sales of Rs. 1.6
Billion, increasing net profits by 96% with the
company's loyalty program, First Citizen Club
(a CRM program) accounting for 63% of the
sales.
 Big Bazar, the leading retailer that operates
multiple retail formats in both the value and
lifestyle segment of the Indian consumer
market uses the loyalty programs like Future
Card (3% discount) and Shakti Card.
 Airtel Prepaid Recharge Rewards Programme
 PVR Club membership
Cont…

 Kingfisher Miles of Chill Times. Under the Miles

of Chill Times offer all guests who fly 5 one
way trips onboard Kingfisher Airlines Kingfisher
Class can avail a free one way ticket on
Kingfisher Class between any two destinations
serviced by Kingfisher Airlines.
 Credit and Debit cards as CRM tools by banks.
 Taj Hotels InnerCircle Programme

Many more……..
RETAIL RESEARCH
 Marketing research specifies the
information required to address the
marketing issues ( marketing
opportunities, evaluate marketing
actions, monitor marketing
performace), design the method of
collecting informations , manages and
implements the data collection
process, analyses and communicated
findings and their implications.
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.
At the retail level, research is used for
concept testing, business feasibility
analysis, identifying the correct product
mix, understand ing the target market
profilce, understanding and analyzing
consumer behaviour.
Qualitiative Research Methods:

It is used to find out what is in

consumer’s mind. The retailer will be
able to get oriented to the range and
complexity of consumer activity and
concerns. Such data may help retailer to
know more about things ( feelings,
thoughts, intentions, past behaviour )
which cannot be directly observed or
measured
 Focus group study is used to identify
the most likely product positioning,
and to know the cues on the various
features which go into the shopping
such as ambience, shopping needs
and requirements, style preferences.
3 Major types:

1. Exploratory Research: defines the

problem in detail, suggest hypotheses,
used for generating ideas for new
product.
2. Orientation Method: getting to know
the consumer’s best view and
vocabulary.
 3. Clinical: Gaining insights of issues
which otherwise might be impossible
to pursue structured reseach
methods.
Qualitative research can take the
form of Focus Group Discussion,
Projective techniques(Word
assocatioation test, third person role
playing, sentence completion test)
Quantitative Research
Quantitative Research through survey:
Survey can help to understand the
consumers behaviour:
current shopping patter, to know the
size of the market, the retail formats
currently being used, size of the core
target.
Survey Method
 The survey in many forms is one of
the most widely used and well know
method of acquiring marketing
informations by communicating with
the group of customers through
questionnaire or interview. It is
efficient and economical .
CLASSIFICATIONS OF SURVEY
METHODS OF RESEARCH
 TELEPHONE
 PERSONAL
 MAIL
 ELECTRONIC
Observation Method
Observation Method of Research:
-used to provide information on current
behaviour.
 The research design can be: Casual or
systematic.
It will be easy to observe the following
information:
- what is the instore traffic pattern
- what is the customers reaction to the
displays, visual merchandising
- what is the pattern of customers movement
- Whos is the reaction to private labels
- which are frequently asked questions by the
customers
Forms of observation:
1)Direct observation: the retailer may
use an observer disguised as a shopper
to observe how long customer spend
time in the display area.
2)Contrived observation: Buying teams
disguised as customers will try to find
out what happens during normal
interaction between the customer and
the retailers.
3) Content Analysis: used to analyse
the content or messages of
advertisement
4)Humanistic Enquiry: It involves
immersing the researcher in the system
under study .The researcher maintains
two dairy1) theory construction which
records in detail the thoughts ,
premises, hypothesis 2) A detailed date
and time sequenced notes which are
kept on the technique used for enquiry
with special attention to biases or
distortions
 5) Behaviour recording devices: help
to overcome deficiencies of human
observers. People meter, Eye
movement recorders, voice pitch
analyses.
IMPORTANCE OF RETAIL RESEARCH
 AREAS IN RETAIL RESEARCH
BRANDS & BRAND
MANAGEMENT

1.41
What is a brand?
 For the American Marketing Association (AMA), a
brand is a “name, term, sign, symbol, or design, or a
combination of them, intended to identify the goods
and services of one seller or group of sellers and to
differentiate them from those of competition.”
 These different components of a brand that identify
and differentiate it are brand elements.

1.42
Brands vs. Products
 A product is anything we can offer to a
market for attention, acquisition, use, or
consumption that might satisfy a need or
want.
 A product may be a physical good, a
service, a retail outlet, a person, an
organization, a place, or even an idea.

1.43
Importance of Brands to Consumers
 Identification of the source of the
product
 Assignment of responsibility to product
maker
 Risk reducer
 Search cost reducer
 Promise, bond, or pact with product
maker
 Symbolic device
 Signal of quality 1.44
Importance of Brands to Firms
 To firms, brands represent
enormously valuable pieces of legal
property, capable of influencing
consumer behavior, being bought and
sold, and providing the security of
sustained future revenues.

1.45
Importance of Brands to Firms
 Identification to simplify handling or
tracing
 Legally protecting unique features
 Signal of quality level
 Source of competitive advantage
 Source of financial returns

1.46
Top Ten Global Brands
Brand 2006 ($Billion) 2005 ($ Billion)
1. Coca-Cola 67.00 67.53
2. Microsoft 56.93 59.94
3. IBM 56.20 53.38
4. GE 48.91 47.00
5. Intel 32.32 35.59
6. Nokia 30.13 26.45
7. Toyota 27.94 24.84
8. Disney 27.85 26.44
9. McDonald’s 27.50 26.01
10. Mercedes-Benz 21.80 20.00
1.47
Strategic Brand Management
Process

 Identifying and establishing brand

positioning and values
 Planning and implementing brand
marketing programs
 Measuring and interpreting brand
performance
 Growing and sustaining brand equity
International Retailing
International Retailing Defined
All the activities involved in
selling products
and services to final
international consumers
for their personal consumption.
Top 10 International
Retail Franchises
1. McDonald’s
2. Great Wraps
3. Subway
4. Kentucky Fried Chicken
5. Kumon Math and Reading
Centers
6. Meineke Discount Muffler Shops
7. TCBY Treats
8. Thrifty Car Rental
9. Blimpie Subs & Salads
10. Mail Boxes Etc.
 REASONS FOR
INTERNATIONALIZATION
 MOTIVES OF I.RETAILING
1. Growth and Profitability
2. E.O.Scales
3. Risk Diversification
4. Sprending R&D Cost
5. Resources and Ideas
6. Skilled man power
7. Others
Retail Formats: Variations in
Different Markets
Specialty Stores
 Retailers offering a narrow product line and
wide assortment
- Virgin Records (music products)
- Mango (youth fashion)

Specialized Markets
 Markets that house stores specializing in a
particular product category
- Jade market (Hong Kong)
- Spice market (Istanbul)
Retail Formats: Variations in
Different Markets
Department Stores
 Offer a broad variety of goods and wide
assortments
 U.S. and Canada: recent substantial losses
 Europe: expansion of national chains
throughout the European Union
 Asia: on the decline
Retail Formats: Variations in
Different Markets
General Merchandise Discount
Stores
 Sell high volumes of merchandise
 Offer limited service
 Charge lower prices
 Types:
- All-purpose: offer wide variety of
merchandise and limited depth
- Category specialists (category killers):
carry a narrow variety of merchandise
and offer a wide assortment
International Food Retailers
 Conventional
Supermarkets
 Self-service retailers with
annual sales higher than
$2 million and less than
20,000 square feet of
store space
International Food Retailers
 Superstores
 Combination stores (food and drug)
 Hypermarkets – combine supermarket,
discount, and warehouse retailing
Nonstore Retailing
 Internet Retailing
 Also known as interactive home shopping or
electronic retailing
 Includes both new dot-com companies and
traditional retailers attempting additional
market penetration
 Increase company diversification

 Vending Machines
 Increasingly popular
 Extent of use varies from country to country
Nonstore Retailing
 Television Home Shopping
 A venue for selling merchandise to consumers in
their homes using cable channels
 Examples: infomercials and direct response
advertising
 Popular in North America and Europe, and
becoming increasingly popular in Asian markets
Nonstore Retailing
 Catalog Retailing and Direct Mail
Retailing
 Venues for selling merchandise to consumers
using catalogs and other types of direct mail
 It allows for the international expansion of
retailers
 Must be adapted to local market needs and
practices
 Obstacles in developing countries:
- deficient telephone service
- unreliable mail service
- low income
- unavailability of credit cards
Nonstore Retailing
 Direct Selling
 A retailing venue whereby a salesperson,
typically an independent distributor, contacts a
consumer, demonstrates product use and
benefits, takes orders and delivers the
merchandise
 Direct selling firms are most active in the
growth markets (in emerging markets, in
particular)
ENVIRONMENT AND YOU
The Marketing Environment
Demographic

Company
Cultural Economic

Publics Suppliers
Company
Customers
Competitors Natural
Political
Intermediaries

Technological
The Microenvironment

Company

Publics Forces Affecting a Suppliers

Company’s Ability to
Serve
Customers
Competitors
Intermediaries

Customers
The Macroenvironment
Demographic

Cultural
Forces that Shape Economic
Opportunities
and Pose Threats
to a Company
Political
Natural

Technological
New Marketing Challenges
New
Marketing
Landscape &
Information Nonprofit
Technology
Marketing

Emerging
Ethical Challenges
Concerns Globalization

Changing
World
Economy
Issues in International
Retailing
 Legislation and Regulation
 Taxation and Cross Border Shopping
 Variations in Retailing Practice and
Customs
Trends in Retailing

Global
Retailing Technological
Advances Stronger
Customer
Service
BE PROACTIVE!!
BE RIGHT
Ethical and Legal Issues
in Retailing

 Consumer Fraud
 Supplier Labor
Practices
 Retail Theft
 Slotting Allowances
 Use of Customer
Information
 Ecological
Considerations