ankur report
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Pantaloon Retail India (Limited)
PROJECT REPORT
Customer relationship management
ANKUR KUMAR
Roll NO. :
Guided By
Ms. NUPUR KRISHNA Submitted by
Ankur Kumar
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.NO. PARTICULARS PAGE NO.
Acknowledgement
Preface
Company profile
Objective of the project
Research Methodology
LIMITATIONS
Suggestions/
Recommendations
Bibliography
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ACKNOWLEDGEMENT
A project is never the sole product of a person whose name has appeared on the cover. Even
the best effort may not prove successful without proper guidance. For a good project one
needs proper time, energy, efforts, patience, and knowledge. But without any guidance it
remains unsuccessful. I have done this project with the best of my ability and hope that it will
serve its purpose.
“To be or not to be is not anything which matters, how to be thankful is what really matters”
It was really a great learning experience and I am really thankful to my faculties, who not only
helped me in the successful completion of this report but also spread his precious and valuable
time in expanding my knowledge base.
I wish to acknowledge my gratitude towards LBSIMDS, my friends and all those persons who are
responsible for the successful completion of this project.
ANKUR KUMAR
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PREFACE
Business, the world over are struggling to deal with competitiveness’ in a rapidly globalized
economy. The boundaries of traditional trade partner are getting dissolved and emerging market
present future opportunities as well as new rivals. In such competitive global environment, it is
imperative for every organization to generate the highest level of customer satisfaction. To attain
these objectives, it has become necessary for the organization to look for the high skilled and
employee according to job.
These days, corporate across the world are facing a difficult task of “Customer
interaction”. Retaining its best employees, a company can improve customer satisfaction,
product sales etc. in other words a business can be improve in all over direction.
Future group is a reputed company; future group brand store such as life style, shoppers
stop, etc. Pantaloons store selling many home brands and international brands for men’s casuals
and formals and also for kids and ladies.
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introduction
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FUTURE GROUP
Future Group is India’s leading business group that caters to the entire Indian consumption
space. Led by Mr. Kishore Biyani, the Future Group operates through six verticals: operates
through six verticals: Retail, Capital, Brands, Space, Media and Logistics.
Apart from Pantaloon Retail, the group’s presence in the retail space is complemented by
group companies, Indus League Clothing, which owns leading apparel brands like Indigo
Nation, Scullers and Urban Yoga, and Galaxy Entertainment Limited that operates Bowling Co,
Sports Bar, F123 and Brew Bar.
The group’s joint venture partners include French retailer ETAM group, US-based stationary
products retailer, Staples and UK-based Lee Cooper. Group Company, Planet Retail, owns and
operates the franchisee of international brands like Marks & Spencer, Next, Debenhams and
Guess in India. The group’s Indian joint venture partners include, Manipal Healthcare,
Talwalkar’s, Blue Foods and Liberty Shoes.
Future Capital Holdings, the group’s financial arm, focuses on asset management and
consumer credit. It manages assets worth over $1 billion that are being invested in developing
retail real estate and consumer-related brands and hotels. The group has launched a consumer
credit and financial supermarket format, Future Money and soon plans to offer insurance
products through a joint venture with Italian insurance.
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The group is currently developing over 50 malls and consumption centers across the country
and has formed a joint venture company focusing on mall management with Singapore-based
CapitaLand, one of Asia’s largest property companies. .
Future Group’s vision is to, “deliver Everything, Everywhere, Every time to Every Indian
Consumer in the most profitable manner.” The group considers ‘Indian-ness’ as a core value
and its corporate credo is - Rewrite rules, Retain values.
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Specialized besinesses
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Major Milestones
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1987 Company incorporated as Manz Wear Private Limited. Launch of Pantaloons
trouser, India’s first formal trouser brand.
1991 Launch of BARE, the Indian jeans brand.
1992 Initial public offer (IPO) was made in the month of May.
1994 The Pantaloon Shoppe – exclusive menswear store in franchisee format launched
across the nation. The company starts the distribution of branded garments
through multi-brand retail outlets across the nation.
1995 John Miller –Formal shirt brand launched.
1997 Pantaloons – India’s family store launched in Kolkata.
2001 Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s first hypermarket chain
launched.
2002 Food Bazaar, the supermarket chain is launched.
2004 Central – ‘Shop, Eat, Celebrate In The Heart Of Our City’ - India’s first seamless
mall is launched in Bangalore.
2005 Fashion Station - the popular fashion chain is launched
all – ‘a little larger’ - exclusive stores for plus-size
individuals is launched
2006 Future Capital Holdings, the company’s financial arm launches real estate funds
Kshitij and Horizon and private equity fund In division. Plans forays into
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insurance and consumer credit.
Multiple retail formats including Collection i, Furniture Bazaar, Shoe Factory,
EZone, Depot and futurebazaar.com are launched across the nation.
Group enters into joint venture agreements with Generali.
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Pantaloon: A brief history
The first Pantaloon was opened in Gariahat in 1997. Over the years, it has undergone
several transitions. When it was first launched, this store mostly sold external brands.
Gradually, it started retailing a mix of external brands while at the same time introduced
its own private brands. Initially positioned as a family store, it finally veered towards
becoming a fashion store with an emphasis on 'youth' and clear focus on ‘fresh fashion’
As India’s leading retailer, Pantaloon Retail inspires trust through innovative offerings,
quality products and affordable prices that help customers achieve a better quality of life
every day. We serve customers in 85 cities and 60 rural locations across the country
through over 15 million square feet of retail space.
Pantaloon Retail is the flagship company of Future Group, India’s retail pioneer catering to the
entire Indian consumption space. Through multiple retail formats, Pantaloon connect a diverse
and passionate community of Indian buyers, sellers and businesses. The collective impact on
business is staggering: Around 220 million customers walk into the stores each year and choose
products and services supplied by over 30,000 small, medium and large entrepreneurs and
manufacturers from across India. This number is set to grow. Celebrate the Fresh Look, Fresh
Feel & Fresh Attitude at Pantaloons Fresh Fashion !Fashion is all about the now. Why, then
should people not see a fresh look every time they walk into a Pantaloons store? That is the
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thought behind 'Fresh Fashion'. An idea that has captured the imagination of young India. With
a focus on the youth of today, Pantaloons offers trendy and hip fashion that defines the hopes and
aspirations of this demography. Pantaloons Fresh Fashion stands out as a fashion trendsetter, on
the lines of how fashion is followed internationally. The ‘look’ and ‘what’s in’ today for the
season is sacrosanct. Pantaloon takes its promise of 'fresh fashion' very seriously making
available to its customers the latest in fashion every week! All Pantaloons stores reflect the new
ideology -- Fresh Feeling, Fresh Attitude, Fresh Fashion. The stores offer fresh collections and
are visually stimulating thanks to appealing interiors and attractive product display!
.Today, the fashion store extends to almost all the major cities across the country. Pantaloons has
established its presence with stores not just in the metros, but also in smaller towns.
Pantaloons stores have a wide variety of categories like casual wear, ethnic wear, formalwear,
party wear and sportswear for Men, Women and Kids.
PARTNER COMPANIES OF PANTALOON
1. Home Solutions Retail (India) Ltd:
2. Future Capital Holdings:
3. Indus league clothing Ltd. :
JOINT VENTURES COMPANIES
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1. Planet Retail Holdings Ltd. :
2. Footmart Retail:
3. Capital Land Retail India:
LINE OF BUSINESS
e – tailing
Futurebazaar.com offers the widest range of products at ‘lowest prices –
everyday!’
Having pioneered the retailing business in India, PRIL has now decided to
revolutionize the consumer e-commerce business in India. It intends to provide
customers with a streamlined, efficient and world class personalized shopping
experience, which will be supported with the best technology platform.
Buying products is a 3 step simple process. All one has to do is Search, Register
and Buy. Here you can expect a shopping experience akin to shopping at an
actual bazaar but with added simplicity & everyday low prices and an assurance
of 'your product' will be delivered within 7 days of purchase.
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We are proud to inform you that Future Bazaar has been named as the Best
Indian Website 2007 in the Shopping category by PC World.
Future Bazaar won the top spot after beating other established players like
Rediff, Indiatimes, Sify, ebay, Indiaplaza, Chennai Bazaar and India Mall. The
award was presented to Future Bazaar for its "decent, no-nonsense approach,
while providing a good shopping experience".
2.Food
Brew Bar: The Brew Bar is a classy and refined; yet reasonable an
egalitarian a bar with loads of bonhomie.
Café Bollywood: Indian street food but with assurance of highest levels of
hygiene and quality.
Food Bazaar: Life is all about good taste and food bazaar aims to ensure
the same. With the low prices, a wide selection of products and
guaranteed freshness, you are bound to find it irresistible.
Sports Bar: A bistro focused on the world of sport, the Sports Bar is
complimented with an unrivalled ambience.
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3.Fashion:
ALL: Shop big and shop for big, coz fashion just got a little larger! Fashion
for plus size people.
Big Bazaar: If value for money is what drives your purchase; there can be
no better place for you other than Big Bazaar.
Blue sky: Accessories like never before....get the best in sunglasses and
watches at your kind of prices.
Central: A showcase, seamless mall for all your needs. Located in the heart
of your city, Central invites you to Shop, Eat, and Celebrate.
Fashion station: Fashion Station takes fashion a notch higher in the value
segment... for the ones who have an eye for it.
Giny & Jony: Gini and Jony is a lifestyle brand with a radical approach to
kids’ fashion. The brand caters to an age group of 2 to 16 years, that is
uber chic, style conscious and stresses on a “head to toe” fashion concept.
Navaras: Navaras is a fine 22 carat pure gold and diamond jewellery brand,
retailed from Big Bazaar stores.
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Lee Cooper: Regarded as a brand that is fun to wear and be associated
with, Lee Cooper offers the entire range of lifestyle products in fashions
category for young men and ladies.
Pantaloons: Today a leader in fashion... Promises Fresh Fashion for
PANTALOONS: Fashion by Pantaloons
Pantaloons is the company's departmental store and part of life style retail format. In fact, PRIL
took its very initial steps in the retail journey by setting up the first Pantaloons store in Kolkata in
1997. In a short time Pantaloons has been able to carve a special place for it self in the hearts and
minds of the inspirational Indian customers. The Stores have entire range of Menswear,
Women’s wear, Kids wear, Active wear, Accessories, Cosmetics, Fragrances, Home ware,
Jewellery, Toys, Books, Music, Stationery, Gift, Novelties, etc.
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With 16 stores across the country and an ever-increasing stable of private brands, Pantaloons - in
the coming years is poised to become a leading fashion trendsetter.
Growth through private labels: A striking characteristic of Pantaloons has been the
strength of its private label programme. In Pantaloons 70% of apparel sales come from own
labels. John Miller, Ajile. Scottsvile, Lombard, Annabelle, Honey, Bare are some of the
successful brands created by the company.
Manufacturing: There is a drive for backward integration, into manufacturing. Pantaloons is
a manufacturer retailer. Manufacturing helps the company plan the products better depending on
what is selling at the stores and also helps better margin. The company has trouser manufacturing
unit in Tarapur and a denim plant in Goregaon, Mumbai.
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CRM in Pantaloon
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CONSUMER BUYING BEHAVIOR
Understanding the buying behavior of the target market is the essential task of
marketing management under marketing concept. The consumer market consists of all
the individuals and households who buy or acquire good and services for personal
consumptions. The buying behavior tries to find out the answers for the questions, who
buys? How do they buy? Where do they buy? Do they buy?
(A)FACTORS INFLUENCING CONSUMER BUYING BEHAVIOR
There are four major factors that influence the buying behavior such as cultural factors,
social factors, personal factors, and psychological factors.
i. CULTURAL FACTORS: Culture is the most fundamental determinant of a
person wants and behavior. Values, perceptions, preferences, and behavior are the
main variable under culture of an individual. Each culture contains sub-culture like
nationality, religious group, geographical area, and linguistic divisions etc.
ii. SOCIAL FACTORS: A consumer behavior is also influenced by social factors
such as the consumer reference group family and social roles and status.
iii. PERSONAL FACTORS: A buyer decision is also influenced by his or personal
characteristics, notably the buyers age, lifestyle, occupation, economic
circumstances etc.
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iv. PSYCHOLOGICAL FACTORS: a person buying choice is also influenced by
four major psychological factors such as motivation, perception, learning belief
and attitudes
(B) BUYING DECISION PROCESS
It includes buying roles, types of buying and steps in buying process.
I. BUYING ROLE
The buying role could be classified into four parts. These are initiator, influencer, decider
and buyer.
II. TYPES OF BUYING BEHAVIOR
Consumer decision taking varies with the type of buying decision. There are four types
buying behavior such as Complex buying behavior, Habitual buying behavior, Variety
seeking buying behavior.
III. STAGES IN BUYING DECISION PROCESS
Here are five stages in buying decision process namely problem recognition search,
evaluation of alternatives purchase decision and past purchase behavior.
NEED RECOGNITION
The buying process starts with the buyer’s recognition of a problem of need. The buyer
senses a difference between his actual state and desired state.
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INFORMATION SEARCH
There are different sources from where a consumer can gather information like personal
sources commercial sources, experimental sources.
EVALUATION OF ALTERNATIVES
After gathering information about different products the customer will be in a fuss as to
choose which product among the mainly alternatives consumer usually evaluate the
alternatives on traditional basis, on the basis of utility function etc. from the many
alternative consumers at last choose the best one for him.
PURCHASE DECISION
A consumer who decides to execute purchase intention will be making up to five
purchase decisions.
POST PURCHASE BEHAVIOR
After purchasing the product and services the consumer will experience some level of
satisfaction or dissatisfaction with the product and services that will influence subsequent
behavior. If consumer is satisfied he may show the probability of buying the product the
next time, satisfied customer will say good thing about the product, proving the statement
that "satisfied customer is the best
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Advertisement.” A dissatisfied customer may take some action against it. They may try to
reduce the dissonance by abandoning returning the product.
Understanding consumer needs and buying process is the foundation of any company. By
understanding how buyers go through problem recognition, information search evaluation
of alternatives, the purchase decision and post purchase behavior marketers can pick up
many clues as to how to meet buyers need.
LITERATURE REVIEW
Marketing
Marketing is a societal process by which individuals and groups obtain what they need
and want through creating, offering and freely exchanging products and services of value
with others or otherwise it is the process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods, services to create exchanges that
satisfy individual and organizational goals.
Marketing Strategy
Marketing strategy is a set of objectives, policies and rules that leads the company's
marketing efforts. It is the marketing approach to accomplish the bread objective of the
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marketing approach to accomplish the bread objective of the marketing plan. The various
process of marketing strategy are given below.
1. Selecting largest markets segmentation
2. Positioning
3. Product
4. Price
5. Place
6. Promotion
7. Research and development
8. Marketing research
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Market segmentation and selecting target market
It is an effort to increase a company's precision marketing. The starting point of any
segmentation discussion is mass marketing. In mass marketing, the seller engaged in the
mass production, mass distribution and mass promotion of one product for all buyers.
Market segment consists of a large identifiable group within a market with similar wants,
purchasing power geographical location, buying attitudes or buying habit. It is an
approach midway between mass marketing and individual marketing. Through this the
choice of distribution channels, and communication channels become much easier. The
researchers try to form segments by looking at consumer characteristics; geographic,
demographic, and psychographic. After segmenting the market then target market
selected.
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2. Positioning: - The positioning is a creative exercise donw with an existing product.
the well known products generally hold a distinctive position in consumer's minds. The
positioning requires that every tangible aspect of product, price, place and promotion
must support the chosen positioning strategy. Company should develop a unique selling
proposition (USP) for each brand and stick to it, PPL consistently promotes its DAP
fertilizer by Higher yield at lower cost. As companies increase the number of claims for
their brand, they risk disbelief and a loss of clear positioning. In general a company must
avoid four major positioning errors. Those are under positioning over positioning,
confused positioning and doubtful positioning.
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3. Product: - A product is any offering that can satisfy a need or want. The major types
of basic offerings are goods, services, experiences, events, places, properties,
organizations, information and ideas. The company gives more importance in quality,
packaging, services etc. to satisfy the customers. The products has it's life cycle. The
product strategies are modified in different stages of product life cycle.
4. Price: - It is the most important aspect in company's point of view. Price of the
product will be decided by the company according to the competitor's price.
5. Place: - This plays a major role in the entire marketing system. The company
emphasis on its distribution network. Proper distribution network gives proper
availability of the product.
6. Promotion: - Promotion is the one of the major aspects in marketing strategies. By
adopting various promotional activities the company create strong brand image. It also
helps in increasing the brand awareness. It includes advertising, sales promotions and
public relations etc.
7. Research and Development: - After testing, the new product manager must develop
a preliminary marketing strategy plan for introducing the new product in to the market.
The plan consists of three parts. The first part describes the target market's size, structure
and behavior. The second part out lines the planned price, distribution strategy and
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marketing budget for the first year. The third part of the development describes the long
run sales and profit goals and marketing mix strategy over time.
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MARKETING MIX
Target Market
Product Price Promotion Place
Product variety List price Sales promotion Channels
Quality Discounts Advertising Coverage
Design Allowances Sales forces Assortments
Features Payment period Public relation Locations
Brand name Credit terms Direct marketing Inventory
Packaging Transport
Sizes
Services
Warranties
Returns
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MARKETING STRATEGY
Marketing is not Euclidean geometry a fixed system of concept. Rather marketing
is one of the dynamic fields with in the management arena. The market faces continually
a new challenge everyday and companies must respond to it positively. Therefore it is
not surprising that new market idea keep surfacing to meet new market place challenges.
The market process is applicable to more than goods and services. Anything
related to market including ideas, events, policies, prices and personalities comes under
market strategy. However it is important to emphasize opportunity in the market through
market strategy.
Following strategies adopted by the organization.
A strong quality of the product and customer satisfaction:
Customers always believe in good quality product. in my Study I found that in
percentage term more people is quality conscious and not price conscious. Customer
satisfaction is very important part of the organization that at any cost they have to fulfill.
A growing relationship with customer and customer retention:
Nowadays a good relation with customer is very important for organization. Sale is
totally depending on the relation with the customers. Customer's retention is also a major
aspect for growing business. It means keep the old customer and try to make new
customer.
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Focus on competitors activity:
Every organization should must be careful about it's competitors step, because they
can disturb the growing sales process of the organization.
A growing emphasis on global thinking and local marketing planning:
Companies are increasing by pursuing market beyond their borders. When they enter
other countries they must follow the tradition of that country and also they make plan for
local market that which type of product has more demand and how can it run in the
market.
Promotional Strategy
Under the market strategy promotional idea is very important. Organization provides
some schemes or rebates to retailers or consumers. They make advertisement according
to convenient of the people and the feature of the product.
So on the basis of marketing strategy a organization runs in the market. It is several
types of which makes helpful to increase sales and turnover of the organization.
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RESEARCH METHODOLOGY:RESEARCH METHODOLOGY:
The research for the study comprised of:The research for the study comprised of:
A. SECONDARY RESEARCH:
A comprehensive secondary research was carried out to find out the various factors that
affect the buying decisions of the consumers in a department store. The main objective of
this study was to analyze how much significant effect each of these factors has on
conversion rate of a store and also their influence on the buying decisions of the
consumers.
It consisted of:
- Searching secondary data sources, which included books, journals, magazines, Internet,
library, etc.
- Research and analysis of the secondary data collected from the store to determine the
trends.
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LIMITATIONS OF THE PROJECT
1) Organized retailing in India as an industry has just started to prosper with the emergence of
FDI1 in retailing and emergence of shopping malls2 in India
2) The loyalty programme of organized retailers mentioned in the project are very similar
compared to international loyalty programs
3) The CRM implementation in retail has just been started in retailing in the form of supplier
goods purchase and customers
4) The Study is too small to predict the initial reaction of customers towards different loyalty
clubs
5) Time needed to study the CRM Process along with the loyalty programs of the retailing
industry
6) In relation to customer loyalty Study the organization also needs to do employee loyalty
Study which would form a base to an CRM process
Research Findings - Customer Relationship management in pantaloons1
2
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3.1 SCIENCE OF SHOPPING
The science of shopping is a hybrid discipline, part physical science and part social science and
only part science at all because it is also an art. It is a practical field concerned with providing
information that can improve the retailer's edge and the odds of making a wrong decision. Much
of the value of the science lies in the ability to go beyond collecting data and making educated
guesses about what it means and how best to respond.
3“A recent study discovered that 75-80 per cent of shoppers often leave a store without any
purchases due to the inability to find products or differentiate between them.” Here comes the
two-fold challenge. How to connect with the customer and at the same time grow in a
competitive marketplace crowded with similarities at every level? Since the mass market and
universal audience are things of the past, traditional advertising no longer works to convey a
brand's image with a difference. In search for growth, companies must think beyond
conventional avenues. For most, growth is not always about square footage expansion but
making the most of what they already have.
The very concept of conversion rate implies that shoppers need to be transformed into buyers,
i.e. when potential customer becomes an actual customer. Conversion rates vary widely
depending on what kind of store or product we're talking about. In some sections of the
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supermarket, conversion rate is probably 100% (dairy or toilet paper). In an art gallery full of
paintings, probably the conversion will be less than 1%. Conversion rate measures what you
make of what you have - it shows how well or how poorly the entire enterprise is functioning.
3.2 CUSTOMER SERVICE
For a retailer, it costs more to get new customers than to keep the ones you have. Also the longer
you can keep a customer, the more valuable that customer becomes. Studies done by consultants
such as McKinsey have shown that repeat customers generate over twice as much gross income
than new customers.
4"Firms that only understand buyer behavior may do a good job of selling existing products
within existing channels of distribution. But firms that understand consumption behaviors are
able to create value with new or improved products and distribution channels.”
For example, if an apparel retailer wants to find out what types of clothing its typical customers
really want to buy, it might want to get into consumers' closets, literally. Enlightened retailers
might ask women to show them how they put together their wardrobes -- how they use the
fashions they own, which may span several years. From such an exercise, retailers can learn how
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consumers mix and match items, which items they choose to keep in their closets for many years,
and why.
However, many organizations do not allocate the time, or the money, to educate and train their
employees to deliver the service customers want. Often, the reason is that those organizations
don't realize how important customer service is to their bottom lines.
Importance of a good customer service:
Educating employees to provide quality service works to an organization's advantage in
many ways. Of primary importance is that it improves customer retention. By finding out
what services customers want -- and then delivering them -- businesses can develop and
nurture a strong, loyal customer base.
Loyal customers are not only important, they are essential. 5”Research shows 65 percent
of a typical organization's business comes from current loyal customers.”
Besides making up a base of customers who continue to purchase a company's products or
services, those loyal customers help drive the company's business by delivering the most
powerful and cheapest form of advertising available: word of mouth. A strong customer base
is the most credible source to potential customers, spreading the reputation of the business,
free of charge, and attracting new customers.
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6As a customer's relationship with [a] company lengthens, profits rise. “Customer
defections have a surprisingly powerful impact on the bottom line. It is common for a
business to lose 15 to 20 percent of its customers each year. When defections are cut in
half, the average growth rate more than doubles. A five percent change in rate of
retention swings profit increases from 25 percent all the way to 100 percent.”
Bad service has another pitfall: It causes employee turnover. Studies have shown that
employee turnover was inversely proportional to employee perceptions of the quality of
service provided by their employers. When service is perceived as bad, not only do
consumers not like to patronize the company, but employees don't like to work for it.
The highest turnover rates are associated with companies possessing the lowest employee ratings
of service quality. That finding was confirmed when Sears Studyed customers in 771 of its
stores. In stores that received relatively high customer service ratings, 54 percent of the sales
force turned over in a year compared with 83 percent at stores with low customer service scores.
How we treat customers throughout the year when they are purchasing or even
when they are returning items, sets the stage for their future business.
Contradictions in consistency will drive them to the competition. You see the gift
at the holidays, is the gift our customers give us by coming back to show how
much they have appreciated us all year long!
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Employees are not bad performers, just poorly trained. In order to have consistent
service, employees must have consistent training on a continual basis. What's
more is that they must be held accountable for their performance on a continual
basis, not just at a once a year review time. Lastly, employees need to be rewarded
consistently so that they realize their importance in the company. Without them,
there would be no business, now would there?
Treating Customers Well:
We make it difficult for them to buy and then we make it more difficult for them to
bring it back and we wonder why they choose to shop elsewhere?
Train the employees to have patience to work within store policy and to do it
positively while showing how proud they are of the store and its products.
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Customer Relationship Management (CRM)
CRM is a management approach that seeks to create, develop and enhance relationships with
carefully targeted customers to maximize customer value, corporate profitability and shareholder
value. CRM leverages information technology (IT) to implement relationship-marketing
strategies. Already customers are getting actively involved, either directly or indirectly with
production processes. They make suggestions, they ask for smaller, brighter, easier-to-use
products.
CRM is not a tool that is specific to any industry type, so there is no one single definition of
Customer Relationship Management. It is up to the organization to formulate one for itself in
order to achieve the CRM goals that it sets for itself. Companies that have adopted CRM regard
every customer as an individual with specific needs and tailor their services accordingly.
Information Technology comes into the picture to help manage Customer relationships in an
organized way.
On an average a company has only a 5 to 20 percent probability of making a successful sale to a
new prospect but has a 60 to 70 percent probability of selling again to active customers. It would
be wiser to invest in encouraging an existing customer to purchase again. Companies that
followed up lapsed cases experienced 20 to 40 percent successful sales. Without a doubt
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customer retention is vital to every company's long-term profitability and success and CRM,
through target selling and customer loyalty programs, can help to motivate the best customers
and to remain loyal as a method of increasing revenues internally.
Rising customer expectations have stiffened the competition among companies to improve their
customer support services. Today’s customer has access to the latest technological devices that
give him instant information, allows him to make instant transactions, buy, sell or transfer
money, he has access to it all over his palm top, PDA, mobile phone or desktop. Today’s
customer is knowledgeable, he knows what he wants and the Internet is a powerful tool in his
hands.
More than ever, customers today have an important role to play in the product lifecycle.
Customers are continually pressing for improved support services in terms of product coverage,
business-ease, response-time and price (or at least value-for-money!).” With a wide variety of
services available at competitive prices and easily accessible at the click of a button, improved
customer services are becoming the need of the day. Customers are driving companies to migrate
from being purely product-centric to purely customer-centric, taking care of all customer
requirements even before they are demanded.
From current customer trends, it is easy to define the future customer. The volume of
information available via the Internet will make the future customer a knowledgeable one. As
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more customers and businesses go online, the Internet will foster a global community that
communicates at real-time. Customers will have access to a wider variety of products and prices
to choose from. To stay ahead of competition, companies will have to anticipate customer needs
even before a need arises. As more and more women began to drive two wheelers in India, the
smarter manufacturers realized that one factor that might hold a sari-clad woman back, would be
having to kick-start her bike. Along came the self-starter button and presto, a surge of women
two wheeler drivers! The success of companies will depend on how well they are able to predict
customer behavior, anticipate requirements and provide for them. The future customer will have
a larger stake in the company’s project plans, his input will have value and his feedback will be
consequential to the development of products or the way a service is delivered. This implies a
significant alteration in the supply chains that we see today.
Figure Figure
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The CRM strategy should include:
(a) Operational CRM: Automating interaction with the customers and sales force, and
(b) Analytical CRM: Sophisticated analysis of the customer data generated by operational CRM
and other sources like POS (Point of Sales) transactions, web site transactions, and third-party
data providers.
A typical retail organization has a huge customer base and often customer's needs are fairly
differentiated. Without the means to analyze voluminous customer data, CRM Strategy is bound
to be a failure. Hence, Analytical CRM forms the core of a retailer's customer relationship
strategy. Marketing and sales functions are the primary beneficiaries of Analytical CRM and the
Main touch points from where the insights gained about the customer is absorbed in the
Organization. Analytical CRM uses the key business intelligence tools like data warehousing,
data mining, and OLAP to present a unified view of the customer.
Following are some of the uses of Analytical CRM In Retailing
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Customer Segmentation
Customer segmentation is a vital ingredient in a retail organization's marketing recipe. It can
offer insights into how different segments respond to shifts in demographics, fashions and trends.
For example it can help classify customers in the following segments
1) Customers who respond to new promotions
2) Customers who respond to new product launch
3) Customers who respond to discounts
4) Customers who show propensity to purchase specific products
Campaign/ Promotion Effectiveness Analysis
Once a campaign is launched its effectiveness can be studied across different media and in terms
of costs and benefits; this greatly helps in understanding what goes into a successful marketing
campaign.
Campaign/ promotion effectiveness analysis can answer questions like:
Which media channels have been most successful in the past for various campaigns?
Which geographic locations responded well to a particular campaign?
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What were the relative costs and benefits of this campaign?
Which customer segments responded to the campaign?
Customer Lifetime Value
Not all customers are equally profitable. At the same time customers who are not very profitable
today may have the potential of being profitable in future. Hence it is absolutely essential to
identify customers with high lifetime value; the idea is to establish long-term relations with these
customers. The basic methodology used to calculate customer lifetime value is - deduct the cost
of servicing a customer from the expected future revenue generated by the customer, add to this
the net value of new customers referred by this customer, and discount the result for the duration
of the relationship. Though this sounds easy, there are a number of subjective variables like
overall duration of the customer's relation with the retailer, gap between intermediate cash flows,
and discount rate. We suggest data mining tools should be used to develop customized models
for calculating customer lifetime value.
Customer Loyalty Analysis
It is more economical to retain an existing customer than to acquire a new one. To develop
effective customer retention programs it is vital to analyze the reasons for customer attrition.
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Business Intelligence helps in understanding customer attrition with respect to various factors
influencing a customer and at times one can drill down to individual transactions, which might
have resulted in the change of loyalty.
Cross Selling
Retailers use the vast amount of customer information available with them to cross sell other
products at the time of purchase. This effort is largely based on the tastes of a particular
customer, which can be analyzed using BI tools based on previous purchases. Retailers can also
'up sell' - sell more profitable products - to the customer at the time of contact.
Product Pricing
Pricing is one of the most crucial marketing decisions taken by retailers. Often an increase in
price of a product can result in lower sales and customer adoption of replacement products.
Using data warehousing and data mining, retailers can develop sophisticated price models for
different products, which can establish price - sales relationships for the product and how
changes in prices affect the sales of other products.Target Marketing
Retailers can optimize the overall marketing and promotion effort by targeting campaigns to
specific customers or groups of customers. Target marketing can be based on a very simple
analysis of the buying habits of the customer or the customer group; but increasingly data mining
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tools are being used to define specific customer segments that are likely to respond to particular
types of campaigns.
Figure Figure
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Designing a customer loyalty program
Customers' expectations are increasing. They want: service, products that meet their Needs,
value for money and added benefits. In response to this, retailers are stepping up. Their
promotional activity to the extent that sales and special offers have become Everyday affairs,
rather than end of season stock clearances. As a result margins are Being eroded to dangerously
low levels. Some retailers have introduced card-based collector schemes that give electronic
points According to the customer's spend, which are subsequently exchanged for gifts or
Discounts. The more strategically minded retailers are introducing systems that monitor
Customer behavior in order to respond better to their increasing demands. Both Approaches are
commonly known as customer loyalty programmes, however, the latter Approach is the only one
that is sustainable and really merits being considered as such.
The basic electronic points schemes are just another way of delivering a promotion and rely upon
giving a higher value incentive to differentiate from the competitors. The objective should be to
maintain the customer's loyalty, not by bribery, but by offering a Better service, thus preserving
margins and profitability. This section examines the elements that need to be considered when
designing a customer loyalty programme. It defines the strategic objectives and examines what
components of the scheme are needed to achieve the benefits, including mechanics and customer
rewards. Finally, it reviews some data analysis techniques that can be used to refine the scheme
in the light of experience gained from running targeted promotions.
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What is Customer Loyalty?
Customer loyalty involves building a long-term relationship between the supplier and the
individual customer in order to improve profitability. To achieve this the supplier needs to
understand the customers' spending habits and know what products they currently buy (and don't
buy) so that any communication can be meaningful. Customers respond better to someone who
understands their special needs - a personalized approach offering products that are really
relevant is more likely to produce the required result.
Ideally, all customers need to be approached with something that motivates them to spend more
if maximum growth is to be achieved, which is not possible from a single, all encompassing
campaign. If traffic through the store needs building or a supplier has a new product, the focus
will be on ways of attracting new customers. In all cases there is an essential need to know and
understand the spending habits of existing customers and what entices new shoppers into the
store. A successful scheme is one that engenders sustainable, long-term loyalty at an affordable
cost. This cannot be achieved with bribery alone, the customer needs to feel wanted and
special. It should be embraced with a comprehensive customer care programme.
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Objectives and Benefits
When designing a customer loyalty programme it is, first, important to agree the strategic
objectives. These will differ from scheme to scheme. To increase profit the aim will be to change
customer behavior and, in particular, they’re buying habits. In a declining market customer
retention may be the only objective. A number of key objectives and the benefits to expect are
discussed below:
increase the turnover and profit
customer retention
establish long term relationships
improve product awareness
develop advocates
increase frequency
cross sell departments
reduce mark-downs
improve the effectiveness of direct marketing
Increase Turnover and Profit
In any business, other than a declining market, the key aim of a customer loyalty scheme must be
to increase profitability - there is no point in rewarding customers for their loyalty and getting
nothing additional in return. To be worthwhile increased loyalty must result in increased spend
(i.e. turnover), whilst retaining reasonable margins, thus improving profits.
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Recent tests have shown that a spend related reward scheme can increase average spend by 30%,
however, a realistic target would be 10 to 20% on a long term basis.
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Customer Retention
Clearly, one approach to retaining existing customers is to offer a suitable reward scheme.
However, giving away something to those customers who would have made the purchases
anyway is not cost effective. Instead of expensive "give-away's" the customer needs to be given
special privileges as a member of an elite and prestigious club. By raising the self-esteem of the
customer and communicating on a personal level with worthwhile information, and making
offers which are relevant, the perceived value can be made to appear high but at a relatively low
cost.
Establish Long Term Relationships
By definition, this should be one of the aims of all customer loyalty schemes. It is widely
Accepted that it is a lot easier (and more cost effective) to sell to the existing customer base.
Also, some organizations establish a dialogue with their customers in order to obtain regular
feedback on its products and services rather than conducting ad-hoc customer Studys. It is vitally
important to know the customer's view of new and existing products and to gauge their reaction
to targeted promotions.
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Improve Product Awareness
A loyalty scheme that restricts redemption to November and December will increase the
frequency during the key months when Diwali products are on display, therefore increasing
awareness. Also, the availability of a new product can be communicated to those customers
likely to be interested with the aid of a suitable customer marketing database.
Develop Advocates
Personal recommendation is the best way of attracting new customers - a genuinely loyal
Customer will become an advocate for the organization. Two recent trials demonstrate the
pulling power of a loyalty scheme. With no advertising other than point of sale within the stores
dramatic increases in club membership were seen. In both cases a loyalty scheme was devised
for members of a long established club.
Increasing Frequency
Out of town stores normally have a higher average spend than high street stores because
Customers want to make it worthwhile to travel the distance. Consider the gain to be made with
one additional visit per customer where the average spends is RS 300 and the annual frequency is
4. This situation is, again, often related to the customer segment and suggests targeted offers
would be beneficial. An appropriate reward scheme might be visit related for, example, spend
over RS 300 on 4 occasions within a month to earn a reward, or a free instant win prize on each
visit.
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Cross Selling Departments
High street chemist chains stock a wide variety of products and often enjoy high frequency but
very low averages spend. This is partly as a result of an association certain customer groups have
with a particular product, for example, ladies may buy cosmetics on a regular basis but nothing
else. If this situation can be identified there is an opportunity for cross-selling departments.
Reduce Mark-Downs
These days mark-downs have increasingly become a standard way of selling rather than a
Mechanism for clearing unwanted or ends of season stock. This has resulted in eroded margins
and reduced profits. A loyalty scheme will reduce the need to employ these tactics. Where stock
needs to be cleared an alternative to price reductions is to make special offers to loyalty
customers. This has the added benefit of increasing the value of the loyalty scheme to existing
members and providing a powerful reason for new customers to join.
Effectiveness of Direct Marketing Improving the
Mails are costly. Indiscriminate mass mails are wasteful and even more costly. Whereas there is,
perhaps, little scope to reduce the cost per person of direct marketing, 'hit' rates can be improved
dramatically by targeting those customer groups most likely to respond to the product(s) on
offer. This means a bigger return from the campaign or an equivalent return from fewer mailed
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customers. To achieve this we need to understand what products are likely to appeal to particular
customers groups.
Elements of a Successful Scheme
Since, by definition, a scheme needs to be long term and cost effective, the customers' interest
needs to be maintained. To achieve this it is important to:
Make the scheme understandable and easy to use
Offer a reward with wide appeal and a high perceived value
Communicate with the customer in a way which is meaningful to them
Establish a way of "locking-in" the customer
The Mechanic
There is no universal reward mechanic that will work for everyone. It has to be designed taking
into account the:
Strategic objectives
Retail operation
Frequency of purchase
Value of purchase
Average spend
Customer types and groups
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Whatever is appropriate it is essential to communicate to the customer what he/she has Earned.
In a reasonably high frequency outlet this will normally mean telling the customer his/her
cumulative "points" balance at the point of sale at every purchase. Statement based schemes
where the customer is informed at three monthly intervals are only appropriate for low frequency
operations. Constantly reminding the customers of the benefits that are accruing will maintain
interest and motivate them to reach their target even quicker. Depending upon the objectives the
"points" can be related to one of the following:
Spend
To increase average spends. There may be a minimum purchase necessary and increasing Level
of points or discounts earned for an increasing spend. Particularly useful for low value products.
For example: 1 point for every RS 50 done by most of the retailers in India.
Frequency
Appropriate to build traffic through the store, where the propensity to spend is already high for
visitors. Also, useful to make customers aware of new products on display in the store at the start
of a new season. For example: spend RS 300 on 4 separate visits in a month and receive 100
bonus points.
Period
Special offers to attract customers on light days. For example: double points on Mondays.
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Product/Department
Provides the means by which suppliers can participate in the scheme by funding special offer
points.
The Reward
To motivate the customer to participate the choice of reward is vitally important. Of course, it is
highly dependent upon the type of customer, but in all cases it should be:
Attractive and desirable to the target audience.
Achievable in a reasonable timescale whilst bearing in mind that the customer should be
made to work for his/her reward but not feel that it is only appropriate for the very high
spenders. Increasing value rewards for increasing spend enables the impatient to receive
some reward quickly to get them "hooked".
A range of rewards to give broad appeal to a wide range of customers.
A high perceived value to make it a genuine reward for loyalty.
Low actual costs. Can be achieved by offering shelf products, which have an in-built Margin.
A cash-in dates so that the liability can be calculated and cleared down. Interestingly, a Cut-
off date does increase spend as customers strive to maximize their points before Closure.
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Types of Reward
These fall into four categories:
Own Goods
For example: gift vouchers, discounts or services. Generally low cost because the
reward has a built-in margin. Applicable when the product is desirable and is not
replacing genuine purchases that would have been made anyway. Perhaps surplus
product can be used (as long as it is still desirable). Not appropriate if there is no
direct benefit to the customer or his/her family such as free petrol to a company car
driver.
Currencies
For example: Most of the airlines use in India Free Air Miles, which can be used
for discount travel, holidays, car hire, hotels etc. Provides a good mechanism for
broadening the appeal and providing a range of rewards easily.
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Gift Catalogues
Gifts as in terms if Vouchers given by Retailers to their customers.
Affinities
Increasingly popular for schools, charities etc. The reward has to be appealing to
the charity concerned. Though hardly any retailers use it in India.
Funding the Reward
It is important to understand from the outset how the reward is to be funded and to calculate the
likely cost (and the benefit). Again, the strategy will depend on the individual retailer's
circumstances and objectives.
Examples are as follows:
Increased spend
Increased frequency (and hence spend)
Reduce mark-downs
Increase margins
Offer spare capacity (e.g .hotel rooms, travel seats etc)
Increased privileges (at little or no cost)
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The aim should also be to retain customer's loyalty through the relationship marketing by making
full use of the database. The reward can be reduced over time. Some retailers look to their
suppliers to fund their promotions by offering rewards based entirely on individual product
purchases. However, it is important not to confuse supplier led brand switching schemes, which
have no place in a customer loyalty scheme. The purpose is to increase spend not switch it from
one product to another.
Capturing Customer Data
In the right hands a marketing database presents an exciting opportunity to increase the value of
existing customers as well as providing a means of attracting new ones. However, as many
retailers, suppliers and service providers have already discovered, it can be an embarrassingly
expensive millstone if not properly thought through. Storing data is expensive. Before embarking
upon the building of a marketing database it is important to have clear objectives.
Categories of Data to Capture
It has already been pointed out that storing data is expensive so it is important to capture only
that which is really needed. The category of data detailed below is a comprehensive list of what
can be collected.
Customer Details
This is fairly static data including:
Name and address
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Family and ages
Job and income level
Residence (own, rent)
Credit cards held
Interests?
Special needs etc. etc.
Not all customers will give all this level of information on first asking. It is, however, possible to
deduce certain details later. For example: if payment method is captured on each purchase we
can soon learn what credit cards are held, if toys are purchased we can gain details of the
children from the guarantee registration card, etc.
Frequency
How often does this person visit the store? On what days of the week? Hour of the day? Is the
frequency increasing or decreasing? Do certain types of in-store promotions or mailing
campaigns effect the frequency?
Regency
When did the customer last visit. Is this potentially a lost customer?
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Spend
Is this increasing as required? Does it vary by customer profile? Do particular types of
promotions affect it?
Sites Visited
Is the customer loyal to a particular store? What distances are traveled, on what days? Will this
customer travel give the right incentive?
Products Purchased
Offers what special offers are taken-up?
Departments what is the level of spend by department?
How does this vary by season and promotion?
Lines what is the typical shopping basket of this
individual?
Capturing the data can be relatively straightforward but it is unlikely that anyone will really need
to maintain a history of each and every product item purchased by each and every customer. For
a large supermarket chain this would amount to approximately 500 gigabytes per annum
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Monitoring, Measuring and refining the Scheme
As has been stated earlier in this paper it is important to define the objectives at the start and
design the scheme and system around achieving those objectives. The dichotomy is that in order
to design an effective scheme there needs to be a good understanding of the customer and one of
the purposes of the system is to capture data to achieve this.
Therefore, designing a successful scheme has to be an iterative process:
1. Design basic scheme
2. Implement system
3. Monitor customer behavior
4. Measure response and performance
5. Refine the design in the light of experience
6. Return to 2. Above
It is not the purpose of this paper to examine ways of analyzing customer data, however, two
statistical techniques (regression and cluster analysis) are mentioned as examples for targeting
and segmentation. Considerable advances are being made in this area with the emergence of
"intelligent" techniques, which are self-learning (e.g. neural networks).
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Targeting
Targeting customers is a way of improving the response rate to promotions. This involves
Measuring the size and characteristics of the target audience and the response and behavior to
various offers, and then using the data to improve the offer.
A common technique for this is regression analysis, which is based on past behavior:
Identify customer purchasing characteristics or attributes
Score individuals according to the characteristics
Target the high scoring individuals in future promotions
Customer characteristics are purchase related (e.g. frequency, average spends,
Departments/products purchased, stores visited etc.) but can also be linked to lifestyle data.
The high scoring individuals (i.e. those with common characteristics) are expected to yield a
higher response rate.
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Segmentation
Segmentation involves defining customer groups and devising separate marketing approaches to
each group. Customers within a segment are as similar as possible and customers in different
segments are most dissimilar. It is expected that customers in the same group will react to
promotions in a similar way.
Cluster analysis is a statistical technique for segmentation. This again relies upon identifying like
characteristics, which can be lifestyle based but preferably uses purchasing data:
Identify customer purchasing characteristics or attributes
Divide into large number of segments
Reduce segments to a manageable number by combining segments with close
Characteristics (nearest neighbor method)
- Market to customers in same segment
This technique enables appropriate and relevant offers to be made to customer groups, which
builds stronger relationships since the marketing is more meaningful to the individual customers.
Whereas there is every likelihood that in five years time most retailers will have a customer
loyalty scheme of some form, it is important to carefully analyze the objectives and the benefits
that are expected. And then to constantly review the benefits that is actually being achieved and
refines the programme accordingly.
In summary, you should only embark on such a system if one or more of the following is true:
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You can benefit from knowing your customers and they’re purchasing behavior
You have an attractive proposition that is sustainable over the long term
There is a competitor threat emerging that can be defended by locking in your customers
Into long term loyalty programme
Your competitors are implementing a scheme (?)
It will retain your share of a declining market.
The cost/benefit analysis shows that profitability can be increased as a result
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CUSTOMER LOYALTY PROGRAMS OF RETAILING IN INDIA
A loyalty programme is an advanced stage of a well-managed CRM process and must be
graduated to and not jumped into. Launching a loyalty programme depends on the Life State of a
mature CRM system, data maturity and organizational preparedness. It needs some amount of
investments in technology, specialized software, statistical tools and logistics. Earned rewards
program by most of the retailers in the form of vouchers in India are actual cash payoffs, differed
or otherwise and need efficient management. The best loyalty programmes are driven out of
customer analytics that work on mature data. When customers opt in to a permission-based
loyalty programme, they are more milling to share information as well, enabling retailers to
create a dialogue with customers.
Clearly, there is no one, right way to market through any one channel,but there is a right way to
market to customers across severalchannels, and a loyalty marketing programme can help. A
successful programme assumes that all channels are included in the customer relationship that
measurable objectives have been established, and that promises are kept. With this foundation in
place, a programme can boast the following characteristics:
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1. Visibility: A loyalty programme must be highly visible regard less of the channel. A Web
site can show special offers for programme members, a catalogue can feature the programme
prominently and shoppers in the store should be asked if they'd like to join.
Cross-promotional materials should be present and easily obtainable.
2. Simplicity: To succeed, a loyalty programme must be easy to use in all channels.
Minimize the fine print; the more the customers have to figure out, the less they like the
programme.
3. Value: The balance of reward and recognition must establish value in the customer's mind
and motivate incremental purchases. Programme rewards should be credited regardless of
where the customer prefers to shop. And while the price of merchandise should be consistent
across all channels, don't be afraid to offer incentives to encourage customers to try a new
shopping experience.
4. Trust: Keep the promises made by the loyalty programme. If the promise is for a
personalized, highly valued service, don't bombard program participants with meaningless
offers that obviously are available to everyone. Recent studies indicate that customers who
shop more than one of a retailer's channels - perhaps looking online and buying in the store
or reading the catalogue/leaflet and buying online-spend more money with that retailer than
single-channel shoppers.
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The best way to coordinate marketing objectives across channels is to build a knowledge base
of customer behaviors and preferences.Retailers cannot afford to let legacy systems interfere
with building this knowledge base. A well-conceived and executed loyalty programme
can be the key to invisible shoppers into hand-raising volunteers and profitable customers
The organized retailers in India have started with their loyalty programmes for instance
Pantaloon: Green Points, Shoppers Stop: First Citizen, Ebony: Elite club, Lifestyles: The Inner
Circle and Westside: Club West these loyalty programmes are in built up with the CRM
strategies for each company. Though every loyalty club has its pros and cons to the program but
the main reason of worry for the organized retailers in India is the amount of average Walk Ins
purchasing from the stores. The people visiting the Malls or specific store locations unlike, Wal-
Mart in US these companies haven’t yet been able to fulfill the need of the customers towards
the loyalty club.
As part of my dissertation research shows that most of the loyalty clubs in India are similar in
their purchase schemes and privileges. I would further support in other sections of the
dissertation.
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RECOMMENDATIONS
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11. RECOMMENDATIONS
1. GCLP promotions must be given more importance.
2. Better visibility and better gifts for such activities.
3. Inside store promotion methods should be more effective so that information about offers not
only reach to the consumer but also stick to them.
4. Quality of the product must be improve so that the customers get the full worth what they are
invested.
5. Provide good services to the consumer like fast billing, better assistance and quality product in
the store so they preferred pantaloons more and retention of customer is increases rapidly.
6. Replenishment of the stock must be done in proper time.
7. PANTALOONS must watch out for more standard promotional activities as major player
entering in the market are internationally acclaimed brands.
8. They are ahead than other competitors in terms of presence and experience, if there are new
strategies coming up they must adapt it and apply them in those stores where they have no
completion to increase customer loyalty.
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CONCLUSION
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CONCLUSION
Pantaloons Retail India Ltd has strong goodwill in Retail Industry in respect of quality.
Customers mostly prefer those outlets, which provide them better services, price& product.
Customers want improvement in Pantaloons in respect of services, variety, and brands.
The customers generally prefer cash discount.
There after they want more variety and quality in the store. Customers go to other places because of
Ambience, product, price, so Pantaloons should also do some work on these.
Customers are generally satisfied with the services provided by the Pantaloons.
Customers are satisfied with the price and schemes running in the store.
There is misperception about Pantaloons store that the store has generally high price products that
is why middle class people do not easily attract towards Pantaloons
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BIBLIOGRAPHY
BIBLIOGRAPHY
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BOOKS
AUTHOR PHILIP KOTLER
TITLE MARKETING MANAGEMENT
PLACE OF PUBLICATION PRENTICE HALL OF INDIA LTD.
NEW DELHI
DATE OF PUBLICATION SEPTEMBER
NUMBER OF PAGES 31-50
MAGAZINE
AUTHOR MURTHY E.N.
TITLE ANALYST
DATE OF ISSUE JULY 2006
PAGE NUMBER 41-46
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