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Pantaloon Retail India (Limited)


Customer relationship management


Roll NO. :

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Guided By

Ms. NUPUR KRISHNA Submitted by

Ankur Kumar

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Company profile

Objective of the project

Research Methodology





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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.


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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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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


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 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.


1. Home Solutions Retail (India) Ltd:

2. Future Capital Holdings:

3. Indus league clothing Ltd. :


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1. Planet Retail Holdings Ltd. :

2. Footmart Retail:

3. Capital Land Retail India:


e – tailing offers the widest range of products at ‘lowest prices –


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".


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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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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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?


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


It includes buying roles, types of buying and steps in buying process.


The buying role could be classified into four parts. These are initiator, influencer, decider

and buyer.


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.


Here are five stages in buying decision process namely problem recognition search,

evaluation of alternatives purchase decision and past purchase behavior.


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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There are different sources from where a consumer can gather information like personal

sources commercial sources, experimental sources.


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.


A consumer who decides to execute purchase intention will be making up to five

purchase decisions.


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.



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


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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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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





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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


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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


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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The research for the study comprised of:The research for the study comprised of:


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


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


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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


5) Time needed to study the CRM Process along with the loyalty programs of the retailing


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


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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.


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


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


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/ 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


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


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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:


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.


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.


Special offers to attract customers on light days. For example: double points on Mondays.

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Provides the means by which suppliers can participate in the scheme by funding special offer


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



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.


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


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.


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?


When did the customer last visit. Is this potentially a lost customer?

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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


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 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 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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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


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


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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


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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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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