inayatullah-0527-retail mktg. strategy in india

8/6/2019 Inayatullah-0527-Retail Mktg. Strategy in India

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A research study on

“ D ev e l o p in g a Ma r k e t i n g st r a t e g y

f r a m e w o r k f o r l a rg e s ca l e Re t a i l i n g i n I n d i a ”

A Dissertation submitted in partial fulfillment of therequirement for the award of MBA Degree of Bangalore

University.

Submitted ByMr. INAYATULLAH

MBA FOURTH SEMESTERRegister No. 05XQCM6031

(This research topic has been conceptualized by me under theguidance of Prof. SHINU ABHI, MPBIM, and Bangalore)

MP BIRLA INSTITUTE OF MANAGEMENT(Associate Bharatiya Vidya Bhavan)

43, Race Course RoadBANGALORE 560001



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STUDENT DECLARATION

I hereby declare that this Research Project entitled “ Developing a Marketing strategy framework for large scale Retailing in India ” has been

undertaken and completed by me under the valuable guidance of Prof. Shinu Abhi,

M.P.B.I.M, in partial fulfillment of Degree of MBA program is my original work and no

part of the work has been submitted for any degree, diploma, fellowship or other similar

title or prizes for any institution previously.

Date:

Place: Bangalore (Inayatullah)



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PRINCIPAL’S CERTIFICATE

This is to certify that this report is the result of Research Project

“ Developing a Marketing strategy framework for large scale Retailing in

India ” undergone by Mr. Inayatullah bearing the register number 05XQCM6031 under

the guidance and supervision of Prof. Shinu Abhi. This has not formed a basis for the

award of any Degree/ Diploma of any University.

Date: Dr Nagesh. Malavalli

Place: Bangalore (Principal)



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1. CHAPTER IResearch Extract 02

2. CHAPTER IIPrologue 04Statement of problem 07

Objective 07

3. CHAPTER IIIReview of the study 08Marketing in retail sector 12Industry profile 21Emerging Retailing Forms in India 24Current Retail Scenario in Bangalore 30Overall Strategic Framework 32

4. CHAPTER IV Methodology 35

5. CHAPTER VAnalysis & interpretation 37

6. CHAPTER VIFinding & Recommendation 51

7. CHAPTER VIIAnnexure 54

CHAPTER SCHEME



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Research Extract

Retailing like rest of the world retailing is one of the largest industries in India with

sales amounting to about $350 billion, but organized retail is estimated at only US$ 8billion. It is country’s largest source of employment after agriculture, has deepestpenetration into rural India and accounts to about 10-11 % of’ India’s GDP and around 8%of the employment. Retailing is one of the least evolved industries in India, it is not evenconsidered as industry, although we have successful retailing models from the developedworld due to early retail revolution there, but considering Indian market’s own uniqueculture, characteristics, tastes, preferences and expectations. It is required to develop itsown model to match Indian consumer’s requirement. The industry suffers from lack of management talent, poor access to capital, unfavorable regulation and denial of access tobest practices.

This study aims at studying the present marketing strategies of large retail playersin India and developing a comprehensive marketing strategy framework to suit the Indianretail market in the emerging competitive environment. Indian retail market is witnessingchange in the consumer environment, lifestyle trends, economic environment, andtechnological and legal environment, which has been a good sign fur potential in retailindustry.Statement of the Problem

Developing a Marketing Strategy framework for large scale retailing in India.

The study focus onStudying Retail scenario in IndiaCurrent retail market scenario in India.Challenges of retailing in IndiaDoing empirical study of marketing strategies in Bangalore marketDeveloping framework for retail marketingSampling procedure: -Non probability Quota sampling used where prescribed number of respondent ineach of several categories will be examined. Sampling size of 30 retail managersfrom Apparel & Grocery sector in Bangalore. Primary sources will be also used to considerable extent to gather information of various retail outlets operating in Bangalore. Learning from the empirics

After doing the apparel retail industry analysis in detail with the help of primary as well as secondary analysis, the most important retail marketing mixelement for apparel retail industry was found to he Location and Branding.Location was perceived to be the most important factor because of the followingreasons.



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Each retail store has distinct retail image in consumer’s mind, which emerges fromits combination of the various elements of the retail mix. The retail mix elements are1. Price which includes markups, markdowns, price lining and discounting

The framework has to cater to Price-Quality of Shopping Experience Mapping priceband, Pricing Strategy and Indirect methods of price competition

2. Promotion which includes advertising, publicity, public relations und characteristicof potential customer

The framework looks into selection of right advertising media, its influence of communication and competitor’s promotion

3. People which includes customer service, personal selling and informationThe framework stresses on methods to uncover customer problems, rapidly

develop/ re-launch market driven solutions and creating a customer valued process

4. Product which includes breadth and depth

The decision has to cater to the number of private vs national brand, licensing,product life cycle, merchandise assortment positioning, merchandise gap strategy andimage fit analysis.

5. Place, which includes location and shopping hoursThis decision has to analyze traffic flow & Accessibility, retail structure, site

characteristic and let and cost factors

6. Presentations which includes layout, atmosphere, store appearanceThe framework decision should cater to decisions regarding look, feel and aroma

extending outside the store, safety of environment and reputation as community playerAfter the primary research of interviewing retail stores manager in the apparel sector onemore element is added to the retail mix i.e. branding

7. Branding includes single brand, multi-brand and private label brandThe decision framework should look into brand leverage, defining target segment andadvertising, & marketing efforts.

The strategic framework is different for new store and a well established store. Theframework has been discussed in detail in the report. Overall strategic framework for retailstore is also proposed in the report.



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Chapter IIPrologue

The Indian retail industry is beginning to evolve in line with the transformation thathas swept other large economies. Fifty years of restriction on the consumer goods industryand a fractured supply chain of agricultural products have all contributed to prevent thedevelopment of modem formats based on scale advantages and Consumer preferences.India is having the highest per capita density of retail outlets with around 12 millionoutlets’ currently present which are mostly unorganized. The total retail trade in India isestimated at about $240 billion, out of which organized business accounts for only $3billion. The organized retail industry is poised to grow at 35 per cent per annum in the nextfive years. This is in exact contradiction of the organized global retail industry. In many of the developed countries organized retail already has about 40% share of the marketcompared to India’s current level of only 3%.

12000

1179

1071

905

324

19044

0 2000 4000 6000 8000 10000 12000 14000

India

Mexico

Brazil

US

Argentina

MalaysiaHonk Kong

retail outlet

retail outlet

Retail with total sales of $6.6 trillion is the world’s largest private industry in theworld economy ahead of’ financial industries ($ 5.1 trillion) and engineering with $3.2trillion

0 1 2 3 4 5 6 7

retail

financial services

engineering

packaged goods

chemical

energy

electronic

industry sales in trilion

Sales per year in trillion dollars across various industries

Retailing like rest of the world retailing is one of the largest industries in India withsales amounting to about $350 billion. It is country’s largest source of employment after



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agriculture, has deepest penetration into rural India and accounts to about 10-11% of India’s GDP.

As seen from above figures organized retailing is one of the least evolved industriesin India, it is no even considered as industry. Over the last few years there have beennumber of attempts to build retail businesses. Entrants have included large business houses,

foreign retailers through joint ventures, new entrepreneurs and government bodies. Yetthere is no significant retail business in India today

Segment wise Retail and organized retail sale:

SegmentRetail

Sale Rscr

OrganizedRetail Sale

Rs cr

% Sharein Org.Retail

Apparel 80,000 10,900 39Jewelry 43,500 850 3

Watches 2,800 1,110 4Footwear 10,000 2,500 9Health & Beauty CareServices

2,500 150 1

Health & Beauty Products(Including Pharma)

30,000 550 2

Consumer Durables 32,000 2,500 9Mobile Handsets &Accessories

13,000 840 3

Furniture & furnishings 33,000 2,200 8Food & Grocery 6,15,000 2,950 11

Catering Services (F&B) 35,000 2,000 7Books, Music & Gifts 8,200 800 3Entertainment 25,000 650 2

9,30,000 28,000 100



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, 39%, 3%

, 4%, 9%

, 1%, 2%

, 9%, 3%

, 8%, 11%

, 7%, 3%

, 2%

s e g m e n t

% share in org sector

Although we have successful retailing models from the developed world due toearly retail revolution there, but considering Indian market’s own unique culture,characteristics, tastes, preferences and expectations, it is required to develop its own modelto match Indian consumer’s requirement. The industry suffers from lack of managementtalent, poor access to capital, unfavorable regulation and denial of access to best practices.

It is the need of the hour for the Indian retail market to build customer traffic andhold their loyalty in the environment of competition from international players, which arebetter funded and the unorganized retail sector, which holds 98% of the market. This studyaims at studying the present marketing strategies of large retail players in India anddeveloping a comprehensive marketing strategy framework to suit the Indian market in theemerging competitive environment.



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Statement of the Problem

Developing a Marketing Strategy framework for large scaleretailing in India.

Objective of the study

This study aims at studying the present marketing strategies for large retailplayer in India and developing a comprehensive marketing strategy framework tosuit the Indian market in the emerging competitive environment. Indian retailmarket witnessing change in the consumer environment, lifestyle trends economicenvironment and technological and legal environment, which has been a good signfor potential in retail industry.

Studying Retail scenario in India1. Current retail market scenario in India2. Comparison of Indian retail scenario with other countries.3. Factors responsible for development of retail industry in India.4. Challenges of retailing in India.5. Hurdles of retailing in India.

Studying Retail Marketing and retail process1. Definition of retail marketing, classification of retailing.2. Contribution of retail marketing.3. Brief description of the process involved in starting a retail outlet.4. Managing and developing strong value chain.

Doing empirical study of marketing strategies in Bangalore market

Developing framework for retail marketing.



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Chapter IIIReview of the study

Basics of Retailing

What is Retailing?Retailing does not contain a single definition because of its customer orientation

and sensitivity to environmental pressures. The definition advanced 1950’s suggested thatretailing is “selling goods in small quantities to households”. A great deal of progress hastaken since then and with the dynamics of the environment, philosophic and institutionalparameters, retailing is defined from three points of view

The discipline of retailing: As a social science discipline, retailing is the study of theinteraction of consumers and their social institutions as they conduct transactions (that isexchange of goods, services, ideas) in the market place (broadly defined).

The science of retailing: Retailing as a science is the attempt to organize our knowledgeabout retailing through observation, study and experimentation and to use this informationin broadening our base of knowledge.

The managerial point of view: Retailing is an attempt to manage transactions at the pointof ultimate consumption for the benefit of the organization and society

Classification of Retailing

Retailing is extremely diverse. Although all retail stores share the common focus of selling to ultimate customers, retail stores have different formats, sizes, policies andmarketing strategies. This has led to various classification schemes to categorize retailstores. They are:

Classification of Retailing

1. Service versusproduct retailing

Furniture, home furnishing andequipment dealers

furniture, homefurnishing and Householdappliances, radios andTVequipment dealers storesOther stores



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Building materials hardwaregarden supplies and mobile homedealers

Building material storesHardware StoresOther stores

Apparel and accessories stores Men’s and boys clothing

and furnishingsWomen’s clothingSpecialty stores FurriersShoe stores

Other apparel andaccessories store

Food stores Grocery stores Otherfood stores

Gasoline service stations

General merchandise stores Department storesVariety storesOther generalmerchandise stores

Liquor stores

Regular storeMail order By catalog selling

By advertising in regularmediaBy membership clubplans

House hold contact By house to housecanvassingBy regular delivery routeserviceBy party plan selling

3. by Method of consumer contact

Vending machine



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Urban Central business districtSecondary businessdistrictString street locationNeighborhood location

Controlled (planned)shopping centerPublic market stalls

Small city Downtown neighborhood

4. By type of location

Rural stores5. by type of servicerendered

Full serviceLimited service (cash and carry)self-Service

6. By legal form of organization

proprietorshippartnership

Corporationspecial types7. By managementorg or operationaltechnique

UndifferentiatedDepartmentalized

8. By margin andturnover

Single unit independent store

Multi unit retail organization

9. By type of ownership

Manufacturer owned retail outletsconsumer Co operativesFarmer owned establishmentCompany owned storesGovernment operated storesPublic utility Co stores

10. By size of Estb By number of employeesBy annual sales volume

11. By degree of integration

Nonintegratedintegrated with wholesalingfunctionIntegrated with manufacturing



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Six Global Formats of Retailing

The major formats of retailing currently being employed are

Formats Characteristic Example

Supermarket 30%of the grocery market. 4000-20000square feet in size, strong focus on foodand personal care

Tesco, Safeway

Hypermarket 40000 square feet plus, out of the townstore that stocks grocery (typically 50% of sales and space), apparel, electronics andconsumables

Super centers - Wal-Mart

Warehouse Club Targets large institutional buyers andhousehold looking to buy large quantities.captures 10%of the grocery market

Sam’s Club

Discounters Stripped supermarkets, offering a basicrange of grocery products at greatdiscounts

Convenience

stores

400-2000 square feet, self service format,

account for the 10%of the grocery marketMoms and Pops This traditional format, next-door stores



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Marketing in retail sector

Retailing Mix

The “Retailing Mix” ref to the combination of’ marketing activities by which theretail managers must determine the Optimum mix of activities and co ordinate the elementsof the mix. While many elements max’ make up firm’s retail mix, the basic ones are asShown in the lit1ure below.

Each retail store has distinct retail image in consumer’s mind, which emerges from itscombination of the various elements of the retail mix. The retail mix must he very carefullyplanned so that it creates the desired image. Each element of the mix must be consistent

with the others or the image will be confused. Retailers can control the retail mix elementsand these elements are the weapons for fighting the competitive war. Now we will see thevarious dimensions of retailing mix in depth.

PriceIn the retailing context the effects of price changes are more immediate and direct and theappeals based on price are the easiest to communicate to prospective buyers. Howevercompetitors can easily react to appeals based on price than those based on product benefits

RetailMarketing

PriceMarkupMarkdownDiscounting

PresentationsLayoutAtmosphere

PromotionAdvertisingPublicityPublic relation

PeopleCustomer servicePersonal sellingInformation

PlaceLocationHours

ProductBreadthDepth



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and imagery. Nevertheless price is considered to be the most significant among thedecisions of the marketing mix for the branded product. The retail price plan should startfrom explicitly defined objectives which are often reflected in the strategic profit model of the retailing organization. The absence of a distinct pricing policy often reflects a lack of strategic focus and a lack of understanding the cost drivers. Strategically the price and the

quality of the shopping experience highly correlatedFramework for retail pricing

Price-Quality of shopping experience If we try to map Price and Quality of shopping experience at least 3 distinct

competitive clusters emerge in the context of price and the quality of the shoppingexperience as a part of the value platform of different retailers.

Most of retail stores have pricing guidelines which are often based on industrypractice like the single-price policy, Negotiated flexible pricing, Price-lining, Leader

pricing and so on.Price zone compatibility is a concept used in the context of price and merchandisingstrategy designed to improve the price line consistency across merchandise classifications.Such a strategy helps to increase sales per square foot since customers can satisfy more of their needs in one store.

What is the Price Band?



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Price band is the degree of price latitude retailers have relative to competitors insetting prices. The price band is usually wider when the price visibility for the product isrelatively low as in the case of infrequently purchased items. The price band is likely to bequite narrow for heavily advertised national brand items.

Role of pricing in competitive strategyPrice cart he assigned one of four roles in a marketing strategy. The retailmanagement can follow a high active, a high passive, a low active or a low passivestrategy. Activeness or passiveness in pricing as an element of strategy means howaggressively price is featured in advertising, personal selling and other promotionalmethods.

High active strategyIs used in the marketing plan to establish a high quality or prestige image in the

minds of the consumers when they have no basis other than price for evaluating quality.Also price gets prominently featured in the marketing plan.

Low-Active strategyIn this the firms offer acceptable quality products at low prices and aggressively

promote the low prices. This basically appeals to the price-conscious consumers. Thisstrategy is effective for companies with low costs that face little threat of competitorsundercutting their prices. Low active strategy players typically carry only the fast movingitems.

High-Passive strategyIn this strategy the firms seta price above the competition, but use non price factors

to persuade customers to buy the product or service. Emphasis is likely to be on quality orperformance instead of price. High prices however do not necessarily mean higher profitssince ego-driven prices can also mean ego-sized overhead.

Low-Passive strategy

Firms with lower quality offerings than the competition do not emphasize price intheir strategy to make customers less likely to equate quality with price. Firms offeringgeneric products follow a low-passive pricing strategy. Virtually no funds are spent onmarketing programs; the low prices are the appealing feature of the offering. Other outletsfollowing a low-passive strategy include those selling perused clothing or other low quality“thrift” shops.

It is found most of the times that retailers arc often hesitant to openly use price as acompetitive weapon. They arc more prone to use indirect methods of price competition thatare not as likely to they followed by competitors. Some of the indirect price strategies usedby retailers are Scrambled Merchandising and in which the retailers try to expand theirmerchandising mix to take the advantage of higher markups and Multiplex Distributionwhich is majority used in major appliance retailing. The other indirect methods of’ pricestrategies used by the retailers are Variations in the Service mix, variation in the brand mix,Price discounts etc.



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Product

The basic aim of the Product or Merchandising strategy is to serve the customer in a‘better’ way than any comparable retailing organization in its market segments. The fiverights’ of successful merchandising are to ensure that the customer is offered the rightmerchandise, at right place, at right price, at right time and in the right quantities.

Some of the strategies used by the retailers for merchandising management arc PrivateLabel versus National brand strategy, Licensing and so on. The various strategic issues inMerchandise / Product management are Product life cycle, Merchandise assortmentpositioning. Merchandise gap strategy and Image lit analysis.

People

The major objective of the People / Services in retail marketing mix is to• Uncover customer Problems• Rapidly develop/Re launch market driven solutions• Create a customer Valued Process

The customer-valued process can be best depicted by the service process map. Thiswill demonstrate the service delivery process from customer’s point of view and definecustomer’s involvement. Identify critical area where service delivery may break down socontingency and recovery plans can he deployed.

We will start by identifying and sequencing all interactions between customer andfrontline company employees. These interactions will involve direct contact between thecustomer and retail store. Then we will map the physical operations of the services that areinvisible to customers the interactions between frontline company employees and supportemployees. Finally employee interaction with the company assets required to support theprocess such as important equipment, vehicles and information databases will be depicted.

People innovationFor the People aspect of retailing proactive intervention by employees with

customers is the need to create the individualized shopping experience. It requires thatmanagement provide the right leadership, create appropriate work environment, andprovide support, skills, tools and reward that propel employees to be proactive with thecustomers.

There are four Principles that must he adhered to in order to maximize the peopleinnovation impact.1. Put people back into the equation as the core part of creating uniqueness in the deliveryof service

Here the employee’s should be allowed to leverage their own intellect and havedegree of discretion and personal judgment when interacting with the customers. Usingintelligently technology should support or enable efforts of the people.2. Create a system that allows people to rapidly create tailored solutions for specificcustomers



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3. Give people the skills that will enable them to provide the customers with the individualexperience

Skill building is an integrated orchestration of setting plans for the employees togain the necessary expertise, providing mentoring and quality leadership and motivatingemployees to take action through awards and incentives.

4. Pursue integrated target customer relationships where individuals from the provider and customer have ongoing personal relationship

Presentations

Consumer responds to more than a tangible product or service. Thus retailers cannotneglect the psychological effects of their outlets on consumer purchasing behavior. Theseeffects are called silent language of communication. Thus following factors have to belooked at fir the presentation

• Store Appearance

The Store Appearance consists of Store equipments: This broadly includes the entire physical object in store such ascounters, elevators, escalators, signs and area dividers

Interior lighting: It comprises of lights used to provide emphasis. Flexible lighting that iscombination of skylight, fluorescent tights and incandescent lights has to he thus needs tobe expertly planned.Counters and display cases: Depending upon the culture to be nurtured in the outlet thedisplay cases and counters have to he planned.• Look, Feel and aroma extending outside the store: In outlets it is wise to display alimited number of items from each floor on the main floor perhaps in window displays to

attract the attention of the customer. This encourages shoppers seek more completeselection available elsewhere in the outlet. In doing so they are likely to pass an extensivearray of other merchandise increasing the likelihood of some type of unplanned purchase. • Safety of environmentThe safety of the environment removes the safety concerns, which usually are in the mindof the customer. This creates worry free environment thus enhancing the shoppingexperience. The following safety concern needs to be addressed in an outlet

Fire safety: This is done as per the safety norms laid down by the government for that typeof outletTheft of personal belongings : Good security and vigilance with the use of technology takes

care of this issue. Emergency power: This is needed to avoid any displeasure due to interruption by power cutduring shopping.

• Reputation as community playerThe increasing competition has lead to various dimension of differentiation of stores. Thereputation of store as community player has great emotional appeal to the customers. The



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• Site CharacteristicThe physical characteristics of the site determine the type of structure that can be built

there, the visibility for the potential customers and the ease with which they can enter and

exit.Although the visibility of the stores in Small Street or in places far from major roadwaycan be remedied by constructing large, clearly visible signs, there is always potential forlosing a significant amount of business. The position of site is also another importantconsideration. Generally a corner site at the intersection of the two roads is better than onein the middle of the block. These corner sites also provide greater opportunity for thewindow display.

The availability of the parking space has also become the important physicalcharacteristics of the site. Stores usually handle this by providing free parking facility butmuch effort is needed by the municipal authorities for making available the parking space.

• Legal and cost FactorsThe attractiveness of the site has to he compared with its cost. This cost varies with

construction of terms of occupancy in variety of ways. Hence expert knowledge and pastexperience must be used to analyze the benefits of the different terms of occupancy andcompare them to the cost.

The sites can be occupied by owing or leasing. The general trend is leasing, which hasvarious forms. One of them is fixed annual or monthly rent, other is sale and lease back arrangement where retailer develops the site and sells it to real estate, which in turn leasesthis site back to retailer.

Promotion

Merchandizing sales depend not only on its physical qualities but also on advertisingand promotion. Hence promotion must grow out of firm’s total merchandizing process. If outlets promotional efforts are not in harmony with decisions on pricing and other elementsa confusing and distorted image of’ outlet will result. A proper communication can only bedeveloped in the context of’ the firm’s objectives and of its marketing strategies. Theadvertising should seek to tap the buying motivation of the specific market groups to whichpromotion is directed.The promotion objectives are

1) Additional buyers - Imaginative in store point of sale promotions may expand

sales by attracting new buyers for the product2) Reminder promotions - Such effort are utilized in getting customers to stock large amount of products prior to seasonal increases in sales, anticipated productshortages and anticipated price increases3) Market expansion

4) Consumer Conversion - These are the campaigns launched to get the consumersto switch brands or stores usually these are the price wars.



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5) Image Development -This helps in identification of the store towards a particularmarket niche and consistently promoting it.6) Market PositioningTo reposition the store in the minds of customers so as to broaden the consumer base

Factors that affect the promotion are• The Characteristic of potential customer like Demographics (age, income. location

e Predispositions (awareness, attitudes, habits).• The media used for the promotion like Newspapers, Magazines. Television, Radio,

Outdoor advertising, Direct Advertising, Catalogs• Influence of Communication which depends upon Group Influences and Cultural

influences

Factors that have major impact on the media selection are• Audience involvement with the program• The ability to provide a specialized audience with group identification

• The ability to offer the advertiser a monopoly over communication on the subject• The quality of the advertising reproduction• The time of message delivery• The available budget and the cost of various media• Competitive promotional campaign

Promotional Strategy — “A continuous Process”

Determinin romotional ob ectives

Establishin overall promotional bud et

Selecting the promotional mix

Implementing the promotional mix

Reviewing & revising the promotional plan



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Influence of 6 Ps of Marketing on Retail Marketing. (Strategy in the Indian context) Price

For the Indian consumer price is the most important issue which the retailers needto address critically. It has been observed that the effects of price chances are moreimmediate and direct and the appeals based on price are the easiest to communicate to

prospective buyers. However competitors can easily react to appeals based on price thanthose based on product benefits and imagery. Nevertheless price is considered to be themost significant among the decisions of the marketing mix for the branded product.

ProductThe basic aim of the Product or Merchandising strategy is to serve the customer in a

better’ way than any comparable retailing organization in its market segments. The fiverights’ of successful merchandising are to ensure that the customer is offered the rightmerchandise, at right place, at right price, at right time and in the right quantities. Thepeculiar characteristic shown by the Indian consumer is his habit of comparing the productsof various brands and then arriving at the purchasing decision. This makes the retailer to

store appropriate kinds of merchandise in the retail store.People

Today’s Indian customer is looking for “personalized attention” in this world of mass merchandising and mass marketing. This is where the personnel at the retail storeplays a special role in making the customer feel that he is the most important customer tothem. The basic quality that these store personnel is to have empathy with the customer,understand his problems and deliver the services and solutions to his problem in a betterway.Presentations

Consumer responds to more than a tangible product or service. Thus retailerscannot neglect the psychological effects of their outlets on consumer purchasing behavior.These effects are called silent language of communication. Let it be any customer in theworld the quality of the retail store is usually associated with the way the retail store is“presented” to him and the Indian customer is no exception to it. This makes the retailer to“present’’ his store to the Customer in a better way.

PlaceThe basic reason for the sustainability of mom-n-pop store in India is the easy of

accessibility they provide as they are located very much near to the customers. This makesthe location an important factor which the retailer needs to look into to give ease of accessibility and convenience to the customers and eat away the market share of mom-n-pop store.Promotion

Just as price is the most important factor for Indian consumer so is the promotion.The promotional schemes not only include the advertising schemes but also the discountschemes for which the Indian customer pays the most attention. This makers the retail storeto keep on developing continuous promotional schemes to motivate the customers forbuying.



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Industry profile

Large Scale Retail Scenario in India

Few years backThe major reasons l retail as one of the least evolved industries m especially the

organized retail sector were

1. Too Many Small playersThe sector had been plagued by the inefficiencies of the smaller players. This in

turn resulted in the lack of an industry status, thereby affecting the financing prospects f theindustry, In contrast, players in other Asian markets such as Malaysia. Singapore or even inthe United Arab Emirates have access to bank financing, thereby enhancing the growthopportunities.

2. Distorted Tax StructureIndia had a differential tax system. This resulted in inability of even large players to

expand on a national basis. Furthermore, with retailing coming under the purview of therespective state governments. Procuring permission at each and every state level createdunnecessary hurdle in the industry.

3. Real Estate ProblemWith location being one of the prime success criteria, acquiring the right location is

a must for every retailer. Unfortunately, retailers didn’t get the optimal location at allcenters in India due to high price factor. In other cases, despite the acquisition of the rightproperty, co-operative landowners were a rarity in the country. With such shortage for thebasic raw material for the industry, prices had been on the increase (despite occasionaldeclines) all the time. Furthermore, there seem to be no cooperation between the mallowners and the tenants in the country. This phenomenon has been a major factor inspurring retail growth in the developed markets

Current Scenario in IndiaIn recent times we have witnessed phenomenal growth in the Indian retailing sector.

Factors such as scale in sourcing, merchandising, operational effectiveness and ambiencehave driven the spread of organized retailing. The various other factors that are responsiblefor the growth of the organized retailing sector in India are

CONSUMER ENVIRONMENT

1. The Trickle Effect

Basic product categories such as tooth paste, soaps etc has traditionally been the largestmarket in the country. With the rural consumer too beginning to enjoy the fruits of liberalization, rural market has become a key consumer of durable goods too (around 35%



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of’ overall demand). This in turn has resulted in the manufacturing and retailing sectorstarling to pay greater attention to this virgin market.

2. The changing Indian FamilySmaller families

Metropolitan life has lead to shrinking space, more independence and privacy for themodern generation. This has resulted in the nuclearization of Indian families.Working womenOne of the most important social changes of the recent years is the growth in the number of workingwomen. With more women entering the labor force, the average time spent by theIndian woman in the kitchen has declined over the years and the disposable income of thedual-career household has increased. As a result of this, two wage families are inclined tospend more and are less likely to delay purchases.

LIFE STYLE TRENDS

1. Poverty of timeThe increasing number of the workingwomen outside the home has given rise to timecompressed consumers. This poverty of time is stimulating the growth of time savingdevices such as microwave ovens, food processors and prepared food. It is also increasingthe growth of convenience stores, fast food outlets and direct marketing. To help customerdo their grocery shopping in less time, a number of supermarket chains now accept ordersby phone and then deliver the order to customer’s home free of cost or for a nominalcharge.

2. Shopping for valueThe biggest base of’ the middle class in the total population in India with cash constrainsand aspiration for more has lead to the lifestyle of’ value for money.

3. Blending of traditional male and female roles,In the past husband and wives had separate and clearly defined purchase domain in India,but now this trend has changed to joint decision of both towards majority of purchasing.This is due to increase in number of the working women. This has increased theirpurchasing power and hence more influence in the traditional male dominated purchasingdecisions

4. Liking for natural productDue to fear of’ chemical usage and ayurveda tradition, large base of’ Indian customerprefer products with natural ingredients. Hence Indian retailing comprises of a separatesection of ayurvedic or herbal products.

ECONOMIC ENVIRONMENT

Due to liberalization the middle and high-income segments in the domestic populace grewat over 10.0% per annum over the last decade. At the same time, the lower income grouphas declined in size. While growth has been more predominant in the urban areas, the



MPBIM 29

effect has trickled down to the rural areas too. Consequently, demand for consumer goodshas been on the increase

TECHNOLOGICAL ENVIRONMENT - New form of retailingWith the penetration of the cable television in India Home shopping through cable

television is the new form of retailing emerging in India. In this type of shopping theretailer displays its products with the help of show, which is viewed by the cable televisionsubscriber. The customer can then identify the product of his need and make a telephonecall to the retailer for buying it. This form of retailing has inconvenience on the customerside to wait and watch for the product he intends to buy.

LEGAL ENVIRONMENT Pre-reform Post-reform

• Small scale sector restriction• No FDI• Dividend balancing norms• Licensing for capacity• Punitive tax• Most consumer goods import

banned, with over 150% dutyas personal import

• Small scale sector restrictionlifted from many areas

•

51% FDI in single brand retailcleared • Dividend balancing waived• Licensing requirement waived• Taxes lowered significantly• Most consumer goods moved to

OGL

• Barriers to FDI : FDI is not permitted in pure retailing at present, but can franchise aswell as enter into technological alliances• Unavailability/high costs of real estates : The rent laws are pro tenant. There isrestrictive zoning legislation. Government land is not available. There is lack of ownershiptitles and complex sub letting arrangements• Complex taxation system: There is different sales tax across the states. The octroi ismulti point. There is evasion of sales tax by smaller stores• Multiple legislations : The labor laws are stringent governing hours of work, minimumwages, payment of PF. Multiple licenses/ clearance are required from different agencies.



MPBIM 30

Emerging Retailing Forms in India

Indian Apparel Retail Market

The apparel sector in India has changed dramatically in the recent past with the growth

of large multi-branded apparel outlets like life Style, Shoppers Stop, etc. and aproliferations of manufacturer brand-led chains like Planet Fashion by Madura garments,Mega Mart by Arvind Mills, Wills Sport by ITC and so on. India’s $25 billion clothingmarket is India’s second-largest opportunity for organized retailers.

Apparel is one of the most advanced yet fragmented retail sectors globally. At Rs.87,000 crore the Indian textiles and clothing market is huge, however only 22% of themarket is apparel and only 20% is branded as can he seen From the graph below.

Indian Textile Market

apparel, 22%sarees, 31%

shirting, 12% suiting, 10%others, 17%

apparelsareesshirtingsuitingothers

Market segments such as men’s ready-to-wear and sports clothing has begun toevolve in recent times and look potentially very profitable. Men’s clothing currentlyaccounts for 70% of all the branded apparel sales of around Rs. 4000 crore compared to22% of children’s wear and 8% of women’s wear. This trend is expected to continue withabout growth of about 30% per year for men’s branded apparel segment and 10% each forchildren’s and women’s branded apparel segment. Branded apparel makes up about 3% of women’s clothing market and around 13% of their apparel market.

The total kids wear market including organized and unorganized market isestimated at around Rs. 6000 crore. The organized sector constitutes of about 10-12% of this market leaving the balance to the unorganized market and small—scale regional localbrands. The market is subdivided into infant wear (0 to 2 years) and kids wear (2- 12years). Now a day with the rise of specialty stores like Kids Kemp, a more assertive target

segment purchases are becoming more frequent. However price-sensitivity remains largebecause of consumer perception that price is proportional to the size of the garment.

Branded ready-to-wear garments account for about 40% of all men’s apparelsegment. The major factors, which contributed to its growth in the recent past, are entry of MNC brands in India after liberalization. Forward integration of Indian textilemanufacturers and the expansion of apparel exporters into the local market.

The entry of textile companies into branded ready-mades like Madura garment(Allen Solly, Van Heusen. Louis Philippe and Peter England), Arvind Mills (Ruggers.



MPBIM 31

Newport, Excalibur and Ruf & Tuf), the .JK Group (Raymond’s), Color Plus, IndusLeague (Indigo Nation. Scullers), Acme Clothing (Provogue) and TNG have been the maindrivers of market growth in the men’s apparel segment in the recent past

Women’s clothing brands are virtually non-existent. Provogue and Allen Solly haverecently entered in this segment in the casual wear segment. Brands if any in the more

lucrative salwar-kameez market belong to small, unorganized players, designers of hautecouture and store labels as Fab India, Soma. Stop and Pyramid.In the kid’s segment the major national brands are Weekender Kids, Benetton 012,

Planet Kids, Oshkosh B’Gosh, Zerotondo and Balloons.Currently in India specialty apparel retail stores are showing decent growth in

comparison to other types of apparel retail stores like department stores, upscale multi-brand outlets, street markets and traditional outlets as can be seen fro the graph below.

Market Share of various types of Retail Outlets in the Apparel Segment

70

25

7

9

5

81

15

1

3

0

0 10 20 30 40 50 60 70 80 90

traditional outlet

street market

multi-brand

speciality

department

t y p e s o f r e t a i l o u t l e t

19952007

The franchising route adopted by MNCs helped to have fast and low investment

expansion, and it’s also helped to get way around the real estate issues which are veryprominent in India.

Over the last five years with the proliferation of brands and the growth in incomeslarge-scale multi branded outlets and department stores have begun to emerge. Some of theretailers have begun to develop a private label brand to supplement their range and improvetheir margins.

In the Indian women’s ethnic sector which is largely unorganized, stores like Nalliand Radha’s in sarees and Fab Indian and Anokhi in salwar-kameez are attempting to buildnational chains.

It is expected that the department stores and multi-brand outlets are likely todevelop into a significant format in the Indian market over the next decade. However forthese formats to become truly successful they will need to improve their merchandising,sales densities and scale of operations.

Indian Electrical / Electronic Goods Retail Market

The Indian electronics market has shown significant growth in the last decade. This growthis largely driven by the rise in Indian incomes and increasing consumer willingness tospend more on home, entertainment and convenience.

The global electrical and electronics market place is characterized by variety of formats, differentiated by range arid pricing. Nearly 80% of the market is controlled by



MPBIM 33

% Share of various formats in Grocery Segment in IndiaGraph below

48%

21%

18%

7%4%

2%

0% 10% 20% 30% 40% 50% 60%

traditional outlets

street vendors

street market

kioskcooperatives

supermarket

% share

% shares

In the past there have been sporadic efforts by the government and the co-operativesector to develop modern formats. These include discount dry grocery shops like SuperBazaar in Delhi and Shakhari Bhandar in Mumbai.

Numbers of traditional kirana stores are expanding to become super kiranas. Newforms of stores are expanding to include customer walk through space and allow self service shopping with touch and feel. Food world is the best example for this whereproduct categories include staples, fresh fruits, vegetables, dairy, bakery, frozen products,processed foods, beverages, household cleaning products and general merchandise. Theother example includes Subhiksha in Chennai.

In parallel with this evolution, a number of specialist chains are beginning to

emerge, especially in fresh products and personal care. Notable successes have been dairybooth like Mother Dairy and Vegetable store chain like Safal.

Indian Niche Retail MarketThere are number of niche retail segments emerging in India. The few emerging of themare books, music, liquor and drugstore.

BooksThe total market for the books is estimated to be Rs. 3000 crores and is growing by

11-12% per annum. Most of these books are produced locally with imports accounting foronly 4% of the market. Regional language books constitute 51% of the book market. Hindi

28% and English only 21%. A major part of this market is estimated to be educationalbooks, and this is expected to be one the fastest growing segments.



MPBIM 34

Retail in book segment

others, 51%

english, 21%

hindi, 28%

othersenglishhindi

Distribution in India is mostly through independent retailers who number over

500,000. Over the last three years focus retailer chains are beginning to emerge. The topthree chains are Landmark, Crossword, and Higginbotham’s and they account for meagerRs 85 crores of sales i.e. 2% of the market.

To build a large business in books retailing, the retailers will need to target mass-market i.e. regional language and educational books

Music

The Indian music market is estimated to be Rs 2000 crores of which 40% is pirated.Low priced cassettes dominate the market. Cassettes sell about 34O million units perannum compared to 14 million CD’s. Nearly 96% of all music sold in India is local. Withsales to the tune of’ 60% film music dominates the market as a result the industry isinextricably linked with that of film industry.

The retai1int of music in India is very fragmented with retail chains accounting forapproximately 5% of sales (Rs 90 crores). Music World and Planet M are the two majorplayers in the retail chains. The music industry is quite amenable to modern retailing as thebusiness relies on walk ins and impulse purchases. The ability to differentiate oneself onthe quality of the retailing experience generated through good merchandising, listen andbuy features and live shows make this sector one of the most attractive for the organizedretailers. One more emerging trend in music retailing is as add-on category in supermarketslike Shoppers Stop. As it evolves in India grocery retailers might become importantdistribution channels for music.

Liquor

The Indian liquor market is estimated to be 370 million cases a year. Country liquor or theunorganized sectors constitute the bulk of liquor produced in India with 67% of thevolumes. The organized liquor segment is divided into beer (15 %), whisky (11%) andother spirits. Wine is nearly non-existent. In value terms the organized liquor market issized at Rs. 1600 crores.

The liquor trade in India is highly regulated, with each state having its own policiesregarding production, distribution and taxation. The retail trade is still licensed and in



MPBIM 35

certain states completely restricted to the government or government appointed dealers. Inthese circumstances it is extremely difficult to create a retail chain of liquor store or eveninclude liquor as category within a large grocery store. So the grocers could attempt onselective basis to gel license fir some of their stores to check the proposition.

Drugstores

In India drug market is highly underdeveloped. While prescription drugs are largemarket ($ 4 plus billion. the market for OTC and personal care products has not evolved toa level where a distinction proposition can be evolved. Operating as a retailer in theprescription market alone is not very attractive due to significant regulatory restrictions andhigh level of unionized behavior of existing trade. While experiments in this area hasbegun by ‘Health and Glow and ‘Subhiksha’.

Wal-Mart’s Personality Characteristic .

93

88

86

80

67

53

0 20 40 60 80 100

Friendly

trustworthy

respected

caring

fun

exciting

personality characterstic

The important step in the brand-building process is assuring a brand’s proximity toconsumers. The culmination of this trend, of course, is electronic commerce over the WorldWide Web. Big-box retailers in particular increasingly face the challenges of multi-channelmanagement and the need to provide a consistent brand statement across each channel. Theultimate mix of channels remains to be seen.



MPBIM 36

Current Retail Scenario in Bangalore

In retailing currently more than around Rs. 2,500 crore of investment is being putin all over India. Various industrial houses such as the RPG and Piramal groups are lookingat the retail sector as a high-growth area while other industrial houses are getting ready for

action too. In Bangalore the investment in the organized retailing sector has begun and thelarge-format supermarkets are coming up. RPG group has started organized retailing inBangalore and Chennai via Food World, Health & Glow and Music World. Times Group’shas also opened music chains under the banner of Planet M in Bangalore. They toyspecialist had opened Kemp Fort. India’s largest single store (300000 sq-ft) on the outskirtsof Bangalore.

Madura Garment, the marketer of’ Van Heusen, Louis Philippe and Allen Sollyclothes, has over 110 showrooms for these high brands and another 79 for its mid pricedbrands. Peter England and Element all over India. Besides, it has started new chains underPlanet Fashion and Trouser Town in Bangalore. Almost a third of the firm’s turnover nowcomes from direct retail. Along the lines of Madura Garments, Arvind Mills have started

Mega Mart and ITC has started Wills Sport in the garments sector.Currently two mega stores have opened in Bangalore on the line of Cross Road in Mumbaiviz Life Style and Shoppers Stop. Shoppers’ Stop’s sales were set to cross theRs 200-crore mark in the year 2006-07 “The Indian consumer is adapting faster than theretailer can adapt right now.”

India’s most successful retailer in consumer durables market segment is Chennaibased Vivek’s, which has been around for 35 years. It recorded a turnover of Rs 106.8crore in 1999-2000, and having acquired another chain Jainson’s in late 1999 and crossedRs 200 crore mark in the year 2000-01. In all, the group now has 36 outlets in Tamil Naduand Karnataka. For TVs, fridges and the like, its dominance of Chennai is near absolute.

It is expected that this trend will follow in near future with more number of large

scale retail stores opening in BangaloreAs the organized retail sector in India is catching up and many players have enteredin this sector the competition is catching up in this sector. Now these players are requiredto differentiate themselves from others by developing and following a framework of marketing strategy to increase their customer base and improve their bottom lines. Themost important issue which these players need to address is the “6 Ps of Marketing” which are Place, Price, Promotion, Product, People and Presentation .

Keeping this thing in mind this project aims at “Developing a Marketing StrategyFramework for Large Scale Retailing in India “.



MPBIM 37

Retail Mindset & Indian Consumer

The big retailers are still looked at with suspicion by the average Indian consumer.The mindset of average Indian is to shop from ‘kirana’ stores for their daily requirements.The question that arises is that, how are the big retailers going to convince the consumer toshop for his daily requirement. This retail mindset drives the crowd away from super storesand malls. The retailer today is not interested in talking about the manufacturer’s brand. It

just wants to sell what the consumer wants. It therefore becomes important for retailer tochange this mindset to bring more customer traffic to the store, and to increase totalrevenue per checkout station. The suspicion prevalent in the Indian consumers’ mind needsto be broken by delivering value and developing trust.

The store will no longer be just a point of distribution. The store today is an activemedium unto itself. Retailers are focusing on branding these needs to be conveyed to themanufacturer also.

Retailers are beginning to put category branding above all those nationally brandedproducts that sit under that banner. They want to separate and differentiate themselves fromtheir competition. They’re doing the same thing with events. If a manufacturer brings aretailer an event today, they better not bring them something everybody else has. They hadbetter bring them something that’s going to be theirs alone, that they can own.

The retail mindset today is about destination - retailers are thinking about theirstore, their chain -- they want to be a destination for shoppers. And they want to do it bydifferentiation. This is critical for them because they have had so many problems withcategory killers. They have to have a clearly defined differentiation strategy.

To assist this change of mindset the retailer today sees the store as a collaborativemarketing medium. Collaborative marketing simply means retailers and manufacturersworking together to understand, anticipate and satisfy consumer needs.

To make collaborative marketing work, manufacturers have to stop presenting and startlistening. They have to understand the retailer’s business and their strategies and how theycan assist .They have to be flexible too. They have to be prepared to adjust to suit theretailer’s need, and provide business-building ideas that are based on consumer andshopper insights. Manufacturers also have to have people who really understand the retailbusiness. They need to work in the retail operation for six weeks and find out how thesystem works. Continuity is also critical. If the manufacturer expects to build a long- termcollaborative process they need to have consistency in terms of the people they haveworking with the retailers, building customer knowledge and know-how.

Thus in building of the marketing strategy to cater to retail mindset integratedstrategic planning will be critical, innovative, proprietary store/category/brand building

ideas will he critical.



MPBIM 38

Overall Strategic Framework

The various market segments that can be targeted by the retailers are either massmarket or market segment or multiple segments. The various strategies that the retailerneeds to follow for new brand and existing brand are as shown in the table belowdepending upon the target market they select. The new brand should generally starttargeting a particular market segment then it should upgrade itself to target multiplesegments and then ultimately it should target the mass market. Existing brand should startwith targeting multiple segments and the eventually move to targeting the mass market.The various strategies that the retailer needs to follow while targeting these differentsegments arc as shown in the table below.

Target Market SelectedStrategicImplications Mass Market Market Segment Multiple Segments

Retailer’sLocation

Near a largepopulation base

Near a small ormedium populationbase

Near a largepopulation base

Goods &Services Mix

Wide assortmentof mediumquality items

Deep assortment of high quality items

Distinct goods andservices aimed ateach market segment

PromotionEfforts Mass advertising

Direct mail.subscription

Different mediaand messages foreach segment

Price

Orientation ‘Popular prices” High or low

High, medium and

low - depending onmarket segment

Strategy Directed at alargehomogeneousgroup of consumers

Directed at aspecific, limitedgroup of customers

Several specificstrategies aimed atdifferent groups of consumers



MPBIM 39

Strategic Retail Marketing Mix Framework

PriceMarkupMarkdownPrice liningDiscounting

PromotionAdvertisingPublicityPublic relation

PeopleCustomer servicePersonal sellingInformation

ProductBreadthDepth

PlaceLocationHours

PresentationLayoutAtmosphere

- Price quality of shoppingexperience mapping

- Price band- pricing strategy-indirect method of price

competition

- Characteristic of potentialcustomer- Advertising media- Influence of communication

- Competitor promotion

- Uncover customer problems- Rapidly develop/relaunchmarket driven solution- Create a customer valuedprocess

Private Vs national brandstrategy- Licensing- Product life cycle- Merchandised assortmentpositioning- Merchandised gap strategy

- Traffic flow & accessibility- Retail structure- Site characteristic- Legal and cost factors

- Store appearance- Look, feel and aroma extendingoutside the store- Safety of environment- Reputation as community

la er

RetailingMix



MPBIM 40

Various pricing issues

Retail ObjectiveSalesProfitsReturn on investmentEarly recovery of cash

Broad price policySelection of target segmentChoice of retail imageComposition of retail mix

Selection of price policy

Price strategy DemandCostCompetitiveIntegrated

Implementation of pricestrategyCustomary & variable pricingOne price & flexible pricingOdd pricingMultiple unit pricingsPrice lining

Price adjustmentMarkdownsAdditional markupsEmployee discounts

Pricing issuesThese needs to be

Addressed on acontinuous basis



MPBIM 41

Chapter IV

Methodology

Secondary DataTo pursue the information on retailing in Indian market like groceries andclothing will be collected through secondary source. The source of datacollection will be through internet, books, journals, Industry reports and businessmagazines.

Primary DataPrimary source will be also used to considerable extent to gather

information of various retail outlets operating in Bangalore. The informationprovided by this source will be helpful in understanding the approaches taken by

various players and the current status of retail market in Bangalore. Finally, withthe help of expert guide and with marketing fundamentals we will study anddevelop marketing strategy framework for large scale retailing in India.

Sampling plan Sampling unit: -

Retail managers and customers of Bangalore city.

Sampling size: -30 retail managers from Apparel & Grocery sector in Bangalore.

Sampling procedure: -Non probability Quota sampling with apparel and groceries retail

outlets with respondent in each of these categories will be examined. Theadvantage of this technique is that it is both economical and reasonably reliable.

Research instrument: -1. Interview techniques will be used to collect data from retail managers.2. Structured questionnaire.3. Personal observation.

Contact method: -1. Email.2. Direct contact with the customer.3. Telephone.

In this way to pursue information on retailing in Indian markets like groceries,clothing, consumer durables, etc. will be collected through secondary sources. The source



MPBIM 42

of data collection will be through internet portals, books, jourr1a industry reports andbusiness magazines.

Primary sources will be also used to considerable extent to gather information of various retail outlets operating in Bangalore. The information provided by these sourceswill be helpful to us in understanding the approaches taken by various players and the

current status of retail market in Bangalore. Finally with the help of expert Guide and withmarketing fundamentals we will study and develop marketing strategy framework for largescale retailing in India.



MPBIM 43

Chapter V

Analysis & interpretation

Segmentation

0

2

4

6

8

10

apparel grocery

Geographic Demographic

Psychographic Behavioral

Inference: - Segmentation for apparel sector mostly based on demographic some go forgeographic where as in grocery segmentation largely based on geographic segmentation.This would infer that nearly 70% of the respondents in apparel believe that segmentation isbased on demographic where as geographic in case of grocery.

Demographic Segmentation

01234567

apparel grocery

18-25 25-35 35 & above

Inference: - Apparel sector looks mostly between the age group of 25-35, where as ingrocery they looks age group between 25 and above. This would infer that nearly 70% of the respondents in both sectors feel the target mostly on age group of 25 and above.

Respondents

Basisapparel grocery

Geographic 4 9Demographic 10 5Psychographic 1 1Behavioral 0 0

15 15

Respondents

Parameterapparel grocery

18-25 4 325-35 7 535 & above 4 7

15 15



MPBIM 44

01234567

apparel grocery

10k-25k 25k- 35k 35k & above

Inference: - Apparel sector looks mostly between the age group of 25k-35k, where as in

grocery they looks age group between 25k and above. This would infer that nearly 70% of the respondents in both sectors feel the target mostly on income group more than 25k.

Pattern of target market selection

024

68

apparelSingle segment concentration

Selection specialization

Product specialization

Market specialization

Full market coverage

Inference: - Apparel sector largely concentrate on single segment where as grocery sectorcover full market as far as pattern of target market selection is concern. This would inferthat nearly 50% of the respondents in apparel sectors look for single market selectionwhere as grocery sector look for full market coverage.

RespondentsIncome

apparel grocery10k-25k 4 325k- 35k 7 535k & above 4 7

15 15

Respondents

Parameterapparel

grocery

Single segment concentration 7 0

Selection specialization 3 3Product specialization 3 5Market specialization 2 0Full market coverage 0 7

15 15



MPBIM 45

Pricing

02468

1012

apparel grocery

Cost plus pricing Demand based pricing

Rate of return Competitor indexing

Inference: - Respondent from both sectors in favor of cost plus pricing model. This wouldinfer that nearly 70% of the respondents in both sectors feel that they follow cost pluspricing.

Sales promotion tools

0

2

4

6

apparel grocery

Samples Coupons Cash refund offer Premium/gifts

Inference: - Sales promotion like coupons & premium/gifts are mostly used in apparelsector where as in samples & coupons were largely used in grocery sector.

Types of advertising

0

5

10

15

apparel grocery

Product advertising

Markdown event advertising

Institutional advertising

Co-operative advertising

Respondents

Typesapparel grocery

Cost plus pricing 11 8Demand based pricing 4 4Rate of return 0 0Competitor indexing 0 3

15 15

Respondents

Toolsapparel grocery

Samples 0 5Coupons 6 6Cash refund offer 4 0Premium/gifts 5 4

15 15

Respondents

Typesapparel

grocery

Product advertising 10 12

Markdown event advertising 3 2Institutional advertising 1 0Co-operative advertising 1 1

15 15



MPBIM 46

Marketing mix: - The objective here is how retail manager rank different marketingmix and different parameter in each marketing mix element.

Product

3.4

4.07 4.274.53 4.47

3.674 4.13

0

1

2

3

4

5

range quality brand service

apparelgrocery

Inference: - In grocery sector Product range got more weightage compared to the apparelsector. As far as quality is concern both apparel & grocery scored equal weight. In case of brand name apparel sectors feels that there should be good brand name for their product,both sectors have par with each other as far as service is concern.

Range Quality Brand name Service line

Scale apparel

grocery

apparel

grocery

apparel

grocery

apparel

grocery

5 3 7 8 7 9 5 6 74 4 4 4 6 4 4 5 43 5 2 2 3 2 3 2 32 2 2 1 0 0 2 2 11 1 0 0 0 0 1 0 0

No of res-pondent

15 15 15 15 15 15 15 15

CumPoint

51 61 64 68 67 55 60 62

Av erage 3.4 4.07 4.27 4.53 4.47 3.67 4 4.13



MPBIM 47

Price

3.464 3.93

4.2 4.2

3.33

4.134.26

00.5

11.5

22.5

33.5

44.5

level qlty/price diffn discount

apparelgrocery

Inference: - Price level in grocery sector has dominated over apparel sector, incase of price

differentiation apparel sector is dominated over grocery sector, and quality/price &discount has earn equal point in both sector.

Level Qlty/price Differentiation Discount

Scale apparel

grocery

apparel

grocery

apparel

grocery

apparel

grocery

5 5 7 5 6 8 2 6 74 3 4 6 6 3 4 5 53 3 2 2 3 3 4 4 32 2 1 2 0 1 3 0 01 2 1 0 0 0 2 0 0

No of res-pondent15 15 15 15 15 15 15 15

CumPoint

52 60 59 63 63 50 62 64

Av erage 3.46 4 3.93 4.2 4.2 3.33 4.13 4.26



MPBIM 48

Place

3.63.73.83.9

44.14.24.34.4

location accessibilty dist channel dist coverage

apparelgrocery

Inference: - Location & accessibility is important for apparel sector as compared to thegrocery sector, distribution channel and coverage in grocery have dominated over apparelsector.

Location Accessibility Dist n channel Dist n coverage

Scale apparel

grocery

apparel

grocery

apparel

grocery

apparel

grocery

5 8 7 5 8 8 8 6 74 5 5 6 5 4 5 5 63 2 2 2 2 2 2 3 22 0 1 2 0 1 0 1 0

1 0 0 0 0 0 0 0 0No of res-pondent

15 15 15 15 15 15 15 15

CumPoint

66 63 59 66 64 66 61 65

Av era ge 4.4 4.2 3.93 4.4 4.27 4.4 4.07 4.33



MPBIM 50

Physical evidence

4.6

3.934.47

3.33

4 4.07

3.33

4.2

0

1

2

3

4

5

furnishing color layout noise level

apparelgrocery

Inference: - Respondent from apparel sector gives important for both store furnishing andcolor, but in case of layout respondent from both the sector given equal point.

Furnishing color layout noise level scale apparel

grocery

apparel

grocery

apparel

grocery

apparel

grocery

5 9 5 8 4 5 7 4 74 6 5 6 4 4 3 3 53 0 4 1 4 3 4 3 22 0 1 0 2 3 1 4 11 0 0 0 1 0 0 1 0

No of res-pondent

15 15 15 15 15 15 15 15

CumPoint

69 59 67 50 60 61 50 63

Av erage 4.6 3.93 4.47 3.33 4 4.07 3.33 4.2



MPBIM 51

Process

3.464 3.93 4.2 4.2

3.33

4.13 4.26

0

1

2

3

4

5

policies procedure m'zation cust invlment

apparel grocery

Inference: - Respondent from grocery sector has given more important to policies,procedure, customer involvement is concern but in case of mechanization respondent fromapparel sector has given more important compare to the grocery sector.

Policies procedures mechanization customerinvolvementscale

apparel

grocery

apparel

grocery

apparel

grocery

apparel

grocery

5 5 7 5 6 8 2 6 74 3 4 6 6 3 4 5 53 3 2 2 3 3 4 4 3

2 2 1 2 0 1 3 0 01 2 1 0 0 0 2 0 0No of res-pondent

15 15 15 15 15 15 15 15

CumPoint

52 60 59 63 63 50 62 64

Av erage 3.46 4 3.93 4.2 4.2 3.33 4.13 4.26



MPBIM 52

The objective here is to know, how the manager rate stores look, infrastructure.

Rating on store ambience

0

1

2

3

4

5

6

apparel grocery

Excellent Very Good Good Average Poor

Inference: Most of the respondents of apparel totally agree with the store ambience. Theatmosphere or mood created by the environment in the store make convenient for thecustomer. This would infer that nearly 70% of the respondents in both sectors in favor of store ambience.

Rating on Displays

01234567

apparel grocery


Inference: Most of the respondents of apparel totally agree with the proper display help thecustomer while shopping their needs. This would infer that nearly 80% of the respondentsfeel that there should be proper display in the store.

Respondents

apparel groceryExcellent 6 3Very Good 5 4Good 4 5Average 0 2Poor 0 0

15 15

Respondents


15 15



MPBIM 53

Rating on Space design

012345678

apparel grocery


Inference: Most of the respondents of apparel totally agree with the space design in store.This would infer that nearly 70% of the respondents agree that space design has effect oncustomer mind.

Rating on Colors

01234

567

apperal grocery


Inference: Most of the respondents of apparel feel that color combination has great impacton the customer mind. This would infer that nearly 85% of the respondents in both thesectors in favor of store colors.

Rating on Lighting

Respondents


15 15

Respondents


15 15



MPBIM 54

0

1

2

3

4

5

6

7

8

apparel grocery

ExcellentVery GoodGoodAveragePoor

Inference: Most of the respondents of apparel totally agree that there should be properlighting in the store to attract the customer.

Do you agree that different stores that cater to different customers need to bedifferent in their internal design?

01

2

3

4

5

6

apparel grocery

Totally agree

Somewhatagree

Neither agreenor disagree

Somewhatdisagree

Totallydisagree

Inference: Most of the respondents of apparel totally agree with the different internaldesign. This would infer that nearly 85% of the respondents in apparel sectors in favor of different internal design.

Respondents

apparel groceryExcellent 7 5

Very Good 5 3Good 3 3Average 0 3Poor 0 1

15 15

Respondents

apparel groceryTotally agree 6 1Somewhat agree 5 1Neither agree nor disagree 3 4Somewhat disagree 1 5Totally disagree 0 4

15 15



MPBIM 55

Do you agree that the window display should be changed weekly or fortnightly toensure fresh display?

0

1

2

3

4

5

6

7

8

apparel grocery

Totally agree

Somewhatagree


Somewhatdisagree

Totallydisagree

Inference: Most of the respondents feel that the display should be changedWeekly/fortnightly to avoid monotony to regular customers. This would infer that nearly85% of the respondents in apparel sectors in favor of store display change.

Do you agree that the visual merchandising help retailers to communicate retailbrand message so that the customers can make better informed choices?

0

1

2

3

4

56

7

appare l grocery

Totally agre e

Somewhatagree

Neither agre enor disagree

Somewhatdisagree

Totallydisagree

Inference: Most of the respondents of apparel sector agree that visual merchandising helpto communicate retail brand message. This would infer that nearly 80% of the respondentsfrom apparel sectors in favor of that the visual merchandising help retailer to communicateretail brand message so that the customer can make better informed choice.

Respondents


15 15

Respondents


15 15



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Do you agree that the retailers should avoid too many floors because shoppers wouldbe tired?

0

1

2

3

4

5

6

appare l grocery

Totally agree

Somewhatagree


Somewhatdisagree

Totallydisagree

Inference: Most of the respondents of grocery feel that too many floors should be avoided.This would infer that nearly 70% of the respondents in grocery sectors agree that too manyfloors should be avoided.

Respondents

apparel groceryTotally agree 4 6Somewhat agree 3 4Neither agree nor disagree 1 2

Somewhat disagree 4 2Totally disagree 3 1

15 15



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Chapter VI

FINDINGS AND RECOMMENDATIONS

• Segmentation for apparel sector mostly based on demographic and for grocery

geographic segmentation. • Apparel sector looks mostly between the age group of 25-35, where as in grocery

they looks age group between 25 and above. • Apparel sector largely concentrate on single segment market where as grocery

sector cover full market • Pricing in both the sector largely depend on cost plus • Sales promotion tools like coupons & premium/gifts are mostly used in apparel

sector where as samples & coupons in grocery. • The marketing mix like product, price, place, promotion, physical evidence and

process were differs in different parameter in apparel and grocery sector.• Apparel sector gives important to store look. They give important to store display,

internal design, color and store environment. • Learning from the empirics

After doing the apparel retail industry analysis in detail with the help of primary aswell as secondary analysis, the most important retail marketing mix element forapparel retail industry was found to he Location and Branding. Location wasperceived to be the most important factor because of the following reasons.

• The traffic flow of the customer largely depends on the location of the store.• Strategic location gives, ease of access to the customers• Strategic location also gives ease of brand presence and increase opportunity for

brand display.

• Space planning is a well-established method of ensuring that core retail offeringsare planned for, and implemented to maximise store sales. In a highly competitivedemand-focused environment the accuracy, compliance and performance of spaceplanning is critical to the success of any retailer.

• The ambience of the store is a very important element as it influences consumers inpurchase decision. A customer is highly influenced by the look and feel of the store.The minute he/she walks in, an image of the store is formed. This image isextremely important to the retailer if he wants to bag a new customer. Hence theambience is to be given utmost importance. A retailer needs to hire a good interiordecorator and if possible use ergonomics while designing a store.



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Recommendation

• Segmentation for apparel sector mostly based on demographic but there is ampleopportunity for apparel sector to target on geographic segment.

• Market segmentation divides large, heterogeneous customer groups into smaller,more manageable segments that can be targeted more efficiently. Aftersegmentation, each of the segments can be evaluated and attractive segmentstargeted. A customer value proposition for the segment can then be developed.Retailers should also be aware that customers, who may look alike, don’tnecessarily act alike, and therefore it is critical to consider segmentation bycustomer needs and attitudes as well as by customer characteristic.

• Apparel sector largely concentrate on single segment market they should go forproduct specialization and full market coverage.

• Apparel sector gives important to store look but the grocery sector have to giveequal importance to store look, design etc.

• Pricing is the spearhead of marketing strategy.It is one of the first things a customer spots and can therefore easily become the

one factor that clarifies or confuses the customers’ perception of brand positioning.Research indicates that pricing has the largest impact on retailer profitability whencompared to the results of traditional cost cutting. A retailer’s brand is of unparalleled importance both for customers and suppliers. Indeed much of aretailer’s market value may be attributable to its brand equity. Retailers need toguarantee that the business is a professional, efficient organisation that managestheir products and processes appropriately.

• One of the key trends to transform many areas of retail is the proliferation of communication and distribution channels. Although some channels have been over-hyped, they have established themselves as part of the retail experience.

• Developing leadership capabilityMy description of personal leadership – it starts with the hard work of strategy,culture and communications. It includes measurement, accountability, visibility andactive participation in all aspects of the enterprise.

• Visual merchandising will lead to impulse purchase of the product. Visualmerchandising is used to attract shoppers to view the product more closely.Effective visual merchandising is essential to attract shoppers enticing them tomake a purchase. Effective visual merchandising should also be supported by goodsales staff to close deals with shoppers.



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• Visual Merchandising enhances the pleasure of shopping experience. Storewindows can be used effectively to entice people on the streets to walk into thestore. Promotions, props and decorative items are huge attractions with regard tovisual merchandising. Unfortunately, stores use these tools only during festivals andanniversaries.

CONCLUSIONThis project has helped me understand the importance and significance of

developing marketing strategy framework in retailing and its impact on consumer buyingbehavior. It has given me exposure to the practical side of retailing and at the same timeenhanced my knowledge by applying theory learnt in class to practice Marketing whenused effectively is no doubt, a powerful tool to entice customers in making a purchasedecision. Retailers can attract more customers and increase sales by proper use of marketing strategy.



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Chapter VII

AnnexureSuccess Stories

Bombay StoreOn December 14th. 1905 the idea of Bombay Swadeshi Cooperative StoresCompany was conceived by eminent personalities like Bal Gangadhar Tilak, DadahhaiNaoroji & other stalwarts like Sir Jamshedji Tata. The first Bomhay SwadeshiCooperative Store was opened by Mr. Dadabhai Naoroji on December I 7. 1906, Mr.Manmohandas Ramji was its Managing Director then.

After its inception the store immediately gained prominence as a reliable place forIndian handloom cottons, woolens, silks, furnishings, linen & handicrafts. In the early daysthere were 12 such stores in India and all of them were located on the famous M.G. Roadsin different cities but eventually the company wound oil its stores in most the cities and

focused its attention on Mumbai and Pune. Currently Bomhay Store is located in threecities; two of its stores are in Mumbai and one each in Pune and Bangalore.

As in the present era of globalization, the Swadeshi movement has littlesignificance in December 1995 the company decided to re-brand the name of its retailoperations and the stores are today popularly known as the Bomhay Store. Bombay Storeshas brought the best designers from around the world in its team to translate traditionalskills into present day functional ideas and an international quality certification is done tobenchmark for all its merchandise. The Bomhay Store has been in forefront to give theworld a taste of contemporary Indian styling. All the products are perceived as ‘culturalambassadors’ and they pass rigid quality tests before being exported.Currently the store is positioned as a “Contemporary lifestyle store” and a showcase of Indian culture & heritage made available under a single roof to Indians, NRIs &Foreigners, all across the country.

The International Trade Division of The Bombay Store has maintained a readydatabase of manufacturers and their ability to source and consolidate all types of handicrafts from different states of India is giving them cutting edge over everybody else inthe market. The Bombay Store exports its products to stores/distributors in Canada, Dubai,Switzerland, New Zealand, USA, Chile, & UK.

The Institutional Sales Division of’ Bombay Stores has been operational from thepast 30 years catering to the requirements of multinationals like Hindustan Lever Ltd,Siemens, Dr. Beck. Corporate like Travel Corporation of India. Camlin. Fulford.Advertising Agencies like Trikaya Grey. Hindustan Thomson Associates. Synchronicity,airlines like British Airways. Air India. Indian Airlines. Publications houses like Times of’India. Indian Express. Zee Premiere. Banks like Reserve Rank of India. Rank of Baroda toname a few. The division supplies mostly gifts & promotional items and it also takes upcontracts for designing & stitching uniforms



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The product range offered by Bombay Stores consists of all the categories of Cosmetic & Health Care, Food products, Leisure & Entertainment. Home Accessories &Artifacts, Home Furnishings, Fashion Accessories, Ready to wear and so on.

The Bombay Store in Bangalore was set up with an investment of Rs2.10 crore n

October 2000 and is unique from its other branches in Mumbai and Pune for the extensivestore space it occupies. The decision on merchandise depends on several factors they arelike of the target segment, the availability of variety, and the seasonality of the product, theavailable shelf’ space. The current trend and the inventory support from the main Office. Incase of Bangalore customers more stress is on breadth of the product rather than the depth.Bombay stores believe in formulating “genuine” promotional schemes for its customers.These promotional schemes range from gift vouchers, which can be used in any of the fouroutlets in country. The other schemes are small gifts with the purchase and bundling of product pricing. However a conscious decision is take not to offer price discounts takinginto account the store positioning as premium niche store.

Bombay Stores has also associated itself either in the form of products or donations

with various NGOs likes MOBILE CRECHES in its attempt to contribute to the Indiansociety.

Future plans of Bombay Store include setting up The Bombay Store in majormetros of India like Delhi, Hyderabad, Calcutta, Madras, Bangalore & cities which arestrong tourist destinations like Lucknow, Agra & Goa as well as explore opportunities atthe busy airports of India. After achieve a stronghold in India, the company had planned toventure into international shores by opening the shop either independently or as afranchisee operation.

In the recent times Madura Garment’s Planet Fashion is proving to be extremelypopular with customers, providing as it does a superior quality retail experience wherein allleading brands of Madura Garments are available under a single roof and this is beingappropriately being conveyed through its positioning strategies that conveys “One stopshopping for all premium brands’.



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Excerpts from interviewMr. Rajan, Store Person, Louis Philippe Bangalore

What according to you are the most important factor/factors while opening an

apparel retail store?The most important factor mat needs to be considered while opening an apparel retail storeis the Location issues. The retailer needs to carefully select the location for its tore to havegreater visibility and ease of access to the customers.Other issues which need to address is the Presentation i.e. how well you can display yourmerchandise to your customers. This is very important to create positive first impression of the apparel store and give quality-shopping experience to its customers. Another importantissue is the brand selection. A well-established brand makes it easy for attracting customersto the retail store. Therefore the new apparel store needs to carefully select its brands.

What are the other important issues that need to be addressed while managing an

apparel retail store?The most important issue here is the merchandise selection and the inventory management.The retailer must always make sure that there is enough product and merchandiseavailability in the store.

Various promotional schemes are always important to create awareness and attractcustomers to the retail store. The retail store should also use various media vehicle forpulling the customers to its store.

Another important issue is providing the customers the “Value for Money”considering the Price sensitive mindset of the Indian customer.

How much is the pricing issue important?Although pricing plays a major role considering the price sensitive Indian customer, thecustomer base it is targeting is not very much price sensitive but at the same time is lookingfor Value for Money”. Louis Philippe makes sure that its customers are getting the valuefor money for all the purchases they are having with them.

How a small Store like Louis Philippe does takes care of the competition from giantstores like Shoppers Stop and Life Style?Louis Philippe tries to differentiate its store from its competitors by giving better customerservice like providing “personal touch” to its customers by having higher degree of personal involvement that the big retail stores like Shoppers Stop and Life Style usuallylack.

What is the expected future scenario of apparel retailing in India?The Indian apparel retailing is moving to organized retail stores, some of them are singlebranded outlets while some are multi branded outlets. The future holds good for apparelretail industry but much more depends on giving better services to the customer and thebuzz word i.e. giving them the value for money.



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QUESTIONNAIRE

I am a student of M P Birla Institute of Management, pursuing MBA Program. As apart of the MBA curriculum, I have taken up a research project on Developing marketing

strategy framework for large scale retailing in India. In this connection, I need someinformation.Below is the questionnaire. Kindly give your responses to the questions in the

Questionnaire. I sincerely assure your responses will be kept strictly confidential and shallonly be used for academic purpose. I shall greatly appreciate your cooperation incompleting my research project.

Mr. Inayatullah

1. Segmentation is based on?

Geographic Segmentation [ ]Demographic Segmentation [ ]Psychographic Segmentation [ ]Behavioral Segmentation [ ]

2. Demographic Segmentation?

Age 18-25 [ ]25-35 [ ]35 & above [ ]

Income 10k-25k [ ]25k-35k [ ]35k & above [ ]

Gender Male [ ]Female [ ]

3. Psychographic Segmentation?

Lifestyle [ ]Personality [ ]Values [ ]Occasions [ ]Loyalty status [ ]



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10. Marketing mix? How would you rank the following for marketing mix?ProductRange [ ] Quality [ ] Brand name [ ] Service line [ ]PriceLevel [ ] quality/price [ ] differentiation [ ] discount [ ]

PlaceLocation [ ] accessibility [ ] distribution channel [ ] distribution coverage [ ]PromotionAdvertising [ ] personal selling [ ] sales promotion [ ] publicity [

] public relation [ ]PeoplePersonnel [ ] behavior [ ] degree of involvement [ ]

customer/customer contact [ ]Physical evidenceFurnishing [ ] color [ ] layout [ ] noise level [ ]Process

Policies [ ] procedures [ ] mechanization [ ] customer involvement [ ]11. How would you rate the store on the following aspects?

12. Do you agree that different stores that cater to different customers need to bedifferent in their internal design?

Totally agree [ ]

Somewhat agree [ ]Neither agrees nor disagrees [ ]Totally disagree [ ]Somewhat disagree [ ]

13. Do you agree that the visual merchandising help retailers to communicate retailbrand message so that the customers can make better informed choices?

Excellent Very Good Good Average PoorAmbienceStore planning & designStore windowsFlooringDisplaysSpace design

Fixture & hardwareProps and decorativeColorsLighting



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Totally agree [ ]Somewhat agree [ ]Neither agrees nor disagrees [ ]Totally disagree [ ]Somewhat disagree [ ]

14. Do you agree that the window display should be changed weekly or fortnightly toensure fresh display?

Totally agree [ ]Somewhat agree [ ]Neither agrees nor disagrees [ ]Totally disagree [ ]

Somewhat disagree [ ]

15. Do you agree that the retailers should avoid too many floors because shopperswould be tired?

Totally agree [ ]Somewhat agree [ ]Neither agrees nor disagrees [ ]Somewhat disagree [ ]Somewhat disagree [ ]



Bibliography

Books and journals

Journal of Retailing

Journal of Advertising and MarketingJournal of Marketing ScienceJournal of the Academy of Marketing ScienceJournal of Super Market BusinessInternational Journal of Research in MarketingFormulating Retail Location Strategy in changing Environment by Abijit Ghosh & SamuelCraig, in Journal of MarketingMcKinsey Quarterly ReportRetail Magazine by Abijit GhoshMarket Leadership Strategic

Websites

www.google.comwww.businessworldindia.comwww.advantage-india.comwww.rediff.comwww.businesstoday.comwww.retailyatra.comwww.wikepedia.com

inayatullah-0527-retail mktg. strategy in india

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