pantaloon new proj
TRANSCRIPT
Pantaloon Retail India (Limited)
PROJECT REPORT
CONSUMER INTRECTION & CONSUMER SERVICE
KRISHNA PAL VERMA
8/27/2009
Guided By
Mr. UMESH PANDAY,’DM’
Submitted by
KRISHNA PAL VERMA
JPPGDM-080121
Contect no.-09452967144
J.P. Institute of Management
Meerut
3 | P a g e
Board of directors
Mr. Kishore Biyani, Managing Director
Kishore Biyani is the Managing Director of Pantaloon Retail (India) Limited and the Group Chief Executive Officer of Future Group. To know more.
Mr. Gopikishan Biyani, Wholetime Director
Gopikishan Biyani, is a commerce graduate and has more than twenty years of experience in the textile business.
Mr. Rakesh Biyani, Wholetime Director
Rakesh Biyani, is a commerce graduate and has been actively involved in category management; retail stores operations, IT and exports. He has been instrumental in the implementation of the various new retail formats.
Mr. Vijay Kumar Chopra, Independent Director
V.K.Chopra is a fellow member of The Institute of Chartered Accountants of India (ICAI) by profession and is a Certified Associate of Indian Institute of Bankers (CAIIB). His banking career spans over 31 years and he has served senior management positions in Central Bank of India, Oriental Bank of Commerce, SIDBI, Corporation Bank and SEBI.
Mr. Shailesh Haribhakti, Independent Director
Shri Shailesh Haribhakti, is a Chartered Accountant, Cost Accountant, and a Certified Internal Auditor. He is the Deputy Managing Partner of Haribhakti & Co., Chartered Accountants and past president of Indian merchant Chambers. He is on the Board of several Public Limited Companies, including Indian Petrochemicals Corporation Ltd., Ambuja Cement Eastern Ltd. etc.
7 | P a g e
He is on the Board of Company since June 1, 1999.
Mr. S Doreswamy, Independent Director
S. Doreswamy, is a former Chairman and Managing Director of Central Bank of India and serves on the board of DSP Merrill Lynch Trustee Co and Ceat Limited among others.
Dr. D O Koshy, Independent Director
D. O. Koshy, holds a doctorate from IIT, Delhi and is the Director of National Institute of Design (NID), Ahmedabad. He has over 24 years of rich experience in the textiles and garment industry and was instrumental in the setting up of NIFT centres in Delhi, Chennai and Bangalore. He is a renowned consultant specializing in international marketing and apparel retail management.
Ms. Bala Deshpande, Independent Director
Bala Deshpande, is Independent Director, Pantaloon Retail (India) Ltd. and also serves on the boards of Deccan Aviation, Nagarjuna Construction, Welspun India and Indus League Clothing Ltd, among others.
Mr. Anil Harish, Independent Director
Anil Harish, is the partner of DM Harish & Co. Associates & Solicitors and an LLM from University of Miami. He also serves on the board of Mahindra Gesco, Unitech, IndusInd Bank and Hinduja TMT, among others.
8 | P a g e
CONTENTS
Acknowledgement
Preface
Executive Summary
Objective of the project
Research Methodology
Company Profile
Marketing Plan
Management Hierarchy
Findings And Analysis
Limitation
Suggestions/Recommendations
Bibliography
Questionnaire
10 | P a g e
ACKNOWLEDGEMENTA work is never a work of an individual. We owe a sense of
gratitude to the intelligence and co-operation of those people who
had been so easy to let us understand what we needed from time
to time for completion of this exclusive project.
We want to express our gratitude towards Mrs. Ismeet
dheer ,HR, Pantaloons :: DT City Center:: Delhi ,for giving us an
opportunity to do this project. Last but not the least, we would
like to forward our gratitude to Mr.Avnish pariyar, ’store
head’,Mr.Umesh Panday,’DM’ Internet & J.P. Institute of
Management College. Meerut. who always endured us and
stood by us and without whom we could not have envisaged the
completion of our project.
KRISHNA PAL
VERMA
PGDM
(2nd YEAR)
11 | P a g e
PREFACE
Business,theworld over are struggling to suction
conpetitiveness in a rapidly globling 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 sailing
many home brand international brand for man casuals and
formals and also for kids and ladies. During working on this
12 | P a g e
project I have observed how the pantaloon store because they
perform our job very honestly and they maintain the section
perfectly.
Major Milestones1987
Company incorporated as Manz Wear Private Limited. Launch of Pantaloons trouser, India’s first formal trouser brand.
1991
Launch of BARE, the Indian jeans brand.
1992
Initial public offer (IPO) was made in the month of May.
1994
The Pantaloon Shoppe – exclusive menswear store in franchisee format launched across the nation. The company starts the distribution of branded garments through multi-brand retail outlets across the nation.
1995
John Miller –Formal shirt brand launched.
1997
Pantaloons – India’s family store launched in Kolkata.
2001
Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s first hypermarket chain launched.
200 Food Bazaar, the supermarket chain is launched.
13 | P a g e
2
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 Indivision. Plans forays into insurance and consumer credit.
Multiple retail formats including Collection i, Furniture Bazaar, Shoe Factory, EZone, Depot and futurebazaar.com are launched across the nation.
Group enters into joint venture agreements with Generali.
What is Pantaloons ?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 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
14 | P a g e
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.
Pantaloons 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!
The first Pantaloons 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’.
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
15 | P a g e
casualwear, ethnicwear, formalwear, partywear and
sportswear for Men, Women and Kids.
Images Fashion Forum 2009
Most Admired Fashion Group Of The Year - Future Group
Most Admired Private Label - Pantaloons, the lifestyle format
Critics Choice For Pioneering Effort In Retail ConceptCreation - Central
Coca-Cola Golden Spoon Awards 2009
Most Admired Food & Grocery Retailer Of The Year
Most Admired Food Court
Most Admired Food Professional
2008
Indian Retail Forum Awards 2008
Most Admired Retail Company of the year - Future Group
Retail Face of the Year - Kishore Biyani
Best Retailer Of The Year ( Hypermarket) - Big Bazaar
Future Group was awarded the Most Admired Retail Company of the year by the Indian Retail Forum at a glittering ceremony
16 | P a g e
organised in Mumbai. Mr Kishore Biyani also won Retail Face of the Year.
India Retail Forum (IRF) is a platform for intellectual insights and information exchange for the retail business in the Indian subcontinent. The forum presents the business of retail in the region to a global audience, with the express aim of facilitating understanding about and encouraging investment in this massive marketplace.
Big Bazaar, the value format of Future Group bagged the Best Retailer Of The Year ( Hypermarket).
The INDIASTAR Award 2008
Food Bazaar: Best Packaging Innovation
Food Bazaar bagged the INDIASTAR Award for Best Packaging Innovation in India, for its private label brand Fresh And Pure Chakki Atta.
INDIASTAR Award is a biennial event which aims to promote and encourage excellence in packaging design, innovation and technology. The contest was established in 1972 and is considered as the most popular and premier event for India’s packaging fraternity. This year there were around 357 entries and the participants had to submit a sample of their designs for selection.
With this award, Pantaloon Retail (India) Limited becomes the first Indian Retailer to win the prestigious INDIASTAR Award.
Retail Asia Pacific 500 Top Awards 2008
Gold Winner -Top Retailer 2008 Asia Pacific
Retail Asia Publishing Pte, the institutor of these awards, aims to set a platform that appraise, raises and recognizes the
17 | P a g e
development and growth of retailing throughout the Asia Pacific region.
Coca-Cola Golden Spoon Awards 2008
Most Admired Food & Grocery Retail Visionary of the Year: Kishore Biyani
Most Admired Food & Grocery Retailer of the Year – Supermarkets: Food Bazaar
Most Admired Food & Grocery Retailer of the Year - Hypermarkets: Big Bazaar
Most Admired Retailer of the Year - Dynamic Growth in Network Expansion across Food, Beverages & Grocery: Future Group
Most Admired Food & Grocery Retailer of the Year - Consumer's Choice: Big Bazaar
The Coca-Cola Golden Spoon Awards 2008, were given away for the first time as a culmination of the ‘Food Forum India 2008’ – a two day convention, which saw the participation of leading brands, retailers & retail support organizations from across the globe. The awards were presented to honour enterprise, innovation and achievement in the food retailing business as a benchmark of excellence.
The Reid & Taylor Awards For Retail Excellence 2008
Retail Leadership Award: Kishore Biyani
Retail Best Employer of the Year: Future Group
Retailer of The Year: Home Products and Office Improvements: HomeTown
The Reid & Taylor Awards for Retail Excellence are an important feature of the Asia Retail Congress, Asia’s single
18 | P a g e
most important global platform to promote world-class retail practices. These awards are aimed at honouring the best, in the Asian Retail scenario. India played host to Asia Retail Congress 2008.
2007
Images Retail Awards
Most Admired Retail Face of the Year: Kishore Biyani
Most admired retailer of the year: Large format, multi product store: Big Bazaar
Most admired retailer of the year: Food and Grocery: Food Bazaar
Most admired retailer of the year: Home & office improvement: HomeTown
Most admired Retail Company of the year: Pantaloon Retail (India) Ltd.
Images Retail Forum followed strict international benchmarks in deciding the top honours for Images Retail Awards ’07, with IRIS as knowledge partner and global consulting firm AT Kearney as the Process Approver.
National Retail Federation Awards International Retailer for the Year 2007 – Pantaloon Retail (India) Ltd
The National Retail Federation is the world’s largest retail trade association with over 1.4 million members in the US and across the world. Some of the past winners of the award include Metro AG (Germany), Carrefour (France), Zara (Spain), Boticario (Brazil) and Ito Yokado (Japan). The award was presented at the Retail’s Big Show held in January 2007 in New York.
World Retail Congress Awards
19 | P a g e
Emerging Market Retailer of the Year 2007 – Pantaloon Retail (India) Ltd
The inaugural World Retail Congress held in Barcelona, Spain in March 2007 attracted over one thousand retail professionals from over sixty countries. The awards were decided by a multinational Grand Jury. Winners in other categories included Inditex, Mall of Emirates, Marks & Spencer and IKEA.
Hewitt Best Employers 2007Best Employers in India (Rank 14th) – Pantaloon Retail (India) Ltd
Leading human resources consultancy, Hewitt Associates conducts an annual survey of the best employers in India, as part of its global initiative. It is based on CEO interview, People Practices Inventory and Employee Opinion Surveys. Pantaloon Retail became the only retailer to feature among the twenty-five best employers in India.
PC World Indian Website AwardsBest Indian Website In The Shopping Category - Futurebazaar.com
PC World, a leading consumer technology magazine selected the best Indian websites in various categories based on use of technology for delivering solutions, information being presented in an intuitive and concise manner and overall experience aided by design.
Reader’s Digest Trusted Brands Platinum AwardsTrusted Brands Platinum Award (Supermarket Category) – Big Bazaar
The Reader’s Digest awards are based on surveys done among consumers by independent research agency, Nielsen Media Research. This is the second consecutive time Big Bazaar has won this award.
2006
Retail Asia Pacific Top 500 Awards Asia Pacific Best of the Best Retailers – Pantaloon Retail (India) Ltd
20 | P a g e
Best Retailer in India – Pantaloon Retail (India) Ltd
The Retail Asia publication in association with EuroMonitor and KPMG honours the best retailers in 14 countries across the Asia Pacific region. The awards were presented in Singapore in October, 2006.
Asiamoney AwardsBest Managed Company in India (Mid-cap) – Pantaloon retail (India) Ltd.
The Asiamoney publication conducts a poll among fund manages and investors and does a quantitative analysis of financial performance to select best managed companies in Asian countries.
Ernst & Young Entrepreneur of the Year AwardErnst & Young Entrepreneur of the Year (Services) – Kishore Biyani
Considered to be one of the most prestigious business awards in India, a jury comprising leading names in Indian business selected the winners based on courage, creativity, passion, endurance and vision.
CNBC Indian Business Leaders AwardsThe First Generation Entrepreneur of the Year – Kishore Biyani
Organized by CNBC-TV18, the twelve awardees in various categories are decided by a high profile jury, along with research partners - The University of Chicago Graduate School of Business, Development Dimensions International (DDI) and AC Neilson ORG MARG.
Lakshmipat Singhania – IIM Lucknow National Leadership AwardsYoung Business Leader – Kishore Biyani
The award recognizes and honors individuals who have contributed consistently to the betterment of our country through their pursuit of excellence. The awards were presented in New Delhi by the Prime Minister Dr. Manmohan Singh in
21 | P a g e
December, 2006.
Images Retail Awards Best Value Retail Store – Big BazaarBest Retail Destination – Big Bazaar Best Food & Grocery Store – Food Bazaar Retail Face of the Year – Kishore Biyani
The Images Retail Awards are decided through a nationwide consumer & industry poll and nominations followed by performance assessment by team of analysts and jury.
Readers’ Digest Awards Platinum Trusted Brand Award - Big Bazaar
The Reader’s Digest awards are based on surveys done among consumers by independent research agency, Nielsen Media Research.
CNBC Awaaz Consumer AwardsMost Preferred Large Food & Grocery Supermarket – Big Bazaar
Conducted in association with AC Nielsen-ORG Marg across 21 major cities, nearly 10,000 consumers were asked to choose their most preferred brands.
Reid & Taylor Awards for Retail ExcellenceRetail Entrepreneur of the Year – Kishore Biyani
2005
Images Retail Awards 2005
PRIL- Most Admired Retailer of the Year
Food Bazaar- Retailer of the Year(Food and Grocery)
Big Bazaar-Retailer of the Year(Value Retailing)
Central-Retail Launch of the Year
Voted by Business Today magazine as one of the
22 | P a g e
Top 20 Companies in India to watch in 2005
India’s most investor-friendly companies in the top 75
India’s Biggest wealth creators in the top 100
DAKS London
PRIL- Brand Builder of the Year
2004
Images Retail Awards 2004
PRIL- Most Admired Retailer of the Year
Food Bazaar- Retailer of the Year(Food and Grocery)
Big Bazaar-Retailer of the Year(Value Retailing)
Central-Retail Launch of the Year
Reid & Taylor and DLF Awards
PRIL - Retailer of the year
2003
Indian Express Award
PRIL –Marketing Excellence and Excellence in Brand Building
Indusland Bank (India Brand Summit)
PRIL - Excellence in Brand Building
23 | P a g e
CONSUMER BUYING BEHAVIOR
Understanding the buying behavior of the target market is the
essential task of marketing management under marketing concept.
The consumer market consists of all the individuals and households
who buy or acquire good and services for personal consumptions. The
buying behavior tries to find out the answers for the questions, who
buys? How do they buy? Where do they buy? Do they buy?
(A) FACTORS INFLUENCING CONSUMER BUYING BEHAVIOR
There are four major factors that influence the buying behavior such
as cultural factors, social factors, personal factors, and psychological
factors.
i. CULTURAL FACTORS: Culture is the most fundamental
determinant of a person wants and behavior. Values,
perceptions, preferences, and behavior are the main variable
under culture of an individual. Each culture contains sub-culture
like nationality, religious group, geographical area, and
linguistic divisions etc.
24 | P a g e
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.
PSYCHOLOGICAL FACTORS: a person buying choice is also
influenced by four major psychological factors such as motivation,
perception, learning belief and attitudes.
(B) BUYING DECISION PROCESS
It includes buying roles, types of buying and steps in buying process.
I. BUYING ROLE
The buying role could be classified into four parts. These are initiator,
influencer, decider and buyer.
II. TYPES OF BUYING BEHAVIOR
Consumer decision taking varies with the type of buying decision.
There are four types buying behavior such as Complex buying
behavior, Habitual buying behavior, Variety seeking buying behavior.
III. STAGES IN BUYING DECISION PROCESS
Here are five stages in buying decision process namely problem
recognition search, evaluation of alternatives purchase decision and
past purchase behavior.
NEED RECOGNITION
25 | P a g e
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.
INFORMATION SEARCH
There are different sources from where a consumer can gather
information like personal sources commercial sources, experimental
sources.
EVALUATION OF ALTERNATIVES
After gathering information about different products the customer will
be in a fuss as to choose which product among the mainly alternatives
consumer usually evaluate the alternatives on traditional basis, on the
basis of utility function etc. from the many alternative consumers at
last choose the best one for him.
PURCHASE DECISION
A consumer who decides to execute purchase intention will be making
up to five purchase decisions.
POST PURCHASE BEHAVIOR
After purchasing the product and services the consumer will
experience some level of satisfaction or dissatisfaction with the
product and services that will influence subsequent behavior. If
consumer is satisfied he may show the probability of buying the
product the next time, satisfied customer will say good thing about
the product, proving the statement that "satisfied customer is the best
26 | P a g e
advertisement.” A dissatisfied customer may take some action against
it. They may try to reduce the dissonance by abandoning returning the
product.
Understanding consumer needs and buying process is the foundation
of any company. By understanding how buyers go through problem
recognition, information search evaluation of alternatives, the
purchase decision and post purchase behavior marketers can pick up
many clues as to how to meet buyers need.
LITERATURE REVIEW
Marketing
Marketing is a societal process by which individuals and groups
obtain what they need and want through creating, offering and freely
exchanging products and services of value with others or other wise 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 marketing approach to
accomplish the bread objective of the marketing plan. The various
process of marketing strategy are given below.
27 | P a g e
1. Selecting largest markets segmentation
2. Positioning
3. Product
4. Price
5. Place
6. Promotion
7. Research and development
8. Marketing research
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 habita. It is an approach midway between mass
marketing and individual marketing. Through this the choice of
distribution channels, and communicaton channels become much
easier. The researchers try to form segments by looking at consumer
characteristics; geographic, demographic, and psychographic. After
segmenting the market then target market selected.
28 | P a g e
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.
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.
29 | P a g e
5. Place: - This plays a major role in the entire marketing system. The
company emphasis on it's 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 promotioins 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 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.
MARKETING MIX
Target Market
Product Price Promotion Place
Product
variety
List price Sales
promotion
Channels
30 | P a g e
Quality Discounts Advertising Coverage
Design Allowances Sales forces Assortments
Features Payment
period
Public relation Locations
Brand
name
Credit terms Direct
marketing
Inventory
Packaging Transport
Sizes
Services
Warrantie
returns
MARKETING STRATEGY
Marketing is not Euclidean geometry a fixed system of concept.
Rather marketing is one of the dynamic fields with in the
management arena. The market faces continually a new challenge
everyday and companies must respond to it positively. Therefore it is
not surprising that new market idea keep surfacing to meet new
market place challenges.
31 | P a g e
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 survey I
found that in percentage term more people is quality conscious and
not price conscious. Customer satisfaction is very important part of
the organization that at any cost they have to fulfill.
A growing relationship with customer and customer
retention:
Nowadays a good relation with customer is very important for
organization. Sale is totally depending on the relation with the
customers. Customer's retention is also a major aspect for growing
business. It means keep the old customer and try to make new
customer.
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:
32 | P a g e
Companies are increasing by pursuing market beyond their
borders. When they enter other countries they must follow the
tradition of that country and also they make plan for local market that
which type of product has more demand and how can it run in the
market.
Promotional Strategy
Under the market strategy promotional idea is very important.
Organization provides some schemes or rebates to retailers or
consumers. They make advertisement according to convenient of the
people and the feature of the product.
So on the basis of marketing strategy a organization runs in the
market. It is several types of which makes helpful to increase sales
and turnover of the organization.
RESEARCH METHODOLOGY:RESEARCH METHODOLOGY:
33 | P a g e
The research for the study comprised of:The research for the study comprised of:
A. SECONDARY RESEARCH:
A comprehensive secondary research was carried out to find
out the various factors that affect the buying decisions of the
consumers in a department store. The main objective of this
study was to analyze how much significant effect each of these
factors has on conversion rate of a store and also their influence
on the buying decisions of the consumers.
It consisted of:
-Searching secondary data sources, which included books,
journals, magazines, Internet, library, etc.
-Research and analysis of the secondary data collected from the
store to determine the trends.
B. PRIMARY RESEARCH
The research was carried out in two stages: The research was carried out in two stages:
11. Tracking the customers’ movements in the store. . Tracking the customers’ movements in the store.
The movement of around 100 customers’ in the store wasThe movement of around 100 customers’ in the store was
tracked on the store map (obtained form the store). Thistracked on the store map (obtained form the store). This
34 | P a g e
was carried out in a structured, disguised manner towas carried out in a structured, disguised manner to
understand and evaluate: understand and evaluate:
The high, medium and low traffic zones in the store.The high, medium and low traffic zones in the store.
The purchases and conversion rate of each section.The purchases and conversion rate of each section.
Customers’ movement in the store and the differences inCustomers’ movement in the store and the differences in
the behaviors of men/women/ kids and their differentthe behaviors of men/women/ kids and their different
shopping preferences.shopping preferences.
The retail settings that affect the buying decisions. The retail settings that affect the buying decisions.
2.2. Customer survey through a structured, non-disguisedCustomer survey through a structured, non-disguised
questionnaire. questionnaire.
The questionnaire was prepared on the basis of in-dept The questionnaire was prepared on the basis of in-dept
interviews with the store customers and management staff.interviews with the store customers and management staff.
It was test marketed on a few consumers and then the finalIt was test marketed on a few consumers and then the final
draft was made.draft was made.
SAMPLING PLANSAMPLING PLAN::
Non Probability Convenience sampling method was usedNon Probability Convenience sampling method was used
to select the customers.to select the customers.
The sample size was 100, a number derived judgmentally.The sample size was 100, a number derived judgmentally.
Analytical toolsAnalytical tools used: SPSS Software and Microsoft Excel. used: SPSS Software and Microsoft Excel.
2.4a LIMITATIONS OF THE SURVEY:2.4a LIMITATIONS OF THE SURVEY:
35 | P a g e
The research and analysis of the project was conductedThe research and analysis of the project was conducted
over a period of three months. The scope of this projectover a period of three months. The scope of this project
has therefore been limited by the time available for thehas therefore been limited by the time available for the
same.same.
The study was conducted on the floor and hence wasThe study was conducted on the floor and hence was
limited to the customers visiting the store. limited to the customers visiting the store.
Non Probability Convenience Sampling, which has beenNon Probability Convenience Sampling, which has been
used in the research, has its own sets of limitations,used in the research, has its own sets of limitations,
though an effort was made to be as rational as possiblethough an effort was made to be as rational as possible
while pursuing this research.while pursuing this research.
All the limitations and disadvantages that attachAll the limitations and disadvantages that attach
themselves to any effort in the collection, tabulation andthemselves to any effort in the collection, tabulation and
analysis of the primary data apply to this project as well.analysis of the primary data apply to this project as well.
This would include the selection error, the measurementThis would include the selection error, the measurement
error, interviewer effect, non- response rate, and dataerror, interviewer effect, non- response rate, and data
login error of the analyst. login error of the analyst.
2.4b SCOPE OF THE STUDY
The study is limited to the customers visiting the store from the
entire NCR region.
The study is also limited to a particular store only.
SECONDARY RESEARCHSECONDARY RESEARCH
3.1 SCIENCE OF SHOPPING
36 | P a g e
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.
1“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 supermarket,
1
37 | P a g e
conversion rate is probably 100% (dairy or toilet paper). In an art gallery
full of paintings, probably the conversion will be less than 1%. Conversion
rate measures what you make of what you have - it shows how well or how
poorly the entire enterprise is functioning.
3.2 CUSTOMER SERVICE
For a retailer, it costs more to get new customers than to keep the
ones you have. Also the longer you can keep a customer, the more
valuable that customer becomes. Studies done by consultants such as
McKinsey have shown that repeat customers generate over twice as much
gross income than new customers.
2"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 consumers mix and match items, which items they
choose to keep in their closets for many years, and why.
2
38 | P a g e
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. 3”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.
4As 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
3
4
39 | P a g e
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 surveyed 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!
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
40 | P a g e
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.
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
41 | P a g e
carve a special place for it self in the hearts and minds of the
aspirational Indian customers. The Stores have entire range of
Menswear, Womenswear, Kidswear, Activewear, Accessories,
Cosmetics, Fragrances, Homeware, Jewellery, Toys, Books,
Music, Stationery, Gift, Novelties, etc.
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.
42 | P a g e
Customer Relationship Management (CRM)
CRM is a management approach that seeks to create, develop and enhance relationships with carefully targeted customers to maximize customer value, corporate profitability and shareholder value. CRM leverages information technology (IT) to implement relationship-marketing strategies. Already customers are getting actively involved, either directly or indirectly with production processes. They make suggestions, they ask for smaller, brighter, easier-to-use products.
CRM is not a tool that is specific to any industry type, so there is no one single definition of Customer Relationship Management. It is up to the organization to formulate one for itself in order to achieve the CRM goals that it sets for itself. Companies that have adopted CRM regard every customer as an individual with specific needs and tailor their services accordingly. Information Technology comes into the picture to help manage Customer relationships in an organized way.
On an average a company has only a 5 to 20 percent probability of making a successful sale to a new prospect but has a 60 to 70 percent probability of selling again to active customers. It would be wiser to invest in encouraging an existing customer to purchase again. Companies that followed up lapsed cases experienced 20 to 40 percent successful sales. Without a doubt 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
43 | P a g e
customers and to remain loyal as a method of increasing revenues internally.
Rising customer expectations have stiffened the competition among companies to improve their customer support services. Today’s customer has access to the latest technological devices that give him instant information, allows him to make instant transactions, buy, sell or transfer money, he has access to it all over his palm top, PDA, mobile phone or desktop. Today’s customer is knowledgeable, he knows what he wants and the Internet is a powerful tool in his hands.
More than ever, customers today have an important role to play in the product lifecycle. Customers are continually pressing for improved support services in terms of product coverage, business-ease, response-time and price (or at least value-for-money!).” With a wide variety of services available at competitive prices and easily accessible at the click of a button, improved customer services are becoming the need of the day. Customers are driving companies to migrate from being purely product-centric to purely customer-centric, taking care of all customer requirements even before they are demanded.
From current customer trends, it is easy to define the future customer. The volume of information available via the Internet will make the future customer a knowledgeable one. As 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
44 | P a g e
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
The CRM strategy should include:
45 | P a g e
(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
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
46 | P a g e
1) Customers who respond to new promotions
2) Customers who respond to new product launch
3) Customers who respond to discounts
4) Customers who show propensity to purchase specific products
Campaign/ Promotion Effectiveness Analysis
Once a campaign is launched its effectiveness can be studied across different media and in terms of costs and benefits; this greatly helps in understanding what goes into a successful marketing campaign.
Campaign/ promotion effectiveness analysis can answer questions like:
Which media channels have been most successful in the past for various campaigns?
Which geographic locations responded well to a particular campaign?
What were the relative costs and benefits of this campaign?
Which customer segments responded to the campaign?
47 | P a g e
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. 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.
48 | P a g e
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
49 | P a g e
analysis of the buying habits of the customer or the customer group; but increasingly data mining tools are being used to define specific customer segments that are likely to respond to particular types of campaigns.
Figure Figure
50 | P a g e
Designing a customer loyalty programDesigning 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.
53 | P a g e
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.
Objectives and BenefitsObjectives and Benefits
54 | P a g e
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.
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.
55 | P a g e
Customer Retention
Clearly, one approach to retaining existing customers is to offer a suitable reward scheme. However, giving away something to those customers who would have made the purchases anyway is not cost effective. Instead of expensive "give-away's" the customer needs to be given special privileges as a member of an elite and prestigious club. By raising the self-esteem of the customer and communicating on a personal level with worthwhile information, and making offers which are relevant, the perceived value can be made to appear high but at a relatively low cost.
Establish Long Term Relationships
By definition, this should be one of the aims of all customer loyalty schemes. It is widely Accepted that it is a lot easier (and more cost effective) to sell to the existing customer base. Also, some organizations establish a dialogue with their customers in order to obtain regular feedback on its products and services rather than conducting ad-hoc customer surveys. It is vitally important to know the customer's view of new and existing products and to gauge their reaction to targeted promotions.
Improve Product Awareness
56 | P a g e
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,
57 | P a g e
often related to the customer segment and suggests targeted offers would be beneficial. An appropriate reward scheme might be visit related for, example, spend over RS 300 on 4 occasions within a month to earn a reward, or a free instant win prize on each visit.
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.
58 | P a g e
Improving the Effectiveness of Direct Marketing
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 customers. To achieve this we need to understand what products are likely to appeal to particular customers groups.
Elements of a Successful SchemeElements 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
59 | P a g e
Frequency of purchase Value of purchase Average spend Customer types and groups
Whatever is appropriate it is essential to communicate to the customer what he/she has Earned. In a reasonably high frequency outlet this will normally mean telling the customer his/her cumulative "points" balance at the point of sale at every purchase. Statement based schemes where the customer is informed at three monthly intervals are only appropriate for low frequency operations. Constantly reminding the customers of the benefits that are accruing will maintain interest and motivate them to reach their target even quicker. Depending upon the objectives the "points" can be related to one of the following:
Spend
To increase average spends. There may be a minimum purchase necessary and increasing Level of points or discounts earned for an increasing spend. Particularly useful for low value products. For example: 1 point for every RS 50 done by most of the retailers in India.
Frequency
Appropriate to build traffic through the store, where the propensity to spend is already high for visitors. Also, useful to
60 | P a g e
make customers aware of new products on display in the store at the start of a new season. For example: spend RS 300 on 4 separate visits in a month and receive 100 bonus points.
Period
Special offers to attract customers on light days. For example: double points on Mondays.
Product/Department
Provides the means by which suppliers can participate in the scheme by funding special offer points.
The RewardThe 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
61 | P a g e
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.
Types of RewardTypes of Reward
These fall into four categories:
Own Goods
For example: gift vouchers, discounts or services. Generally low cost because the reward has a built-in margin. Applicable when the product is desirable and is not replacing genuine purchases that would have been made anyway. Perhaps surplus product can be used (as long as it is still desirable). Not appropriate if there is no direct benefit to the customer or his/her family such as free petrol to a company car driver.
62 | P a g e
Currencies
For example: Most of the airlines use in India Free Air Miles, which can be used for discount travel, holidays, car hire, hotels etc. Provides a good mechanism for broadening the appeal and providing a range of rewards easily.
Gift Catalogues
Gifts as in terms if Vouchers given by Retailers to their customers.
Affinities
Increasingly popular for schools, charities etc. The reward has to be appealing to the charity concerned. Though hardly any retailers use it in India.
Funding the RewardFunding 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).
63 | P a g e
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)
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
64 | P a g e
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
Family and ages
Job and income level
Residence (own, rent)
Credit cards held
Interests?
Special needs etc. etc.
Not all customers will give all this level of information on first asking. It is, however, possible to deduce certain details later. For example: if payment method is captured on each purchase
65 | P a g e
we can soon learn what credit cards are held, if toys are purchased we can gain details of the children from the guarantee registration card, etc.
Frequency
How often does this person visit the store? On what days of the week? Hour of the day? Is the frequency increasing or decreasing? Do certain types of in-store promotions or mailing campaigns effect the frequency?
Regency
When did the customer last visit. Is this potentially a lost customer?
Spend
Is this increasing as required? Does it vary by customer profile? Do particular types of promotions affect it?
Sites Visited
66 | P a g e
Is the customer loyal to a particular store? What distances are traveled, on what days? Will this customer travel give the right incentive?
Products Purchased
Offers what special offers are taken-up?
Departments what is the level of spend by department?
How does this vary by season and promotion?
Lines what is the typical shopping basket of this
individual?
Capturing the data can be relatively straightforward but it is unlikely that anyone will really need to maintain a history of each and every product item purchased by each and every customer. For a large supermarket chain this would amount to approximately 500 gigabytes per annum!
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
67 | P a g e
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).
Targeting
Targeting customers is a way of improving the response rate to promotions. This involves
68 | P a g e
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 promotionsCustomer 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.
Segmentation
Segmentation involves defining customer groups and devising separate marketing approaches to each group. Customers within a segment are as similar as possible and customers in different segments are most dissimilar. It is expected that customers in the same group will react to promotions in a similar way.
Cluster analysis is a statistical technique for segmentation. This again relies upon identifying like characteristics, which can be lifestyle based but preferably uses purchasing data:
Identify customer purchasing characteristics or attributes Divide into large number of segments
69 | P a g e
Reduce segments to a manageable number by combining
segments with closeCharacteristics (nearest neighbor method)
- Market to customers in same segmentThis 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:
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
70 | P a g e
Customer Loyalty Programs of Retailing in IndiaCustomer Loyalty Programs of Retailing in India
A loyalty programme is an advanced stage of a well-managed CRM process and must be graduated to and not jumped into. Launching a loyalty programme depends on the Life State of a mature CRM system, data maturity and organizational preparedness. It needs some amount of investments in technology, specialized software, statistical tools and logistics. Earned rewards program by most of the retailers in the form of vouchers in India are actual cash payoffs, differed or otherwise and need efficient management. The best loyalty programmes are driven out of customer anaytics 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 successfulprogramme assumes that all channels are included in the customerrelationship that measurable objectives have been established, andthat promises are kept. With this foundation in place, a programme canboast the following characteristics:
1. Visibility: A loyalty programme must be highly visible regardlessof the channel. A Web site can show special offers for programmemembers, a catalogue can feature the programme prominently andshoppers in the store should be asked if they'd like to join.
71 | P a g e
Cross-promotional materials should be present and easily obtainable.
2. Simplicity: To succeed, a loyalty programme must be easy to use inall channels. Minimize the fine print; the more the customers have tofigure out, the less they like the programme.
3. Value: The balance of reward and recognition must establish valuein the customer's mind and motivate incremental purchases. Programmerewards should be credited regardless of where the customer prefers toshop. And while the price of merchandise should be consistent acrossall channels, don't be afraid to offer incentives to encouragecustomers to try a new shopping experience.
4. Trust: Keep the promises made by the loyalty programme. If thepromise is for a personalized, highly valued service, don't bombardprogram participants with meaningless offers that obviously areavailable to everyone.
Recent studies indicate that customers who shop more than one of aretailer's channels - perhaps looking online and buying in the storeor reading the catalogue/leaflet and buying online-spend more moneywith that retailer than single-channel shoppers.
The best way to coordinate marketing objectives across channels is tobuild a knowledge base of customer behaviors and preferences.Retailers cannot afford to let legacy systems interfere with building
72 | P a g e
this knowledge base. A well-conceived and executed loyalty programmecan be the key to turning invisible shoppers into hand-raisingvolunteers 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 companies. Though every loyalty club has its pros and cons to the program but the main reason of worry for the organized retailers in India is the amount of average Walk Ins purchasing from the stores. The people visiting the Malls or specific store locations unlike, Wal-Mart in US these companies haven’t yet been able to fulfill the need of the customers towards the loyalty club.
As part of my dissertation research shows that most of the loyalty clubs in India are similar in their purchase schemes and privileges. I would further support in other sections of the dissertation.
Analysis of QuestionnaireAnalysis of Questionnaire
73 | P a g e
Most of the respondents go to near by areas to shop. The malls in Mumbai where weekend rush is a major pinpoint. The others are markets like Crawford , Heera panna.
74 | P a g e
46%38%
15%
Where do you like to shop?
Malls Markets Others
6%
36%
40%
12%6%
Which Shopping store's do you like to shop?
Life style
Pantaloon
Shoppers Stop
Westside
Others
The preference towards the area of Mall holds the key to where people frequently shop. The success of a store is concentrated towards the area of the place and the brand value it holds in terms of the changing consumer lifestyles. The average walk ins are high in Shoppers stop because of the wholesome entertainment in the location of the store. I believe if Pantaloon as a store can look for opportunities where there is wholesome entertainment along with the Mall E.g. Forum in Kolkotta it would surely add to their profits.
75 | P a g e
The Loyalty club members are less because of the number of people who frequently shop at the same store in a particular area. The respondents I asked questionnaire vary from places in Pantaloon, Shoppers Stop, Internet and marketing my mailers.
76 | P a g e
4431
Are you a member of any Shopping Store Loyalty
Program
YES
NO
As you can see majority of the loyalty programs members are through In store purchases. The loyalty clubs in India are at initial stage of getting the customers. There are similar programs of every organized retailer for membership. The criteria for Pantaloon are higher because of majority of respondent from being collected from that area.
77 | P a g e
Ebony Pantaloon Shoppers Stop
Westside Others0
102030
3 2 1 2 0322 18 10 70
0 30
0
How did you come to know about the loyalty club?
Friends In store Internet
Lifestyle Pantaloon Shoppers Stop
Westside Others0
102030
3 2 1 2 0218
6 10 60
0
3 00
How did you come to know about the loyalty club?
Friends In store Internet
8%
34%
31%
17%
10%
Which shopping club are you a member?
Lifestyle
Pantaloon
Shoppers Stop
Westside
Others
78 | P a g e
3%29%
45%
13%
10%
Rate Your Prefered Club
Lifestyle Pantaloon Shoppers Stop Westside Others
Most of the people who frequently shop at the same stores are members of two or more loyalty club programs. Most of the common is being Shoppers Stop and Pantaloon. Shoppers Stop is most preferred loyalty club with members getting updates and knows how about the store regularly. Pantaloon loyalty program isn’t followed in terms of its CRM processes unlike Shoppers Stop. Westside stores follow up is very punctual in terms of their reminders to their selected customers.
79 | P a g e
Lifestyle Pantaloon Shoppers Stop
Westside Others0
5
10
15
20
What offers do you get by those clubs?
Discounts Promotions Points Gifts
All the loyalty programs provide similar offers. They invite you to different events depending upon your membership relating to the card you hold.
80 | P a g e
81 | P a g e
Poor
Averag
eOk
Good
Excell
ent
0
5
10
15
20
Pantaloon Loyalty club in terms of services
Reward Structure
Promotion Offers
Schemes privileges
Redemption options
Poor
Averag
eOk
Good
Excell
ent
0
5
10
15
20
25
Sense of bond-ing with staff
Value Added services of the store
Other prefer-ences:- Parking preferences
The respondents who were members of pantaloon loyalty club were 24. The graph clearly shows that the staff of pantaloon is very good and helpful in terms of the services. Unlike most of the shoppers people aren’t satisfied enough with the kind of reward structure the company provides. But, the best part of the people is the kind of promotion offers differs from the rivals. I think this can be a Unique Selling Preposition for pantaloon stores all over India.
Most of the time the shoppers aren’t interested in any sort of loyalty program because it doesn’t add to much to their value. The criteria for the shopping stores to have a loyalty program is to increase the frequent purchases of the store but, somehow it isn’t able to cater the services of the respondent who is at an age where he or she is doing her graduation or about to start his or her career.
82 | P a g e
44%
34%
22%
Why aren't you a part of any shopping store loyalty pro-
gram?
Minimum Requirements
Don’t shop fre-quently at the same store
Not interested
Out of the 31 respondents most of the people aren’t willing to be a member of any loyalty club as such probably because of shopping at different places in different areas. One of the mains reason being said by few customers is they don’t add to
the overall value to their purchases.
84 | P a g e
32%68%
Would you consider being a part of a loyalty club?
YES NO
4827
Ratio of Respondent
Male Female
As you can clearly see from the above graphs the loyalty club members are usually high-end A1 customers who frequently shop at a particular place. Most of the people are working
85 | P a g e
A1
A2
B1
B2 0
20
4034
270
14
SEC Classification Total
Series1
A1
A2
B1
B2 0
20
40
23
190
2
Loyalty Club Members
Series1
executives and businessmen who find ambience and latest fashions the key dominants to shop and enroll for the loyalty program.
Findings from QuestionnaireFindings from Questionnaire
1) People respond better to Internet mailers then courier. I think that this suggests the loyalty club members are technosavy so, there is a need for all the loyalty clubs to start their online ventures in relation to their CRM process.
2) Most of the organized retailers in India are offering similar services on customer loyalty programs. From a customer’s stand he or she would only be differentiated by the brand name of the company.
3) Shoppers Stop is the number one retailer whose Customer loyalty program is very well integrated compared to the other retailers.
4) Pantaloon as a store appeals more to the working class and family oriented people especially in Gurgoan.
5) Lifestyle is at a initial phase of launching the Customer loyalty program.
6) The average number of walks ins in a store is generally on the place of the mall.
7) The CRM strategies of all the organized retailers are still very less integrated in terms of the international players like Wal- Mart and other multi chain outlets in the World.
8) I think the changing consumer patterns are not tapped by the retailers for the Customer loyalty programs
9) Banks provide cash back credit card in form of an extended discount to various organized retail outlets.
10)The Reward structure needs a revision to tap in more customers so that the profit margins can be increased 11)Overall, the companies should start looking for means to attract people coming in at the store in the form of extended shopping hours, double points on off days etc.
86 | P a g e
12)The pantaloon store should have a small area specified to the entertainment segment inside the store in the form of contest etc.
87 | P a g e
Limitations of the Project
1) Most of the questionnaire filled by the customers are suppose to be a loyalty club member of two or more clubs
2) Organized retailing in India as an industry has just started to prosper with the emergence of FDI5 in retailing and emergence of shopping malls6 in India
3) The loyalty programmes of organized retailers mentioned in the project are very similar compared to international loyalty programs
4) The CRM implementation in retail has just been started in retailing in the form of supplier goods purchase and customers
5) The survey is too small to predict the initial reaction of customers towards different loyalty clubs
6) The organized retailing in India is just 2% of the total retailing compared to the other parts of the world.
7) Time needed to study the CRM Process along with the loyalty programs of the retailing industry
8) In relation to customer loyalty survey the organization also needs to do employee loyalty survey which would form a base to an CRM process
BIBLIOGRAPHY5
6
88 | P a g e
BOOKS
AUTHOR PHILIP KOTLER
TITLE MARKETING MANAGEMENT
PLACE OF PUBLICATION
PRENTICE HALL OF INDIA LTD.
NEW DELHI
DATE OF PUBLICATION SEPTEMBER
NUMBE
R OF PAGES
31-50
MAGAZINE
AUTHOR MURTHY E.N.
TITLE ANALYST
DATE OF ISSUE JULY 2006
PAGE NUMBER 41-46
INTERNET - www. pantaloon.com - www.amazon.com- www.economictimes.com
89 | P a g e
APPENDIX
QUESTIONAIEER
(1) NAME :(2) AGE :(3) ADERSS:(4) GENDER:
(5) How often do you buy
apparels(clothes) ?
- Once a week- Once in 15 days- Once a month- Once every three month- Once every 6 month- Once a Year
(6) From where do you buy your apparels(clothes) ? Pram id Central ’s Shopper’s Mega mart
(7) How much do you normally spend on apparels(cloths) bought from shopping mall in a single shopping
90 | P a g e