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Master of Business Administration MBA Semester 3 MK0012 Retail Marketing 4 Credit Assignment Set 1

Q.1 What is Retailing? Explain the retailing management decision process.


What is retailing? Retailing involves selling products and services to consumers for their personal or family use. Department stores, like Burdines and Macy's, discount stores like Wal-Mart and K-Mart, and specialty stores like The Gap,Zales Jewelers and Toys 'R' Us, are all examples of retail stores. Service providers, like dentists, hotels and hair salons, and on-line stores, likeAmazon.com, are also retailers. Many businesses, like Home Depot, are both wholesalers and retailers because they sell to consumers and building contractors. Other businesses, like The Limited, are both manufactures and retailers. Regardless of other functions these businesses perform, they are still retailers when they interact with the final user of the product or service.

Retailing Management Decision Process


The decision-making process describes the elements of the retail organization that accepts and processes information inputs and transforms them into useful conclusions. These conclusions help in selecting a desirable course of action which, when implemented, will provide a solution to a management problem. The process is as follows:

1. Identification of the problem:


The first step in the decision-making process is recognizing a problem. Problems generally arise because of disparity between what is and what should be. To identify the gaps between The current and desired state of affairs, managers should look for problems that need solving. Identification of the real problem is important; otherwise, the manager may be reacting to symptoms and fire fighting rather than dealing with the root cause of the problem.

2. Identify the objectives: It is important at this stage to identify the


objective of the decision. In other words, the manager must determine what is to be accomplished by the decision.3.

Gather and evaluate the data: This step of the decision making
process involves gathering information relevant to the problem. The manager must pull together sufficient information about why the problem occurred.

This includes conducting a thorough diagnosis of the situation and undertaking a fact-finding exercise.

4. Evaluating alternative courses of action:


The fourth step is listing and evaluating alternative courses of action. During this step, a thorough "whatif" analysis should also be conducted to determine the various factors that could influence the outcome. It is important to generate a wide range of options and creative solutions in order to be able to move on to the next step. In this step, the decision maker tries to outline the advantages and disadvantages of each alternative. The consequences of each alternative would also be considered. Sometimes the alternatives developed may meet internal demands but may fail to meet the environmental conditions. While evaluating the available alternatives, the decision maker should try to visualize both the desirable and undesirable characteristics. All pertinent facts must be collected, they must be classified, the pros and cons must be considered and the important points must be distinguished from trivial or peripheral matters. The attempt is made chiefly to limit the alternatives to a manageable and economically feasible number.

5. Selection of the best alternative: In this step, the decision


maker merely selects the alternative that will maximize the results in terms of existing objectives. If the problem has been diagnosed correctly and sufficient alternatives have been identified, this step is much easier. Peter Drucker has offered the following four criteria for making the right choice among available alternatives. (a)Risk: The decision maker has to weigh the risk of each course of action against the expected gains. (b)Economy of effort: The alternative that will give the greatest output for the least inputs in terms of material and human resources is obviously the one to be selected. (c)Timing: If the situation is extremely urgent, the best alternative is one that dramatizes the decision and serves notice on the organization that something important is happening. On the other hand, if consistent effort is needed, a slow start that gathers momentum may be preferable. (d)Limitation of resources: Physical, financial and human resources impose a limitation on the choice of selection. Of these, the most important resources whose limitations have to be considered are the human beings who will carry out the decision. No decision can be better than the people who have to carryout the decision.

6. Implementation and follow up: Finally, the solution is


implemented. The situation must then be monitored to see whether the decision meets its objectives. Consistent monitoring and periodic feedback is an essential part of the follow-up process. Feedback allows managers to become aware of the recent problems associated with the solution. It permits managers to monitor the effects of their acts to gauge their success. They can also take the opportunity to evaluate their own decision-making abilities.

Decision making can be stressful. Managers must make decisions with significant risk and uncertainty, and often without full information. They must trust and rely on others in arriving at their decisions, but they are ultimately responsible. And often, they meet with considerable criticism.

Q.2 Mention the types of retailers with examples.


Ans:-Types of Retailers
Retailers can be classified into the following categories: 1. Based on the type of ownership 2. Store based retailers 3. Non-store based retailers

1. Based on the type of ownership


One way of making a distinction between different types of retailers is by looking at the organization in terms of ownership and control. Most retail organizations can be placed into one of four categories, the independent retailer, the small multiple retailer, the large multiple retailer and the retail conglomerate.

Independent retailer
An independent retailer is a small scale retail organization owned and managed by private individuals, with a network of less than 10 branch stores. Many independents are sole traders, or family-run business operation out of a single site. Independent retailers are often run by entrepreneurs who prefer to work for themselves and would feel vulnerable in adverse trading conditions because they do not have the financial support of a large organization.

Multiple retailers

Most high-street retailers fall into the category of the multiple retailer, which is the term applied to retail organizations that have a central operational headquarters and a collection of branch stores under common ownership. Most, although by no means all, multiple retailers are public limited companies and are therefore owned by a collection of shareholders to whom the directors of the companies are responsible. The multiple retailers is a term that can only really be applied to store based retailers, or to the store side of the business, and therefore this term may lose its meaning in the future as more retailers become multi format organizations. Another term that is often used for a multiple retailers is a chain store.

Voluntary retail group


One way in which independent retailers have been able to fight against the might of the multiple retailers is by becoming a member of a voluntary retail group. Such groups operate in a variety of ways, but the main objective is to gain some of the buying power advantages of multiple retailers by collating orders from a number of independent retailers and negotiating with suppliers through a central buying organization. Members pay a subscription that may also cover the provision of additional retail services such as marketing and training.

Retail conglomerate

As retailers become increasingly powerful corporations, there has been a growing amount of financial organizational activity in term of mergers, takeovers alliances and joint ventures. In many cases companies have been amalgamated under one retail brand, but in others separate brands or fascias have been retained with the holding company trading as separate identity, giving rise to the retail conglomerate. A recent high-profile retail acquisition in the UK was the Wal-Mart-ASDA takeover in1999.

Franchises in retailing
Franchises are operated on the basis of an agreement between two separate business organizations. One (the franchiser) provides a product and/or a retail format, whilst the other provides the means by which an outlet is run. The franchisee provides the human resources and the finance required for the premises, is responsible for the operations management of the outlet and pays a royalty to the central organization. The problem with this type of organization is that the issue of ownership and control is often the cause of disputes between franchiser and franchisee. Franchising is successfully used in the running of multiple food retailers such as McDonalds, Pizza Hut and Costa Coffee.

Co-operative retailers

A cooperative is managed on the basis that the customers of a business are also the owners of the business. Each customer is entitles to become a member of the co-operative society, thereby receiving in the UK reached its heyday between the world wars, when the co-operative movement accounted for 11 per cent of total retail sales and a quarter of the grocery trade (Olins, 1997), but the fragmented organizational structure has prevented timely reactions to changes in the retail environment, and the co-operative retail movement has literally been left behind in the face of strong competition.

2. Store based retailers


Department stores
Department stores are the oldest form of large store. A department store is a multi-level store (at one time six or seven stories were common, but today there tend to be two or three levels), which is split up into clearly defined areas or departments according to product category. Any department stores offer width and depth in the product range so that almost every shopping need can be met, but other department stores concentrate on fewer categories and aim to offer a great choice within those categories. Pyramid Retail, Pantaloons Retail and Shoppers Stop; they all started off as department stores. Variety stores Variety stores are so named because they offer a large variety of goods under one roof, including both food and non-food items. This format combines the product and brand choice of the department store with the low price orientation of the variety store, with service level and store environment lying somewhere in between

Specialist stores
Although some department stores might be considered specialist stores because of the restricted product range (for example Harvey Nichols) or the customer market that they target (for example Harrods), most specialist stores are smaller, in line with the size of the product range offered. The

majority of stores found in shopping centers or central retail areas are specialist stores due to the distinguishing feature of one product area dominating the retail offer. Specialist retailers are not restricted to the selling of products; many specialty outlets offer service products to consumers. Examples include fast-food outlets, cafes and restaurants, banks and building societies, repair centers and try cleaners, hair salons, nail bars and beauty salons.

Category killers
The term category killer, which originated in the USA, describes the large specialist retailer that is typically found in an out-of town or edge-of-town retail park or site. The product range is geared to a restricted merchandise area, but the large size of store allows a very extensive selection within that classification. Comet, PC World, Toys RUs, IKEA, B&Q, Petsmart and Staples are all examples of this type of retailer. The stores are based on a one-level format and the economies of scale and inexpensive locations allow a value driven price offer. Many of the stores offer goods that satisfy complex needs (for example a computer or a carpet), and therefore specialist help is usually available, but the service orientation is relatively low key allow in the opportunity to browse.

Convenience stores (C-stores)

As yet, no official definition of a convenience store has been established although the following criteria generally apply to this format: self service, 1,000-3,000 sq ft selling area, parking facilities, open 7 days a week for long hours, a wide range of goods, but limited brand choice, including groceries, CTN (Confectionary, Tobacco and Newspaper) products, toiletries, OTC (Overthe-counter) medicines, alcohol and stationery . Other products and services that might be offered are take-away foods, toys, video hire, film processing and petrol (Nielsen, 2001).

Supermarkets, superstores and hypermarkets


Supermarkets, superstores and hypermarkets can be considered in the same family of retail format, in that the stores are self-service, usually on one level and laid out in a functional grid pattern of aisles and shelving. Supermarkets are the smaller variant, usually located in a town centre or neighborhood location, with a product range that concentrates on food and household consumables. Superstores are 25,000 square feet(approximately 8,000 square meters) or more, are usually in an edge or out-of-town location, and they have an extended product range featuring product categories such as clothing, home furnishing and home entertainment goods ( For example ASDA and Casino ). A hypermarket is a huge retail outlet (over 50,000 square feet) in an out-oftown location, which offers an extensive range of products with the proportion of non-food items being greater than a superstore (a hypermarket is typically 60 per cent non-food). Carrefour for example, sells car tyres and bicycles in their hypermarkets in France and Spain. They all provide faster product purchasing, as customers are required to do self service.

Discount stores
Defining a discount store is not an easy task, because the key characteristic is the price of the merchandise, which is subject to individual customer perceptions. Discount stores are sometimes run on the basis of a product range geared by opportunistic buys by the retailer, or they have planned ranges, sold with an unusually low profit margin. Examples of emerging strong players who have adopted this type of format are Reliance, West Side, Trent and Raymonds in the clothing sector. The following kinds of stores can becategorised under discount stores: Factory outlets: Factory outlet retailers offer customers a range of seconds-quality and/or previous seasons.

3. Non-store based retailers Catalogue and Mail Order Sales


Catalogue marketing helps companies reduce their cost per customer and increase their reach significantly. Catalogue retailing is a convenient way for customer to purchase products. Retailers too have an advantage in catalog marketing as they can operate from remote locations with minimum store operating expenses and need not spend heavy amounts on store dcor. However, catalog marketing is suitable only for a limited range of products. Amazaon.com , an e-tailer in the US, mails its broachers to customers before occasions of festivals like Christmas and Fathers day. The catalog contain information related to products such as books, electronics, toys and games, apparels and accessories, home and gardening products and software. A toll-free number provided for customers to place orders.

Direct Selling
Direct selling is a dynamic, vibrant, rapidly expanding channel of distribution for the marketing of products and services directly to consumers. Direct selling is the marketing of products or services to consumers through sales tactics including presentations; direct selling is a dynamic, vibrant, rapidly expanding channel of distribution for the marketing of products and services directly to consumers. Direct selling is the marketing of products or services to consumers through sales tactics including presentations, demonstrations, and phone calls. It is sometimes also considered to be a sale that does not utilize a "middle man" such as a retail outlets, distributors or brokers. The effectiveness of direct marketing can be measured easily because direct feedback is available to marketers from customers in direct marketing; generally, a data base of customers is maintained. This helps marketers understand customers and serve them better, and eventually gives the marketer a competitive advantage. Direct marketing evaluates the direct response patterns of customers, enables a company to formulate future marketing strategies for building customer loyalty and for profitable business growth.

Personal selling

Personal selling involves a face to interaction with the customers wherein there is quick response and personal confrontation. This allows for more specific adjustment of the message. The communication message can be adjusted as per the customers specific needs or wants. It offers the opportunity to develop long-term familiarity and relationship. The salesman becomes the representative of the company.

Vending Machine Retailing


An automatic vending machine is formed of a commodity-selecting device for selecting a commodity to be purchased, a device for paying money required to purchase the commodity, a commodity-transfer device for transferring the selected commodity, and a main control section. Examples for automated vending machines: Potato Chip Vend Machines: Potato Chips Vending Machines With Different Flavored Sauces. Automated Rigging: Design, manufacture, installation of automated rigging equipment

AGVs by FMC Technologies: Automatic Guided Vehicle (AGV)


Systems featuring laser guidance.

Hospitality Equipment: Spanish Exporting Association for Hospitality


and Catering Equipment

Coffee Vending Machine: Coffee and snack vending machine not for
rent and not used machine! Snack Dispenser: Nuts, Snack & Topping Dispensers Portion Control and Easy To Clean Laser video 24h:DVD vending machine, video dispense automatic DVD rental, DVDvending Kiosks: Kiosks are highly beneficial for retail outlets, especially groceries, banks (ATM), etc. once a customer fills in the details regarding the products he needs, they are delivered to him either immediately (in an ATM) or at his address, where the payment for the goods is made. They can be set up in even a very small area. On an average, each kiosk requires around four square feet space. These can be operated twenty-four hours a day, seven days a week, with out any super vision.

Television Home Shopping

The earliest form of shopping via the television was by means of information provider networks such as Ceefax in the UK. This method of retailing suffers from the same product-presentation drawback as telesales, but has been useful for services retailing (travel, entertainment, insurance) when the product is intangible, information-based and the price offer is variable. More recent TV shopping developments have used the three-dimensional visual representation abilities of a screen image to provide dynamism to print-based retail offerings, first in the form of videos, and soon after in the form of a shopping channel,QVC, which was launched in 1983.One of the difficulties of programmed retail offerings is the need to provide the consumer with the opportunity to skip through unwanted product categories, and so interactive screen-based

retailing is the most likely retailing format to offer the potential customer everything that is necessary to emulate the usual shopping experience. The conversion to digital TV and broadband internet services will greatly facilitate the adoption of interactive TV shopping.

Electronic Retailers
As a sophisticated and interactive medium, the internet accessed by personal computer is showing every sign of being accepted as a mainstream shopping mode by an increasingly computer-literate society. Using the internet to access information has been accepted as part of everyday life for many sectors of society, and in the process of shopping it has become very useful to customers as a way of accumulating information about retailers product and service offerings in a relatively fast and convenient manner. As a way of accessing specialist retailers that might be geographically remote from consumers, the internet provides a channel of discovery for the consumer, and a way of providing home shopping services for a wider target market for the retailer. The internet is also an efficient home-shopping device, enabling time-poor or less mobile consumers to order and take delivery of routinely purchased items such as basic groceries and household items.

Q3.Discruss the conclusion.Ans.

theories

of

retailing

with

your

Theories of Retailing
Retailing theories help us understand the concept of retailing in a better manner. Some of the important retailing theories are discussed in subsequent sub-sections.

Wheel of retailing theory


According to a better-known theory of retailing wheel of retailing proposed byMalcomb McNair new retailers often enter the marketplace with low prices, margins, and status. The low prices are usually the result of some innovative cost-cutting procedures and soon attract competitors. With the passage of time, these businesses strive to broaden their customer base and increase sales. Their operations and facilities increase and become more expensive. They may move to better up-market locations, start carrying higher-quality products, or add services and ultimately emerge as a high cost-price-service retailer. By this time newer competitors as low-price, lowmargin, low-status emerge and these competitors too follow the same evolutionary process. The wheel keeps on turning and department stores, supermarkets, and mass merchandisers went through this cycle.

Accordion theory
The accordion theory of retailing suggests that retailers initially enter a market as a general retailer and then with experience they focus down on

particular groups. Over time they begin to diversify their offer in order to grow, but again would revert to specialization. Thus retail accordion is based on cyclical functioning in variety and adjustment. Hollander (1966) proposed the Retail Accordion theory, which explained retail evolution as a cyclical trend in terms of the number of merchandise categories (i.e., product assortment) In this theory, at the beginning of operation, a retail institution carries abroad assortment of merchandise (i.e., various types of products or product classifications) but does not carry a deep assortment (i.e., various styles within one product classification). At this early stage, the retail institution is a general store. As time passes, the retail institution becomes specialized by carrying a limited line of merchandise with a deep assortment. At this point, the retail institution is a specialty store. At some point, every retail institution. Returns to the inventory profile of the old operation with a broad assortment of many lines of merchandise.

Natural selection theory (Environmental theory)


The Environmental theory explains how variables in the environment affect retail evolution; however, it does not explain patterns of change or changes over extended time, as do the two previous primary theories. The basic notion of the natural selection theory is that retailers that successfully adapt to changing lifestyles of the consumers and other environments will survive the longest. According to this theory, formats best able to adapt are most likely to survive e.g., current supermarket trends and department store trends are attempts to adapt and survive; stores that originally resisted the Internet channel, are now benefiting from it.

Dialectic process
Many researchers have proposed some form of a Conflict theory to explain retail evolution (e.g., Berens, 1980; Bliss, 1967; Cauwe, 1979; Gist, 1968;Oxenfeldt, 1960; Schumpeter, 1947; Thomas, 1970). Research in this area, as with the cyclical theories, has been done primarily in Europe and the United States based on observations of retail operations. Among these researchers, Gist (1968) proposed the Dialectic theory, a well-known Conflict theory that has been the basis for the common concepts of many conflict theories. The Dialectic theory is based on Karl Marxs Theory of Evolution.According to this theory; retailing evolves through synthesis of two opposing store types into a superior form. This theory suggests how the original forms of retailers change into new forms. Figure 2.2 shows this dialectic process.

Q4.Dots Ltd. Manufactures variety of packaged food. They are also keen to enter fast food sector and want to open up small restaurants in certain regions. What considerations do you think the company has to keep in mind while maintaining their food retailing and before entering service retailing? Ans. Selection of region
Generally, a country is divided into regions on the basis of directions (east,west, north and south) or political boundaries. Therefore, after selecting the country, the second step is to decide on the right region based on comparative cost advantages available out of the possible regions. Proximity to the market Infrastructural facilities Transport facility

Climatic conditions Government policy Subsidies and sales tax exemptions

Selection of the locality/community


After selecting the region, the third step in deciding on the store location is to select a particular locality or community within the selected region. It means taking decisions regarding: Urban area Rural area Suburban area The selection of a locality in a particular region is determined by the following factors: Labour and wages Community facilities Community attitudes Banking facilities Existence of supporting stores Local taxes and restrictions

Suburban area

As the name implies, it is a compromise between the urban and rural areas. Itis generally located at the outskirts of the city. Suburban areas, being locatedat the outer rim of the city, provide comparative advantages of both thelocations, for instance, Bawana, Nangloi, Mangolpuri, Badarpur, Narela arte suburban areas of National Capital Region of Delhi.

Rural area
By definition, a rural area is an area outside cities and towns. Generally no retailer would like to set up a store in a rural area but due to problems of urban area and government restrictions on urban area construction, rural areas have become an attractive place for new retail stores. A rural area is blessed with these merits.

Trade Area Analysis


A through analysis of trade area is necessary to estimate market potential, understand customer profile, competition, develop merchandising plan, and focus promotional activities. Increasingly, retailers are using Geographic Information System (GIS) software in their trade area delineation and analysis. GIS combine digitized mapping with key locational data to graphically depict such trade area characteristics as the demographic attributes of the population, data on customer purchases, and listing of current, proposed and competitors locations

Market Potential

In estimating the market demand potential, retailers consider factors that are specific to their product line. Hence, often there is a variable in the criterion used by retailers for market estimation. Some of the important indicators of market demand are as follows: Population characteristics and its trends.

Population characteristics such as geo-demographics, psychographic, and behavioural characteristics are used to segment markets. Considerable information about an areas population characteristics can be acquired from secondary sources. Retailers can access data regarding population size, population density, and number of households, income distribution, sex,education, age, occupation and mobility. Purchase power and its distribution The average household purchasing power and distribution of householdincome can significantly influence selection of a particular retail area. Thus,as purchasing power rises, the population is likely to exhibit an increaseddemand for luxury goods and more sophisticated demand for necessities.Business climateRetailers should take into account the employment trends of the marketbecause a high level of employment drives up the purchasing power. It is inthe interest of retailers and developers to determine which geographicalareas are growing rapidly and why.Competition The level and nature of competition in an area also influence the selection of a particular retail location. On the basis of levels of competition, trade areacan be classified into three typesPurchase power and its distribution The average household purchasing power and distribution of householdincome can significantly influence selection of a particular retail area. Thus, as purchasing power rises, the population is likely to exhibit an increaseddemand for luxury goods and more sophisticated demand for necessities.Business climate Retailers should take into account the employment trends of the market because a high level of employment drives up the purchasing power. It is in the interest of retailers and developers to determine which geographical areas are growing rapidly and why. Competition The level and nature of competition in an area also influence the selection of a particular retail location. On the basis of levels of competition, trade area can be classified into three types The importance of support of public and the already existing business in adjoining area is evident from the following example. Sonepat-Delhi national highway is one of the busiest highways in the country; therefore, it has immense economic potential for dhabas. An entire stretch of one kilometer on this highway near Delhi has no outlet serving non-vegetarian. Social norms have ensured that nonvegetarian outlets do not set shops on this stretch.

Competitors location
The type and number of competitors is another important factor. The presence of major retail centers, industrial parks, franchisee chains, and department stores should be noted. Intense competition in the area shows that new businesses will have to divide the market with exiting businesses

Ease of traffic flow and accessibility

These two factors are more important to some businesses than others. Consider the nature of the business you are planning to open and your potential customers. Retailers selling convenience goods must attract business from the existing flow of traffic. Studying the flow of traffic, noting one-way streets, street widths, and parking lots, is hence important.

Parking major thoroughfares


Parking is another site characteristic that is especially a cause for concern indensely populated areas. When evaluating the parking that exists at a retail

site, there are two considerations, parking capacity, and parking configuration. There are several ratios that are generally used to determine the adequacy of a parking lot. While different ratios exist for different types of retailers or service providers the ideal ratio for food stores is in the magnitude of 7-8 cars per 1,000 square feet of food store.

Market trends
Evaluate the community from a broad, futuristic perspective. Local newspapers are a good source of information. Discussions with business Owners and officials in the area can also help. Make use of information available through the chamber of commerce. Is the community receptive to change and will a new business be welcome? Does the community depend ona single firm of industry? If so, is it prospering? Is there sufficient demand in the local market to support a new business?

Visibility

Visibility has a varied impact on a stores sales potential. It is important when a shopper is trying to find the store for the first or second time. Once the shopper has become a regular customer, visibility no longer matters. Another

Q5.Eleborate on the role played by advertising in retail business?


Ans.AdvertisingAmerican Marketing Association defines advertising as , any paid form of non- personal presentation and promotion of ideas, goods or services by an identifiable sponsor. In the subsequent sections, we will discuss some important aspects of advertising.

7.7.1 Characteristics of advertisement


Advertising is a promotion tool, which is non-personal and is paid for by the sponsor who is easy to be identified, whose aim is to disseminate detailed information about the product to the target audience. At this point, it is important to go into the details of what are the various characteristics of advertising. Paid form: Advertising is a tool of promotion, which is paid for by the advertiser.

Provide some information: Advertising is informative and provides


valuable information to the consumers.

Motivation of sales: Advertising inspires the consumers for purchase of


a product. It lures the consumers for the purchase of the product by enticing them to possess it.

Non-personal presentation: Advertising is addressed to massaudience.

Promotion: The aim of advertising is to persuade people to buy products


and services or to accept ideas, which are being advertised.

Identifiable sponsor: The sponsor is the person or group, which is


paying for the advertisement. In case of advertisement, it can be easily identified as to what is the source of advertising message. Advertising is not the guarantee of sales: One of the features of advertisement is that it stands alone for promotion. It does not guarantee increase in the sales.

7.7.2 Advertising creativity


In advertising, creativity plays a very important role. Creativity is the ability to generate fresh, unique and appropriate ideas that can be used as a solution to problems. To be to the point and at the same time being effective, a creative idea must be relevant to the target audience. Developing advertisement that is creative and different yet communicates relevant information to the target audience is important. People who work for the creative team in advertising, must take all the research, creative briefs; strategy statements, communications objectives and other input and transform them into an advertising message. Rather than simply stating the features or benefits of a product or service, the advertising Message must be put into a form that will engage the audiences interest and make the ads memorable. Every marketing situation is different and each campaign or advertisement may require a different creative approach.

7.7.3 Advertising appeals


The advertising appeal refers to the approach used to attract the attention of consumers and/or to influence their feelings toward the product, service or cause. The appeals are generally broken into two categories: informational/rational appeals and motivational appeals.

Informational/rational appeals
Informational/Rational Appeals focus on consumers practical, functional or utilitarian need for the product or service and/or the benefits or reasons for owning or using a particular brand. The main aim of these messages is, to emphasize facts, learning, and the logic of persuasion. Their objective is to persuade the target audience to buy the brand because it is the best available or does a better job of meeting consumers needs.

Emotional appeals

Emotional Appeals relate to the customers social and/or psychological needs for purchasing a product or service. Many consumers motives are important than knowledge of its features or attributes. Table 7.1 lists feelings or needs that can serve as the basis for advertising appeals designed to influence consumers on an emotional level. Table 7.1: Basis for Emotional Appeals

In many advertising situations, the decision facing the creative specialist isnot whether to choose an emotional or rational appeal but rather determining how to combine the two approaches. Consumer purchase decisions are often made on the basis of both emotional and rational motives and attention must be given to both elements in developing effective advertising. The most basic idea is to find out how consumers think about brands in respect of product benefits. This occurs, for the most part, through a rational learning process. Marketers can measure the effectiveness of an appeal by how well advertising communicates product information. Consumers at this stage are not very brand loyal and brand switching is very common. At the next stage, the consumer assigns a personality to a brand. For example a brand may be thought of as self assured, aggressive and adventurous as opposed to complaint and timid. The consumers judgment of the brand has moved beyond its attributes or delivery or product/service benefits. In most instances, consumers judge the personality of a brand onIn many advertising situations, the decision facing the creative specialist isnot whether to choose an emotional or rational appeal but rather determining how to combine the two approaches. Consumer purchase decisions are often made on the basis of both emotional and rational motives and attention must be given to both elements in developing effective advertising. The most basic idea is to find out how consumers think about brands in respect of product benefits. This occurs, for the most part, through a rational learning process. Marketers can measure the effectiveness of an appeal by how well advertising communicates product information. Consumers at this stage are not very brand loyal and brand switching is very common. At the next stage, the consumer assigns a personality to a brand. For example a brand may be thought of as self assured, aggressive and adventurous as opposed to complaint and timid. The consumers judgment of the brand has moved beyond its attributes or delivery or product/service benefits. In most instances, consumers judge the personality of a brand on Consumers develop emotional bonds with certain brands, which result in positive psychological movement toward them. The marketers goal is to develop the greatest emotional linkage between its brand and the consumer.

Q6.How to develop marketing channel strategies for retail? Explain. Ans.Developing the Marketing Channel Strategy
Developing a viable marketing channel strategy involves some important decisions. These are discussed in subsequent sub-sections.

Channel design

Designing of the distribution channels deals with the decisions that are associated with forming a new distribution channel or modifying an existing. In designing marketing channels, manufacturers have to decide what is ideal, what is feasible, and what is available. A new firm typically starts as a local operation selling in a limited market. Since it has limited capital, it usually uses existing intermediates. The number of intermediaries in any local market is apt to be limited. Designing a channel system calls for analyzing customer needs, establishing channel objectives, and identifying and evaluating the major channel alternatives.

Analyzing customers desired service output levels Lot Size: Lot size refers to the total number of units of products that a
customer acquires during a transaction period.

Waiting Time: Waiting time is the average time that customers of that
channel wait for receipt of the goods. Customer normally prefers fast delivery channels. For example, withdraw the money from ATM, Sending money to other stations. You need not step into the bank and fall into the line to withdraw for above-mentioned things.

Spatial Convenience: It represents the degree to which the marketing


channel makes it easy for customer to purchase the Product. For example, booking the Product through E-Commerce

Selection Utility: The selection utility of a marketing channel refers to


the likelihood that the needs of customers will be exactly satisfied. Marketing channels like super markets ensure that they not only carry a wider assortment of products but also a greater variety or breadth of product assortment. Service Backup: Service back represents the bundle of services offered by the marketer. Services such as credit facility, free home delivery, Installation free, repairs and so on enhance the image of the marketer which can facilitate to the marketer to acquaint a certain percentage of market shares in the market. Establishing the channel objectives: According to Bucklin, under competitive conditions, channel institutions should arrange their functional tasks so as to minimize total channel cost with respect to desired levels of service out puts. Effective channel planning requires determining which market segment to serve and the best channels to use in each case. Channel objectives vary with product characteristics perishable products require more direct marketing because of the dangers associated with delays and repeated handling. High unit value products such as generators and turbines are often

sold through a company sales force rather than through intermediaries. A manufacturer, whether big or small, has to conduct a SWOT analysis of the intermediaries in terms of their strengths and weaknesses in the internal environment and opportunities and threats in the external environments.

Terms and responsibilities of channel members


The producer must determine the rights and responsibilities of the participating channel members make sure that each channel member is treated respectfully and given the opportunity to be profitable. Distributor territorial right: Distributors territorial rights are another element in the trade-relations mix distributors want to know where and under what terms the producer will enfranchise other distributors. They would also like to receive full credit for all sales taking places to their territory, whether or not they did the selling. Motivating channel members: Intermediaries must be continuously motivated to do their best job. The terms that lead them to join the channel provide some motivation, but these must be supplemented by training, supervision, and encouragement. Evaluating channel members: The producer must periodically evaluate intermediaries performance against such standards as sales-quota attainment, average inventory levels, customer delivery time, treatment of damaged and lost goods, and cooperation in promotional and training programs.

Types of intermediaries Company sales force


The sales force the assets of the organization. Taking the more no of sales force, train them to fit for the needs of the organization and assign the each territory to them to contribute the business.

Manufacturers agency
Hire manufacturer agents in different regions or end-use industries to sell the new test equipment.

Industrial distributors

Find the potential distributors in all regions and endorse the entire fished goods on to them. Give them the exclusive distribution, adequate margins, Product training to draw he attention of the customer and promotional support.

Evaluating channel alternatives


Each alternative needs to be evaluated against economic, control and adaptive criteria.

Economic criteria

Most marketing managers believe that a company sales force will sell more. Company sales representatives concentrate entirely on the company products. The simple reason can be customers willingness to deal with sales representatives dealing in several brands of the same product rather than a specialized sales representative dealing in only a single brand.

Control criteria
A sales agency is an independent business firm seeking to maximize its profits. The company depends on external services, the less it can control its

product and resources. There fore, while selecting an intermediary, accompany has to strike a balance between its desire to control important functions of the firm, and the need to market coverage with the help of external agencies.

Adaptive criteria
To develop a channel there should be some agreement on the commitment levels from both the sides before the actual start of the business. These commitments invariably lead to a decrease in the producers ability to respond to a changing market place. Channel members who operate in a highly turbulent atmosphere will try to structure the channel in a way that will allow them to adapt to the changes by altering their channel strategy.

Modifying channel arrangements


Modification becomes necessary when the original distribution channel is not working as planned, consumer buying patterns change, the market expands, new competition arises, innovative distribution channels emerge, and the product moves into later stages in the product life cycle. A channel alternative is described by three elements: (1) The types of available business intermediaries (2) the number of intermediaries needed (3) Terms and responsibilities of each channel participant.