Retail Sector poised for phenomenal growth

Size & Position in the current Scenario

The Indian Retail Sector, currently the Fifth largest in the world, is poised for phenomenal growth in the coming years

Current Size & Future growth of Organized Retail in India

ORGANISED RETAIL EXPECTED TO GROW 35-40% CAGR

Source: India Shopping Trends, 2008 - Technopak

PRESCRIPTION FOR SUCCESS IN THE CPG RETAIL BUSINESS

1.

The Product In this age of sku-rationalization, its critical that your product has a defined market need, point of differentiation, and good timing.

2.

The Right People The CPG retail industry is complex and unforgiving with hundreds of hidden details and nuances in working with retailers, buyers, brokers, trade shows, and more. Experience PAYS!
The Right Appointments Retailers operate with specific category planning calendars. Its critical to get the right timing down with all the right people in the room on both sides of the table. The Right Presentation Making a comprehensive proposal with all the key retail elements is essential to drive the desired results. The Right Package/Design This is not merely a graphic artists function. Consumer package design will make or break your results on the retail shelves. Poor velocity is often attributed to even the most subtle. The Right Marketing/Promotions and Ongoing Brand Management Your products survival on the shelves needs thoughtful planning, detailed attention, and expert consultation. This is vital from day one. Slow movers are short lived in retail stores.

3.

4.

5.

6.

DAVID BIERNBAUM & ASSOCIATES

THE PARTNERSHIP THAT REALLY WORKS

Supply chain strategy trends

Modern supply chain management retail is based on the following concepts:
Vendor Managed Inventory (VMI) Efficient Consumer Response (ECR) Collaborative Planning, Forecasting and Replenishment (CPFR) Electronic marketplaces Radio frequency Identification Detection (RFID)

Vendor Managed Inventory (VMI)

VMI is a continuous replenishment program in which the retailer provides the supplier with detailed information to allow the supplier to manage and replenish product at the store or warehouse level
Typically the activities of forecasting, scheduling, requisitioning and ordering are performed by the supplier. Electronic Data Interchange (EDI)s an integral part of the VMI process Benefits of VMI
Solidified customer-vendor relationships Reduced shipping costs and lead time Fewer human errors Improved service levels

Efficient Consumer Response (ECR)

ECR is a grocery industry supply chain management strategy aimed at eliminating inefficiencies, and non-value-added costs, thus delivering better value to the end customers
It is designed to re-engineer the grocery supply chain from a push system into a pull system by using e-commerce information technology ECR attempts to eliminate inefficiencies by introducing strategic initiatives in four areas:
Efficient store assortment Efficient product information Efficient promotion Efficient product replenishment

Efficient Consumer Response (ECR)

Programs that companies need to have in place are:
Category management (i.e. managing a group of products as strategic business units within each store) Continuous replenishment program (CRP)

Further support is needed of the following technologies:

Barcodes / Scanners Electronic Data Interchange (EDI) Computer aided ordering (CAO) Cross docking / direct store delivery Activity based costing

The main obstacle is not technical but managerial, with managers reluctant to transform their adversarial trading relationships into open partnerships

Efficient Consumer Response (ECR)

Kurnia et al, (2002)

Collaborative Planning, Forecasting and Replenishment (CPFR)

CPFR allows cooperation across the supply chain, using a set of processes and technology models.
Providing dynamic information sharing and integrating both demand and supply side processes, for effectively planning, forecasting and replenishing customer needs through the total supply chain. Advantages of CPFR:
Increased responsiveness Product availability assurance Optimized inventory and associated costs Increased revenues and earnings Improved relationships with trading partners

Electronic marketplaces
A distinction can be made between Open exchanges (accessible for everyone) and Private exchanges (only for members)
An e-marketplace can provide a platform for: Core commerce transactions which can automate and streamline the entire requisition-to-payment online A collaborative network for production design, supply chain planning, optimization and fulfillment process Industry wide product information that is aggregated into a common classification and catalogue structure An environment in which sourcing, negotiations and auctions can take place in real-time An online community for publishing and exchanging industry news, information and events

Radio frequency Identification Detection

RFID is a term for technologies that use radio waves to automatically identify. Auto-ID Center is developing an open global network (a layer on top of internet) that can identify anything, anywhere, automatically. This network will give companies near perfect supply chain visibility Also, if widely adopted the network could: eliminate human error from data collection reduce inventories keep product in stock reduce loss and waste free up staff to perform more value added functions improve safety and security

Supply chain strategy trends

The four major developments show how the landscape of the traditional retail buyer has changed Advanced systems will allow them to optimize their supply chain operations Future competition in retail will no longer be between individual companies, rather it will be among clusters of companies As research shows the development towards this kind of collaboration can be troublesome Trust between the partners, a long term commitment and a balanced sharing of risks and rewards is required to be successful

Changes in Import Management

Conventional Route
Producer

Restructured Route
Producer Czinkota/Ronkainen, Global Marketing, p.507

Import Agent Importing Company Processing + Packing Plant Primary Wholesaler Processing and Packing Plant

Depots

Intermediary Wholesaler

Distribution Wholesalers Distribution Centers

Small Wholesaler

Retailer Retail Price: 170 yen/300g package

Retailer 15 Retail Price: 128 yen/300 g package Savings: 25 %

Demand Planning Simulation

3-Tier Distribution System
Tier 1

Tier 2
Retail Vendor Tier 3

Stores Legend
National DC Regional DCs Tier 2 Regional DCs Tier 3

Communicating with the Retailers Replenishment Team

Causes of Forecast Error
There are many internal and external factors that have an impact on forecast error.
Bad Profile Improper INFOREM settings Lead Time Variance Unit Integrity Poor Sister Item Product Availability External Market Conditions Merchandise Display

Pure Hub and Spoke

vs. Hybrid Hub and Spoke

Marketing Strategies Are Showing Diminishing Returns

Product differentiation is harder to achieve. Acquisitions and mergers have as many failures as successes. Internationalization is offering less opportunities because either the good markets are overcrowded or the poor markets have no money. New products unfortunately fail more times than they succeed. Price cutting doesnt work because competitors will match. Pricing raising doesnt work since there isnt enough differentiation to support it. Cost cutting has eliminated much of the fat but is now risking cutting the muscles.

Printed on CANON

Strategies for Firms in Different Market Positions

Printed on CANON Jagdish Sheth, Singapore Marketer, 2002

Five Winning Strategies

Cost reduction: (IKEA, Southwest Airlines, WalMart, Enterprise Rent-a-Car). Improved customer experience (Starbucks, Harley Davidson)

Innovative business model (Barnes & Noble, Charles Schwab, FedEx, Sony).
Improved product quality (P&G, Toyota). Niching: (Progressive Insurance, Tetra)
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Dual Strategies
Planning for today
Defining the business. Shaping the business to meet needs of todays customers Improving alignment between functional activities and business definition Organization mirrors current business activities Optimizing current operations to achieve excellence.

Planning for tomorrow

Redefining the business Reshaping the business to compete for future customers and markets Making bold moves away from the existing ways of doing business Reorganizing for future business challenges Managing change to create future operations and processes
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Some Vertical Marketing Methods

Modulation The juice manufacturer varies the sugar content, fruit concentrate, with or without vitamins Sizing Potato chips are offered in sizes 35 grams, 50 grams, 75grams, 125 grams, 200 grams, multi-packs Packaging Nestles Red Box chocolates comes in different containers: cheap paper box for the grocery trade, premium metal box for the gift trade Design BMW designs cars with different styling and features... Complements Biscuits with sugar spread on it, with cinnamon, with chocolate, with white chocolate, with black chocolate, filled biscuits Efforts reduction Charles Schwab offers different channels for transacting such as retail stores, telephone, internet.

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Other Examples of Lateral Marketing

Kinder Surprise = candy + toy. Seven Eleven = food + depot. Actimel = yogurt + bacteria protection. Gas station stores = gas station + food. Cyber cafes = cafeteria + Internet. Be the godfather of a kid = Donation + adoption. Huggies Pull-ups = diapers + 3 year olds. Walkman = audio + portable
Source: Philip Kotler and Fernando Trias de Bes, Lateral Marketing: A New Approach to Finding Product, Market and Marketing Mix Ideas (Wiley, 2004)

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Check Where You Stand

Marketing does the marketing -> everyone does the marketing. Organizing by product units -> organizing by customer segments. Making everything -> outsourcing more goods and services. Using many suppliers -> working with fewer suppliers. Emphasizing tangible assets -> emphasizing intangible assets. Building brands through advertising -> building brands through integrated communications. Attracting customers to stores -> making products available on-line. Selling to everyone -> selling to target markets. Focusing on profitable transactions -> focusing on customer lifetime value. Focusing on market share -> focusing on customer share. Being local -> being glocal. Focusing on the financial scorecard -> focusing on the marketing scorecard. Focusing on shareholders -> focusing on stakeholders

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A Strong Brand Improves Demand and Supply

On the demand side:
higher price increased sales volume lower churn more brand stretching

On the supply side:

greater trade acceptance, more favorable supplier terms, lower rejection lower staff acquisition and retention costs lower cost of capital better scale economics through higher volume
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A Brand Must be More Than a Name

A brand must trigger words or associations (features and benefits).

A brand should depict a process (McDonalds, Amazon).

A great brand triggers emotions (Harley-Davidson). A great brand represents a promise of value (Sony). The ultimate brand builders are your employees and operations, i.e., your performance, not your marketing communications.

Printed on CANON

Tools for Building Brands

Advertising (e.g.,Absolut Vodka) Sponsorships (e.g., Kodak and Olympics) Clubs (e.g. Nestles Casa Buitoni Club) Company visits (e.g., Cadburys theme park, Hallmarks Museum) Trade shows Traveling exhibits Worldwide web casts of presentations, roundtables, entertainment Distribution outlets (e.g., Haagen-Dazs)

Public facilities (e.g., Nestle Nestops)

Social causes (e.g., American Express) High value for the money (e.g. buzz created by Ikea, etc.) User community building (e.g., Harley-Davidson) Founders personality (e.g., Colonel Saunders) Celebrity spokespersons

Printed on CANON

Characteristics of Strong Brands

Provides superior delivery of desired benefits.
(Starbucks, FedEx, Amazon)

Maintain innovation and relevance for the brand.

(Gillette, Charles Schwab)

Establish credibility and create appropriate brand personality and imagery.

(Apple, Virgin)

Communicate with a consistent voice.

(Coca-Cola, Accenture)

Strategically design and implement a brand hierarchy and portfolio.

(BMW, The Gap)
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How Do You Revitalize a Brand?

A dowager brand pioneered the market but now is declining. It will be hard to reverse the decline and give it new life but the decline can be slowed down. Two general approaches: Marketing mix modification Improve the product, distribution, price, or promotion Market modification Find new segments, new usage benefits or occasions, more frequent usage, etc. Find out to whom the dowager brand is losing share: Old peer brands New peer brands Retail store brands Generic brands Elite brands Find out to whom the dowager brand is losing sales. Interview people who defected to each competitive class and their dissenting rationales. Determine a counterlogic for each group and direct them to the groups that can most easily be won back.
Source: Dennis W. Rook and Sidney J. Levy, Defending the Dowager: Communication Strategies for Declining Main Brands.
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How Do You Rationalize Your Product Line?

Unilever found that the largest 50 brands accounted for 63% of its revenues. Unilever decided to emphasize 400 core brands and dispose, delete or consolidate 1,200 of its marginal brands. Unilever selected its 400 core brands based on brand scale, brand power (#1or 2), and brand growth potential. 40 brands were designated as core global brands (e.g., Dove, Knorr, Lipton), and 360 as regional core brands. The core brands would get disproportionate investments in advertising and promotion, innovation, marketing competence and management time. The core brands would be extended. Weak brands had small market shares; poor profitability; negative cash flow; weak channel support; disproportionate consumption of management time. The weak brands would be milked, sold, delisted, or their attribute would be migrated to another brand.
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What Are the Most Frequent Causes of Brand Failure? Failure to live up to the brand promise. Failure to adequately support the brand. Failure to adequately control the brand. Failure to properly balance consistency and change with the brand. Failure to do brand equity measurement and management.
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Achieving Deep Customer Focus

1. 2. Create strategic excitement. Enlist points of light.

3.
4. 5.

Articulate the new market space focused on customer outcomes.

Identify the value opportunities through using the customer activity cycle. Build a compelling case (not through a plan but a story).

6.
7. 8. 9. 10.

Size the prize.

Modeling the concept with a few chosen customers. Get people working together. Get critical mass. Gather momentum. Source: Sandra Vandermerwe, Achieving Deep Customer Focus, MIT Sloan Management Review, Spring 2004, pp. 26-34.
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Building Customer Equity

How customer-centered is your company? How do you measure this? Does your company need to be more customer-centered? To all customers or only the more important customers? How can you go about becoming more customercentered? How much would this cost you in new technology and training? How much would you gain as a result of becoming more customer-centered?

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Achieving Outcomes in Market Space

Achieving a deep customer focus is not done simply by building a customer database or customizing your product offerings. A company must define its marketspace not in terms of products but in terms of customer outcomes.
Baxter Healthcare supplies home-recovery enhancement, not just nursing care or wheelchairs. IHI, a health insurance company, operates in the lifetime health and personal safety marketspace.

A company then examines the customer activity cycle and the value gaps.
The company then invests in filling the major value gaps. The company ends up being favored and grows through doing more things better for their customers.
Source: Sandra Vandermerwe, Achieving Deep Customer Focus, MIT Sloan Management Review, Spring 2004, pp. 26-34

Printed on CANON

Role in retail strategy

1. 2. 3. 4. 5. 6. 7. 8. Enhances the image of the retail outlet Attracts new customers Creates a definite USP Generates excitement Facilitates easy movement inside the store Facilitates access to merchandise inside the store Ensures optimum utilization of retail space Ensures effective and desired presentation of merchandise 9. Reduces product search time for the customer 10. Reinforces the marketing communication of the outlet 11. Influences the service quality experience

Impact of physical environmental factors on shopping behaviour

Emotions
Physical environment Store layout & design Merchandise display Music

Customer Senses

Customer Senses

Aroma

Elements of retail atmospherics

Exterior Atmospherics
Storefront Marquee Entrances Display windows Size of building Visibility Adjoining Stores Parking Accessibility

Interior Atmospherics
Flooring Dead area Lighting Personnel Odour Cleanliness Wall Trial room Aisles Temperature Fixtures

Elements of retail store atmospherics

Store Layout
Floor space allocation for selling, merchandise display, and customer Traffic Flow Department location Space/merchandise category Signage

Visual Merchandising
Assortment Theme Ensemble Racks and shelves Payment Counters

IMCAudience Contact Points

Point of Purchase Internet/ Interactive Media Public Relations

Publicity

Packaging

Direct Mail

Marketing Communications Audience

Direct Response Sales Promotion

Print Media

Broadcast Media

Outdoor

Events

2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Traditional Approach to Marketing Communications

Point of Purchase

Publicity

Sales Promotion

Special Events

Media Advertising

Packaging

Direct Response

Public Relations Direct Marketing

2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Interactive Marketing

Contemporary IMC Approach

Packaging

Sales Promotion

Direct Response

Point of Purchase

Publicity

Media Advertising

Public Relations

Interactive Marketing

Direct Marketing

Special Events

2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The New Model:

Four Elements
Holistic Marketing Permission Marketing Four Motives Security Social

Four Rs
Relevance Relationship

Measurement
Experimentation

Responsiveness
Repetition

Five Media
Store Planning Fixtures Packaging Marketing At Retail
42

Five Shareholders
Retailer Brand

Alpha-Status Communications Exploration

Agency
Producer Shopper

Three-Existing Forms of Marketing at-Retail 1.Traditional Consumer Package Goods Companies branding & selling products at retail.
2.Retailers branding and selling their own products at retail 3.Retailers branding and customizing their stores and chains
43

MARKETING COMMUNICATIONS OBJECTIVES

Increase Market Penetration Develop Repeat Purchase Behavior Establish Customer Relationships Increase Rate of Consumption Encourage Product Trial Stimulate Impulse Buying Stimulate Demand Differentiate the Product Establish a Product Image Influence Sales Volume Establish, Modify, or Reinforce Attitudes Develop Sales Leads Stimulate Interest Establish Understanding Build Support & Acceptance

Marketing at-Retail Advantages

Defines the entire retail store as an advertising not just POP or in-store advertising When integrated into the total marketing mix, Marketing at-Retail creates and experience for the shopper from outside and throughout the store. Provides and opportunity to attract the consumer to your product at the point when they are shoppers in the store The competition for the shopper is taking place real time at-retail Marketing at-Retail advertising can be presented in context with other products or services to create a retail experience.
45

Why Marketing at-Retail

Marketing at-Retail is being integrated into the marketing plan from the beginning. Marketing at-Retail creates an experience for the shopper where the buying decision is being made. Marketing at-Retail reinforces the overall marketing campaign where the shopper is looking for brand information. Marketing at-Retail reinforces your brand message where 70% of the purchase decisions are being made. As traditional media audiences fades Marketing atRetail provides a better value for marketing dollars Because of these changes, the industry throughout the world has embraced the new term Marketing at-Retail

46

Industry Research Vision

47

Research Methodology - IC Scan

Shoppers on a main shopping trip were recruited to wear IC Scan spectacles during the store visit. The spectacles are equipped with a special micro colour camera that provides the vision of the shopper as they walk through the store 50 shoppers per store were recruited Analyses include: where shoppers go what categories they visit what in-store media they pass what in-store media comes into their vision
48

POPAI Classification 35 Media Types

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Branded Counter Display (P) Branded Equipment (P) Coupon Tear Pad (T) Floor Graphics (T) Trolley Advertising Inflatable / Moveable Manufacturer Produced Signage Retailer Produced Signage (P) Neck Hangers (T) Standees (T) Shelf Strips (T) Shelf Talker (T) Wobbler (T) Case / Stack Displays (T) Dump Bins (T) Pallet Displays (T) Side Kicks / Parasite Units (SP) Wall Displays (SP) Walk Around Displays (eg Bumble Bees in Morrison) (P) 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. Stack Cards (T) Ceiling Hanging Boards (T) Gondola Header Boards (T) Easel Cards (T) A Board Posters Dump Bin Wraps (T) Revolving Floor Displays (Carousel) (P) Pole Top Displays (T) Premium Displays (P) Interactive Displays (SP) Digital Signage Wall Displays (Poster) (SP) Bus Stops / Banners / Finns (P) Table (P) Ladder Rack (SP) Fixture Header (T) Freezer / Fridge Sticker (T)

P = Permanent

SP = Semi Permanent T = Temporary

49

Tips for Increasing Sales in Retail Space

Attract and Keep shoppers in the store Honor the transition zone Dont make them hunt Make merchandise available to the reach and touch Note that men do not ask questions Remember women need space Make checkout easy

Indicators of Sales Effectiveness

Number of people passing by Percent who enter store Percent who buy Average amount spent per sale

Objectives of Communication Program

Long-term Build Brand (retailers name) Image Create Customer Loyalty Short-term Increase Traffic Increase Sales

Value of Brand Image

Value to Retailers
Attract Customers Build Loyalty Higher Prices Leading to Higher Gross Margin Reduced Promotional Expenses Facilitates Entry into New Markets Allen Solly Allen Solly Women

Value to Customers
Promises Consistent Quality Simplifies Buying Process Reduces Time and Effort Searching for Information About Merchandise/Retailer

McDonalds Brand Associations

Golden Arches Mc Aloo Tikki

Fast Food

McDonalds
French Fries Clean

Ronald McDonald

Wal-Mart Associations

16-55

Consistent Reinforcement
The retailers brand image is developed and maintained through the retailers communication mix
Retail Communication Mix

Consistent Reinforcement through Integrated Marketing Communication Program

Integrated Marketing Communication Program

A program that integrates all of the communication elements to deliver a comprehensive, consistent message Providing a consistent image can be challenging for multichannel retailers Need to consider the needs of all channels early in the planning of its communication program

Model of IMC

Integrated Marketing Communications Planning Model

Review of Marketing Plan Promotional Program Situation Analysis Analysis of the Communications Process Budget Determination Develop Integrated Marketing Communications Programs Advertising Sales Promotion Sales Promotion Objectives Sales Promotion Strategy PR/ Publicity PR/ Publicity Objectives PR/ Publicity Strategy Personal Selling Personal Selling Objectives Personal Selling Strategy Direct Marketing Direct Marketing Objectives Direct Marketing Strategy Internet/ Interactive Internet/ Interactive Objectives Internet/ Interactive Strategy

Advertising Objectives
Message Strategy

Integration & Implementation of Marketing Communications Strategies Monitor, Evaluate & Control Promotional Program
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Communication Methods

Paid Impersonal Communications

Advertising Sales promotions
Sale Contests Coupons

Store atmosphere and visuals Website

Store Atmosphere
The combination of the stores physical characteristics (architecture, layout, signs and displays, colors, lighting, temperature, sounds, smells) together create an image in the customers mind

Website
Merchandise available Price range Special offers Store locations

Paid Personal Communication

Retail salespeople are primary vehicle for providing paid personal communication to customers.
Personal selling salespeople satisfy needs through face to face exchange of information

Email

PR
PR entails any communication that fosters a favourable image for the retailer among its publics.

Publicity
Publicity is communication through significant unpaid presentations about the retailer, usually a news story, in impersonal media. Newspaper TV coverage

Unpaid Personal Communication

Word-of-mouth Can be favorable Can be detrimental

Social Shopping A communication strategy in which consumers use Internet to engage in the shopping process by exchanging preferences, thoughts, and opinions Product/service reviews

Comparison of Communication Methods

Differential Advantage
High Product Quality

Rapid Delivery

Features that Provide Differential Advantage

Low Prices

Excellent Service

Unique Features
70

Product Life Cycle and the Promotional Mix

Sales ($)
Maturity

Introduction

Growth

Decline

Time
-Light Advertising -Heavy Ads -PR for Awareness -Advertising and PR for brand Loyalty -Personal Selling for Distribution -Reminder Ads -Ads & PR Decrease -Limited Sales Promotion -Personal Selling for Distribution
71

-PreIntroduction Publicity -Sales Promotion for Trial

-Sales Promotion
-Personal Selling

Type of Buying Decision

Routine
Advertising Sales Promotion Advertising Public Relations

Type of Buying Decision Affects Promotional Mix Choice

Not Routine or Complex

Complex

Personal Selling

72

Push and Pull Strategies

PUSH STRATEGY (Office Depot and Office Max)
Manufacturer promotes to wholesaler Wholesaler promotes to retailer Retailer promotes to consumer Consumer buys from retailer

Orders to manufacturer

PULL STRATEGY (Coke and Pepsi)

Manufacturer promotes to consumer Consumer demands product from retailer Retailer demands product from wholesaler Wholesaler demands product from manufacturer

Orders to manufacturer
73

Planning a Retail Promotional Strategy

Determine promotional objectives Establish an overall promotional budget Select the promotional mix Implementing the promotional mix Reviewing and revising the promotional plan

Objectives
Increasing sales Raise customer traffic Reinforce brand image Popularize new stores or products Enhance customer relations

Establishing Promotional Budget

All-you-can-afford method
The remaining funds

Incremental Method
A percentage is either added or subtracted from one years budget to determine the next years

Competitive Parity Method

Budget is raised or lowered based on competitors actions

Percentage-of-sales Method
Sales used as a base

Selecting the Promotional Mix

Objective Gain awareness of working women Gain attention of motorist
Gain awareness of pedestrians

Budget Rs. 20,000

Rs. 12,000

Rs. 15,000

Media/Task page ads in weekly papers (Sunday edition) Radio ads during prime time on local radio stations Shopping bags

Implementing Promotional Mix

Timing: Frequency and Reach
Content of Messages
Pioneer message, Competitive message, Reminder message, Institutional message

Coordination
Makeup of Sales Force
Qualification, training, compensation, supervision

Displays Products

8 Types of Brand Extensions 1. Similar product in a different form from the original
parent product. 2. Distinctive flavor/ingredient/component in the new item. 3. Benefit/attribute/feature owned. 4. Expertise. 5. Companion products. 6. Vertical extensions. 7. Same customer base.

8. Designer image/status.

Motives for shopping

Motives influence a consumers shopping activities

Personal Motives
- role playing: where a daughter is influenced by her
mothers choices while shopping and plays a role of demonstrating learned behaviour diversion: diversion from daily life to shopping self-gratification: expected utility of the buying process learning about new trends: to gain information about new trends physical activity: exercise involved sensory stimulation: gain sensory benefits like listening to music

Motives for shopping contd

Social Motives
- chance to socialize: can meet up with friends or seek acquaintances - peer group attraction: a meeting place for peers - status and authority: attain status and power by being waited upon - pleasure bargaining: enjoyment in gaining a lower price

Consumer decision-making process

Factors affecting the consumer decision making process

Indian shoppers
Indian shoppers tend to visit the market in the seond half of the day rather than in the first half, especially during summers Cineplexes in the major cities carried out a drive to introduce effective air conditioning systems in their theatres to attract the crowds during morning or noon hours in north India Inconvenience of carrying too many purchases over a longer distance using two-wheelers, bicycle, scooters etc Prefer to purchase products, other than food or beverages in the company of their relatives or friends

Sample of customer profile and analysis

When do customers like to shop? How do customers like to pay? What quality of merchandise do customers usually prefer? What type of store has the maximum appeal for my customers? How do customers handle servicing of the mechanical products purchased by them? Who does most of the buying in the homes of my customers? What is the income level of my average customer? What is the age profile of my average customer? What is the general attitude of my customer towards his community? How does my customer react to new and different merchandise or promotional activities? What major changes has my customer made in the last two years?

 Define Merchandising as The analysis, planning, acquisition, handling and control of merchandise investments of a retail operation. Merchandising is the core of retailing.

The function of merchandising is an integral part of retailing and also one of the most challenging functions.
AMA define The planning involved in marketing the right merchandise at the right place at the right time in the right quantities at the right price.
Presented by www.InfoFan.zcom Prepared by Dr.Pooja Sharma 85

 Achieving these five Right is the key to successful merchandising and many a times, this remains an elusive goal for most retailers. Merchandising management can be termed as Planning, analysis, acquisition, handling and control of the merchandise

Presented by www.InfoFan.zcom Prepared by Dr.Pooja Sharma

86

 Analysis: because retailers must be able to correctly identify their customers before they can ascertain consumer desires and their needs/requirements for making a good buying decision. Planning is important because merchandise to be sold in the future must be bought now. Acquisitions because the merchandise needs to be procured from others, either distributors or manufactures. Handling involves seeing that the merchandise is where it is needed and in the proper condition to be sold. Control is required since the function of merchandise involves spending money for acquiring products it is necessary to control the amount of money spent on buying
Presented by www.InfoFan.zcom Prepared by Dr.Pooja Sharma 87

LEARNING OBJECTIVES
Understand the contribution that visual merchandising (VM) makes to RPM process by presenting the product to its best advantage Explore the scope of VM within a variety of retail contexts Understand the supporting role VM plays within a positioning strategy Appreciate how VM and store design work together to create a stimulating environment Understand how creativity in VM and display can enhance product appeal

THE SCOPE OF VISUAL MERCHANDISING

makes the market place innovative, exciting and stimulating by creating product-led stories supported by merchandising solutions (Corsie, 2003:1)
choice of fixtures method of product presentation construction of displays (including window) choice of layout use of point of sale/purchase material

Store layout
Store layout:
the interior retail store arrangement of departments or groupings of merchandise

Store arrangement:
- pays adequate attention to the expected movement of the customers visiting the store - space allotted to customers to shop - adequate facilities for merchandise display

Customer friendly store layouts motivate shoppers to move around the store and shop more than what they had planned

Store layout
contd

Organized retail firms on the other hand, ensure sufficient space within the store for customers and create a layout to facilitate a specific pattern of traffic movement Most independent retailers prefer racks and shelves placed along the walls Logical sequencing and category adjacency is essential in planning store layout Store layout planning involves decisions about allocation of floor space, product groupings, and nature of traffic flow

Grid layout

Free form layout

Boutique layout

Race track layout

Entry I

Entry 2

Visual merchandising
Visual merchandising or display is the presentation of products in order to sell them Key aspects: store floor plan, store windows, signs, merchandise display, space design, fixtures and hardware More sophisticated and encompassing and goes beyond merely arranging merchandise for easy access to customers. Process set in motion with designing the floor plan of the store, placing of mannequins, etc,.

Wall displays
Slatwall is a popular wall system used to display merchandise and maximize the total use of wall areas Slatwall panels and accessories allow complete versatility to display merchandise on the panel Give a clean and streamlined appearance Slotted wall standards are effective for displaying heavier merchandise and allowing the display of more merchandise on wall areas Hardware accessories such as shelving brackets, hangrail brackets, and face-outs provide organized and effective merchandise presentation

Floor fixtures
Gridwall panels and accessories : - a versatile fixture to utilize both wall-mounted applications and
freestanding floor displays durable, medium weight system in a variety of panel sizes, which accept various display accessories for hanging, shelving, and merchandising products Garment racks and displayers: garment racks and displayers are beneficial to show and sell items using floor displays Display cases and counters: display cases and counters feature sturdy construction and durable low-pressure laminated finishes in solid colors and wood grain styles Metal shelving gondolas: metal shelving gondolas display a number of products easily with total merchandising flexibility

Product display fixtures

Mannequins and body forms
- essential for enhancing merchandise - make it easier for customers to visualize how clothing will look on the wearer - traditional life size mannequins offer a flattering look to clothing - most effective way to sell merchandise

Clear acrylic displays

- offer many innovative fixtures - give a clean look with the greatest eye appeal for products - help the retailer sell more merchandise - display items on slatwall, gridwall, and countertop use - useful for displaying accessory items

Promotional items
Window signs and banners
- traffic-stoppers and create an opportunity to get a shoppers attention - many retailers underestimate the powerful pull of an effective window sign - a retail store sell merchandise to shoppers by attracting then with effective signs, banners, and promotional displays - a well thought out and effectively signed promotional interior can be a call to action for shoppers - using promotional signs and sign holders, and colourful sales tags as a visual hook can attract customer response and help increase sales

Lighting fixtures
Track lighting enhances colour and vivid colour sell merchandise Used for perimeter lighting and illuminating wall displays Used as accent lighting for highlighting specific merchandise adding excitement and drawing attention to merchandise

Store space management

Retail space allocation decisions are conceived and implemented at department level, category level, and the SKU level for big departmental super market stores

Space allocation: process of distributing the right

amount of space to the right merchandise at the right time according to a detailed analysis of customer demand Retailers normally depend on historical data or on their experience for allocating space (common with retailers using unorganized formats) Sales and profitability are bases for space allocation

Walls as retail selling tools

Walls are the largest selling fixture in the retailers overall selling strategy Meet several visual-merchandising objectives
-captures shopper attention as they enter the retail space -wall displays draw shoppers into the store and exposing them to more merchandise -communicates fashion information -encourages multiple purchases -act as a way-finding tool and guides shoppers to products -forms the retail background, supports store image by the strategic use of a variety of interesting wall surfaces, paints, colours, and wallpapers -these reinforce the retailers atmospheric intent

Colour planning
Color Schemes
- complementary schemes
- split-complementary schemes - double-complementary schemes - triadic schemes - analogous schemes (or color families) - monochromatic schemes

Physical materials in store designing

Materials used in retail store designing
Type of material for flooring
- carpet (designer, one-colour, multi-colour) - wood work (polished/unpolished) - tiles (terra-cotta, marble, mosaic, sun mica ) - rubber/ plastic

Type of material for walls

- plaster (painted, raw paint effect) -- glass (opaque, tainted, coloured) - panelling (wood, steel, dark, light, illuminated) - ceramic tiles

MAJOR TYPES OF RETAILERS BY PRODUCT OFFERING

Department Stores
Specialty Stores Supermarkets

Drugstores
Convenience Stores

Discount Stores
Restaurants

NON-STORE RETAILING
Automatic Vending

Direct Marketing

Major Forms of Nonstore Retailing

Electronic Retailing

CHOOSING THE RETAIL MIX

Product Choosing the Retailing Mix Price Promotion

Place Personnel Presentation

CHOOSING THE RETAIL MIX

Product Personnel Promotion

Target Market

Presentation

Place

Price

PRESENTATION (COMMUNICATION) OF THE RETAIL STORE

Employee Type & Density Merchandise Type & Density Fixture Type & Density

Factors in Creating Stores Atmosphere

Sound Odors Visual Factors

PERSONNEL OF THE RETAIL STORE

How many How knowledgeable

How helpful / invasive

Factors in Personnel decisions

Fit the image of the product Good personal sellers

How to Underwhelm Customers and Shareholders

Poor Understanding of Customers and Competition

Pressure for ShortRun Results

Unfocused Competitive Position

Stagnant Shareholder Value

Me-Too Customer Value

Accounting Maneuvers Drive Financial Results

Excessive Customer Turnover

Sporadic Business Unit Profit

Market Share Instability

High Cost of Customer Retention and Acquisition

Integrated image and promise form the company

Product Packaging

Website

Company

Advertisements

Product A Product B

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Top 10 Ways to Turn Off Customers

customer service tips retail atmospherics As individuals, we all have our own little pet peeves. What may turn off one customer may not bother another. As retailers, we can't afford to turn off a single customer and image is everything. Keeping our stores neat and clean is not only easy to do; it is generally an inexpensive way to attract customers and create a pleasant store atmosphere. Take a look around your retail store. Do any of the following situations exist? If not, look harder. Your store may be exhibiting some other offenses you haven't noticed until now. Here are ten ways your store may be turning off customers:

1. Dirty Bathrooms
This customer pet peeve clearly deserves the number one spot on this list. Retail store restrooms should always be sparkling clean, whether they are open for public use or not. Make sure to stock the bathrooms with plenty of paper products, soap, trash receptacles and clean it daily. 2. Messy Dressing Rooms Keeping the dressing room area free of discarded hangers, tags and empty packaging goes beyond creating a neat store appearance, it is also a good step towards loss prevention. Take a quick look for out of place items after each customer uses the dressing room. 3. Loud Music

Playing music in a retail store can help create a certain atmosphere for our shoppers. Music that is too loud, inappropriate or of poor quality can run a positive shopping experience.

4. Handwritten Signs In this era of technology, there is no excuse for displaying handwritten signage. It is too simple to print a sign from our computers or use pre-printed signs. Printed signs simply look more professional and signs with hard-to-read handwriting can be a customer turn-off.

5. Stained Floor or Ceiling Tiles It is true, accidents happen. However, our customers don't have to see them. Dirty carpet, stained flooring and ugly ceiling tiles can turn off many shoppers. Sweeping, vacuuming and mopping should be done on a regular basis. Consider hiring a professional cleaning crew to polish tile floors. Replace stained portions of carpet and ceiling tiles where possible.

6. Burned-out or Poor Lighting Replace any burned out light bulbs as soon as possible. Make sure all customer areas of the store have ample lighting and take into consideration shoppers with aging or less than perfect eyesight. Your store should be well illuminated for all customers 7. Offensive Odors

Customers understand if they visit a lawn and garden center they will have to deal with the smell of fertilizer. The same goes for shoppers of a feed supply store. Certain odors are understandable and may even appeal to the customer's sense of smell. However, shoppers don't want to smell an employee's lunch drifting across the store. Use neutralizers to combat any offensive odors.

8. Crowded Aisles
Consumers like a selection but not if it means sacrificing comfort while shopping. Be sure your store is designed to allow adequate space between aisles and keep walkways free of merchandise. Cramped spaces can ruin a shopping experience and turn off a customer.

9. Disorganized Checkout Counters A stack of hangers, returned merchandise and sloppy work areas behind the checkout is a huge customer turn-off. This particular area where a customers financial transaction is taking place should not show any signs of disorganization. Like messy dressing rooms, a disorganized checkout counter can lead to theft. Keep those register areas neat and tidy.

10. Lack of Shopping Carts/Baskets Your type of retail shop may not require a shopping cart or your store may be too small, but there's not a single type of retailer that wouldn't need at least some sort of shopping basket. If you hope for your customer to purchase more than one item in your store, be sure to have an adequate supply of shopping carts or baskets on hand