Download VTU MBA 3rd Sem 16MBAMM301-Retail Management RM Chapter 1 -Important Notes

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RETAILING IS.......

• DERIVED FROM FRENCH WORD RETAILLER

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• BERMANS AND EVANS STATES THAT

"IT ENCOMASSES THE BUSINESS ACTIVITIES INVOLVED IN SELLING GOODS AND SERVICES TO CONSUM FOR THEIR PERSONAL, FAMILY, OR HOUSEHOLD USE. IT INCLUDES EVERY SALE TO FINAL CONSUMER RANGING FROM CARS TO APPAREL TO MEAT, RESTAURANTS TO MOVIE TICKETS. RETAILING IS THE LAST STAGE IN DISTRIBUTION CHANNEL "

Concept in Retail management

• Retail
• Consumer Vs Customer

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• Retailer
• Retail Store

• 2 types of retail
• Organised
• Unorganised

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RETAIL MANAGEMENT

• What is retail management:
• Retail management. The various processes which help the customers to procure the desired merchandise from the retail stores for their end use refer to retail management.

Four pillars of retail

• Customer service orientation

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• Co-ordinated effort
• Value -Driven
• Goal orientation

Why retailing has become a popular method of conducting business?

• Ease of variety of products

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• Freedom of choice
• Customer service

FOUR PILLARS OF RETAILING

The Retailing Concept

• Customer orientation - The retailer determines the attitude & endeavors (take action) to satisfy these needs.

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• Coordinated effort - The retailers integrates all plans & efficiency.
• Value-driven - The retailer offers good value to the customer (expensive) or discount i.e., "appropriate pricing" for
• Goal oriented - The retailer sets goal & uses its strategy

CHANNEL LEVELS IN DISTRIBUTION

• Two types of Channel-

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• Direct -Zero level channel

Indirect:

• One level

• Two level

Three level:

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CHARACTERISTICS OF RETAILING

• Direct interaction with customers/end customers.
• POP display and promotions
• Lower average amount of sales transaction
• Customer service plays a vital role

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• Sales promotions are offered at this point only
• Retail outlets are more than any other form of business
• Location and layout are critical factors in retail business
• Factors of production
• Market

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• Potential demand
• Store image

POS displays & P

Definitions

• Point of Sale (POS) Displays

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• They are Ads placed near the checkout or bill on-the-fly purchase that the customer makes
• Point of Purchase (POP) Displays
• They are Ads placed near the merchandise to where the customer makes buying decision.

FUNCTIONS AND ACTIVITIES OF R

• SORTING: The retailers offer an assortment, specialize in market to which the offering is made.

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• ARRANGING AN ASSORTMENT OF OFFERINGS: Retailers selection of merchandise

Assortment should contain:

• Substitute items of multiple brands
• SKU'S
• Prices

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• Physical dimensions and attributes
• BREAKING BULK:
• according to customers convenience and stocking requirements
• HOLDING STOCK
• CHANNEL OF COMMUNICATION

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• EXTENDING SERVICES

Category wise major

Role of retailer

• Link between Producer and consumer:
• Serves the consumer by acting as an intermediary, place and ownership utility

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• Serves as a channel member:

• Image Creator
• Managing Merchandise
• Store operations and Management

• The category role identifies the importance of the This is the role the retailer wants the category to

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Emergence of Organisations of Retailing

• Ancient retailing –
• Cretans
• Phoenicians
• Romans

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• Dark ages:
• Peddlers,
• Fairs & flea market
• Speciality shops during greek and Roman
• Small stores-special line of goods-18th centuary

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• Social development and their impact
• First department store in Paris-Bon Marche(1852)
• 1800's-rise of 5 & 10 - cent stores
• 1870-Montgomery ward launched the first mail order catalogue-c
• Industrial revolution

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• Increase in urbanisation -emergence of shops
• Emergence of co-operatives, to refer to working class

Emergence of Organisations of

• Emergence of self service:with Piggly Wiggly store by Clarence
• Development of super markets and convenience stores

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• 1920-convenience stores
• 1926-Tote'm stores-7 eleven
• 1930 -emergence of supermarkets and discount stores

• Speciality stores, malls, formats
• Rise of web

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• Speciality stores-80's
• Shopping malls-late 20th century
• Rise of web:
• firstranker.com

Types of retail formats

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Retail types

• Three types of retailing:
• market
• Shop or store trading
• Virtual retail

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Classification based on size, shape, product line

• Store based
• Non store based
• Service retailing

TYPES

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Store based retailing

Form of ownership Pricing

Indpt franchising Leased Consumer Stores depts. Co-operatives

• Vision regarding the nature and size of present and
• Degree of control he wishes to have

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• Legal and regulatory provisions
• Tax provisions of various structure
• Finance
• Locality/region/country

Independent stores: An independent retailer owns retail establishment.

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It is family managed business

Franchise: "Franchising is a long-term cooperation between two entities-a franchisor and one or that is based on an agreement in which the franchisor licensed privilege to the franchisee to do business

Eg; Mc Donald, Louis phillippe, Arrow

Leased department (SIS)

A leased department consists of space in a large rented to an outside vendor.

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Cooperatives: is an organisation which economies of scale on behalf of its members discount from manufacturers and to provide

Consumers' Co-operative

• For protecting interest of general
• by making consumer goods available at reasonable price;
• Source goods directly from the manufacturers;

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• eliminates middlemen in the process.

Some examples:

• Kendriya Bhandar,
• Apna Bazar
• Sahkari Bhandar

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• Employees consumer co-operative; Etc.

Store based Retailing:

General Merchandise retailers:

Departmental stores – are retailers that variety and deep assortment, offer some services, are organised into separate departments displaying merchandise.

Speciality Stores: Specialty stores are retailers that focus on specific product categories supplies, men's or women's clothing, or

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Convenience stores: Stores located in areas to the customers.

Supermarket: A retail that sells food, convenience goods, household merchandise arranged display

Pricing based:

Off price retailer: Off-price retailers owned and operated by manufacturer and manage or by a speciality/department store irregular goods are sold.. They sell merchandise at every day low price factory outlet

Discount stores: department stores with offers special discounts. High volume turnover outlet selling a broad merchandise for less than conventional prices .One discount

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Factory outlet: Manufacturer himself operates in certain areas and sells at low price to

Factory outlet: is a manufacturer owned manufacturer closeouts, discounted merchandise irregular and cancelled orders.

Category killers:

Speciality retailers who offer a large selection chosen product category Nalli's in Chennai killer in sarees

Price clubs(Cash and carry): business that extremely simplistic level. One has to pay a fee. Once the product is purchased, customer responsible for carrying their products place of purchase

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Hypermarket is a format combining a supermarket department store.

Mall

Non store retailing:

• In non store retailing, customers do not
• Direct selling

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• Direct response marketing
• Catalogue retailing
• Television shopping
• Automated vending

• Direct Response Retailing: marketers advertise products/ services in magazines, newspapers and/or television offering an address and phone number so that consumers can write or phone in their order.

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• Automatic Vending: is the ultimate in non store retailing. Products are sold customers/buyers from machines. These dispense products which enable customers closing hours.
• Electronic Retailing/E-Tailing: retailers communicate with customers and offer products and services over the internet. EBAY, Rediff Shopping

Service Retailing

• Consignment shops: a shop that sells second-hand items on behalf of the original owner, who receives a percentage of the selling price.

The sender of goods is known as the "consignor" and the agent entrusted with the custody and care of the goods is known as the "consignee".

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• Concept store

It offers shoppers multiple types of items with one centralized theme. Examples of themes for a concept store are eco-friendly, street and high-end luxury.

Concept store

All the products in a concept store add to the theme of the establishment, even though they might be different categories altogether.

Many concept stores offer customers the chance to pick up food, clothing, electronics, perfumes, books and other items that are connected to the concept the shop promotes. These stores focus on creating a personalized shopping experience around the chosen theme

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CONSUMER BEHAVIOUR

• Behaviour that consumers display in searching evaluating, disposing of products and services satisfy their needs.
• It helps us understand why, when, where and purchase decision

• FACTORS AFFECTING CUSTOMER DECISION
• CULTURAL FACTORS

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• Consumer behavior is deeply influenced by culture buyer's culture, subculture and social class.
• Culture
• Essentially, culture is the share of each company cause of the person who wants and behavior on the purchasing behavior varies from country sellers have to be very careful in the analysis different groups, regions or even countries.
• Subculture
• Each culture has different subcultures, such geographical regions, racial, etc. marketing group groups, segmenting the market in several small example, marketers can design products according specific geographical group.

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Social Class

• Every society has some kind of social class is because the buying behavior of people in a particular similar. Thus marketing activities could be adapted classes. Here we should note that social class is by income, but there are several other factors education, occupation etc.

SOCIAL FACTORS

• Social factors also influence the purchasing behavior Social factors are: the reference groups, family

• Reference groups

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• Reference groups have the potential for the or behavior of the individual. The impact of reference across products and brands. For example, if buying clothing, shoes, car etc., the influence of reference Reference groups also include opinion leaders influences others by his special skill, knowledge characteristics).
• Family

Buyer behavior is strongly influenced by a family are trying to find the roles and influence of the children. If the decision to purchase a particular by the wife of then sellers will try to target women should note that the purchase of roles changes of consumers.

• Roles and Status
• Each person has different roles and status in society clubs, family, etc. organization to which it belongs working in an organization as manager of finance roles, one of the chief financial officer and the marketing purchasing decisions will be influenced by their

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PERSONAL FACTORS

• Personal factors may also affect consumer behavior important factors that influence personal buying economic status, occupation, age, personality and
• Age

Age and life cycle have a potential impact on the consumers. It is obvious that consumers change the services over time. Family life cycle consists of different singles, married couples, unmarried couples etc that develop suitable products for each stage.

• Occupation

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The occupation of a person has a significant impact For example, a marketing manager of an organization business suits, while a low level worker in the same resistant clothing work.

• Economic situation

economic situation of the consumer has a great impact behavior. If income and savings a customer is high expensive products. Moreover, a person with low cheap products.

• Lifestyle

Lifestyle clients is another factor affecting important consumers. Lifestyle refers to the way a person lives things in their environment. It is determined by their opinions, etc and activities shapes their whole pattern interacting in the world.

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• Personality

Personality changes from person to person, time- Therefore, it can greatly influence the buying behavior personality is not what one has, but is the totality different circumstances. Has different characteristics aggression, confidence etc that may be useful to offer consumers to the product or service.

4. PSYCHOLOGICAL FACTORS

There are four major psychological factors purchasing behavior of consumers. These motivation, learning, beliefs and attitudes.

Motivation

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The level of motivation also affects the purchase customers. Each person has different needs physiological needs, biological needs, social nature of the requirements is that some are more others are less pressing. Therefore, a need becomes when it is most urge

HISTORICAL PERSPECTIVE

• CLASSICAL SCHOOL OF THOUGHT:
• Classical schools of marketing are identified as commodity School, and the institutional School.
• The commodity school focused on the objects of marketing generated the specialty - shopping - convenience goods popular in marketing practice.

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• The functional school focused on the activities inherent and generated a classification of functions such as goods physical distribution.
• Finally, institutional school focused on the agents of wholesalers and retailers which resulted in channels added services provided by tire middlemen. (Sheth,
• case studies, market surveys, and use of census data methods of understanding consumer behavior.

MANAGERIAL SCHOOL OF THOUGHT

• it generated such concepts as the four Ps of the mix, product differentiation .ind market segment

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• Tire managerial schools of marketing thought sciences but borrowed the more recent concepts it eagerly borrowed Concepts and methods of managerial economics Which shifted focus away to the theory of the firm, and especially the competition and product differentiation. Similar diffusion of innovations

BEHAVIOURAL SCHOOL OF THOUGHT

• behavioral sciences could contribute more to the individuals than the social sciences.
• Various branches at psychology as more relevant
• economic psychology with its emphasis on customer

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• clinical psychology with its emphasis on nonfunded and services,
• organizational psychology with its emphasis on organizations,
• social psychology with, its emphasis on cognitive of human behavior became more exciting and in marketing.

ADAPTIVE SCHOOL OF THOUGHT

• the marketing discipline is shifting its focus to behavior by focusing on the environmental changes generated by technology, regulation and global

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• Concepts taken from from business strategy, and stakeholder analysis as well as the social global markets

CUSTOMER DECISION MAKING

NEED RECOGNITION

The first stage of the buyer decision the consumer recognizes a problem

INFORMATION SEARCH

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The stage of the buyer decision in which the consumer aroused to search for more information; the consumer may simply have heightened attention or may go into active information search.

The consumer can obtain from any of several

• Personal Sources:

(family, friends, neighbors etc)

• Commercial Sources:

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(Advertising, Sales people, Dealers etc

• Public Sources:

(Mass Media, Consumer Rating Organizations

• Experimental Sources:

(Handling, Examining, Using the product

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EVALUATION OF ALTERNATIVES

The stage of the buyer decision in which the consumer uses information to evaluate alternative brands in

PURCHASE DECISION

The stage of the buyer decision process in which the consumer actually buys the product.

• Personality

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• Lifestyle
• Culture
• Social class
• Family & household influences

POST-PURCHASE BEHAVIOUR

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The stage of the buyer decision which the consumer take further the purchase, based on their satisfaction dissatisfaction.

FDI

• What is FDI?

Definition:

A foreign direct investment (FDI) is an investment a controlling ownership in a business in one country in another country.[

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Direct investment reflects the aim of obtaining a resident of one economy in an enterprise another economy.

Current FDI in retail

• There are 2 routes an FDI is possible:
• Automatic route: no prior approval is required
• Prior Government approval route: Proposals for limited category of sectors

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Need for FDI in Indian retail

• On 7 December 2012, the Federal Government multi-brand retail in India.
• India in 1997 allowed (FDI) in cash and carry wholesale
• automatic permission was granted in 2006.
• Between 2000 to 2010, Indian retail attracted a direct investment, representing a very small 1.5% into India.

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• 30% of food staples and perishable goods produced poor infrastructure and small retail outlets prevent movement of the goods from the farmer to the
• A 25% market share, given the expected growth through 2021, is estimated to be over $250 billion

Need for FDI in Indian retail

• FDI encourages firms to bring about:
• Improvements in supply chain

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• Investment in technology
• Manpower and skill development
• Greater sourcing from India
• Benefit to Government

Current trends in retailing

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• New retail formats have emerged
• Internet age, increased computer awareness has
• Specialty stores
• Sales promotions
• Retailers targeting not only tier 1 but also tier two

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• Use of plastic money
• Improvement in infrastructure
• Partnerships and tie-ups among retailers
• Government support
• Sophisticated customers

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Problems of retailing

• High cost for unorganized sector
• Specialisation
• Poor infrastructure
• Lack of trained workforce

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• Multiple and complex taxation system
• Threat of substitutes
• Bargaining power of suppliers
• Bargaining power of buyers
• Intense of rivalry

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• Lack of data integrity
• Inability in selecting the right location
• Excessive shrinkage
• Poor merchandise

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