Ajeet Tiwari Report

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A

PROJECT REPORT

ON

Promotional Activity OnRetail Sector

In the Partial Fulfillment

For the Degree of

MBA:-2010-2012

Submitted to :-

Mahamaya Technical University, Noida

Under the Supervision of

Mr. Shashank Chaudhary

(Faculty of MBA)

Submitted By :-Ajeet Tiwari

MBA 4th Semester

Roll No. 1011470004

A-13/1, South Side, G.T. Road, NH-24, Ghaziabad 201010

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PREFACE

Theoretical studies provide general information about the

managerial aspects, but practical observations provide

information about the activities taking place in an organization.

Practical and direct observation is a dynamic approach in learning

the functions of an organization, which provides first-hand

information through various means such as discussions with

mangers, executives, workmen, etc. Apart from such discussions,

I gathered information through journals, magazines, handbook,

website, etc. Practical observation is an important part of

Personnel Development.

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ACKNOWLEDGEMENT

A work is never a work of an individual. I owe a sense of gratitude to the

intelligence and co-operation of those people who had been so easy to let me

understand what I needed from time to time for completion of this exclusive

project.

I am greatly indebted to my faculty & internal guide Mr. Shashank Chaudhary

who always endured me and stood by me and without whom I could not have

completed the project.

Ajeet Tiwari

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DECLARATION

I, the undersigned, hereby declare that this project report submitted by me

under the guidance of Mr. Shashank Chaudhary (faculty of MBA) for the partial

fulfillment of Master degree in Business Administration from Institute of

Professional Excellence And Management, Mahamaya Technical University

Noida is exclusively prepared and conceptualized by me and the empirical findings

in this project report are based in the data collected by me, and I have not copied

from any research report or project report submitted by anyone, anywhere earlier.

Date : Signature of student

Place : ( Ajeet Tiwari )

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TABLE OF CONTENT Page No.

Title PageI

Preface .....

Acknowledgement.. .

Declaration...

Introduction .

Objectives of study.

Scope of the study.

Research Methodology..

Data Analysis ..

Findings..

Suggestions

Limitations.

Conclusion

Bibliography..

Questionnaire

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INTRODUCTIONINTRODUCTION

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Introduction

Retail comes from the Old French word tailor(compare modern French retailer),

which means "to cut off, clip, pare, divide" in terms of tailoring (1365). It was first

recorded as a noun with the meaning of a "sale in small quantities" in 1433 (from

the Middle French retail, "piece cut off, shred, scrap, paring").[2] Like the French,

the word retailin both Dutch and German (detailhandelandEinzelhandel,

respectively) also refers to the sale of small quantities of items

Sales promotions have traditionally been heavily regulated in many advanced

industrial nations, with the notable exception of the United States. For example,

the United Kingdom formerly operated under a resale price maintenance regime in

which manufacturers could legally dictate the minimum resale price for virtually

all goods; this practice was abolished in 1964.

In India, clothing retail accounts for 36% of organized retail business. It is thelargest sector. Ready-made apparel accounted for an estimated 20% of domesticclothing sales in 20051. With growing working women wearing western wear towork, and pressed for time, market for good readymade clothes is likely to grow.India is a film-crazy nation, and the largest producer of films, with more than 1,000every year. They provide entertainment and an escape from reality for Indiasmasses, and set the popular fashion trend. Bollywood fashions have become panIndian. They affect various sectors of the market including clothing, footwear,weddings and fashion accessories.

With the advent of modern format retailers and the growth of plastic cards, affluenturban Indian women are shopping like never before. They spend mornings

browsing in stores looking for deals or latest styles. Upper income urban womenare adopting ethnic chic. These are designer clothes that incorporate Indian motifs,ethnic fabrics and are a fusion of western and Indian styles.

In the large urban centers, apparel retailers, like Shoppers Stop, Westside andPantaloons have popularized their private labels, which have attracted urbanshoppers. Westside carries only its own private labels, while for the other stores,

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20-30% of their apparel turnover is from private labels. Customers have loyalty toa store rather than any particular garment brand. This has led to a thrivingunbranded or local brand market for ready-to-wear clothes leading to severecompetition. Hence organized retailers like Lifestyle, for instance, has a loyalty

programme called `The Inner Circle', while Pantaloons offers a `Green Card'Rewards programmes, Westside has `Club West' to woo the customers. Customerslook to design and fit of the clothes, and use the shops name as a quality standard.

According to a report by Datamonitor (2006)2, global apparel, accessories &luxuries market is likely to grow by 4.5% annually and Asia Pacific region isanticipated to acquire leadership position by 2011. Apparel sector in India poses alot of challenges to a marketer. So far Indias share in world apparel trade has beeninsignificant(less than 3%). World garment trade is estimated at around 195 BillionUS$ annually. The Biggest manufacturer & supplier is China producing over 50

billion $, followed by Mexico which produces over 8 billion and followed by manycountries like India, Sri Lanka and Bangladesh, being the third place countriesmaking and exporting garments worth 5 - 6 billion $ annually.

Characteristics of Apparel retail sector

As apparel retail is led by fashion, a player needs to keep a close watch on fashionamongst teenagers as they are the trend setters. Role of Bollywood in spreadingfashion needs to be understood. Seasonal variations on stocking pattern and need toclear inventory at the end of season should be understood by apparel retailer.Typically once an item is sold from the outlet, retailer ensures that there is norepetition of same. It gets replaced by different design, style, colour. Importance of

store layout, dcor is very critical. A browser visiting the store frequently likes tosee changes in the layout otherwise he may carry the impression that stocks are notmoving out of the store. Category management becomes very crucial function astransformation of design into production and delivery has to be completed beforefashion or fad changes in the market.

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This highlights the importance of sales promotions- short term activities whichinduces trade or consumer to buy now rather than in future as the value of apparelafter the season, goes down substantially and inventory carrying burden turns outto be very high. Apparel retailer needs to understand critical role of sales

promotions. Attractive promotions induces purchase acceleration, stock piling andbrand switching on the part of a consumer which substantially reduces retailersfinancial and inventory risk and consumers financial risk and psychological risk.

This paper compares various sales promotion activities followed by apparel retail

stores in organized sector. Both exclusive and multibrand retailers in apparel retail

sector are studied. On the basis of practices, it poses few challenges which

managers in the sector encounters

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Literature review:

Several studies on apparel retail sector and usage of promotions are reported in thecontext of developed markets. A brief overview is presented below:

Deeter-Schmelz, Dawn R.; Moore, Jesse N.; Goebel, Daniel J, (2000) examinedPrestige clothing shopping by consumers by a confirmatory assessment andrefinement of the PRECONscale. Aspects studied include background on thesymbolic aspects of consumption; prestige shopping behavior; reassessment andrefinement of the PRECON scale and impact of income and age on prestigeshopping. The paper concludes with managerial implications for the United Statesapparel retailers dealing in prestige clothing.

Kincade, Doris H.; Woodard, Ginger A.; Park, Haesun (2002) studied Buyersellerrelationships for promotional support in the apparel sector which is critical forsuccess. The purpose of the study was to define promotional support categoriesoffered to apparel retailers by manufacturers, to identify the retailer's perceptionsof the offering frequency and importance of the promotional support, and toinvestigate the relationship between offering frequency and perceptions ofimportance. Results indicated that monetary support was regarded as the mostimportant promotional support.. A positive and significant correlation was found

between items the buyers perceived as important and the frequency of offerings ofthese items.

Liu, Yuping, (2007) found out the Long-Term Impact of Loyalty Programs on

Consumer Purchase Behavior and Loyalty. Using longitudinal data from a

convenience store franchise, the study found out that consumers who were heavy

buyers at the beginning of a loyalty program were most likely to claim their

qualified rewards, but the program did not prompt them to change their purchase

behavior. In contrast, consumers whose initial patronage levels were low ormoderate gradually purchased more and became more loyal to the firm. For light

buyers, the loyalty program broadened their relationship with the firm into other

business areas. Thus there is a need to consider patronage to decide rewards for

loyalty programmes.

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In the context of French market, Meyer-Waarden, Lars; Benavent, Christophe.(2006) studied the Impact of Loyalty Programmes on Repeat Purchase Behaviour

based on the Behavior Scan single-source panel which has been compared with the

store data base . The double jeopardy phenomenon was present and loyaltyprogrammes did not substantially change market structures. When all companieshad loyalty programs, the market was characterized by an absence of change of thecompetitive situation.

Hyllegard, Karen; Eckman, Molly; Descals, Alejandro Molla; Borja, Miguel Angel

Gomez (2005), studied Spanish consumers' perceptions of US apparel speciality

retailers' products and services. The study emphasized that speciality retailers'

success in international markets is contingent upon their knowledge of culturally-defined values, norms and behaviour that influence consumer decision making and

impact acceptance of products and services. The study examined consumers' store

patronage and apparel purchase behaviour, acceptance of US apparel brands,

perceptions of retailers' products and services, and perceptions of the impact of

foreign retailers on local communities. It found out that the perceptions differed

regarding quality, fashionability, product assortment, extent and quality of

customer service, convenience of location, payment options, national brands and

store layout. Consumers' acceptance of US apparel brands was a function of age,household income, apparel product country of manufacture and price.

Rationale for sales promotion activities

Usage of sales promotion activities has a direct impact on behaviour as itmotivates a consumer to buy now rather than in future, enhances value of anoffer temporarily till the promotion period, encourages switching, reinforce orreward loyalty etc. Broadly, objectives set for these activities are; i)to generatestore traffic, ii) to move excess inventory, iii)to enhance store image and iv)tocreate a price image( high or low). Traffic building is achieved by special event

promotions like Diwali, Rakshabandhan promotions; inventory reduction

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through end of season sale; creation and building store image through featureadvertising and displays and joint promotions and price image by highlightingthe discounts. It helps consumer reduce not only financial risk but also

psychological and social risk by making consumer confident of his/herpurchase, conformation to group norms by shopping at famous stores/brandsand possibility of acquiring well known branded apparel during promotions.Promotions may induce non buyers to walk in to the store and loyalty

programmes may encourage to buy more, more often or upgrade to betterquality. Exciting promotions also have tendency to generate positive word ofmouth and help consumer feel a smart shopper. Thus not only utilitarian

benefits like, saving of money, time or quality upgradation but hedonic benefitslike feeling confident, feeling of excitement and entertainment etc.

Sales Promotion at different Level and different programme

One of the most difficult marketing decisions facing companies is how much to

spend on promotional John Wanamaker, the departmental - store magazine, said, "I

know that half of my advertising is wasted but I don't know which half."

Thus it is not surprising that industries and companies vary considerably in how

much they spend on promotion. Promotional expenditures might amount to 30-50% of sales in case in cosmetics industry and only 10-20% in the industrial

equipment industry. Within a industry, a low and high spending companies can be

found.

How do companies decide on their promotion budget? There are mainly four

methods of this :

Affordable Method :

Many companies set the promotion budget at what they think the company can

afford. One executive explained this method as follows : "Why, its simple. First I

go upstairs to the controller and how much they can afford to give us this year. He

says a million and half. Later, the boss comes to me and asks how much we should

spend and I say Oh about a million and half."

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It is a method which is uncertain one and makes long term planning difficult.

Percentage of Sales Method :

Many companies set their promotion expenditures at a specified percentage ofsales. Accordingly the sales is set on the basis of sales.

In this a specified sales percentage is decided for the promotional budget

Advantages of this method :

First, its use means that promotional budget vary with what a company can afford.

Second, it encourages the management to think in terms of the relationship among

promotion costs, selling price, and profit per unit,

Third, it encourages the competitive stability to the extent that competing firms

spend approximately the same % of their sales on promotion.

Inspite of the advantages, the % sales method has little to justify it. Its reasoning is

circular : It views sales as the determiner of the promotion rather than as a result. It

leads to budget setting by availability of funds rather than by marketing

opportunities.

Competitive Parity Method :

Some companies set their promotional budget to achieve share-of-voice parity with

other competitors. Two arguments are made in support of competitive parity

method. One is that the competitors expenditure represents the collective wisdom

of the industry. The other is that maintaining a competitive parity helps prevent

promotional wars.

Neither argument is valid. There are no grounds for believing that competition

knows better what should be spent on promotion.

Objective and Task Method :

The objective & task method calls upon marketers to develop their promotion

budgets by defining their specific objectives, determining the task that must be

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performed to achieve these objectives, and estimating the cost of performing these

tasks.

Deciding on the promotion mix :

Companies face the task of distributing the total promotion budget over the five

promotional tools :

Advertising

Sales Promotion

Public Relations and Publicity

Sales Force

Direct Marketing.

Whatever method a company adopts for promoting its product it must be from

above mentioned method.

Sales Promotion

Promotion is the final element in the marketing mix. After the nature of product isdecided, its price fixed and the methods of distribution decided, the manufactureshas to take effective steps in meeting the consumers in the markets. In the presentconsumer oriented markets it is the duty of manufacturers to know what is required

by the consumer. It is also their duty to make the customers know where, whenhow and at what prices. The products would be available.

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Acc. to A.H.R. Delons :-

"Sales promotion means any step that are taken for the purpose of obtaining orincreasing sales".

Acc. to W.Q. Kelly Opines :-

"Muddled misused misunderstood that is sales promotion Acc. to him the field of

sales promotion as a marketing activity is still vaguely defined and organized.

Sales Promotion and Advertising

There is no universally accepted distribution between these two terms. To sameadvertising includes all forms of mass media communication directed towardsinfluencing the end consumer. Sales promotion on the other hand, includes theform of mass communication directed towards information and influencing thechannel of distribution (e.g. distributors, retailers etc.). Hence a price of productliterature distributed by retailers in sales promotion. These sales promotion merges

on one side in to advertising and on the other in to personal salesman ship. It isconcerned with the dissemination of information to whole sellers, retailers,customers (both actual and potential, and to the salesman).

Sales promotion is concerned with the creation. Application and dissemination ofmaterial and techniques that supplement advertising and personal selling. Sales

promotion makes use of direct mail, catalogues, trade shows, sales contests,premiums, samples, windows displays and other aids. Its purpose is to increase the

desire of salesman, distributors and dealers to sell a certain brand to makeconsumers more eager to buy that brand. Personal selling and advertising doinclude prospects to make these decisions. Sale promotion provides an extrastimulus.

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Objective of Sales Promotion

1. To increase sales directly by publicity through media which are complementaryto press and poster advertising.

2. To disseminate information through sales man dealers etc. So as to insure theproduct getting in to satisfactory use by the ultimate consumer.

3. To attract new consumer.

4. To face the competition effectively.

5. To help salesman in selling more to the retailers and consumers.

6. To check seasonal decline in sales. Generally speaking sales promotion involvesrendering the following services:-

(a) Services to dealers.

(b) Services to own salesman.

(c) Special publicity.

Sales Promotional at different levels

1. Sales promotion at Dealers Level:-

It may include various schemes some of which are discussed here.

(i) Advertising Materials:-

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The advertising material prepared by the company such as store signs, banners,shelf signs, board etc. are distributed to sub dealer for display purposes this is infact a method of advertising.

(ii) Store Demonstration:-

In the promises of the whole seller or the retailer the products sales personnel willconduct special demonstration for the companies product. A personaldemonstration is good to introduce a new product at its peculiar advantage can behigh lightened and the consumers doubt clear. It can be used to restimulate an old

product. A good demonstration with a great dealer of action will draw heavycrowds in to the store and will attract attention to the product.

(iii) Special Display and Shows :-

These are in seasonal in character but could be arranged in an elaborate mannerand for all the products of an company. Usually these are arranged along with tradefair and exhibition. Besides effecting sales these shows impress the companysname generally on the public.

Sales promotion at consumers level

The various schemes of sale promotion at Consumers Level may include.

1. Coupons (A Chit of Stated Value):-

These are given directly to the consumer these coupons are in most cases kept

inside the package. The consumers many receive a price reduction of the stated

values of the coupon at the time of purchase. The retailer receives reimbursement

for the value of the coupon form the manufacturer. Coupons act as a short run

stimulus to the sale of the product, since they are directly tied with the purchase of

the item. They encourage the retailer to stock the product.

What is important is that a coupon offer does not spoil the named price of thebrand nor does it un pair the margin of the dealers. But it is not easy to measure the

effectiveness of a coupon offer. One over knows how many customer would have

bought the product without the incentive. It is also difficult to find out how many

customers were held after the coupon offer expired.

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2. Price-off-offer (Also known as bargain offer price packs):-

This offer is intended to stimulate the sales during a slump season. In this methodthe customer is offered a reduction from the printed price list. It is also used when

a substitute for competing product enters the market.

Many experts on sales promotion fed that Off Schemes are among the weaker

and less desirable methods of promotion. These can be trade resentment

particularly when the retailer raises the price to retain his margin. Secondly that is

not conductive to building up brand loyalty. Consumers may simply shift to the

products that offer this scheme.

3. Samples:-

In the hope of converting a prospect into a customer a sample (Some quantity of

the product) may be given. This helps the consumer to verify the real quality of the

product. Various pair manufacturing companies offer this method. For developing

brand loyalty this method is quite useful. Sampling is a fast method of demand

creation because one knows the result as soon as the consumer has had time to use

the sample and buy the brand.

Disadvantage of Sampler:-

Offering sample in quit expensive. There is the cost of producing samples. The

distribution costs are also high. Sample has to be mailed to potential customers or

to be distributed through retail shops. There are also problems when the real

product does not resemble the sample supplied.

4. Money Refund Offer:-

An offer usually stated on the package is that manufacturers will return with in a

stated period part or all of the purchasers money if he is not completely satisfied

with the product.

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5. Trading Stamps:-

A premium in the form of stamps is given by the sellers to consumers while sellinggoods. The number and value of stamp that the buyer receives depends on the

values of the purchase. These stamps are redeemable through premium catalogues

at the stamp redemption centers.

6. Buy-Back Allowance:

This an allowance following a previous trade deal not offer a certain amount of

money for new purchases based on the quantity of purchases on the first trade deal.

It extends the life of a trade deal and helps to prevent part deal sales decline. Itgreatly strengthens the buyers motivation to co-operate on the first deal.

7. Premium :-

There are various forms of premiums provided by the manufacturer as sales

promotional devices:-

(a) Coupons are supplied for effecting price reductions.

(b) Factory in pack premium these are popular in the case of Body food and Tin

food items, Spoons, Cups, Measuring, Glass etc. and such other items are packed

with the product in the box itself. Factory in pack premium are particularly goods

for product meant for children. The Binaca Toothpaste packs contain animal shape

toys. These are very attractive and qutie popular among the children.

(c) Self Liquidating Premiums :-

The cost of the premium is collected from the buyer himself. But when the buyers

pays for it he has to pay only a considerably low price for the premium. This is

possible for the manufacturer purchases the items in bulk at a premium and his cost

per unit as is substantially low.

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Other Steps by Manufacturer for Promoting Sales

Dealers can be helps in different ways :-

1. Communicating Market News :-

Often this service is reciprocal the manufacturer may acquaint his dealer with the

fact relating to his production and prices while the dealer may familiarize him in

return with the information bearing on charges in the consumer's demand, their likeand dislike complaints and criticism, substitutes etc.

2. Inviting to Sales Conference and Convention :-

The gestures of regard and respect pave the way for better relation and co-

operation.

3. Offering Reasonable Terms of Sale :-

Of all the forms of encouragement, the monetary incentive evokes immediate

response. Hence every producer must offer the most responsible terms of sale such

as longer periods of credit and higher rates of descants.

4. Supplying suitable packages and useful things.

5. By taking the return back.

6. By furnishing them with sales literature and display materials.

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Types of promotional activity regarding the product

a) Product Advertising:

The main purpose of such advertising is to inform and stimulate the marketabout the advertisers products of services and to sell these. Thus type ofadvertising usually promotes specific, trended products in such a manner as tomake the brands seam more desirable. It is used by business governmentorganization and private non-business organizations to promote the uses features,images and benefits of their services and products. Product advertising is sub-

divided into direct action and indirect action advertising, Direct action productadvertising wages the buyer to take action at once, ice he seeks a quick response tothe advertisement which may be to order the product by mail, or mailing a coupon,or he may promptly purchase in a retail store in response to prince reduction duringclearance sale.

Product advertising is sub-divided into direct & indirect action advertising &product advertising aims at informing persons about what a products is what itdoes, how it is used and where it can be purchased. On the other hand selectiveadvertising is made to meet the selective demand for a particular brand or type is

product.

b) Institutional Advertising:

It is designed to create a proper attitude towards the sellers to build companyimage or goodwill rather than to sell specific product or service. Its purpose is tocreate a frame of mind and to implant feeling favorable to the advertisers company.Its assignment is to make friends for the institution or organization.

It is sub-divided into three categories: patronage, public, relations and public

service institutional advertising.

i) In patronage institutional advertising the manufacturer tells his prospects andcustomer about himself his policies and lives personnel. The appeals to the

patronage motivation of buyers. If successful, he convince buyers that hisoperation entitles him to the money spent by them.

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ii) Public relations institutional advertising is used to create a favourable imageof the firm among employees, stock-holders or the general public.

iii) Public service institutional advertising wages public support.

c) Other Types:

The other types are as follows:

i) Consumer advertising

ii) Comparative advertising

iii) Reminder advertising

WHY & WHEN WE DO PROMOTION

Advertising as a tool to marketing not only reaches those who buy , but alsothose whose opinions or authority is counted for example a manufacturer of marble

tiles and building boards advertises not only to people who intend to build housesbut also to architect and engineers. While the manufacturers of pharmaceuticalsproducts advertise to doctors as well as to the general public. At time it isnecessary for a manufacturer or a concern to advertise things which it does not sell

but which when sold stimulates the sales of its own product. There are concernslike electric heaters, iron etc. because the use of these increases the demand fortheir products.

Advertising should be used only when it promises to bring good result more

economically and efficiently as compared to other means of selling. There aregoods for which much time and efforts are required in creating a demand bysending salesman to prospective buyers than by simply advertising them. In theearly days of the cash register in America it was sold by specially trained salesmanwho called on the prospective users and had the difficult task of convincing themthat they could no longer carry on with the old methods, and that they urgentlyneeded a cash register. In our country certain publishers have found it less costly to

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sell their books by sending salesman from house to house among prospectivebuyers than to advertise them. In these two examples the cost of creating demandwould be too high if attempted by advertising alone under such circumstancesadvertising is used to make the salesman acceptable to the people they call upon toincrease the confidence of the public in the house. Naturals when there are good

profits competitors will be attracted and they should be kicked out as and whensufficient capital is available by advertising on a large scale. Immediate result maynot justify the increased expenditure but it will no doubt secure future sales.

DESIGNING PROMOTIONAL CAMPAIGN

Advertising is an organized series of advertising messages. It has been defined as"a planned, co-ordinate series of promotional efforts built around a central themeand designed to reach specified goals." In other words, it is an orderly plannedeffort consisting of related but self contained and independent advertisements.The campaign may appear in one more media. it has single theme or keynote idea

and a single objective or goal. Thus, "a unified theme of content providespsychological continuity throughout the campaign while visual and oral similarityprovide physical continuity. In short run, all campaign want pre-determinedpsychological reaction in the long run, practically all campaigns have sales goal.

The series of advertisements used in the campaign must be integrated with thesales promotional efforts and with the activities of the sales force.

Campaign varies in length some may run only for a few days, other for weeks, yetother for a season or the entire year. Usually a range of 3 to 6 months includesmany campaigns. Many factors influences campaign length such as competitorsadvertising media, policies, seasonal falls curves of the product involved, the size

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of the advertising funds, campaign objectives and the nature of the advertisersmarketing program.

OBJECTIVES OF CAMPAIGN

The advertising campaign, especially those connected with the consumers aims at

achieving these objectives :

i) To announce a new product or improve product.

ii) To hold consumers patronage against intensified campaign use.

iii) To inform consumers about a new product use.

iv) To teach consumers how to use product.

v) To promote a contest or a premium offer.

vi) To establish a new trade regional, and

vii) To help solve a coca regional problem.

The institutional advertising campaign on the other hand, have these objectives.

i) To create a corporate personality or image.

ii) To build a company prestige.

iii) To keep the company name before the public.

iv) To emphasize company services and facilities.

STAGE IN ADVERTISING CAMPAIGN

Several steps are required to developed an advertising campaign the number ofstages and exact order in which they are carried out may vary according to anorganisations resources, the nature of its product and the types of audiences to bereached. The major stages/step are :

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1. Identifying and analyzing the advertising.

2. Defining advertising objects.

3. Creating the advertising platform.

4. Determining the advertising appropriation.

5. Selection media plan.

6. Creating the advertising message.

7. Evaluating the effectiveness of advertising.

8. Organizing of advertising campaign.

1. Identifying & Analyzing the Advertising target :

Under this step it is to decided as to whom is the firm trying to reach with

the message. The advertising target is the group of people towards whichadvertisements are aimed at four this purpose complete information about themarket target i.e. the location and geographical location of the people, thedistribution of age, income, sex, educational level, and consumers attitudesregarding purchase and use both of the advertising product and competing productsis needed with better knowledge of market target, effective advertising campaigncan be developed on the other hand, if the advertising target is not properlyidentified and analyzed the campaign is does likely to be effective.

2. Determining the advertising objectives :

The objectives of advertisement must be specifically and clearly defined inmeasurable terms such as "to communicate specific qualities about a particulars

product to gain a certain degree of penetration in a definite audience of a given size

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during a given period of time", increase sales by a certain percentage or increasethe firms market shares."

The goals of advertising may be to :

i) Create a favourable company image by acquainting the public withthe services offered available to the employees and its achievements.

ii) Create consumers or distributor awareness by encouraging requestsproviding information about the types of products sold; providinginformation about the benefits to be gained from use of the company's

products or services; and indicating how product (or services) can beused;

iii) Encourage immediate sales by encouraging potential purchasersthrough special sales contests, getting recommendation of professional

people about company's products etc.

iv) It secures action by the reader through associating ideas, repetition ofthe same name in different contexts, immediate action appeal.

3. Creating the Advertising platform :

An advertising platform consists of the basic issues or selling points that anadvertiser wishes to include in the advertising campaign. A single advertisement inan advertising campaign may contain one or more issues in the platform. Amotorcycle producers advertising platform should contain issues which are ofimportance to consumers filling and such issues also be those which thecompetitive product do not posses.

4. Determining the Advertising Appropriation:

The advertising appropriation is the total amount of money which marketerallocates. For advertising for a specific time period. Determining the campaign

budget involves estimating now much it will cost to achieve the campaignsobjectives. If the campaign objectives are profit relating and stated quantitatively,then the amount of the campaign budget is determined by estimating the proposed

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campaigns effectiveness in attaining them. If campaigns object is to build aparticular type of company image, then there is little basis for predicting either thecampaigns effectiveness or determining the budget required.

5. Selecting the Media :

Media selection is an important since it costs time space and money variousfactors influence this selection, the most fundamental being the nature of the targetmarket segment, the type of the product and the cost involved. The distinctivecharacteristics of various media are also important. Therefore management shouldfocus its attention on media compatibility with advertising objectives.

Media Form

1. Press Advertising or Print

i) Newspapers City, Small town, Sundays,Daily, weekly, Fortnightly,quarterlies, financial andannuals, English, vernacular or

regional languages.ii) Magazines General or special, illustrated or

otherwise, English, Hindi,Regional language.

iii) Trade & Technical Journals, Industrialyear books, commercial, directories,telephone, Directories, references

books & annuals.

Circulated all over the countryand among the industrialist and

business magnates.

2. Direct Mail Circulars, catalogues, leaflets,

brochures, booklets, folders,colanders, blotters, diaries &other printed material.

3. Outdoor or Traffic Poster and bills on walls,railways stations platformsoutside public buildings trains,

buses.

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4. Broadcast or radio and T.V. Spot, Sectional or national tradecost

5. Publicity Movie Slides and films nontheatrical and documentary

films metal plates and signsattaches to trees.

6. House to house Sampling , couponing, freegifts, novelties, demonst-rations.

7. Dealer aids Counter and widows displaydemonstration given by retaileror the advertises goods.

8. Internet Today, Internet is a big spot for advertising.

So these are the media of the advertising campaign of the selecting of the media.

6.Creating the Advertising Messages :

This is an important stage of advertising campaign. The contents of themessage has to be very carefully drafted in the advertisement. Characteristics of

person in the advertising target influence the message content and form. Anadvertisers must use words, symbols and illustration that are meaningful, familiarand attractive to those persons. The type of media also influence the content andform of the message.

7. Evaluating the Effectiveness of Advertising :

The effectiveness of advertising is measured for a variety of reasons :

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a) To determine whether a campaign accomplished its advertisingobjects.

b) To evaluate the relative effectiveness of several advertisements toascertain which copy, illustrations or layout is best.

c) To determine the strengths and weaknesses of various media andmedia plans.

In other words, measuring advertising effectiveness is needed to determinewhether proposed advertisement should be used and if they will be now they might

be improved; and whether going campaign should be stopped, continued orchanged. In accomplishing these purposes, pretests and post test are conducted.The former tests before exposing target consumers to advertisements and the letter

after consumers have been exposed to advertisements and the letter afterconsumers have been exposed to advertisements.

Executive Summary

The Indian retail industry is now beginning to evolve in the line with thetransformation that has swept other large economies. It witnesses tremendous growthwith the changing demographics and an improvement in the quality of life of urban

people. The growing affluence of Indias consuming class, the emergence of the newbreed of entrepreneurs and a flood of imported products in the food and groceryspace, has driven the current retail boom in the domestic market.

The concept retail which includes the shopkeeper to customer interaction hastaken many forms and dimensions, from the treditional retail outlet and local

market shops to upscale multi brand outlet s, espically stores of departmentalstores. Though at this moment, it is still premature to say that the Indian retailmarket will replicate the success story of name s such as Wal- Mart stores.

Hecce, focusing on two aspects of retail marketing i.e. Store retailingand non storeretailing ,store retailng as the departmental store, which is a store or multi brandoutlet,offering an array of products in various categories under one roof, trying to

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cater to not one or two but many segments of society and non store retailing asdirect selling, direct marketing, automatic vending

Therefore the concept of retail marketing through departmental stores, which iscoming up in a big way in india as decided to be studied in detail, through anexploratory and conclusive research .

The objective being to assess the various parameters that influences a buyer to visitor shop at departmental stores there by contributing to its turnover (in terms ofsales and profits)hence leading to its overall success.

The extensive research brought me to conclude that departmental stores are soonemerging on the top priority lists, amongst the shoping spree in Delhi as they seemto drive immence pleasure of convenience and exposure to variety under one roof

in their extremely busy lives, when they dont have time for things.

Through some of the customers perceive departmental stores to be expensive andonly high income category cup of tea, the stores make constant effortto includethem to at least visit the store at once during the sales period on discount offer.

Most of these stores believe in creating not just a marketing activity with itscustomers,but rather favor relationship building with him so as to convert firsttime customers into client.

Hence this document entails me though these aspects in great detail helping me tounderstand the concept of retail marketing through departmental stores

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RETAILING- THE SUNRISE INDUSTRY

The word retail means to sell or be sold directly to individuals. Retail in Indiaslargest industry, and arguably the one with most impact on the population .It is thecountrys largest source of employment after agriculture has the deepest

penetration of rural India , and generates more than 10% of Indias GDP . Howeverretailing in India has so far , been mostly in the hand of small disorganized

entrepreneur . It is also Indias least involved industries . In fact , it is not evenconsidered a real industry.The industry suffers from lack of management talent , poor assess to capital,unfavorable regulation and Daniel of access to best practices . The Indian retailindustry is only now beginning to envolve in line with the transformation that hasswept other large economies .Fifty years of restricting the customer goods industrya national midset which favored denial over indulgence and a fractured supplychain for agricultural product have all contributed to prevent the development ofmodern tenants based on scale advancements and customer preferences.

India has some 12 million retail outlets but many of these act merely as subsistenceproviders for their owners and survive on a cost structure where labour and land isassumed to be free and tax nil . Compare this with the global retail industry , whichone of the worlds largest organized employers, is at the cutting edge of technologyand which leverages and scope to offer value-added services to its customers.

However, only recently has there been an awaking in this sector , with moreorganized retailers starting to make an impact.The liberalization of the customergoods industry, initiated in the mid 80s and accelerated through the 90s has

begun to impact the structure and the conduct of the retail industry . Backed bychanging consumer trends and metrics, liberalization in mindsets driven by media,new opportunities and increasing wealth, retailing in India, present vastopportunities for a variety of a business- real estate store design and operations,visual merchandising logistics and communications B2C service providers andFMCG companies who can add to their offer by partnering this revolution.

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The Indian retailing industry stands poised to take off into the 21st century . it isone of the fastest growing sectors in the nation that catters to the worlds secondlargest consumers market retail boom is unabating . India has five million retailerswith a business volume of $180 million growing at 5 to 7 % a year. The middleclass drives retailing anywhere in the world and this segment should havereasonable income. The next driver is availability of variety of goods, products and

brands. The third one is sense of awereness.

In other developing economies, the transformation has already begun . in many ofthese countries, organized retail already has 40% share of the market compared tothe Indias current level of 2% . As India goes through this transformation, new

business with sales of 1 billion -2billion US$ in apparel. Smaller but stillinteresting opportunities will be created in other sectors like books, electronics andmusic. This transformation will also impact the supply chain in agriculture, the tax

collections from trade and the way people shop.

In the last 10 years, the Southeast Asian countries like Indonesia, Malaysia,Taiwan and Korea have gone through similar phases . China with a per capitaincome of $650-700per annum, is going through the same phases what India is alsofacing now. Europe went through this phase of retail revolution about 40-50 yearsago. It is believed that when a countrys per capita income reaches the level of$1,200per annum organized retailing begins to takeover . Through India has a percapital income of $400, on the basis of purchasing power parity it has already hitthe $1200 level . This does strengthen the belief that probably, the right fororganized retailing to click in India has come.

This project aims at providing an insight in to the emerging trends in the industryand the barriers to change and a perspective on what this industry could becomeusing the global industry as the backdrop.

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Overview of the global retail industry

Retail, with total sales of $6.6trillion, is the worlds largest private industry aheadof financial industry $5.1trillion . It is also home to a number of the worlds largest

enterprises. Over 50 of the fortune 500 companies and around 25 of the Asian top500 companies are retailers. The industry accounts for over 8% of the GDP inwestern economies.

A study by Mc Kinsey states that organized retail accounts for just around 2% (outos which modern retail formats account for 7% trade) presently is set to grow atexponential exceeding 35% . Fitch estimates the current share of organized retail togrow from 2% presently to around 15 to20 % .

Retail Consumptionareas

US $ billion Existing Companies in theorganized sector

Food Retailing 130 Food Bazaar (Pantaloon) FoodWorld Subhishka.

Clothing & Apparel 12 Pantaloon Westside, Shoppers Stop

Jewelry, Watches 7 Tanishq, Titan, Gold Bazaar(Pantaloon)

Home Furnishing 5 Home Store, Arcus (Pantaloon)Foot wear 1.7 Bata, Woodland

Beauty Care 3.6 VLCC, Health & Glow

THE RETAIL MARKETING REVOLUTION

By 2012 the list of Indias top 10 retailers will have at least 5 Indian corporate.Retail marketing will go through a tremendous change in India has millennium. Itwill change India cities its people and its households . the Indian consumer isreportedly the largest spender in Singapore and London. It is therefore strange thatthere have so far been few efforts to present the product in the right kind ofenvironment in India. Indeed the right shopping experience does the induce the

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Indian consumers to spend more .This is evident from the experiences of retail-outlet like Shoppers Stop , music World , Food World. The Home store Ebony,Bigios Saboos standard Vijay store and janaki das & sons Westside etc.

However the development of organized retail is dependent on the efforts of severalagencies and institutions . The first among these is the government . In a country as

big as India and with as many states as ours , it is imperative that the centalgovernment and all state governments bring in value added texation or a unifiedtaxation system to ensure that the tax regimes are the same across the country

The laws governing retail real estate should also be looked into , so that it ispossible to develop real-estate beyond the city limits.

Apart from providing entertainment and retail opportunities, this will also decongestthe city center and facilitate the development of suburbs. The relevant rules shouldalso be amended to allow retail-stores to operate 7 days a week, 12 hours a day. Giventhe hours most urban consumers keep at work, and keeping in mind the increase in thenumber of nuclear families, this may, indeed, make sense. This will also help peopleenjoy their evenings, out at malls.

The second group, whose participation is essential in making retail a boom-sector inthis millennium, comprises developers. Most properties are developed withoutconsidering the end user; thus, we sometimes find high-ceilinged offices and low-

ceilinged retail stores. Often, the shopper's convenience is not taken into considerationwhile the property is constructed.

Another area of concern is the way in which developers sell their space. The onlyconsideration is the price, not the usage pattern or the nature of the product that is to

be sold. In contrast, internationally, mall-management is treated as a specializeddiscipline of retail management. This is what we have to focus on in this millennium.

The third constituency that has a role to play in the fortunes of organized retail thiscentury is the education-sector. Retail is a people-intensive business, and there is a

huge opportunity for retail institutes in India.

For manufacturers, retailing will present an attractive opportunity. Organized retailallows them to expose their products to a large volume of customers in anenvironment conducive to buying. Already, several transnational retail giants haveestablished their presence in India; others, notably Chinese retailers, have visited India

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and studied the Indian market. There's a lot at stake here: even so early in the 21stCentury, India is too large a market to be ignored by transnational retail giants.

From the manufacturing company's perspective, the focus should be on producinggood products, and forging relationships with organized retail. Manufacturers need to

draw a plan of producing quality products and tie in with retailers. Indeed, the birth oforganized retail will also engender the creation of private labels and store-brands.Thus, if a manufacturing company lacks the resources to build a brand, it can supplyto a retail-chain that has the resources to create a brand of its own.

A glimpse of the last 2 decades of the previous century proves illuminating. Large-format retailing started with outlets like Vivek's and Nalli's in Chennaiand Kidskemp in Bangalore, and, at another level, with manufacturer-retail brandslike Bata, Bombay Dyeing, and Titan. The last decade of the millennium witnessedthe emergence of lifestyle brands and the plastic culture. Liberalization and increasing

awareness of the world around us created the Indian yuppie, who aspired to owneverything we saw on TV, or in shops during jaunts abroad. New lifestyle brandsoffered traditional retail-outlets an opportunity to convert themselves into exclusivestores, franchised or otherwise. And even as these developments were taking place,the Indian consumer became more mature. Customer-expectations zoomed

Thus, at the beginning of the New Millennium, retailers have to deal with a customerwho is extremely demanding. Not just in terms of the product-quality, but also interms of service, and the entire shopping experience. Today, the typical customer whoshops in a retail outlet compares the time spent at the check-out counter with that at anefficient petrol station, and the smile of the counter-person to that decorating the faceof a Jet Airways' crew member. To cope with the new customer, manufacturers haveto focus on product quality and brand building. And retailers, in turn, have to focus onthe quality of the shopping experience.

Internationally, retailing is a large business; you find at least one retailer amongst thetop 10 companies in every country. In the US, it is Wal-Mart with a turnover in excessof $ 120 billion. In the UK, it is Marks and Spencer's with close to 10 billion; and,in Germany, it is Karstadt with a turnover in excess of dm 10 billion.

Top 10 Retailers Worldwide

Rank Retailer No of stores Sales in US$

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owned Millions

1 Wall-Mart Stores Inc. (USA) 4178 $180,787

2 Carrefour Group (France) 8130 $61,047

3 The Kroger Co. (USA) 3445 $49,000

4 The Home Depot, Inc. (USA) 1134 $45,7385 Royal Ahold (Netherlands) 7150 $45,729

6 Metro AG (Germany) 2169 $44,189

7 Kmart Corporation (USA) 2105 $37,028

8 Sears, Roebuck and Co. (USA) 2231 $36,823

9 Albertson's, Inc. (USA) 2512 $36,726

10 Target Corporation (USA) 1307 $36,362

Studies by consulting firms like A.T. Kearney, KSA Technopak, and McKinsey &Co. in India have indicated a huge potential for retailing in the country. Drawn by themagic number of Rs 1, 60, 000 crore that is expected to be the size of the retailindustry by the end of the first decade of this millennium, several companies from theorganized sector have also jumped into the fray.

In this millennium, like in the last, customers will want to spend time with theirfamily and friends. They may like to visit malls on weekends where everything will

be available under one roof. India will benefit from these developments because ofincreased consumption through retailing and the corresponding increase in

employment created by retailing.

Retail Marketing

Retail Marketing includes all the activities involved in selling goods or servicesdirectly to final consumes for personal, non-business use. Any organization selling tofinal consumers -- whether a manufacturer, wholesaler, or retailer is doing retailing.

It does not matter how the goods or services are sold (by Person, Mail, Telephone,Vending Machine, or Internet) or where they are sold (in a store, on the street, or inthe consumers home).

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There are many approaches to understanding and defining retail marketing; mostemphasize retail marketing as the business activity of selling goods or services to thefinal consumer, but what we emphasized upon is defined as follows:

Any business that directs its marketing efforts towards satisfying the final consumer

based upon the organization of selling goods and services as a means of distribution

The concept assumed within this definition is quite important. The final consumerwithin the distribution chain is a key concept here as retailers are at the end of thechain and are involved in a direct interface with the consumer.

A retailer or retail store is any business enterprise, whose sales volume comesprimarily from retailing. Retail organizations exhibit great variety and new forms keepemerging. There are store retailers, non-store retailers, and retail organizations.Consumers today can shop for goods and services in a wide variety of stores. The

best-known type of retailer is the department store. Japanese department stores suchas Takashimaya and Mitsukoshi attract millions of shoppers each year. These storesfeature art galleries, cooking classes, and childrens playgrounds.

A retailer is at the end of the distributive channel. He provides goods and service tothe ultimate consumers. This he does through his small organization, with the help ofa few personnel. In an individual retail store there is not much scope for organizationexcept in the sense that the shopkeeper has to organize and apportion his time andresources. The need for organization becomes essential as soon as he hires people andenters into partnership or takes the help of members of his family in running his store.

A retailer deals in an assortment of goods to cater to the needs of consumers. Hisobjective is to make maximum profit out of his enterprise. With that end in view hehas to pursue a policy to achieve his objective. This policy is called retailing mix. Aretailing mix is the package of goods and services that store offers to the customersfor sale. It is the combination of all efforts planned by the retailer and embodies theadjustment of the retail store to the market environment. Retailing mix, acommunication mix and a distribution mix. The maximum satisfaction to thecustomers is achieved by a proper blend of all three.

The success of the retail stores, therefore, depends on customers reaction to theretailing mix which influences the profits of the store, its volume of turnover, its shareof the market, its image and status and finally its survival.

There are three main phases in the life of a retailing institution. These are: -

Innovation (Entry)

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Trading Up Vulnerability.

In the entry stage, a new retailer enters with new price appeal, limiting productofferings, Sparton Stores & Limited services. Its monopoly power over the others is

its price advantage, which means that it offers products at low prices so as to get acompetitive edge over its competitors.

In the trading up stage, the retailer starts expanding. It expands in terms of productoffering, better services, and improved interiors. With all these, it starts charging a bithigher prices.

In the vulnerability stage, there is a gap in the market leaving some space for the newplayers to come in. this is due to increase in the prices by the retailer.

I have already explained the three stages in life of a retail institution. Normally thesestages are there in the life of a retail institution. But all these may not be necessarilythere in every retail institution. For instance, any retail institution targeting the upperclass may start itself with a large variety & high price.

This brings to broadly identify and categorize the types of retail marketing, which aredefined as follows:

1. Store Retailing

2. Non store Retailing

Types OF Retail Marketing

Store Retailing

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Store retailing provides consumers to shop for goods and services in a wide variety ofstores and it also help the Consumers to get all the needed goods and services fromone shop only. The different types of store retailing are given below:

Specialty Stores

These stores focus on leisure tastes of different individuals. They have a narrowproduct line with deep assortment such as apparel stores, sporting goods stores,furniture stores, florists and bookstores. These stores are usually expensive and satisfythe needs of selected consumers who have liking or preference for exclusive things.

Departmental Store

These stores are usually built in large area and keep variety of goods under one shed.It is usually divided into different sections like clothing, kids section, homefurnishings, electronic appliances and other household goods. In a departmental storea consumer can buy variety of goods under one shed.

Supermarket

These stores are relatively large, low cost, low margin, high volume, self service

operations designed to serve total needs for food, laundry and household maintenanceproducts. Supermarkets earn an operating profit of only 1 percent on sales and10percent on net worth.

Convenience Stores

These are relatively small stores located near residential area, open for long hoursseven days a week, and carrying a limited line of high turnover convenience products

at slightly higher prices than departmental stores. Many such stores also have addedtakeout sandwiches, coffee and pastries.

Off - Price Retailer

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These stores sell goods at low price with lower margins & higher volumes. Thesestores sell goods with deteriorated quality. The defects are normally minor. This targetat the persons belonging to the lower income group, though some have a collection ofimported goods aimed to target the younger generation. The company ownedshowroom selling the seconds products is a typical example of off - price retailer.

Discount Store

These stores sell standard merchandise at lower prices by accepting lower marginsand selling higher volumes. The use of occasional discounts or specials does not makea discount store. A true discount store regularly sells its merchandise at lower prices,offering mostly national brands, not inferior goods.

In recent years, many discount retailers have traded up. They have improved decor,added new lines and services, and opened suburban branchesall of which has led tohigher costs and prices and as some department stores have cut their prices to competewith discounters.

Not only that, discount stores have moved beyond general merchandise into specialtymerchandise stores, such as discount sporting goods stores, electronics stores, and

bookstores.

Catalog Showroom

Catalog showrooms generally sell a broad selection of high-markup, fast-moving,brand-name goods at discount prices. These include jewelry, power tools, cameras,luggage small appliances, toys, and sporting goods. Catalog showrooms make theirmoney by cutting costs and margins to provide low prices that will attract a highervolume of sales. Catalog showrooms have been struggling in recent years to hold theirshare of the retail market.

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RETAIL SCENE IN INDIA

India has some sometimes been called a nation of shopkeepers. This epithet has itsroots in the huge number of retail enterprises in the country totaling 12 million, about78 percent of these are small family owned businesses utilizing only householdlabour. even among retail enterprises that hire workers the bulk of them hire less than3 workers .Indias retail sector appears backwards not only by standards ofindustrialized countries but also in comparison to several other emerging markets inAsia and elsewhere. There are only 14 companies that run departmental stores andmere two with hypermarket operations. While the number of businesses operatingsupermarkets is higher ( 425 in 2004 ) most of these had only 1 outlet, the number of

companies with supermarket chains was less than 10.

Major Formats of Retailing

Major formats of In-Store Retailing have been listed in Table given below:

Format Description The Value PropositionBranded Stores Exclusive showrooms either

owned or franchised out by amanufacturer.

Complete rangeavailable for a given

brand, Certified productquality.

Specialty Stores Focus on a specific consumer Greater choice to the

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need; carry most of thebrands available.

consumer, comparisonbetween brands possible

DepartmentStores

Large stores having a widevariety of products,

organized into differentdepartments, such asclothing, house wares,furniture, appliances, toys,etc.

One stop shop cateringto varied consumer

needs.

Supermarkets Extremely large self-servicesretail outlets.

One stop shop cateringto varied consumerneeds.

Discount Stores Stores offering discounts onthe retail price throughselling high volumes andreaping the economies ofscale.

Low prices.

Hyper-mart

Larger than a Supermarket,sometimes with a warehouseappearance, generally locatedin quieter parts of the city

Low prices, vast choiceavailable includingservices as cafeterias.

ConvenienceStores

Small self-service formatslocated in crowded urban

areas.

Convenient location andextended operating

hours.Shopping Malls An enclosure having different

formats of in-store retailers,all under one roof.

Variety of shopsavailable close to eachother.

Non-store Retailing

It is another type of retail marketing. Different types of non-store retailing are given

below:

Direct Selling

Direct selling which started centuries ago with itinerant peddlers has burgeoned into a$9 billion industry, with over 600 companies selling door to door, office to office, orat home sales parties. A variant of direct selling is called multilevel marketing,

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whereby companies such as Amway recruit independent businesspeople who act asdistributors for their products, who in turn recruit and sell to sub distributors, whoeventually recruit others to sell their products, usually in customer homes.

Direct Marketing

Direct marketing has its roots in mail-order marketing but today includes reachingpeople in other ways than visiting their homes or offices, including telemarketing,television direct response marketing, and electronic shopping.

Automatic Vending

Automatic vending has been applied to a considerable variety of merchandise,including impulse goods with high convenience value (cigarettes, soft drinks, candy,newspaper, hot beverages) and other products (hosiery, cosmetics, food snacks, hot

soups and food, paperbacks, record albums, film, T-shirts, insurance policies, andeven fishing worms).

Organized Retail Formats in India

Each of the retail stars has identified and settled into a feasible and sustainablebusiness model of its own.

Shoppers' Stop - Department store format Westside - Emulated the Marks & Spencer model of 100 per cent private label,

very good value for money merchandise for the entire family Giant and Big Bazaar - Hypermarket/cash & carry store

Food World and Nilgiris Supermarket format Pantaloons and The Home Store - Specialty retailing Tanishq has very successfully pioneered a very high quality organized retail

business in fine jewellery.

Structure of the retailing industry according to ownership patterns:

An unaffiliated or independent retailer A chain retailer or corporate retail chain A franchise system

A Leased Department (LD) Vertical Marketing System (VMS) Consumer Co-operatives

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A new entrant in the retail environment is the 'discounter' format. It is also is knownas cash and-carry or hypermarket. These formats usually work on bulk buying and

bulk selling. Shopping experience in terms of ambience or the service is not themainstay here. RPG group has set up the first 'discounter' in Hyderabad called theGiant. Now Pantaloon is following suit.

Two categories of customers visit these retail outlets.

1. The small retailer. For example, a customer of Giant could be a dhabawala whoneeds to buy edible oil in bulk.

2. The regular consumer who spends on big volumes (large pack sizes) because of aprice advantage per unit.

Retailing in India is still evolving and the sector is witnessing a series of experimentsacross the country with new formats being tested out; the old ones tweaked around or

just discarded. Some of these are listed in Table below.

Retailer Current Format New Formats

Shoppers' Stop Department Store Quasi-mall

Ebony Department Store Quasi-mall, smaller outlets, adding food retail

Crossword Large bookstore Corner shopsPyramid Department Store Quasi-mall, food retail

Pantaloon Own brand store Hypermarket

Subhishka Supermarket Considering moving to self service

Vitan Supermarket Suburban discount store

Foodworld Food supermarket Hypermarket, Foodworld express

Glob us Department Store Small fashion stores

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Bombay Bazaar Super market Aggregation of Kiranas

Efoodmart Food super market Aggregation of Kiranas

Metro Departmental store Cash and carry

S Kumar's Departmental store Discount store

Retailers are also trying out smaller versions of their stores in an attempt to reach amaximum number of consumers. Crossword bookstores are experimenting withCrossword Corner, to increase reach and business from their stores. FoodWorld isexperimenting with a format of one-fourth the normal size called FoodWorld Express.

Trends in Retail Marketing

At this point, I can summarize the main development retailers and manufacturers needto take into account as they plan their competitive strategies.

In India the trends are mainly in three sectors. These sectors are:

Trends in retail marketing

1. New retail forms and combinations continually emerge. Bank branches and ATMcounters have opened in supermarkets. Gas stations include food stores that makemore profit than the gas operation. Bookstores feature coffee shops.

Even old retail forms are reappearing: In 1992 Shawna and Randy Heniger introducedpeddlers carts in the Mall of America. Today three-fourths of the nations majormalls have carts selling everything from casual wear to condoms. Successful cartsaverage $ 30,000 to $ 40,000 a month in sales and can easily top $ 70,000 inDecember. With an average start-up cost of only $3,000, push carts help buddingentrepreneurs test their retailing dreams without a major cash investment. They

provide a way for malls to bring in more mom-and-pop retailers, showcase seasonalmerchandise, and prospect for permanent tenants.

2. New retail forms are facing a shorter life span. They are rapidly copied and quicklylose their novelty.

3. The electronic age has significantly increased the growth of non store retailing,consumers receive sales offers in the mail and over television, computers, andtelephones, to which they can immediately respond by calling a toll-free number orvia computer.

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4. Competition today is increasingly intertype, or between different types of storeoutlets. Discount stores, catalog showrooms, and department stores all compete for thesame consumers. The competition between chain superstores and smallerindependently owned stores has become particularly heated. Because of their bulk

buying power, chains get more favorable terms than independents, and the chainslarge square footage allows them to put in cafes and bathrooms. In many locations, thearrival of a superstore has forced nearby independents out of business. In the bookselling business, the arrival of a Barnes & Noble superstore or Borders Books andMusic usually puts smaller bookstores out of business. Yet the news is not all bad forsmaller companies. Many small independent retailers thrive by knowing theircustomers better and providing them with more personal service.

5. Todays retailers are moving toward one of two poles, operating either as massmerchandisers or as specialty retailers. Superpower retailers are emerging. Throughtheir superior information systems and buying power, these giant retailers are able tooffer strong price savings. These retailers are using sophisticated marketinginformation and logistical systems to deliver good service and immense volumes of

product at appealing prices to masses of consumers. In the process, they are crowdingout smaller manufacturers, who become dependent on one large retailer and aretherefore extremely vulnerable, and smaller retailers, who simply do not have the

budget of the buying power to compete. Many retailers are even telling the mostpowerful manufacturers what to make; how to price and promote; when and how toship; and even how to reorganize and improve production and management.Manufacturers have little choice: They stand to lose 10 to 30 percent of the market if

they refuse.

6. Marketing channels are increasingly becoming professionally managed andprogrammed. retail organizations are increasingly designing and launching new storeformats targeted to different lifestyle groups. They are not sticking to one format, suchas department stores, but are moving into a mix of retail formats.

7. Technology is becoming critical as a competitive tool. Retailers are usingcomputers to produce better forecasts, control inventory costs, order electronicallyfrom suppliers, send e-mail between stores, and even sell to customers within stores.

They are adopting checkout scanning systems, electronic funds transfer, and improvedmerchandise-handling systems.

8. Retailers with unique formats and strong brand positioning are increasingly movinginto other countries. McDonalds, The Limited, Gap, and Toys R Us have becomeglobally prominent as a result of their great marketing prowess. Many more Indianretailers are actively pursuing overseas markets to boost profits.

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9. There has been a marked rise in establishments that provide a place for people tocongregate, such as coffeehouses, tea shops, juice bars, bookshops, and brew pubs.Denvers two Tattered Covered bookstores host more than 250 events annually, fromfolk dancing to womens meetings. Brew pubs such as New Yorks Zip City Brewingand Seattles Trolley man Pub offer tasting and a place to pass the time. TheDiscovery Zone, a chain of childrens play spaces, offers indoor spaces where kidscan go wild without breaking anything and stressed-out parents can exchange stories.There are also the now-ubiquitous coffeehouses and espresso bars, such as Starbucks,whose numbers have grown from 2,500 in 1989 to a forecasted 13,000 by 2001. AndBarnes & Noble turned a once-staid bookstore industry into a fun-filled village green.

RETAIL MARKETING IN INDIA

Retail marketing is the most important part of the entire logistics chain in a businessespecially in consumer related products. Without proper retailing the companies can'tdo their business. Retailing is the process of selling goods in small quantities to the

public and is not meant for resale. Retail is derived from the French word retailer,meaning to cut a piece off or to break bulk.

There are various ways of making goods available to consumers like:

Company to distributor to wholesaler to retailer to consumer Company to salesperson to consumer Company to consumers (online/ phone/ catalog ordering)

These three are among the most common ways of making the goods available toconsumers. But in India the three layered system of distributor, wholesaler andretailer, forms the backbone of the front-end logistics of most of the consumer-good

companies.

In this system the company operating on all India basis appoints hundreds ofdistributors across the country that supplies to various retailers and wholesalers.Wholesalers in turn can either directly sell in the market or can supply to retailers. Thecurrent retailing system prevalent across the country is highly fragmented and

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unorganized. Anyone with some money and some real estate can open a small shopand become a retailer catering to the locality in which he opens the shop.

There are a number of reasons behind this fragmented retail market. Some of themajor reasons being:

Poverty and lower literacy levels.

Low per capita income. Savings focused and less indulgence mindset. Poor infrastructure facilities like roads etc. Restrictions on intra-state good movement. High taxes. No exposure to media. High import duties on imported goods. FDI in retailing is not allowed. Retailing is not considered as a business or industry by the government. Hitherto none of the business schools in India were offering specialized courses

on retailing. Expensive supply chain.

Besides this there is other reasons too, which led to stifling of growth of organizedsegment of retailing sector and which instead led to highly fragmented market.

Today in India we have more than 12 million retail outlets and most of then are familyrun and locally owned. There are very few nationally present retail stores. In India the

process of buying and selling at these unorganized retail outlets, is highlycharacterized by bargaining and negotiations. But slowly with increasing influence ofmedia and urbanization the market is shifting towards organized segment. Seeing thehuge market size of retail business in the country and the current level of organizedsegment, many players have jumped into the fray and many are waiting for the rightopportunity to enter it.

Retailing in 1990s

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On account of the liberalization drive in the 1990s, several structural and demographicchanges that are taking place are helping the industry to grow. The GDP has grown by6.6percent in the last decade resulting in increased income levels and higher

purchasing power for the population. Increasing literacy levels, increasing number ofworking women, increasing urbanization, higher international travel by Indian

population and increasing media penetration has raised aspiration levels of thepopulation, resulting in demand for better shopping experience and larger variety ofgoods. India has close to 54percent of population below the age of 25, whichtranslates into higher prospects for increased consumption levels in the future. Finally,interest rates have also declined in the past few years further propelling theconsumption demand.

These factors were the key drivers for the retail wave in the country. Notable amongthe early entrants were players like Shoppers Stop, Pantaloon, Ebony, Foodworld,Subhiksha, etc. Initially, the growth in organized retail was very slow andconcentrated mainly in metros, with south India holding its ground as the pioneer inorganized retail growth, on account of the low cost of real estate. Due to the highinvestments required in the early stages and the fact that real estate was the keydeciding factor for success of stores, real estate developers have been the major

players in the industry (see Table).

Sponsors

Group Retail Business

Rajan Raheja Real Estate Developer Globus Chain of departmental stores

K, Raheja - Real Estate Developer Shoppers Stop - Chain of departmentalstores

Hiranandani - Real Estate Developer Haiko supermarket, Loft shoe stores andHakone mall.

Tata Diversified Business House Westside chain of department stores

DS Group - Real Estate Developer Ebony - chain of department stores

RPG Diversified Business House Foodworld supermarkets, Gianthypermarkets, Health & Glow beauty and

health stores.DLF Real Estate Developer DLF malls

ITC - Diversified Business House Wills Sport Chain of apparel stored.

Source: Fitch

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In the early 1990s, as the players were lower down on the learning curve manyfaltered in their models, and growth of the industry remained slow. The second half of1990s saw several players making losses and exiting from the business. The worstyears for the industry were 2000 and 2001, as the stock market downturn, whichreduced customer confidence and spending, had a direct impact on the performance ofthe industry. The industry recovered starting 2002. It now appears the efforts andlearnings of the players in the last decade are beginning to pay off; the organizedretail industry has established firm roots and is beginning to grow.

Present Retail Scenario In India

Retail experts find Indian industry promising Retail sales to touch Rs. 30,000 crore by 2005 Mall Mania: The developing mall culture in India Emergence of region-specific formats Emergence of discount formats

Entry of international players

Retail experts find Indian industry promising

The retail movement in India has acquired the critical mass that is required for rapidacceleration in terms of industry growth as well as geographical spread. The Indianretail industry can no longer be called nascent.

The spread of super stores to the northern cities such as Delhi, Chandigarh, Jaipur andKolkata is evidence of the fact that organized retailing in India has emerged from itssouthern bastion.

The retailing boom is being driven by increased expectations as well as changingshopping behavior of the urban Indian consumer. With the increasing number ofnuclear families, working women, greater work pressure and increased commutingtime, consumers are looking for convenience. And, convenience is defined as havingeverything under one roof, longer hours and multiplicity of choice.

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On the supply side, the current inefficient supply chain in India, particularly for fooditems has led a few players to consolidate their operations to take advantage ofeconomies of scale and match consumer expectations in terms of delivery as well asspace. So, we have a situation where both demand and supply side dynamics arefuelling the growth of organized retailing in India, although improvements in thesupply chain are yet to fully match with consumer expectations.

The future growth need not necessarily come only from the big metros, where therealready exists a good retail network. The fact that big Indian retail chains are movinginto places like Indore or Chandigarh is an important indicator of future growth. Forthe Rs. 5000-crore organized retail industry it is, perhaps, time to tap the relativelysmaller cities. The share of organized sector in total retail sales will grow from one

per cent now to six per cent by 2005.While projections can be slippery, hard factspoint to exciting growth ahead for this sector.

According to KSA, organized retailing is focusing on only SEC-A cities, Indias 23largest cities. That is where a large portion of the country's urban population exists.Today 82 per cent of organized retailing comes from the top six cities and 12 per centfrom the next four. KSA says the top 10 cities provide 94 per cent of organized retailsales in India.

By 2005, KSA projects the top six cities will account for 66 per cent of totalorganized retailing and the next four for 20 per cent. The top 10 cities will account for

86 per cent of organized retail sales. There could be variations in growth patterns indifferent segments. The second half of the top 10 cities will provide large growth forfood and groceries, while the top six would still be the growth centers for consumerdurables, believes KSA.

The spread of organized retailing is unlikely to be a national phenomenon yet. Thisappears to be the case so far. South India, particularly Chennai, Hyderabad andBangalore, have seen the emergence of chain stores or large format stores. Whilegarment stores have been around for sometime, other segments like food andgroceries, consumer durables and even books and music have witnessed theemergence of organized players in large cities in South India. The lack of trainedmanpower or alternatively the tremendous scope the sector has to provideemployment is another issue.

Mall Mania: The Developing Mall Culture in India

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Modern malls made their entry into India in the late 1990s, with the establishment ofCrossroads in Mumbai and Ansals Plaza in Delhi. By early 2001, several mall projectswere announced. According to market estimates, close to 12 million sq. ft. of mallspace is being developed across several cities in the country, of which 10 million sq.ft. is expected to be operational by end of 2003 (see Table below). With this, rentalsfor retail properties have shown a marked decline, which has brought down the break-even levels of the retail projects. Moreover, retailers would now have access to retail-specific properties, which will increase their efficiencies.

Mall Development in India

Mall Location Rate / Sq. ft.

Crossroads Tardeo, Mumbai 225-250

Ansals South Ex, Delhi 175-200Nirmal Lifestyle Mulund, Mumbai 75-90

Runweals Mall Mulund, Mumbai 75-90

Karnavat Mall Thane, Mumbai 65-85

Raheja Mind space Malad, Mumbai 60-80

Jogs Mall Andheri, Mumbai 55-75

Cable Corporation Borevali, Mumbai 55-75

Ansals East Delhi 75

Sahara Gurgaon 50-70

MGF Malls Metroplitian & Plaza Gurgaon 65-85*DLF Gurgaon 65-85

Shipra Noida 80-180

Forum KolKotta 100

City Center KolKotta 55

Rave 3 Kanpur 45-55

Inox Baroda 75

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Ajeet Tiwari Report

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