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SERVICE MARKETING

INTRODUCTION:REASONS FOR GROWTH:THE SERVICE SECTOR HAS EXPERIENCED RAPID GROWTH SINCE

WORLD WAR-2 AS MANY NATIONS SHIFT FROM MANUFACTURING BASED ECONOMY TO A SERVICE ECONOMY. A MAJOR STIMULUS IN THIS SHIFT IS THE MOVEMENT TO AN INFORMATION AGE SPURRED BY INVENTION OF THE COMPUTER AND ADVANCEMENTS IN TELECOMMUNICATIONS. AS COUNTRIES CONTINUE TO SHIFT FROM AN AGRICULTURAL AND INDUSTRALIZED ECONOMIC BASE, THE DEMAND FOR SERVICES WILL CONTINUE TO INCREASE. ADDITIONAL FACTORS CONTRIBUTING TO GROWTH OF THE SERVICE SECTOR ARE AN AGING POPULATION, LONGER LIFE EXPECTANCIES, INCREASED LESIURE TIME, HIGHER PER CAPITA INCOME, INCREASED TIME PRESSURE, MORE FEMALE WORKFORCE PARTICIPATION, CHANGING SOCIAL AND CULTURAL

VALUES, AND ADVANCES IN TECHNOLOGY.

CHANGE IN CULTURE AND SOCIETY HAVE CHANGED PEOPLES PERCEPTION OF THE SERVICE INDUSTRY. EX: -HIRING A HOUSE CLEANING SERVICE IS NO LONGER THE WEALTHY. MOTHERS ARE NO LONGER RESERVED FOR SEEN SHIRKING

THEIR DUTY IF THEY DONT STAY HOME WITH THEIR CHILDREN AND PROVIDE FOR THEIR CARE UNTIL THEY ARE OUT OF THEIR SCHOOL.

HIGHER PER CAPITA INCOME MEANS A LARGER

DISCRETIONARY INCOME FOR INDIVIDUALS TO SPEND ON LUXURY SERVICES. A LARGE DISCRETIONARY INCOME OFFERS OPPORTUNITIES FOR ENTERTAINMENT SERVICES, ESPECIALLY TO BABY BOOM GENERATION. IN ADDITION, THERE WILL ALSO BE INCREASE IN DEMAND FOR SERVICES THAT ENABLE INDIVIDUALS TO HAVE MORE FREE TIME, SUCH AS HOUSE CLEANING, LAWN AND CHILD CARE SERVICES. THE INCREASE IN DEMAND FOR THESE SERVICES IS ALSO DUE TO INCREASE IN NO. OF WO MEN IN THE WORK FORCE. WITH MORE TWO HOUSEHOLDS PRODUCING GREATER DISCRETIONARY DOLLARS AND LESS TIME TO DO HOUSEHOLD CHORES, MOR OUTSIDE SERVICES ARE REQUIRED. REASONS FOR DECLINE IN SERVICE QUALITY:

GLOBALIZATION OF THE ECONOMY HAS FORCED BUSINESSES

TO COMPETE ON AN INTERNATIONAL LEVEL, CAUSING MANY FIRMS TO DOWNSIZE AND CUT SERVICES TO KEEP PRICES FROM RISING.

DEREGULATION OF THE AIRLINES, TRUCKING, AND BANKING INDUSTRIES HAS CREATED PRICE WAR AMONG FIRMS WITHIN THE DEREGULATED EMPLOYMENT FIRMS. INDUSTRIES. CUTBACKS THIS HASFURTHER GOOD CAUSED MORE MAKING SERVICES

DIFFICULT TO PROVIDE FOR THE ALREADY UNDERSTAFFED

HIRING COMPETENT SERVICE WORKERS IS DIFFICULT BECAUSE OF LABOR SHORTAGE IN MANY AREAS. TO COMPENSATE FOR RISING LABOR COSTS AND LABOR SHORTAGES, SERVICE FIRMS SEEK TO REPLACE HUMAN WORKERS WITH MACHINES AND COMPUTERS. MANY FIRMS HAVE MOVED TO SELF SERVICE FACILITIES AND INCREASE THE AMOUNT OF CUSTOMER SELFSERVICE PROCEDURES.

INCREASED GLOBAL COMPETITION HAS LEAD TO MERGERS AND ACQUISITIONS RESULTING IN LOWER LEVEL OF CUSTOMER LOYALTY TO A PARTICULAR BRAND OR COMPANY. AT THE SAME TIME, THE PRIMARY GOAL IS TO REDUCE COSTS, OFTEN IN THE AREA OF LABOR.

FROM CUSTOMER PERPECTIVE, A DECLINE IN SERVICE QUALITY CAN BE ATTRIBUTED TO THE RISE IN TWO- INCOME HOUSEHOLDS, INCREASE IN EDUCATION LEVEL OF CUSTOMERS AND THE BUSIER LIFESTYLES. HAVING HIGHER INCOMES, BETTER EDUCATION, AND LESS TIME HAS MADE CONSUMERS MORE DEMANDING WITH REGARD TO CONVENIENCE AND SERVICE QUALITY.

IMPORTANCES OF SERVICES TO THE GLOBAL ECONOMY:-

AS WORLD MOVES TO TOWARDS TO A GLOBAL ECONOMY, THE SERVICE SECTOR HAS BECOME A VERY SIGNIFICANT SECTOR. THE UNITED STATES IS ONE OF THE LEADING EXPORTERS OF SERVICES WITH A SURPLUS OF $80.6 BILLION; COMPARED TO $345.6 BILLION DEFICIENCY FOR GOODS. MOST OF THESE SERVICES (48%) GO TO DEVELOPED COUNTRIES IN WESTERN EUROPE AND JAPAN AND 26% GO TO CANADA AND LATIN AMERICA.PRIVATE SERVICES SUCH AS FINANCIAL, BUSINESS, PROFESSIONAL, AND TECHNICAL SERVICES ACCOUNT FOR 49% OF THESE EXPOTS AS COMPARED TO 45% FOR PUBLIC SERVICES SUCH AS TOURISM AND TRANSPORTATION. SPAIN, ITALY AND UNITED KINGDOM ARE EXCELLENT MARKETS FOR U.S. SERVICES. BIG SERVICE EXPORTS TO SPAIN INCLUDE MEDICAL SERVICES, BUSINESS SSERVICES, COMPUTER SERVICES AND TRAVEL AND TOURISM. WITH PLANS TO UPGRADE THEIR INFRASTRUCTURE, SPAIN PROVIDES HUGE OPPORTUNITIES FOR SERVICE EXPORTS FROM THE UNITED STATES AND IT HAS BECOME A HUB FOR EUROPEAN UNION CALL CENTRES BECAUSE OF RELATIVELY CHEAP LABOR AND CHEAP REAL ESTATE COMPARED TO THE UNITED KINGDOM AND IRELAND. IN ITALY, THE PRIMARY OPORTUNITIES ARE FOR INFORMATION AND COMMUNICATION TECHNOLOGY AND INFRASTRUCTURE DEVELOPMENT AND SERVICES. FOR THE UNITED KINGDOM, THE BEST SERVICE EXPORT OPORTUNITIES ARE FOR TRAVEL AND TOURISM EDUCATION, TRAINING AND INTERNET SERVICES.

COMPANIES INTERESTED IN EXPORTING CAN GO TO http://www.export.gov FOR RESOURCE INFORMATION ABOUT INTERNATIONAL MARKETS, COUNTRY COMMERCIAL GUIDES, TRADE LEADS, AND A CALENDAR OF EVENTS. A VIRTUAL TRADE SHOW AT E-EXPO USA BRINGS SELLERS AND OVERSEAS BUYERS TOGETHER ONLINE. THE SITE OFFERS A VIRTUAL BOOTH, HOT LINK TO BUYERS AND THE ABILITY TO DISPLAY UP TO FIVE GOODS AND SERVICES WITH PICTURES AND LOGOS. THROUGH VIDEOCONFERENCING AND WEBCASTING, BUSINESS CAN BE LINKED DIRECTLY TO OVERSEAS BUYERS. IN INDIA, THE EXPORTING OF SOFTWARE SERVICES HAS INCREASED. WHILE HALF OF INDIAS POPULATION IS ILLITERATE, THEY ALSO HAVE LARGEST POOL OF ENGLISH SPEAKING SCIENTISTS AND ENGINEERS.USING THIS RESOURCE POOL, INFOSYS, WHO PROVIDES SERVICES TO GLOBAL COMPANIES SUCH AS GOLDMAN SACHS, VISA AND DHL HAS BECOME A WORLD S DUE LEADER THEIR IN HIGH SOFTWARE LEVEL OF DEVELOPMENT.THEIR SUCCESS

EFFICIENCY AND UNCOMPROMISING ATTENTION TO DETAIL.

WHAT is a SERVICE ?

work done by one person or group that benefits another an act of help or assistance

CHARACTERISTICS OF SERVICES:SERVICES POSSESS FOUR INHERENT CHARACTERISTICS NOT FOUND IN GOODS: INTANGIBILITY, PERISHABILITY, INSEPARABILITY AND VARIABILITY. THESE CHARACTERISTICS CREATE UNIQUE CHALLENGES FOR SERVICES. INTANGIBILITY INTANGIBILITY REFERS TO LACK OF TANGIBLE ASSESTS THAT CAN BE SEEN, TOUCHED, HEARD, SMELLED OR TASTED PRIOR TO PURCHASE. SERVICES VARY IN THE DEGREE TO WHICH THEY ARE TANGIBLE, HOWEVER FOR MOST ITEMS THERE ARE TANGIBLE ITEMS THAT ARE USED TO PERFORM THE SERVICE. SERVICES SUCH AS COLLEGE EDUCATION, AIR TRAVEL AND SPORTING EVENTS ARE HIGHLY INTANGIBLE BECAUSE THEY CANNOT BE SEEN, TOUCHED, SMELLED, HEARD OR TASTED PRIOR TO PURCHASE BUT THERE ARE ASPECTS OF SERVICE THAT ARE TANGIBLE. EX :- IN A SPORTING EVENT,CUSTOMERS CAN VIEW THE STADIUM AND PERHAPS SEE THE TEAM PRACTICING. BUT, THE ACTUAL SEVICE OUTCOME CANNOT BE SEEN UNTIL THE SERVICE IS PERFORMED OR THE EVENT HAS TAKEN PLACE. SOME SERVICES OFFER TANGIBLE PRODUCT WITH THEIR SERVICES BUT THE SERVICE IS STILL INTANGIBLEBECAUSE THE CONSUMERS ARE PURCHASING THE SERVICE NOT THE GOOD. FOR EX :- IN A RESTAURANT,FOOD IS SERVED.CUSTOMERS ARE PAYING THE RESTAURANT THE FOOD PREPARED AND SERVED TO THEM.

EVALUATION IS DONE ON HOW WELL THE RESTAURANT PREPARES AND SERVES THE FOOD. TO REDUCE INTANGIBILITY, SERVICES HAS SEVERAL OPTIONS, SUCH AS:STRESSING TANGIBLE CUES; USING PERSONAL SOURCES OF INFORMATION; STIMULATING WORD-OF-MOUTH COMMUNICATION; CREATING A STRONG CORPORATE IMAGE; AND ENCOURAGING EMPLOYEES TO COMMUNICATE WITH CUSTOMERS. 2.PERISHABILITY:THE SECOND CHARACTERISTICS OF SERVICE IS PERISHABILITY, MEANING THAT SERVICE CANNOT BEINVENTORIED OR STORED. FOR EX:- IF A PAIR OF JEANS DOES NOT SELL TODAY,A RETAILER CAN STORE IT AND SELL IT AT A LATER TIME.THIS FEATURE ALLOWS FIRMS TO MASS PRODUCE GOODS AND STORE THEM IN WAREHOUSE UNTIL CUSTOMERS ARE READY TO PURCHASE. FOR SERVICES THIS IS NOT POSSIBLE. A DELTA FLIGHT THAT SELLS ONLY 75 OF THE 200 SEATS WILL LOOSE THE REVENUE OF 125 EMPTY SEATS IF THE PLANE TAKES OFF WITH THOSE SEATS EMPTY.THAT REVENUE IS LOST FOREVER. PERISHABILITY CAN ALSO CAUSE REVERSE TO OCCUR. DEMAND CAN BE GREATER THAN SUPPLY.IN HIS SITUATION, THE AIRLINE DOES NOT HAVE ENOUGH SEATS FOR EVERYONE AND CUSTOMERS ARE LEFT AT THE GATE. TO REDUCE NEGATIVE IMPACT OF PERISHABILITY, SERVICES MUST DEVELOP STRATEGIES TO COPE WITH FLUCTUATING DEMAND. THIS GOAL CAN BE ACHIEVED BY MAKING SIMULTANEOUS ADJUSTMENTS IN

DEMAND, SUPPLY AND CAPACITY. THE GOAL OF THESE STRATEGIES IS TO ACHIEVE PARITY AND BALANCE AMONG THREE. IN AN IDEAL WORLD, DEMAND EQUALS SUPPLY, WHICH IN TURN EQUALS CAPACITY. EX:- FOR A SEVICE SUCH AS MOVIE THEATER,DEMAND SOMETIMS EXCEEDS CAPACITYDURING EVENING OR WEEKEND SHOWS OF POPULAR RELEASES,WHILE DURING DAY IME SHOWINGS THE THEATER USUALLY HAS EMPTY SEATS. ONE METHOD OF ADJUSTING DEMAND IS TO MOVE SOME OF THE DEMAND FROM HIGH-PEAK EVENING SHOWINGS TO NON-PEAK AFTERNOONS. REDUCING THE PRICE FOR THIS AFTERNOON SHOWS IS ONE METHOD OF DOING THIS. 3.INSEPERABILITY:- INSEPERABILITY IS SIMULTANEOUS PRODUCTION AND CONSUMPTION OF SERVICES. GOODS CAN BE PRODUCED AND THEN SOLD AT A LATER TIME; SERVICES CANNOT. FOR EX: GETTING A HAIR CUT INVOLVES CUSTOMER GOING TO A HAIR STYLIST AND BEING PRESENT WHILE THE SERVICE IS BEING PERFORMED. BECAUSE THE MUST BE PERFORMED AND/OR CONSUMED AT THE SAME TIME,THE QUALITY OF SERVICE IS HIGHLY DEPENDENT ON THE ABILITY OF SERVICE PROVIDER AND QUALIY OF INTERACTION BETWEEN THE SERVICE PROVIDER AND THE CUSTOMER. MANAGING THE HUMAN ELEMENT IS CRITICAL FOR SUCCESS FOR SERVICE FIRMS WITH HIGH DEGREE OF INSEPERABILITY. TO REDUCE DEPENDENCE ON CUSTOMER EMPLOYEE-INTERACTION, COMPANIES MAY LOOK FOR WAYS TO AUTOMATE THEIR SERVICES THROUGH USE OF MACHINES AND COMPUTERS. FOR EX :- MANY LARGE BANKS SUCH AS CHEMICAL BANK, USE AUTOMATED TELLER MACHINES

(ATMS) TO CONDUCT BUSINESS WITH CUSTOMERS. ATMS PROVIDE EFFICIENCY FOR THE BANK AND CONVENIENCE FOR THE CUSTOMER. 4.VARIABILITY :- VARIABILITY REFERS TO SPORADIC OR RANDOM LEVELS OF SERVICE QUALITY CUSTOMERS RECEIVE WHEN THEY PATRONIZE A SERVICE. VARIABILITY IS PRIMARILY CAUSED BY THE HUMAN INPUT. ELEMENT, ALTHOUGH MACHINES MAY MALFUNCTION A VARIATION IN SERVICE. VARIABILITY IS ALSO CAUSED BY A VARIANCE IN COMPUTER CONSULTANTS STAFFING HOTLINES FACE THE CHALLENGE OF DEALING WITH VARIABILITY OF KNOWLEDGE AND EXPERTISE THAT CUSTOMERS BRING TO SERVICE PROCESS. STANDARDIZATION AND QUALITY CONTROL MEASURES CAN BE USED TO REDUCE THE VARIABILITY OF SERVICES. BY STANDARDIZING THE SERVICE, CUSTOMERS WILL TEND TO RECEIVE SAME QUALITY OF SERVICE, REGARDLESS OF WHO PERFORMS THE SERVICE AND WHEN THE SERVICE IS PERFORMED. INDUSTRIALIZATION IS ANOTHER METHOD BY WHICH MACHINES AND STANDARDIZED PROCEDURES TO INCREASE THE PRODUCTIVITY AND EFFICIENCY OF A BUSINESS. EX:- HAMBURGERS, FRENCH FRIES, AND OTHER FOODS ARE PRODUCED IN ADVANCE AND PUT IN WARMING BINS. BY MASS PRODUCING THESE ITEMS IN ADVANCE, MORE CUSTOMERS CAN BE SERVED DURING PEAK DEMAND TIMES.

SERVICE MARKETING MIX The marketing mix concept was popularized by an American professor Jerome Mc Carchyin terms of 2ps-Product, price, promotion and place. The major part of marketing after considering the environmental variables is assembling and managing the marketing variables. The most important task is to blend the 4 elements in different combination in order to have greater marketing impact and also to be cost effective. Elements of Service marketing mix The service marketing mix consist of the following variables Product Price Promotion Place

PRODUCT A product is anything that can be offered to market for attention, acquisition use or consumption that satisfy a want or need. It includes physical objects(TV), service(banking), person(political person), place(holiday resort), organization(red cross) and idea(aid awareness). The American Marketing Association defines services as activities, benefits or satisfaction which are offered for sale or are provided with sale of goods. Philip Kotler - service is an act or performance that a party can offer to another that is essentially intangible and does not result in the ownership pf anything. Its production may or may not be tide to a physical product.

Service offer is the element that makes up the total service package. It includes both tangible and intangible components of service. The service package includes all decisions involving the essential concepts of the service and the range of service and the range of service provided. Christian Gronroos describes services package as a bundle of different services tangible and intangible together which form the total product. Price Price is the exchange value for a product or service, expressed in terms of money. In services it is known by different names, like fees or retention charges as professional firms call it, transporters call it fare, insurance company call it premium, clubs call it subscription etc. The art of effective pricing is to establish a price level that is low to represent good value to the buyers but yet it should be high enough to allow the service provider to make his profits. A service marketer has to consider the following issues regarding pricing methods and policies to be adopted. Intangibility Perishability Customer Participation Controllability Variability

Pricing Strategy: 1. New Service Pricing Strategy : While launching a new service there are two alternative pricing strategies.
a)

Price skimming Strategy and

b) Penetration pricing strategy a) Skimming Strategy In this the services are introduced at a high price. It is assumed the the customers are more concerned about obtaining a quality service rather than cost of the service as the demand for the services falls, the price level is reduced e.g. mobile phones, computers etc b) Penetration Pricing In this new services are priced low.the prices are kept low to stimulate trial and thereby ensure customer loyalty. Low pricing is possible when the services are sensitive to price and it is possible to achieve economies of large scale operation by oprating at large volumes.

The penetration pricing begins with a low price but it increase in the growth stage. The increase usually associated with additional services that are offered. 2) Differential pricing/market segmentation pricing: Different market segments may show different price elasticity of demand. The pricing strategy adopted to successfully cater to these groups is known as discriminatory pricing on the basis of market segmentation.

It may be done on the following basis. . Different time of consumption. . Different point of consumption. . Group of buyers. 3) Service-Mix pricing: In this, the firms with multiple services offering that are more often interrelated may adopt this strategy. . Captive service . Competing service or . Optional additional service.

4) Price bundling: It means pricing and selling the service as a group rather than an individual offering. In this the service firm will be able to sell all the products in the service line. E.g. Health clubs 5) Relationship pricing: In this type of pricing the lifetime value of the customer is taken into account. The main objective is to encourage customer loyalty by rewarding it. John Winkler has rightly stated that pricing can never be an automatic or impersonal process it cannot be reduced to a mathematical or accounting formula. It is an elusive art. The more you examine the market, the better you judge the value of what you want to offer.

PROMOTION One of the key elements of the marketing mix is promotion which is used for the purpose of encouraging sales and conveys to the customer the position of the service promotion helps to create awareness among among the customers. It enables them to exercise their rights to choose service provider. The promotion of services can be done through various tools like advertising, sales, promotion, public relations, personal selling and mailing offers. A service firm can select any one of tools or a combination of them in creating a favorable response from the target audience . W.R George and L.Berry have identified six guidelines that can be used for promoting services. They are mostly applicable to all service sectors, with the exception to some few due to the variable nature of services Direct Advertising to employees Use of word of mouth publicity Promising a service which can be delivered Make the service easy to understand

Place In services, the place decision depends on the location and use of distribution channel.The main problem in the creation of channels for services is that they cannot be manufactures in one place and distributes all over. They can be offered from either a single outlets. Common functions like production, promotion and purchasing can be done at a central point. Also Number of services do not allow the use of intermediaries in the distribution of the service. For E.g. a teacher or a surgeon cannot use an intermediary to

provide his service. In such cases the provider has to sell his services to the consumer. The next option is the use of agents and brokers to sell the services. These intermediaries work on commission basis or charge fees to the customer or the service firm. They act as a catalyst in the transaction between the service firm and the customer. In insurance selling, real estates, tours and travels agents are common. The third option is known as franchising. Franchising consist of signing an agreement between the service organization and another individual or a firm. Ha agreement permits the franchisee to use the name and goodwill of the service firm. The franchisee sells the product of the service firm and gets a fixed percentage on the sale PEOPLE In the services, the employees very often represent the firm and in many cases they are the services. The service provider has to train and equip the front line staff with the abilitiesto perform the service, in order to deliver quality service. This causes the service irm to integrate appropriate human resource practices into its strategies .it involves four major steps Recruit or hire the right people with inclination to serve. Development of people Provide support system Retention

Types of Service encountersAs the level of customer contact with the service operation increases, there are likely to be more and longer service encounters. High-contact servicesThis group of services involves personal visits by customers to the service facility. Customers are actively involved with the service organization and its personnel during service delivery. All people-processing services, other than those delivered at home, are high contact. Examples include hairdressing, lodging or medical services. Services from the other three process-based categories may also involve high levels of customer contact when, for reasons of tradition, preference, or lack of other alternatives, customers go to the service site and remain there until service delivery is completed. Low-contact servicesAt the opposite end of the spectrum are services that involve little, if any, physical contact between customers and service providers. Instead, contact takes place at arms length through the medium of physical distribution channelssuch as mail or courier service or electronic channels such as telephone and internet. Many high-contact and medium-contact services are being transformed into low-contact services as customers engage in home shopping, conduct their insurance and banking transactions by telephone, or research and purchase products through the internet. The Purchase process for services involves multiple stepsWhen customers decide to buy a service to meet an unfilled need, they go through what is often a complex purchase process. This process has three identifiable stages- the prepurchase stage, the service encounter stage, and the post purchase stage.

Prepurchase stageThe decision to buy and use a service is made in the prepurchase stage. Individual needs and expectations are very important here because they influence what alternatives customers will consider. If the purchase is routine and relatively low risk, customers may move quickly to selecting and using a specific service provider. But when more is at stake or if a service is about to be used for the first time, customers may conduct an intensive information search. The next step is to identify potential suppliers and then weigh the benefits and risks of each option before making a final decision. This element of perceived risk is especially relevant for services that are high in experience or credence attributes and thus difficult to evaluate prior to purchase and consumption. First time users are especially likely to face greater uncertainty. Risk perceptions reflect customers judgments of the probability of a negative outcome. The worse the possible outcome and the more likely it is to occur, the higher the perception of risk. When they feel uncomfortable with risks, customers can use a variety of methods to reduce them during the prepurchase stage. Its important to educate customers about the features of a particular service, describe the types of users who can most benefit from it, and offer advice on how to obtain the best results. Service encounter stageAfter making a purchase decision, customers experience additional contacts with their chosen service provider. The service encounter stage often begins with submitting an application, requesting a reservation, or placing an order. Contacts may take the form of personal exchanges between customers and service employees or impersonal interactions with machines or computers. In highcontact services such as restaurants, health care, hotels, and public transportation, customers experience a variety of elements during service delivery, each of which may provide clues to service quality. Post purchase stage-

During the post purchase stage, customers continue a process they began in the service encounter stage evaluating service quality and their satisfaction/dissatisfaction with the service experience. The outcome of this process with affect their future intentions, such as whether to remain loyal to the provider that delivered service and whether to pass on positive or negative recommendations to family members and other associates. Customers evaluate service quality by comparing what they expected with what they perceive they received from a particular supplier. If their expectations are met or exceeded, customers believe that they have received a quality service provided that the price/quality relationship is acceptable and other situational and personal factors are positive, customers are likely to be satisfied and are therefore more likely to make repeat purchases and remain loyal to that supplier. However, if the service experience does not meet their expecations, customers may complain about poor service quality, suffer in silence, or switch providers in the future. Consumer as a Risk TakerThe concept of perceived risk as an explanation for consumer purchasing behavior is based on the assumption that consumer behavior involves risks in the sense that any action of a consumer will produce consequences that cannot be anticipated with any certainly and some of which are likely to be unpleasant. Performance risk relates to the idea that the item or service purchased will not perform the task for which it was purchased. Financial risk assumes there may be financial costs if the purchase goes wrong or fails to operate. The physical risk of a purchase can emerge if something goes wrong and injury is inflicted on the purchaser.

Services have a higher perceived risk of purchase than goods, for several reasons. The fact that it is extremely difficult to standardize the service product makes it difficult for customer to predict precisely the quality of the service. A

large proportion of the service can only be discovered after the consumption of the service. To be part of a process and not knowing exactly what is going on clearly increases the uncertainty about the consequences. One Strategy for the consumer is to be brand or store loyal having been satisfied in one high risk purchase, consumers are less likely to experiment with others. A reference from a friend becomes more important when the purchase has a greater risk. Similarly, there is evidence to suggest that opinion leaders play an important role in the purchase of service. Relationship marketingRelationship marketing is a philosophy of doing business, a strategic orientation that focuses on keeping and improving current customers, rather than on acquiring new customers. Building on this assumption and the fact that it is usually much cheaper to keep a current customer than to attract a new one, successful marketers are working on effective strategies for retaining customers. The primary goal of relationship marketing is to build and maintain a base of committed customers who are profitable for the organization. Finally, the goal of customers enhancement suggests that loyal customers can be even better customers if they buy more products and services from the company over time. Assuming they have a choice, customer will remain loyal to a firm when they receive greater value relative to what they expect from competing firms, but they also benefit from long term relationships because such associations contribute to a sense of well-being and quality of life. E.g. - legal, medical, education, etc. Most consumers have many competing demands for their time and money and are continually searching for ways to balance and simplify decision making to improve the quality of their lives. Calculating the lifetime value of a customer allows a firm to make accurate evaluations of investments designed to retain customers.

Rural Marketing
Defination:Rural marketing involves the process of developing, pricing, promoting, distributing rural specific product and a service leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational objectives. It is a two-way marketing process wherein the transactions can be:1. Urban to Rural: It involves the selling of products and services by urban marketers in rural areas. These include: Pesticides, FMCG Products, Consumer durables, etc. 2. Rural to Urban: Here, a rural producer (involved in agriculture) sells his produce in urban market. This may not be direct. There generally are middlemen, agencies, government co-operatives, etc who sell fruits, vegetables, grains, pulses and others. 3. Rural to rural: These include selling of agricultural tools, cattle, carts and others to another village in its proximity.

Features of Indian Rural Markets: Large, Diverse and Scattered Market: Rural market in India is large, and scattered into a number of regions. There may be less number of shops available to market products.

Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with agriculture prosperity. In the event of a crop failure, the income of the rural masses is directly affected.

Standard of Living and rising disposable income of the rural customers: It is known that majority of the rural population lives below poverty line and has low literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax structure, good monsoon, government regulation on pricing has created disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him.

Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is a continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages.

Rising literacy levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increases and the farmers are well-informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better lifestyle.

Diverse Socioeconomic background: Due to dispersion of geographical areas and uneven land fertility, rural people have disparate socioeconomic background, which ultimately affects the rural market.

Infrastructure Facilities: The infrastructure facilities like cemented roads, warehouses, communication system, and financial facilities are

inadequate in rural areas. Hence physical distribution is a challenge to marketers who have found innovative ways to market their products. As part of planned economic development, the government is making continuous efforts towards rural development. In this age of liberalization, privatization and globalization, rural market offers a big attraction to the marketers to explore markets that are untapped.

Roadblocks of Indian Rural Markets:1. Standard of living: The number of people below the poverty line is more in rural markets. Thus the market is also underdeveloped and marketing strategies have to be different from those used in urban marketing.

2. Low literacy levels: The low literacy levels in rural areas leads to a problem of communication. Print media has less utility compared to the other media of communication.

3. Low per capita income: Agriculture is the main source of income and hence spending capacity depends upon the agriculture produce. Demand may not be stable or regular.

4. Transportation and warehousing: Transportation is one of the biggest challenges in rural markets.

5. Ineffective distribution channels: The distribution chain is not very well organized and requires a large number of intermediaries, which in turn

increases the cost and creates administrative problems.

6. Many languages and diversity in culture: Factors like cultural congruence, different behavior and language of the respective areas make it difficult to handle the customers.

7. Spurious brands: Cost is an important factor that determines purchasing decision in rural areas. A lot of spurious brands or look-alikes are available, providing a low cost option to the rural customer. Many a time the rural customer may not be aware of the difference due to illiteracy.

8. Seasonal demand: Demand may be seasonal due to dependency on agricultural income. Harvest season might see an increase in disposable income and hence more purchasing power.

9. Dispersed markets: Rural population is highly dispersed and requires a lot of marketing efforts in terms of distribution and communication.

Characteristics of rural market:-

1) The rural markets are of diverse nature. There are people from diverse cultural, linguistic and religious background. No two markets are alike and it is dispersed across India.

2) Shift towards rural markets are mainly because of saturation and competitiveness of urban market. Marketers do not want to neglect this huge untapped market.

3) The incomes of rural customers are also increasing. As seen earlier disposable income of rural consumers have increased and they spend on FMCG and consumer durables.

4) Rising literacy has generated a demand of life style products. Lot of youth move out of the village and visit surrounding cities. They come back and influence decision making.

5) Cable television has also contributed to an increase in life style. The reach has increased and marketers are in a position to promote their products much more easily

Challenges of rural marketing:1) Availability:The first challenge in rural marketing is to ensure availability of the product or service. Given the poor infrastructure, it is a greater challenge to regularly reach products to the far-flung villages. India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system which helps its brands reach the interiors of the rural market.

2) Affordability:The second major challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages. A solution to this has been introduction of unit packs by some companies. This ensures greater affordability. Examples: Most of the shampoos are available in smaller packs. Fair and lovely was launched in a smaller pack. Colgate toothpaste launched its smaller packs to cater to the traveling segment and the rural consumers.

3) Acceptability:The next challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market. Examples: LG Electronics have developed a customized TV for the rural market named Sampoorna. It was a runway hit selling 100,000 sets in the very first year.

Coca-Cola provided low-cost ice boxes in the rural areas due to the lack of electricity and refrigerators. It also provided a tin box for new outlets and thermocol box for seasonal outlets.

4) Awareness A large part of rural India is inaccessible to conventional advertising media. Coca-Cola uses a combination of TV, cinema and radio to reach the rural households. It has also used banners, posters and tapped all the local forms of entertainment. Example: Since price is a key issue in the rural areas, Coca-Cola advertising stressed its `magical' price point of Rs 5 per bottle in all media. LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising.

The 4Ps of Rural Marketing:4Ps of rural marketing with respect to a rural Consumer are as follows :-

1. Product:A product is the heart of rural marketing. It is a need satisfying entity to a rural consumer. Some high demanded products in rural areas are Pressure Cookers, Pressure Pans, Wrist watches,TVs, Scooters, Radio/Transistors, Motor Cycles, Ceiling Fans, Table Fans Mixer/grinders, Bicycles etc. In rural markets, brands are almost non-existent. They identify FMCG by three things:

1. Color, 2. Visuals of animals and birds and 3. Numbers.

So a 555, 777, hara goli, pila hathi, lal saboon, saphed dantmanjan are the kind of terms with which they identify brands. Hence it is very important for us to understand that a lot needs to be done in terms of communications, media, marketing and branding. There are a number of cases which suggest that to sell brands in the rural market, it is necessary to simultaneously educate the consumers. If you have to create brand communication, marketing efforts must be supported by education.

The following have to be kept in mind while the marketer makes a decision on the product:-

1). The product for the rural markets has to be simple, easy to use and provide after sales service or maintenance.

2) The product has to be packed for low price and convenient usage.

3) The pack has to be easily understood by the rural consumer. The information on the pack is preferred in local language communicating the functional benefit of the product.

2. Pricing:A rural customer is price sensitive and shops for value. This is mainly because of his lower income levels than his urban counterparts. Hence the marketer has to find ways of making the product affordable to the rural consumer. Banks offer loans for tractors, pump sets, television sets and so on to make the product affordable to a rural consumer. Smaller unit packs are preferred in the case of FMCG products to offer at lower prices. The product packaging and presentation offers scope for keeping the price low. Reusable packs or refills are also preferred and are seen as value addition.

3. Placement or Distribution:Distribution of products is one of the biggest challenges of rural marketing. Example:-Parle has the best distribution network. There are some problems of rural distribution: Transportation has not been fully developed. Lack of proper channels of communication like telephone, postal services, and so on pose a lot of problem to marketer to service the retailer as it is difficult to the retailers to place order for goods. Storage of goods in rural areas is also a problem for the marketers. Multiple tiers push up the costs and channel management is a major problem for marketers due to lot of middlemen in the process. Availability of suitable dealers

Poor viability of rural outlets

4. Promotion:-

Communication to rural consumer is through organized media. More number of rural consumer (70%) listen to radio and many go to cinema. Rural communication can be through Conventional media or through a nonconventional media. The most common conventional media include: Print,Cinema, Television and Print. The Non-conventional media include: Theatre,Posters, Haats and Melas. The conventional media have excellent reach, less expensive and create a better impact. But at the same time, it is not customized to each village and also offers unnecessary coverage at times. Low literacy rates, culture, traditions, rural reach, attitudes and behavior are the other problems in rural communication. An effective promotion should plan for a proper mix of media. This is very important to create a mind share in the rural consumers. Hence, talking to the customer in a language known to him, advertising the functional benefits and demonstrating the product go a long way in capturing the rural market. Hindustan Lever is the first company that comes to mind while thinking of rural marketing. Amul is another case in point of aggressive rural marketing. Some of the other corporates that are slowly making headway in this area are Coca Cola India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

Segmentation and Targeting

In rural market consumers are not a homogeneous lot in economic conditions, or literacy, or behavior. So it would be unwise for firms to assume that the rural market as a whole can be served by a single offer or a single product-pricepromotion combination. So firms have to analyse the consumers in-depth, carryout thorough market segmentation and select relevant segments as target markets. Geographic segmentation In the first place, the rural market can be segmented geographically, using different geographic bases. Climate and level of irrigation

For example, climate can be one of them; regions endowed with favourable climate are usually more prosperous compared with climatically handicapped region. Level of irrigation can be another base; irrigated areas and dry land areas pose different economic and marketing environments.

Nearness to a feeder town / industrial project

Firms can also segment the rural market using nearness to a feeder town or industrial project as the base. Studies have revealed that consumers located close to a feeder town visit atleast once a month to sell their product and/or buy their requirements, and in buying habits they differ from those living in the interior areas. Similarly, nearness to an industrial project centre can also be used as the base for segmentation.

Demographic segmentation

The rural marketing can be segmented demographically too. In fact, there are many possibilities of segmenting the rural market demographically.

Population concentration

Population spread or population concentration can be one base. The market can be segmented on the basis of different size classes with regard to population. Age

There is a population of more than 20 crore in the age group of 16-30 years in the rural market. Surveys have revealed that the younger generation dominates purchases in the rural market. Literacy level

Though rural india, in general, is characterized by low literacy, there are wide variations in the matter of literacy within rural india. For example, while the rural literacy rate in kerala is 80 percent, that in Bihar is only 15 percent. Income

Income too can be a base. The rural consumers can be segmented into different income classes. The rural consumers can also be segmented into regular income and seasonal income segments.

Sources of data on rural consumers India has a rich source of data on rural consumers in the form of census data. Reports of the Centre for Monitoring India Economy also form a useful resource. As these are not usually in a user-friendly format, firms have to discern the needed insights from them and use them as the base for segmentation. Product strategy :- The first decision to be made in product strategy in the rural context is whether the product that is sold in the urban market can be supplied to the rural market as it is, or whether it must be adapted. It depends on the situation and the nature of the product. In many cases, some adaptation will be advantageous. Basically , the form must find out what kind of product is actually required by the rural consumer and then decide if it should make an altogether distinct product or adapt the existing product.

Economic and income realities of the market should certainly be considered while developing the product strategy for the rural market. In addition, sociocultural realities should also be considered. Lower-priced product versions do help in many cases in the rural market, but no generalization can be made in this regard.

Specifically-Designed Products The tractor/trailer The tractor/tailor is an apt example. It is a product specifically designed for the rural market. It is designed as a replacement for the plough as well as a vehicle for transporting both men and material in the rural areas.

Model variants Models developed for the rural market have found more takers in the market. For instance, motorcycles that are designed to take on the rigours of rural roads have succeeded more in the rural market. Color variants The rural consumers differ from their urban cousins in color preference. In the case of some products, color may vary much. Firms can exploit these facts to their advantage. For example, Asian paints understood the substantial difference between the urban and rural buyer in color preferences. Asian paints introduced paints with bright colors for the rural market. Package Design and Pack Size In some cases, the product can be the same, but the package and pack size may have to be different for the rural target group. Package design and color help identification of brands by rural buyers. Many rural consumers are not quite conversant with the various brands. All the same, they manage to pick the brands that they want. They recognize the brands from its packaging. This is the reason why a number of local brands in rural areas imitate the packaging of big national brands. As regards pack size, as a general it can be stated that smaller packs are more suited to the rural areas. Also rural consumers want to try the product in small quantity.

The fact that most shampoo brands were priced at Re 1 or below per sachet helped the trial and adoption. The 5-gram Vicks Vaporub tin and the small-size Lifebouy soap are such examples.

Logos, Symbols and Mnemonics Image is far more potent in the rural market, which in many cases is an uninitiated market. Symbols, therefore, add value to brand recall and brand personality in the rural market. The Nirma Girl: The Nirma girl in frock on the packs of Nirma washing powder has become the mnemonic for effective and good value in washing powders. Brand Decisions Branding too needs skillful handling in the rural markets. The rural consumers have already graduated from generic products to branded products. Today, the brand name is the surest means of conveying quality to rural consumers. Sell value Brands, Not cheap Brands While specifically developed for the rural market and lowpriced variants may work better in many cases, the strategy should be one of selling value brands, not cheap brands. HLLs Lifebouy, for example, is a low priced carbolic soap that is often the first choice of bath soap by rural consumers. HLL however, does not sell it as a cheap soap. Instead, sells it as a hygiene brand. Physical Distribution Let us first see the special problems, which marketers have to face in physical distribution in the rural context. The problems in Transportation and Warehousing

It is well known that transportation infrastructure is quite poor in rural India. Though the country has the fourth largest railway system in the world, many parts of the rural India remain outside the rail network. Nearly 50 percent of the 570,000-odd villages in the country are still not connected by proper roads.

Cost-Service Dilemma More Acute

The constraints affect adversely the service as well as the cost aspect in distribution. Maintaining the required service level in delivery of products becomes very difficult. At the same time, costs of distribution are escalated. The scattered nature of the market and its distance from the urbanbased production points compound the difficulty. In the matter of transportation, combining different modes can be cost-effective. Tracks for medium-distance movement and delivery vans and bullock carts for local haulage may serve the purpose better. Bullock carts have a special role on rural distribution, especially in tertiary transport. They are cheaper; they are available in plenty and are ideal for the rural roads. The Delivery Van

The delivery van has a key role in rural distribution. The companies concerned or their C&F agents/stockists/distributors operate these vans. Companies like Hindustan Lever and Itc, who are pioneers in rural marketing in India, have a fleet of company delivery vans for rural distribution. The van takes the products to the retail shops in every nook and corner of the rural market.

CHANNEL MANAGEMENT Problems in organizing channel management:Multiple tires add to the cost The distribution channel in the rural context usually requires more tires, compared with the urban distribution chain. The distance between production points and the rural market and the scattered location of consumers make it necessary. The distribution channel requires Minimum three tires viz., shopkeeper, mundi level distributor and wholesaler. Producer who can reach the customer through the shortest distribution chain can do better in this Market. 1) Non availability of dealer Firms find the availability of dealer is limited and the scope for appointing fresh/executive dealers of the company is equally limited in view of the low demand and non availability of suitable candidates. 2) Poor viability of out lets A good number of retail outlets in rural market suffer from poor viability. A familiar paradox in rural distribution is that on the one hand the manufacturer incurs additional expenses on distribution and on the other, the retail outlets find that the business is Un-remunerative to them. 3) Inadequate banking and credit facilities-Distribution in rural markets is also handicapped due to the lack of adequate banking and credit facilities. It is estimated that there is only one bank branch for every 50 villages. Rural outlets need banking support for three important purposes: For remittances to principals and to get fast replenishment of stocks For supplies through bank For securing credit E.g. Nirma realizes on wholesaler network, HLL is trying to get around this problem by giving credit to the distributor. 4) The village shop is the key to rural distributionFor a large variety of consumer product, the private village shops are the main channel in the rural markets; they are also the cheapest and the most convenient channel to align with. The network of village shop of India is considered by several experts as the largest and cheapest distribution channel in the world.

5) Improving the viabilities of outlets-

The firm must be willing to view rural marketing as long term venture. The firm must encourage the outlets to deal in no. of product lines. In, fact firm can collaborate with other firms and make joint retailing offer, thereby promoting the viability of the retail operation.

SALES FORCE MANAGEMENT Rural marketing calls for some special traits on part of salesman Willingness to be located in rural areas- only those who feel happy in leaving and working in villages can become good rural salesman.

Cultural congruence- The salesman must be well acquainted with the cultural aspects of rural life. Since the culture pattern of rural community differs from one another, background that gels with the culture of the given community is to be preferred. Attitude factor- The rural salesman must have a great deal of patience, as their customer is traditional and cautious person.Perseverance is another essential trait. It will not be possible for the rural salesman to clinch the sale quickly. He may have to spend a lot of time with customer and make several visits to him to gain a favorable response. Knowledge of local language- rural salesman should also be conversant with the local language. Ability to handle several product lines- rural salesman are compiled to handle a large variety of products, as they do not generates economic volume of a business with a few products. Quite often, the item differs widely from one another. Managing rural sales force- It will be evident from the foregoing discussions that the task of sales force management carries certain added responsibilities in the rural context. In salesman, in giving them orientation, in motivating them, and in developing them the sales manager in charge of a rural sales force has to make several adaptations.

MARKETING COMMUNICATIONS Selecting media mix:-

TV-With the increase in coverage and increase in TV ownership in rural areas, TV is gradually becoming the prime medium for rural communication. Cinemas-Cinema is relatively a more available medium. It has been estimated that 33% of the total cinema earning in the country come from rural India. Radio- The radio is a well established medium in rural areas. A big expansion in broadcasting facilities has taken place in the country over the years. Outdoors- The outdoors, which includes holdings well printings, illuminations and other displays, also lend well for rural communication. POPs-Point of purchase promotion tools is also useful in the rural market. POPs meant for the rural market should be specially designed to suit the rural requirement. Symbols, colors and pictures must be used liberally in POPs meant for the rural markets. Audio-visual /publicity vans- The van is comprehensive mobile promotion station at the exclusive command of the concerned firm. The firm can exhibits its film and other audio visual presentations, such as slide shows, sounds, and sight presentations puppet shows, etc., from this instant promotion stations. E.g. Colgate-Palmolive has supply vans that offer free sample and screen video film on the oral hygiene. Godrej vans play music and announce free gifts in the village square. Syndicated AV vans-Firms which cannot afford to operate vans of their own, utilize syndicated van service offered by independent agencies. Puppet shows, Hrikathas - Popular entertainment programs like puppet shows, dance, dramas and Harikathas, specially developed for promotion purpose are now being used in rural markets. Village fairs, festivals and melas are ideal venues for projecting these programs. Music cassettes- I t is an appealing medium and comparatively inexpensive medium. They can be played in cinema houses or in other places where rural people assemble.

Retail Marketing
IntroductionRetailing was introduced in terms of its function and structure. However not everyone may be clear that retailing involves the activity of shopping, purchasing by means of the internet, dealing with financial services or even visiting a local fast food outlet or hairdresser. This daily involvement is interpreted in different ways and underlies the complexity of retail marketing operations. Retail comprises all the activities involved in the marketing and distribution of goods and services. Therefore, marketing is a core area for any retail operation As the success or failure of retailers is based upon how well they understand and serve the needs of their customers.Retail marketing operates as a demand management function within an organizational context and as such it needs to be adequately resourced and managed in order to be effective Retail marketing has evolved due to the different business and social changes which have occurred throughout the twentieth century. Marketing has developed as a reaction to the different conditions which impinge on business operations. While we can identify different business philosophies, clarify the marketing concepts and describes the benefits of a marketing orientation, the heart of marketing lies in the way marketing management functions in an attempt to create consumer satisfactions. Retail definition: 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 final consumer within the distribution chain is a key concept here as retailers are at the end of the chain and are involved in a direct interface with the customer. However, the emphasis on final consumer is intentionally different from that on customer.

Consumer behaviour and retail operations Does consumers' selection of retail outlets depend on the brands available or is it the retail outlet first and the brand next? Marketers need to do in-depth research on the various aspects that link brand and retail strategy. DECISION-MAKING with regard to retail outlet selection is very similar to consumer decision-making on brands where the consumer goes through a process starting from identifying needs to post-purchase issues. There are a few interesting and important dimensions associated with consumer behaviour and retail outlet selection. Does the retail outlet have psychological implications on the target segment? When Titan and Timex watches were retailed through exclusive shops, consumers wanting lower-end watches probably felt that a typical Titan showroom was too elitist, which could have had a negative impact. Does selection of outlets vary in accordance with types of product categories? While buying a TV or a washing machine, would consumers visit an exclusive showroom of BPL, Onida or Sony, or would they visit a multi-brand outlet? Would there be differences in the psychographic (and demographic) profiles of consumers choosing outlets? What is the sequence in which consumers are likely to go about their decisions? Will they select the brand or the category first before choosing the outlet? What is the impact of the image developed by a retail outlet? Is FoodWorld different from a neighbourhood grocery shop in the minds of consumers? What kind of perception are consumers likely to have with regard to shopping from an online outlet such as Fabmart vis--vis a brick-and-mortar outlet like Fountainhead or Landmark? Would consumers be interested in store or retail brands? Traditionally, retailers have been carrying manufacturers' brands. But in recent times (at least to a significant extent in the foods category), supermarkets such as FoodWorld have started carrying retail or store brands. Nilgiri's is another example in the South which carries its own brands of chocolates, biscuits and other commodities. What contributes to retail equity or retail image or retail loyalty? How do retail outlets handle perceived risks?

Marketers need in-depth knowledge about the various dimensions which link retailing and consumer behaviour. There is research required to handle retail decisions in a competitive context. McDonald's found that a major chunk of its consumers decide to eat a few minutes before they make the purchase decisions and hence it is building small outlets in large supermarkets such as Wal-Mart and Home Depot. It is providing play areas to ensure a number of families visit its outlets with children. A few companies also operate through kiosks in airports, malls and high-traffic areas. Sunglass Hut is a brand which operates kiosks at various places which displays about 1,000 different models along with their prices. Consumers could place an order through these kiosks and the product is home-delivered. Categories of customers Generally the customers can be grouped into three main categories. These are:

1. Bargain hunters visit retail store, pick over last years holiday inventory, and then disappear for months.

2. Casual shoppers chat up with sales staff and buy sometimes.

3. Devoted customers, loyal clientele, love the store, buy often, and refer their friends to you. Target market A retailers most important decision concerns the target market. Until the target market is defined and profiled, the retailer cannot make consistent decision on product assortment, store dcor, advertising messages and media, price, and service levels.

Marketing Decisions In the past retailers held customers by offering convenient location, special or unique assortments of goods, greater or better services than competitors, and store credit cards. Today, national brands are found in department stores, in their own shops, in merchandise outlets, and in off-price discount stores. In their drive for volume, national brand manufacturers have placed their branded goods everywhere. The result is that retail store assortments have grown more alike. Customers have become smarter shoppers. They do not want to pay more for identical brands, especially when service differences have diminished; nor do they need credit from a particular store, because bank credit cards are almost universally accepted. Retailers marketing decisions can be examined through target market, product assortment and procurement, services and store atmosphere, price, promotion, and place.

Product assortment and Procurement The retailers product assortment must match the target markets shopping expectations. The retailer has to decide on product assortment breadth and depth. Thus a restaurant can offer a narrow and shallow assortment (small launch counters), a narrow and deep assortment (delicatessen), a broad and shallow assortment (cafeteria) or a broad and deep assortment (large restaurant). The real challenge begins after defining the stores product assortment, and that is to develop a product differentiation strategy. After deciding on the product-assortment strategy, the retailer must establish procurement sources, policies, and practices. Retailers are rapidly improving their skills in demand forecasting, merchandise selection, stock control, space allocation, and display. Stores are using direct product profitability (DPP) to measure a products handling costs (receiving, moving to storage, paperwork, selecting, checking, loading, and space cost) from the time it reaches their warehouse until a customer buys it in their retail store.

Services and store atmosphere Retailers must also decide on the services mix to offer customers:

Prepurchase services include accepting telephone and mail orders, advertising, window and interior display, fitting rooms, shopping hours, fashion shows, trade ins.

Postpurchase services include shipping and delivery, gift-wrapping, adjustments and returns, alterations and tailoring, installations, engraving.

Ancillary services include general information, check cashing, parking, restaurants, repairs, interior decorating, credit, rest rooms, and babyattendant service.

The services mix is a key tool for differentiating one store from another, so is atmosphere. Atmosphere is another element in the store arsenal. Every store has a physical lay out that makes it hard or easy to move around. Every store has a look. The store must embody a planned atmosphere that suits the target market and draws consumers towards purchase. Price decision Prices are a key positioning factor and must be decided in relation to the target market, the product-and-service assortment mix, and competition. All retailers would like to achieve high volumes and high gross margins, but the two usually do not go together. Most retailers fall into the high-mark up, lower volume group (fine specialty stores) or the low-mark up, higher volume group (massmerchandisers and discount stores). Retailers must also pay attention to pricing tactics. Most retailers will put low prices on some items to serve as traffic builders or loss dealers. They will run storewide sales. They will plan markdowns on slower-moving merchandise.

Promotion decision Retailers use a wide range of promotion tools to generate traffic and purchases. They place ads, run special sales, issue money saving coupons, and run frequent shopper-reward programmes, in-store food sampling, and coupons on shelves or at checkout points. Each retailer must use promotion tools that support and reinforce its image positioning.

Place decision Retailers are accustomed to saying that the three keys to success are location, location, and location. Customers generally choose the nearest bank and gas station. Department-store chains, oil companies, and fast food franchisers exercise great case in selecting locations. The problem breaks down into selecting regions of the country in which to open outlets, then particular cities, and then particular sites. Retailers can locate their stores in the central business district, a regional shopping center, a community shopping center, a shopping strip, or within a large store. In view of the relationship between high profits and high rents,, retailers must decide on the most advantageous locations for their outlets. They can use a variety of methods to assess location, including traffic counts, surveys of consumer shopping habits, analyses of competitive locations. Retailers can assess a particulars stores sales effectiveness by looking at 4 indicators.

1. Number of people passing by on an average day. 2. Percentage who entered the store. 3. Percentage of those entering who buy. 4. average amount spent per sale.

The retail marketing mix The term 'marketing mix' was first used in 1953 when Neil Borden, in his American Marketing Association presidential address, took the recipe idea one step further and coined the term "marketing-mix". A prominent marketer, E. Jerome McCarthy, proposed a 4 P classification in 1960, which has seen wide use. The four Ps concept is explained in most marketing textbooks and classes. Elements of the marketing mix are often referred to as 'the four Ps':

Product - A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are service based like the tourism industry & the hotel industry or codes-based products like cellphone load and credits. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system.

Price The price is the amount a customer pays for the product. It is determined by a number of factors including market share, competition, material costs, product identity and the customer's perceived value of the product. The business may increase or decrease the price of product if other stores have the same product. Place Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet. Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements - advertising, public relations, word of mouth and point of sale. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any communication that is paid for, from cinema commercials, radio and Internet adverts through print media and billboards. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product above).

Whatever approach is taken to the classification of the controllable aspects of marketing there is a need to realise that purchase s do not take place unless customers know: That an offer exists; Where it is best to purchase the offer; That it offers value and is affordable; That the offer is likely to satisfy the need for which it is required The productA break down of retailing as a product The formulation of a successful retailing operation invovles a combination of: 1 Service 2 Quality

3 Merchandise 4 Brand name 5 Features and benefits Service An agreement to service provision is concerned with creating the level of services to be offered. In a store, how much of the service should the client be expected to perform and how much should be provided by staff? Quality A decision regarding quality invovles deciding on quality standards and implementing a method of assurance on the performance level of staff and facilities. It is important to create a good quality reputation for the product and services offered as this provides a positive image for the company or organisation and is a major advantage in countering the perception of risk which, for many retail consumers, is high. Quality is also used strategically: as a way of differentiating merchandise and of positioning the offer or retail outlet in an exclusive way. Merchandise Retailers need to decide on the merchandise to offer by engaging in the sorting process of assembling a range of goods and services from a variety of suppliers. The depth and width of this range will depend on the specific strategy of each retailr, who must decide how different products will fit into the overall range of products they offer the marketplace. Decisions over merchandise have to take into account that a consumer may want to choose to purchase from a range of different types of goods. This could encompass the following categories. 1. National brands 2. own labels 3. licensed mechandise 4. franchised products via concessions in store.

Store layout Well-planned retail store layout allows a retailer to maximize the sales for each square foot of the allocated selling space within the store. Store layouts generally show the size and location of each department, any permanent structures, fixture locations and customer traffic patterns. Each floor plan and store layout will depend on the type of products sold, the building location and how much the business can afford to put into the overall store design. The design of stores has to produce an efficient layout with the qualities of ambience that attract members of the target market. Aspects of atmospheric and store layout may affect: 1.The speed at which consumers move from one point to another point in the store 2.The degree of well being felt by staff 3.The total sasles revenue sales patterns and types of product sold 4.The image the consumer has of the store and its merchandise. Pricing Pricing involves asking questions like:

How much to charge for a product or service? This question is that a typical starting point for discussions about pricing, however, a better question for a vendor to ask is - How much do customers value the products, services, and other intangibles that the vendor provides. What are the pricing objectives? Do we use profit maximization pricing? How to set the price?: (cost-plus pricing, demand based or value-based pricing, rate of return pricing, or competitor indexing) Should there be a single price or multiple pricing?

Should prices change in various geographical areas, referred to as zone pricing? Should there be quantity discounts? What prices are competitors charging? Do you use a price skimming strategy or a penetration pricing strategy? What image do you want the price to convey? Do you use psychological pricing? How important are customer price sensitivity (e.g. "sticker shock") and elasticity issues? Can real-time pricing be used? Is price discrimination or yield management appropriate? Are there legal restrictions on retail price maintenance, price collusion, or price discrimination? Do price points already exist for the product category? How flexible can we be in pricing?

Price lining is the use of a limited number of prices for all your product offerings. This is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. Its underlying rationale is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices. A loss leader is a product that has a price set below the operating margin. This results in a loss to the enterprise on that particular item, but this is done in the hope that it will draw customers into the store and that some of those customers will buy other, higher margin items. Promotional pricing refers to an instance where pricing is the key element of the marketing mix. The price/quality relationship refers to the perception by most consumers that a relatively high price is a sign of good quality. The belief in this relationship is most important with complex products that are hard to test, and experiential products that cannot be tested until used (such as most services). The greater the uncertainty surrounding a product, the more consumers depend on the price/quality hypothesis and the more of a premium they are prepared to pay. The classic example of this is the pricing of the snack cake Twinkies, which were perceived as low quality when the price was lowered. Note, however, that excessive reliance on the price/quantity relationship by consumers may lead to the raising of prices on all products and services, even those of low quality, which in turn causes the price/quality relationship to no longer apply. Premium pricing (also called prestige pricing) is the strategy of consistently pricing at, or near, the high end of the possible price range to help attract statusconscious consumers. A few examples of companies which partake in premium

pricing in the marketplace include Rolex and Bentley. People will buy a premium priced product because: 1. They believe the high price is an indication of good quality; 2. They believe it to be a sign of self worth - "They are worth it" - It authenticates their success and status - It is a signal to others that they are a member of an exclusive group; 3. They require flawless performance in this application - The cost of product malfunction is too high to buy anything but the best - example : heart pacemaker. The term Goldilocks pricing is commonly used to describe the practice of providing a "gold-plated" version of a product at a premium price in order to make the next-lower priced option look more reasonably priced; for example, encouraging customers to see business-class airline seats as good value for money by offering an even higher priced first-class option.[citation needed] Similarly, third-class railway carriages in Victorian England are said to have been built without windows, not so much to punish third-class customers (for which there was no economic incentive), as to motivate those who could afford second-class seats to pay for them instead of taking the cheaper option.[citation needed] This is also known as a potential result of price discrimination. Demand-based pricing is any pricing method that uses consumer demand based on perceived value - as the central element. These include : price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing. Pricing factors are manufacturing cost, market place, competition, market condition, quality of product. Multidimensional pricing is the pricing of a product or service using multiple numbers. In this practice, price no longer consists of a single monetary amount (e.g., sticker price of a car), but rather consists of various dimensions (e.g., monthly payments, number of payments, and a downpayment). Research has shown that this practice can significantly influence consumers' ability to understand and process price information [1 Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time. It is a temporal version of price discrimination/yield management. It allows the firm to recover its sunk costs quickly before competition steps in and lowers the market price.

RETAIL ADVERTISING - RETAIL PROMOTION Although the primary purpose of this section is to discuss merchandise management, advertising is so important to the concept that its inclusion, though brief, is necessary. There are two major types of advertising: Advertising to acquaint potential buyers with the special features of a product. With many industries, advertising of this type is done by the manufacturer of the product. Quite often, however, the retailer must do some of this advertising. When this occurs, it is often necessary to work with an advertising agency so they may help you write the copy (wording) such that the advertising will bring the best results. Such advertising concentrates almost solely on the single featured product. Advertising the availability and price of nationally known merchandise. Much retail advertising is merely directed at letting potential customers know that the product is available and informing the customer of special prices or promotions which may encourage her/him to buy, at your store. This is perhaps best done through 'Omnibus' ads which feature many products, their prices, and brief slogans about their benefits. Consumers very often "shop" such ads and will come into your store to buy one or two of the items listed. While there, they buy other things on impulse. Whatever your message may be, there are many ways to advertise - depending on how much information you wish to impart to prospective consumers, what kind of information (audio and/or visual), and how many consumers you wish to reach. Retailers who cater to local clientele may use advertising methods such as:

In-house flyers indicating products and bargains Signs both internal and external to the store Informative in-house displays of merchandise Direct mail advertising Local newspapers Distribution of flyers by hand or using the local newspaper deliveries (some papers have such arrangements)

Those retailers who wish to launch a large scale campaign may, of course, resort to advertising via radio, television, or widely circulated newspapers. It is very important to remember that for any kind of advertising, single ads bring very sparse results. In order to make an advertising campaign successful, it is usually necessary to advertise repeatedly (five or six times during a one to two week period) to acquaint consumers with your service or product and, most

important, with your store. It is also necessary to maintain a regular program of advertising throughout the year in order to continue bringing customers into the store. Continual experimentation is necessary to determine which approaches are best. Although proper advertising may involve an initially high expense, if it succeeds both in drawing more clientele into your store and in increasing sales in both advertised and unadvertised products, the initial investment may more than pay for itself. Once advertising has brought the consumer into your store, promotion and sales efforts must transfer the customer's attention and interest into desire and action to buy. In-Store Promotion Promoting merchandise may often be achieved by special arrangements with a manufacturer or a wholesaler. Often new merchandise will be offered at low introductory prices and the manufacturer or wholesaler will provide the retailer with special informative displays of the product as well as offer special rewards to the consumer. Many times a manufacturer will not offer displays but you will want to promote certain merchandise nevertheless. Basic ways through which you may create your own in-store promotions are:

window displays special in-store displays signs and posters personal selling efforts

Retail Displays Both in-house displays of merchandise and advertising displays should be:

attention getting in coloration and layout informative in regard to the product either a direct or subtle sales pitch to convince the customer that he or she needs the product informative of price, especially if it is a 'special price'

Both display advertising and in-house displays often do well to feature a number of related products, some of which may or may not be on sale. Past studies in advertising have shown that a person's eye is generally attracted to the center of a display, then off to the right of center and lastly reaches the

edge of the display. It is therefore good practice to place a featured item, which may be on sale, at the center of the display and another product for which you most wish to generate sales, to the immediate right of the featured item. Other related products may be placed outward from around the center of the display. When creating a display, it is important to tie-in merchandise lines with one another wherever possible. In this way, customers who are in the market for a specific product are also exposed to many related products and accessories which they will often buy. Such tie-in displays also create a more organized appearance of your store and will make products easier to find. For example, a person looking for toothpaste might be more likely to buy a toothbrush, dental floss, or mouthwash if those products are in close proximity to the toothpaste. Tie-in displays also help to generate impulse buying. Quite often an advertised or 'sale' product will draw people into the store who will buy not only the advertised product but will also buy, on impulse, other unadvertised merchandise. Sales are often helpful to impulse buying since, when people feel they are getting a good bargain, they are often likely to reciprocate by purchasing other merchandise from you with money saved from the sale. Sales Effort All promotions and attempts to interest customers in new lines, new products, or in special sales, will work better if they are supported with sales effort. For example, just before a product is rung up at the cash register, it is always a good idea to ask a customer whether he or she knows of a special sale, knows of a special product you are promoting, or could use something that goes well with the things the customer has already purchased. If such reminders are given in a friendly way without being persistent, many customers will make additional inquiries and often additional purchases. ON-THE-JOB ACTIVITY For your next in-store promotion, you might try using a tie-in display, with the featured item in the center of the display, surrounded by related products or accessories. If possible, discuss your ideas with a person knowledgeable in advertising; pursue any additional ideas which may arise from such a discussion

Following are some more effective promotional activities:

1.Personal Selling. Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high. 2. Sales Promotion. Sales promotion tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative. 3. Public Relations (PR). Public Relations is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan. 4. Direct Mail. Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is 'defined' based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors' surgeries as the basis of your mail shot. 5. Trade Fairs and Exhibitions.

Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events. 6. Advertising. Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides). 7. Sponsorship. Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization.

The elements of the promotional mix are then integrated to form a unique, but coherent campaign.

Supply chain management

Supply Chain Management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole (Mentzer et al, 2001) Global Supply Chain Forum - Supply Chain Management is the integration of key business processes across the supply chain for the purpose of adding value for customers and stakeholders (Lambert, 2008)[2]. According to the Council of Supply Chain Management Professionals (CSCMP), Supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise.

Retail logisticsRetailing and logistics are concerned with product availability. Many have described this as getting the right products to the right place at the righttime. Unfortunately however that description does not do justice to the amount of effort that has to go into a logistics supply system and the multitude of ways that supply systems can go wrong. The very simplicity of the statement suggests logistics is an easy process. As the boxed example shows, problems and mistakes can be all too apparent. The real management trick is in making logistics look easy, day in and day out, whilst reacting to quite volatile consumer demand.

The logistics management task is therefore initially concerned with managing the components of the logistics mix. We can identify five

components: Storage facilities: these might be warehouses or distribution centres or simply the stock rooms of retail stores. Retailers manage these facilities to enable them to keep stock in anticipation of or to react to, demand for products. Inventory: all retailers hold stock to some extent. The question for retailers is the amount of stock or inventory (finished products and/or component parts) that has to be held for each product, and the location of this stock to meet demand changes. Transportation: most products have to be transported in some way at some stage of their journey from production to consumption. Retailers therefore have to manage a transport operation that might involve different forms of transport, different sizes of containers and vehicles and the scheduling and availability of drivers and vehicles. Unitization and packaging: consumers generally buy products in small quantities. They sometimes make purchase decisions based on product presentation and packaging. Retailers are concerned to develop products that are easy to handle in logistics terms, do not cost too much to package or handle, yet retain their selling ability on the shelves. Communications: to get products to where retailers need them, it is necessary to have information, not only about demand and supply, but also about volumes, stock, prices and movements. Retailers have thus become increasingly concerned with being able to capture data at appropriate points in the system and to use that information to have a

more efficient and effective logistics operation. It should be clear that all of these elements are interlinked. In the past they were often managed as functional areas or silos, and while potentially optimal within each function, the business as a whole was sub-optimal in logistics terms. More recently the management approach has been to integrate these logistics tasks and reduce the functional barriers. So, if a 4 Logistics and retail management retailer gets good sales data from the checkout system, this can be used in scheduling transport and deciding levels and locations of stock holding. If the level of inventory can be reduced, perhaps fewer warehouses are needed. If communications and transport can be linked effectively, a retailer can move from keeping stock in a warehouse to running a distribution centre which sorts products for immediate store delivery: that is, approaching a Just-In-Time system. Internal integration has therefore been a major concern.

Retail marketing methods and approachesEveryone knows that marketing is essential to effectively communicate a business to its customers in order to sell more of its existing products, launch new products to the marketplace, and to maximise revenues and profits. But creating a marketing plan that actually achieves those goals can seem a daunting and arduous task. Following points should be considered while preparing a plan

1.Save time and money because you can start your own plan right now based directly on an industry standard and complete marketing plan 2.Immediately see the exact contents required in your own marketing plan 3.Properly present your plan in the exact format professionals prefer and support for approval and for any finance you may be seeking 4.Learn profit attracting strategies from a plan specifically developed for a real Retail business 5.Accelerate your own plan completion by simply customising this Microsoft Word professional plan for your own business 6.Start your marketing plan immediately because you can access and download this plan online right now

Retail Location Strategies

Nationwide, the retail sector enjoyed robust growth during the first half of the decade. The excitement, however, is dying down, as several category-killer retailers experience slowing sales. The once-zealous players are becoming more cautious, and once again the rules of the game are changing for developers and commercial brokers. New Development Drivers Traditionally, retail centers have been defined as either regional, community, or neighborhood, with standard tenants for each of these categories. Recently, though, the lines have blurred, as discount department stores anchor regional malls and traditional mall tenants move in-line at strip centers or into freestanding locations. The three familiar categories have now polarized into either regional or neighborhood locations. Lackluster performance has caused the retreat or merger of a number of retail chains, both large and small. The theater and entertainment group, once shunned by many developers and anchor retailers, is fast becoming the darling of the industry. And in the wake of continuing retail bankruptcies and mergers, capital markets are taking a closer look at new development. In fact, many financial institutions have reallocated funds for property types, dropping retail from the most-favored status. With smaller quantity of money is being focused on this overbuilt market-and cautious tenants becoming more selective in choosing new locations-developers and retailers must be more creative. As a result, new deals will rely less on the credit of the tenant and more on the developer's use and positioning of a site as it relates to the market. Location Historically, the criteria for many retailers has included a location on Main and Main, with a minimum population within a specific radius, generally concentric rings of 1, 3, 5, or 10 miles. But providing demographics based on concentric rings and identifying the competition are no longer enough to sell a buyer on a location. Road systems, buyer preferences, and new venues of competition must now be considered, making use of the new technologically advanced systems that overlay mapping, demographics, and other data. Consistency in consumer behavior also plays a part in the decision-making process, as cluster analysis, which identifies similar behavior patterns within

similar demographic tracts, becomes prevalent. Psychographics-adding psychology, behavior, and lifestyles to demographic data-is also being utilized. For example, the shopping patterns in the Midwest are not the same as those in the New York City metropolitan area when parking, road access, and visibility are considered. Providing information on the existing, proposed, and potential competition surrounding each site is critical when reviewing any location. Geodemographic systems have quickly become the choice among savvy market researchers, as the use of one or more of these systems has proved successful in selecting new store locations. Doing research and providing this information are now key to satisfying retailers and capital markets. Retailers, developers, and brokers must push the envelope and look beyond the obvious to find creative options. For example, Tandy's Incredible Universe, the cutting edge of electronics retailing, includes in-store McDonald's in its 185,000square-foot stores. Brand recognition has made Starbucks a household word, with locations in malls, airports, stadiums, and most recently, flying the friendly skies with United Airlines. Current Trends With many retailers opting for locations in more densely populated areas, sites currently occupied for other uses are finding new life as adaptive reuse becomes the standard in urban economic development. Many of the nation's retailers are discovering the substantial dollar volumes that are largely untapped in the major urban markets. Obsolescent industrial buildings in A locations are making way for new supermarkets, Wal-Marts, and Home Depots across the country. In fact, Wal-Mart is considering obsolescence in its new prototype by designing stores that can be converted into multifamily housing in the future. Communities with enterprise zones and other economic incentives are getting a second chance as retailers rediscover downtown in more-affluent markets. A shining example is the Circle Centre redevelopment in Indianapolis. B locations, or those neighborhood centers once anchored by supermarkets, are getting a breath of new life from Rite Aid, Walgreens, and CVS as consumers yearn for service and convenience. In addition, the surviving supermarkets and large discount department stores are anchoring regional malls. K mart now focuses on its superstore concept in metropolitan locations, with Wal-Mart continuing to identify gaps in suburban markets. There are fewer active big-box players; therefore, opportunities for

regional mall locations, as they become repositioned, will become more prevalent. Under All Is the Land In many areas, few choice undeveloped sites-level and visible from the highway or easily accessible-are still available. Those remaining may have any number of challenges associated with them. Determining and providing the following information to the developer or user will undoubtedly expedite the process, and surprisingly, is often overlooked. Physical constraints. Does the site have difficult topography? Are the soil conditions such that blasting will be required? A review by a geologist will quickly assist in determining whether the soil conditions will result in any unusual site costs. Are there any easements or rights of way that will affect access or use of the site? Do a title search earlier rather than later to identify any potential negotiations with additional third parties.

Conservation issues. Are wetlands on the site? Are they regulated by the state or federal government? Is the site in an established flood plain area? Reviewing local or county soils and flood plain maps will reveal these facts. Additionally, if its suspected that the site may be home to some rare species of plant or animal life, we need to consult with a qualified biologist to avoid any surprises.

Assembling a qualified and experienced team of professional consultants is critical to the success of any project. Site selection and development focus on managing the process versus monitoring the transaction. The Players In addition to the developers, professional consultants, brokers, and tenants, today communities themselves are very much a part of the success or failure of proposed retail projects. Citizens are more educated, sophisticated, and involved in the development of their communities. Organized grass-roots efforts opposing retail projects are no longer the exception but the norm. Community public relations is an important early step to identify opposition groups and potential objections so that issues can be negotiated and projects are presented in a manner that will win all necessary approvals. Satisfying the concerns of the municipal planning and zoning boards is critical; however, the potential always exists for a "change of heart" by one board member as a result of pressures from organized, vocal opposition-which could prove fatal to a project. In a few areas,

the competition among tenants has created direct or indirect opposition for projects-an expensive lesson to learn and too often overlooked by developers. Increased site costs, costs to development of community opposition, high land prices, and changing tax laws have contributed to rising project costs. As a result, many retailers have found themselves in the development business to maintain already thin profit margins and meet their objectives for new locations. Other new players in the site development arena include real estate investment trusts, which will continue to see mergers as shareholders demand favorable returns. The changing rules of retail raise as many questions about site selection as they answer. For instance, what will happen when category-killer retailers finally "kill" off each other? Consider the coming decrease in disposable income-expected to drop off, as well as the compression of the retail cycle (concepts that once took 10 years to mature now fade after five or six years). These are the factors that will continue to influence retailers in their search for perfect locations. Flexibility and preparedness will aid savvy developers and brokers in staying one step ahead of the game.

CONSUMERISM IN INDIA The Indian retail market, which is the fifth largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009. As per a study conducted by the Indian Council for Research on International Economic Relations (ICRIER), the retail sector is expected to contribute to 22 per cent of India's GDP by 2010. Banks, capital goods, engineering, fast moving consumer goods (FMCG), software services, oil, marketing, power, two-wheelers and telecom companies are leading the sales and profit growth of India Inc in the fourth quarter of 200809. India continues to be among the most attractive countries for global retailers. Foreign direct investment (FDI) inflows as on September 2009, in single-brand retail trading, stood at approximately US$ 47.43 million, according to the Department of Industrial Policy and Promotion (DIPP).. With rising consumer demand and greater disposable income, the US$ 400 billion Indian retail sector is clocking an annual growth rate of 30 per cent. It is

projected to grow to US$ 700 billion by 2010, according to a report by global consultancy Northbridge Capital. The organised business is expected to be 20 per cent of the total market by then. In 2008, the share of organised retail was 7.5 per cent or US$ 300 million of the total retail market. A McKinsey report, 'The rise of Indian Consumer Market', estimates that the Indian consumer market is likely to grow four times by 2025. Commercial real estate services company, CB Richard Ellis' findings state that India's retail market has moved up to the 39th most preferred retail destination in the world in 2009, up from 44 last year. India's large youth population is driving the consumerism trend in the country. For the youth shopping is just not a necessity but a leisure activity. Also more disposable income and more number of people working in families have also contributed to this trend. The good news is that Indian consumerism is yet to attain maturity. But the catch here is society has a whole believes in saving rather than spending A liberalized economy has open doors to MNCs, and all the companies have successfully adapted their products or their marketing communication or in some cases both to the local conditions and preferences. Like Mac-Donalds, PizzaHut, Maggi - noodles tastes different in every country. India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. As a democratic country with high growth rates, consumer spending has risen sharply as the youth population (more than 33 percent of the country is below the age of 15) has seen a significant increase in its disposable income. Consumer spending rose an impressive 75 per cent in the past four years alone. Also, organised retail, which is pegged at around US$ 8.14 billion, is expected to grow at a CAGR of 40 per cent to touch US$ 107 billion by 2013. Organized retail formats have also contributed to the spending spree in the country. One myth is that Indian consumers are price sensitive. It is partly true, yet it is fast changing. FMCGs or fashion brands, all have above average pricing, but in spite of this, these companies have gained profit from operations in the sub-continent. We need value for money and this is misinterpreted quite a few times. But certain conditions such as high inflation which is prevalent here right now, hinders the new found consumerism confidence. The organised retail sector, which currently accounts for around 5 per cent of the Indian retail market, is all set to witness maximum number of large format malls and branded retail stores in South India, followed by North, West and the East in the next two years. Tier II cities like Noida, Amritsar, Kochi and Gurgaon, are emerging as the favoured destinations for the retail sector with their huge growth potential.

Further, this sector is expected to invest around US$ 503.2 million in retail technology service solutions in the current financial year. This could go further up to US$ 1.26 billion in the next four to five years, at a CAGR of 40 per cent. India has emerged the third most attractive market destination for apparel retailers, according to a study by global management consulting firm AT Kearney. The Northbridge Capital report states that apparel is the "largest organised retail category", accounting for 39 per cent of the organised market. It is growing at the rate of 12 to 15 per cent annually. Organised apparel retail is projected to touch US$ 200 million by 2010 from the current worth of US$ 120 million, the report noted. Experts agree that apparel, along with food and grocery, is leading the growth of organised retailing in India. The results of the past quarter support these findings. Thinking globally and acting locally works very well here. The Bharatiya or the Indianness is crucial to the people and this is precisely what companies are cashing in on. One needs to see how this strategy would work in the future as the socio- economic scenario is fast changing here in India. Buoyed by improved consumer spending, sales of listed retailers increased by 12 per cent in the September 2009 quarter compared with the same period in 2008. This is higher than the 8.2 per cent posted in the June 2009 quarter. While the previous quarter saw value retailers such as Koutons Retail and Pantaloon leading sales recovery, this time around, sales of lifestyle and premium retailers led the growth trend. Two out of every three retailers managed an increase of at least 10 per cent, compared to about one in three in the June 2009 quarter. Premium players such as Shoppers' Stop and Gitanjali Gems clocked strong growth of 11 and 31.7 per cent, respectively. Policy Initiatives

100 per cent FDI is allowed in cash-and-carry wholesale formats. Franchisee arrangements are also permitted in retail trade. 51 per cent FDI is allowed in single-brand retailing

Opportunities Retailing has seen such a transformation over the past decade that its very definition has undergone a sea change. No longer can a manufacturer rely on sales to take place by ensuring mere availability of his product. Today, retailing is about so much more than mere merchandising. Its about casting

customers in a story, reflecting their desires and aspirations, and building long-lasting relationships. As the Indian consumer evolves they expect more and more at each and every time when they steps into a store. Retail today has changed from selling a product or a service to selling a hope, an aspiration and above all an experience that a consumer would like to repeat. For manufacturers and service providers the emerging opportunities in urban markets seem to lie in capturing and delivering better value to the customers through retail. For instance, in Chennai Kaya Skin Clinic and Apollo Hospitals & Apollo Pharmacies are examples, to name a few, where manufacturers/service providers combine their own manufactured products and services with those of others to generate value, up till now which was not known. The last mile connect seems to be increasingly lively and experiential. Also, manufacturers and service providers face an exploding rural market yet only marginally tapped due to difficulties in rural retailing. Only innovative concepts and models may survive the test of time and investments. However, manufacturers and service providers will also increasingly face a host of specialist retailers, who are characterized by use of modern management techniques, backed with seemingly unlimited financial resources. Organized retail appears inevitable. Retailing in India is currently estimated to be a US$ 200 billion industry, of which organized retailing makes up a paltry 3 percent or US$ 6.4 billion. By 2010, organized retail is projected to reach US$ 23 billion. For retail industry in India, things have never looked better and brighter. Challenges to the manufacturers and service providers would abound when market power shifts to organized retail.

Challenges facing Indian retail industry


The tax structure in India favors small retail business Lack of adequate infrastructure facilities High cost of real estate Dissimilarity in consumer groups Restrictions in Foreign Direct Investment Shortage of retail study options Shortage of trained manpower Low retail management skill

Application of IT to retail marketing The advent of technology has changed the idea the idea of business process outsourcing to a plane where information & knowledge management has become the key. This has resulted in small firms with good understanding of IT & its prowess, providing several services like vendor evaluation, real estate tracking, and site location & trading area analysis. These are pure play service organizations that add value to service delivery & success of the retail organization. Malls outsource In- store services & space-management in addition to facility management. Call centers of large retail chains are outsourced & marketing analytical firms are involved in market research outsourcing. IT has spurred a range of business process outsourcing possibilities in retailing. Many IT companies in India started with retail clients as outsourcing partners for developing their IT backbone. Therefore, it may not be an exaggeration to say that retailing is the mother of the outsourcing business. The Challenge of Cyber Retailing Technology is making a dramatic impact on the retail industry as a whole. A recent study concluded that 40 percent of all shoppers are now using non-store venues to make some of their purchases. Another recent study concluded that electronic shopping could shift 10 percent to 20 percent of sales away from retail stores. In addition to catalog and TV shopping, cyber retailing has entered the scene, and continuing advances in information technology will make home shopping more desirable. Many retailers now have World Wide Web pages on the Internet to market their goods, making cyberspace the great equalizer as retailers of all sizes compete on an even electronic playing field. At a recent panel discussion regarding retail strategies, a panelist and counsel for a major supermarket company in the Northeast stated that his company is "rethinking" the concept of the 25-year lease, as the speed of technology is changing the way retailing will be done in the future. The Catalina Marketing Corporation is currently beta testing a new Web site that will allow consumers to choose from various options. The site also provides on-line advertising from manufacturers and coupons that consumers can print from their home computers.

Ultimately these technological changes will result in a reduced need for physical space as retailers expand electronically. Tenants that may disappear from shopping centers include camera and photo-processing stores (as digital cameras, without film, become more popular), travel offices, music stores, and bank branches (that are meeting and serving customers on-line, greatly reducing costs). All of these factors will diminish the value of location. Eventually consumers will come to value the convenience of shopping on-line over the need to personally pick out products, just as they have with catalog shopping. For example, if a retailer were to offer its products on-line, the customer who wants to touch and try on the products at a regional location could do so; others could stay at home, make a selection, place an order, and await delivery. The retailer would eliminate the need for a location in every market. As an example, consider L.L. Bean, the leader in catalog retailing; most consumers know where they can visit its stores. Becoming a destination retailer, less emphasis is placed on location. With fewer retailers needing fewer locations, there will be an abundance of good locations. The Indian retailing scene has not been as encouraging with respect to eretailing as a concept. This has been mainly because of the reach & quality of access as well as the medium used in transaction. However, these aspects in the immediate future may not be a limiting feature for the spread of Internet retailing. Tremendous efforts are on to spread IT to rural areas &increased rural connectivity is being experimented through cheap wireless connectivity, indigenously developed. Applications in several local languages have been developed successfully to suit the requirements of different states in India. In view, of these positive developments, E-retailing is set to stage a major comeback in India.

Some of the existing issues in developed countries where online retailing is very popular relates to consumer use experience. About two-thirds of online stores have ineffective search engines, leaving customers frustrated & apt to do business with a competitor. While analysts rate a few top e-retailers, like LandsEnd, Petco & L.L.Bean, highly for their sites search capabilities, the majority of on-line stores treat search engines like a afterthought. Also, there is an absence of any offer to help shoppers sort their search results, such as allowing them to pick out a certain brand, price range or availability. Moreover, most of them fail to allow customers to describe the item they are searching for in

their own terms, instead of demanding a specific name or title. E-retailers themselves were unhappy about online fundamentals such as site navigation & setting up online accounts. However, industry experts rate better aspects like the online ordering process, site functionality & content. The Next Trend Will all of this technology eliminate the need for us to leave our homes? Human beings are by nature social creatures. Therefore, shopping will evolve into places for entertainment and socialization. In many areas of the country, particularly the waterfronts, we have already seen this new breed of retailers clustering around entertainment venues and tourist destinations. Now that value pricing has left its mark, customer service and entertainment will again become the hallmarks of retailing. For example, theater chains and other entertainment venues are taking center stage as the anchors of new retail centers. National and regional restaurant groups are complementing the mix of this new environment. The Future The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone up and is also expected to go up further in the future. In the last four year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%. The Indian retail sector is ready to take on challenges from global retail players such as Wal-mart and Carrefour because unlike them, they have a better understanding of the Indian consumers psyche. Ultimately, a successful retailer is one who understands his customer. The Indian customer is looking for an emotional connection, a sense of belonging. Hence, to be successful any retail outlet has to be localised. The customer should feel that it is a part of his culture, his perceived values, and does not try to impose alien values or concepts on him. Indian customer is not keen to buy something just because it is sold by an international company. Ultimately, it boils down to how much localisation and adaptation the company is willing to do for India. Other than tremendous money power, global companies have nothing extra or special that the Indian retail business does not have. Only two percent of Indias retail market is organised.

The future shows tremendous potential for growth in the retail sector. Almost all large companies worldwide are looking to establish a base or stake in the Indian market. In this scenario, the Indian retail sector itself must seize the initiative to realise the dreams of contributing to a prosperous and booming economy. The focus should be on the Indian horizon before looking for retail opportunities in other countries because India itself is a big retail market. In the near future India will see a phenomenal growth of shopping malls and speciality retail stores. The speciality stores will cater for home, electronics, furniture, watches, sunglasses and assorted items. There will be more fashion stores for youth. Speciality retail stores and malls are the future of Indian retail market. Road Ahead According to industry experts, the next phase of growth is expected to come from rural markets. According to a new market research report by RNCOS titled, 'Booming Retail Sector in India', organised retail market in India is expected to reach US$ 50 billion by 2011.

Number of shopping malls is expected to increase at a CAGR of more than 18.9 per cent from 2007 to 2015. Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50 per cent. Organised retailing of mobile handset and accessories is expected to reach close to US$ 990 million by 2010. Driven by the expanding retail market, the third party logistics market is forecasted to reach US$ 20 billion by 2011.

Rakhee Nagpal, MD Dynamic Vertical Solutions while speaking at the Entrepreneur Summit said that the Indian retail industry is growing currently at 10% of GDP and is likely to get double in the next few years. Foreign companies are tying up with Indian companies because of their strong domain knowledge and good distribution system. Besides other likely developments in the retail scenario as discussed in the Summit are: Europes largest retail, Carrefour SA is gearing up to start its operations in India in the next year and plans to set up its first cash-and-carry outlet in Delhi (NCR). Jewellery manufacturer and retailer, Gitanjali Group and MMTC would jointly set up a chain of exclusive retail outlets called Shuddi- Sampurna Vishwas in the next year to retail hallmark gold and diamond jewellery.

Mahindra Retail plans to invest 19.8 million dollar by 2010 and come up with speciality retail concept Mom and Me .

Pantaloons Retail India is investing further (more than $103.3 million) to expant its mall Central over the next two years.

WalMart has tied up with Bharti and has come up with a store in Amritsar and plans to open few more. Carrefour is looking to enter India in the next year. Tesco, UKs retail giant has entered into a joint venture with Tatas Trent Ltd. to start operations in India. UKs biggest retailer Tesco, have entered into a 50:50 joint venture with Trent Ltd. (Tata Groups retail arm) as they plan to open stores in India very soon. Luxury Goods Retail, which currently sells its products in India under a franchise agreement, has been allowed to directly retail Gucci products in the country. Gucci Group NV, Netherlands is investing US$ 225,867 to pick up 51 per cent stake in the venture. Australia's Retail Food Group is planning to enter the Indian market in 2010. It has ambitious investment plans which aim to clock revenue of US$ 87 million from the country within five years from start of operations. In 20 years, they expect the Indian operations to be bigger than their Australian business. Lifestyle International, part of the Dubai-based US$ 1.5 billion Landmark Group, plans to have over 50 stores across India by 201213. These will include 35 Lifestyle stores for retailing apparel, cosmetics and footwear, besides 15 Home Centres that sell home furnishing goods. Watch maker, Timex India, is looking at increasing its presence in the country by adding another 52 stores by March 2011 at an investment of US$ 1.3 million taking its total store count to 120.

Wills Lifestyle plans to expand its operations by opening 100 new stores in the next three years. It also plans to concentrate on online buyers. Pantaloon Retail India (PRIL) is planning to invest US$ 77.88 million this fiscal to add up to 2.4 million sq ft retail space at its existing operations. Pantaloon Retail is also looking to hive off its value retail chain, Big Bazaar, into a separate subsidiary, which may eventually go for an initial

public offer (IPO). PRIL proposes to open 155 Big Bazaar stores by 2014, increasing its total network to 275 stores. Aditya Birla Retail which operates the More chain of supermarkets and hypermarkets is scaling up its private labels business as an independent strategic business unit (SBU) and profit centre. This may be spun off as a separate entity as private labels business account for over 19-20 per cent sales of More supermarkets and hypermarkets.

Conclusion The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services. It is also the second largest industry in US in terms of numbers of employees and establishments. There is no denying the fact that most of the developed economies are very much relying on their retail sector as a locomotive of growth. The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the countrys GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry.