Jatin Gadhiya SDM Questions and AnswersQ1. Explain the various Channel Systems.Ans : Companies use various channel partners to market their products. The type of channelpartners used by the companies depends upon the type of product and the level of service whichthe companies want to provide. The channel partners can be grouped into the following types ofchannel systems ; - Verticle marketing systems - Horizontal marketing systems - Multi-channel marketing systemsVerticle Marketing SystemsIn this type of channel system, the product passes from the producer through the distributor tothe retailer. But these channel members do not act as if trying to run an independent business.Rather, they work as a team and co-operate with each other. The idea is to reduce conflict andwork in the common interest. When they act as a unified system, the resulting size gives themimmense bargaining power and reduces duplication of efforts. Vertical Marketing Systems are ofthree types – - Corporate : In this type, the different stages from production to distribution are all handled by one entity. This type of system is now found in chain stores like More mega store, where production, distribution and retailing is controlled by one company. - Administered : Unlike in the corporate type, here the different stages are not owned by a single company. But the manufacturer is such a big entity that it is able to control the other channel members. For eg HUL, P&G, ITC. The entire marketing efforts of the system are coordinated by the company. - Contractual : Here the members arrive at an arrangement between themselves to gain economies of scale and bargaining power. Most consumer cooperative stores like Apna Bazar are examples of this type.Horizontal Marketing Systems :This is an arrangement between two totally unrelated organizations for mutual benefit. Forexample, the tie up between Domonos and Coke allows only Coke to be sold at all the DominosPizza Outlets. Similarly, a tie up between Inox and McDonalds may allow only McDonalds tobe located at Inox theatres.
Jatin GadhiyaMulti-Channel Marketing System :This system is used by companies which use two or more marketing channels to reach theircustomers. For example HUL has a different channel to service the retail trade and a differentchannel to service the institutional trade.This system enjoys many benefits like : - Better coverage of the market - Having a separate channel to service large A category customers .Multi channel systems are used where - The same product is sold to different market segments . Example moisturing lotion being sold through provision stores and chemists. - Unrelated products are sold to the same market. Example ITC selling Cigarettes and Chocolates to the same retailer - Size of the buyers varies . Example selling milk to retailers and canteens or hotels. - Geographic concentration of the customers varies . For example HUL having one distributor to service Baroda City and another to service the rural markets of Baroda district. - The reach is difficult for certain segments – like North Eastern States, ladakh.Q2. Who is a retailer and what is retailing? What are the general characteristics of retailtrade?Ans: A retailer is the last link in the distribution channel by which a company reaches its endcustomer. He is the one who breaks the bulk into suitable lots for the consumers. Being the onein direct contact with the consumers, he has the best knowledge of the consumers’ expectationsand is in a position to influence the consumer decision making.Retailing includes all the activities involved in selling consumer products and services directly tothe consumers for their personal or domestic consumption.The general characteristics of retail trade are: - The order size tends to be small - The retailer caters to a large variety of customers and hence stocks a large assortment of goods. - The retail store service personnel and the goods displayed play an important role in the selling process. - A lot of retail buying is on impulse therefore managing inventory is important. - The retailer must ensure availability and visibility of the products he sells.Q3. What are the factors which influence the choice of retailer from which the customersbuy?
Jatin GadhiyaAns: The retailer plays an important role in the success of a product because he is the last link inthe distribution channel and therefore knows what the customer’s expectations are. Moreover, ithas been found that only 35% of consumer purchases are planned. The rest are either impulsepurchases, substitutions of one brand for other. These decisions can be greatly influenced by thequality of retailers’ merchandising efforts. A consumer selects a retailer on the basis of thefollowing factors: 1. Price – whether products are reasonably priced or not. Also the terms and amount of credit extended and concessions and discounts offered. 2. Location: customers generally prefer a retailer who is conveniently located – from ehere they can easily buy their requirements. The location may be near the residence or work place. 3. Product selection: Consumers generally prefer the retailer who offers a wide choice of brands and quality of a product. 4. Special Services: customers prefer the retailer who offers special services like free home delivery, gifts wraps etc. 5. Helpful Salespeople: Customers prefer that retailer where the sales staff is helpful and courteous. 6. Fairness in dealings: the retailer who is fair in his dealings with the customers is preferred more.Q4. Write a note on the Global Retailing Scene?Ans: Retailing today is the fastest growing industry in the world. Globally, the retail trade isworth US $ 6.6 trillion. In developed countries, most of the retailing trade is organized whereasin developing countries it is unorganized. In US the share of organized retail is 85% whereas inIndia it is only 5%. The Indian retail trade is worth US $ 180 bn.The retail trade is considered a part of the service sector. It contributes highly to the GDP of acountry and also has immense employment potential. Therefore it plays an important role in theeconomic growth of a country.Globally, retail is gaining an upper hand over its suppliers. At one time the packaged goodsmanufacturers were calling the shots in the retail sector. But the things have changed today andorganized retail has gained a lot of bargaining power over its suppliers.Traditionally, the corner grocery store worked on high margins. But today, the modern retailtrade works on low margin – high volumes basis. Since today the customer is better informed, itbecomes impossible to work on high margins. The modern retailer therefore, tries to maintain hisprofitability by saving on his purchases. He also tries to save on inventory carrying costs bykeeping the optimum level of inventory. He is well aided in this by the developments ininformation technology.Organized retailing has also resorted to private labeling. Where the retailers cannot integratebackwards on their own, they resort to private labeling. This gives them a chance to achieve theirprofitability.
Jatin GadhiyaQ5. Write a note on the trends in Retailing in IndiaAns : The organized retail trade in India constitutes only 5% if the total estimated business ofUS $ 180 bn. But keeping with the trends the world over and with the growing consumerism andswelling middle class, this is set to change. There are a number of factors which are boosting theorganized retail trade in India. Some of them are: 1. With growing awareness, the Indian consumer has come of age. He is no longer content with what is available, but demands what he needs. 2. The requirement for variety is rising with rising income levels and willingness to pay for it. 3. The proliferation of communication channels has influenced the product choices expected. 4. With increased literacy rates, the consumer, both in rural as well a urban centres ha become more aware of his bargaining power. 5. Just as urban centers are demanding what is available in foreign developed countries, the rural Indian is also demanding what is available in the urban centers. 6. Supply chains of the suppliers as well as the retailers have improved tremendously. 7. Improvement in the infrastructure like roads, transport etc. has given a further boost to this industry. 8. People have understood the advantage of bargaining with large volumes. 9. Corporate sector has entered the retailing sector. 10. Branding of stores has emerged. 11. The use of IT has given added advantage to retailing. Q6. Explain the role played by a retailer in the retail trade? Ans: The retailer is the last link in the distribution channel of the company. He plays a vital role in serving the customers. He is able to provide service to the customer by the following; Merchandising : It may be defined as – ‘ a set of activities involved in acquiring goods and services and making them available at the place, time, and prices and the quantity that enable a retailer to reach his goals. This definition includes almost all the aspects of retailing. Merchandising provides time, place and convenience utility to the consumer. Customer Service: The basic service provided by any retailer is that he makes the goods required by the customers at the time and place of his choice. Every customer has some expectations of the store in terms of basic needs to be fulfilled. These basic needs ensure that the customer at least visits the store. There are certain add on services like home delivery which make the customer stick to the store. By providing these services, the retailer ensures that the customer visits the store regularly and helps in the sale of product.
Jatin GadhiyaCustomer communication: The retailer plays an important role in communicating with theconsumers. Through this communication the retailer may inform or educate the consumersabout the products etc. The retailer also needs to communicate with the customers to makethem aware about the ongoing promotion schemes etc.Q7. Explain the various strategies in retail?Ans: The retail business thrives on certain basic things which drive the retail trade. They are- No of customers visiting the store each day ( footfall ). In a corner grocery store, all the visitors are there necessarily to purchase something. This may not be the case in modern retail trade. A substantial number of visitors visit the store for window shopping.- The number of footfalls converted into purchases: The idea is to see that maximum number of visitors to the store buy something. If the customer has come with an intention to buy, then he must be persuaded to buy more.- Increase the depth of purchases of each customer: That is, the store must get the maximum share of the spending of the customer.- Retention of the customer: Once a customer has shopped in the store, he must not only come back again for all his needs but also recommend the store to his friends and relatives.Given that these are the drivers of retail trade, the strategy must be so designed so as toachieve these objectives. It can be done by the following ways:- Having a wide range of products with some differentiation that are characteristic of the store.- Having an efficient operation which gives the customers what they want in the least time and with the least effort.- Building long term relationship with the customers with the help of loyalty programs etc.The differentiation can be in terms of product or store related benefits.Positioning Strategy: In this strategy, the store develops an identity for itself in terms ofwhat it has to offer to the customers. The identity developed must be different from otherstores. For example Subhiksha had positioned itself as a no frills store with a wide range ofofferings.Product Differentiation Strategy: In this strategy, the store may offer products that are noton offer at any other store.Operational Superiority: In this strategy, the store must have highly efficient operationswhich help the customers. For example, having many billing counters so that the customerdoes not waste time in making payments. Another way is to have a very efficient andsystematic display of products so that the customer can access very easily the product hewants to buy.Store location: The location of the store must be such that it is easily accessible to a largenumber of customers.
Jatin GadhiyaQ8. What is electronic retailing or e-Tailing? What are its advantages anddisadvantages?Ans : E- tailing is shopping on the internet without the customer having to visit a store.Advantages:1. Assortment can be unlimited2. Comparison of products is easier to make on the internet.3. There are no geographical boundaries. A customer in Baroda can buy a product from Guwahati.4. There are no time restrictions. Shopping can be done at any time of day.5. Payment is online. There is no need to handle cash.Disadvantages:1. The joy of shopping cannot be had in e-tailing.2. Modern retail formats make shopping experience also entertaining. This cannot be had in e-tailing.3. Customers cannot touch and feel the product before buying.4. In e-tailing, there is nobody to help or make recommendations to the customer in the shopping.5. Most customers in India are still averse to using credit cards for shopping because of security reasons. These customers will not shop through e-tailing.