SALES AND RETAIL MANAGEMENT 10MBAMM312 PART B Retail Management
Module - 8VTU SyllabusRelationship Marketing in Retailing Management of Relationship Evaluation of Relationship Marketing Relationship Marketing Strategies Retail Research Retail Audits
Building and Sustaining Relationships in RetailingIn recent years Relationship Marketing (RM) has been widely promoted asa means of retaining customers.
Relationship Marketing refers to a long-term arrangement whereboth the buyer and seller have an interest in providing a moresatisfying exchange!Relationship marketing is not about having a "buddy-buddy"relationship with your customers! & the customer don’t wantthat. Relationship Marketing uses the event-driven tactics ofcustomer retention marketing, but treats marketing as a processover time rather than single unconnected events.Relationship Marketing approach achieves very high customersatisfaction and is highly profitable
What is Value?The bottom line: Consumers will demand more for less from the shopping experience They will spend less time shopping They will split the commodity- shopping trip from the value-added shopping trip
What is Value?Channel Perspective: Customer Perspective: Value is a series of Value is the perception activities and processes - that the shopper has of the the value chain - that value chain provides a certain value It is the view of all the benefits from a purchase for the consumer versus the price paid.
Retail Value ChainRepresents the total bundle of benefits offered to consumers through a channel of distribution ▫ Store location & parking ▫ Retailer ambience ▫ Customer service ▫ Branded Products ▫ Product quality, ▫ Pricing
Potential Pitfalls to Avoid in Planning aValue-Oriented Retail StrategyPlanning value with just a price perspectiveProviding value-enhanced services that customers do not want or will not pay extra forCompeting in the wrong value/price segmentBelieving augmented elements alone create valuePaying lip service to customer service
A Value-Oriented Retailing Checklist Is value defined from a Is the retailer’s value- consumer perspective? oriented approach Does the retailer have a clear effectively communicated to value/ price point? the target market? Is the retailer’s value position competitively defensible? Can the target market clearly Are channel partners capable identify the retailer’s of delivering value-enhancing positioning strategy? services? Does the retailer set Does the retailer distinguish customer satisfaction between expected and goals? augmented value chain elements? Does the retailer periodically Has the retailer identified measure customer meaningful potential value satisfaction levels? chain elements? Is the retailer careful to Is the retailer’s value-oriented avoid the pitfalls in value- approach aimed at a distinct oriented retailing? market segment? Is the retailer’s value-oriented Is the retailer always looking approach consistent? out for new opportunities that will create customer value?
3 Aspects of Value-OrientedRetail Strategy Expected Augmented Potential
Customer Service Expected customer Augmented customer service is the service service includes the level that customers activities that enhance want to receive from the shopping any retailer such as experience and give basic employee retailers a competitive courtesy advantage
Fundamental DecisionsWhat customer services are expected and what customer services are augmented for a particular retailer?What level of customer service is proper to complement a firm’s image?Should there be a choice of customer services?Should customer services be free?How can a retailer measure the benefits of providing customer services against their costs?How can customer services be terminated?
Typical Customer Services Credit Gift certificates Delivery Trade-ins Alterations/ Trial purchases Installations Special sales Packaging/ gift Extended store hours wrapping Mail and phone orders Complaints/ Return handling
Turning Around WeakCustomer Service Focus on Empower Front-Line Customer Concerns Employees Show That You Are Express Sincere Listening Understanding Apologize and Rectify the Situation
Principles of CategoryManagementRetailers listen more to customersProfitability is improved because inventory matches demand more closelyBy being better focused, each department is more desirable for shoppersRetail buyers are given more responsibilities and accountability for category resultsRetailers and suppliers must share data and be more computerizedRetailers and suppliers must plan together
Elements Contributing to EffectiveChannel Relationships
3 Kinds of Service RetailingRented goods servicesOwned goods servicesNon-goods services
Four Characteristics ofServices RetailingIntangibilityInseparabilityPerishabilityVariability
Characteristics ofService Retailing Intangibility •No patent protection possible •Difficult to display/communicate service benefits •Service prices difficult to set •Quality judgment is subjective•Some services involve performances/experiences
Characteristics ofService Retailing Inseparability•Consumer may be involved in service production •Centralized mass production difficult •Consumer loyalty may rest with employees
Characteristics ofService Retailing Perishability •Services cannot be inventoried •Effects of seasonality can be severe •Planning employee schedules can be complex
Characteristics ofService Retailing Variability•Standardization and quality control hard to achieve •Services may be delivered in locations •beyond control of management •Customers may perceive variability •even when it does not actually occur
Selected Factors Affecting ConsumerPerceptions of Service Retailing
RETAIL RESEARCHInformation Gathering andProcessing in Retailing
Suppliers Need To Know From the Retailer From the Customer Estimates of category Attitudes toward styles sales and models Inventory turnover rates Extent of brand loyalty Feedback on competitors Willingness to pay a premium for superior Level of customer returns quality
Retailers Need To Know From the Supplier Advance notice of new From the Customer models and model Why people shop there changes What they like and dislike Training materials Where else people shop Sales forecasts Justifications for price changes
Consumers Need To Know From the Supplier From the Retailer Assembly and operating Where specific instructions merchandise is stocked in Extent of warranty the store coverage Methods of payment Where to send a acceptable complaint Rain check and other policies
How do we gatherinformation?• Qualitative Methods ▫ Nonsystematic Information Gathering ▫ Focus Groups, Depth Interviews• Quantitative Methods ▫ Secondary ▫ Primary
Nonsystematic Info’Gathering• Intuition (either self or based on few individuals)• Status Quo• Copying a Competitor• Assume Past will Continue into the Future• What are the problems with these?
Retail Information System(RIS) Anticipates the information needs of the organization Collects, organizes, and stores relevant data on a continuous basis Directs the flow of information to the proper decision makers
Database ManagementA major element in an RISSystem gathers, integrates, applies, and stores information in related subject areasInformation can be from external or internal sources (by customer, vendor or product category)Data warehousing –all databases are in one location & accessible by employees anywhere.Components - physical storage location, software to copy original databases, interactive software to process inquiries & a directory
Data Mining andMicromarketingData mining is the in-depth analysis of information to gain specific insights about customers, product categories, vendors, and so forthMicromarketing is an application of data mining, whereby retailers use differentiated marketing and develop focused retail strategy mixes for specific customer segments
Marketing Research in Retailing• The collection and analysis of information relating to specific issues or problems facing a retailer• Examples: How can we improve sales in this store? How effective was our last promotion campaign?• Secondary data –existing data: internal/external• Primary data – collected specifically for issue under consideration – usually collected when secondary data is inadequate
Marketing Research Process Define Issue or Problem to be Researched Methodology Examine Issues Secondary Data Generate Primary Data Analyze Data Make Decision Implement Findings
Secondary Data Advantages Disadvantages Inexpensive May not suit current Fast study Several sources and May be incomplete perspectives May be dated Generally credible May not be accurate Provides or credible background May suffer from poor information data collection techniques
Secondary Data SourcesInternal External Sales reports Databases Billing reports ▫ Research Agencies, Business Periodicals Index, Inventory records etc. Performance reports Government ▫ Census of Retail Trade ▫ Statistical Abstract of the Country ▫ Public records
Primary Data Advantages Disadvantages Collected for specific May be more expensive purpose Tends to be more time Current consuming Information may not be Relevant acquirable Known and controlled Limited perspectives source
Primary Decisions • In-house or outsource? • Sampling method? ▫ Probability ▫ Non-probability • Data collection method? ▫ Survey ▫ Observation ▫ Experiment ▫ Simulation
Survey Methods In-person Disguised Over the telephone Non-disguised By mail Online
Mystery ShoppersRetailers hire people to pose as customers and observe operations from sales presentations to how well displays are maintained to service calls
UPC & EDIUniversal Product Code read by scanners contains model number, size, color, etcUPC-A labeling format – numbers & linesAdvantages: speed transaction, reduce errors, rich data, inventory managementElectronic data interchange – data transfer using networks (computer systems linked together)
RETAIL AUDITRetail-audit service providers gatherinformation on a brand’s sales volume,sales trends, stock levels, effectivenessof in-store display and promotion efforts,and other associated aspects.
Performance Measures Total sales Operating income Average sales per store Inventory turnover Sales by goods/ service category Markdown percentages Sales per square foot Employee turnover Gross margins Financial ratios Gross margin return on Profitability investment
Obstacles for Doing a Retail AuditAn audit may be costlyIt may be quite time consumingPerformance measures may be inaccurateEmployees may feel threatened and not cooperate as much as desiredIncorrect data may be collectedManagement may not be responsive to the findings