Customer perseption


Published on

Published in: Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Customer perseption

  1. 1. A Study On “Customer perception towards the Marketing Mix on Big Bazaar”Dissertation submitted in partial fulfillment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATION Of BANGALORE UNIVERSITY by Mr. SUNIT GUPTA Register No: 06KXCM6034 Under the Guidance of Mr. RAMANATH SURANA COLLEGE CENTRE FOR POST GRADUATE STUDIES Bangalore-560060 1
  2. 2. DECLARATIONI, SUNIT GUPTA, hereby declare that this report titled“Customer perception towards the Marketing Mix on Big Bazaar”at BIG BAZAAR. Submitted by me to the department of management,Bangalore University in partial fulfillment of requirements of Master ofBusiness Administration programme is a bonafide work carried by me underthe guidance of Mr.Ramanath. This has not been submitted earlier to anyother university or institution for the award of any degree or diplomacertificate or published any time before.PLACE: BANGALOREDATE: SUNIT GUPTA (06KXCM6034 2
  3. 3. ACKNOWLEDGEMENTI extend my hearty thanks to all the following members for their kind co-operation and valuable guidance provided by them during my project as apart of MBA course.I would like to thank Dr. Prabhu Dev Director, Surana College PG Centrefor his kind cooperation to complete this report.I would like to thank my guide Mr.Ramanath for spending his valuable andprecious time in guiding and helping me to prepare my report.I also thank my parents for their support. SUNIT GUPTA 3
  4. 4. EXECUTIVE SUMMARYRetail is the booming sectors of India in the present times. Retail, one of India’s largestindustries, has presently emerged as one of the most dynamic and fast paced industries ofour times with several players entering the market. Accounting for over 10 per cent of thecountry’s GDP and around eight per cent of the employment retailing in India isgradually inching its way toward becoming the next boom industry.Big bazaar is the hypermarket discount store imitative of the company commissioned toaddress the discount and bargain hunting tendencies of the Indian shopper. Big Bazaarchain houses everything that one may need in house, under one roof, at the lowest prices.It sells all items either branded or unbranded. This includes clothing, apparel, hometextiles & furnishing, white goods, provisions; etc. The merchandise will either be a partof Big Bazaar goods or will be a part of the shop-in-shop. Big Bazaar, Pantaloonpromises more for less, addressing a wider range of product lines which are of interest tothe mass market. The high service levels, good ambience and implicit guarantees makeshopping at Big Bazaar a worry-free experience. Essentially this hypermarket concept iswell on its way to changing the very face of the Indian retailing industry.Understanding shopping behavior is in shopping malls is one of the greatest problems ofthe marketer. He has to fine tune his marketing mix strategies according to the marketneeds. For this an in depth Analysis is necessary to understand the shopping behavior.Big Bazaar is one of the well-known shopping malls in the city of Bangalore and has adifferent kind of marketing strategy as compared to others. The study conducted in Big Bazaar is focused on understanding the marketing mixstrategies of Big Bazaar from customers point of view. The required data is collectedthrough questionnaire, analysis is made based on data collected and necessarysuggestions are given 4
  5. 5. INDEX ChapterNo Contents Page No 1 Introduction 1-40 2 Research design 41-43 3 Company Profile 44-51 4 Data Analysis & Interpretation 52-77 5 Findings, Suggestion & Conclusion 78-81 6 BibliographyLIST OF TABLES 5
  6. 6. SL. TABLE TITLE PAGENO. NO. NO.1 4.1. Frequency Of Visit 522 4.2 Preference Of Shopping Days 543 4.3 Preference Of Shopping Time 564 4.4 Accompanied By 585 4.5 Source Of Knowledge 606 4.6 Customer Perception Towards Big Bazaar 627 4.7 Product Satisfaction 648 4.8 Product Availability 669 4.9 Helpful Signage 6810 4.10 Awareness Of Promotional Offers 7011 4.11 Advantage Of Promotional Offers 7212 4.12 Age 7413 4.13 Marital Status 7514 4.14 Monthly Family Income 76 INTRODUCTION“Nothing happens in business until somebody sells something to someone” 6
  7. 7. RETAILINGA retailer buys goods or products in large quantities from manufacturers or importers,either directly or through a wholesaler, and then sells smaller quantities to the end-user.Retailing can be defined as the buying and selling of goods and services. It can also bedefined as the timely delivery of goods and services demanded by consumers at pricesthat are competitive and affordable.Retailing consists of the sale of goods or merchandise, from a fixed location such as adepartment store or kiosk, in small or individual lots for direct consumption by thepurchaser.Retailing includes all the activities involved in selling goods or services directly to finalconsumers for personal, non-business use. A retailer or retail store is any businessenterprise whose sales volume comes primarily from retailing. Any organization sellingto the final- whether it is manufacturer, wholesaler, or retailer- is doing retailing. It doesnot matter how the goods or services are sold (by person, mail, telephone, vendingmachine, or internet) or where they are sold (in the store, on the street, or in consumershome).Retailing is a trading activity directly activity directly related to the sale of goods ofservices to the ultimate consumer for personal, non-business use. A retailer is the lastmiddleman in the machinery of distribution and he is responsible to satisfy recurrentwants of consumers, Retail trade is selling of varied goods in small quantities to the finalconsumer. There are three distinguishing feature of retail trade. The retailer deals in smallquantities and his business are usually local in character. Secondly retail trade alwaysshows tendency towards variety as it has to satisfy innumerable wants of consumers. Aspecialized retail shop is an exception. Thirdly a retailer, by predating near about theresidential areas of consumer, sells his wares directly to consumers. Manufactured goodsare worthless until they pass acid-test of retail distributions. The retailer alone can offersafe and reliable goods to consumers.Retail Sector in India 7
  8. 8. Retail is the booming sectors of India in the present times. Retail, one of India’s largestindustries, has presently emerged as one of the most dynamic and fast paced industries ofour times with several players entering the market. Accounting for over 10 per cent of thecountry’s GDP and around eight per cent of the employment retailing in India isgradually inching its way toward becoming the next boom industry.As the contemporary retail sector in India is reflected in sprawling shopping centers,multiplex- malls and huge complexes offer shopping, entertainment and food all underone roof, the concept of shopping has altered in terms of format and consumer buyingbehavior, ushering in a revolution in shopping in India. This has also contributed to largescale investments in the real estate sector with major national and global players investingin developing the infrastructure and construction of the retailing business. The trends thatare driving the growth of the retail sector in India are • Low share of organized retailing • Falling real estate prices • Increase in disposable income and customer aspiration • Increase in expenditure for luxury itemsAnother credible factor in the prospects of the retail sector in India is the increase in theyoung working population. In India, hefty pay-packets, nuclear families in urban areas,along with increasing working-women population and emerging opportunities in theservices sector. These key factors have been the growth drivers of the organized retailsector in India which now boast of retailing almost all the preferences of life - Apparel &Accessories, Appliances, Electronics, Cosmetics and Toiletries, Home & Office Products,Travel and Leisure and many more. With this the retail sector in India is witnessing arejuvenation as traditional markets make way for new formats such as departmentalstores, hypermarkets, supermarkets and specialty stores. 8
  9. 9. The retailing configuration in India is fast developing as shopping malls are increasinglybecoming familiar in large cities. When it comes to development of retail space speciallythe malls, the Tier II cities are no longer behind in the race. If development plans till 2007is studied it shows the projection of 220 shopping malls, with 139 malls in metros and theremaining 81 in the Tier II cities. The government of states like Delhi and NationalCapital Region (NCR) are very upbeat about permitting the use of land for commercialdevelopment thus increasing the availability of land for retail space; thus making NCRrender to 50% of the malls in India.India is being seen as a potential goldmine for retail investors from over the world andlatest research has rated India as the top destination for retailers for an attractive emergingretail market. India’s vast middle class and its almost untapped retail industry are keyattractions for global retail giants wanting to enter newer markets. Even though India haswell over 5 million retail outlets, the country sorely lacks anything that can resemble aretailing industry in the modern sense of the term. This presents international retailingspecialists with a great opportunity. The organized retail sector is expected to growstronger than GDP growth in the next five years driven by changing lifestyles,burgeoning income and favorable demographic outline.Another cap to the retailing industry in India is allowing 51% FDI in single brand outlet.The government is now set to initiate a second wave of reforms in the segment byliberalizing investment norms further. This will not only favor the retail sector develop interms of design concept, construction quality and providing modern amenities but willalso help in creating a consumer-friendly environment. Retail industry in India is at thecrossroads but the future of the consumer markets is promising as the market is growing,government policies are becoming more favorable and emerging technologies arefacilitating operations in India. And this upsurge in the retail industry has made India apromising destination for retail investors and at the same time has impelled investmentsin the real estate sector. As foreign investors cautiously test the Indian Markets forinvestments in the retail sector, local companies and joint ventures are expected to bemore advantageously positioned than the purely foreign ones in the evolving Indiasorganized retailing industry. 9
  10. 10. 3 million square feet of retail space spread across 25 cities where 12 crore Indians willshop this year. This is Pantaloon Retail (India) Limited, (a Pantaloon Knowledge GroupCompany) - India’s face of organized retail business.Presently, in to five lines of businesses – fashion and footwear, food, general merchandise,leisure & entertainment and home – the Indian Retail sector An analysis of the company operates multiple delivery formats: thefashion store format under the Pantaloons brand; the showcase seamless mall under theCentral brand; the hypermarket discount store format under the Big Bazaar brand; the food& grocery retail format under the Food Bazaar brand, and apparel stores under FashionStation.The Company plans entry in telecommunications retail and other lines of businesses suchas wellness and beauty as well as books and music, besides pantalooning a portal for e-retailing in the near future as another delivery format.Retailing sectorIndia is still in the nascent stage of organized retailing and is constantly evolving.Pantaloon Retail (I) Limited is a front runner in India’s modern retail space and companyrepresent fashion ,food, general merchandise and other lines of business, through multipledelivery formats, primarily catering to the lifestyle and value customers.The company has stores in nearly 30 cities across the country, constituting over 2.7 millionsquare feet of retail space. The company has also signed close to 10 million sq. ft. of retailspace to be operational by end 2008, which represents 20-30 % of all modern retail spacecoming up in the next three years. Over 200 million footfalls are expected in our stores by2006-07.They believe that consumption will be the next big driver of India’s economic growth.Rising incomes and increased exposure to global products and global consumption patternshave changed the average Indian’s attitude towards consumption and savings.Consumption = Development. Increased and channelized consumption would lead to thedevelopment of the nation through improved and better infrastructure facilities, greateremployment generation possibilities will emerge with increased consumption, leading topeople wanting to spend more on themselves. This cycle is what will fuel the consumptionboom in the country.Company is in the process of constant evolution and firmly believes in creating the present,with the future in mind. The company only one vision-to captures the highest share of theconsumer’s wallet.This is what has led them to believe that apart from their core strengths in fashion, food andgeneral merchandise, they will operate through various formats in other lines of businesses;complete home solutions, leisure & entertainment, wellness, communications and financialproducts. Company also has two AMC’s. One that specializes in Property and the other is a‘Consumer India Fund’. The property fund aims at sourcing high quality property at thelowest possible rates, while the consumer fund will look at providing our retail pipeline andexpertise to national and regional brands, thereby enabling them with a wider coverage.The major competitors and the market share of Big Bazzar.Company operates in a competitive environment. For each line of business, companywould face competition from established national and regional companies. In the fashionsegment, they probably face competition from Shoppers Stop, Trent and Lifestyle. The 10hypermarket business is relatively new, being just about three to four years old in thecountry. They face competition from the likes of RPG (Spencer’s), Trent (Star IndiaBazaar) and with Shoppers Stop too indicating their entry into the hypermarket segment. Inthe Food business, they face competition from Subhiksha, Food World to name a few.
  11. 11. 1. An Overview of the Retail sector:The Indian retail sector is highly fragmented with 97% of its business being run by theunorganized retailers like the traditional family run stores and corner stores. Theorganized retail however is at a very nascent stage though attempts are being made toincrease its proportion to 9-10% by the year 2010 bringing in a huge opportunity forprospective new players. The sector is the largest source of employment after agriculture,and has deep penetration into rural India generating more than 10% of Indias GDP. Source: Ernst &Young, the Great Indian Retail Story, 2006.A look at the statistics shows that the retail sector in India is worth USD 394 billion andis growing at the rate of 30% annually. An ICRIER study has found that retailing ($180billion) contributes to 10 per cent of GDP and employs 7 per cent (21 million) of theworkforce. According to AT Kearney, India is given the top ranking as the next foreigninvestment destination, as markets like China become increasingly saturated. India is the4th largest economy as regards GDP (in PPP terms) and is expected to rank 3 rd by 2010just behind US and China. Over the past few years, the retail sales in India are hoveringaround 33-35% of GDP as compared to around 20% in the US. The table gives thepicture of Indias retail trade as compared to the US and China. Source: Economist, Let gradualism guide FDI in retail, 2006. 11
  12. 12. The last few years witnessed immense growth by this sector, the key drivers beingchanging consumer profile and demographics, increase in the number of internationalbrands available in the Indian market, economic implications of the governmentincreasing urbanization, credit availability, and improvement in the infrastructure,increasing investments in technology and real estate building a world class shoppingenvironment for the consumers. In order to keep pace with the increasing demand, therehas been a hectic activity in terms of entry of international labels, expansion plans, andfocus on technology, operations and processes. This has lead to more complexrelationships involving suppliers, third party distributors and retailers, which can be dealtwith the help of an efficient supply chain. A proper supply chain will help meet thecompetition head-on, manage stock availability; supplier relations, new value-addedservices, cost cutting and most importantly reduce the wastage levels in fresh produce.Large Indian players like Reliance, Ambanis, K Rahejas, Bharti AirTel, ITC and manyothers are making significant investments in this sector leading to emergence of bigretailers who can bargain with suppliers to reap economies of scale. Hence, discounting isbecoming an accepted practice. Proper infrastructure is a pre-requisite in retailing, whichwould help to modernize India and facilitate rapid economic growth. This would help inefficient delivery of goods and value-added services to the consumer making a highercontribution to the GDP.International retailers see India as the last retailing frontier left as the Chinas retail sectoris becoming saturated. However, the Indian Government restrictions on the FDI arecreating ripples among the international players like Wal-Mart, Tesco and many otherretail giants struggling to enter Indian markets. As of now the government has allowedonly 51% FDI in the sector to `one-brand shops like Nike, Reebok etc. However, otherinternational players are taking alternative routes to enter the Indian retail marketindirectly via strategic licensing agreement, franchisee agreement and cash and carrywholesale trading (since 100% FDI is allowed in wholesale trading).2. How has the Indian consumer changed over the years?In the past few years the whole concept of shopping has been altered in terms of formatand consumer buying behavior. With the increasing urbanization, the Indian consumer isemerging as more trend-conscious. There has also been a shift from price considerationsto designs and quality as there is a greater focus on looking and feeling good (apparel aswell as fitness). At the same time, the Indian consumer is not beguiled by retail productswhich are high on price but commensurately low on value or functionality. However, itcan be said that the Indian consumer is a paradox, where the discount shopper loyaltytakes a backseat over price discounts. 12
  13. 13. Indians have grown richer and thus spending more on vehicles, phones and eating out inrestaurants. The spending is focused more outside the homes, unlike in other Asiancountries where consumers have tended to spend more on personal items as they growricher. Spending on luxury goods have increased twice as fast with 2/3 of Indiaspopulation is under 35, consumer demand is clearly growing. The mall mania has boughtin a whole new breed of modern retail formats across the country catering to every needof the value-seeking Indian consumer. An average Indian would see a mall as a perfectweekend getaway with family offering them entertainment, leisure, food, shopping allless than one roof. Source: Ernst & Young, the Great Indian Retail Story, 2006.Indian consumer is also witnessing some changes in its demographics with a largeworking population being under the age group of 24-35, there has been an increasingnumber of nuclear families, increase in working women population and emergingopportunities in the service sector during the past few years which has been the keygrowth driver of the organized retail sector in India. The emergence of a larger middleand upper middle classes and the substantial increase in their disposable income haschanged the nature of shopping in India from need based to lifestyle dictated. The self-employed segment has replaced the employed salaried segment as the mainstreammarket, thus resulting in an increasing consumption of productivity goods, especiallymobile phones and 2 - 4 wheeler vehicles. There is also an easier acceptance of luxuryand an increased willingness to experiment with the mainstream fashion, resulting in anincreased willingness towards disposability and casting out from apparels to cars tomobile phones to consumer durables. Indians spend over USD 30,000 a year (in PPPterms) on conspicuous consumption that represents 2.8% of the entire population (which 13
  14. 14. is approx 30 million people) making it the 4th largest economy in PPP terms next only toUSA, Japan and China .With reference to the map of Indias income class, it can be noticed that the real driver ofthe Indian retail sector is the bottom 80% of the first layer and the upper half of thesecond layer of the income map. This segment of about 40 million households earns USD4,000-10,000 per household and comprises salaried employees and self-employedprofessionals and is expected to grow to 65 million households by 2010 1. In addition tothis, facilities like credit friendliness, availability of cheap finance and a drop in interestrates have changed consumer markets. Capital expenditure (jewelry, homes, and cars) hasshifted to becoming redefined as consumer revenue expenditure, in addition to consumerdurables and loan credit purchases.3. FDI in retail:Global retailers have already been sourcing from India; the opening up of the retail sectorto the FDI has been fraught with political challenges. With politicians arguing that theglobal retailers will put thousands of small local players and fledging domestic chains outof business.The only opening in the retail sector so far has been to allow 51% foreign stakes in singlebrand consumer stores, private labels, high tech items/ items requiring specialized aftersales service, medical and diagnostic items and items sourced from Indian small sector(manufactured with technology provided by the foreign collaborations). Partiessupporting the FDI suggest that the FDI in retail should be opened in a gradual/ phasedmanner, such that it can promote competition and contribute to the growth of the Indianeconomy. The impact of the FDI would benefit the end user of the consumer to a greatextent and will help to generate a decent amount of employment as more and moreentrepreneurs would be coming forward to invest and taste the new generation in retailmarketing. The opening of FDI should be designed in such a way that many sectors -including agriculture, food processing, manufacturing, packaging and logistics wouldreap benefits. The table below lists the pros and cons of allowing FDI into retail.Benefits of FDI in retail  Inflow of investment and funds.  Improvement in the quality of employment.  Generating more employment.  Increased local sourcing.  Provide better value to end consumers.  Investments and improvement in the supply chains and warehousing.  Franchising opportunities for local entrepreneurs.  Growth of infrastructure.  Increased efficiency.  Cost reduction.  Implementation of IT in retail. 14
  15. 15.  Stimulate infant industries and other supporting industries.Thus it can be said that this investment boom could change the face of Indian retail byoffering quality goods at lower prices to the consumers. In addition to this, the presenceof global retailers will further enhance exports from India as they would also sourceIndian goods for their international outlets in a big way leading to a remarkable increasein Indian exports.4. Segment analysis:The structure of Indian retail is developing rapidly with shopping malls becomingincreasingly common in the large cities and development plans being projected at 150new shopping malls by 2008. However, the traditional formats like hawkers, grocers andtobacconist shops continue to co-exist with the modern formats of retailing. Modernretailing has helped the companies to increase the consumption of their products forexample: Indian consumers would normally consume the rice sold at the nearby kiranasviz. Kolam for daily use. With the introduction of organized retail, it has been noticedthat the sale of Basmati rice has gone up by four times than it was a few years back; as asuperior quality rice (Basmati) is now available at almost the same price as the normalrice at a local kirana. Thus, the way a product is displayed and promoted influences itssales. If the consumption continues to grow this way it can be said that the local marketwould go through a metamorphoses of a change and the local stores would soon becomethe things of the past or restricted to last minute unplanned buying.4.1 Food and grocery retail:The food business in India is largely unorganized adding up to barely Rs. 40,000 crore,with other large players adding another 50% to that. The All India food consumption isclose to Rs. 900,000 crore, with the total urban consumption being around Rs.330,000crore. This means that aggregate revenues of large food players is currently only 5% ofthe total Indian market, and around 15-20% of total urban food consumption. Most foodis sold in the local `wet market, vendors, roadside push cart sellers or tiny kirana stores.According to McKinsey report, the share of an Indian households spending on food isone of the highest in the world, with 48% of income being spent on food and beverages.4.2 Apparel retail:The ready-mades and western outfits are growing at 40-45% annually, as the marketteems up with international brands and new entrants entering this segment creating anRs.500 crore market for the premium grooming segment. The past few years has seen thesector aligning itself with global trends with retailing companies like Shoppers stop andCrossroads entering the fray to entice the middle class. However, it is estimated that thissegment would grow to Rs. 300 crore in the next three years. 15
  16. 16. 4.3 Gems and Jewellery retail:The gems and jewellery market is the key emerging area, accounting for a highproportion of retail spends. India is the largest consumer of gold in the world with anestimated annual consumption of 1000 tones, considering actual imports and recycledgold. The market for jewellery is estimated as upwards of Rs. 65,000 crores.4.4 Pharma retail:The pharmacy retailing is estimated at about Rs. 30,000 crore, with 15% of the 51 lakhretail stores in India being chemists. According to Vikas Bali, Principal, A.T. Kearney(India) Ltd, "Pharma retailing will follow the trend of becoming more organized andcorporatized as is seen in other retailing formats (food, apparel etc)". A few corporatewho have already forayed into this segment include Dr Morepen (with Lifespring andsoon to be launched Tango), Medicine Shoppe, Apollo pharmacies, 98.4 from GlobalHealth line Pvt Ltd, and the recently launched CRS Health from SAK Industries. In thesouth, RPG groups Health & Glow is already in this category, though it is not a pure playpharma retailer but more in the health and beauty care business.4.5 Music Retail:The size of the Indian music industry, as per this Images-KSA Study, is estimated atRs.1100 crore of which about 36 percent is consumed by the pirated market andorganized music retailing constitutes about 14 percent, equivalent to Rs.150 crore.4.6 Book retail:The book industry is estimated at over Rs. 3,000 crore out of which organized retailaccounts for only 7% (at Rs.210 crore). This segment is seen to be emerging with textand curriculum books accounting to about 50% of the total sales. The gifting habit inIndia is catching on fast with books enjoying a significant share, thus expecting thissector to grow by 15% annually.4.7 Consumer durables retail:The consumer durables market can be stratified into consumer electronics comprising ofTV sets, audiosystems, VCDplayers and others;andappliances likewashing 16
  17. 17. machines, microwave ovens, air conditioners (A/Cs). The existing size of this sectorstands at an estimated USD 4.5 Billion with organized retailing being at 5% Source: E&Y, the Great Indian Retail Story, 2006.As noticed in the figure above, the organized retail penetration (ORP) is the highest infootwear with 22% followed by clothing. Though food and grocery account for largestshare of retail spend by the consumer at about 76%, only 1% of this market is in theorganized sector. However, it has been estimated that this segment would multiply fivetimes taking the share of the organized market to 30 percent in the coming years.5. Industry analysis of the Indian retail sector:Modern retailing has entered India in form of sprawling malls and huge complexesoffering shopping, entertainment, leisure to the consumer as the retailers experiment witha variety of formats, from discount stores to supermarkets to hypermarkets to specialtychains. However, kiranas still continue to score over modern formats primarily due to theconvenience factor. 17
  18. 18. The organized segment typically comprises of a large number of retailers, greaterenforcement of taxation mechanisms and better labour law monitoring system. Its nolonger about just stocking and selling but about efficient supply chain management,developing vendor relationship quality customer service, efficient merchandising andtimely promotional campaigns. The modern retail formats are encouraging developmentof well-established and efficient supply chains in each segment ensuring efficientmovement of goods from farms to kitchens, which will result in huge savings for thefarmers as well as for the nation. The government also stands to gain through moreefficient collection of tax revenues. Along with the modern retail formats, the non-storeretailing channels are also witnessing action with HLL initiating Sangam Direct, a directto home service. Network marketing has been growing quite fast and has a few largeplayers today. Gas stations are seeing action in the form of convenience stores, ATMs,food courts and pharmacies appearing in many outlets.In the coming years it can be said that the hypermarket route will emerge as the mostpreferred format for international retailers stepping into the country. At present, there are50 hypermarkets operated by four to five large retailers spread across 67 cities catering toa population of half-a-million or more. Estimates indicate that this sector will have thepotential to absorb many more hypermarkets in the next four to five years. 18
  19. 19. List of retailers that have come with new formats: Retailer Current Format New Formats. Experimenting With Shoppers Stop Department Store Quasi-mall Ebony Department Store Quasi-mall, smaller outlets, adding food retail Crossword Large bookstore Corner shops Piramyd Department Store Quasi-mall, food retail Pantaloon Own brand store Hypermarket Subhiksha Supermarket Considering moving to self service Vitan Supermarket Suburban discount store Food world Food supermarket Hypermarket, Food world express Globus Department Store Small fashion stores Bombay Bazaar Aggregation of Kiranas Efoodmart Aggregation of Kiranas Metro Cash and carryTraditionally, the small store (kirana) retailing has been one of the easiest ways togenerate self-employment, as it requires minimum investments in terms of land, labourand capital. These stores are not affected by the modern retailing as it is still consideredvery convenient to shop. In order to keep pace with the modern formats, kiranas havenow started providing more value-added services like stocking ready to cook vegetablesand other fresh produce. They also provide services like credit, phone service, homedelivery etc.The organized retailing has helped in promoting several niche categories such aspackaged fruit juices, hair creams, fabric bleaches, shower gels, depilatory products andconvenience and health foods, which are generally not found in the local kirana stores.Looking at the vast opportunity in this sector, big players like Reliance and K Rahejashas announced its plans to become the countrys largest modern retainers by establishinga chain of stores across all major cities.A few facts:  Rural India consists of 720 million consumers across villages  17% of these villages account for 50% of the rural population  60% of the rural wealth reaches out to almost 1000000+ villages to address just 50% of this opportunityApart from metro cities, several small towns like Nagpur, Nasik, Ahmadabad,Aurangabad, Sholapur, Kolhapur and Amravati as witnessing the expansion of modernretails. Small towns in Maharashtra are emerging as retail hubs for large chain stores likePantaloon Retail because many small cities like Nagpur have a student population, lowerreal estate costs, fewer power cuts and lower levels of attrition. However, retailers need toadjust their product mix for smaller cities, as they tend to be more conservative than themetros. 19
  20. 20. In order for the market to grow in modern retail, it is necessary that steps are taken forrewriting laws, restructuring the tax regime, accessing and developing new skills andinvesting significantly in India.6. Business analysis of the Indian retail sector:The size of modern retail is about US$ 8 Billion and has grown by 35% CAGR in lastfive years. (KSA Technopak, June 2006). In modern retailing, a key strategic choice isthe format; retailers are coming up with various innovative formats to provide an edge toretailers.Most attractive developing markets for retail by region according to AT Kearney Study:Source: AT Kearney, GRDI 2006.A look at the graph above shows that the Asian markets are considered attractive forretail as per the AT Kearneys report; India is being placed on the radar by the USA andUK. Global giants like Tesco and Wal-Mart are experimenting with various options toenter India. One possibility for Wal-Mart would be to open Sams club wholesalebusiness through a joint venture and sell strictly to other retailers. This strategy skirts theissue of not being able to sell directly to customers and establish a strong presence in thelocal market. On the other hand, Tesco is planning to get into a partnership with HomeCare Retail Mart Pvt. Ltd expecting to open 50 stores by 2010. The government is takinggradual steps in allowing the FDI into Indian retail, when it takes the final steps the peaktime will quickly pass giving the existing players a distinct edge. 20
  21. 21. 6.1 Merger and acquisition activity: India witnessed a record number of M&A deals in the first half of 2006, which were collectively worth USD 25.6 billion. A significant number of deals have being carried out in the Indian retail sector in the past few months in order to acquire a larger share in the growing domestic market and to compete against the prospective global and domestic players. The table below shows some recent deals that have taken place in the Indian retail sector: Consideration Acquired/ JVYear Acquirer Nature of Business Stake Company/ Target (US$ million)2005 Liberty Shoes Future group Retail (Footwear) 51% 3 Indus - League2005 Future group Retail clothing 68% 5 Clothing Leisure retail chain2005 Odyssey India Deccan Chronicle Holdings 100% 14 (books, music, toys) Books, music,2005 Landmark Tata Trent 74% 24 accessories TGI Fridays (a subsidiary of2006 Bistro Hospitality Restaurant (Food retail) 25% N/A Carlson Restaurant World-wide) Indus League clothing 50% Lingerie and womens2006 Etam group, France 8 wear retailing (Future group (JV) company) Source: PricewaterhouseCoppers, Asia-Pacific M&A bulletin, mid year 2006. 21
  22. 22. 6.2 Business models for entry in Indian markets:Due to the FDI restrictions the international players are looking for alternative avenues toenter the Indian markets. The chart below shows the current formats permitted by theGovernment of India for the international players. Source: Ernst & Young, The great Indian Retail Story, 2006.7. Employment opportunities in this sector:The Indian retail sector offers an economic opportunity on a massive scale both as aglobal base and a domestic market. This sector yields many positive results likegenerating more jobs and bringing numerous goods to the consumers at reasonable prices.According to Ernst &Youngs report `The Great Indian Retail Story this sector isexpected to create 2 million jobs by 2010.About 4 crore people are employed in retail trade, assuming each person supports afamily of 5, this, implies that about 20 crore people are dependent on this sector. For avast majority of the households, retailing is a euphemism for a marginal existence.Modern retail formats have generated huge employment for the young and even seniorcitizens and women wanting to work part-time (even in small towns). People have greaterexposure to the technical aspects, training and also earn higher salaries along withbonuses and incentives. With foreign companies opening expanding in India, employeesare being re-trained according to international standards and practices that are beingbought in. There is also an increase in the number of retail management programmes andinstitutes. This will bridge the gap in availability of talented professionals at the middleand lower levels. Successful Indian retailers are creating a robust second and third level 22
  23. 23. of management by hiring aggressively for these key roles. Talented professionals will putincreased pressure on wage costs. Therefore operating margins, especially for mid-sizedretailers, are becoming a poaching ground for international retailers once they enter India.With private companies getting into retail, there are people employed from diversecultures (no room for reservations unlike government owned stores) where there is asense of unity in diversity. The companies are also employing people who are physicallyhandicapped. The next few years are expected will see the sector offering new jobs to50,000 young graduates and diploma holders.8. What makes foreign firms come to India?A host of traditional `brick and mortar companies such a Tata’s have entered the retailbusiness. With demographic changes like rising disposable incomes and rapidlyexpanding middle class, the Indian retail sector is at an inflexion point where the growthin consumption and growth of organized retailing are taking it towards higher growth.Market liberalization and an increasingly assertive consumer population have attractedbigger Indian and multinational operations to make investments, but are yet to achievesuccess or reach break even.The Indian consumption pattern and preference have undergone vast changes over theyears allowing the foreign retailers to play with the psyche of the brand consciousmodern Indian, who has no qualms spending a fortune on overhauling his wardrobe. Thisled to the entry of up-market brands like Nautica and New Balance into the country tocash in on this opportunity.India has the youngest population in the world, with large population between 20-34 agegroups in the urban regions boosting the demand. All these factors have tempted theforeign firms such as Wal-Mart, Tesco and Carrefour to enter India. India is now firmlyplaced on the US and UK radars as US retailers are gradually realizing the potential ofthe retail and consumer goods sector. The timing is the most important source ofcompetitive advantage for global and regional retailers in the globalization race. Knowingwhen to enter emerging retail markets is the key to success.AT Kearneys study on global retailing trends found that India is the least competitive aswell as least saturated of all major global markets. This implies that there are significantlylow entry barriers for players trying to setup base here, in terms of the competitivelandscape. The report further stated that global retailers such as Wal-Mart, Carrefour,Tesco and Casino would take advantage of the more favorable FDI rules that are likely inIndia and enter the country through partnerships with local retailers. Other retailers suchas Marks & Spencer and the Benetton Group, who operate through a franchisee model,would most likely switch to a hybrid ownership structure.However, in order to achieve breakthrough growth the global retailers might have to facesome glitches in India. High taxes, poor infrastructure, bureaucratic hurdles and high cost 23
  24. 24. of real estate are some of the challenges that overseas retailers may have to tackle in thecountry.9. IT and latest development:Technology has played a key role in retailers efforts to compete in this volatile market.With e-tailing channels making its presence felt in India companies are using either theirown web portal or are tying up with horizontal players like to offer their products on the web 15 ( IT has been usedby retailers ranging from to eBay, in order to radically change the buyingbehavior across the globe.Retailers worldwide are looking forward to increase their IT spending by almost 15% in2006, allocating almost half of this increase to application software with a particularfocus on tools that facilitate multi-channel customer relationships, point of sale systems,strategic merchandising and supply chain management 17. The last 2-3 years have seenseveral retailers ranging from F&B operations to discount clothing implementing supplychain management (SCM) solutions to improve core business processes such as globalsourcing, distribution, logistics, innovations, transparency and visibility in financials andinventory, compliance and management of point of sale (POS) data. However, organizedretailers have not taken well to the concept of 3PL (third party logistics) due to theirapprehensions of losing control over the supply chain. Currently, the transportation iscarried out partly by organized service providers and partly by truckers and localtransporters.In conclusion, it can be said that in order to deliver the levels of quality and service thatconsumers are demanding; the organized retailers are in a pressing need for a singleenterprise wide IT platform to manage operations, which will become increasinglycomplex once the market expands.10. A look at the rural retailing:More than half of retail market in India is in the rural areas (55%); although share ofurban market is increasing by almost 5% every 8-10 years 14. Accommodating almosttwo-third of the countrys consumers and generating almost half of the national income,the rural India offers tremendous opportunities for organized retailers which manycompanies have failed to access. According to the study conducted by NCEAR, thenumber of `lower middle income group in rural areas is almost double as compared to theurban areas, having a large consuming class with 41% of the Indian middle class and58% of the total disposable income.Importance of rural markets • The rural market accounts close to 70% of toilets soap users • 38% of all two wheelers are purchased by the rural consumers • The market for FMGC products is growing much faster than urban counterpart 24
  25. 25. • The rural market accounts accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing shops, tea, salt and toothpowder.A look at the demographics reveals that the highest income levels households in the ruralareas are 1.6 million as compared to 2.3 million in urban areas. It has also been forecastedthat the middle and the higher income households are expected to grow to 111 million by2007 from the current levels of 80 million. Thus, it can be said that with 128 millionhouseholds, the rural population is nearly three times the urban. This vast demand baseand size offers a huge opportunity that MNCs cannot afford to ignore.According to the ERNEST & YOUNG India retail report • Hypermarkets to be preferred format for international retailers entering India. • Malls to move beyond the metros, increase presence in tier II cities. • Organized retail penetration highest across footwear, clothing segments. • Franchising gaining steam with retailers.In order to meet with this rapid growth in demand the government has shown its concernby providing an induction of Rs.140 billion and Rs. 300 billion in the rural sector throughits development schemes in the Seventh and the Eight plan respectively. The largeplayers like ITC, HLL, BPCL are realizing the potential of this sector and are seenexperimenting with new ways to tap this segment.ITC spent 3 years and Rs. 80 crore on R&D to come up with the concept of E-choupaland Choupal Sagar-rural hypermarkets. Through this, the farmers can access latest localand global information on weather and market prices, scientific farming techniques at thevillage itself through a web-portal - all in Hindi. E-Choupal also facilitates supply of highquality inputs as well as purchase of commodities at their doorstep. The hypermarket(Choupal Sagar) provides them with another platform to sell their produce and purchasenecessary farm and household goods under one roof.Next in line, HLL came up with Project Shakti in late 2000 to sell its products throughwomen self-help groups who operate like a direct-to-home team of sales women ininaccessible areas where HLLs conventional sales system does not reach. Another step totap the rural market was `Operation Bharat wherein low-priced sample packets oftoothpastes, fairness creams, Clinic Plus shampoos and Ponds face creams to 20mnhouseholds.As a part of their rural strategy, BPCL introduced Rural Marketing Vehicles (RMVs) thatmove from village and village and filling cylinders on the spot for rural consumerskeeping in mind the low-income of the rural population. The Company also introduced asmaller size cylinder to reduce both the initial deposit cost as well as the recurring refillcost.Future outlook: 25
  26. 26. Investments in the range of US$ 20+ Billion are expected in the next 5 years in Retail &its Supply Chain alone.Size of modern retail likely to touch US$ 60+ Billion by 2011:At least 2.5 Million additional direct jobs likely to be created in the next 5 years.Hyper-competition is expected to set in by 2008-9 as the footprint of the top-5 playersstarts significant overlapping in top 20 - 30 towns.Significant impact on other retailers and branded good players- creating new opportunities and threats:According to Assocham, the overall retail market would grow by 36 per cent with theorganized sector expected to register three-fold growth to Rs 15,000 crore by 2008. Thetotal size of the market is also expected to increase to Rs 14, 79,000 crore from thecurrent level of Rs 5, 88,000 crore.Challenges faced by this sector:The industry is facing a severe shortage of talented professionals, especially at themiddle-management level.Most Indian retail players are under serious pressure to make their supply chains moreefficient in order to deliver the levels of quality and service that consumers aredemanding. Long intermediation chains would increase the costs by 15%.Lack of adequate infrastructure with respect to roads, electricity, cold chains and portshas further led to the impediment of a pan-India network of suppliers. Due to theseconstraints, retail chains have to resort to multiple vendors for their requirements,thereby, raising costs and prices.The available talent pool does not back retail sector as the sector has only recentlyemerged from its nascent phase. Further, retailing is yet to become a preferred careeroption for most of Indias educated class that has chosen sectors like IT, BPO andfinancial services.Even though the government is attempting to implement a uniform value-added taxacross states, the system is currently plagued with differential tax rates for various statesleading to increased costs and complexities in establishing an effective distributionnetwork.Stringent labor laws govern the number of hours worked and minimum wages to be paidleading to limited flexibility of operations and employment of part-time employees.Further, multiple clearances are required by the same company for opening new outletsadding to the costs incurred and time taken to expand presence in the country. 26
  27. 27. The retail sector does not have industry status yet making it difficult for retailers to raisefinance from banks to fund their expansion plans. Government restrictions on the FDI areleading to an absence of foreign players resulting into limited exposure to best practices.Non- availability of government land and zonal restrictions has made it difficult to find agood real estate in terms of location and size. Also lack of clear ownership titles and highstamp duty has resulted in disorganized nature of transactions.Marketing"Marketing is a management process whereby the resources of the whole organization are 27
  28. 28. utilized to satisfy the needs of selected customer groups in order to achieve the objectivesof both parties. Marketing them, is first & foremost an attitude of mind there than aservices of functional activities “McDonald.Success and marketing depends upon the proper efficient and effective marketing mix.INTRODUCTIONThe marketing mix refers to the appointment of efforts, the combination, the designingand the integration of the elements of marketing into a programme of mix which, on thebasis of an appraisal of the market forces will best achieve an enterprise at a given time".According Stanton, "Marketing mix is the term used to describe the combination of thefour inputs which constitute the core of a companys marketing system the product, theprice structure, the promotional activities and the distribution system" - Borden.Marketing mix is the policy adopted by the manufacturers to get success in the field ofmarketing. Those days, when goods were matched with the market, have gone. Themodern market concept emphasizes the importance of the consumers preference.Manufacturers take various policies to get success in the market and the marketing mix isone of the important policies in marketing planning, we make use of marketinginformation to assess the situations. Therefore, a manufacturer first Analysis the nature ofthe consumers needs and then plans his product to give satisfaction to the consumers, AHthe marketing effort focuses attention around the consumers need. The managementtherefore is concerned with the markets and market behaviors to identify the target groupsof consumers through market information. Then the management plans to meet theconsumers needs and to face the competitors. All these programmes involve a number offunctions, which are to be planned carefully: and planning need analysis of the market totake a decision prediction and forecasting, to the future needs of the public, Marketingdepartments perform the operations and the market offering mix is the result. Thus theidentification of demand and supply involves various functions of marketing to attainsuccess in the market and the combination of these functions is known as marketing mix.Thus marketing mix is the combination of the product, the distribution system, the pricestructure and the promotional activities, The term marketing mix is used to describe a 28
  29. 29. combination of four elements-the product, price, physical distribution and promotion,These are popularly known as "four Ps" These four elements or sub-mixes should betaken as instruments, by the management, when formulating marketing plans, As such,marketing manager should have a thorough knowledge about the four Ps.. The marketingmix will have to be changed at the change of marketing conditions like economical,political, social etc. Marketing mix is developed to satisfy the anticipated needs of theidentified markets.Four variables make up the marketing mix:1. Product,2. Price,3. Place, and4. Promotion,A business person can controls, varies, and uses these variables to influence hiscustomers.These variables are interrelated and form the total package that will determine the degreeof marketing success.1. PRODUCTThe product is the most tangible and important single component of the marketingprogramme. The product policy and strategy is the cornerstone of a marketing mix.Without a product, there is nothing to distribute, nothing to promote, nothing to price. Ifthe product fails to satisfy consumer demand, no additional cost on any of the otheringredients of the marketing mix will improve the product performance in the market-place.To the marketer products are the building blocks of a marketing plan, Good products arekey to market success, Product decisions are taken first by the marketers and thesedecisions are central to all other marketing decisions such as price, promotion anddistribution, product is the vehicle by which a company provides consumer satisfactions.It is the engine that puts the rest of the marketing programme.The product may be a good, a service, a good plus service, a good plus service, or just anidea, A product is all things offered to a market, Those things include physical objects, 29
  30. 30. design, brand, package, label price, services, supportive literature, amenities andsatisfaction not only from physical product and services offered but also from idea,personalities and organizations. In short, a product is the sum total of physical, economic,social and psychological benefits. Marketers must define their market in terms of productfunctions-who the customer expects from the product.As a product is designed to satisfy consumer needs, Product strategy includes decisionsabout its uses; quality, features, brand name, style packaging, guarantees, designs, andoptions, decisions about changes in the product characteristics are needed as the productgoes through its life cycle.2. PRICEEconomist defines price as the exchange value of a product or service always expressedin money. To the consumer the price is an agreement between seller and buyerconcerning what each is to receive; price is the mechanism or device for translating intoquantitative terms (Rupees and Paisa) the perceived value of the product to the customerat a point of time. The buyer is interested in the "price" of the whole "package" consistingof the physical product plus bundle of expectations or satisfactions. The consumer hasnumerous expectations such as accessories, after-sale-service, replacement parts,technical guidance, extra services, credit and many other benefits. Thus price must beequal to the total amount of benefits (physical, economic, social and psychologicalbenefits). Any change in the price will also bring about alterations in the satisfaction sideof the equation. To the ultimate consumer, the price he pays for a product or servicerepresents a sacrifice of purchasing power, prices paid by resellers are also sacrifices.Price is the only objective criteria (although an imperfect measuring rod) for theconsumer for comparing alternative items and making the final choice. To the consumersprice is a product disfeatures, i.e. a feature of which he disapproves. However, to theseller price is a source of revenue and main determinant of profit to the seller is a productfeature most welcome.Pricing is equivalent to the total product offering. This offering includes a brand name, apackage, product benefits, after sale service, delivery, credit and so on. From themarketers point of view, the price also covers the total market offering, i.e. the consumer 30
  31. 31. is also purchasing the information through advertising sales promotion and personalselling and distribution method that has been adopted. The consumer gets these vales andalso covers their costs. We can now define price as the money vale of a product or serviceagreed upon in a market transaction, we have a kind of price equation, where;Money (price) = Bundle of expectations or Satisfactions.Include in the bundle of expectations may be physical product plus other attributesSuch as delivery, installation, credit, return privileges, after-sales servicing and so on.Besides being the amount you charge customers for your products, price involvesmanagement policies on discounts, allowances, credit terms, payment periods, transitpayments, etc.3. PLACERetailers 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 care in which to openoutlets, and then particular-cities, and then particular sites, retailer is adding stores inspite of a sales decline.Placing your product means providing it at the right place at the right time. Distributionstrategies involve decisions on such things as store location and territories, inventorylevels, shelf, location, type of shipments.4. PROMOTIONSBroadly speaking promotion means to push forward or to advance an idea in such a wayas to gain its acceptance and approval. Promotion is any communicative activity whosemain object is to move forward a product, service or idea in a channel of distribution, it isan effort by a marketer to inform and persuade buyers to accept, resell, recommend, oruse the article, service or idea which is being promoted. Promotion is a form ofcommunication with an additional element of persuasion. The promotional activitiesalways attempt to affect knowledge attitudes, preferences and behaviour of recipients, i.e.buyers, the element of persuasion to accept ideas, products, services, etc., is the heart ofpromotion. 31
  32. 32. In any exchange activity, communication is absolutely necessary, you may have the bestproduct, package and so on. It may have fair price. But people will not buy your product,if they have never heard of it, and they are simply unaware of its existence. The marketermust communicate to his prospective buyers and provides them adequate information in apersuasive language. People must know that the right product is available at the rightplace and at the right price. This is the job of promotion in marketing. Sales do not takeplace automatically without promotion or marketing communication, even though ourproduct it superb, it can precisely fill the consumer wants and we have appropriatechannels for distribution.Promotion is the process of marketing communication involving information, persuasionand influence, promotion has three specific purposes, it communicates marketinginformation to consumers, users and resellers, it is not enough to communicate ideas.Promotion persuades and convinces the buyers and enters into this consumer behaviour,promotional efforts act as powerful tools of competition providing the cutting edge of itsentire marketing programme.Types of Promotion:Advertising It is defined as any paid form of non-personal presentation and promotion ofideas, goods and services by an identified sponsor. It is impersonal salesmanship for massselling, a means of mass communication.Publicity It is non-personal stimulation of demand for a product, service or a businessunit by placing commercial significant news about it in a publication or obtainingfavourable presentation of it upon radio, television, or stage that is not paid for by thesponsor.Personal Selling It is the best means of oral and face-to-face communication andpresentation with the prospect for the purpose of ranking sales. There may be oneprospect or a number of prospects or a number of prospects in the personal conversion.Sales Promotions It covers those marketing activities other than advertising, publicityand personal selling that stimulate consumer purchasing and dealer effectiveness. Such 32
  33. 33. activities are displays, shows, exhibitions, demonstrations, and many other non-routineselling efforts, at the point of purchase. Sales promotion tries to complement the othermeans of promotion given above.Promotion is informing and persuading your target market of the value of your products.The major promotional tools are advertising, personal selling, publicity and salespromotion, which media you is also an important part of promotion.RETAILINGRetailing includes all the activities involved in selling goods or services directly to finalconsumers for personal, non-business use. A retailer or retail store is any businessenterprise whose sales volume comes primarily from retailing. Any organization sellingto the final- whether it is manufacturer, wholesaler, or retailer- is doing retailing. It doesnot matter how the goods or services are sold (by person, mail, telephone, vendingmachine, or internet) or where they are sold (in the store, on the street, or in consumershome).Retailing is a trading activity directly activity directly related to the sale of goods ofservices to the ultimate consumer for personal, non-business use. A retailer is the lastmiddleman in the machinery of distribution and he is responsible to satisfy recurrentwants of consumers, Retail trade is selling of varied goods in small quantities to the finalconsumer. There are three distinguishing feature of retail trade. The retailer deals in smallquantities and his business are usually local in character. Secondly retail trade alwaysshows tendency towards variety as it has to satisfy innumerable wants of consumers. Aspecialized retail shop is an exception. Thirdly a retailer, by predating near about theresidential areas of consumer, sells his wares directly to consumers. Manufactured goodsare worthless until they pass acid-test of retail distributions. The retailer alone can offersafe and reliable goods to consumers.Levels of Service:The wheel-of-retailing hypothesis explains one reason that new store types emerge.Conventional retail stores typically increase their services and raise their prices to cover 33
  34. 34. the costs. These higher costs provide an opportunity for new store forms to offer lower prices and less service. New store types meet widely different consumer preferences for service levels and specific services. Retailers can position themselves as offering one of four levels of service: 1. Self-service: Self-service is the cornerstone of all discount operations, Many customers are willing to carry out their own locale-compare -select process to save money. 2. Self -selection: Customers find their own goods, although they can ask for assistance. 3. Limited service: These retailers carry more shopping goods, and customers need more information and assistance. The stores also offer services (such as credit and merchandise-return privileges). 4. Full services: Salespeople are ready to assist in every phase of the locate-compare- select process. Customers who like to be waited on prefer this type of store. The high staffing cost, along with the higher proportion of specialty goods and slower-moving items and the many service, results in high-cost retailing. Trends in Retailing1. New retail forms and combinations, some supermarkets include bank branches, Bookstores feature coffee shops. Gas stations include food stores. 2. Growth of intertype competition, different types of stores-discount stores, catalogue showrooms, and department stores-all compete for the same consumers by carrying the same type of merchandise. 3. Growth of giant retailers. Through their superior information systems, logistical systems, and buying power, giant retailers are able to deliver good service and immense volumes of product at appealing prices to masses of consumers. They are crowding out smaller manufacturers who cannot deliver enough. 4. Growing investment in technology Retailers are suing computers to produce better forecasts, control inventory costs, order electronically from suppliers, send e-mail between stores, and even sell to customers within stores. They are adopting checkout 34
  35. 35. scanning system" electronic funds transfer; electronic data interchange" in store television, store traffic radar systems," and improved merchandise-handling systems.5. Global presence of major retailers. Retailers with unique format and strong brand positioning are increasingly appearing in other countries U.S retailers such as Me Donalds has become globally prominent, Wal-Mart operates over 700 stores (outside USA)6. Selling an experience, not just goods Retailers are now adding him and community in order to compete with other stores and online retailers. There has been a rise in establishments that provide a place for people to congregate, such as coffee houses, tea shops, juice bars, book-shops, etc. INDIAN SCENARIO Indian retail industry has the potential to grow to Rs 35,000 crore in three years. Defining a new consumer culture, retailing beats everything else hollow. Though still at a nascent stage, the rate at which retail outlets are mushrooming could give an amoeba a complex. From supermarkets and hypermarkets to department stores and convenience stores and one-stop shops, a retailing wave is currently on in the country. And from food to music and apparel to tea and coffee bars, companies of all hues are indulging in retail speak. Organized retailing has grown three-fold from Rs 5,000 crore in 2000 to Rs 15,000 crore today, with a potential to expand to Rs 35,000 crore in 2005. The Indian consumer initially accepted everything that was offered to them but from the nineties the trend changed and the market became more consumers driven. Consumers became more specific about what they wanted and did not pick up anything and everything that was given to them. In shot they became very choosy and needed alternatives to choose from. These in turn made the Indian consumers more knowledgeable about the products and facilities and they have now become tough critics, savvy, purchasers, value driven spenders and practical thinkers when it comes to shopping. The demand for their time at work and home has made the consumers extremely selective about how they would spend their limited time on shopping. 35
  36. 36. The rate of growth in India has gradually picked up in the last two decades. Growthprospects apart, Indias very size acts as the fourth largest economy in the world. It is alsothe second most populous nation in the world. This clearly indicates that within the broadpicture of a developing nation, there are segments to represent big enough to representlarge markets for organized retail.Due to the increasing demand of consumers for variety and convenience less than onesingle roof and the concept of shopping malls started taking shape in India. Though theconcept of shopping malls came from the west, when it was introduced in India is wasaccording to Indian taste and preferences.Shoppers stop was the first Shopping mall to start in India. It was promoted byMr.K.Raheja , a prominent Mumbai-based builder, opened the first outlet in Andheri,Mumbai in 1991, initially it underwent a fair share of growing pains but slowly it caughton and has now been very well excepted by the masses.In India there are a number of large towns and the population in these towns is also veryhigh. This acts as a very important factor to attract the large retailers in venturing intothese towns. In the ascending traffic congestion levels, the net result is overcrowdedtowns and parking hassles, One-stop shops have become the places of choice in such ascenario.There has been an explosion of branded goods as a corollary to the receptive conditionscreated by The new trend; For example: In the eighties there was only one brand of saltavailable in the Indian market but today there are many brands that are available.Garments, cosmetics, shoes, etc are no way different as a number of brands have enteredinto the market.Indian Retailing - On to Generation Mall:The changing structure of the industry is in response to global forces. There is aperspective of the existing opportunities and the future potential areas across varioussegments of the retail industry. While this sector hasnt yet been thrown open to foreigninvestments, the potential for the same in the future is huge. Technology is playing anincreasingly crucial role for the success of a retail venture. Retailers are scrambling to tap 36
  37. 37. the vast consumer information at their disposal using technological advancements. Thesection on such initiatives in the Indian retail scenario is a must for any potential entrantand for majors in the software industry wanting to tap the potential in this industry.Today the Indian consumer wants everything under one roof.PRODUCT CLASSIFICATIONSProducts and services fall into two broad classes based on the type of customers that usethem:1. Consumer products2. Industrial products1. Consumer products:Consumer products are products and services bought by final consumers for personalconsumption: Marketers usually classify these products and services further based onhow consumers go about buying them. Consumer products include convenience products,shopping products, speciality products, and unsought products. These products differ inthe ways consumers buy them and therefore in how they are marketed.Convenience Products: are consumer products and services that the customer usuallybuys frequently, immediately, and with a minimum of comparison and buying effort.Examples include soap, candy, newspapers, and fast food. Convenience products areusually low priced, and marketers place them in many locations to make them readilyavailable when customers need them.Shopping Products: are less-frequently-purchased consumer products and services thatcustomers compare carefully on suitability, quality, price, and style. When buyingshopping products and services consumers spend much time and effort in gatheringinformation and making comparisons, Examples include furniture, clothing, used cars,major appliances, and hotel and airline services, shopping products marketers usually 37
  38. 38. distribute their products through fewer outlets but provide deeper sales support to helpcustomers in their comparison efforts.Speciality Products: are consumer products and services with unique characteristics orbrand identification for which a significant group of buyers is willing to make a specialpurchase effort, Example include specific brands and types of cars, high pricedphotographic equipment, designer clothes, and services of medical or legal specialists. ALamborghini automobile, for example, is a specialty product because buyers are usuallywilling to travel great distances to buy one. Buyers normally do not compare speciallyproducts. They invest only the time needed to reach dealers carrying the wantedproducts.2. Industrial Products:Industrial products are those purchased for further processing or for use in conducting abusiness. Thus, the distinction between a consumer product and an industrial product isbased on the purpose for which the product is bought. If the same consumer buys thesame lawn mower for use in a landscaping business, the lawn mower is an industrialproduct.The three groups of industrial products and services includeMaterials and parts,Capital items, andSupplies and services,Material consist of farm products (wheat, cotton, livestock, fruits, vegetable) etc., andnatural products (fish, lumber, crude petroleum, iron ore). Manufactured materials andparts consist of component materials (iron, yarn, cement, wires) and component partssmall motors, tires, castings. Most manufactured materials and parts are sold directly toindustrial users. Price and service are the major marketing factors branding andadvertising tend to be less important. 38
  39. 39. Marketing strategies for various products:1. Convenience Products:Price: convenience products are usually low priced goods.Distribution/Place: the distribution is widespread and the products are made to beavailable easily. Convenient locations are also very essential. Promotion: the promotionactivities are usually mass promotion by the producer.Examples: toothpaste, magazines.2. Shopping Products:Price: shopping products are usually high priced goods. Distribution/Place: thedistribution is selective and there are fewer outlets.Promotion: the promotion activities are usually advertising and personal selling by bothproducer and resellers. Examples: televisions, furniture.3. Speciality Products:Price: speciality products are usually high priced goods.Distribution/Place: the distribution is exclusive and there are fewer outlets per marketarea.Promotion: the promotion activities are more carefully targeted these activities arecarried on by both producer and resellers.Examples: Rolex watches, fine crystal.CONSUMER BEHAVIOUR TOWARDS VARIOUS PRODUCTS1. Convenience Products:These products are frequently purchased by the consumer as they are required for dailyuse. There is very little planning involved and there are very little comparisons between 39
  40. 40. similar or subsidiary products. The shopping efforts are also very low and the customerdoes not involve himself while shopping.2. Shopping Products:These products are purchased less frequently as they are usually durables. There is a lotof planning involved while shopping and shopping efforts are also high. There is a lot ofcomparison between brands, price, quality, style etc. and the consumer may postpone thepurchase to get a better product.3. Specialty Products:These products have strong brand preference and brand loyalty. There are specialshopping efforts made by the customer to get these products. There is low comparison ofbrands and there is low price sensitivity.THE INDIAN CONSUMERConsumerism in IndiaIn India, as a developing economy, it is felt that the plight of the consumers is notdifferent from that of their counterparts in the rest of the world, in spite of the Fact thatnot all the Indian consumers are well educated and hence, unable to comprehend andunderstand the complex methods of marketing, they are also exploited and very oftenbecome victims of false claims for products, misled by deceptive advertisements, misledby packaging, poor after sales service and so on. Because of the above felt abuses, thereis observed and seen a growing consumer awareness leading to the growth ofconsumerism and an increasing demand for consumer protection in India.Consumerism can be said to be still in its infancy stage, but the consumer movement isslowly gathering momentum, it is a social force used to protect the consumers against theunfair marketing practices occurring in the transaction between the sellers and buyers. Attimes there is a deliberate attempt on the part of the marketer to adopt misleading, false ordeceptive advertisements, where only half truths are offered to the consumers so as togive a difference impression and create a different image as compared to the actual fact. 40
  41. 41. Since the 1980s, there have been certain changes taking place in the socio economicenvironment, making it conductive for marketers to adopt unethical marketing practices.Since the market was flooded with many goods, it was difficult for the customer toascertain the quality or utility of the goods and services. The manufacturers tried tocapitalize on the situation by adopting unfair and unethical marketing practices in theform of fictitious pricing or price collusion, unsafe products, adulteration, misleadingadvertisements, black-marketing, false warranties, etc., in 1990s also after liberalizationof the economy, the market was again flooded with varieties of goods and services. Thedifferences in the scene now as continuous entry of new competitors willing to makeenormous investments for long term market shares fast failing margins cutting into theprofitability of many marketers.Rapid rise in the consumer earnings, fall in the savings rate resulting in generatingincreasing amounts of disposable income to be spent on consumer products and services.With the advent of information age bringing with it real time images of the global lifestyle; And thus making high spenders and budget shoppers spend lavishly on productsand services.Under the above circumstances, "survival of the fittest" was the motto, this resulted inmarketers using wrong means to increase their market share rather than face the situationof being wiped out from the, market place. The following situational factors also aidedthe marketers,  The vastness of a country like India along with an imbalance in the distribution of income and wealth and backwardness of the people came in the way of organizing consumer awareness and movements.  The high rate of illiteracy and ignorance among the majority of the population 41
  42. 42.  Onslaught from the unscrupulous businessmen due to the traditional outlook of the people to suffer in silence, lack of education and information.  Unable to understand the technical complexity of the goods and thus accepting the information given by the manufacturers or sales persons on face values.  Indian consumers getting carried away by the clever advertising and promotion tactics used by the marketers. While on one hand the manufacture, distribute, advertise and price the product, the consumer has got the right to decide whether or not to purchase the product. However, the consumer is not in a position to exercise this power, while purchasing a product or services. This is because of either the lack of information or excess of indigestible information or conflicting information received from one or more competing firms. This has resulted in the rise in consumerism. The Indian Consumer Consumerism today, as a collective action of the consumers to protect their own interests indicates failure on the part of the business system, Which includes the public policy makers and the government to guarantee and ensure the legitimate rights of the consumers. This is also the reason being consumer seeking protection. To ensure consumer protection, the onus of responsibility lies on the shoulders of three groups of people namely: the business, the government and the consumers themselves. There are several problems faced by the Indian consumers, thus making it necessary to have an effective and more involvement from the government and consumer movements to safeguard the consumer rights. The factors responsible for the sad plight of Indian consumers are given hereunder:1. Very often India faces a severe imbalance in the demand and supply of essential commodities. This has produced evils in the form of hoarding and black marketing 42
  43. 43. profiteering corruption, nepotism, red tapism irresponsibility and arrogance while dealing will consumers.2. With low literacy levels and incorrect & unsatisfactory information generated, many of the Indian consumers are not consciously aware of their rights. This further encourages businessmen to develop indifferent attitudes and behaviours towards their consumers.3. Though the market is flooded with many goods and services, there is seen an imperfect and ineffective competition, for, in a perfect (competition) market the buyer may be in a position to substitute one product for another with visible differences in the quality service and price of the products. But in the exciting scenario, apart from the lack of general essential information, there are very few sellers available in the market, which can keep the competition alive and also work to avoid the threat of potential competition by offering equally good alternative products and services to consumers. Thus the Indian consumer becomes a victim of ineffective competition and is forced to make a choice from the available few alternative goods and services.4. In the absence of proper information and unfamiliarity with some of the new Product features, consumerism at times, become easy victims and accept substandard, inferior to even defective products.5. Consumerism is still in its infancy stage and hence not well organized and developed as in the developed countries.6. The legal framework and system in India is a time consuming and tiresome process, thus consumers are hesitant to seek reprisal of their grievances by taking the help of the judiciary.7. The government had started the public sector undertakings to serve the public interest by providing effective competition to the private sector, increase production, etc., however, these units have yet to produce benefits that will commensurate with the investment. The basic objective behind investing and encouraging the growth of public sector was to 43
  44. 44. encourage the concept of consumer welfare. But as far as performance is concerned, many of the public sector monopolies are making the life of consumers miserable. To quote a few examples, the services provided by some of the state owned electricity boards is very poor, very often, consumers are compelled to make hard payments for the services hardly received by them. The state of the public roads in the various cities and towns are always uneven with many pot holes, thus causing more inconvenience and harm to the people and all the vehicle users, who make use of the road.8. The existing laws which have been framed to protect and safeguard the interest of the consumers at large, are not being effectively implemented and enforced to achieve the said objectives. From the above discussions we can see that many of the above pitfalls can be removed it active participation is there from the business, government and consumers.  The business comprising of all the manufacturers and intermediaries must take up the responsibility to ensure efficiency in production and quality of the output. They must also abstain from resorting to unhealthy practices like charging exorbitant prices, or hoarding and black marketing thus voluntarily the businessmen themselves should take up the responsibility to ensure that qualitative goods and services reach the ultimate consumer in time and at reasonable prices.  The government can come to the help of the consumers and prevent them from being exploited by passing certain legislation to protect the consumer and also by having certain statutory bodies to prevent firms from exploiting the consumers. The government has also included consumer protection as an item of the 20 point programme, A consumer advisory council has been set up by agencies, including state governments the textile committee and the department of science and technology added to this the government is seeking to increase the awareness of the consumers rights through various media. Doordarshan has been organizing 44
  45. 45. programmes like Lok Samasyani, Jansad, Janavani etc.,  And lastly consumers themselves should themselves assert their rights and protect themselves from business malpractices. They should accept consumerism and work towards making the businesses and government more responsive to the rights of the consumer, various consumer movements have also been organized in many parts of the county and there are as many as 237 or so consumer organizations working towards consumer protection.STATEMENT OF THE PROBLEMUnderstanding shopping behavior is in shopping malls is one of the greatest problems ofthe marketer. He has to fine tune his marketing mix strategies according to the marketneeds. For this an in depth Analysis is necessary to understand the shopping behavior.Big Bazaar one of the well-known shopping malls in the city of Bangalore has a differentkind of marketing strategy as compared to others. In this background an attempt is madeto understand the marketing mix strategies of Big Bazaar from customers point of view. 45
  46. 46. OBJECTIVES OF THE STUDYThe study is conducted with the main intention of understanding:1. The shopping behavior of the customers.2. Customers perception about the marketing mix strategies of Big Bazaar.3. Customers preference for Big Bazaar.4. Customers expectation and satisfaction levels.5. To offer suggestions based on findings.NEED FOR STUDYRetail market has come of age and is witnessing a global trend. Bangalore is one of thecities witnessing this trend hence it attracts the attention of any researcher to understandthe shoppers behavior and strategies of the retailer in this regard.SCOPE OF THE STUDYThe study confines itself in understanding the customers view point of the marketing mixstrategies of Big Bazaar in Bangalore.RESEARCH METHODOLOGYDATA SOURCES:1. Primary DataPrimary data is the information collected for research purpose at hand. Primary data wascollected through an interview with the help of a structured questionnaire, whichcontained quires that were relevant to the purpose of the study as well as pertinent; 46
  47. 47. industry related questions. The present study questionnaire makes use of both open endedand close ended questions.2. Secondary DataSecondary data is the information which already exists. Secondary data is collected fromjournals, magazines, books, dissertations etc. The secondary data for this research wasobtained from company profile, corporate magazines, corporate broachers, websites,journals etc. Various books and other published matter were also referred to for sorting,tabulating and analyzing the raw data collected. Very little research specific data wasavailable; hence much emphasis was given to primary data.RESEARCH APPROACHSurvey method was adopted in order to collect the primary data required for the study.RESEARCH INSTRUMENTQuestionnaire was designed with open-end and close-end questions. The Questionnairewas designed in such a manner so as to cater to all the areas and aspects of the study.SAMPLING PLAN1. SAMPLING UNIT: A customer visiting Big Bazaar is identified as the sampling unit.2. SAMPLING SIZE: The sampling size was 100.3. SAMPLING PROCEDURE: Random SamplingLIMITATIONS OF STUDY  Due to time constraint the study was limited to Bangalore City and the number of questionnaires was restricted to 100.  It is assumed that the respondents understood the questions in the questionnaires as they were supposed to. The chances of misunderstanding were remote but it 47
  48. 48. cannot be ruled out. It is assumed that the information given by the respondents is true as per their knowledge and hence the chances of biased information is remote but definitely cannot be ruled out. Due to the limited number of respondents, the finding may not be the same for the whole population. 48
  49. 49. Company ProfileIncorporated in October 1987, Pantaloons ranks amongst the top five retailers inIndia.Pantaloon Retail (India) Limited (PRIL) was incorporated on October 12, 1987 as MansWear Private Limited under the stewardship of Mr. Kishore Biyani. The Company wasconverted into a public limited company on September 20, 1991 and on September 25,1992 the name was changed to Pantaloon Fashions (India) Limited and the same time itwent public and today it has approximately 14,000 shareholders. It later changed its nameto Pantaloon Retail (India) Limited on 7th July 1999.From a humble beginning in 1987, Pantaloon as today evolved as a leading manufacturer-retailer in the country with 12 Pantaloon stores and 6 hypermarkets operational across thecountry. It has been a remarkable journey for PRIL as it’s evolved from a manufacturingto a completely integrated player controlling the entire value chain.CORPORATE MISSION"We share the vision and belief that by improving our performance throughinnovative spirit and dedication, we shall serve our customers and stakeholderssatisfactorily."PRIL believes that unconventional and innovative thinking will be the key ingredients toattain leadership in the emerging retail sector where the rules of the game are stillevolving. Whereas serving the customers satisfactorily is the core focus, the companyalso believes in adequately rewarding its shareholders though concerted efforts onreducing cost and improving profitability. To implement the corporate mission, PRIL haspenned a well thought of corporate strategy and policy which will ensure rapid growth inthe coming years. This strategy can be best described in the following words RewriteRules Retain Values.Seamlessly integrate businesses 49