Final riku-project

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Final riku-project

  1. 1. A project report oN MArket coMMuNicAtioN iN A New digitAl world iN Submitted in partial fulfillment of the requirements for 3 rd year BBA course for the degree of Bachelor in Business Administration BY Soumya Ranjan Sahoo Of ASIAN SCHOOL OF BUSSINESS MANAGEMENT BHABANESWAR UNDER GUIDANCE OFMr. Bipin Satapathy Prof. B. BramhaStore Manager Faculty GuideReliance Fresh ASBM,Bhubaneswar
  2. 2. IDENTIFICATIONName of the student : Soumya Ranjan SahooEnroll No. : 56317UT02105Registration no : 36088/07Project Topic : Market Communication in a New Digital world of Reliance FreshSession : 2007-2010Course name : BBAInstitute : Asian School of Business Management.University : Utkal UniversityProject Guide : Mr. Bipin SatapathyFaculty Guide : Mr. Prof B Bramha Date of Issue: 18.05.2009 Date of Submission: 20.06.2009 Soumya Ranjan Sahoo 3rd year BBA [2]
  3. 3. DECLARATION I, Soumya Ranjan Sahoo, here by declare that this project report titled “Marketcommunication in a new digital world” is original and the result of my own work. This project report has not been submitted to any other university or institute forthe award of any degree or diploma. SOUMYA RANJAN SAHOO [3]
  4. 4. CONTENT• Acknowledgement• Executive summery• Certificate of corporate guide• Certificate of faculty guide• Introduction• Retail overview  Overview on Global Retail  Overview on Indian Retail industry• Reliance  Company profile  Founder profile  Board of Directors of Reliance Industries Limited  Board Committees  RIL commitment  Major Subsidiaries & Associates  Major associates• Brief on Reliance retail• Brief on Reliance fresh  History  Present status  Future plans  Farm to Fork  Supply chain model of reliance fresh  SWOT analysis on the Reliance Fresh• Brief on Reliance fresh in Orissa• Market communication in New digital world [4]
  5. 5.  Introduction  Background  Communication Technologies o Pull vs. Push• Direct Marketing o The Internet o Streaming Audio and Video  YouTube  Joost  MySpace o RSS o Webcasting o Podcasting o Blogs o Peer-to-Peer (P2P) Computing o E-Procurement o Mobile Internet  M-Commerce  Wireless Advertising• Market communication  Definition  Communication process at Reliance fresh Brand identify at Reliance Fresh Integrated Marketing Communication (IMC) Environmental Analysis for Reliance Fresh Communication gap Conclusion Bibliography Questionnaire [5]
  6. 6. ACKNOWLEDGEMENT I wish to express my appreciation and thank to all those with whom I have had theopportunity to work and whose thoughts & insights have helped me in furthering my knowledgeand understanding of the subjects. Every page of this report reminds me about the moral support and guidance that wasbestowed on me by the respected guide, professor, friends, and family members through out theduration of the project. First of all I owe my special thanks to the management of Reliance fresh, for so kindlyproviding me data and useful information for the purpose of the study. My sincere gratitude goes to my project guide Mr. Bipin Satapathy, Store Managerwithout whose valued guidance, encouragement and inspiration the project could ever havebeen possible. I convey my regards to Mr. Biswajit Pattanayak, ASBM, Bhubaneswar for providingample opportunity and me to prepare this academic task. I am also grateful to my parents for their encouragement. I am unable to mention many other name who have helped me greatly but it givesimmense pleasure to appreciate and thanks all those without whose encouragement and help thisproject would never have been completed. [6]
  7. 7. SOUMYA RANJAN SAHOO EXECUTIVE SUMMERYThese days’ organizations are looking forward to obtain competitive edge over their competitorsthrough highly developed employee skills, excellent market communication skills, distinctiveorganizational cultures, management processes and systems which are in contrast to traditionalemphasis on transferable resources such as equipment that can be purchased any time bycompetitors’.Reliance Fresh is the retail chain division of Reliance Industries of India which is headed byMukesh Ambani. In reliance also much work is done to develop the marketing competencies soas to have better results. Reliance has entered into this segment by opening new retail stores atHyderabad on 3 November 2006. Reliance plans to invest 25000 crores in the next 4 years intheir retail division and plans to begin retail stores in 784 cities across India.In my study I have tried to study the market communication processes in digital world forReliance Fresh. For that I had gone to different reliance fresh retail stores and find out thecommunication ways they use.I also did environmental analysis for my study. Types of Communication techniques used here.Big retailers like Reliance have huge resources and network which directly impacted many ofthe retailers some of whom are planning to quit. In our sample size of 75 retailers more than 30agreed to have lost as much as 50% of their sales. This case also discusses pros and cons ofcontract farming which on one part assures farmers of price for their crop and knowledge aboutfertilizers and seed but on other side has some obvious drawbacks like monopoly of bigretailers. As a big market in which organized sector is poised to grow with 25% - 30% annuallyour government must come with appropriate regulations to save small retailers and ouragricultural sector. [7]
  8. 8. Certificate from the Corporate GuideThis is to certify that work entitled Project title “Marketing Communication in New DigitalWorld” is done by Soumya Ranjan Sahoo under my guidance and supervision for the partialfulfillment of degree of BBA, Asian School of Business Management, Bhubaneswar.To the best of my knowledge and belief of the thesis: • Embodies the work of the candidate himself. • Has duly been completed. • Fulfills the requirements of the rules and regulations relating to the summer internship of the store.Date Signature of the Corporate Guide [8]
  9. 9. Certificate from the Faculty GuideThis is to certify that work entitled Project “Marketing Communication in New DigitalWorld” is done by the student name Soumya Ranjan Sahoo under my guidance andsupervision for the partial fulfillment of degree of BBA, Asian School of BusinessManagement, Bhubaneswar.To the best of my knowledge and belief the thesis: • Embodies the work of the candidate himself. • Has duly been completed. • Fulfills the requirements of the rules and regulations relating to the summer internship of the institute. • Is up-to the standard both in respect to contents and language for being referred to the examiner. Date Signature of the Faculty Guide [9]
  10. 10. INTRODUCTIONWith a vision to generate inclusive growth and prosperity for farmers, vendor partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Group’s foray into organized retail.With a 27% share of world GDP, retail is a significant contributor to overall economic activity across the world. Of this, organized retailing contributes between 20% to 55% in various developing markets. The Indian retail industry is pegged at $ 300 billion and growing at over 13% per year. Of this, presently, organized retailing is about 5%. This is expected to grow to 10% by 2011. RRL has embarked upon an implementation plan to build state-of- the-art retail infrastructure in India, which includes a multi-format store strategy of opening neighborhood convenience stores, hypermarkets, specialty and wholesale stores across India.RRL launched its first store in November 2006 through its convenience store format ‘Reliance Fresh’. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end of FY 2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first and India’s largest hypermarket ‘Reliance Mart’ in Ahmadabad in August 2007. This year, RRL has also launched its first few specialty stores for apparel (Reliance Trends), footwear (Reliance Footprints), jewellery (Reliance Jewels), books, music and other lifestyle products (Reliance Timeout), auto accessories and service format (Reliance AutoZone) and also an initiative in the health and wellness business through ‘Reliance Wellness’. In each of these store formats, RRL is offering a unique set of products and services at a value price point that has not been available so far to the Indian consumer. Overall, RRL is well positioned to rapidly expand its existing network of 590 stores which operate in 57 cities. [10]
  11. 11. During the year, RRL also focused on building strong relationships in the agri-business value chain and has commenced marketing fruits, vegetables and staples that the company sources directly to wholesalers and institutional customers. RRL provides its customers with high quality produce that has better shelf life and more consistent quality than was available earlier. RRL has made significant progress in establishing state-of-the-art staples processing centers and expects to make them operational by May 2008.Through the year, RRL also expanded its supply chain infrastructure. The Company is fully geared to meet the requirements of its rapidly growing store network in an efficient manner.Recognizing that strategic alliances are going to be a key driver to its retail business, in FY 2007-08, RRL established key joint ventures with international partners in apparel, optical and office products businesses. Further, RRL will continue to seek synergistic opportunities with other international players as well. This year, RRL will continue its focus on rapid expansion of the existing and other new formats across India.. [11]
  12. 12. RETAIL OVERVIEWEtymology:Retail comes from the French word retaillier which refers to “cutting off, clip and divide” interms of tailoring (1365). It first was recorded as noun with the meaning of a “sale in smallquantities” in 1433(French). Its literal meaning of retail was to “cut off, shred, paring” like theFrench, the word both in Dutch and German (Detailhandel and Einzelhandel respectively) alsorefer to sale small quantities of items.Simply retailing means, directly selling many goods or commodities and services to theconsumer. Retail business involves selling commodities form a retail store, online order,through vendors and so many other policies.Retail types:There are three major types of retailing. The first is the market, a physical location where buyersand sellers converge. Usually it’s done in town squares, sidewalks, or designated streets andmay involve the construction of temporary structures (market stalls).The second form is shop or store trading. Some shops use counter services, where goods are outof reach of buyers, and must be obtain from the sellers. This type of retail is common for smallexpensive items (e.g. jewelry) and controlled items like medicine and liquor. Self-service,where goods may be handled and examined prior to purchase, has become common since the20th century.The third form of retail is virtual retail, where products are ordered via mail, telephone or onlinewithout having been examined physically but instead of catalog, on television or website.Retailing consists of the sale of goods merchandise for a fixed location, such as a departmentalstore or kiosk, or by post, in small or individual lots of direct consumption by the purchaser.Retailing may include retailing service, such as delivery. In commerce, a retailer buys goods orproducts in large quantities from manufacturers or business. In commerce, a retailer buys goodsor products in large quantities from manufacturer or importers, either directly or through awholesaler, and then sells smaller quantities to the end user. Retailers are the end user of thesupply chain. Manufacturing marketers see the process of retailing as a necessary part of theiroverall distribution strategy. [12]
  13. 13. Retail industry:Retail industry has brought in phenomenal changes in the whole process of production,distribution and consumption of consumer goods all over the world in the present world most ofthe developed economics are using the retail industry as there vital growth instrument.At present, all the industries of U.S.A the retail industry holds the second place in termsemployment generation. In fact, the strength of retail industry lies in its ability to generate largevolume of employment. Not only in U.S.A but also the other developed countries like the UK,Canada, France, Germany and Australia are experiencing tremendous growth in there retailsector.Observing the global upward trend of retail industry, now the developing countries like Indiaare also planning to tap the enormous potential of retail sector. Wal-Mart the world largestretailer, is interested in opening shops in India. Other popular brands like Pantaloons, BigBazaar (India) and Archies (U.S.) are rapidly increasing their market share in the retail sector.Emergence of a strong retail sector can contribute immensely at the economic development ofany country with a dominant retail sector, the farmers and other suppliers can sell their productsdirectly to the major retail companies and can ensure stable profit. On the other hand, to ensuresteady supply of goods, the retail companies can inject cash into the production system. Thiswhole process can result into a more efficient production and distribution system for theeconomy as a whole.Retail business:It is not a secret that retail business is one of the most actively developing sectors of nationaleconomy. Besides territorial extension retail chain now tends to create new format in retailoutlets in order to gain more customers. With the increasing power of the people the retailbusiness is sure to flourish.Retail business is all about the study of the relationship of customer satisfaction, consumerloyalty and profitability. By retail business we mean a lot of things right from bank to shop atthe door step, no matter how or small the business is, it all runs in the basic principles ofcustomer satisfaction, customer loyalty and profitability.Today, with the customers being provided a array of choices, is the king. He can choose what tobuy what not to buy and from where, so a good retailer strive to achieve the maximum customersatisfaction. After the satisfaction comes the loyalty to the customer, which plays a major role in [13]
  14. 14. bonding and cementing the relationship of the retailer and customer. Last but not the least is theprofit part, which without saying the most aspect of any business.Retailers satisfy consumer needs by offering right products at the right place and at the rightprice. Retailers are the final business in the distribution channel that link manufacturers withconsumers. A distribution channel is a set of firms that facilitate the movement of products fromthe point of production to the point of sale to the ultimate consumer. GLOBAL RETAIL OVERVIEWRetail has played a major role world over in increasing productivity across a wide range ofconsumer goods and services. The impact can be best seen in countries like U.S.A, UK, Mexico,Thailand and more recently China. Economics of countries like Singapore, Malaysia, HongKong, Sri Lanka and Dubai are also heavily assisted by the retail sector. Retail is the secondlargest industry in the United States both in number of establishments and number ofemployees. It is also one of the largest worldwide. The retail industry employees more than 22million Americans and generates more than $3 trillion in retail sale annually.The world’s largest retailer is also the world’s largest corporation in terms of annual sales. Wal-Mart’s net sales of $401.24 billion — up 7.2 per cent– for the fiscal year (2008-09) ending 31stJanuary, 2009. Wal-Mart has become the most successful retail brand in the world due its abilityto leverage size, market clout, and efficiency to create market dominance. Wal-Mart headsfortune magazine list of top 500 companies in the world. Wal-Mart, which employs over 1.4million associates in the US and over 0.68 million associates outside the US, created around63,000 jobs worldwide this year, including over 33,000 in the United States. Wal-Mart Storeswas placed in 16th position in 2008 Forbes Global 2000 list. It is a major public corporation inUnited States of America. It operates a group of big departmental stores and discount stores.In Forbes annual list, large numbers of billionaires are from retail business. INDIAN RETAIL INDUSTRYIndia retail industry is the largest industry in India, with an employment of around 8% andcontributing to over 10% of the countrys GDP. Retail industry in India is expected to rise 25%yearly being driven by strong income growth, changing lifestyles, and favorable demographicpatterns.It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion.India retail industry is one of the fastest growing industries with revenue expected in 2007 toamount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is [14]
  15. 15. expected in the industry of retail in India by growth in consumerism in urban areas, risingincomes, and a steep rise in rural consumption. It has further been predicted that the retailingindustry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5billion.Shopping in India has witnessed a revolution with the change in the consumer buying behaviorand the whole format of shopping also altering. Industry of retail in India which has becomemodern can be seen from the fact that there are multi- stored malls, huge shopping centers, andsprawling complexes which offer food, shopping, and entertainment all under the same roof.India retail industry is expanding itself most aggressively; as a result a great demand for realestate is being created. Indian retailers preferred means of expansion is to expand to otherregions and to increase the number of their outlets in a city. It is expected that by 2010, Indiamay have 600 new shopping centers.In the Indian retailing industry, food is the most dominating sector and is growing at a rate of9% annually. The branded food industry is trying to enter the India retail industry and convertIndian consumers to branded food. Since at present 60% of the Indian grocery basket consists ofnon- branded items.India retail industry is progressing well and for this to continue retailers as well as the Indiangovernment will have to make a combined effort. • India Shopping Malls • Scope of the Indian Retail Market • Indian Organized Retail Market • Growth Factors in Indian Organized Retail sector • Opportunities in Indian Organized Retail sector • Challenges facing the Indian Organized Retail sector • Role of Supply Chain in Indian Organized Retail • Employment Generation by Indian Organized Retail Sector • Indian Organized Retail Sectors Impact on Lifestyles [15]
  16. 16. • Emerging Trends in Indian Organized Retail Sector • Growth of Retail Companies in India • Evolution of Indian Retail • FDI in Indian Organized Retail Sector • Formats in Indian Organized Retail Sector • Consumer Durables RetailGrowth phase of Indian Retail Industry:The growth factors in Indian organized sector are various but it is mainly due to the fact thatIndian economy is booming also, the rise in the working population which is young, pay-packets which are hefty, more nuclear families in urban areas, rise in the number of womenworking, more disposal income and customer aspiration, western influence and growthexpenditure in luxury items. All these are the factors for the growth in Indian organized retailsector.The phase of high growth of Indian retail sector is expected to Continue due to huge amounts ofinvestments and breaking up of traditional concepts in this sector. These are leading to variouschanges and are providing further boost to the growth of the Indian Retail Sector. The IndianRetail Sector that includes the traditional retail and the modern retail is estimated to grow at avery fast pace from US$ 336 billion, in 2006 to US$ 590 billion, by 2011.The traditional retail sector is expected to increase from US$ 324 billion, in 2006 to US$ 493billion, by 2011. The share of the modern retail in the Indian Retail Sector is also estimated toincrease from 4% in 2008, to 16% in the next five years. This exceptional growth is expected totake place in the retail sector due to large amounts of investment which is estimated to be aboutUS$ 35 billion in the next five years. The "cash- and- carry" activities are expected to receivethe majority of investment.The maximum amount of growth in the Indian Retail Sector will be registered in the topmost 50to 60 markets that are located in the urban areas. These markets would be mostly supermarketsand hypermarkets. However, these supermarkets and hypermarkets will also witness fasterosions in their margins. Further, it is estimated that in the longer run, the convenient storesthat are located in the local neighborhood will continue to survive.A major focus area in the Indian retail sector is the supply chain management. In the westerncountries, the retail sector has a highly developed system of supply chain. Howeverdevelopments in supply chain in Indian retail sector has been quite slow. [16]
  17. 17. Other areas that need attention for the growth of the Indian retail sector to continue includesduty and tax structures, infrastructure, rising land prices and effective trend forecasting. Trendforecasting needs to be done in the country especially in the segments of cosmetics, apparel andfootwear for this will help the retail companies to curtail their expenses substantially. Alsoanother area that requires attention is manpower for it is estimated that the Sector of IndianRetail will suffer from shortage of manpower by about a million people, by 2012.The chains in the Indian retail sector need to frequently change their stocks and also adoptconcepts like home delivery. If all these areas are given immediate attention then the growthphase of Indian retail sector would continue at a very fast pace. The Indian retail sector wouldthen witness the setting up of retail parks that are flourishing in Europe. Further, the growth ofthe Indian retail sector would help in making the country ready for big retailers by 2015- 2016.Global retail giants are also entering the retail industry in India and this is also one of the factorsin the growth of the organized retail sector in India. The global retail giants who are entering theorganized retail sector in India are: • Wal-Mart • Tesco • Metro AGThe factors for growth in Indian organized retail sector are many and that’s the reason behind itsmassive growth. But for this no continue both the Indian retailers and the government will haveto work together.India a perfect destination for business expansion:A stable government with 2nd stage reforms in place. Well established corporate ethics. Majortax reforms including implementation of VAT.A resplendent market of India:Largest young population in the world - over 890 million people below 45 years of age.More English speaking people in India than in the world of Europe taken together.600 million+ effective buyers by 2010.550 million+ under the age of 20 by 2015. [17]
  18. 18. 70 million+ earns Rs. 8, 00,000+ ($18,000) a year-number to rise to 140 million by 2011.Opportunities in Indian organized retail sector:The opportunities in Indian organized retail sector are many for this sector is witnessing aboom. The Indian retail industry in amounted to US$200 billion in 2006, and out of this amountthe amount the Indian organized retail sector amounted to US$6.4 billion. The opportunity inIndia organized retail sector can be judge from the fact that by 2010 it is expected to rise toUS$23 billion.The Indian governments in 2005 allowed foreign direct investment (FDI) in single brand retailto 51%.These have opened up a lot of opportunities in India organized retail sector. In fact 325departmental stores, 300 new malls and 1500 super markets are being built which shows thetremendous opportunities in the organized retail sector in India. Many Indian companies seeingthe various opportunities in organized retail sector in India have entered in. reliance industrieslimited is targeting for annual sale of US$25 billion by 2011. It is planning to invest US$6billion in order to open 1,500 supermarkets and 1000 hyper markets. Bharti telecoms is palling ajoint venture with Telco a global retail giant worth 750 million. [18]
  19. 19. Company profile:Reliance Industries Limited (NSE: RELIANCE) is Indias largest private sector conglomerate(and second largest overall) with an annual turnover of US$ 35.9 billion and profit of US$ 4.85billion for the fiscal year ending in March 2008 making it one of Indias private sector FortuneGlobal 500 companies, being ranked at 206th position (2008).Backward vertical integration has been the cornerstone of the evolution and the growth ofreliance. Starting with textiles in the late seventies, reliance pursued a strategic of backwardvertical integration- in polyester, fiber intermediates, plastics, petrochemical, petroleum refiningand oil and gas exploration and production- to be fully integrated along the energy and valuechain.Reliance enjoys global leadership in the business, being the largest polyester yarn and fiberproducer in the world and among the top five to ten producers in the major petrochemicalproducts.The group export products in excess of US$ 20 billion to 108 countries in the world. Majorgroup companies are Reliance Industries Limited (including main subsidiaries ReliancePetroleum Limited and Reliance Retail Limited) and Reliance Industrial Infrastructure Limited.Founder profile: “Growth has no limit at Reliance, I keep revising my vision. Only when you can dream it, you can do it” Dhirubhai H. Ambani Founder Chairman Reliance Group [19]
  20. 20. December 28, 1932-July 6, 2002 Board of Directors of Reliance Industries Limited Shri Mukesh D. Ambani Chairman & Managing DirectorShri Nikhil R. Meswani Shri Hital R. Meswani Shri H.S.Kohli Executive Director Executive Director Executive Director Shri PMS Prasad Shri R. Ravimohan Shri Ramniklal H. Ambani Executive Director Executive Director [20]
  21. 21. Shri Mansingh L. Bhakta Shri Yogendra P. Trivedi Dr. D. V. KapurBoard Committees:The Board has established the following Committees to assist the Board in discharging itsresponsibilities: • Audit Committee • Remuneration Committee • Shareholders/Investors Grievance Committee • Finance Committee • Health, Safety and Environment Committee • Corporate Governance and Stakeholders Interface Committee • Employees Stock Compensation CommitteeThe Board has adopted charters setting forth the roles and responsibilities of each of the aboveCommittees as well as qualifications for Committee membership, procedures for Committeemembers appointment and removal, Committee structure and operations and reporting to theBoard. The Board may constitute new Committees or dissolve any existing Committee, as itdeems necessary for the discharge of its responsibilities. [21]
  22. 22. RIL commitment: Growth through commitment: We care about Quality Research and development Health, safety & environment Human resource development Energy conversion Corporate citizenshipReliance believe that any business conduct can be ethical only when it rests on the nine corevalues of honesty, integrity, respect, fairness, purposefulness, trust, responsibility, citizenshipand caring.The essence of these commitments is that each employee conducts the company’s business withintegrity, in compliance with applicable laws, and in a manner that excludes considerations ofpersonal advantages.We do not lose sight of these values under any circumstances, regardless, of the goals we haveto achieve. To us, the means are as important as the needs.For Reliance...Growth is care for good health:Reliance occupational health centers carry out pre-employment and periodic medical checkupsas well as other routine preventive services. Specialized tests like biological monitoring, healthrisk assessment studies and audits to various materials are also performed. Health education andawareness form an integral part of the health care program at reliance [22]
  23. 23. Growth is care for safety:We believe that the safety of each employee is the responsibility of the individual as well as thewhole community of employees.Growth is care for the environment:Reliance believes that a clean environment and around the work place fosters health andprosperity for the individual, the group and the larger community to which they belong.Environmental protection is an integral part of the planning, design, construction, operation andmaintenance of all our projects.Growth is conservation:At reliance, energy conservation efforts seek to reduce the unit cost of fuels and to improveefficiencies in energy in intensive processes.Growth is better in our people:Reliance builds with care a work place that pro actively fosters professional as well as personalgrowth. There is freedom to explore and learn and there are opportunities the inspire initiativeand intrinsic motivation. We believe the people must dream to achieve these dreams will drivethe company’s excellences in all its businesses. Reliance thinks behaves lives and thrives with aglobal mind set, encouraging every employee to reach his/her full potential by availingopportunities that arise across the groups.Growth is thinking beyond business:As corporate citizens, we invest in social infrastructure, believing strongly that our businessstrength fuels our social contributions. To these end reliance encourages funds and developsnumerous education, health, and human capital and infrastructure initiatives. These initiativesare under taken through partnership with non-governmental organization, corporate and trusts.Major Subsidiaries & Associates: • Reliance Petroleum Limited • Reliance Netherlands by (including Trevira) • Reliance Retail Limited • Reliance Jamnagar Infrastructure Limited • Reliance Haryana SEZ Limited [23]
  24. 24. • Reliance Industrial Investment & Holdings Limited• Reliance Ventures Limited• Reliance Strategic Investments Limited• Reliance Exploration & Production DMCC• Reliance Industries (Middle East) DMCC• Reliance Global Management Services Private Limited• Reliance Commercial Associates Limited• RIL (Australia) pty Ltd• GAPCO Tanzania Limited• Gulf African Petroleum Corporation (Mauritius)• GAP OIL Tanzania Limited• GAPCO Kenya Limited• Transenergy Kenya Limited• GAPCO Uganda limited• GAPCO Rwanda Sarl• GAPOIL Zanzibar Limited• Reliance Fresh Limited• Retail Concepts and Services (India) Limited• Reliance Retail Insurance Broking Limited• Reliance Diary Foods Limited• Reliance Retail Finance Limited• RESQ Limited• Reliance Financial Distribution and Advisory Services Limited• Reliance Digital Retail Limited• Reliance Retail Travel & Forex Services Limited• Reliance Hypermarket Limited• Reliance Brands Limited [24]
  25. 25. • Wavely Investment Limited • Reliance Footprint Limited • Reliance Integrated Agri Solutions Limited • Reliance Trends Limited • Reliance Lifestyle Holdings Limited • Reliance Universal Ventures Limited • Reliance AutoZone Limited • Strategic Manpower Solutions Limited • Reliance Gems and Jewels Limited • Delight Proteins Limited • Reliance Agri Products Distribution Limited Reliance Leisure Limited • Reliance Retail Securities and Broking Company Limited • Reliance Home Store Limited • Reliance Trade Services centre Limited • Reliance Food Processing Solutions Limited • Reliance Supply Chain solutions Limited • Reliance Loyalty & Analylitics LimitedMajor associates: • Reliance Europe limited • Reliance industrial infrastructure limited [25]
  26. 26. Reliance retail limited:With a vision to generate inclusive growth and prosperity for farmers, vendor partners, smallshopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up tolead Reliance Group’s foray into organized retail.Reliance is gearing up to revolutionize the retailing industry in India. Towards this end,Reliance is aggressively working on introducing a pan-India network of retail outlets in multipleformats. A world class shopping environment, state of art technology, a seamless supply chaininfrastructure, a host of unique value-added services and above all, unmatched customerexperience, is what this initiative is all about. The retail initiative of Reliance will be without a parallel in size and spread and make Indiaproud. Ensuring better returns to Indian farmers and manufacturers and greater value for theIndian consumer, both in quality and quantity will be an integral feature of this project. Bycreating value at all levels, we will actively endeavor to contribute to India’s growth.The project will boast of a seamless supply chain infrastructure, unprecedented even by worldstandards. Through multiple formats and a wide range of categories, Reliance is aiming to touchalmost every Indian customer and supplier.Reliance Fresh recently (24th Jan, 2007) opened 12 “Fresh” outlets in Chennai increasing itstotal store count to 40. Reliance is still testing its retail concepts by controlled entry beginningin the southern states.The entry of the giant corporate retail in India’s food market will have direct impact on India’s650 million farmers and 40 million people employed in tiny retail. More than 6600 mega storesare planned with Rs. 40,000 crore by 2011.With a 27% share of world GDP, retail is a significant contributor to overall economic activityacross the world. Of this, organized retailing contributes between 20% to 55% in variousdeveloping markets. The Indian retail industry is pegged at $ 300 billion and growing at over13% per year. Of this, presently, organized retailing is about 5%. This is expected to grow to [26]
  27. 27. 10% by 2011. RRL has embarked upon an implementation plan to build state-of-the-art retailinfrastructure in India, which includes a multi-format store strategy of opening neighborhoodconvenience stores, hypermarkets, and specialty and wholesale stores across India.RRL launched its first store in November 2006 through its convenience store format ‘RelianceFresh’. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end ofFY 2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first andIndia’s largest hypermarket ‘Reliance Mart’ in Ahmadabad in August 2007. This year, RRL hasalso launched its first few specialty stores for apparel (Reliance Trends), footwear (RelianceFootprints), jewellery (Reliance Jewels), books, music and other lifestyle products (RelianceTimeout), auto accessories and service format (Reliance AutoZone) and also an initiative in thehealth and wellness business through ‘Reliance Wellness’. In each of these store formats, RRLis offering a unique set of products and services at a value price point that has not been availableso far to the Indian consumer. Overall, RRL is well positioned to rapidly expand its existingnetwork of 590 stores which operate in 57 cities.During the year, RRL also focused on building strong relationships in the agri-business valuechain and has commenced marketing fruits, vegetables and staples that the company sourcesdirectly to wholesalers and institutional customers. RRL provides its customers with highquality produce that has better shelf life and more consistent quality than was available earlier.RRL has made significant progress in establishing state-of-the-art staples processing centers andexpects to make them operational by May 2008.Through the year, RRL also expanded its supply chain infrastructure. The Company is fullygeared to meet the requirements of its rapidly growing store network in an efficient manner.Recognizing that strategic alliances are going to be a key driver to its retail business, in FY2007-08, RRL established key joint ventures with international partners in apparel, optical andoffice products businesses. Further, RRL will continue to seek synergistic opportunities withother international players as well. This year, RRL will continue its focus on rapid expansion ofthe existing and other new formats across India. A target sales turnover of Rs. 90, 000 crore (US$ 20 billion) by 2010 with a planned investmentof Rs. 30, 000 crore over the next five years- that’s the retail vision of Mukesh Ambani and hisRIL retail team. RIL retail venture seems all set to achieve the status of being the flag-bearer ofIndia Retail Inc, and that too in record time!Earlier, about a year ago, it only whispered in close industry circles. Slowly the whispersbecome louder, and the word gained ground that India’s largest private sector company, relianceindustry limited (RIL), is entering the Indian retail sector in a real big way.But with virtually nothing coming from anyone known inside RIL about their retail plans, thishas to be one of the most closely guarded secrets of Indian corporate story. Amidst all sorts ofspeculations in the media circles about RIL intended retail foray, the word finally came out onJanuary 23, 2006, when the Mukesh Ambani – controlled Reliance Industries Limited presented [27]
  28. 28. mega retail initiative retail plans to the board of director who subsequently gave their consent topursue the retail business through a wholly-owned subsidy of the company – likely to bechristened reliance retail limited.The reliance retail blueprint envisages nation-wide chains of hypermarkets, supermarkets,discount stores, department stores, convenience stores, in about 800-odd cities and towns acrossthe length and breadth of India. The RIL board of directors approved the initial phase of theretail foray at an estimated cost of Rs.3,350 crore (US$ 750 million).Just how big and grand this investment in Indian retail sector can be gauged by the simple factthat the Indian retail sector is estimated to be at Rs.10,50,000 crore (US$ 233 billion) - growing5% annually- and the estimated share of the organized retail only Rs.36,000 crore (US$ 8billion), at present , albeit growing at over 30% every year. That makes reliance retail proposedinvestments equivalent to about 10% of India organized retail market- such a level ofinvestment in the Indian retail arena has been unprecedented in the country’s most promisingsunrise industry- retail.So much so, projections by the images-KSA India retail report 2005 of an organized retailmarket of Rs. 1,00,000 crore (US$ 22billion) by 2010 now appears conservative, likely to beachieved much earlier than 2010.Mukesh Ambani, who has been nourishing retail ambitions for quite some time now, has clearlypositioned himself in to the role of redefining the entire landscape of Indian retail.Reliance Retail is likely to launch 252 new Fresh stores across the country by March next year.It also plans to start “Rose”, a jewellery store modeled on Tanishq.Sources also said the company may unveil 200 Fresh stores in Mumbai alone; but they didn’tspecify any deadline. The sizes of Fresh stores may differ from place to place, they added.Currently Reliance Retail operates 372 Fresh outlets across the country.As per the Macquarie research equities report, the retail major plans to have a total of 100m sqft of retail space in 800 cities by calendar year 2010 and revenues of $22 billion by the end offinancial year 2011. Currently, the Fresh store sizes are anywhere between 1100 sq ft and 7500sq ft depending on the location.An analyst added the company will have to restrict its store sizes to 1,000 sq ft in Mumbaiconsidering the real-estate crunch and crowded landscape of neighborhood stores in the city.A few days ago DNA Money had reported about Reliance talking to mom-and-pop stores totake the franchisee route for small stores. The analyst added that Reliance Fresh stores couldalso be run on a franchise model in Mumbai considering the strong associations of smallretailers in the city. And it’s not just the Reliance Fresh- a convenience store format where themost valued business house is pumping money. The Reliance Hyper mart (above 50,000 sq ft)also plans to spread its presence from 1 (in Ahmadabad) to 10 by the end of this financial year. [28]
  29. 29. Similarly, there will be 26 minimarts (10,000-50,000 sq ft) dotting the Indian retails cape byMarch 2008. Sources added that these mini-marts and hyper marts will also include specialtystores. Reliance has already bought 1 lakh sq ft in the crown interior mall in Haryana’sFaridabad to launch its home décor specialty store.Cost-cutting plans Things aren’t all that hunky-dory at Reliance Retail. Stores haven’t been ableto meet the profitability targets, a Reliance source said. Spinning off the retail venture intodifferent verticals, the source added, is to treat them as independent cost-profit centers and bringmore accountability in the areas of costing, manpower, stocks, procurement, and advertising andpromotions.“Earlier there were different reporting centers for different business functions. Now one storemanager will be responsible for all the functions of a particular store,” the source said. Thecompany is planning to hire a lot of apprentices and trainees to do front-line jobs and therebyslash manpower costs. Also, the spin-off is expected to help the company offset losses incurredin other sections such as jewellery, footwear, apparel due to lock-outs or strikes by protestors.Fresh vegetables and fruits section has especially been targeted by the small retailers. Currently,out of 372 Reliance fresh stores, 26 are closed due to protests (19 of them in Uttar Pradesh andGhaziabad, five in Noida).Jai Bendre, head, marketing, food business, Reliance Retail, recently said: “The wastage in foodand vegetables products in India is believed to be more than the total production of UK.”Unmesh Sharma, analyst, Macquarie research equities, in a report to investors said: “The lack ofcold/supply chain infrastructure has resulted in a food & vegetable produce wastage of 25-40%.The company will aim to improve margins by investing in IT and infrastructure to improve thesupply chain efficiencies. However managing space acquisition, IT and manpower challengesmight delay the ramp-up by 36 months.”Food:Food retail in India is food dominant shopping basket in India. The US$ 6.1 billion Indian foodsindustry, which forms 44%of the entire FMCG sales, is growing at 9%and has set the growthagenda for modern trade formats. Food accounts for the largest share of consumer spending.Food and food products account for about 53%of the value of final private consumption.Reliance retail looks forward to be the driver of growth in the industry with a committed teamunder the leadership of Mr. Gunender Kapur, Chief Executive and President of Foods Business.Targets: • Reliance retail turn over by 2010 Rs.1, 00, 000 crore (Out of which 40% is estimated Reliance Retail Turnover by 2010 to be form Foods Business) • Capture dominant market share of Indian retail industry [29]
  30. 30. • A pan India footprint is more than 800 cities and towns • Cater to both urban and rural populations Reliance food team strives to continuously delight the customers. This is the first small step intheir attempt to build and forge strong and enduring bond with millions of farmers andtransform their relationship with customers to a new level. The Organization believes in givingcustomers quality food items, fruits and vegetables at affordable price at Reliance Fresh store.Footwear:The Footwear Vertical headed by Mr Gopalakrishnan Sankar is out to create a niche within theRetail Revolution in Reliance Retail. Envisioned by a clear goal of becoming destination storeof footwear. Reliance industry plans to stamp its presence across 42 cities by opening over 80independent stores by 2010, which will insuring them capturing maximum market share in the18, 000cr footwear industry armed with a mission of creating destination Shoe Shop. Thesestores will stocked with National, International and Private Label products that will providecutting edge retail and shopping experience to the individual and family. Product source fromBrazil, China, Indonesia, Malaysia, Vietnam and Thailand to name a few countries will bedisplay and sold across all stores.These products are value led, meant to create novelty and developed category killers infootwear, accessories and luggage in all segments for all occasions. Creating these will bePortland Design- specialist in design and providing solution for meaningful customerexperience. All this will be provided through a State of the Art Design Studio which is being tocreated to have an in-built Design/CAD Room, Product Development Area, Mock DisplayRoom, Testing Laboratory, Range Presentation Area, Reprographic, and Sample Storage Area.Apparel:As the glaring gaps in the market today remain unattended, it gives Reliance the idealopportunity to step in and revolutionize the shopping environment in the country. The challengeis to transform the Indian customer’s lifestyle and the way our people shop. By offering exiting,fashionable and extreme value products of international caliber they want to capture asignificant share of customer spending more on clothing and luggage. The plan of offer‘Extreme Value’ to the customer by weaving together competitive price with an irresistible line,where the customer would have the luxury of shopping from a diverse product range in an upmarket ambience. They will be focusing at offering ‘affordable fashion’ with superior qualityfabrics. They are also looking for house brands to build a strong business in their departmentaland fast fashion apparel specialty and luggage store. To be a part of India’s globalization, theyplan to tie up with big international brands. [30]
  31. 31. Membership finance and travel:Membership program:They plan to have 100 million customers out of which it is expected that 50 million will bemembership customer – who will have the success to the benefits of the loyalty program under“Reliance One”Payment:To improve the customer experience and to enable cashless payments by customers it isproposed to introduce several payment options that can be used in all the store formats. Theservice offered are, Close Loop Store Cards (Prepaid, Gift & Credit) Credit card, Debit card,ATM availability, Mobile and internet payment options etc.Lending:As an Indian customer becomes aware and demanding, they will need access to demand easycredit to meet their requirements. It is expected that a significant percentage of reliance retailcustomers will use leading products both in the urban and rural areas. The services offered areCustomer Finance, SME Finance and Rural Hub Finance.Insurance and investment:Reliance retail will plays a role of a broker o services the needs of the customers distributing awhole range of insurance and investment products. The intention is to give them choice andimpartial advice. The services offered are life insurance, general insurance and variousinvestment products.Travel service:Reliance Retail proposed to offer Travel Services to its customers covering of range of offeringat unbeatable value owing to the scale of distribution envisaged. Services offered are travelpackages for individuals, Corporate Clients and Family Holidays, FOREX, Other ForeignTravel linked products, Travel Insurance, Ticketing and Hotel Booking (both Domestic &International)Automotive: [31]
  32. 32. The automotive team, currently comprising of 20 members from reputed auto companies isheaded by Mr. Arun Dey, CE –Automotive Retail. The team aims to participate in the vehicleownership experience of Reliance Retail customers and constantly keep on creating value andretaining value. To deliver this the organization will be retailing automotive products andaccessories and setting up worlds class services facilities catering to two wheelers & passengerscars. India today boasts of a population of more than10 million cars and 43 million twowheelers. Despite the burgeoning vehicle population, services & maintenance of these vehiclesstill remains a problem. It is with these underserved market that Reliance Retail decided to setits foot towards creation of a world class auto care chain, in sync with the Reliance Retail. Thefacility would also be retailing auto products namely- Tyres, Tubes, Lube, Car Accessories, e-bikes etc. all these facilities are coming up shortly.Lifestyle:At reliance retail lifestyle they promise to offer a world of products and experiences never seenbefore. A world of style and class for fun and excitement with indulgence and pampering ofknowledge and entertainment. They recognize their role in bringing their style, excitement andentertainment to customers’ lives. so they are offering categories like jewellery, books, music,cosmetics, fragrances, watches, sunglasses, toys, sporting goods, stationary, gifts, flowers, printservices.CDIT:It will be a one stop for all technology solutions in the field of consumer electronics, homeappliances, information technology and telecommunication.Experience zone:A showcase for technology, every experience zone will have fully functional products, for thecustomer to have a true ‘touch & feel’ experience. Experts will guide customers on how to getthe beast quality experience in their own setups at home. Zones will be for the followings, andwill be present in stores as per the respective business plans:Home theaters - different zones ranging from entry –level to a very premium experience.Photography - with a digital mini labDesigner kitchen - completely operational kitchen with appliancesGaming area - vibrant and happeningA collapsible classroom space for training and contests [32]
  33. 33. Reliance Fresh SupermarketsType : SupermarketFounded : 3- October 2006Headquarters : Mumbai, IndiaKey people : Mukesh Ambani, CEOReliance Fresh is the convenience store format which forms part of the retail business ofReliance Industries of India which is headed by Mukesh Ambani. Reliance plans to invest inexcess of Rs 25000 crores in the next 4 years in their retail division. The company already hasin excess of 560 reliance fresh outlets across the country. These stores sell fresh fruits andvegetables, staples, groceries, fresh juice bars and dairy products.A typical Reliance Fresh store is approximately 3000-4000 square feet and caters to a catchmentarea of 1-2 km.History:Post Lunch, in a dramatic shift in its positioning and mainly due to the circumstances prevailingin UP, West Bengal and Orissa, it was mentioned recently in news Dailies that, Reliance Retailis moving out of stocking fruits and vegetables. Reliance Retail has decided to minimize itsexposure in the fruit and vegetable business and position Reliance Fresh as a pure play supermarket focusing on categories like food, FMCG, home, consumer durables, IT and wellness, [33]
  34. 34. with food accounting for the bulk of thebusiness.The company may not stock fruit andvegetables in some states. Though RelianceFresh is not exiting the fruit and vegetablebusiness altogether, it has decided not tocompete with local vendors partly due topolitical reasons, and partly due to its inabilityto create a robust supply chain. This is quitedifferent from what the firm had originally planned.When the first Reliance Fresh store opened in Hyderabad last October, not only did thecompany said the store’s main focus would be fresh produce like fruits and vegetables at amuch lower price, but also spoke at length about its “farm-to-fork’’ theory. The idea thecompany spoke about was to source from farmers and sell directly to the consumer removingmiddlemen out of the way.Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, Reliance Footprint, RelianceWellness, Reliance Jewels, Reliance Timeout and Reliance Super are various formats thatReliance has rolled out.Current status:The super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars anddairy products and also will sport a separate enclosure and supply-chain for non-vegetarianproducts.Currently, selling through company-owned stores currently totals just $8 billion in India.Industry estimates say that the countrys retail industry is worth $300 billion, that is aboutRs 13,50,000 crore. This stands a chance to blossom to $427 billion in the next four years.Organized retail accounts for just over Rs 35,000 crore. Reliance Fresh bids to tap the potentialfor organized retail in the country.Future plan:The Reliance Fresh supermarket chain is RILs Rs 25,000 crore ventures and it plans to addmore stores across different geographies, and eventually have a pan-India footprint by year2011.The opening of Reliance’s retail chains closely follows the moves of global players like Wal-Mart Stores Inc and Metro AG seeking to open shop here in the country. With Reliance [34]
  35. 35. announcing plans to expand, and that too rapidly, the retail scenario in the country is all set totake off in a big way.Besides, the stores would provide direct employment to 5 lakh young Indians and indirect jobopportunities to a million people, according to the company. The company also has plans totrain students and housewives in customer care and quality services for part-time jobs.“Reliance Retail plans to introduce private label sale to kirana stores”Mukesh Ambani’s Reliance retail is understood to be exploring ways to supply its private labelsin food and groceries to Kirana Stores and small retails in the country. A separate entity, mostlikely to be named Reliance foods, will carry out the private label business. With out having tospend much on advertising & marketing expenses apart from generating business volumes.Sources said that after lunching private labels in food & groceries, Reliance Retail is alsoexpected to lunch soaps, detergents, cosmetics & non-FMCG products under its private labelssegment with a new brand name. The company flagship chain Reliance Fresh sells staples andfood items under Reliance select and reliance value brands, diary product under “Diary Pure”brand. Preposition, said Purnendu Kumar. FARM TO FORKThe Reliance retail company sources say it is setting aside Rs 50,000 crore to build its farm-to-fork linkage. Reliance has drawn up plans for a presence in 784 towns and 6,000 mandi(wholesale market) towns with 1,600 rural business hubs to service these. It has already rolledout 177 Reliance Fresh stores across major towns in 11 states. According to a company report,RIL is targeting a turnover of Rs 40,000 crore in the next few years. [35]
  36. 36. After Future Group, Reliance Retail plans to introduce private label sale to kirana storesReliance Retail is understood to be exploring ways to supply its private labels in food andgroceries to kirana stores and small retailers in the country. A separate entity, most likely to benamed Reliance Foods, will carry out the private label business. Reliance Fresh head GunenderKapur was made head of private labels business in the company. Once, they entirely cater to thedemands of their stores, and then they can certainly look at supplying them to other retailerssince they have required infrastructure, process and systems in place.It is said that after launching private labels in food and groceries, Reliance Retail is alsoexpected to launch soaps, detergents, cosmetics and non-FMCG products under its privatelabels segment with a new brand name. The company’s flagship chain Reliance Fresh sellsstaples and food items under Reliance Select and Reliance Value brands, dairy products under“Dairy Pure” brand.Kishore Biyani Future Group, too, also have plans to sell its private labels to stores outside thegroup and it has already carried out pilot studies for this venture and is expected to start thebusiness soon. Future Logistics, the logistics arm of the group, also has plans to foray intowholesale distribution of products such as food, apparel, grocery to organized retail chains inthe country, which is expected to start from this month. [36]
  37. 37. Nearly 2 years ago, Reliance Industries announced an ambitious plan to invest Rs 25,000 croreto expand its stores in the country to take the advantage of organized retail in the country.Initially, the company was planning to open 2,000 stores by 2008, and 5,000 stores by 2010, butdue to a delay in delivery of properties, economic downturn and demand slump the companyhad to scale back its expansion plans.Reliance Retail runs over 850 stores, which include stores for food and grocery, consumerdurables, beauty and wellness, jewellery, footwear, among others. Its formats such as apparelchain Reliance Trends, beauty and wellness format Reliance Wellness, consumer durable chainReliance Digital have private labels or are in the process of launching private labels.The whole idea of private labels is based on pricing and retailers get enough volumes on theirshelf at marginal costing. Retailers have an opportunity to sell their private labels to kiranastores. But it depends on their strategy on pricing and marketing right products is said byNaimish Dave, director with OC & C Strategy Consultants..Business consultancy Techno Park Purnendu Kumar says retailers can sell their products tomom-and-pop stores only through their cash and carry ventures as reaching out to individualstores would be tough preposition. Supplying to kiranawalas is a tedious job as you need to havedifferent points of sale, enough manpower and transport and delivery systems. But sellingproducts through cash and carry stores is a viable SUPPLY CHAIN MODEL OF RELIANCE FRESHReliance started its retail operations of reliance fresh stores with following supply chain model.Procuring directly from the farmers and operating with moderate margin but mass selling waskey to reliance fresh operations for first few months.The following figure depicts the reliance fresh modelMODEL 1 :- [37]
  38. 38. MODEL 2 :-Model 2: Whole Sale Trading (WST) Reliance formalized its second supply chain model toshift itself from grocery retailer to grocery supplier by focusing and establishing itself inMandi’s.Steps in WST model:1. Reliance has owned farms on contract basis for production of specific crop which is decided after extensive research depending on•SOIL CONDITIONS.•CLIMATE CONDITIONS.•RETURN OVER COSTS INCURRED. [38]
  39. 39. 2. Different vegetables and fruits from such farms are collected through reliance own logistics and brought to collection Processing centers where quality check and other required processing is done. In processing centers workers wearing balaclavas, woolen trousers and bulky jackets work inside a room kept at a constant 3 0 celcious, peeling and chopping vegetables, spinning them dry and then heaping them in small plastic packets before placing them in plastic transport crates. At the other end of the 5,000-sq-m warehouse, men unload crates of fruits from a truck pulled up to a spotless loading dock. A quality-control expert samples every tenth crate; if the fruits are good a team will ready them for delivery within hours to Reliance fresh stores around different places like U.P and as far away as Hyderabad and even Mumbai (formerly Bombay). If they are not, workers will inspect the entire shipment and discard anything below standard. [39]
  40. 40. 3. Merchandise from these collection processing centers are collected and loaded for Wholesale mandi’s. As this merchandise is to be made available by 4 A.M in morning thus deliveries in trucks are sent at time depending upon: TRANSIT TIME. – Time required reaching destination i.e mandi’s. MARGIN TIME. – Time period between a truck reaching mandi and then Unloads. Can be 2 to 3 hours.4. From mandi’s where the trucks have been unloaded, roadside vendors and pull carters buy fruits and vegetables to supply in households.5. In case still some vegetables and fruits are not sold reliance logistics own transportation send them to reliance fresh stores SWOT ANALYSIS ON THE RELIANCE FRESHStrengths:Reliance is the first into enter into this unorganized sector of vegetables and fruits. According tothem its intentions to have100% farm fresh foods in their new retail stores. It is also addingshortly a juice bar, and even a large counter for puja flowers. In fact, over 60 per cent of thefloor space has been dedicated to fresh fruits and vegetables, the rest to other food products likestaples, spices, bakery, etc. But reliance has decided not to add any bar soap or toothpaste anddetergent in its shelves. So by using this strategy they are positioning themselves different fromother players of the industries like Food world, Big Bazaar and Nilgiris. But overcome the shortcomings of these specialized stores they are also introducing new Reliance full-fledgedsupermarket called Shakhari Bhandar which offers each and everything from the staple to soap.Most of the staples are under its own private label brand — ‘Reliance Select’. There is a 500gchanna dal pack priced at Rs 28, a 500g urad dal pack for Rs 39, all under Reliance’s ownbrand. Excepting a few packets of Nestle’s Maggi, or MTR’s masalas or Pepsi’s Lays chips,there is very little shelf space given to the big brand owners in the country. Reason: privatelabels offer far better profit margin to the retailer than branded products of FMCG companies.Most of these outlets will need only 2,000-5,000 sq. ft. A supermarket may need as much as8,000-10,000sq.ft.Weakness:This is definitely an interesting business venture but it may miss out on the opportunity tocapture a greater share of the customer’s wallet. For customers, too, this could be irksome, as [40]
  41. 41. they would have to visit another store to pick up essentials. Reliance could easily fix thisproblem by adding a few small counters for some basic non-food products. According to theirofficial this format is not final one they are accepting the new changes which are required toattract the large number of customers.Opportunities:Reliance wants to build a high-profitability business and food is, perhaps, the best venture tostart. That is because the Indian food supply chain is grossly inefficient. There are severalintermediaries, each of whom adds his own profit margin to the cost. Besides, there is hugewastage in transit. This offers potential for savings and profits. To reduce the cost and increasethe profit it has been sourcing out its requirements from the farmers. For example, the leafyvegetables, brinjals, tomatoes and green chilies in the Banjara Hills outlet were sourced directlyfrom farmers in Vantimamdi, Chevella and nearby mandals in Ranga Reddy district of AndhraPradesh. The supply chain already has been backed by few hundred farmers the number isestimated to touch million in next five years. The main aim of the reliance is to eliminate theintermediaries in the sector and reduce the cost. Smaller stores have two advantages. They bringdown the cost of real estate (and increase profits). It is easier to find space for smallconvenience stores in a quiet neighborhood than for supermarkets in high streets.Threats:This model is engineered to clock a faster turnover of inventory — Reliance expects consumersto visit the store at least twice a week for their top-up groceries. Each store will have aninvestment of Rs 50 lakh to Rs 60 lakh. Unlike global retailers who operate on thin margins,Reliance Retail is looking at a fairly high-margin business model. Deliberately stopped short ofbeing a full-fledged supermarket rather, it has limited itself to a food and grocery conveniencestore. They also have a threat from the existing supermarkets which provides all the services toits customers. For Example Food world and Nilgiris also provides food and beverages withother personal care products. These convince are not existed in the present Reliance retailstores. RELIANCE FRESH IN ORISSAReliance fresh stores in Orissa opened on 25th October, 2007. The store was first opened inKalpana square, Bhubaneswar. Core business of Reliance Fresh is selling Fruits and Vegetablesto the ultimate customer. When it opened, traders and rode side vendors opposed. RelianceFresh is hampering local vegetables vendors business. After that blow Reliance Fresh decidednot to sell fruits and vegetables in Orissa. There are 14 reliance fresh stores in Orissa. [41]
  42. 42. Stores in ORISSA: Stores in Store location Date of Total area of Orissa inauguration square ft. Bhubaneswar Kalpana Square 25/09/2007 2925 Gopobandhu Square 09/10/2007 3259 Lewis Road 30/10/2007 2200 Bomikhal 07/11/2007 6368 Nayapalli,IRC 17/11/2007 4935 Baramunda 24/11/2007 4176 Unit-4 23/02/2008 3428 Saheed Nagar 00/00/2008 5245 Cuttack CDA-Sector-6 22/12/2007 4749 Mahanadi Vihar 22/12/2007 2999 (Sanjivani Chowk) Dolamundai 08/03/2008 5349 Jhola Sahi 12/03/2008 4921 Kanika Chowk 01/04/2008 0000 31/05/2008 CantonementIn 2008, without selling fruits and vegetables, Reliance Fresh stores of Orissa are performingwell in nationwide. The average Sq. feet sale of Reliance Fresh in India is Rs. 22 and in OrissaSq. Feet sale is Rs. 17 without selling fruits and vegetables. The Head Office of Reliance Freshof Orissa is in Fortune tower, Bhubaneswar. Reliance fresh is targeting the Upper class andMiddle class customers. But according to location of these stores Upper class, Middle class, andLower class customers are visiting to the store. But, now in the every store in Orissa, are sellingfruits and vegetables. [42]
  43. 43. MARKET COMMUNICATION IN NEW DIGITAL WORLDIntroduction: “Few industries are under as much pressure as media…thanks to a growing number ofdelivery channels and formats, consumers have virtually unlimited options when itcomes to how and when they consume information. While audiences’ appetite forinformation and entertainment is truly staggering, providers are finding they mustspread the wealth in a buyer’s market now glutted with delivery points. It’s notsurprising that enterprises — from entertainment, broadcasting and cable companies,to publishers and digital media innovators — are seeing once-predictable revenuestructures give way as consumers get used to information available virtually ondemand — whenever, however and from wherever they choose to absorb it.”Long back when marketing was in its baby years and many of its now elementary issues wereassumed to fall within basic concepts of economics (e.g., price setting was viewed as a simplesupply and demand issue) and it had barely differentiated from plain advertising theory.In the increasing competition of the midst 20th century companies slowly began to realize thatthe old ways of selling were losing their ways. As competition grew stiffer across mostindustries, organizations started to peek on the consumer side of the transaction as well.What evolved from there was a new philosophy which suggested that in order to increase sales,companies needed also to understand the needs and behaviors of their consumers. Not until thenwas marketing in its truest sense born. Marketing was now first and foremost about knowing theconsumer and it is very likely that it is from this time that the term “The Customer is King” wasborn.However, up until now marketing have continuously separated between sender and receiver,companies have send their marketing messages, the consumer have received them and actedupon the multitude of messages from different companies. The significance of the consumerbeing the sender of the marketing message was minimal. Sure, there has always been the impactof word-of-mouth, but its influence was still not powerful enough to generate a great concernfor management.Fast forward to 2007, and we can now surely talk about the consumer as being the king. TheInternet connects billions of people across continents and people are actively grouping,discussing, reading, inventing, sharing and trading online. In an environment like this, wherepeople are unlimitedly connected with each other, word-of-mouth, or “word-of mouse” rather,has a completely new meaning. Blogs have on occasions destroyed company images,plummeted sales, and ruined entire organizations. Companies now have all the reasons in theworld to worry about what people think about them, and they do! [43]
  44. 44. Background:In the modern society, consumers– just as well as companies, are senders of marketingmessages. Today, people influence other people’s buyer behavior perhaps even to a greaterextent than companies do.On the other hand, this also means increased opportunities for companies as they too haveaccess to the World Wide Web and all its functions just like anyone. They can send youpersonalized information in an instant and customize marketing messages based on consumer’sInternet behavior. Companies, too, can utilize the power of blogs, websites, and communities.The Internet opens up a whole new world of marketing opportunities in this new age ofinterconnectedness.Still, market changes that are occurring today are not only limited to the proliferation of theweb, but all kinds of new technologies of the 21st century are collectively challenging thetraditional market structures and they are continuously forming new conditions to act upon.Here is an instant time machine in bullet points that will give you a glimpse of what ishappening: • The difference between broadcast, cable and satellite will become irrelevant because all screens will be connected to a single pipe that is now known as the Internet. • DVRs (digital video recorders) as we know they will die out since all screens will be powered by computers (read: have memory and web access) and all content will be available on demand. Cell phones will become DVRs-on-the-go, their storage capacity accommodating for thousands of programming hours. • We will be moving from the rule of mass content to the rule of content communities as TV content recommendation technologies proliferate. • The mobile phone is not only a media consumption device; it’s also a content creation device. • Consumers have moved from owning the means of content consumption to owning the means of production and ultimately — the means of distribution. • Nobody knows how a particular device can evolve, least of all its engineers. An evolution of any medium is shaped by its users. • If, in the early days of television, a celebrity was somebody who had done something notable, “A modern celebrity is someone who is recognized by more people than he himself can recognize.”It is clear that we are moving towards a situation where the individual has an increasinglypowerful influence on the market and in which customization and personalization to the needsof the consumer is key.“Strategic Responses to Media Market Changes” [44]
  45. 45. “The pace of market changes is extraordinary, forcing managers, shareholders, and employeesto scramble to comprehend the changes, to develop strategic responses, and to reorganize theiractivities. The process is complex and there is difficulty determining where to focus attentionbecause no single force is behind the changes. Instead pressures are coming from technologicalforces, production forces, market forces, social forces, and managerial forces simultaneously.”Market communication techniques:Market communication are means by which firms attempt to inform, persuade, and remindconsumers -directly or indirectly- about the products and brands that they sell. There are various technologies through which companies can interact to consumer and provideinformation about a product or services. They are:Pull vs. Push:There are basically two ways to receive information, either you actively seek it or it is given toyou.Pull strategy, when the manufacturer uses advertising & promotion to persuade consumersto ask intermediaries for the product, thus inducing the intermediaries to order it.Push strategy, when a manufacturer uses its sales force & trade promotion money to induceintermediaries to carry, promote, and sell the product to end users.Example: If you are browsing the Web pages on the Internet, this is considered to be a “pull”technology because you are the one who actively seek information. Receiving e-mails is, on theother hand, a ”push” technology since you are given information by another part withoutnecessarily asking for it.Direct marketing:Use of mail, telephone, fax, e-mail or internet to communicate directly with or solicit responseor dialogue from specific customers & prospects. Customized: The message can be prepared to appeal to the addressed individual. Up-to-date: A message can be prepared very quickly. Interactive: The message can be changed depending on the person’s response. [45]
  46. 46. The Internet:The internet is a global system of interconnected computer networks that use the standardizedInternet Protocol Suite (TCP/IP).it is a network of networks that consists of millions of privateand public, academic, business, and government networks of local to global scope that arelinked by copper wire, fiber-optics cables, wireless connections and other technologies.The internet carries a vast array of information resources and services, most notably, the interlinked hypertext documents of the World Wide Web(WWW) and the infrastructure to supportelectronic mail, in addition to popular services such as online chat, file transfer and file sharing,online gaming and voice over internet protocol(VoIP) person-to-person communication viavoice and video.Since the Internet has a central role in the changes that are studied in this thesis, let us take alook on how fast and how widespread its usage actually is. Larry Landweber of the ComputerScience Department at the University of Wisconsin, Madison, USA, has created some maps thatsuitably illustrate this matter. [46]
  47. 47. This first map shows the differential levels of network connectivity in September 1991: Map of International Connectivity, 1991. the next map is from June 1997 and the vast proliferation after only six years is very evident. [47]
  48. 48. Map of International Connectivity, 1997.Even though the last map shows how nearly the entire world is connected, it is still from 1997and thus quite old. Nowadays the whole world is more or less considered to have Internet accessand it is instead the number of Internet users within each country that is studied. AntonioScarponi (2005) has created an animated map of the world showing the growth of Internet usersfrom 1993 and predicted to 2015, the following map depicts the predicted Internet usage 2015and uses a cartogram representation where the size of the country is based on the number ofInternet users rather than the geographical area.Internet Users World Map, 2015.It is evident that the Internet is extremely widespread, and that its formation was quite rapid,particularly in comparison with that of television which was discussed earlier. The point here isthat changes and evolvements in technology and society take place with varying paces and withvarying effects. In the same reasoning, the authors believe that the changes that are explored inthis thesis will have a dramatic impact on how companies communicate in their markets, howconsumers retrieve information, communicate, buy commodities and receive services in theirdaily lives. It can be discussed how long it will take until there is a dramatic result on society asa result of the current changes; will it take more than thirty years as in the case of television, orwill it be faster as in the case of radio and the Internet? However, it is much more important torealize that the changes are actually occurring, and that they are gradually imposing companiesto respond as it was made clear in the introduction of the thesis, and it is thus even more [48]
  49. 49. important to try to grasp the changes and try to realize what they imply – which is exactly whythe authors have dedicated themselves to this thesis.Streaming Audio and Video:Traditional techniques for receiving multimedia over the Internet required that you firstdownload the content, and not until the completion of the download could you watch or listen toit. Nowadays, however, you can watch or listen to content on the Internet at the same time asyou are receiving it, this is what is called “streaming”. It implies major benefits in regards to nothaving to wait and it generally enriches the experience of the Internet, making it more vibrantand dynamic.YouTube:YouTube is a video streaming site owned by GOOGLE, it grows by an addition of 65,000 newvideos every day and over 100 million video clips are watched each day by people allover theworld. The videos can easily be forwarded to friends over the Internet but recently, however, thevideos are being increasingly forwarded to cell phones as well.YouTube is extremely huge communities where members upload, view, forward, saves andcomment on video clips in virtually all possible topics. This enormous reach has, of course,attracted businesses to join the network and even the United States Army has recently started touse YouTube for uploading videos from the war in Iraq. [49]
  50. 50. Joost:Joost is a new computer based, ad financed television service that differs from YouTube in thesense that all material is straightly from the content producers which resolves any copyrightissues. On YouTube, on the other hand, many members upload recorded content from othersources, such as movies or TV shows, which can cause copyright issues with the originalcontent producer and/or provider.Regarding the interface, Joost operates on full screen and the user can switch between channelsjust as with regular television. Rather than running directly on the Web browser, like YouTube,Joost is instead installable software available for both Mac OS and Windows. The software isnot completely finished but a beta version is available through invitation and one of the authorshas managed to receive one.MySpace:MySpace.com, which was launched less than two years ago, is the fifth ranked web domain interms of page views. It integrates web profiles, blogs, instant messaging, e-mail, musicdownloads, photo galleries, classified listings, events, groups, chat rooms, and user forums, andMySpace.com has thus created a connected community where users put their lives online. [50]
  51. 51. Here is a quote from a press release by com-Score - a measurer of the digital world, inSeptember 27, 2006:“MySpace fares particularly well in U.S. user engagement. The site ranks first among all sites inindividual video streams initiated by U.S. users with nearly 1.5 billion streams, whichrepresented 20 percent of all videos streamed by U.S. Internet users in July. The typical U.S.streamer on MySpace initiated an average of 39 streams during the course of the month, orslightly more than one per day.”RSS:RSS (Rich Site Summary or Real Simple Syndication) is a format for delivering regularlychanging web content. Many news-related sites, weblogs and other online publishers syndicatetheir content as an RSS Feed to whoever wants it.RSS solves a problem for regular users of the web. It allows you to easily stay informed byretrieving the latest content from the sites you are interested in, you thus save time by notneeding to visit each site individually and you ensure your privacy by not needing to join eachsites email newsletter.Webcasting:A webcast is a media file distributed over the Internet using streaming media technology. Awebcast may either be distributed live or on demand. Essentially, webcasting is “broadcasting”over the Internet.The generally accepted use of the term webcast is the "transmission of linear audio or videocontent over the Internet".A webcast uses streaming media technology to take a single content source and distribute it tomany simultaneous listeners/viewers.The largest "webcasters" include existing radio and TV stations that "simulcast" their output, aswell as a multitude of Internet only "stations". The term webcasting is usually reserved forreferring to non-interactive linear streams or events.Rights and licensing bodies offer specific "webcasting licenses" to those wishing to carry outInternet broadcasting using copyright material. [51]
  52. 52. Webcasting is also used extensively in the commercial sector for investor relations presentations(such as Annual General Meetings), in E-learning (to transmit seminars), and for relatedcommunications activities. However, webcasting does not bear much, if any, relationship to theidea of web conferencing which is designed for many-to-many interaction.The ability to webcast using cheap/accessible technology has allowed independent media toflourish. There are many notable independent shows that broadcast regularly online. Oftenproduced by average citizens in their homes they cover many interests and topics. Webcastsrelating to computers, technology, and news are particularly popular and many new shows areadded regularly.Podcasting:Podcasting is quickly becoming a buzzword today and it simply implies online audio contentthat is delivered through an RSS feed. Many people describe podcasting as radio on demand.However, podcasting gives significantly more options in terms of content than radio does. Inaddition, with Podcasting, listeners can determine the time and the place, meaning they decidewhat programming they want to receive and when they want to listen to it.Blogs:A blog (a contraction of the term "weblog") is a type of website, usually maintained by anindividual with regular entries of commentary, descriptions of events, or other material such asgraphics or video. Entries are commonly displayed in reverse-chronological order. "Blog" canalso be used as a verb, meaning to maintain or add content to a blog.Many blogs provide commentary or news on a particular subject; others function as morepersonal online diaries. A typical blog combines text, images, and links to other blogs, Webpages, and other media related to its topic. The ability for readers to leave comments in aninteractive format is an important part of many blogs. Most blogs are primarily textual, althoughsome focus on art (art log), photographs (photo blog), sketches (sketch blog), videos (vlog), music(MP3 blog), and audio (podcasting). Micro-blogging is another type of blogging, featuring veryshort posts.As of December 2007, blog search engine Technocratic was tracking more than 112 millionblogs. [52]
  53. 53. Peer-to-Peer (P2P) Computing:Peer-to-peer (P2P) networking is a method of delivering computer network services in whichthe participants share a portion of their own resources, such as processing power, disk storage,network bandwidth, printing facilities. Such resources are provided directly to other participantswithout intermediary network hosts or servers. Peer-to-peer network participants are providersand consumers of network services simultaneously, which contrasts with other service models,such as traditional client-server computing.This was mostly done in order to share files or scarce resources such as printers in company or aschool computer lab, for example. Today, however, we have the same server-client structureacross the entire Web and each separate computer can act as a server as well as being a client,this consequently implies a significant decentralization of the Internet.E-Procurement:Websites are organized around two types of e-hubs: vertical hubs centered on industries(plastics, steel, chemicals, and paper) and functional hubs (logistics, media buying, advertising,energy management). In addition to using these web sites, companies can do e-procurement inother ways: • Direct extranet links to major suppliers: companies can setup extranet links to its major suppliers. It can setup a direct e-procurement account at Dell or office depot, and its employees can make their purchases this way. • Buying alliances: Several companies buying same goods join together to form purchasing consortia and gain deeper discounts on volume purchases.Coca-Cola, Sara Lee, Kraft, PepsiCo, Gillette, P&G and several other companies joined forcesto form a buying alliance called Transora to use their combined leverage to obtain lower pricesfor raw materials. Transora members also share data on less expensive ways to ship productsand track inventory.Mobile Internet:Audio and video streaming generally enriches the experience of the Internet, making it morevibrant and dynamic, however, streaming technology not only enriches the Internet but it mayalso be the strongest force for significantly extending the Internet to cell phones. Internet traffichas increased significantly much due to the growing popularity of video streaming sites such asYouTube, and it speculates that this popularity will spill over to the telecommunications sector.When you can browse the Web on your cell phone just as you do on your computer, the barriersare gone, and the article mentions Australia, Japan and South Korea as examples where youngpeople already are walking the streets watching YouTube clips on their cell phones. [53]
  54. 54. However, Mobile Web access today still suffers from interoperability and usability problems.This is partly due to the incompatibility of the format of much of the information available onthe Internet with mobile devices and partly due to the small physical size of the screens ofmobile devices and other device limitations. Mobile Internet involves a trade-off between reach(portability) and richness (small screens and keyboards), where the latter is sacrificed for higherreach and mobility. In Japan, use of the mobile Internet really has gained foothold.M-Commerce:Mobile commerce also known as M-commerce, M-Commerce or U-Commerce, owing to theubiquitous nature of its services) is the ability to conduct commerce, using a mobile device e.g.a mobile phone (cell phone), a PDA, a Smartphone and other emerging mobile equipment suchas dashtop mobile devices. Mobile commerce has been defined as follows:Mobile commerce is any transaction, involving the transfer of ownership or rights to use goodsand services, which is initiated and/or completed by using mobile access to computer-mediatednetworks with the help of an electronic device.Few typical examples of m-commerce: • Purchasing airline tickets • Purchasing movie tickets • Restaurant booking and reservation • Hotel booking and reservation • Mobile banking • Mobile brokerageIf we really stretch our creativity and try to imagine the possibilities of m-commerce beyond,for example, downloading ring tones and wallpapers, this leads us to the next notion of wirelessadvertising.Wireless Advertising:The advertising industry is extremely excited about the idea of reaching high-income earnersanywhere and everywhere for promoting the products and services of its sponsors, and thatwireless internet makes this technically possible. [54]
  55. 55. Possibilities of mobile Internet using the following examples:“Say you are driving down the freeway. As you approach an exit, your wireless phone issuddenly deluged by come-ons from fast food restaurants that are located just off the exit ramp.Or you’re in an unfamiliar city on a business trip, you have time to kill after your meeting, andyou feel like browsing in a bookstore. Your cell phone can provide you with the location of theclosest Barnes & Noble.” MARKET COMMUNICATIONDefinition:Market communications are means by which firms attempt to inform, persuade, and remindconsumers -directly or indirectly- about the products and brands that they sell. Marketingcommunications represent the “voice” of the brand and are a means by which it can establish adialogue and build relationships with consumers. [55]
  56. 56. Marketing communication performs many functions for consumers. Consumers can be told orshown how and why a product is used, by what kind of person, and where and when; consumerscan learn about who makes the product and what the company and brand stand for; andconsumers can be given an incentive or reward for trial or usage. Marketing communicationsallow companies to link their brands to other people, place, events, brand, experiences, feeling& things. Marketing communications can contribute to brand equity by establishing the brand inmemory and crafting a brand image. Advertising so often a central element of a marketingcommunications program.Figure of element of communication process:Communication process at Reliance Fresh:First discuss the whole communication process models with reference to reliance fresh. Thecommunication process (Macro model of communication) involves two elements represents themajor parties in a communication- Sender and Receiver while the other two represents thecommunication tools- Message and Media.Sender: Here sender is Reliance fresh; it encodes the information regarding the promotions andoffers for its potential customers. . The tools of communication are discussed further. [56]

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