This document discusses relationship marketing in retailing. It defines relationship marketing as a long-term arrangement where both the buyer and seller have an interest in providing a more satisfying exchange. Relationship marketing uses customer retention tactics but treats marketing as an ongoing process rather than single events. The document also discusses providing extra value for customers, potential pitfalls to avoid in a value-oriented retail strategy, and the importance of retail research and information gathering.

1. SALES AND RETAIL MANAGEMENT
10MBAMM312
PART B
Retail Management

2. Module - 8
VTU Syllabus
Relationship Marketing in Retailing
 Management of Relationship
 Evaluation of Relationship Marketing
 Relationship Marketing Strategies
 Retail Research
 Retail Audits

3. Building and Sustaining Relationships
in Retailing
In recent years Relationship Marketing (RM) has been widely promoted as
a means of retaining customers.

4. Relationship Marketing refers to a long-term arrangement where
both the buyer and seller have an interest in providing a more
satisfying exchange!
Relationship marketing is not about having a "buddy-buddy"
relationship with your customers! & the customer don’t want
that. Relationship Marketing uses the event-driven tactics of
customer retention marketing, but treats marketing as a process
over time rather than single unconnected events.
Relationship Marketing approach achieves very high customer
satisfaction and is highly profitable

5. What is Value?
The bottom line:
Consumers will demand more for
less from the shopping experience
They will spend less time
shopping
They will split the commodity-
shopping trip from the value-added
shopping trip

6. What is Value?
Channel Perspective: Customer Perspective:
 Value is a series of  Value is the perception
activities and processes - that the shopper has of the
the value chain - that value chain
provides a certain value  It is the view of all the
benefits from a purchase
for the consumer
versus the price paid.

7. Providing Extra Value for Customers

8. Retail Value Chain
Represents the total bundle of benefits
offered to consumers through a channel
of distribution
▫ Store location & parking
▫ Retailer ambience
▫ Customer service
▫ Branded Products
▫ Product quality,
▫ Pricing

9. Potential Pitfalls to Avoid in Planning a
Value-Oriented Retail Strategy
Planning value with just a price perspective
Providing value-enhanced services that
customers do not want or will not pay extra for
Competing in the wrong value/price segment
Believing augmented elements alone create value
Paying lip service to customer service

10. A Value-Oriented Retailing Checklist
 Is value defined from a  Is the retailer’s value-
consumer perspective? oriented approach
 Does the retailer have a clear effectively communicated to
value/ price point?
the target market?
 Is the retailer’s value position
competitively defensible?  Can the target market clearly
 Are channel partners capable identify the retailer’s
of delivering value-enhancing positioning strategy?
services?  Does the retailer set
 Does the retailer distinguish customer satisfaction
between expected and goals?
augmented value chain
elements?  Does the retailer periodically
 Has the retailer identified measure customer
meaningful potential value satisfaction levels?
chain elements?  Is the retailer careful to
 Is the retailer’s value-oriented avoid the pitfalls in value-
approach aimed at a distinct
oriented retailing?
market segment?
 Is the retailer’s value-oriented  Is the retailer always looking
approach consistent? out for new opportunities
that will create customer
value?

11. Bring the Care Back to Health
Care

12. 3 Aspects of Value-Oriented
Retail Strategy
Expected
Augmented
Potential

13. Customer Service
 Expected customer  Augmented customer
service is the service service includes the
level that customers activities that enhance
want to receive from the shopping
any retailer such as experience and give
basic employee retailers a competitive
courtesy advantage

14. Classifying Customer Services

15. Fundamental Decisions
What customer services are expected and what customer
services are augmented for a particular retailer?
What level of customer service is proper to complement a
firm’s image?
Should there be a choice of customer services?
Should customer services be free?
How can a retailer measure the benefits of providing
customer services against their costs?
How can customer services be terminated?

16. Typical Customer Services
 Credit  Gift certificates
 Delivery  Trade-ins
 Alterations/  Trial purchases
Installations  Special sales
 Packaging/ gift  Extended store hours
wrapping  Mail and phone orders
 Complaints/ Return
handling

17. Miscellaneous Customer
Services
 Interior designers  Restrooms
 Personal shoppers  Restaurants
 Ticket outlets  Baby-sitting
 Parking  Fitting rooms
 Water fountains  Beauty salons
 Pay phones  Fur/Coat storage
 Baby strollers  Shopping bags
 Information

18. Turning Around Weak
Customer Service
Focus on Empower Front-Line
Customer Concerns Employees
Show That You Are Express Sincere
Listening Understanding
Apologize and Rectify
the Situation

19. Principles of Category
Management
Retailers listen more to customers
Profitability is improved because inventory
matches demand more closely
By being better focused, each department is
more desirable for shoppers
Retail buyers are given more responsibilities
and accountability for category results
Retailers and suppliers must share data and
be more computerized
Retailers and suppliers must plan together

20. Elements Contributing to Effective
Channel Relationships

21. 3 Kinds of Service Retailing
Rented goods services
Owned goods services
Non-goods services

22. Four Characteristics of
Services Retailing
Intangibility
Inseparability
Perishability
Variability

23. Characteristics of
Service Retailing
Intangibility
•No patent protection possible
•Difficult to display/communicate service benefits
•Service prices difficult to set
•Quality judgment is subjective
•Some services involve performances/experiences

24. Characteristics of
Service Retailing
Inseparability
•Consumer may be involved in service production
•Centralized mass production difficult
•Consumer loyalty may rest with employees

25. Characteristics of
Service Retailing
Perishability
•Services cannot be inventoried
•Effects of seasonality can be severe
•Planning employee schedules can be complex

26. Characteristics of
Service Retailing
Variability
•Standardization and quality control hard to achieve
•Services may be delivered in locations
•beyond control of management
•Customers may perceive variability
•even when it does not actually occur

27. Selected Factors Affecting Consumer
Perceptions of Service Retailing

28. A Self-Checkout Station

29. Consumer Advantages to
Self-Checkout
Shorter lines
Increased speed
Privacy

30. Lessons in Service Retailing

31. RETAIL
RESEARCH
Information Gathering and
Processing in Retailing

32. Suppliers Need To Know
From the Retailer From the Customer
 Estimates of category  Attitudes toward styles
sales and models
 Inventory turnover rates  Extent of brand loyalty
 Feedback on
competitors  Willingness to pay a
premium for superior
 Level of customer
returns quality

33. Retailers Need To Know
From the Supplier
 Advance notice of new From the Customer
models and model  Why people shop there
changes  What they like and dislike
 Training materials  Where else people shop
 Sales forecasts
 Justifications for price
changes

34. Consumers Need To Know
From the Supplier From the Retailer
 Assembly and operating  Where specific
instructions merchandise is stocked in
 Extent of warranty the store
coverage  Methods of payment
 Where to send a acceptable
complaint  Rain check and other
policies

35. How do we gather
information?
• Qualitative Methods
▫ Nonsystematic Information Gathering
▫ Focus Groups, Depth Interviews
• Quantitative Methods
▫ Secondary
▫ Primary

36. Nonsystematic Info’
Gathering
• Intuition (either self or based on few individuals)
• Status Quo
• Copying a Competitor
• Assume Past will Continue into the
Future
• What are the problems with these?

37. Retail Information System
(RIS)
Anticipates the information needs of
the organization
Collects, organizes, and stores
relevant data on a continuous basis
Directs the flow of information to the
proper decision makers

38. Database Management
A major element in an RIS
System gathers, integrates, applies, and
stores information in related subject areas
Information can be from external or
internal sources (by customer, vendor or
product category)
Data warehousing –all databases are in one
location & accessible by employees anywhere.
Components - physical storage location,
software to copy original databases, interactive
software to process inquiries & a directory

39. Data Mining and
Micromarketing
Data mining is the in-depth analysis of
information to gain specific insights about
customers, product categories, vendors, and
so forth
Micromarketing is an application of data
mining, whereby retailers use differentiated
marketing and develop focused retail
strategy mixes for specific customer
segments

40. Marketing Research in Retailing
• The collection and analysis of
information relating to specific issues
or problems facing a retailer
• Examples: How can we improve sales in this
store? How effective was our last promotion
campaign?
• Secondary data –existing data:
internal/external
• Primary data – collected specifically for
issue under consideration – usually collected
when secondary data is inadequate

41. Marketing Research Process
Define Issue or
Problem to be
Researched
Methodology
Examine Issues
Secondary
Data
Generate
Primary
Data
Analyze
Data
Make
Decision
Implement
Findings

42. Secondary Data
Advantages Disadvantages
Inexpensive May not suit current
Fast study
Several sources and May be incomplete
perspectives May be dated
Generally credible May not be accurate
Provides or credible
background May suffer from poor
information data collection
techniques

43. Secondary Data Sources
Internal External
 Sales reports  Databases
 Billing reports ▫ Research Agencies,
Business Periodicals Index,
 Inventory records etc.
 Performance reports  Government
▫ Census of Retail Trade
▫ Statistical Abstract of the
Country
▫ Public records

44. Primary Data
Advantages Disadvantages
 Collected for specific  May be more expensive
purpose  Tends to be more time
 Current consuming
 Information may not be
 Relevant acquirable
 Known and controlled  Limited perspectives
source

45. Primary Decisions
• In-house or outsource?
• Sampling method?
▫ Probability
▫ Non-probability
• Data collection method?
▫ Survey
▫ Observation
▫ Experiment
▫ Simulation

46. Survey Methods
 In-person  Disguised
 Over the telephone  Non-disguised
 By mail
 Online

47. Mystery Shoppers
Retailers hire people to pose as
customers and observe operations from
sales presentations to how well displays
are maintained to service calls

48. UPC & EDI
Universal Product Code read by scanners
contains model number, size, color, etc
UPC-A labeling format – numbers & lines
Advantages: speed transaction, reduce
errors, rich data, inventory management
Electronic data interchange – data
transfer using networks (computer systems
linked together)

49. Retail
Audit

50. RETAIL AUDIT
Retail-audit service providers gather
information on a brand’s sales volume,
sales trends, stock levels, effectiveness
of in-store display and promotion efforts,
and other associated aspects.

51. Performance Measures
 Total sales  Operating income
 Average sales per store
 Inventory turnover
 Sales by goods/ service
category  Markdown percentages
 Sales per square foot  Employee turnover
 Gross margins  Financial ratios
 Gross margin return on  Profitability
investment

52. Utilizing Gap Analysis

53. Minimizing Gaps
Customer insight
Customer profiling
Customer life-cycle
Extended business model
Relationship program planning and
design
Implementation

54. The Retail Audit Process

55. Obstacles for Doing a Retail Audit
An audit may be costly
It may be quite time consuming
Performance measures may be
inaccurate
Employees may feel threatened and
not cooperate as much as desired
Incorrect data may be collected
Management may not be responsive to
the findings

56. Thank You