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.
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?
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
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
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
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
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)
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
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
