mrktg retail final
Post on 13-May-2015
72 Views
Preview:
DESCRIPTION
TRANSCRIPT
Case Study :Penetrating Indian Retail Industry Case Study :Penetrating Indian Retail Industry Highest Quality
Largest Variety
Consistent Professionalism
Visually Appealing
Highest Quality
Largest Variety
Consistent Professionalism
Visually Appealing
By,Vivek VermaDoMS,IISc
1
2
Source: Technopak Advisors Pvt Ltd, Aranca Research
Source: Business standard, Business Monitor international (BMI),Winning
in India’s Retail Sector, PWC, Aranca Research Notes: E – estimate for
2015, FDI – Foreign Direct Investment
3
4
Favorability to Food and Grocery Retail sector in India
5
6
NOT STACKED
200 Sq.Ft. LOCATION
ONLY DRY ITEMS
DAILY ITEMS ONLY
DIS.ON TOTAL COST
NO PARKING
NO LOYALTY PROGRAMS
NO USE OF TECHNOLOGY
NOT STACKED
200 Sq.Ft. LOCATION
ONLY DRY ITEMS
DAILY ITEMS ONLY
DIS.ON TOTAL COST
NO PARKING
NO LOYALTY PROGRAMS
NO USE OF TECHNOLOGY
WELL STACKED ITEMS
CLEAN ENVIROINMENT
FRESH STOCK
MORE VARIETY
LESS PRICE
PARKING FACILITY
LOYALTYPROGRAMS
BARCODE SYSTEM
WELL STACKED ITEMS
CLEAN ENVIROINMENT
FRESH STOCK
MORE VARIETY
LESS PRICE
PARKING FACILITY
LOYALTYPROGRAMS
BARCODE SYSTEM
TRANSFORMATION
Largest retail destination which is expected to grow to US$ 637 billion by 2015
It provides highest employment to the people after agriculture
It is classified majorly into organized and unorganized retail market
Over Rs.4,00,000 crores of retail market in un organized and Rs.20,000 crores is organized.
Reliance fresh, More ,India Bulls, Spencer’s are replacing the kirana stores
Retailing has evolved from local merchandising to modern e-tailing
7
Indian middle class is constitutes 300 million people who are scarce in spending with low PPP and Indian customers are not so resilient Mall rental rates are high which is about 4% whereas its operating profit margin is just 8%Organized retailers are unable to match up with convenience offered by traditional retailers.While tending to expand, their debt equity ratio increasing constantlyHigh rental, high inventory levels and interest payouts together squeezed the profit margin of retailers
8
Mall culture induces the growth because total mall space availability is increasing constantly.
High disposable income in IT/ITeS has increased the standard of living. Increasing urbanization. Young working population and population of working women is increasing. Easy availability of retail credits.
As Head of Strategic Marketing Division of UK based F&G Retailer.
To ImproveRetail Penetration
Footfall
Retail Promotions
Average Spent per visit
Of in-store Customers in Mumbai, Delhi, Chennai, Bangalore, Kolkata, Pune, Lucknow, Vizag, Ahemdabad
9
Opportunities
•Increasing awareness of consumers about products and services.•Changing consumers’ requirement and lifestyles.•Innovation for new product development.•Private label has been boosted by economic downturn.
Strengths•Emerging retails formats like malls, hyper/supermarkets and specialty stores which provide products, services and entertainment at one place.•Indian consumers have high disposable incomes, which translate into high consumption level.•Large number of earning young population.•Growth of real-estate and improvement in infrastructures.•Huge agricultural sector offering an abundance of raw materials.
Weakness•Demographic differences between the regions require a regionally adjusted to business.•Presence of a significant number of strong and well-established players in the sector limits markets entry potential.•Relatively small domestic market limits growth opportunities.•High real estates and distribution costs are the obstacles for growth of retail in India
Threats
•Economic slowdown is having an adverse effect on consumer spending.•Rigid government policies and regulations restrict the entry of new players.•Price competitions amongst retailer puts downward pressure on margins.
10
11Source: DAFF Australia
12
13
A segmentation based on few demographic parameters for 9 cities.
For targeting select consumers the above parameters would play a key role. For e.g. Highest purchasing power(local) is in Bengaluru.
14
15
For Targeting consumer based on the clusters discussed above, select a city and study the various demographic parameters area wise. For e.g. showroom rent.
Showroom rent along with average age , disposable income, number of households and VALS segmentations would help in zeroing in on the select customers .
16
For an area like Hosur road, with a medium rent and young and medium population, the primary target customer for this F&G retailer would be
Working Couple
High-Medium Disposable Income
Brand Conscious
Likes mall culture
Scope for Food & Grocery Retail
In 2011, ‘Food and Grocery’ accounted for nearly 59.5 per cent of total revenues in the retail sector in India
In 2011, 48 per cent of total household income in India was spent on food and groceries
Organized Retail Penetration (ORP) in India is low (5 per cent) compared to other countries such as the US (85 per cent)
This indicates strong growth potential for organized retail in India
India’s ‘Grocery’ retail segment is the most attractive in the world
17
Challenges for Food & Grocery Retail
Demand Side Penchant for fresh/home-made and value consciousnessDiversity of tastes and preferencesWillingness to travel
Supply Side Sourcing base and efficiencyReal estate availability and costManpower availability
Emerging trends in Food and Grocery retailing
Big becoming bigger Rise of organic foods and health and
wellness segment Increasing focus on private labels
Marketing, positioning is the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization.
18
19
Successful mix
What is Service Marketing Mix?
Ground-up Development
Joint Venture?
Create a winning team
Versatile Retailing
Multiple Formats, Multiple brands- A comprehensive retail mix
Building scalable model that is replicable across regions and extending models to smaller cities and towns
Passing on benefits of lower costs to consumers offering better value proposition than what neighborhood stores offer.
Home delivery to match the customer convenience offered by the unorganized segment
Better shopping environment benchmarked to international standard Focus on private label particularly for staple foods Loyalty Programs
20
21
Distance to Nearest Market AnalysisIt is important to consider that price is not the only means by which retail outlets compete- but Consumers consider a range of factors when purchasing food and grocery products. These include:price, store location, product range and quality, queuing time, opening hours and access to car parking. For stores such as supermarkets, price plays an important part in this mix.
Customer intimacySuccessful retailers focus on the importance of intimacy with the customerInvestments in display, storage and technology are made with a strong sense of purpose to enhance the durability of the connection with the customer.
Category management-To generate shopper enthusiasm for a product category. -mine the overall retail sales value potential of the product line by effective use of shelf space, promotional support and price competition where necessary.
Points of differenceRetailers compete on many planes for the loyalty of the consumer. Whilst ‘sales’, ‘specials’ and ‘lowest prices across the store’ are common marketing tools used by all retailers, each also strives for a non-price point of difference based on a combination of service, quality goods, convenience, range and so on.
22
Leverage
Innovation on Retail format - Players can innovate on formats in different ways:
by targeting specific customer segments and serving their needs better e.g. working women, single office goers, etc by changing the product mix e.g. entirely private label stores, exclusively fresh produce stores by offering new forms of convenience and wider range to the customer e.g. Tele-retail and internet retail
Technological Innovations - Employing cutting edge technology in retail could prove to be the source of competitive advantage for retailers. Self-scan checkouts have the potential of both reducing check-out time manpower cost for the retailer Using RFID tags can help track and reduce in-store inventory management costs and give retailers better insights into customer in-store movement patterns Web-enabled e-SCM systems, e-Procurement systems and warehouse management systems. Use of cutting edge analytics can bring insights into customer buying behavior with implications on store layout, pricing and promotions.
Existing Players
Food Bazaar
Metro Cash and
Carry
Reliance Fresh
More
Namdhari’s
Nilgiri’s
Spencer’s
Foodworld
Subiksha
Other infinitely many local players(98%)23
KIOSKS SABZI MANDI KIRANA SHOP
STREET VENDORS
24
Based on the cluster and segmentation and targeted group
Newspaper
TV
Banners
Electronic Ads
76 % / 8 sec.
26
KEEP THE SHELF IN ORDER DECREASE OUT OF STOCK SITUATIONS CUT COSTS – INCREASE SPACE
EFFICIENCYSELL MORE
76% OF BRAND PURCHASE DECISIONS ARE MADE
IN FRONT OF THE SHELF IN APROX. 8 SEC.
Source:Neilen Survey
Source:http://nptel.iitm.ac.in/courses/110105029/pdf%20sahany/Module.5%20-12.pdf27
It helps in forecasting consumer behavior which influenced the decision making process and hence leads to increase in purchase decision.
It helps to find loyalty of customer towards a specific product so that they can buy same product again n again and increase the sell
It helped to know how consumers’ process information and where marketing money can be splurged more.
The model is user friendly and is one of the few models which has been used most commonly and tested in depth.
Limitation lies in the fact that the various constructs cannot be realistically tested; some of the constructs are inadequately defined, and thus do not lend to reliable measurements
28
Source:http://nptel.iitm.ac.in/courses/110105029/pdf%20sahany/Module.5%20-12.pdf29
Tries to integrate the body of knowledge of customer and enhance it further
Focus on the conscious decision-making behavior of consumers, where the act of purchase is entirely based on consumer buying decision is made after entering the shop and finally to shelf.
The interference of firm in this model helped customer to know the
product and compare the brand and finally decide to buy.
It contributed the step by step "funnel approach" which views consumers’ movement from general product knowledge toward specific brand knowledge and from a passive position to an active state which is motivated toward a particular brand and comparing at shelf with other brands.
Limitations in the sense that the model proposes assumptions, boundaries and constraints that need not be realistic.
It has been argued that attitude, motivation and experience may not occur in the same sequence.
The mathematical testing of the model and its validity are questionable30
Source:http://nptel.iitm.ac.in/courses/110105029/pdf%20sahany/Module.5%20-12.pdf31
The model incorporates many constructs that impact consumer decision making by exposure to various brands of same product, which helps him to make decision while moving around the shelf.
It tries to explain clearly the interrelationships between stages in the decision process and the finally coming to a single solution of selecting a product. They attempted to relate belief-attitude-intention.
An attempt has been made to make customer to exposure to many brands of same product and including the price comparison.
However, the model fails to adequately explain as to how each of these influences consumer decision making.
Critics argue that there are too many variables;
-these have not been defined; the model is vague and complex; and the validity of the model has been questionable
32
Gaining meaningful insight and actionable business intelligence at reasonable costs
It is now practical to develop extremely cost-effective and highly targeted marketing campaigns
Businesses now focus on knowing their customers as real people with real needs and preferences, leading to better customer satisfaction and hence attraction
Behavior is a stable element on which to base a website as it evolves slowly over time
Businesses stop throwing away money spent on marketing to the wrong customers as they can now known who their customers are and what they desire
Best point of contact for credible dialogue can be identified Loyal customers cost less than acquiring new ones and are a great source of
information to create new and innovative services By knowing their customers, a business can be assured of the fact that they
will always be kept ahead of their competition 33
• VALS – A trademark psychographic market segmentation methodology developed at SRI International. Stands for Values Attitudes and Lifestyles.
• The main dimensions of the VALS framework are primary motivation (the horizontal dimension) and resources (the vertical dimension).
Image Source : SRI International34
Differs from other segments as F&V are perishable items.
Segmentation based on income and purchasing power will not reflect true
nature of consumer preference.
Underlying principle - even though a blue collar and a white collar worker
may earn the same level of income, differences of social class will compel
them to spend the income in different ways
Owing to the heterogeneous nature of Indian consumer, VAL segmentation
methodology is highly relevant .
VAL segmentation would offer the retailer detailed knowledge about
consumer preference and his/her taste.35
Source : Journal of Asia Pacific Economy,Vol 13
VALS and cluster analysis of consumer in 5 metropolises Mumbai, Kolkata, Delhi,Chennai and Bangalore.
36
1. Market Attractiveness
a. Investment Potential (Global Retail Development Index)
India’s retail market attractiveness amongst the highest in the world and organized retail is expected to by 15% 37
1. Market Attractiveness
b. Foreign Direct Investments
Till 2008 the scenario was grim for FDI but situation for single brand retail improved post 2012. The issue still remain for multi-brand retail. 38
2. Competitive Strength
a. Inducing Customer loyalty – Shopper Stop loyalty and credit card.
b. Promoting own brand – PRIL’s strategy to promote its own brand and
earn increased margin.
c. Shop in shop approach – Future group adopting this strategy to increase
revenue per sq ft.
d. E-tailing : Online retailing by offering products at lower cost due to
absence of middlemen and negligible stock holding cost.
39
3. Value added structures, people and organization.
a. Structure : With increased pressure and competitiveness (FDI), the retail industry have
focused on innovations and technology to optimize resources. Factors like these have driven
retailers to refocus on supply chain optimization and use new techniques like marketing
analytics to gain competitive advantage.
b. Organization : Reliance’s Sahakari Bhandar - With a strong brand name, well
trained staff and focus on good service, good products and value for money , the company’s
wing has been doing well even during market turbulence. With them, farmers also benefitted
by removal of middlemen.
40
1. The Indian retail industry although affected by the economic downturn is in its growth stage and will be a huge attractive market for retail investors.
2. The organized sector in retail is set to grow by 15% over the next 8-10 years which would mean increase in numbers of super markets/hypermarkets and malls.
3. For any retailer, understanding the customer needs, behaviors and buying patterns are key parameters to be studied before investing into any marketing activities
41
42
top related