mk0012_ retail marketing_sem 3_fall 2011
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MBA Semester 3MK0012Retail Marketing
ASSIGNMENT- Set 1Q 1. List the different stages involved in retail environment analysis.
Answer:
The Stages in analysing retail environment include analysing market size,
competitors, rules, industry attractiveness and industry structure. These stages are
explained below.-
Market Size/Age: Is the market relatively small or large, and can it be broadly
classified by its stage of development (Start-up, emerging, growth, maturing,
declining)
Number of competitors:What is the level of competition for the market? Are there
many small rivals or few large? How easy is it for new players to enter the industry?
Rule of the game:How do firms compete in this market? Do they compete on price,
quality, technology, service etc? What is the average level of profitability? Is it a
profitable market or is it a high-volume, low margin field?
Industry Trends/driving forces:What are the industry trends and how rapidly they
change? Is the industry growing and innovative or stable or slow to change? The rate
of market growth is critical factor because it influences the equilibrium between
demand and supply.
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Industry Attractiveness:The overall attractiveness of an industry is determined by
the interaction of these key structural forces. The higher the rate of growth and the
weaker the competition, the more attractive the industry.
Industry Structure analysis: The initial analysis of industry structure provides a
snap of the competitive environment. The strategists also need to anticipate future
trends, new development that may change the existing structure.
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Q 2. Briefly explain GAP model of service quality
Answer
Gap theory, or the Service Quality Gap model was proposed by Parasuraman,
Zeithaml, and Berry in 1985.
This models identifies the different sources of gaps or differences between the
service quality that a customer expect to receive from a service provider and the
customer perception of of the service actually received.
The model identifies 5 different types of gaps. The first four gaps are called company
gaps, and the last or fifth gap is called customer gap - that is, the gap as perceived
by customer. The customer gap is the resultant effect of the four company gaps. The
description of these five quality gaps is given below.
Gap 1:The difference between the the service actually desired by the customer and
company's perception of what the customer desires.
Gap 2: The difference between company's understanding of the service desired by
customer and the service as designed to be delivered by the company, and the
performance standards set for the same.
Gap 3:The difference between the service design and actual service delivered.
Gap 4: The difference between actual service delivered and the service as perceived
by customer.
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Gap 5: The difference between service as perceived by customer and service
expected by company.
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Q 3. Discuss are the various types of retail store locations. What are their pros and
cons?
Answer:
Following are various types of retail store locations.-
Mall Space
The mall has many retailers competing with each other under one roof. It hosts a
variety of stores and retail formats, from anchor stores to kiosks. There are generally
3 to 5 anchor stores, or large chain stores, and then dozens of smaller retail shops.
Typically the rent in a mall location is much higher than other retail locations. This is
due to the high amount of customer traffic a mall generates.
Free standing locations
This type of retail location is basically any stand-alone building. It can be located in a
neighbourhood or right off a busy highway. Depending on the landlord, there are
generally no restrictions on how a retailer should operate his business. It will probably
have ample parking and the cost per square foot will be reasonable
Downtown area
This type of store location may be another premium choice, just like malls. However,
there may be fewer rules and more freedom for the business owner. Many
communities are hard at work to revitalize their downtown areas and retailers can
greatly benefit from this effort. However, the lack of parking is generally a big issue
for downtown retailers.
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Shopping centre
Strip malls and other attached, adjoining retail locations also have some guidelines or
rules for their tenants directing their conduct of business, these rules are probably
more lenient than a mall, but make sure you can live with them before signing a
lease.
Home based
Home based businesses or stores are an inexpensive option but in such a business,
growth may be restricted. It, may a times, becomes really hard to separate business
and personal life in this setup and the retailer may run into problems if there is not a
separate address and/or phone number for the business
Office Building
The business park or office building may be another option for a retailer, especially
when they cater to other businesses. Tenants share maintenance costs and the
image of the building is usually upscale and professional.
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Q 4. List the factors influence retail store image.Discuss the elements of
an interior store design
Answer:
The factors affecting the image of retail store can be classified into primary and
complimentary factors. The primary factors are.-
The products itself/the merchandise features
The place where it is sold or the location of store
The pricing of the product.
The manner in which it is presented to the customers
The advertising and promotion for the store
Perhaps the most important factor that affects the store image is the product features
or the merchandise itself. For example, if the garments sold by an apparel store lose
shape or run colour, it creates a bad image in the mind of the customer. The location
of the store and the price of the merchandise sold also communicate the image of the
store. For example, stores at breach candy or Nepeansea Road are considered up-
market, as compared to those in suburbs like kandivali or Borivali. Similarily, a store
at South extension communicate a different image as compared to a store in chandni
chowk or Karol Bagh. The manner in which the merchandise is displayed and
presented is an integral part of communication of the image. The price of the product
plays an important role in creating the image. Expensive products are generally
perceived to be good. Advertising also helps create image.
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The shopping experience provided in the store, customer service, sales staff and the
brand associations that the store provides also affect the store image. These are
hence termed as complimentary factors.
Store design has always been used to reinforce other elements of a retail store
strategy. For example, plush carpeting and marble used in a store denotes high-
quality merchandise and may suggest high-price positioning. Strip lighting and dump
bins for merchandise brings the word bargains to mind. However, as retail markets
mature, the design of retail space are increasingly being used as a means by which
strategic aims are reached. For example, in 2001 safeway introduced a new store
design to reinforce their position as a good-value fresh and quality grocery retailer.
Wood paneling, slate tiling and pendent lighting were used in the wines and beers
sections to create the impression of up-market wine cellar; baskets and barrels were
used in the fruit and vegetable section to give the impression of market freshness
and chalkboard signage to foster the impression of good prices. It is these small
details that help to refocus the attention of the stopper on to revised core values,
providing a struggling grocery chain with a new lease of life to compete against other
forceful players in the market (Atkinson, 2001)
Store design elements include:
Exterior elements like marquee, entrances, windows, banners, planters, awnings and
lighting
Display Areas
Corner Shops
Shelves
Ledges
Merchandise walls
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Colour and lighting
Sound and aroma
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Q 5. Write short note on visual merchandising.
Answer:
Visual merchandising is concerned with presenting products to customers
within the retail space. It is a term sometimes used as an alternative to
merchandise display, but these days is generally understood to have a
wider definition encompassing all activities concerned with the
presentation of the product within the retail outlet, including the choice of
store layout, the method of product presentation, the choice of fixtures
and fittings, the construction of displays, and the use of point-of-sale
material. It also has a very close connection with the allocation of space
within the outlet. Visual merchandising is more important in some retail
sectors than others. For Example, fashion and home furnishing retailers
have always devoted considerable resources to displaying products in a
visually appealing way, whilst discount grocery retailers are much more
concerned with space efficiency. However, the need to adapt to style-
conscious twenty-first-century is as relevant to the way products are
presented as the way a store environment is designed.
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Q 6. Briefly discuss the strategic retail planning process
Answer: The strategic planning process, after considering the HR potential and the
unique Selling preposition (USP) of a particular store, takes proper shape. Strategic
retail planning process divided into the four steps as discussed in subsequent sub-
heads
1. Deciding the stores mission and objectives
The retail strategic process starts with the identification of a stores mission for its
existence, and hence the scope of retail store. The mission of a store is, identifying
the goods and services that will be offered to customers. It also deals with the issue
of how the resources and capabilities of a store will be used to provide satisfaction to
customers and how the store can compete in the target market vis-a-vis its
competitors.
The mission also involves the way of stores functioning. How a store will work and
accomplish its day to day functioning.
Once the organisation mission has been determined, its objectives the desired future
positions that it wishes to reach, should be identified. A stores objectives are defined
as ends that the store seeks to achieve by its USP and operations.
The stores objectives may be classified into two parts.-
a) External Store objectives: Those objectives that define the impact of store on its
environment, e.g. to develop high degree of customer confidence by providing quality
goods at affordable price.
b) Internal Store objectives: Those objectives that define how much is expected to be
achieved with the available resources, e. g. To raise the store turnover by 20% in the
coming year
2. Situational Analysis. The objective of doing the stores situational analysis is to
determine where the store is at present and to forecast where it will be if the
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formulated strategies are implemented. The difference between current and future
position is known as planning. As the objective of conducting stores situational
analysis, normally study in the context of external environment and internal
environment.
a. External Analysis: The purpose of examining the stores external environment is to
study the opportunities and threats in the retailing environment. The external analysis
studies factors that affect the macro-environment of the retailing industry and the task
environment. Under external analysis retailer study these parameters.-
i. Economic environment of retailing
1. Inflation
2. Employment
3. Disposal income
4. Business cycle
5. Energy Availability and cost
6. Others
ii. Political/legal environment of retailing
1. Monopolies legislation
2. Environmental protection laws
3. Taxation policy
4. Employment laws
5. Government Policy
6. Legislation
7. Others
iii. Socio-cultural environment of retailing
1. Demographics
2. Distribution of Income
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3. Social Mobility
4. Lifestyle changes
5. Consumerism
6. Levels of education
7. Others
iv. Technological environment of retailing
1. New discoveries and innovations
2. Speed of technology transfer
3. Rates of obsolescence
4. Internet
5. Information technology
6. Others
v. Internal environment of retailing
1. Growth
2. Opportunities
3. Others
b. Internal Analysis: The objective of studying the internal environment of its own store
is to identify the stores capabilities and weakness. The store will try to increase its
capabilities and overcome the weakness that deters the business profit. While doing
the internal analysis, the store examines the quality and quantity of its available
resources and critically analyse how effectively these resources are used. The
resources for the purpose of examining are normally grouped into human resource,
financial resources, physical resources and intangible resources.
3. Formulation of retail strategy
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After analysing the stores capabilities in terms of HR, finance, physical and
intangible resources, a store manager formulates a retail strategy with regards to
marketing retail positioning and retail mix.
Retail positioning is a plan of the stores action for how the retailer will enter target
market and will compete with its main competitors. Retail positioning from a retail
stores point of view is a step by step plan to create and maintain a unique and
everlasting image of store in the consumers mind. Retail positioning is made possible
under three circumstances.-
By differentiation of stores merchandise from that of its competitors
By offering a high level of service after sales at nominal cost
By adopting low pricing policies
4. Strategy implementation and Control
It is concerned with the designing and management of retail system to achieve the
best possible combination of human, financial, physical and service resources of a
retail store; to achieve the formulated objectives, without timely and efficient
implementation also requires scheduling and coordination of various retail activities.
The implementation of new retailing strategies sometimes require changes in the way
of functioning and duties that can lead to resistance from employees. Therefore,
stores should take positive steps to reduce this resistance to change and to convince
the employees that it in the long term will be beneficial for both the store and the
employees.
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MBA Semester 3
MK0012 Retail Marketing
(4 credits)
(Book ID: B1240)
ASSIGNMENT- Set 2
Marks 60
Note: Each Question carries 10 marks
What is positioning? Discuss various positioning approaches
1. Write a short note on- psychographic segmentation.
2. Briefly describe the criteria for effective segmentation.
How and when can demographic and benefit segmentation be used to maximum
efficiency?
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3. Briefly discuss the channel strategies adopted by the retailers.
4. Differentiate between relationship marketing and transactional marketing
5. Discuss the components of CRM