Services Marketing @

RETAIL

By: Group 6 1

Service Marketing in Retailing : A Double Edge Sword

LO 32

The Basic Tasks of Retailing

LO 13

Service Delivery Touch Points : Task 1

• Pretransaction services - Provided to the customer prior to entering the store.– Convenient hours– Information aids

LO 24

Service Delivery Touch Points : Task 2

• Transaction services - Provided to customers when they are in the store shopping and transacting business.

CreditLayawayGift wrapping and

packagingCheck cashingGift cards

Personal shopping Merchandise availability Personal selling Sales transaction

LO 25

Service Delivery Touch Points : Task 3

• Posttransaction services - Provided to customers after they have purchased merchandise or services.

Complaint handlingMerchandise returns

Renting, not buyingFraudulent employee

actionsShoplift returnsPrice switching

Servicing, repair, and warranties

DeliveryPostsale follow-up

LO 26

Various Customer Types

LO 47

Various Customer Types

LO 48

Drivers of Retail Service Strategy

LO 39

7 P’s 1. Product • -Providing value for money by adding value to the product or service being offered.

2.Price• -A product is only worth what a customer is prepared to pay for it. • -Be open to the possibility that the current pricing structure may not be ideal for the

current market.

3. Place• -The product must be available at the right place (Product category), at the right time

(time you sell your product), and in the right quantity (enough stock).

4.Promotion• -This is the way in which you communicate to your potential customers about your

product. • -This can be done in a number of ways, which includes your brand image, advertising,

special offers.• -Small changes in the way the products are promoted and sold can lead to dramatic

changes in results.  10

5. Physical Evidence• This is the intangible part of the business mostly concerned with services as

they cannot be seen.• This is important because, fundamentally you are selling a product, but in

order for you to be able to price your goods at the right the level, you will also be selling the service the buyer will receive.

6. People• The reputation of the brand rests in the people’s hands. You must therefore

ensure that all your people are appropriately trained, well motivated and have the right attitude.

7. Process• -The process that you go through and the behavior of those who deliver the

products are crucial to customer satisfaction. • -Issues such as waiting times , the information passed onto customers are

vital factors when trying to maintain 100% satisfaction.

• -Processes must help the customers get what they want.  11

Retailing World’s largest private industry

US$ 6.6 trillion sales annually

Indian retailing Largest employer after agriculture -

8%* of population Highest outlet density in world

Around 12 mn outlets Still evolving as an industry

Long way to go

An overview

Retailing: An overview

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Global Retail Industry

1999 2002 2005 2006

Total Retail (US$ Billion) 150 180 225 260

Organized Retail (US$ Billion) 1.1 3.3 7 9.1

% share of Organized retail 0.7 1.8 3.2 3.5

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Top 10 Retailers World WideRetailer Home Country

Wal-Mart StoresCarrefour GroupThe Home Depot, IncThe Kroger Co.Royal AholdMetro AGTarget CorporationAlbertson’s,Inc.Sears, Roebuck and Co.Kmart Corporation

USAFranceUSAUSANetherlandsGermanyUSAUSAUSAUSA 14

Informal retailing Sector Typically small retailers. Evasion of taxes

Difficulty in enforcing tax collection mechanisms

No monitoring of labor laws

Formal Retailing Sector Typically large retailers Greater enforcement of taxation

mechanisms High level of labor usage monitoring

Indian retail

Evolution of Indian retail

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Corporate Houses Tatas: Tata Trent RPG group: Food World, Health and Glow, etc ITC: Wills Life Style Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc.

Dedicated brand outlets Nike, Reebok, Zodiac etc

Multi-brand outlets Vijay Sales, Viveks etc

Manufacturers/ Exporters Pantaloons, Bata, Weekender

Indian retail

Categories of Indian retail

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Modern Format retailers Supermarkets

(Foodworld) Hypermarkets (Big

Bazaar) Department Stores (S Stop) Specialty Chains (Ikea) Company Owned Company Operated

Traditional Format Retailers Kiranas: Traditional Mom and Pop

Stores Kiosks Street Markets Exclusive /Multiple Brand Outlets

Indian retail

Classifying Indian retail

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Hypermarket Big Bazaar Star

Department store Lifestyle Pantaloons Pyramids Shoppers Stop Trent

Entertainment Fame Adlabs Fun Republic Inox PVR

Indian retailers

Large Indian retailers

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19

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Greater per capita income Increase in disposable income of

middle class households 20.9%* growth in real disposable

income in ’99-’03. Growing high and middle income

population Growing at a pace of over 10%* per

annum over last decade Affordability growth

Falling interest rates Easier consumer credit Greater variety and quality at all

price points

Indian consumer

The changing Indian consumer

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The urban consumer Getting exposed to international

lifestyles Inclined to acquiring asset More discerning and demanding

than ever

No longer need-based shopping Shopping is a family experience

Changing Mindset Increasing tendency to spend Post Liberalization children coming

of age100 mn 17-21 year olds*. Tend to spend freely.

Greater levels of education

Indian consumer

The changing Indian consumer

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Low domestic competition Because of fragmented nature of

industry

Lack of exposure to global best practices

Low entry barriers for unorganized retailing

Moderate entry barriers for organized retailing

Wholesale system under-invested leading to 20-40% wastage

Non level playing field issues Wide differences in treatment of

small and large retailers

IndustryChallenges

Challenges in the Industry

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Real Estate Costs Supply Chain Inconsistency Poor Infrastructure Lack of Skilled Manpower

issues

Challenges……

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Market size Current market size is roughly US$

286 bn* 96% of the 12 Million stores are less

than 500 Sq. ft. Forecast Growth rate for the retailing

industry is roughly 8.3% for 2003-2008

Sales from large format stores would rise by 24-49%**

Formal and modern format retailing would enjoy rapid growth

Anticipated growth

Opportunities

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Growth determining factors Government Policy Infrastructure development GDP growth Employment generation and job

creationIn several new sunrise industriesImplies greater purchasing power

Growth factors

Growth factors

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Current Indian FDI Regime FDI not permitted in retail trade

sector, except in: Private labels Hi-Tech items / items requiring specialized after sales service Medical and diagnostic items Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required)

FDI in Retail not

permitted

FDI in Indian retailing

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FDI should be allowed in stages Initial stages: 26% FDI

Establishment Phase: 49% FDI

Mature Phase: 100% FDI

FDI policy No incentives needed to attract FDI Market size and potential are

sufficient inducers No need for costly tax breaks, import

duty exemptions, land and power subsidies, and other enticements

How FDI ?

How FDI ?

2 yrs

2 yrs

2 yrs

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Franchise International company gives name

and technology to local partner. Gets royalty in return

In case master franchise is appointed for region or country, he has right to appoint local franchisees

Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango

Manufacturing Company sets up Indian arm for

production Bata India. It also has right to retail in India

How they are present

International retailers in India: Strategies

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Distribution International company sets up local

distribution office Supply products to Indian retailers

to sell Also set up franchised outlets for

brandSwarovski, Hugo Boss

Wholesale trading Cash and Carry operations 100% FDI permitted

Metro Cash n Carry

How they are present

International retailers in India: Strategies

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• Rural India consists of 720 Million consumers across 6,38,000 villages

• ---17% of these villages account for 50% of the rural population and 60% of the rural wealth

• ----Extensive reach is required as to cover 50% market 1,00,000 villages must be catered Immense opportunity amounting to US$ 125 billion

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• Rural Retail is growing @ 7% p.a.

• Rural consumption is also shifting from basic food grains to fruits, vegetables, dairy and poultry products, as well as beverages

• Demand for better quality food leading to huge demand for basic foods

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The Rs 140,000 crore rural retail market is expected to cross Rs 180,000 crore mark by 2011, And up to Rs 240, 000 crore by 2015 (CII).

The rural revolution is driven by Rising purchasing power, Changing consumption patterns,

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increased access to information and communication technology,

improving infrastructure

increased government initiatives to boost the rural economy,April 7, 2023 34

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Is a value seekerSeeks comforts and amenities Does not wish to be seen as the deprived cousin. Does not experiment easily but this does not mean that “he would not change”.Values local relationships because of unfavourable past experiences

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GODREJ ADHAR

ITC-CHAUPAL

HARIYALI BAZAAR

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FORMAT OF GODREJ ADHAR FMCG products, fertilizers, animal feed, etc. Services like banking, insurance, pharmacy, postal services and petrol pumps

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The Trusted Rural Business HubHelp the customer increase his income, educate the customer, before you sell to the customer.The number of Hariyali outlets now stands at 200, which the company plans to scale up aggressively to around 500 outlets by March 2012. Launched in 2004-05

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1.Provide the power of expert knowledge to even the smallest farmer

2. Information helps farmers secures better price, quality and productivity

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5 Dimensions of Service Quality• TANGIBLES• Appearance of physical facilities, equipment, personnel, and

communication materials.• RELIABILITY• Ability to perform the promised service dependably and accurately.• RESPONSIVENESS• Willingness to help customers and provide prompt service.• ASSURANCE• Knowledge and courtesy of employees and their ability to convey

trust and confidence.• EMPATHY• Caring, individualized attention the firm provides its customers

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What lies ahead? ..• The retail industry in India is currently growing at a great pace

and is expected to go up to US$ 833 billion by the year 2013. • It is further expected to reach US$ 1.3 trillion by the year 2018

at a CAGR of 10%.• As the country has got a high growth rates, the consumer

spending has also gone up and is also expected to go up further in the future.

• In the last four year, the consumer spending in India climbed up to 75%.

• As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%.

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Thank you

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