Pantalloom Markeitng Project

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Retailing- The growth Engine

INTRODUCTION

Retailing is an industry with which virtually everyone has to deal with on a day to day

basis. It is also one of the industries that have witnessed some of the most dramatic

changes in the recent decades.

Retailing is the summation of all activities that result in the offering for sale of goods and/

or services to individuals and/ or organizations for purposes of ultimate consumption.

According to Philip Kotler Retailing includes all the activities involved in selling goods

or services directly to final consumers for personal, non business use. A retailer or retail

store is any business enterprise whose sales volume comes primarily from retailing.

Any organization selling to final consumers- whether it is a manufacturer, wholesaler, or

retailer is doing retailing. It does not matter how the goods or services are sold (by

person, mail, telephone, vending machine or internet) or where they are sold (in store, on

the street, or in the consumers house).

Retailing encompasses various types of outlets ranging from the supermarkets, specialty

stores, franchisee retailers and discount stores to the neighborhood kirana stores. These

fall under the broad categories of the organized and unorganized retail segment.

Unorganized retail segment is a huge segment that includes the small family owned

shops, local grocers and even the roadside vendors.

The organized retail segment on the other hand is a blooming industry, offering various

opportunities. This industry includes specialty stores, supermarkets, departmental stores,

discount stores and others. This industry targets value conscious shoppers and promotes

mutually beneficial relations through whom the retailers chalk up large volumes, thus

bigger turnovers and the consumers are exposed to better products and larger discounts.

Submitted by Dhananjay Bairy- 1 -


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RETAILING AS THE WORLDS LARGESTBUSINESS

Retail is the biggest industry in the world with sales of $ 7.2 trillion.

Every 10th billionaire in the world is a retailer.

25 of the top 50 Fortune 500 companies are retail.

Retail generated a shareholder return of 18%

TOP RETAILERS WORLDWIDE

Company Home Country Sales($ U.S. Millions)

Wal-Mart Stores, Inc. USA $229,617.0

Carrefour Group France $64,762.3

The Home Depot, Inc. USA $58,247.0

The Kroger Co. USA $51,760.0

Metro AG Germany $48,124.4

Royal A hold Netherlands $47,114.3

Target Corporation USA $42,722.0Tesco PLC United Kingdom $39,517.2

Costco Companies USA $37,993.1

ITM Enterprises France $36,183.7Source: Retail Forward, Inc. The Top 100 Retailers Worldwide 2002 October 06, 2003

Organized retail is estimated to be in the region of 20-40% in developing nations and 60-

80% in developed nations. Retail is also amongst the most respected businesses in terms

of employment and more importantly has been a very profitable business too. Not without

reason has Retail provided the highest sustained returns over both the longer and mediumterm.



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RETAILING IN INDIA

In 1947, when India gained Independence, the backbone of Indian economy was largely

agrarian. During the Nehru Ian era, Indian economy focused and gained a lot from

Industrial economy. And today India is considered a giant in the field of Information

Technology. But, after the Info-Tech Phenomenon, if there is one traditional business that

has dominated the public attention, it is retailing. Retailing is destined to be the next

Growth Engine for the Country.

Indian retail is rapidly moving on the evolution curve

Various structural (social and demographic) and macro economic factors have brought

retailing at the threshold of a transformation. Rising income levels, baby boomer phase

of the Indian economy, available credit facility, nuclear family structure, and exposure to

international brands and media have raised aspirations of the consumers who now

demand a complete shopping experience. There has been a marked shift in consumer

attitude from self denial to affordable indulgence, arising from changing values and

higher incomes.



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The size of the retailing industry in India is estimated to be in the order of Rs. 7200 to

8100 billion (US $ 160-180 billion), with organized retailing estimated to be

approximately 2 % (Rs 160-180 billion) of the total retailing industry in the country. Food

and grocery retailing is estimated to contribute to around 50% (Rs 3500-4000 billion) of

the total sales from retailing. The number of total retail outlets in the country is estimated

to be around 12 million. The retail sector is the second largest employer of the country

after agriculture.

Total retail sales area in India is estimated at 328 million sq meters in 2001. So theaverage retail selling space works out to be below 30 sq meters per outlet. However, the

trend towards larger outlets is expected to increase the average retail space per outlet.

A T Kearney, Global Retail Development Index, 2003, ranks India as the 5th among the

30 emerging markets for new retailers to enter. The Indian retail market is estimated to

have sales of around US $ 160-180 billion (Rs. 7200 to 8100 billion) and is estimated to

be growing at above 5 annually. A CII-McKinsey study estimates that if the growth rate is

kept at around 6-7%, the market would reach around US$ 300 billion by 2010. However,

if the existing supply chain constraints are removed, real estate markets made more

organized and tax structure rationalized, retailing in India has the potential to grow as

large as US $ 450 500 billion by 2010.

Organized retail does not grow overnight. It takes years to mature into holding a

commanding share in the total retailing business of a country. The following chart tells

the story about the number of years various countries have taken to reach to the stage they

presently are:



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Retail is a difficult business to manage and scale. Therefore, the transformation would not

be easy. Otherwise, retail offers easy pickings for an entrepreneur with capital or real

estate. There exist serious bottlenecks to growth on the regulatory, infrastructure and

supply chain fronts. Moreover, unorganized players compete favorably with organized

retailers on convenience, service and price. According to a study done by McKinsey,

organized retailers are at a 32% tax disadvantage vis--vis traditional retailers owing to

tax evasion that exists in the system. The only way organized retailers can counter this

significant disadvantage is by dealing with inefficiencies in supply chain and passing on

the benefits of operational efficiency to consumers.

FACTORS FUELING RETAIL GROWTH IN INDIA

At 1.027 billion people, the second most populous market in the world.

At 271 million, one of the largest consuming base in the world, forming 27% of the

total population.

Attractive incremental reality - nearly 18 million. By 2013, an estimated 200 million

Indian will join the nations productive age bracket and the net addition to productive

assets is 91 million.

A high spending community below 45 years comprises 81 percent of the population

Average compounded 6.6% GDP growth rate in the last nine years. On a PPP basis,

World Bank estimated Indias 2002 GDP at $ 3 trillion, the fourth largest in the

world.

A young population with 54% population below 25 years

A growing urbanization @ 3.2% every year accounting for 28% of the population



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Increased literacy from 44% in 1965 to 65% in 1999

With rate of interest coming down by over 500 basis points, there has been an

unprecedented real estate boom, fueling retail demand. Growing private consumption

expenditure at 5% compounded annually since 1993-94

Car sales grew at a CAGR of 16.6% during 1996-2000. 5.4 lac cars added in 2002-03.

Declining of interest rates by over 500 basis points in the last two years, fueling the

propensity to consume

Increase in workingwomen from 1.3 million in 1961 to 4.8 million in 1998

Increase in media penetration to 38-million cable household and 80-million TV

household in 2001

Increase in international travel by 6% since 1999

With more than 20 million sons and daughters living in 110 countries across the

world, India is the largest recipient of remittances, receiving 14% of global total.

FACTORS HINDERING THE GROWTH OF RETAIL IN

INDIA.

Lack of value-added products to increase organized retail off take

Predominantly high savings market and less consumption

High real estate costs and pro-tenant laws

Barriers to FDI and lack of industry status

Large inefficiencies in the supply chain keeping prices of products high

Complex taxation systems

Multiple legislation

Lack of trained human capital in the industry

PANTALOONS RETAIL (INDIA) LIMITED (PRIL)

Pantaloon Retail India Ltd is a leading organized retailer operating multiple formats

across India. These formats address the latent demands of middle-income households. It



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has 13 Pantaloon stores and 9 hypermarkets, 13 Food Bazaars and 1 central operational

across the country.

Pantaloon Retail (I) Limited (Pantaloon) is striving to be every inch Indian - Indian

stores, Indian company, Indian consumers, Indian experiences, Indian merchandise,

Indian habits and Indian preferences. All have contributed towards creating an Indian

retailing company. Indian-ness is reflected in every move of Pantaloon, whether it is in

the launch of a new store or new products. It is surprising to find that a key Indian value

is the driving force behind it. Isn't it then strange to be Indian in a westernized industry?

Retail is organized to the extent of 85% in USA and in India it is just at 2%. Soeverybody is surprised at Pantaloon not aping any western model. The answer to this is

very simple. They believe that India is a market that is distinctly different from others. 18

languages, 6400 castes and sub-castes, six religions, more than two major festivals every

month and 1.2 billion people make India perhaps the most heterogeneous market in the

world. India is different. And so they came up, trying to create an Indian model of

retailing. They have been able to capture the imagination of Indian customers. They have

emerged as a fast growing retailer with three formats of retailing.

COMPANY PROFILE

Pantaloon Retail (India) Limited (PRIL) was incorporated on October 12, 1987 as Menz

Wear Private Limited under the stewardship of Mr. Kishore Biyani. The Company was

converted into a public limited company on September 20, 1991 and on September 25,

1992 the name was changed to Pantaloon Fashions (India) Limited and the same time it

went public and today it has approximately

14,000 shareholders. It later changed its name to Pantaloon Retail (India) Limited on 7th

July 1999.

From a humble beginning in 1987, Pantaloon has today evolved as a leading

manufacturer-retailer in the country with 13 Pantaloon stores and 9 hypermarkets, 13

Food Bazaars and 1 central operational across the country.



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Pantaloon has been a pioneer in introducing the concept of mega retail stores in India

called 'Pantaloons' for the entire family. In an extremely price-sensitive market like India,

the Pantaloons chain of stores has been successful in maintaining the equilibrium between

quality and price.

It has been a remarkable journey for PRIL as it has evolved from a manufacturing to a

completely integrated player controlling the entire value chain.

The following charts present the sales and PBIDT figures achieved by the Pantaloon

group over the years:



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The charts are clear indicators of the growth achieved by Pantaloon in a very short span

of time.

MAJOR MILESTONESDuring its evolution the company achieved various milestone and demonstrated

innovativeness and leadership by pioneering concepts that has now become industry

standards. Some of the major milestone achieved by the company in its life span of 14

years is enumerated below:

Company Incorporated 1987-88

The Pantaloon Trouser Indias first formal trouser brand launched 1987-88

BARE Indian Jean brand launched 1989-90John miller- Shirt inspired by America - Formal shirt in popular segment

launched

1993-94

Distribution of branded garments through multi-brand retail outlets across

nation and exports of garments

1993-94

The Pantaloon Shoppee Exclusive menswear store in franchisee format

launched across nation

1993-94

PANTALOONS- INDIAS FAMILY STORE launched 1997-98

BIG BAZAAR - Isse se sasta aur acha kahi nahi! Indian Hypermarket

launched

2001-02

FOOD BAZAAR - Ab Ghar Chalaana Kitna Aasaan - chain of large

supermarkets with a difference.

2001-02

GOLD BAZAAR - Sone pe suhaga. Shudh bhi, sasta bhi 2003



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The evolution of Pantaloon can also be understood in terms of change in core-

competence through the following chart:

(Source: Business World, 14 June 2004)

INTEGRATED BUSINESS

In any typical industry, the trade channel evolves over the years from extended to direct,

as shown in the following diagram:



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However, in case of an extended channel, a lot of value goes out of the control zone of the

manufacturer. However, if a manufacturer is able to establish direct retail points, it can

capture the full value of the process, of course to the benefit of both the manufacturer and

the customer.

By seamlessly integrating business and disintermediation, PRIL has a competitive

advantage over other retailers in the company. Managing the value chain from retailing to

manufacturing of apparels, which helps it to deliver value to the customer, contain costs

and reduce time-to-market significantly. By capturing the value added at each level, the

company has also been able to capture maximum value for itself as shown in the

following diagram:

The above diagram shows that in the process of converting Rs. 45/- worth of yarn to Rs.

745/- worth of Trouser, a lot of value gets added. Pantaloon, through the integration of

various stages involved in the process, is able to achieve substantial savings in terms of

cost and quality.



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THE DIFFERENT RETAIL FORMATS OF PRIL

Pantaloon: Indias Family Store

Pantaloon is the company's departmental store and part of life style retail format. In fact,

PRIL took its very initial steps in the retail journey by setting up the first Pantaloon store

in Kolkata in 1997. In a short time Pantaloon has been able to carve a special place for it

self in the hearts and minds of the inspirational Indian customers. The company has depth

of offering for both men and women at affordable prices. A striking characteristic of

Pantaloon has been the strength of its private label programme. John Miller, Ajile.

Annabelle are some of the successful brands created by the company. With 13 stores

across the country and an ever-increasing stable of private brands, Pantaloon - in the

coming years is poised to become a leading fashion trendsetter.

Big Bazaar: Is se sasta aur acha kahin nahin

Big bazaar is the companys foray into the world of

hypermarket discount stores, the first of its kind in India.

Price and the wide array of products are the USPs in Big

Bazaar. Close to two lakh products are available under one

roof at prices lower by 2 to 60 per cent over the

corresponding market prices. The high quality of service, good ambience, implicit

guarantees and continuous discount programmes have helped in changing the face of the

Indian retailing industry. A leading foreign broking house compared the rush at Big

Bazaar to that of a local suburban train.

Food Bazaar Wholesale prices

Food Bazaars core concept is to create a blend of a typical Indian Bazaar and

International supermarket atmosphere with the objective of giving the customer all the

advantages of Quality, Range and Price associated with large format stores and also the

comfort to See, Touch and Feel the products. The company



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has recently launched an aggressive private label programme with its own brands of tea,

salt, spices, pulses, jams, ketchups etc. With unbeatable prices and vast variety (there are

42 varieties of rice on sale), Food Bazaar has proved to be a hit with customers all over

the country.

Gold bazaar- sone pe suhaga, shudh bhi sasta bhi

Gold Bazaar is the only gold retail store offering value for money. The store exchanges

old jewellery for new without calculating any kind of weight loss. It also offers after-sales

service like polishing and repairing and a 15-day money-back guarantee from the date ofpurchase. At Gold Bazaar, the making charges are 20% lower than market prices. There is

also a buy-back scheme from ICICI-Lombard. The store sells only 22 carat gold and the

customers can check the golds purity at the store with the help of a karat meter. For gold

jewellery, the company has tied up with Mumbai-based Chintamani Jewellers who has

invested in stocks and manages designers and artisans. And Pantaloon will promote the

brand, regulate the price and improve on the concept.

Central Mall - Shop, Eat, Celebrate.

Located in the heart of the city, of Banglore, Central is five floors of customer fantasy.

From the basic to the extravagant, from home furnishings to groceries, from apparel to

white goods, from ATMs to restaurants. And many more all under one roof!

Central will provide customers the opportunity of choosing from amongst the best brands

in apparel, toys, books, music, sports, lifestyle accessories and more. With more than 300

brands and floors dedicated for women, men, youth and home, Central aims to provide

customers with an array of options never seen before. Tired of shopping? Restaurants

and food courts are just a floor away. Need a manicure, please step into the beauty

parlour. Looking for an evening out? A pub and a nightclub await you. Central in a

nutshell is a one-stop destination for shopping, eating and chilling out.

SPACE OCCUPIED



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Pantaloons currently have about a million square feet space in operation. The company is

in an expansion mode and expects to reach more than 1.4 million square feet of space by

the end of2005.

(FO = Franchisee Outlet)



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PANTALOONS- INDIAS FAMILY STORE (PIFS)

Started in 1997 through one 8,000 square feet store in Kolkata, Pantaloons is the

companys departmental store format targeting the Indian middle class and upper class

customers. The focus is largely apparels and accessories and covers the entire Indian

family from grandfather to father to child on the one hand to grandmother to mother to

child on the other. The companys strategy on the Pantaloons front is to focus on its own

private label that makes the merchandise more affordable to the customer. Pantaloons has

grown from 8,000 square feet to 263,000 in 2002-03. Now in the year of 2004 they have

added more Pantaloons departmental store accounting to more 59000 sq feet. By 2005

they are aiming on an additional of 50000 sq feet area. The number of stores as on June

2003 was 12 and contributed Rs 174 cr to the turnover, a growth of 12 per cent. In the

financial year 2003-2004, the sales turnover of PIFS was Rs. 250 crores.

STRATEGIC DIRECTION

The companys research on consumers showed that the customers were more willing to

enter the stores now than before. On average the customer entry increased from the earlier

2-3 times to 6-7 now. This is because Pantaloons tried moving towards an affordable

high-fashion retailer with focus on speed of delivery resulting in shortening of time-to-

market and mind-to-market. In other words, by cutting time-to-market, the customer will

see new merchandise every time they enter the store. Besides, this will increase the

companys full price sales and also increase gross margin. The margin strategy got a fillip

with more focus on in-house production of garments and trouser. Pantaloons will sourcemore garments from in-house manufacturing, thereby increasing margins. Pantaloons also

identified the gap in merchandise and worked on a strategy to fill every gap in each

category. Another strategic direction the company took was to open Pantaloons in high

traffic areas like entertainment complexes with a 20,000 25,000 square feet store.

MANUFACTURING



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More from within is driving the backward integration into manufacturing at Pantaloon.

Pantaloon is a manufacturer retailer. Manufacturing helps the company plan the products

better depending on what is selling at the stores and also helps better margin.

A 200,000 sq. ft. space dedicated to manufacturing 1,200 trousers per day and a central

warehouse have already been set up. PRIL has also set up a knits manufacturing facility at

Gurgaon and is setting up another shirt-manufacturing facility. With this backward

integration, the share of in-house manufactured menswear as a proportion of total

menswear sold in Pantaloon shops will move up from the current level of 50% to 80% bythe close of the year. As the margin on in-house garments is as high as 60%, the bottom-

line becomes that much stronger.

Many of the brands of Pantaloons are manufactured in-house. However in case of some

brands they prefer outsourcing basically job working wherein they hire jobbers to do the

manufacturing on their prerequisites.

TEAM (PEOPLE) INVOLVED IN THE WORKING OF

PANTALOONS STORES

While managing its marketing team, PRIL practices category management in Pantaloon

showrooms. Pantaloon has four categoriesMens formal, Mens casual, Mens

knitwear and ladies and kids wear. Each category manager operates like a CEO of his

category and is given a quantum of showroom space and his objective is to maximize

contribution after meeting the variable cost and fixed cost (including rental cost) for the

space under his management; the



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category manager with the help of 6 to 7 executives pores over the sales data of each of

the stores and tries to figure out the trend of sales.

On the basis of this extensive analysis, he draws out the plan of procurement and

negotiates with various brands (say, Color Plus, Levis, Lee etc.) as to how much space

and at how much cost such retail shelf space is available to them. To give an example, as

the Crossroads Pantaloons real estate space is expensive and the customers are more

upmarket, the category manager has given space to Color Plus but as the sales in

Kolkata stores are not so upmarket, "Color Plus is off the shelves of Kolkata showrooms.

Such a local flavor and variation is possible as the category manager is fully empowered

to increase the sales per square feet and his pay packet is structured in consonance with

the target achieved within the category.

To cite another example, initially Pantaloons was not selling mens shorts, except that of

Color Plus. The category manager of Mens casual identified this niche and started

stocking Mens shorts and in the recent festival season Pantaloon could sell 13,000 mens

shorts. Hence unlike other retail players who work on the pull of brands, Pantaloon shops

do not have any particular allegiance to brands; the category managers work out the

optimum mixes of brands for each of the stores that can maximize sales.

The category team is given the responsibility to launch a particular product. They are

given the budget in which they have to manufacture and launch the product.

Category team works together with the designer and the production department. The

designer is known for all the trends going on. The category team works with the designer,

they know about the needs of the customers. The designer designs



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the wear. Now the category takes into consideration the fabric best suited for the garment

in the set up budget and other requirements like accessories etc. they make up a sample

piece of the garment and then send it to the production department. The production

department has to work out that were the raw materials are cheaply available and that of

the required quality, who are the job workers who will do the job better. They then

coordinate it to the category team.

The category team is a coordinator between the production and the designer. The

category team decides upon that which product has to be built, maintained, harvested ordivested in a particular product line.

DESIGNERS

The success of the various brands wouldnt have been possible without the diligent,

dedicated and professional team of designers, all qualified NIFT and NTU (U.K.)

graduates. Today, the design studio provides its design in each and every step of the

organization, whether internal communication or external communication. Innovation and

Indianess drive the design process.

Besides the garments, the team has also started designing and developing logos and

identities, to emerge as complete design solution provider. The design team manages the

different Pantaloon brands like John Miller, Bare Jeans, Ajile Sports, HNY, Bare Kids,

Annabelle, Disney & Pooh, Popeye, No Rules.

VISUAL MERCHANDISERS

Customers respond to overall image that projects the best possible selection, price service,

quality, style/fashion, shopping environment and presentation. This is the role Visual

Merchandisers play in creating the image of the store. At Pantaloons, its in-house team

partnered with Gibam, the Italian firm known for its stylish stores and Tessaract, to put

together the Pantaloons, Pheonix in Mumbai and Pantaloons, Inox in Pune. Stores are

now done by the in house team,



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by adapting the Indian essence keeping the best of Western concepts and practices in

mind. PHF, a Pantaloon group company also helps in visual merchandising for the stores.

The marketing activities for the Pantaloon stores are carried on by the marketing

department at PRIL. The marketing department is headed by Mr. Sanjeev Agarwal.

7 Ps OF MARKETING IN THE CONTEXT OF PIFS

In the following I would like to discuss the marketing activities carried out by PRIL for

the family store in relation to 7 Ps of marketing as shown in the following diagram:.


7 PS of

marketing

for

Pantaloons-

Indias

family store

PRODUCT

PROMOTION

PLACE

PRICE

PHYSICAL

EVIDENCE

PROCESS

PEOPLE


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P1: PRODUCT MIX

Product is a key element in the market offering. Marketing- mix planning begins with

formulating an offering to meet target customers needs or wants.

A product is anything that can be offered to a market to satisfy a want or a need. Products

that are marketed include physical goods, services, experiences, events, places, properties,

organizations, information, and ideas.

A product mix (also called as product assortment) is the set of all products and items that

a particular seller offers for sale. The retailers product assortment must match the target

markets shopping expectations.

At pantaloons the complete store is promoted as a product. Here various different

products are available thus marketing physical goods; also the store provides services in

the form of various products under one store thus marketing the service provided.

CORE BENEFIT

In case of Pantaloons the family store of India, the core benefit which the stores offer is

the shopping experience.

BASIC PRODUCT

The marketer has to turn the core benefit into the basic product. In case of Pantaloons- the

family store here the basic product would be the offering of different products like the

apparels (menswear, ladies wear, kids wear), accessories (fragrance, sunglasses,

jewellery, watches, cosmetics etc).



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EXPECTED PRODUCT

Expected product is the set of attributes and conditions buyers normally expect they

purchase this product. In case of Pantaloons a set of attributes and conditions a buyer will

expect while purchasing the product. These are as follows:

Value pricing

Brand name of the provider

Cleanliness

Variety products

Proper service by the service provider on the stores

Billing and payment

Infrastructure

Layout

1. VALUE PRICING

Prices offered on Pantaloon products like the apparels are very competitive and also

in accordance with the quality. Prices are generally 20 to 25% less than the national

brands. This is because the apparels are manufactured in-house i.e. either is given or

job-work basis or manufactured at their own mills. So no extra manpower charges and

no mediator

2. BRAND NAME OF THE PROVIDER

All the products are sold under PANTALOONS- INDIAS FAMILY STORE which

itself is a recognized brand.

3. CLEANLINESS

Any customer would expect the shopping area i.e. the store to be clean and tidy so as

to have a better experience while shopping.

4. VARIETY PRODUCTS

Any customer if he visiting a family store to shop he would definitely like to have avariety of products i.e. variety in designs, styles, patterns, sizes etc. At



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this store a large variety of apparel and accessories are available which can satisfy the

customer. Variety brands like Ajile, Bare, Honey etc are available. Also, some of the

floor space is given on a lease hold basis to other firms products like Biba and many

more.

5. PROPER SERVICE BY THE SERVICE PROVIDER AT THE STORE

A customer would visit the store to buy products which are tangibles. However, they

would also be concerned with the service provided i.e. the how well the sales

executive are responsive, the assistance provided by them. At Pantaloons, when the

apparels are taken for trial basis then there is always a sales executive assisting the

customer.

6. BILLING AND PAYMENT

A computerized bill is produced at the billing counter. The payment can be made

either in terms of cash or in term of credit cards. They have also come up with a

EMIS scheme for a month wherein you can pay by ICICI card if shopped for more

than 3000.

7. INFRASTRUCTURE

Infrastructure is an essential element forming the basis of any structure. In the case of

Pantaloons- Indias family store the infrastructure would include a huge parking area.

Along with it infrastructural facilities like the escalators lifts. At the Pantaloons store

in Mumbai (Phoenix mills) there are 3 lifts and staircase for the convenience of the

customers which a customer would expect in a retail outlet.

8. LAYOUT

A well planned layout of each and every floor guides the customers at every stage.

The nearness of the trial rooms to the apparel section, Availability of washrooms

safety doors at the proximity, also the stores department at the proximity so that the

sales person wont take a long time getting the required product, placement of the

billing and payment counters, allocation of specific sections on different floors, theentry and exit; all these criterias are noteworthy while planning a layout.



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In case of Pantaloons at Mumbai (Phoenix Mills), at the very entry of the store we

have the fragrance and the cosmetic inlets. Moving further is the apparel section for

ladies wear (western wears & casual wears). Near the apparel section there are 3 trial

rooms. The payment and the billing counter are located at the centre of the floor. On

the first floor is the ethnic wear for women.

AUGMENTED PRODUCT

The marketer prepares an augmented product that exceeds customers expectations. An

augmented product however soon becomes an expected product. So a marketer needs to

search for other features and benefits.

In case of Pantaloons-Indias family store the augmented product are the

Green card

Gift vouchers

1. GREEN CARD

Pantaloons Green Card is a Loyalty Card.

The GREEN CARD opens the doors to benefits and privileges for you and your family,

making shopping experience at Pantaloons more enjoyable, rewarding and memorable.

We can earn points with every purchase that you make at

Pantaloons on absolutely anything purchased. As we you collect more points we move up

the privilege ladder.



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For every Rs.50 we spend at any Pantaloons store we get one Green Point. There are

various privileges of the green card like

We can get a one star privilege if we have 500 green card points in a year 500 to 999 can

get us a three star privilege.

And its not just points. There's loads more on offer- Free tickets to the most happening

events in your city, Add-on Cards we can share with family members, special schemes,

customize offers, free home delivery, longer exchange periods.

Some special offer for green card members are: entertainment shows, travel packages, gift

vouchers, in-store product offers, special discount and much more.

One of the city specific offers is as follows:

At Ahmedabad, The Copper Chimney is giving the following offers for a green card

holder 15% discount on Regular Lunch & 10% discount on Regular Dinner.

Any dish on the menu for a fixed price of Rs.99/- per person. Offer validity till 31 st

October 2004.

2. GIFT VOUCHERS

Gift vouchers are extremely flexible and often represent a more appropriate, thoughtful

gift than cash bonuses and other incentives. Pantaloons gift voucher entitles the bearer to

exchange it for goods upto the face value of the voucher. These vouchers give the

recipient a chance to select product of his choice.

Types of Gift Vouchers at Pantaloons :



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Trendsetter Vouchers : Ideal for Corporate's

These vouchers can be redeemed on Pantaloon brands only .These vouchers cannot be

used in conjunction with any other instore offer. These vouchers are valid for a period of

one year.

Connoisseurs Choice Vouchers : Ideal for gifting purpose.

These vouchers can be redeemed on any product sold at Pantaloons. These vouchers can

be used in conjunction with any other offer instore. These vouchers are valid for a period

of one year.

Many Corporate's use gift vouchers to reward staff and customers and to help promote

their goods and services. Employees also get the benefit of tax exemption on Gift

Vouchers in addition to Freedom of Choice. Corporate's can purchase Gift Vouchers

in bulk orders at special discounts. These discounts vary according to the type of

voucher and the quantity required.

POTENTIAL PRODUCT

Potential product encompasses all the possible augmentations and transformations the

product or offering might undergo in the future. Here is where the companies search for

new ways to satisfy customers and distinguish their offer. Successful companies add

benefits to their offering that not only



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satisfy customers but also surprise and delight them. Delighting customers is a matter of

exceeding expectations.

In case of Pantaloons they have come up with a very attractive offering for the kids. It is

called as the kids bank

To encourage Kids to realize the value of money and to encourage them to save and plan

for the future - Pantaloons has come out with a wonderful concept of a Kids Bank with

the motto - Learn to Earn"

Kids Bank is a bank for kids. Kids have their very own bank account, their own Kids

Bank card, own wallet and own money to save or spend on products just for them.

For every Rs 50 that parents spend on kids apparel, 5 Kids Money (KM) is given back to

the child. The kid is encouraged to save this Kids Money (In his own smart Kids Bank

wallet) and buy whatever toys he wants from the Kids Bank at Pantaloons. The emphasis

is on saving the Kids Money so the kid can buy bigger products at the Kids bank.

Products are displayed at the Kids Bank. These products are exciting kids toys like racer

cars, remote controlled cars, trucks, soft toys and more. So the entire attention of the child

is on this colourful range of products, and the concept revolves around the child savinghis kids money to buy things off the Kids Bank unit. These products can also be

purchased by payment of cash.

The other form of delightful feature which Pantaloons is adding in their store is the

Springboard, prt collections of leading designers at affordable prices.

Fashion-conscious people yearning to wear designer labels need not have cough up awhooping sum any more. Designers from all over the country are now in Mumbai tying



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up with high-end boutiques/ lifestyle stores to showcase their designer creations.

Springboard, the Designer Gallery at the new Pantaloon Store at High Street, Phoenix

Mills endeavors to make designer wear more affordable and easy to acquire as it

concentrates on selling the prt collections of designers rather than the couture range.

With dcor by eminent Italian designer, Bartoli, the sleek yet vibrant dcor of

Springboard is extremely appealing. Offering prt collections of eminent designers such

as Rohit Bal, Raghavendra Rathore, Ashish Soni, Anshu Arora Sen, Anju Modi, Sonal

Mansingka etc., Springboard promises to be the ultimate fashion mecca for the men and

women of the new millennium. Apart from showcasing prt collections of leadingdesigners, Springboard will also serve as a launch pad for budding designers.



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The total product concept of Pantaloon can be presented in the form of the following

diagram:


TOTAL PRODUCT CONCEPT FOR PANTALOONS-


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PRODUCT MIX WIDTH AND PRODUCT LINE

LENGTH FOR PANTALOONS- INDIAS FAMILYSTORE

PRODUCT MIX WIDTH

APPARELS ACCESSORIES

PRODUCT

LINE

LENGHT

MENS WEAR

Formal

Casual

Designer

Sportswear

Footwear

Undergarments

Winter wear

WOMENS WEAR

Formal

Casual

Ethnic

Designer

Lingerie and nightwear

Saris

Footwear

Winter wear

KIDS WEAR

Infants wear

Girls wear

Boys wear

MENS

Watches

Leather

Sunglasses

Fragrance

Personal accessories

Writing instrument

WOMENS

Cosmetics

Fragrance

Jewellery

Watches

Leather

Sunglasses

KIDS

Toys



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The width of a product mix refers to the different product lines. In this case Pantaloons

carries 3 different types of product line.

The length of a product mix refers to the total number of items in the mix. In case of

Pantaloons there are 11 total number of items in the 3 product width taken altogether i.e.

mens wear, womens wear, kids wear, mens accessories, females accessories, home

appliances, bed, bath etc.

The depth of a product mix refers to how many variants are offered of each product in the

line. In case of Pantaloons the product depth are the different types of mens wear like the

formal, casual, designer etc, different types of womens wear like ethnic, western etc and

kids wear like clothes for infants, girl etc. In case of accessories we have the mens

watches, fragrance, sunglasses etc as the depth. And in case of female accessories

jewellery, cosmetics etc are included in the depth. Altogether there are 27 product depths.

Some of the product depths are further classified as:

Formal

Casual

Ethnic

Toys

Infants/girls/

boys wear

Shirts, trousers, suits

T-shirts, denims, tops, bottom wears

Salwar kameez, mix n match

Dolls, soft toys, board games, puzzles,

electronics

Shirts, trousers, bottom wear, tops etc

The consistency of the product mix refers to how closely relate the various product lines

are in end use, production requirement, distribution channels, or some other way. In case

of Pantaloons, the complete store is promoted as a whole and and they manufacture or

outsource clothing and so the production requirement for different product lines is the

same.



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BRAND DECISIONS

Branding is a major issue in product strategy.

The most distinctive skill of professional marketer is their ability to create, maintain,

protect and enhance brands. Branding is the art and cornerstone of marketing. The

American marketing association defines a brand as a name, term, sign, symbol or design,

or a combination of them, intended to identify the goods or services of one seller or a

group of sellers and to differentiate them from those of competitors. The brand identifies

the seller or the maker.

Pantaloon- Indias family store also has significance by itself. Initially, Pantaloons were

manufacturers of trousers. Trousers are generally termed as Patloon (in Parsi) so they

associated there brand name in relation to it. People were aware of it so the best suited

name which they can give to their family store was PANTALOON- INDIAS FAMILY

STORE.

All the products (i.e. all the clothing) are sold under one roof i.e. Pantaloons. However

these have different brand names associated with it. They are called as Pantaloon products

but are tagged as different names.

The different brand products which can be shopped at Pantaloons are as follows:



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JOHN MILLER SHIRTS:

A forerunner in the branded shirts market, this range of classical quality shirts are

designed with international styling and incorporate features like double stitching,

plackets, pearl buttons, button down and saville collars.

PANTALOONS- INDIAS NO.1 TROUSERS:

Launched in 1987, today this product is a well recognized name in men's wear. The

formal, executive and cotton collection is characterized by perfect fits, flawless falls,

knife-edge creases and classic cuts. Pantaloon is synonymous with the ready- made

trouser for the contemporary Indian male looking for style, quality and affordability.

BARE:

Bare is the casual range by Pantaloon for men, women as well as children. It was

originally launched as a jeans brand in 1991, but was later extended to include shirts, knit

wear, gabardines, jackets and other accessories. Bare denim basically is for teeny and

college going crowd.



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ANNABELLE: WESTERN WEAR FOR CONTEMPORARY

MODERN WOMEN:

The amazing silhouettes in the "office wear" complement the working women with

sensuous lingerie, delightful accessories, cosmetics and exotic fragrance completing her

wardrobe at Pantaloons.

AJILE- MORE THAN A SPORTS WEAR:

The Ajile street gear is a range of products including knitted T-shirts, polo shirts, joggingpants, track suits, shorts and accessories, inspired by American street fashion .This brand

also confirms to the Pantaloons marketing philosophy-'Bringing the common man what

only the rich can afford'.

HONEY:

It is a brand for women offering western clothes.

RIG: It is a utility wear for both men and women, which is stain resistant, with extra

pockets and is wrinkle free. They also include accessories like small bags.



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AKRUTI: Akruti is a ethnic wear for women including salwar suits, mix n match,

ghaghrus (long skirts with an elegant look), kurtas and many more which offer an elegant

Indian look to women.

BARE KIDS:

Bare Kids caters to children from age group of 3-14.

The Brand has Sportswear, Street wear, Casual Wear, Jeans Wear and Khaki Wear.

CHALK: It is a brand of kids wear catering to children from age group of 2 to 7 years.

URBAN SPOOLS: It is also a kid wear wherein they are for the age group form 7 to 14

years.

The above mentioned brands are manufactured or are outsourced by Pantaloons.

All the names of the brand are exclusively for Pantaloon products.

Names are decided by an agency at LONDON.

They change names according to the season, latest trend and also according to the age and

the activity of the age group.



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For instance, chalk is the brand name for kids wear of age between 2 to 7. Such a name

is given to it because at an age of 2 to 7 kids are very much familiar with the word chalk.

Similarly in case of urban spools.

They generally select and compose catchy names which are easy to remember, for

instance ghaghru which is very trendy and catchy for the teens in women ethnic wear.

LICENSEE BRANDSPantaloons have got a license from foreign brands like UMM, DISNEY, NO RULES and

many more to market their brand in India. These are termed as licensee brands. The

different licensee brands marketed at Pantaloons are:

DISNEY:

The Disney brand covers Characters Mickey and Friends Winnie The Pooh.

Mickey and friends Basic Range which covers the basic casual wear covering knits to

woven to denims.



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POPEYE:

The Popeye & friends range of Kids clothing brought exclusively in India by Pantaloon

Retail (India) Ltd. The clothing range launched initially is for age groups 3-12 both boy's

and girl's (with Popeye & Olive Oyl labels respectively). Introducing a Basics collection

available in brightest colors and the contemporary styles. The knits range consists of basic

T-shirts, tops and bottoms with variety of Classic Popeye prints. Priced very reasonably

starting with RS 175/- for shorts goes upto RS 295/- for some extra detailed tees.

UMM: It is a foreign brand called as underground music

movement meant basically for music lovers. It is an Italian

brand. It was launched in April. Pantaloon is a licensee of

UMM. It offers funky types of clothes.

NO RULES: It is a brand for kids. Generally kids engaged in X-TREME sports. Suitable

for a child who is not a mamas boy and is very adventurous.

The design for the wears i.e. in case of licensee brands is made at Pantaloons. The designs

are then sent to the licensor company. The design needs to be approved by the licensor.Once it is approved they sell it under the brand name of the licensor at their stores. Now,

only those who have the license can manufacture clothes under these brands. But if

suppose any other retail store wants to sell these brands then they have to purchase it from

the licensee and sell it.

Pantaloons- Indias family store also has accessories and home dcor of different brands.

Accessories include brands like swatch, Fossil, Espirit, Ray-ban, Oakley, Hidesign,



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Maybellin, Davidoff, Ferrari, Revlon, Hugo boss and many others. In case of apparels

they have BIBA and many others. They also have different sports brand like the Nike,

Reebok etc.

PACKAGING

As it is a retail store so all the products are on display. In case of apparels packaging isnt

very important at the store. Also in case of accessories and home dcor the products are

displayed without packaging. Shirts are generally displayed with a plastic packaging over

it. After the purchase of any product they pack the goods in plastic bags.

LABELLING

It is important for any seller to label the products.

At Pantaloons, the apparels label consists of the brand name like the Bare or Ajile or

Disney or any one. It also shows the size i.e. may be S for small or L for large, in case of

shirts 40 cm or 42 cm and so on. This is the labeling which is permanently attached to the

clothing.

However, some extra labeling is done like price tag, the reference number of the product

to keep a track of the product at the store, barcode number, also the colour, type and the

feature of the product in short. It also shows the date of packaging and the address of the

manufacturer. This labeling is temporary that is it is removed when the product is utilized.

Some of the products like the shirts and the trousers consist of an extra labeling. In this

they provide the complete data about the product i.e. how it is to be washed, what

precautions needs to be taken, some of the benefits attached with this product and many

more. In case of shirts and trousers they also have a extra

piece of an accessory like the button attached to this label. This is also a temporary label

which can be restored separately.



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The bag which the store provides has an attractive labeling in the brand name Pantaloon.

It has attractive graphics.

SERVICES, WARRANTIES AND RETURNS

Pantaloons provide alteration services to the customers. Also, there is flexibility in case of

exchange of any product on reproducing the bill.

Products like home appliances, footwear do have warranties for some stipulated time

span. In case of any product if it is defective then they take the product back, on

reproducing the bill by the customer.

They provide regular service to the green card customers by informing them about the

upcoming sale, or discount scheme etc.

P2: PRICING

Price is the one element of the marketing mix that produces revenue; the other elements

produce costs. Prices are the easiest marketing- mix element to adjust; product features,

channels ad even promotion take more time. Price also communicated to the market the

companys intended value positioning of its product or brand.

In case of a retail industry prices are a key positioning factor and must be decided in

relation to the target market, the product and service assortment mix, and competition.

Every retailer likes to achieve high volume and high gross margins.

Pantaloons competence since inception has been textiles. They began as textile traders

and migrated to fabric and garment manufacturing. More than 15 years into the textile

trade gives them a better understanding of this business and they have built on this core

strength in their retail business to improve their margins. Apparel certainly contributes to

a major chunk of business. That is their strength and they are capitalizing on that strength.



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The others segments are also profitable, but apparel provide higher margins compared to

them.

PRIL has positioned Pantaloons range of superstores for mid-to-up market clientele.

Now as they focus on the mid to upper market i.e. upper middle class and the middle

class people quality is the pre requisite. It is a store where a person is ready to pay an

extra penny to purchase branded products.

Also in case of apparels, they have an edge over their competitors because of the in-

house manufacturing, better sourcing, negotiations and economies of scale. So they

generally offer apparels at a price which is 20 to 25% lower than that of the competitors.

Along the grid of price quality strategies, Pantaloons superstore can be placed at the

second position i.e. high value strategy as they offer good quality branded products at a

price which is lower to that offered by competitors in the same value range.

PRICE QUALITY GRID



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PRODUCT

Q

UALIT

Y

Pantaloons superstore has come a long way.

Back in 1997, Mr. Biyani was manufacturing two brands, John Miller and Bare. Both

were struggling. Even though his products were good, and the pricing was competitive,

high distribution costs and margins were making the whole business unviable. And so he

decided to set up his own stores. That year, the first of these came up in Kolkata. At this

stage, the plan was that the company would open another 2-3 such stores, no more. That

time they were not sure whether the other store would come up. But the Kolkata store was

an eye-opener. The Indian market was under-retailed. This was when the aggressive retail


HIGH MEDIUM LOW

HIGH

1. Premium

strategy

2. High-value

strategy

(PANTALOON)

3. Super-value

strategy

MEDIUM

4. Overcharging

strategy

5. Medium-value

strategy

6. Good-value

strategy

LOW

7. Rip-off

strategy

8. False economy

strategy

9. Economy

strategy


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expansion started. Today there are 13 pantaloons superstore serving the population of

India in different cities.

One of the important factor because of which Pantaloons was a big success was the

quality and the affordable price for the upper middle class and the upper class. The prices

are well set in relation to the value delivered and perceived by the customers at

Pantaloons. This is one of the factor because of which Pantaloons has harvested potential

profits and have many opportunities ahead.

High

PRICE PAID Medium

Low

Low Medium High

VALUE RECEIVED


MISSED OPPORTUNITIES

PRICE = VALUE

(At Pantaloons superstore dueto which they have harvested

potential profits)

UNHARVESTED VALUE


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PRICING POLICY

Selecting the pricing objective

The company first decides where it wants to position its market offering. The clearer the

firms objectives the easier it is to set price.

Pantaloons is a superstore profoundly known as a family store. Pricing of the product is

done is such a way that it reflects the prices of a family store.

Prices are generally 20 to 25% less that the national brands.

DETERMINING THE DEMAND

Each price will lead to different level of demand and therefore have a different impact on

a companys pricing objective.

The customers are price sensitive at Pantaloons. This is evident from the fact that during

the seasons of sale and discounts the sales volume increases. This shows that the lower

the price the higher is the demand. In many cases it so happens that a particular apparel or

a product does not perform well then in that case they offer discounts and sales to

generate demand and clear the stock.

Generally, as a means to know the demand curve, the marketers at Pantaloons collect the

customers feedback. They try to understand customers reactions to merchandise.

ESTIMATING COSTS

Every company wants to charge a price that covers its cost of producing, distributing, and

selling the product, including a fair return for its effort and risk.

A companys cost take two forms, fixed and variable.



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Every category team is given a particular budget in which they have to manufacture a

product and launch it in the store. The sample pieces are then passed to the production

team. The production team has to work out that were the raw materials of good quality is

available at the cheapest possible price so as to reduce the variable cost. Also, the job

workers who would be given the job of manufacturing have to be chosen well keeping in

mind the cost factor. In this way the variable cost is minimized.

In case of fixed cost, the rent associated with a particular product or the floor space area

that the product occupies is minimized.

One additional factor in relation to cost which Pantaloons considers (rather every retail

shop considers) is the floor or space utilization.

Retailing works on how you manage your square foots. Efficient space utilization enables

to improve turnover per square foot. On a lesser space, if we do more business, the return

per square foot increases. Efficient use of space would enable thinner spread of overheads

allowing margin improvement Also; the other costs like warehousing, corporate and

advertising will come down as a proportion to sales and the company will benefit from

the economies of scale too. So while estimating cost the category team looks upon this

aspect as well.

Pantaloons competence since inception has been textiles. They began as textile traders

and migrated to fabric and garment manufacturing. More than 15 years into the textile

trade gives them a better understanding of this business and they have built on this core

strength in the retail business to improve margins. They are able to provide leading

brands at a lower price than that of the competitors because of the in house

manufacturing/ production. They have reduced their operation cost by doing better

sourcing, better negotiations, manpower and economies of scale. They never let the

suppliers walk out with high margins.

One more factor which is beneficial to minimize the price at Pantaloons is the direct link

i.e. no intermediaries in between. It is like Pantaloons manufactures



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in-house and sells it in their own retail shops which minimize the addition of cost in case

of when the goods pass via various channels.

In this way keeping in mind the various factors the category team arrive at the cost

incurred on any product. They try to keep it at minimum by utilizing the resources

efficiently.

ANALYZING COMPETITORS COSTS, PRICES AND

OFFERS

Within the range of possible prices, determined by market demand and company costs,

the firm must take the competitors costs, prices and possible price reactions into account.

In the words of Mr. Sanjeev Agarwal, they partly to some extent consider the pricing

which the competitors adopt. This is because generally their prices are less then the

leading brands because of the in-house manufacturing, better space utilization and other

factors. In-house brands offer a better margin because there are no associated channel

costs or advertising costs that other brands have to cough up. This ensures not only better

margins but also enables the brand to be priced cheaper than competition.

SELECTING A PRICING METHOD

Given the 3 Cs- the customers demand schedule, the cost function and the competitors

prices- the company is now ready to select a price. Companies select a pricing method

that includes one or more of these three considerations i.e. the Cs.The different pricing

methods adopted by Pantaloons- Indias family store are as follows:

MARK UP PRICING

It is the most elementary pricing method in any retail business. This method is to add a

standard markup to the products cost. In any retail business the mark up price is about 40

to 60%. In case of Pantaloons-Indias family store, the in house

brands are markup by 60% i.e. they earn a margin of 60 % on the in-house brands.



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PERCEIVED VALUE PRICING

An increasing number of companies base their price on the customers perceived value.

They must deliver the value promised by their value proposition, and the customer must

perceive this value. They use the other marketing mix elements, like advertising and sales

force, to communicate and enhance the perceived value in the buyers minds. Perceived

value is made up of several elements; such has the buyers image of the product

performance, the channel deliverables, the warranty quality, customer support and softerattributes like the sellers reputation, trustworthiness and esteem.

At Pantaloons, prices are based on a large extent on the customers perceived value.

Pantaloons have been in the apparels business line since past. They are the leading

producers of apparels. In the past they produced trousers by the name of pantaloons

which were the leading trouser brand. After that they came up with the retail store i.e.

pantaloons family store. They are in this business since 1987. They have made a good

reputation before the customers. Brand name of Pantaloon itself is self promoter. Because

of the past experience in apparels they provide product which is good in performance.

The target customer for Pantaloons- family store is the upper middle class and the upper

class people. They price their product on the basis of it keeping in mind the preference of

these people, the value they attribute to the product. For e.g. the teeny wears which are

used by the college going crowd is not priced very high; same is the case with the casual

wears like T- shirts etc. Whereas the formal wears and Indian wears like saris etc are

priced marginally higher as compared to the casuals. However the prices of the products

at the store are less than 25% of the competitors prices.

Various channel deliverables like newspaper ads, ads in magazines are used to promote

their brand and enhance their perceived.

Pantaloons has currently more than 20 % of its customers making five or more visits to

the store every year and more than 75000 shoppers frequent visitors.



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They generally do not distinguish among their buyers as the price or loyal or value in

terms of the value and price of the product. However they do run a promo for the queen

card customers in year or something.

SELECTING THE FINAL PRICE

Pricing methods narrow the range from which the company must select its final price. In

selecting that price, the company must consider various additional factors like

psychological pricing, influence of other marketing mix elements on price, company

pricing polities and the impact of other parties.

PSYCHOLOGICAL PRICING

Many consumers use price as an indicator of quality. Image pricing is effective in case of

store like Pantaloons. Being a family store its target consumers are the upper middle class

and the upper class. These people are brand conscious and Pantaloons is the store for

them where they satisfy their demands as in brand conscious manner and also value added

price.

When looking at a particular product, buyers carry in their minds a reference price formed

by noticing current prices, past prices or the buying context. Sellers often manipulate

these reference prices. For example, a seller can situate its product among expensive

products to imply that it belong in the same class. Here we can say that Pantaloons or

rather any other department store displays products like womens apparel in separate

departments differentiated by price, dresses found in the more expensive department are

assumed to be of better quality. At Pantaloons family store the casual wears are placed

together whereas the formals of Annabela or Indian wears which are expensive like Biba

etc are placed together as they are designer wears and assumed to be of better quality and

with special features.

Many sellers believe that prices should end in an odd number. At Pantaloons the products

are priced at Rs. 299 or may be Rs. 495 etc. This reflects a better way to present their



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prices as 300 or 500 may be considered a price a bit high but a 3 digit number starting

with 2 may indicate lesser price.

THE INFLUENCE OF OTHER MARKETING MIX ELEMENTS

AND THE COMPANYS PRICING POLICY

Now the category team is allotted the complete budget of the product which is to be

launched and which is running. They have to decide the prices keeping in mind the other

elements like the advertising or promotional activities of the product.

As a consistent philosophy the complete store i.e. Pantaloons- Indias family store is

taken as a product so the prices are decided keeping in mind the overall brand and the

prices are decided keeping in mind the pricing policies of the complete store as a whole.

ADAPTING THE PRICE

Here we will examine various price adaptation strategies: geographical pricing, price

discounts and allowances, promotional pricing, discriminatory pricing and product mix

pricing

GEOGRAPHICAL PRICING AND DISCRIMINATORY

PRICING

Geographical pricing involves the company in deciding how to price its products to

different customers in different locations and countries. Pantaloons- Indias family store

is situated in varied locations like the Kolkatta, Mumbai, Hyderabad, Chennai and many

other places. Though the geographical area is different however Pantaloons have same

prices for all the products throughout the country. When asked Mr. Sanjeev Agarwal he

said that it is Ok if the profit margin is different at different locations. However they do

not discriminate amongst the customers in terms of location.

PRICE DISCOUNT AND PROMOTIONAL PRICING



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Price discount in the form of seasonal discount is offered at Pantaloons. This is basically

done during off seasons and end of season so that the stock is cleared to get the new

stock. They had the recent discount month and sale during July. Also many a times a

particular product if it does not perform well in the market then they offer discount on

these products to clear the stock.

Special event pricing: Pantaloons establish special prices in certain seasons like Diwali,

or Durga Pooja or other festive seasons to draw in more customers. Also during winter

and summer season.

P3: PLACE MIX

Place is an important element of marketing. Marketing managers think about the place,

making products available to customers as and when and where they want to buy them.

The place element is vital for getting orders from the dealers and from the buyers. The

place element is divided as:

Locations

Channels

Coverage

LOCATIONS

Retailers are accustomed to saying that the three keys to success are location, location

and location. Departmental store chains exercise great care in selecting a location. The

choice of a store location is significant because of the complex decision making involved,

the high costs, the lack of flexibility once a site is chosen, and the impact of a site on a

retailers strategy. A good location may let a retailer succeed even if its strategy mix is

relatively mediocre.



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The problem breakdown into selective regions of the country in which to open outlets,

then particular cities and the particular sites. After deciding on particular site the retailer

has to decide where to locate their stores? Should it be in the central business district or in

an outlying area? Should it be in conventional shopping centre or in a mall? Where

should it be in the mall in relation to similar stores? The main stores? Is the parking

available at the site? Is it safe and is it accessible? Keeping in mind the above factors a

suitable location for the store should be decided.

The Pantaloons- Indias family store is situated at various cities throughout India.

Pantaloons have tried to study each of the distinct communities in India closely and havecreated a store that talks to each of these communities. Pantaloons stores are situated in

different cities like Mumbai (Vashi, Lower Parel, and Thane), Kolkatta, Hyderabad,

Chennai, Gurgaon, Kanpur, Pune, Ahmedabad, Baroda. They started with an area of 8000

sq feet in Kolkatta and covered an area of 2,63,000 sq feet in 2002-03 by expanding its

operations i.e. coming up with retail family stores in different cities in India. In june

2004 they came up in different locations like Gurgaon, Vashi, Baroda adding more

59,000 of square feet area. By June 2005 they will set up their stores at Juhu (Centaur)and Noida adding over an additional 50,000 sq feet area.

To talk about the location i.e. the site or the region where the outlet is to be opened we

can take the example of Pantaloons at Gurgaon which has been set up recently. Basically

Gurgaon was the pace why Pantaloons came up with the store was because of the

development of Gurgaon as a top residential area in the past 3 to 4 years because of the

presence of large multinational companies there.

Another example with context to the location of the store at a particular site we can take

the example of the Pantaloon store at Phoenix mills at Lower Parel in Mumbai. Phoenix

mills is a mall which is a 10 minute drive away form Crossroads (crossroads being a mall

in Haji Ali area). Pantaloons had rented space in Crossroads; however they hop across to

Phoenix mills because of the space at lower rent than Crossroads. Pantaloons have been

strategically located



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at the Phoenix mills. Phoenix high street known as Phoenix mills is a complete mall by

itself. There are different entertainment hubs like the COs i.e. the bowling alley and the

video game parlour and other entertainment added spots. The famous Disc called as

FIRE AND ICE is also an attraction at the Phoenix. Various food outlets like Mc

Donalds, Bombay Blues etc are located here which gives the shoppers a full time happy

eating experience along with shopping at Pantaloons. The shoppers can enjoy the

chatpatta chaat at the place along with throat quenching yummy Natural ice creams.

Pantaloons other retail outlet called as Big bazaar, gold bazaar and food bazaar sits in the

same complex as his Pantaloons at Phoenix mills itself offering a different shopping

experience to the customers. Various other stores like the famous Marks & Spencers, Ritu

Kumars collections, Oobe, lifestyle etc are also located at the Phoenix.

A person entering Phoenix mills will satisfy his needs right from shopping of food,

clothing, home equipments etc and entertainment, fun and eating. There is a huge parking

area at Phoenix mills thus is an ease for the customers shopping at Pantaloons. Also

Phoenix mills is very near to the station i.e. lower parel station which causes convenience

for the local train travelers and people staying at far off suburban areas to come atPantaloons and shop out there. The location is well strategically planned and all the

Pantaloon stores are well strategically placed at different cities catering to the needs of

their target market.

CHANNELS

Delivering the products to the customers is an important task in the process of marketing.

In reaching the products to the customers, producers entrust some of their selling task to

the middlemen. The producer, the middlemen and the final user constitute the marketing

channel.

One of the channels available to facilitate the flow of consumer goods is

MANUFACTURER- CONSUMER. This channel is also called as direct channel of

distribution and also known as the zero level of marketing channel.



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In the direct channel there are no intermediaries between the producer and the final buyer.

The producers directly sell the products to the final buyers through his own network of

stores.

Pantaloons have been manufacturing trousers since past. They then came up with Bare

jeans and then John Miller. Having started there, they moved on to having small-format

outlets branded Pantaloon Shoppe, which were franchisee operations as well. Over a

period of time, two things happened. One, of course, was realizing the global phenomena

that retailing is really the space that has a future. The second was the associated problems

that they had with franchisees and people who own the floor space. Therefore the best

way to go forward was to have self owned retail outlets.

Thus we see here that Pantaloons is undergoing a zero level channel of distribution of

goods wherein they manufacture the apparels or outsource it according to their designs


MANUFACTURER

(PANTALOON)

CONSUMERS


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and requirements and sell it to the consumers directly through their retail outlet i.e.

Pantaloons- Indias family store. They manufacture goods i.e. apparels for their store so

that the consumers have an easy access of the apparels under one roof itself.



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COVERAGE

Once the company decides the general channel to be used, it has to decide on the number

of middlemen in each channel i.e. intensity of distribution.

In case of Pantaloons, coverage implies the number of stores in different cities for the

distribution of the product. Pantaloons have its family store i.e. Pantaloons- Indias family

store in number of cities. Up till now they have altogether 12 family stores spread

throughout India in cities like Mumbai (3 i.e. at Thane, Vashi, Lower Parel), Gurgaon(1

which opened last year), Chennai (1), Kolkatta (2), Hyderabad (2), Kanpur (1), Pune (1

last year), Ahmedabad (1), and Baroda( 1 last year). Now in the coming year Pantaloons

family store will be set up at Juhu (Centaur) and Noida. The total area which will be

under the coverage of Pantaloons family store up till 2005 will be 3,72,000 sq feet.

Pantaloons is subsequently mapping the catchments areas and subsequently leasing out

for retail formats. They are expanding their network not only in METRO and A CLASS

cities but also in cities like Baroda.

In this way Pantaloons is rapidly achieving regional and national coverage to cover major

and smaller cities in the country.

SUPPLY CHAIN MANAGEMENT

Physical distribution starts at the factory. Managers choose a set of warehouses and

transportation carriers that will deliver the goods to final destinations in the desired time

or at the lowest total cost. Physical distribution has now been expanded into the broader

concept of supply chain management (SCM).

Supply chain management starts before physical distribution: it involves procuring the

right inputs (raw materials, components and capital equipments), converting them

efficiently into finished products and dispatching them to the final destinations. An even

broader perspective calls for studying how the companys uppliers themselves obtain

their inputs. The supply chain perspective



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can help a company identify superior suppliers and distributors and help them improve

productivity which ultimately brings down the companys costs.

SCM is critical to any retailer. Last year Pantaloons formed this division that not only

managed logistics (warehousing and transportation), but also managed vendors and

quality assurance. In line with the companys strategy to move further on the speed of

delivery in making Pantaloons a fashion destination, supply chain has been focusing on

reducing the time-to-market (TTM) and mind-to market (MTM) cycles. Besides,

the18company has beeninstitutionalizing quality at thevendors premises and at its own

warehouse so that every piece thatreaches the customer is of therequisite fit. SCM alsofocused on vendor rationalization and identified long-term supply partners to grow the

company andgrow with the company.

Some achievements of the SCM in 2002-03 include:

Reduction of TTM from 90 days in 2001-02 to 55 days in 2002- 03.

Introduction of a Vendor Rating and Appraisal system. The demand and the

supply capabilities of vendors were mapped and rationalized and a capacity planning

exercise was done with vendors.

Implementation of a full fledged quality system was implemented at the vendor

sites as well as at the Central Warehouse. Quality control process flow was

streamlined, thus cutting down approval times

This led to the rejections coming down from 22% to five percent in 2002-03.

Warehouse asset utilization increased from 40% to 65% through better planning and

rationalization of loads. A centrally-decentralized structure was put in place.

The key in retail is to fully align the supply chain to the demand chain. The customer the

final consumer is not willing to wait.

They have undergone a responsive supply chain, which has meant several things.

Pantaloons have improved its on time deliveries form an abysmal 33% to 75% and

reduced its mark down form 15% to 5%. A few key elements drive the responsive supply

chain:



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Postponement: what quantities of stock to order form the factory or the warehouse

has always been the tricky part. The tradition so far has been to use variations of a

forecasting led model with disappointing results in matching the demand with the supply.

Pantaloons have deployed a software tool, Automatic Replenishment System (ARS) that

tracks stock levels in each store and triggers replenishment from the warehouse based on

current off takes. This way the stores dont have to worry about the inventory. The ARS

acts as a real time link that controls stock movement form the warehouse to the stores.

Visibility: pantaloons found that turnaround time at these warehouses was between 2 to

8 days. Only if the position of each stock is known could the processing time at the

warehouse be reduced. Pantaloons has implemented warehouse management system

(WMS)- a software which gives full visibility of its stocks in the warehouse. It shows the

stocks position in complete detail- down to the slot, rack and aisle where it is kept. The

moment the ARS triggers replenishment, the warehouse can process the request in a real

time. The quantity allocated by the merchandising team is always dispatched from the

warehouse without the variance.

Speed: At Pantaloons for the items to be hung on racks (trousers, suits etc), it has

specially fabricated racks with trolley. These racks with displayed items are wheeled into

the trucks and wheeled out to the display shelves directly. Other innovations like

developing an inner pack bar code label- it gives details of pieces inside a carton without

opening it- have also given speed to the process.

Integration: Pantaloons has integrated backward- it is the only departmental store chain

that has its own garment manufacturing units for tops and bottoms. In other categories

number of vendors has been rationalized form 400 to 120 now.

P4 : PROMOTION MIX



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Modern marketing calls for more than developing a good product, testing it attractively,

and making it accessible. Companies must also communicate with present and potential

stakeholders and the general public. Every company is inevitably cast into the role of a

communicator and promoter. The marketing communication mix consists of five major

modes i.e.

Advertising

Sales promotion

Public relations and publicity

Personal selling

Direct & interactive

Promotion mix can be said to be the right mix of these promotional tools to

Create awareness about a company or a product

Create a favorable image of the company

Increase consumer loyalty

Promotional decisions include tools that are used by a company to communicate ones

products value to the customer in order to encourage them to buy the same. When one is

making a promotion plan, one has to keep in mind what the competitors are doing and

how much money one can spend on ones own promotion strategy. One must also

identify ones target audience, determine the communication objective, that is what one

wishes to portray to the market, design this message and implement the program by

choosing the right channels and hiring an agency. Market research plays a big role as it

helps to know what e

Documents

Pantalloom Markeitng Project