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Q.

1
Who are channel partners? What are different types of channel partners? What role do they play?

A.1
Channel participants are defined as businesses that acknowledge their dependence upon one another in a channel arrangement and assume risk during the value addition distribution process. Manufacturers A manufacturer is one who produces the product. Manufacturing activity creates form utility. Manufacturing in combination with agriculture and mining serves to generate a flow of products, services, commodities and materials that ultimately become the local concern of the marketing channels. Manufacturer takes significant risk with creation of their products like manufacturers of automobiles, appliances, food, pharmaceuticals etc. Wholesalers It is important to understand that there are many different kinds of wholesalers, all of which differ in product categories handled as well as in specific marketing functions performed. There are three basic types of wholesale institutions, namely merchant wholesalers, agent wholesalers and manufacturers sales branches and offices. Merchant wholesalers Merchant wholesalers are independently owned; separate from suppliers, on the one hand and from the retailers on the other hand. The distinguish feature of merchant wholesalers is that they take ownership and associated risks related to the goods in which they trade. Merchant wholesalers are of two general classes: full function or service wholesalers and limited function wholesalers. Agent wholesalers Agent wholesalers are primarily involved in the buying and selling of goods and services. They typically negotiate sales as representatives of other firms and do not take title to merchandise. They also participate in the collection of market information. Agents receive a commission for performing these functions. Among different types of agents are manufacturers agents, brokers, commission merchants, selling agents and auction companies. On the other hand, these agent wholesalers are largely involved in domestic trade; on the other hand, agent wholesalers also play an integral role in international trade. Manufacturers sales branches and sales offices Branches, sometimes called captive distributors, are wholesaling operations owned and operated by a manufacturer and maintain separately from the producing plant to sell and market its products. The sales branches include a warehouse with consumers and individual users are classified within retail trade. Consumer channels Manufacturers may reach out to consumer either directly, i.e., without using distribution channels, or by using one or more distribution channel members. Manufacturer to consumer: Company contacts customers directly through salespersons, mail, telephone, or Internet and make sales. The products are sending directly to customers by the manufacturers. Avon Cosmetics and Eureka Forbes use this type of channel. Manufacturer to retailer to consumer: The growth in retailer size means that it has become economic for manufacturers to supply directly to retailers rather than through wholesalers,

supermarkets chains and corporate retailers exercise considerable power over manufacturers because of their enormous buying capabilities. Manufacturer to wholesaler to retailer to consumer: Retailers have the power to buy directly from manufacturers and thus cut out the wholesalers, these big retailers are also able to sell at a cheaper rate to consumers than retailers who buy from the wholesaler. Wholesalers dominate where retail oligopolies are not dominant. Manufacturer to agent to wholesaler to retailer to consumers: The agents contact wholesalers and receive commission on sales. A company product may be found in a companyowned store, an exclusive store, a multi-brand store and a discount store simultaneously. Companies have realized that all customers of a product do not buy form the same retail.

Q.2
Discuss the components of CRM. What are the benefits of maintaining good relationship with customers? A.2

Components of CRM
Personalisation Personalization describes the social interaction between service employees and their customers. It refers to the way in which employees relate to customers as people - cold and impersonal at one end, and warm and personal at the other. Consequently, personalization can be regarded as a means of showing recognition and respect for the other party. Some of the common examples of social relationship benefits include feelings of familiarity, personal recognition, friendship, and social support. Such an interaction afforded by shopping sometimes works as a prime motivator for some consumers to visit retail establishments. Communication Communication is without a doubt, an essential condition in the existence of any relationship. A retailer's communication with a buyer conveys his interest in them and serves to strengthen their relationship. So, efforts to stay in touch with the customers have been identified as the key determinants of relationship enhancement in retailer-customer relationship. It is generally observed that buyer-seller relationships become stronger when the ease and volume of exchange between buyers and sellers increase. Rewards Providing customers with tangible rewards is often referred to as level one relationship marketing'. This level of CRM relies primarily on pricing incentives and money savings to secure customers' loyalty. Rewards should be designed to promote long-term behaviour and discourage short-term deal-seeking behaviour. Rewarding efforts refer to structured and planned marketing efforts that should encourage loyal behaviour, distinguishing it from shortterm oriented sales promotions. Special treatment benefits A key aspect of relationship marketing is that all consumers do not need to be served in the same way. If a consumer receives personalized, customized service from retailer A, but not from Retailer B, and if this service is valued, then the consumer will be less likely to leave

Retailer A for B. The retailers can distinguish between at least two identifiable customers segments: loyal customers and non-loyal customers. The next few sub-sections discuss the other important aspects CRM in the retail sector.

Benefits of Relationship Marketing Retaining customers for the long-term offers many benefits. The aim of the company is to obtain life time customers. Some of the benefits of relationship marketing include: 1. Loyal customers are willing to try some of your new products, because they trust you. 2. Loyal customers will recommend your business to others, thus expanding your business for you. 3. Loyal customers will tell you about problems with your products/services enabling to improve your products/services. 4. Customers will be willing to pay more for your services/products if there are adjustments in pricing because they are loyal to you and trust your services/products. 5. The ultimate benefit will be an increase sales, market share and dominance.

Q.3
What is e-tailing? What are different categories of online retailing? A.3

Electronic Retailers As a sophisticated and interactive medium, the internet accessed by personal computer is showing every sign of being accepted as a mainstream shopping mode by an increasingly computer-literate society. Using the internet to access information has been accepted as part of everyday life for many sectors of society, and in the process of shopping it has become very useful to customers as a way of accumulating information about retailers' product and service offerings in a relatively fast and convenient manner. As a way of accessing specialist retailers that might be geographically remote from consumers, the internet provides a channel of discovery for the consumer, and a way of providing home shopping services for a wider target market for the retailer. The internet is also an efficient home-shopping device, enabling timepoor or less mobile consumers to order and take delivery of routinely purchased items such as basic groceries and household items.
Irrespective of the way we access the e-retailer, whether it is via the PC, the mobile phone or the hand-held personal organizer, consumers increasingly expect retail organizations to be able to offer flexibility in terms of information gathering (to supplement pre-sale shopping), purchase transaction, and taking delivery of the product or service (post-sale activity). By using a number of different retail formats, retail businesses are better able to allow consumers this flexibility. Most large retailers in the UK now fall into the category of the 'multi-channel' retailer, which is a term used to describe the strategy of using more than one 'route' to consumer markets.

Typically, the multi-channel retailer runs stores and has a transactional website (the so called 'clicksand-mortar', or 'clicks-and-bricks' approach), but other combinations might be stores/catalogue, stores/catalogue/website, stores/website/direct mail. Offering alternative ways to shop may encourage customers to remain loyal to a favoured retail brand as lifestyles change, but it can also present retailers with new operational and competitive challenges. E-tailing is becoming popular day by day. Internet retailing can be classified into three main categories: Click Retailing: This category of retailers operate only through online channels. Some popular companies that fall under this category are Dell, Amazon.com and e-Bay. Click and Brick Retailing: This category of retailers operate through both the online as well as the offline channels. Common example includes: Barnes and Noble's. Brick and Mortar Retailing: This category of retailers use conservative modes of retailing They do not rely upon modern techniques of retailing.

Q.4
What do you mean by acquisition? What are the types of acquisitions? .

A.4
An acquisition, also known as a takeover, is the buying of one company (the 'target') by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover. Types of acquisition The first type is in which the buyer buys the shares, and therefore control, of the target company being purchased. Ownership control of the company means that there is control over the assets of the company. Since the company is acquired intact as a going business, this form of transaction carries with it all of the liabilities accrued by that business over its past and all of the risks that company faces in its commercial environment. The second type is in which the buyer buys the assets of the target company. The cash the target receives from the sell-off is paid back to its shareholders by dividend or through liquidation. This type of transaction leaves the target company as an empty shell, if the buyer buys out the entire assets. A buyer often structures the transaction as an asset purchase to "cherry-pick" the assets that it wants and leave out the assets and liabilities that it does not. This can be particularly important where foreseeable liabilities may include future, un-quantified damage awards such as those that could arise from litigation over defective products, employee

benefits or terminations, or environmental damage. A disadvantage of this structure is the tax that many jurisdictions, particularly outside the United States, impose on transfers of the individual assets, whereas stock transactions can frequently be structured as like-kind exchanges or other arrangements that are tax-free or tax-neutral, both to the buyer and to the seller's shareholders. The terms "demerger", "spin-off" and "spin-out" are sometimes used to indicate a situation where one company splits into two, generating a second company separately listed on a stock exchange.

Q.5
Explain retailing & its features. How has the growth of retail sector helped the Indian economy?

A.5
Retailing in simple term can be defined as Retailing is the business activity of selling goods and services to the final consumer. Retailing can be defined as the business products and services to consumers for their own use. It has its origin in the French word, retailer meaning to cut a piece off. According to Kotler, Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non business use. The definition of retailing is actually breaking the bulk. Retailing is the activity of selling goods and services to last level consumers for their use. It is concerned with getting goods in their finished state into the hands of customers who are prepared to pay for the pleasure of eating, wearing or experiencing particular product items. Retailing is all about the distribution of goods and services because retailers play a key role in the route that products take after originating from a manufacturer, grower or service-provider to reach the person who consumes. Retailers provide a collection of service benefits to their customers such as being located in convenient places, editing product ranges according to shopping tasks, and selling goods in quantities that match personal consumption levels. The term retailing applies not only to the selling of tangible products like loaves of bread or pairs of shoes, but also to the selling of service products. Companies who provide meals out, haircuts and aromatherapy sessions are all essentially retailers, as they sell to the final consumer, and yet customers do not take goods away from these retailers in a carrier bag. The consumption of the service product coincides with the retailing activity itself. Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store or kiosk, or by post, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility like electric power. The following points show how significant this sector is for the Indian economy. As of now, retail sector in India employs around 17% of population and promises to employ more in the near future

As per to PricewaterhouseCoopers (PWC), retail sector will create additional eight million jobs though retailing in India and will benefit population by employing local (Urban) youth and others directly or indirectly. A new development in organized retailing in India is Contract Farming. It is a mutual agreement between the farmers and the retailers, in which both the parties benefit. Retailers assist the farmers with the latest technology and equipments to do scientific farming, which increases productivity in agriculture. The entire produce is bought by the retailers and the farmers get a uniform payment for their produce irrespective of fluctuations in market price.

Retailing also provides adequate management training and entrepreneurial opportunities. The extraordinary role played by retail sector throughout the world in increasing productivity of consumer goods and services are commendable. And it is also becoming a major industry by creating millions of employment opportunities to people directly and indirectly is greatly admired. Retailing industry becoming one of the most dynamic sectors in India with numerous players jumping into this market makes it competitive and lucrative. Though organized retail sector is serving the needs and aspirations of high end and middle class
customers but ignoring the common man's needs and aspirations are lamentable. So, the organized sector should look at the common mans needs, and his ability, affordability and go ahead, then only the aim of giving world class quality products at affordable prices to common man dream will come true, thereby contribution to the economic growth and up lifting the standard of living there by serving humanity.

Q.6
Discuss the concept of price sensitivity and its relevance for retailers.

A.6
We have already discussed the demand factor that affects pricing. Demand is based on the consumption patterns of the consumers. Sensitivity to price change will vary from consumer to consumer. In a particular situation, the behavior of one individual may not be the same as that of the other, and may not follow the 'law of demand'. In fact, the pricing decision ought to rest on a more incisive rationale than simple elasticity. Some important characteristics of consumer behavior are detailed below: From the point of view of consumers, prices are quantitative and unambiguous, whereas product quality, brand image, customer service, promotion and similar factors are qualitative and ambiguous. Price constitutes a barrier to demand when it is too low just as much as when it is too high. Above a particular price, the product is regarded as too expensive and, below another price, as constituting a risk of not giving adequate value or being perceived as a low quality product. If the price is too low, consumers will tend to think that a product of inferior quality is being offered. Price inevitably enters into the consumer's assessment of quality. There are two reasons for this. First, it needs expert knowledge and appropriate equipment to test the quality or durability

of some particular products (to say nothing of the time and cost involved in carrying out a proper test), and second, customers tend to look upon price itself as a reasonably reliable indicator of quality. What is costly is thought to be of a high quality. A higher price is ordinarily taken to be a symbol of extra quality, or extra value or extra prestige. Consumers may be persuaded to pay more for heavily advertised goods. Consumers perceive a firm's size, financial power and age as measures of quality. Well-known firms very often assert that by virtue of their reputation they are able to charge 5 to 10 per cent higher than other firms. Whether the price is considered a bargain or not would depend upon the average market price of the item, the gender of the potential consumer, and the value of the item to the purchaser. Price reductions tend to be perceived absolutely rather than relatively. This means that the percentage reduction decreases for the item to be considered a bargain as the usual price increases. In a comprehensive survey of consumer consciousness, it was revealed that the basic postulate of the demand theory, i.e. the consumer has appropriate knowledge of market prices, is not fundamentally wrong.

Q.1 Why should retailers choose to go global? What are the benefits? A.1
A.T. Kearneys Global Retail Development Index ranks 30 emerging countries on the urgency and willingness of retail organisations to enter the country. The scores are based on 25 variables across four primary categories: Economic and political risk Market attractiveness Market saturation Time pressure As per the seventh annual Global Retail Development Index (GRDI), India has been replaced by Vietnam as the most attractive emerging market destination for retail investment. Other findings are as follows: Vietnam tops list of most attractive countries Seven Middle Eastern and North African countries are among Top 20 India and China face speed bumps on the retail highway Latin American retail, led by Brazil, grows stronger Vietnam's jump from fourth place in the 2007 GRDI to first rank in 2008 has been driven by strong GDP growth, changes to the country's regulatory structure favoring foreign investors, and increasing consumer demand for modern retail concepts. India, Russia and China, the top three countries as per 2007s GRDI, fell to second, third and fourth, respectively, in the 2008 GRDI. These countries still remain important retail investment destinations but due to high real estate costs in large cities and growing competition, their attractiveness relative to prior years have declined and retailers are forced retailers to look for opportunities in tier II and III cities. Ever since it was published (2001), the GRDI has been helping the retailers in prioritize their global development strategies by ranking the retail expansion attractiveness of emerging countries based on a set of 25 variables based on earlier discussed categories. The GRDI focuses on opportunities for mass merchant and food retailers, which are typically the bellwether for modern retailing concepts in a country.

Vietnams retail market is valued at $20 billion which is very small in comparison to India or China, but lesser competition and 8 percent GDP growth, make it an attractive

destination for retailers looking for expansion. Vietnamese consumers are among the youngest in Asia, with 79 million below the age of 65, and increased their consumer spending by more than 75 percent between 2000 and 2007. The country is urbanizing at a
good pace and more and more people are migrating to the two large cities of Ho Chi Minh and Hanoi. The Vietnamese government is expected to remove controls foreign ownership of retailers in the country and establish a new program to develop wholesale and retail real estate by 2010. The entire region, covering Thailand, Philippines and Malaysia, is going through an exciting phase of development of modern retail. Middle Easts and North Africas Story The North African and Middle Eastern region is clearly the hottest region as far as retail expansion is concerned as seven countries belonging to these regions are among the top 20 in the 2008 GRDI. Some of the reasons that are responsible for making these regions, sought after are the strong Euro supporting investment in the region, consumer familiarity with modern retail concepts and petrodollar wealth are the primary factors making the region an attractive retail destination. With more than $9 trillion flowing into the region by 2020, infrastructure investments will spur consumer and retail growth over the next decade, according to A.T. Kearney. Among the Middle East countries, Saudi Arabia, with a high 9 percent growth rate and low retail consolidation is among the most attractive global retail destinations. In Saudi Arabia, less than 7 percent of the market is held by the top 5 retail players Morocco, Algeria and Tunisia are three North Africa countries in the top 15 rankings. These countries, on average, grew by more than 6 percent in 2008 and have benefited from tourism, trade with Europe and periods of political and economic stability. The Indian and Chinese Story India still is, one of the most attractive destinations for retailers. The retail market opportunity is larger than ever at $510 billion. There has been a rapid growth in spending patterns and consumer maturity, more than what the global retailers had forecast. But recently several challenges have popped up which can slow down the pace of growth for global retailers. Foreign players entering India today face stifling regulations, a clouded political atmosphere, soaring real estate costs and a fiercely competitive domestic retailer group. Even though China has gone down to number 4 in GRDI rankings, it still remains one of the, fastest-growing economies and hottest retail destination in the world. Despite the per capita GDP being low in China, the consumer spending has more than doubled from the mid-1990s because of its large population and it is growing rapidly, especially in the large southern and eastern cities. Latin American Story Latin America is fast emerging as a preferred retail destination as political and economic stability return to the region. The region has seen increase in GDP and purchasing power and as a result an increase in retail sales. There are five countries from the region that appear in the GRDI top 20 rankings, up from only one country in 2005. The countries being talked about are Chile, Brazil, Mexico, Peru and Colombia. As per A.T. Kearney's Apparel Retail Index, an analysis of the 30 most attractive emerging market retail destinations for apparel retailers, Brazil is the most preferred destination for apparel retailing.

Q.2. How do you the future of e-tailing? Discuss the possible barriers in the growth of e-tailing. Future of Electronic Retailing The investment and improvements in the communication infrastructure will lead to the mass offering of electronic services in the home from several appliances. Established appliances, including the television and telephone will be equipped to provide simple access to electronic products and services. Furthermore, the increased power and portability of computers will facilitate easy, carefree, and daily use of electronic shopping options. Consumers As e-shopping becomes the most sensible alternative of procuring goods and services, consumers are likely to abandon their traditional views of shopping. No longer will a routine trip to a supermarket or mass retailer, suchas Wal-Mart, satisfy the e-consumers expectations. The effort of the trip will require an experience that appeals to ones social needs, entertainment needs, creativity, and curiosity. Brick and mortar retail This new shopping experience segues into the changes required by suppliers. As stated above, retailers and manufactures will have to rethink their physical selling strategies. Shoppers will use the Internet to quickly gather product information, including price, to save time in comparison shopping and unsuccessful outings due to lack of stock. Once a product and location decision has been made, the consumer will load up the kids into the SUV and venture in the brick-and-mortar world of shopping.
E-marketing In time, however, the dominance of electronic purchasing is inevitable. Suppliers should bet their lives on it, especially if the product is not particularly differentiated or unique. Marketers must rethink their strategies and target audience. Mass marketing will not have the same appeal to the individual consumer. Marketers must utilize the massive databases that will be built through consumer clicks on the Internet, to personalize company advertising efforts. Suppliers Manufactures and retailers must also evaluate their relationships. Manufactures have spent the past twenty years dominated by their retail customers. The chain of products to consumers has been drastically altered already. Manufactures are no longer separate from their consumers. They have new opportunity to establish a direct link with the end-consumer companies, such as Dell Computers, have proven that direct selling to the consumer is more efficient and satisfying to the customer. The only advantage of a retail electronic shopping site is the collection and convenience of many products in one location or site. Vision The future of electronic retail is indeed the future of retail. However, electronic shopping will transcend the mere transaction and become a pillar of daily virtual activities. On-line purchasing activities will be only a part of a new e-lifestyle. Issues in e-tailing Some of major issues in e-tailing have been discussed below. Customer Service, Distribution and Logistics related issues: it is evident that e-tailing facilitates business transactions but care should be taken to ensure that the products are delivered on time. Most of the e-tailers adopt fancy techniques to attract customers but fail to acknowledge one of the most important aspects of customer satisfaction, which is achieved through a flawless delivery. It is important to follow through and ensure a smooth delivery to the

customer. E-tailers should provide prompt and smooth delivery to enhance customer experience. Mode of Payment related issues: credit cards are fast becoming the preferred mode of payment for all online purchases. There is always a possibility of misuse of the card details as the e-tailers cannot capture any signatures of the cardholder. Some alternative modes of payment include: Smart Cards: they are a more accepted form of payment across Europe, but have had a limited global impact. They are used for small purchases and do not require the consumers to disclose their personal information. American Express is working on a smart card that would come with a chip inside, to allow the storage of transaction history and other important data related to transactions. To use Smart Cards, consumers need to install a "reader" on their machines (whether a PC or a mobile device). VeriSign: it provides a secure online payment option that helps customers overcome the fear of misuse of information. It has purchased Cybercash that offered multiple payment solutions to its customers. PayPal: this tool is owned by E-bay. This tool allows the e-tailing sites who do not accept credit cards to process online payments in an effective and efficient manner. It facilitates person-to-person transactions. It has acquired all the VeriSigns payment services including Cybercash. Personalization vs. Privacy related Issues: In e-tailing, there is a disagreement between the e-tailers need to be able to personalize the offerings in order to provide a better experience to the consumers and consumers need for privacy, of their identity and financial information. There is an urgent need to address both the issues and strike a balance. This will surely affect the growth of online retailing in a positive way. There is an urgency to acknowledge the rules governing the use of personal information.

Q.3 Discuss the stages in retail environment analysis A.3


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 macroenvironment of the retailing industry and the task environment. Under external analysis retailer studies these parameters: Economic environment of retailing Inflation Employment Disposal income Business cycle Energy availability and cost

Others Political/Legal environment of retailing Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others Socio-cultural environment of retailing Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others Technological environment of retailing New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology Others International environment of retailing Growth Opportunities Others 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 analysis how effectively these resources are used. These resources for the purpose of examining are normally grouped into human resource, financial resources, physical resources and intangible resources.

Q.4 Discuss the channel strategies adopted by the retailers, in brief.

A.4
Developing a viable marketing channel strategy involves some important decisions. These are discussed in subsequent sub-sections. 9.4.1 Channel design Designing of the distribution channels deals with the decisions that are associated with forming a new distribution channel or modifying an existing. In designing marketing channels, manufacturers have to decide what is ideal, what is feasible, and what is available. A new firm typically starts as a local operation selling in a limited market. Since it has limited capital, it usually uses existing intermediates. The number of intermediaries in any local market is apt to be limited. Designing a channel system calls for analyzing customer needs, establishing channel objectives, and identifying and evaluating the major channel alternatives. Analyzing customers desired service output levels Lot Size: Lot size refers to the total number of units of products that a customer acquires during a transaction period. Waiting Time: Waiting time is the average time that customers of that channel wait for receipt of the goods. Customer normally prefers fast delivery channels. For example, Withdraw the money from ATM, Sending money to other stations. You need not step into the bank and fall into the line to with draw for above-mentioned things. Spatial Convenience: It represents the degree to which the marketing channel makes it easy for customer to purchase the Product. For example, Booking the Product through ECommerce

Selection Utility: The selection utility of a marketing channel refers to the likelihood that the needs of customers will be exactly satisfied. Marketing channels like super markets ensure that they not only carry a
wider assortment of products but also a greater variety or breadth of product assortment. Service Backup: Service back represents the bundle of services offered by the marketer. Services such as credit facility, free home delivery, Installation free, repairs and so on enhance the image of the marketer which can facilitate to the marketer to acquaint a certain percentage of market shares in the market. 9.4.2 Establishing the channel objectives According to Bucklin, under competitive conditions, channel institutions should arrange their functional tasks so as to minimize total channel cost with respect to desired levels of service out puts. Effective channel planning requires determining which market segment to serve and the best channels to use in each case. Channel objectives vary with product characteristics perishable products require more direct marketing because of the dangers associated with delays and repeated handling. High unit value products such as generators and turbines are often sold through a company sales force rather than through intermediaries. A manufacturer, whether big or small, has to conduct a SWOT analysis of the intermediaries in terms of their strengths and weaknesses in the internal environment and opportunities and threats in the external environments. 9.4.3 Terms and responsibilities of channel members The producer must determine the rights and responsibilities of the participating channel members make sure that each channel member is treated respectfully and given the opportunity to be profitable. Distributor territorial rights

Distributors territorial rights are another element in the trade-relations mix distributors want to know where and under what terms the producer will enfranchise other distributors. They would also like to receive full credit for all sales taking places to their territory, whether or not they did the selling. 9.4.4 Motivating channel members Intermediaries must be continuously motivated to do their best job. The terms that lead them to join the channel provide some motivation, but these must be supplemented by training, supervision, and encouragement. 9.4.5 Evaluating channel members The producer must periodically evaluate intermediaries performance against such standards as sales-quota attainment, average inventory levels, customer delivery time, treatment of damaged and lost goods, and cooperation in promotional and training programs. 9.4.6 Types of intermediaries Company sales force The sales force the assets of the organization. Taking the more no of sales force, train them to fit for the needs of the organization and assign the each territory to them to contribute the business. Manufacturers agency Hire manufacturer agents in different regions or end-use industries to sell the new test equipment. Industrial distributors Find the potential distributors in all regions and endorse the entire fished goods on to them. Give them the exclusive distribution, adequate margins, Product training to draw he attention of the customer and promotional support. 9.4.7 Evaluating channel alternatives Each alternative needs to be evaluated against economic, control and adaptive criteria. Economic criteria Most marketing managers believe that a company sales force will sell more. Company sales representatives concentrate entirely on the companys products. The simple reason can be customers willingness to deal with sales representatives dealing in several brands of the same product rather than a specialized sales representative dealing in only a single brand. Finally, sales and cost are compared. There is one sales level at which selling costs are same for the two channels. The fixed cost incurred in using a sales agency is lower than that of developing a companys sales force. However these costs go up as the sales increase owing to the higher commissions of the sales agency. Control criteria A sales agency is an independent business firm seeking to maximize its profits. The company depends on external services, the less it can control its product and resources. There fore, while selecting an intermediary, a company has to strike a balance between its desire to control important functions of the firm, and the need to market coverage with the help of external agencies. Adaptive criteria To develop a channel there should be some agreement on the commitment levels from both the sides before the actual start of the business. These commitments invariably lead to a decrease in the producers ability to respond to a changing market place. Channel members who operate in a highly turbulent atmosphere will try to structure the channel in a way that will allow them to adapt to the changes by altering their channel strategy. 9.4.8 Modifying channel arrangements Modification becomes necessary when the original distribution channel is not working as planned, consumer buying patterns change, the market expands, new competition arises,

innovative distribution channels emerge, and the product moves into later stages in the product life cycle. A channel alternative is described by three elements: (1) The types of available business intermediaries (2) The number of intermediaries needed (3) Terms and responsibilities of each channel participant.

Q.5 Explain the concept of social marketing. Discuss the Ps under social marketing A.5
Social marketing in retailing Social marketing was "born" as a discipline in the 1970s, when Philip Kotler and Gerald Zaltman realized that the same marketing principles that were being used to sell products to consumers could be used to "sell" ideas, attitudes and behaviors. In social marketing also, the main focus is on the consumers. The main aim is to learn what people want and need rather than trying to persuade them to buy whatever we produce. Marketing talks to the consumer, not about the product. The planning process takes this consumer focus into account by addressing the elements of the "marketing mix." This refers to decisions about (1) the conception of a Product, (2) Price, (3) distribution (Place), and (4) Promotion. These are often called the "Four Ps" of marketing. Social marketing also adds a few more "P's." Product The product offered under social marketing may not always be a tangible offering. A continuum of products exists, ranging from tangible, physical products (e.g., condoms), to services (e.g., medical exams), practices (e.g., breastfeeding, ORT or eating a heart-healthy diet) and finally, more intangible ideas (e.g., environmental protection). In order to have a viable product, people must first perceive that they have a genuine problem, and that the product offering is a good solution for that problem. The role of research here is to discover the consumers' perceptions of the problem and the product, and to determine how important they feel it is to take action against the problem. Price To obtain the social marketing product, customers must give up a number of things. This is known as the "Price" of the product. This price may be monetary, and/ or efforts and time put in by the consumers. If the costs outweigh the benefits for an individual, the perceived value of the offering will be low and it will be unlikely to be adopted. However, if the benefits are perceived as greater than their costs, chances of trial and adoption of the product is much greater. There are many factors that must be considered while deciding the price of a physical product, such as contraceptives, there are many issues to consider. If the product is priced too low, or provided free of charge, the consumer may perceive it as being low in quality. On the other hand, if the price is too high, some will not be able to afford it. Social marketers must balance these considerations, and often end up charging at least a nominal fee to increase perceptions of quality and to confer a sense of "dignity" to the transaction. These perceptions of costs and benefits can be determined through research, and used in positioning the product. Place

The decisions regarding the channels through which the product will reach the consumers are put under "Place" decisions. For a physical product, this refers to the distribution system including the warehouse, trucks, sales force, retail outlets where it is sold, or places where it is given out for free. For an intangible product, place is less clear-cut, but refers to decisions about the channels through which consumers are reached with information or training. This may include doctors' offices, shopping malls, mass media vehicles or in-home demonstrations. Another element of place is deciding how to ensure accessibility of the offering and quality of the service delivery. By determining the activities and habits of the target audience, as well as their experience and satisfaction with the existing delivery system, researchers can pinpoint the most ideal means of distribution for the offering. Promotion Social marketing is only a part of promotions. Promotion consists of the integrated use of advertising, public relations, promotions, media advocacy, personal selling and entertainment vehicles. The main aim of these activities is to attract people, and create and sustain demand. Public service announcements or paid ads are one way, but there are other methods such as coupons, media events, editorials, "Tupperware"-style parties or in-store displays. Research is crucial to determine the most effective and efficient vehicles to reach the target audience and increase demand. The primary research findings themselves can also be used to gain publicity for the program at media events and in news stories. Additional social marketing "P's" Publics: in order to be successful, social marketing target different groups. "Publics" include both the external and internal groups involved in the program. Target audience, secondary audiences, policymakers, and gatekeepers are all a part of external audience. On the other hand, internal public are those who are involved in some way with either approval or implementation of the program. Partnership: The complex nature of the social and health issues makes it really difficult for one agency to handle them effectively. A willing support of other organizations is required. You need to figure out which organizations have similar goals to yours not necessarily the same goals and identify ways you can work together. Policy: Social marketing programs can be good motivators in inducing change in individual behavior, but that is difficult to sustain unless the environment they're in supports that change for the long run. Often, policy change is needed, and media advocacy programs can be an effective complement to a social marketing program. Purse Strings: this is a major concern as these programs require good amount of funds. Most organizations that develop social marketing programs operate through funds provided by sources such as foundations, governmental grants or donations.

Q.6 Why has segmentation gained importance in recent years? Discuss the criteria for effective segmentation.

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Importance of Market Segmentation in Retail A market segment is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relatively similar product needs. Segmentation studies are used to uncover needs and wants of specific groups of consumers for whom the marketer develops especially suitable products and services to satisfy their needs. Marketers also use these studies to guide them in redesigning, repositioning, or targeting new segments for the existing product. For example, the heavy user adult market has been targeted for Johnson baby shampoo. For sensitive skins, Dove has come out with a variant, Dove Gentle Exfoliating Bar (it has a pH range of 6.5 - 7.5, almost neutral, neither acidic nor alkaline). Segmentation studies help in identifying the most appropriate media for promotional messages. Almost all media vehicles use segmentation studies to determine the characteristics of their audience and publish their findings to attract marketers seeking a similar audience. Segmentation is an important input to marketing planning because it can be used to formulate company "product-market" objectives, by which the enterprise may: define its markets, position ranges of brands and product varieties, identify gaps which offer significant opportunities for expansion or new product positioning and rationalize policies for existing brands, products and mixes. Market segmentation plays a dual role, namely as a marketing tool, and as a basic input to business planning. There are three main reasons for the importance of market segmentation. These are: Market fragmentation: it is caused by demographic and lifestyle changes, new product and process developments and intense market competition/some markets, which once had a homogeneous character, has now split into a variety of consumer groups, each with different tastes and preferences.
The development of retailer power: with this, the relative advantage obtained from bulk buying, the use of retailers' brands, and policy limitations on the merchandise stocked, all combined to put the manufacturer or supplier at a disadvantage. At the same time concentration has occurred amongst retail companies, leaving a small number of very large companies as well as a large number of smaller retailers. The volume trap: this situation occurs when suppliers who are capable of volume production and distribution to retail multiple chains dominate the markets for commodity type products (like plant-baked bread). But to avoid this situation, marketers can use segmentation. For example, value-added or non-standard items are now frequently targeted on customer segments which seek to avoid the purchase of standardized products, whether these are foodstuffs, clothes, computers or industrial machinery. Alternatively, production arrangements may be designed to be flexible enough to supply target markets in a large number of relatively small and specialized niches, such as in the market for industrial or aviation control systems. 8.2.1 Marketing complex Marketing departments use segmentation so they can target their products more accurately. It affects each of the 4Ps in their marketing mix. If the product is effectively segmented a company will be able to promote the right product, at the right price and use the right distribution to reach the place where the consumers are. Now look at the way the 4Ps are used in market segmentation. Product

Companies produce a wide range of products or variations that is meant for different groups or segments. For example, a car manufacturer will often have a range that includes a family model, an executive model and a sports model. Lifestyle segmentation will be used to develop their product line and to target their products. Price There are obvoius linkages between price and quality, but not all customers can afford to buy the most expensive goods. There is a large range of televisions on the market, for example, each with slightly different features. Within this range of products, there will also be a range of prices to cater for varying disposable incomes. Promotion Studying how a product is advertised can reveal its target market. Recently Nokia, a leading mobile phone company, used advertising campaigns that varied for men and women. The male phone was pictured in black and white, and all its features and business applications described. The female phone was in bright colors, and was pictured as a matching accessory to go with a woman's lipstick and handbag. You may not agree with this stereotyping, but it is a good example of gender segmentation. Place It is very important for firm to know where its target market is. A producer of automobile parts needs to identify areas where automobile companies are located. The firm would have to consider how best to get its product to these areas.

Criteria for Effective Segmentation Marketing managers should ensure that the segmentation passes through six criteria based acid tests. As a student of marketing, you need to understand what makes a good segmentation so that in the event of doing segmentation in your workplace, you can test your decisions on these grounds. These six criteria include identity; accessibility, responsiveness, size, measurability and nature of demand. 1. Identity: The marketing manager must have some means of identifying members of the segment i.e. some basis for classifying an individual as being or not being a member of the segment. There must be clear differences between segments. Members of such segments can be readily identified by common characteristics, and display similar behavior.
2. Accessibility: It must be possible to reach the different segments in regard to both promotion and distribution. In other words, the organization must be able to focus its marketing efforts on the chosen segment. Segments must be accessible in two senses. First, firms must be able to make them aware of products or services. Second, they must get these products to them through the distribution system at a reasonable cost. 3. Responsiveness: A clearly defined segment must react to changes in any of the elements of the marketing mix. For example, if a particular segment is defined as being cost-conscious, it should react negatively to price rises. If it does not, this is an indication that the segment needs to be redefined. 4. Size: The segment must be reasonably large to be a profitable target. It depends upon the number of people in it and their purchasing power. For example, makers of luxury goods may appeal to small but wealthy target markets whereas makers of cheap consumption goods may sell to the large number of persons who are relatively poor. The idea is that enough potential

buyers must exist to cover the costs of production and marketing required in that segment. This is often called as substantiality. 5. Nature of Demand: It refers to the different quantities demanded by various segments. Segmentation is required only if there are market differentiation in terms of demand. The marketing manager should not only be able to find out the total demand but also the differences in demand patterns in each of these segments. 6. Measurability: The purpose of segmentation is to measure the changing behavioral pattern of consumers. For example, the segment of a market for a car is determined by a number of considerations, such as economy, status, quality, safety, comforts etc.