Services Marketing @

RETAIL

By: Group 6

Service Marketing in Retailing : A Double Edge Sword

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The Basic Tasks of Retailing

3 LO 1

Service Delivery Touch Points : Task 1

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

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Service Delivery Touch Points : Task 2

Transaction services - Provided to customers when they are in the store shopping and transacting business.
Credit Layaway Gift wrapping and packaging Check cashing Gift cards Personal shopping Merchandise availability Personal selling Sales transaction

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Service Delivery Touch Points : Task 3

Posttransaction services - Provided to customers after they have purchased merchandise or services.
Complaint handling Merchandise returns
Renting, not buying Fraudulent employee actions Shoplift returns Price switching

Servicing, repair, and warranties Delivery Postsale follow-up

6 LO 2

Various Customer Types

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Various Customer Types

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Drivers of Retail Service Strategy

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7 Ps
1. Product -Providing value for money by adding value to the product or service being offered.

2.Price -A product is only worth what a customer is prepared to pay for it. -Be open to the possibility that the current pricing structure may not be ideal for the current market. 3. Place -The product must be available at the right place (Product category), at the right time (time you sell your product), and in the right quantity (enough stock).
4.Promotion -This is the way in which you communicate to your potential customers about your product. -This can be done in a number of ways, which includes your brand image, advertising, special offers. -Small changes in the way the products are promoted and sold can lead to dramatic 10 changes in results.

5. Physical Evidence This is the intangible part of the business mostly concerned with services as they cannot be seen. This is important because, fundamentally you are selling a product, but in order for you to be able to price your goods at the right the level, you will also be selling the service the buyer will receive. 6. People The reputation of the brand rests in the peoples hands. You must therefore ensure that all your people are appropriately trained, well motivated and have the right attitude. 7. Process -The process that you go through and the behavior of those who deliver the products are crucial to customer satisfaction. -Issues such as waiting times , the information passed onto customers are vital factors when trying to maintain 100% satisfaction. -Processes must help the customers get what they want.
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Retailing: An overview

Retailing Worlds largest private industry US$ 6.6 trillion sales annually Indian retailing Largest employer after agriculture - 8%* of population Highest outlet density in world Around 12 mn outlets Still evolving as an industry Long way to go

An overview

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Global Retail Industry

1999 2002 2005 2006
Total Retail (US$ Billion)

150

180

225

260

Organized Retail (US$ Billion)

% share of Organized retail

1.1
0.7

3.3
1.8

7
3.2

9.1
3.5

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Top 10 Retailers World Wide

Retailer Home Country

Wal-Mart Stores Carrefour Group The Home Depot, Inc The Kroger Co. Royal Ahold Metro AG Target Corporation Albertsons,Inc. Sears, Roebuck and Co. Kmart Corporation

USA France USA USA Netherlands Germany USA USA USA USA

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Evolution of Indian retail

Indian retail

Informal retailing Sector Typically small retailers. Evasion of taxes Difficulty in enforcing tax collection mechanisms No monitoring of labor laws Formal Retailing Sector Typically large retailers Greater enforcement of taxation mechanisms High level of labor usage monitoring

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Categories of Indian retail

Indian retail

Corporate Houses Tatas: Tata Trent RPG group: Food World, Health and Glow, etc ITC: Wills Life Style Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc. Dedicated brand outlets Nike, Reebok, Zodiac etc Multi-brand outlets Vijay Sales, Viveks etc Manufacturers/ Exporters Pantaloons, Bata, Weekender

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Classifying Indian retail

Indian retail

Modern Format retailers Supermarkets (Foodworld) Hypermarkets (Big Bazaar) Department Stores (S Stop) Specialty Chains (Ikea) Company Owned Company Operated Traditional Format Retailers Kiranas: Traditional Mom and Pop Stores Kiosks Street Markets Exclusive /Multiple Brand Outlets

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Large Indian retailers

Hypermarket

Big Bazaar Star Lifestyle Pantaloons Pyramids Shoppers Stop Trent Fame Adlabs Fun Republic Inox PVR

Department store

Indian retailers

Entertainment

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The changing Indian consumer

Indian consumer

Greater per capita income Increase in disposable income of middle class households 20.9%* growth in real disposable income in 99-03. Growing high and middle income population Growing at a pace of over 10%* per annum over last decade Affordability growth Falling interest rates Easier consumer credit Greater variety and quality at all price points

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The changing Indian consumer

The urban consumer Getting exposed to international lifestyles Inclined to acquiring asset More discerning and demanding than ever No longer need-based shopping Shopping is a family experience Changing Mindset Increasing tendency to spend Post Liberalization children coming of age 100 mn 17-21 year olds*. Tend to spend freely. Greater levels of education

Indian consumer

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Challenges in the Industry

Low domestic competition Because of fragmented nature of industry

Industry Challenges

Lack of exposure to global best practices Low entry barriers for unorganized retailing Moderate entry barriers for organized retailing
Wholesale system under-invested leading to 20-40% wastage Non level playing field issues Wide differences in treatment of small and large retailers

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Challenges

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

issues

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Opportunities
Market size Current market size is roughly US$ 286 bn* 96% of the 12 Million stores are less than 500 Sq. ft. Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008 Sales from large format stores would rise by 24-49%** Formal and modern format retailing would enjoy rapid growth

Anticipated growth

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Growth factors

Growth factors

Growth determining factors Government Policy Infrastructure development GDP growth Employment generation and job creation In several new sunrise industries Implies greater purchasing power

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FDI in Indian retailing

FDI in Retail not permitted

Current Indian FDI Regime FDI not permitted in retail trade sector, except in: Private labels Hi-Tech items / items requiring specialized after sales service Medical and diagnostic items Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required)

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How FDI ?

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

2 yrs 2 yrs 2 yrs

Establishment Phase: 49% FDI

Mature Phase: 100% FDI

How FDI ?

FDI policy No incentives needed to attract FDI Market size and potential are sufficient inducers No need for costly tax breaks, import duty exemptions, land and power subsidies, and other enticements

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International retailers in India: Strategies

How they are present

Franchise International company gives name and technology to local partner. Gets royalty in return In case master franchise is appointed for region or country, he has right to appoint local franchisees Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango Manufacturing Company sets up Indian arm for production Bata India. It also has right to retail in India

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International retailers in India: Strategies

How they are present

Distribution International company sets up local distribution office Supply products to Indian retailers to sell Also set up franchised outlets for brand Swarovski, Hugo Boss Wholesale trading Cash and Carry operations 100% FDI permitted Metro Cash n Carry

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 Rural India consists of 720 Million consumers across 6,38,000 villages ---17% of these villages account for 50% of the rural population and 60% of the rural wealth ----Extensive reach is required as to cover 50% market 1,00,000 villages must be catered Immense opportunity amounting to US$ 125 billion
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 Rural Retail is growing @ 7% p.a. Rural consumption is also shifting from basic food grains to fruits, vegetables, dairy and poultry products, as well as beverages
Demand for better quality food leading to huge demand for basic foods
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The Rs 140,000 crore rural retail market is expected to cross Rs 180,000 crore mark by 2011, And up to Rs 240, 000 crore by 2015 (CII).

The rural revolution is driven by

Rising purchasing power, Changing consumption patterns,

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increased access to information and communication technology,

improving infrastructure increased government initiatives to boost the rural economy,
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Is a value seeker Seeks comforts and amenities Does not wish to be seen as the deprived cousin. Does not experiment easily but this does not mean that he would not change. Values local relationships because of unfavourable past experiences
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GODREJ ADHAR

ITC-CHAUPAL
HARIYALI BAZAAR

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

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

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1.Provide the power of expert knowledge to even the smallest farmer 2. Information helps farmers secures better price, quality and productivity

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5 Dimensions of Service Quality

TANGIBLES Appearance of physical facilities, equipment, personnel, and communication materials. RELIABILITY Ability to perform the promised service dependably and accurately. RESPONSIVENESS Willingness to help customers and provide prompt service. ASSURANCE Knowledge and courtesy of employees and their ability to convey trust and confidence. EMPATHY Caring, individualized attention the firm provides its customers
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What lies ahead? ..

The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone up and is also expected to go up further in the future. In the last four year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%.
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Thank you

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