Fashion retailing study material

MINISTRY OF Commerce & Industry, Govt. of India
FASHION RETAILING
School of Fashion Design
Course- B. Des. (Fashion Design)
Course Code- B. Des. (FD)
Subject Head FASHION RETAILING
Subject Code (BFD 503)
Student Learning Booklet (SLB) SLB Sr.
No:- Of
FDDI
Ministry of Commerce & Industry,
Government of India,
A-10/A, Sector- 24, Noida-201301.
FDDI/FD/SLB/FASHION RETAILING/SEM5 {CONTROLLED} 1
This─booklet─is─not─for─any─commercial─purpose─nor─for─sale,─it─is─prepared─solely─for─the─purpose─
of─private─and─internal─circulation─for─the─students─of─this─college─as─study─material.─

Acknowledgement
`Asato ma sadgamaya, Tamaso ma jyotirgamaya, Mrtyormaamrtamgamaya’
`Lead me from the asat(lie) to the sat (truth), Lead me from darkness to light, Lead me from
death to immortality.’
Saraswati, the goddess of knowledge and arts, represents the free flow of wisdom and
consciousness. My first acknowledgement is to her blessings. To attain excellence, it is
important that knowledge sharing shall be carried out with best possible methodology so that
quest for knowledge can be achieved. This is the biggest challenge to the human society and to
the institution in particular as they are the torch bearer for disseminating the knowledge. Project
`Saraswati’ has been envisaged with the dream of attaining excellence in delivery of training by
employing best practices in the field of knowledge sharing.
FDDI as an institution has been pioneer in development of ‘Swayam Siddha’ self-paced
knowledge & skill set based learning materials for the footwear, fashion and retail sector.
This manual represents an extended and thoroughly revised version of notes on Fashion Design
which are collected from books, journals, internet, and other standard publications.
These manual are primary source of learning and still relevant for delivery of the training.
Project Saraswati is the next logical step in the augmentation of the knowledge domain. It
focuses on standardization of learning material, training delivery, assessment system and
validation system so that knowledge reaches with same light and equal opportunity of learning is
available to all.
FDDI firmly believe that for the attainment of goal, team work is an essential part, while
preparing this manuscript there are many individuals whose names may not appear on this page
but their contribution had been immense as far as development of this learning material is
concerned. The management of FDDI acknowledges contribution of each and every person
involved in the shaping and preparation of this manual.
This entire learning material was reviewed and conformity to the requirement of the syllabus
including deliberation. The training material design guidelines and deliberation were carried out
by Fashion Design Department. FDDI is also grateful to Mr. V. B. Parvatikar, Advisor
(Technical) who has been instrumental in providing resources and guidance in proactive manner
& for providing critical inputs at the time when it was needed the most.
FDDI also acknowledge other team members notably Mr. Ashish Kumar (Manager, RCIP) and
Mr. Sanjay Kamlay for documentation control and management activity.
FDDI hope that this document will help immensely to the students and teachers alike in
understanding of the subject in more comprehensive and objective way.
It is the reader who provides us the inputs for further improvement. The management of FDDI
welcomes all the suggestions to further improve this learning material.
Ajay Kumar

INSTRUCTION SHEET
• This learning guide is developed to provide you the necessary information
regarding the content specified in the index.
• This guide will also assist you to attain the learning outcome stated here
Specifically upon the completion of this learning guide, you will be able to:
- Seek clarification.
- To study the functioning of the retail industry from an Indian as well as
International perspective.
- To understand the concept of retail business.
- To understand various retailing strategies.
Guidelines:
1. Read the specific objective of this learning guide.
2. Read the detailed information given in the units.
3. Accomplish the self-check given twice (one in the middle, the other at the end) in the
complete learning handbook.
4. If you have earned a satisfactory result in self evaluation, then proceed further.
However if your rating is unsatisfactory, see your teacher for guidance.

CONTENTS

S.No.

TOPIC

PAGE
NO.

1. Introduction to retail 6
2. Classification of retail format 16
3. Retail market strategy 24
4. Self check I 35
5. Layout and retail site selection 36
6. Retail promotion and communication mix 41
7. Retailing and buying seasons 46
8. Retail Pricing Strategies 49
9. Self check II 52

UNIT
1

INTRODUCTION TO RETAIL

Outline of Chapter
• Introduction to retail
• What is retailing
• Evolution and role of retailing
• Role of retail in marketing system
• The wheel of retailing
Learning Objectives:
At the end of this chapter, you will be able to discuss:
• What is meant by Retailing?
• The Importance of Retailing
• Services of retailer to producers and wholesalers
• Evolution and Role of Retailing
• Role of retail in marketing system
• The wheel of retailing

INTRODUCTION TO RETAIL: The word retail is derived from a French word with the prefix
re and the verb tailor meaning “to cut a piece off or to break bulk”. In simple terms, it implies a
first-hand transaction with the customer.
Evidently retail trade is one that cuts off smaller portions to large lumps of goods. It is a process
through which goods are transported to final consumers. It embraces the direct-to-customer sales
activities of the producer, whether through his own stores by house to house canvassing or by
mail order business.
A retailer is a merchant or occasionally an agent or a business enterprise, whose main business is
selling directly to ultimate consumers for non- business use. He performs many marketing
activities such as buying, selling, grading, risk trading and developing information about
customer’s wants. If over one half of the amount of volume of business comes from sales to
ultimate customers, i.e. sales at retail, he is classified as a retailer. Retailing occurs in all
marketing channels for consumer products.
Retailing is a convenient, convincing and comfortable method of selling goods and services.
Retailing, though as old as business, trade and commerce has now taken new forms and shapes.
This is because of new management techniques, marketing techniques and also due to ever
changing and dynamic consumer psychology.
What is retailing:
The distribution of consumer products begins with the producer and ends at the ultimate
consumer. Between the producer and the consumer there is middleman – the retailer, who links
the producers and the ultimate consumers.
Retailing is one area of the broader term, e-commerce. Retailing is buying and selling both goods
and consumer services. With more number of educated and literate consumers entering the
economy and market, the need for reading the pulse of the consumers has become very essential.
Retail marketing is undergoing radical restructuring. This is because of increase in gross
domestic product, increase in per capita income, increase in purchasing power and also the ever

changing tastes and preferences of the people. The entry of plastic money, ATMs, credit cards
and debit cards and all other consumer finances, the taste for the branded goods also added for
the evolution of retail marketing.
Retail marketing is not just buying and selling but also rendering all other personalized consumer
services. With the RM picking up it has given a new look for various fast moving capital goods
(FMCG) goods. This not only increased the demand for various goods in the market but also
made retail marketing the second largest employment area, the first being agriculture.
Evolution and Role of Retailing:
Many researchers and retail analysts describe the growth of retailing in India as evolution,
especially when they discuss retail formats. But, has the industry evolved?
Retail Industry, one of the fastest changing and vibrant industries in the world, has contributed to
the economic growth of many countries. Retailing involves a direct interface with the customer
and the coordination of business activities from end to end- right from the concept or design
stage of a product or offering, to its delivery and post-delivery service to the customer. The
industry has contributed to the economic growth of many countries and is undoubtedly one of the
fastest changing and dynamic industries in the world today.
Retailing in India came with evolutionary patterns from Kirana store to Super market. This
sector was un-organized in the initial stage, and after that it carried forward by the textiles
industries through the dealer model. Now it is growing as supermarket and hypermarket. The
main drivers of the retail evolution in India are buying behavior of the customer, increase in
disposable income of middle class, infrastructure development and changing customer choice.
The target segments of retailers are the younger middle class earners which belong to more than
20% of total population.
The growth in retail sector also comes through innovative ideas. As retailers are providing the
innovative buying options at different store like as Cash & Carry, lowest price day (Sabse Sasta
din) which help to increase the customer base. Initially organize retail was involve in the
apparels and footwear. Now retail has included the food chains, book & CD store (landmark) and

electronics (CROMA store a Tata retail chain). These all changes occurred at a passage of time
so it is an evolution rather than revolution
After 2003, India is recognized for all round development in the important infrastructure sectors.
The government is investing hugely on the road, port, aviation and basic need. All these factors
attract the foreign investor to invest in retail sector. Now, the reach of information has easier than
previous years because of the development in infrastructure i.e. Telecommunication, IT, Internet
and satellite TV. Now customer is more aware of the product and their features because of the
internet accessibility. The reach of satellite TV channels is helping in creating awareness about
global products for local markets. So, rapid development in the infrastructure sector is one of the
important factors to accelerate the retail in India.
The retailing is growing at a tremendous pace in India but many environmental factors are
creating barriers to it. Therefore, the industry is also fearing and trying to overcome these
problems. The retail sector growth can be faster than the current growth rate if retail organization
crosses following hurdles:
• The organized retail industry in India is faced with stiff competition from the
unorganized sector. The local shopkeepers are making cartel for wholesale buying which
help them to reduce the cost of inventory. Small traders also oppose to Foreign Direct
Investment (FDI) in retail industry. So, government is prohibiting foreign investment in
real estate business.
• Another factor which is hampering the retail sector most is; high price of quality real
estate and infrastructure. It is high because of very high stamp duty on transfer of
property.
• Shortage of retail space in central and downtown locations also hinders the growth of
retail industry. Land-use conversion is time consuming and becoming complex. For
settling property disputes, it consumes lot of time and rigid building laws makes
procurement of retail space difficult.
• The entry barriers are also high as non residents are not allowed to own property except
they are of Indian origin and customs duties are levied on import of goods in India.

Importance of Retailing: The retailer is an intermediary in the marketing channel because he is
both marketer and customer, who sells to the last man to consume. He is a specialist who
maintains contact with the consumer and the producer; and is an important connecting link in a
complex mechanism of marketing. Though producers may sell directly to consumers, such
method of distributing goods to ultimate users is inconvenient, expensive and time consuming as
compared to the job performed by a specialist in the line. Therefore, frequently the
manufacturers depend on the retailers to sell their products to the ultimate consumers. The
retailer, who is able to provide appropriate amenities without an excessive advance in prices of
goods is rewarded by larger or more loyal patronage. All middlemen basically serve as
purchasing agents for their customers and as sales specialists for their suppliers. To carry out
those roles, retailers perform many activities, including anticipating customers wants, developing
assortments of products, acquiring market information and financing. It is relatively easy to
become a retailer. No large investment in production equipment is required, merchandise can
often be purchased on credit and store space can be leased with no down payment or a simple
website can be set up at relatively little cost. Considering these factors, perhaps it’s not
surprising that there are just over a 6 million retail outlets operating across the Indian cities from
north to south and from east to west. This large number of outlets, many of which are trying to
serve and satisfy the same market segments, results in fierce competition and better values for
shoppers.
Role of retail in marketing system:
Retailers have an important place in the distribution channel. As they sell goods to final
consumers, they play useful as well as an important role in distribution channel as the last link.
In the absence of retailers, the consumers cannot find necessary goods at only one place or at a
single shop. They need to walk to many shops to find one after other goods. The producers and
wholesalers also need to face various problems. To discuss the role and importance of retailer
means, it is relevant to mention their services provided to producers, wholesalers and consumers.
Services of retailer to producers and wholesalers:
The valuable services provided by retailers to producers and wholesalers are as follows:
- Sources for wider distribution of goods
- Information about consumers

- Risk bearing
- Increase in sales volume
- Storing function
- Reduced distribution cost
- Expertise advice
Services of retailer to consumers:
Retailers also provide different services to consumers as follows:
- Supply of varieties of goods
- Supply of necessity and fresh goods
- Selection facility
- Credit facility
- Home delivery
- Information about new goods
- Advice
Thus, retailers provide valuable services to producers, wholesalers and consumers. The services
they provide to producers, wholesalers and consumers make it clear that retailers remain present
in the distribution channel as bridge between producers or wholesalers and consumers.
General services: The general services which a retailer provides are:
1. The retailer anticipates the wants of the consumers and then supplies them the right kind of
goods at reasonable price. His job is to make the consumers buying as easy and convenient as
possible i.e. he acts as a consumers agent.
2. He performs the service of bulk-breaking i.e. dividing large quantities into small units, such as
individual cans, bottles, boxes, wrappers, packages, appropriate for consumer use.
3. He offers a large assortment of merchandise, of suitable size, colour, design, style and
seasonal items-ranging from domestic utensils, household requisites to speciality goods.
4. He creates time and place utility by storing the products in off season and by transporting
these goods to the places where they can be readily available as and when needed by the
consumer.

5. He also assumes risks by guaranteeing the goods he sells to the consumer.
6. He also offers free delivery of goods, credit on open accounts, free alteration, liberal exchange
facilities, instructions in the use of goods, revolving credit plans, and long term installment
programmes.
7. He adds to the convenience and ease of consumer purchasing by offering convenient shopping
locations, market information and other services such as free parking privileges, lessons on
product use and a multitude of other facilities may be offered and found sufficiently desired to
result in increased patronage.
8. He helps the producers in distributing their products by using advertisement display and
personal selling.
9. The level of retail sales is one of the most useful barometers of the nation’s economic health.
For example when sales of cycles pick-up, sales of steel and components also increase, as does
employment and thus increasing purchasing power. But when sales go down, manufacturers cut
back production, unemployment increases and retail sales also goes down.
Facilitating Services: In order to carry out functions involving transfer of ownership and
physical supply effectively retailers perform a number of facilitating functions i.e. functions
relating to standardisation and grading, financing, risk-taking and market information. A retailer
of fresh fruits and vegetables has to standardise and grade these to make these acceptable to
customers. They establish standards, inspect goods they receive, and sort them in various
classifications. Quite often they purchase in large quantities and then divide them and repack
them before selling. When the retailer sells goods on credit he performs finance function. From
the moment he sells and collects the last rupee from the customer, when goods are sold on credit,
he is said to be performing a financing function.
Another function performed by retailers is that of risk-taking. During the entire time a retailer
holds title to particular goods, he must inevitably bear a wide variety of risks. Not only the goods
may be destroyed through fire or flood, but also, there is often the danger of theft, deterioration
or spoilage. Furthermore, such merchants are also faced with the threat that consumers will not
accept their product or will purchase them only at unprofitable prices. He also undertakes risk in

handling of fashion goods and other items for which consumer demand varies greatly from time
to time. Since the retailer knows about the wishes of his customers the price, quality and the kind
of merchandise available in the market as well as the existing and anticipated style trends, he
keeps in stock the goods usually required by customers.
Overview of Retail Sector: All over the world, retailing is undergoing a process of evolution
and is poised to undergo dramatic transformation. With special reference to India, the retail
sector employs over 10 per cent of the national work force but is characterised by a high degree
of fragmentation with over 5 million outlets, 96 per cent of whom are very small with an area of
less than 50 m2. The retail universe doubled between 1986 and 2006 and the number of outlets
per 1000 people at an All India Level increased from 4.9 in 1988 to 14.8 in 2006. Because of
their small size, the Indian Retailers have very little bargaining power with manufacturers and
perform only a few of the flows in marketing channels unlike in the case of retailers in developed
countries

THE WHEEL OF RETAILING
The wheel of retailing was proposed by Malcomb McNair at Harvard University. It is basically a
theory of cyclical or circular development. The wheel of retailing concept describes how retail
institutions transform during their evolutionary life cycles.
Wheel of Retailing Concept:
1. New retailers often enter the market place with low prices, margins but as their sales start
increasing they quickly shift to a high cost, high revenue model. The low prices are usually the
result of some innovative cost- cutting procedures and soon attract competitors.
2. With the passage of time, these businesses strive to broaden their customer base and increase
sales. Their operations and facilities increase and become more expensive.
3. They may move to better up market locations, start carrying higher quality products or add
services and ultimately emerge as a high cost price service retailer.
4. By this time newer competitors as low price, low margin, low status emerge and these
competitors too follow the same evolutionary process.
5. The wheel keeps on turning and department stories, supermarkets, and mass merchandise went
through this cycles.
Example
A restaurant started in a temporary location would be offering a limited number of items at low
price. It looks to develop its client base but as soon as the construction is completed or final, it
starts providing a lot more variety and introduces a number of new services (free home delivery,
boarding, and lodging) it also starts increasing its prices on its earlier items. This is done to
recover its fixed cost quickly and have an early breakeven so that it can start generating some
profit since it is operating in a virgin market it will look to increase its market share.

However with passage of time when a new restaurant comes up in its vicinity and starts offering
the same items at a lower price in order to retain its customers it will bring down its prices back
to where its earlier ones.
The wheel of retailing

UNIT
2
CLASSIFICATION OF RETAIL FORMAT
Outline of Chapter
A. Store based retailer:
B. Non-Store Retailing:
• Types of retailing under store based and non-store set up
CLASSIFICATION OF RETAIL FORMAT
A. Store based retailer:
Store based retailing can be further classified
I. On the Basis of form of ownership

1. Independent retailer:
An independent retailer is one who owns and operates only one retail outlet. Such stores can be
seen under proprietorship. The individual retailer can easily enter into a retail market. The owner
is assisted by local staff or his family members. These kinds of shops are passed from one
generation to other generation.
The independent retailer maintains a good relationship with the customers. Small scale retail
business: Single owners can easily start and manage small business units profitably with the help
of one or two assistants. It can be a grocery store, stationery shop, or a cloth store, etc.
2. A chain retailer:
When two or more retail outlets are under a common ownership it is called a retail chain. For
example: One of a number of retail stores under the same ownership and dealing in the same
merchandise. It is called chain retailing.
Chain Stores are groups of retail stores engaged in the same general field of business that operate
under the same ownership or management, chain stores are retail outlets owned by one firm and
spread nationwide. For example, Van Heusen, Food world, Shopper’s stop etc.
3. Franchise:
A franchise is a contractual agreement between franchisor and a franchisee in which the
franchisor allows the franchisee to conduct a business under an established name as per the
business format. In return the franchisee has to pay a fee to the franchiser. For example: Pizza
hut, McDonalds, etc.
4. Leased Department:
These are also known as Shop in Shops. When a section or a department in a retail store is rented
to the outside party it is called leased department. The licensor permits the licensee to use the
property and in turn the licensee pays a fee to the licensor for using his property.

5. Consumer Co-operatives:
A consumer co-operative is a retail organisation owned by its member customers. The objective
is to provide commodities at a reasonable price. For example: Sahakari Bhandar, Apna Bazaar
etc.
II. On the Basis of Merchandise offered
1. Departmental Stores:
A departmental store is a large scale retail institution that offers several products from a pin to
plane such as clothing, grocery etc. Retail establishment that sells a wide variety of goods.
Departmental stores are the largest form of organized retailing today, located mainly in metro
cities, in proximity to urban outskirts. They lend an ideal shopping experience with an
amalgamation of product, service and entertainment, all under a common roof. Examples include
Shoppers Stop, Piramyd, Pantaloon.
2. Convenience stores:
These are relatively small stores located near the residential area. They offer limited line of
convenient products such A ` store is a small store or shop that sells items such as candy, ice-

cream, soft drinks, lottery tickets, cigarettes and other tobacco products, newspapers and
magazines, along with a selection of processed food and perhaps some groceries, etc.
Such stores enable the customers to make quick purchase and offer them few services. They
stock a limited range of high-turnover convenience products and are usually open for extended
periods during the day; Prices are slightly higher due to the convenience premium.
3. Super Market:
These are retail organisations that provide low cost high volume self-service operation to meet
consumer’s requirements. Most of the super market charge lower price. Example: Subhiksha.
They are the large self-service outlets, catering to varied shopper needs. These are located in or
near residential high streets. A supermarket, also called a grocery store, is a self-service store
offering a wide variety of food and household merchandise, organized into department.
It is larger in size and has a wider selection than a traditional grocery store and it is smaller than
a hypermarket or superstore. Supermarkets usually offer products at low prices by reducing their
economic margins.

3. Hyper Market:
A hypermarket is a superstore which combines a supermarket and a department store. Hyper
markets are huge retail stores that offer various products such as clothes, jeweler, stationery,
electronic goods at cheaper price. Example: Big Bazaar, Star Bazaar, Giant Stores etc. They
focus on high volume.

4. Specialty stores:
A specialty store is a store, usually retail, that offers specific and specialized types of items. They
offer a narrow product line that concentrates on specialised products such as jeweler, fabrics,
furniture etc. Customer service and satisfaction are given due importance.
For example, a store that exclusively sells cell phones or video games would be considered
specialized. A specialty store specializes in one area.
5 Catalogue showroom: Catalogue retailers usually specialize in hard good such as house
wear, jewellery, and consumer electronics. A customer walks into this retail show room, goes
through the catalogue of the products that he would like to purchase.
6 Off-price retailers: They buy products from manufactures in off seasons as a deep discount
and sell them at less than retail prices. The merchandise may be in odd sizes, unpopular colors or
with minor defects. They may be manufacturer owned and care called factory outlets.
B. Non-Store Retailing:
A direct relationship of the retailer with his customer is on the basis of non-store Retailing. In
India around twenty percent of retail sale is from non-store. The proportion of non store is
growing steadily.

It is classified as under:
1. Direct Selling:
Direct selling is a retail channel for the distribution of goods and services. There is no fixed retail
location. In direct selling there is a direct contact of the retailer with his ultimate customers.
It is highly an interactive form of retailing. Products like cosmetics, jewellery, food items are
sold in such manner. The retailers visit home place or work place of the customers to sell the
products. It is also known as network marketing where the products and services are sold face to
face.
2. Mail order:
It is a retail format in which offerings are communicated to the customers through a catalogue,
letters or brouchers. Such retailing is suitable for specialty products. The buyer places an order
for the desired products with the merchant through a telephone call or website. Internet and
online payment options, has made shop from home easier.
3. Tele Marketing:
It is a form of retailing in which the products are advertised on television. Details about the
product in regard to its features, price, warranty, direction to use etc. are mentioned and
explained. Phone numbers are provided due to which customers can make a call and place an
order for the product.
Beside these the other two non-store retailing are as follows-
4. Automatic Vending:
This is a form of non store retailing in which the products are stored in a machine and dispensed
to the customers when they deposit cash. Vending machines are placed at convenient and busy
locations like air ports, shopping malls, working place etc. This machine primarily contains
products like chocolates, snacks and drinks etc.

5. Electronic retailing:
It is also called as e-tailing or internet retailing. It is a retail format in which products are offered
to the customers through internet. The customers can evaluate and purchase the products from
their homes or office place. This kind of retail is gaining importance in recent years.
C. Service Retailing: Services retail would involve the retail of various services to the end
consumer. Key services have been identified as:
• Retail banking
• Service contracts which may be entered in to for servicing for consumer durables like
maintenance of water filters, computer system etc.
• Car rentals, Shops selling mobile connections, courier services etc.
A key area within services retail is retail banking. Retail banking refers to the dealing of
commercial bank with individual customers. The retail banking products would include fixed,
current saving accounts on the liabilities side; and mortgages and loans (e.g. personal, housing,
auto and educational) on the assets side. Related ancillary services include credit cards or
depository services.
While retail banking offers phenomenal opportunity for growth, the challenges are equally
daunting. There is a need of constant innovation in retail banking. In bracing for tomorrow, a
paradigm shift in bank financing through innovative products and mechanisms involving
constant up gradation and revalidation of the banks’ internal systems and process is called for.
Banks now need to use retail as a growth trigger.

UNIT
3

RETAIL MARKETING STRATEGY

Outline of Chapter
Retail marketing strategy
1. Retail positioning
2. Location of the retail store
3. Product assortment and services
4. Price
5. Promotion
6. Store atmosphere
RETAIL MARKETING STRATEGY
A retail marketing strategy refers to how a store and its products sell goods to its target
customers. Each type of retail business has to make decisions about all the details of its
marketing mix. A marketing mix consists of the product, price, place, promotion and packaging.
Internet marketing strategies and those for stores that people shop at in person must be developed
to meet the needs of potential customers. A retail marketing strategy is first outlined in a
business plan.
A business plan contains information about the intention and goals of the company. It's created
before a business opens. Business plans include research about who the company's potential
customers are as well as what their needs and wants are. A retail marketing strategy should be a
part of the business plan. It should include decisions about the marketing mix approach, such as
how customers will get the products.

For instance, a furniture company may choose a large warehouse, while a jewelry manufacturer
may decide to sell only over the internet. Other businesses may select a combination of a brick
and mortar store for in person customer purchases plus a website for customer online shopping.
All retail marketing decisions should consider the target customer as well as the company's
profit. For example, having a retail website rather than a retail store may save on overhead costs,
but it won't be a profitable choice if the target customer isn't likely to shop online.
Common retail marketing strategies involve how products and stores are positioned and
differentiated. A differentiation strategy focuses on products that can stand out from the others
competing for the attention and dollars of the target market. For example, a furniture store may
offer hand-made products or other items very different from what competing stores are offering.
Of course, the product shouldn't only be different; it has to be something that targeted customers
want and need. Retail market differentiation must set stores and products apart in order to create
strong branding.
Branding is the identity of a product or service. Retail products and services in the same industry
can differ widely from each other. For example, low-cost hair cutting services are branded and
differentiated from upscale salons by their "no frills" store design. Expensive hair salons, on the
other hand, are usually very detailed and fashionable in their store's look. As part of it's retail
marketing strategy, an upscale salon may be positioned to potential customers as trendy, while
the low-cost basic hair cutting establishment's market positioning could be promoted as budget-
friendly.
Some of the best retailing strategies to decide the target market and then select the
appropriate combination of product, price, place and promotion are as follows:
A retailer needs to decide as to what it wants to achieve for its customers. It has to decide the
target market and then select the appropriate combination of product, price, place and promotion
to the needs of their chosen customer segments.

1. Retail positioning:
This involves choice of target market and differential advantage. Targeting allows retailers to
tailor the marketing mix which includes product assortment, service levels, store locations, prices
and differentiation provides a reason to the customer to shop at one store rather than at another.
The customer should have distinct expectations from the store when he walks into it which
should be different from the expectations that he has when he walks into another store. Retail
positioning comes from novelty in the processes of shopping offered to the customers and
novelty in the product assortment or both.
Novelty in the process offered to the shopper:
The way a store facilitates a shopper to make his choice of products and brands, the way he is
able to access the items in the store, and the way he makes his payments, determine a customer’s
satisfaction with a store.

But a customer does not want a similar treatment for all his purchases and on all occasions when
he visits the store. For some products, his choice of brand may be very clear, and a salesperson’s
attempt to help him would only irritate him.
But for some other products, the same customer would solicit help of salespersons in making a
choice among brands and would welcome a salesperson’s attempt to influence his purchase. For
some purchases, the customer would like his favourite brand to be placed prominently on the
shelf.
But when he does not have a clear brand choice, he would not mind some clutter on the shelves
because he wants all the brands to be available. Most customers would prefer to be allowed to
pay their bills as early as possible but on some occasions they would be more tolerant of delays
than on others.
Customers would be finicky about delays in making payments when they are rushing home after
office but they would be more relaxed during their weekend shopping trips. While it is not easy
to distinguish between customers and their purchase occasions, the retailer will have to make
judgments about the expectations of a customer when he walks into the store.
It will be a good idea to allocate a particular salesperson to a customer, i.e., when a customer
walks in he is always served by a particular salesperson rather than different salespersons
depending on what he proposes to buy.
Such salespersons specialize in a product category and assist any customer who is interested in
the category. Under the new arrangement, all salespersons would have to know enough about all
the product categories but would know more about the purchasing behaviour of a set of
customers allocated to them.
Novelty in the product/product assortment offered to the shopper:
A retail shop has to be known for being of a certain type. A store may be famous for being very
prompt in stocking the latest or the most fashionable product. Another may be known for

stocking all possible variety in a category and yet another may be famous for stocking the most
premium brands.
A store would become too unwieldy if it tries to have too many different types of assortments. A
store which stocks the latest products in a category will also be able to stock the most premium
brands of the category but the attention of the company will be divided and it will be difficult to
handle relationships with diverse suppliers whose business philosophies are different. Such a
strategy will also send conflicting signals to customers as to what the store really stocks well.
2. Location of the retail store:
For some products like groceries, consumers do not like to go to a far away store. Therefore,
store location has great influence on sales performance of such products. A retailer has to decide
whether it will be a standalone store in a city, or will it open stores to cover a designated area
like a city, state or country. A retailer may decide to open one store in each city.
The retailer has to buy from distributors to replenish its stocks. Or it decides to open as many
stores as a city can sustain, and moves to another city and again opens as many stores as that city
can sustain. Therefore, it covers cities one by one, instead of opening one store in each city. It
opens a distribution centre in each city.
The distribution centre receives supplies for all the stores in the city in a single truck from each
supplier. Smaller lots of each of these supplies are loaded on trucks bound for each store. The
retailer buys from the manufacturer directly, and does not have to buy from distributors.
A retailer’s choice of a city depends upon factors like its congruence with its chosen target
market, the level of disposable income, the availability of suitable sites and level of competition.
A retailer’s choice of a particular site in a city depends on level of existing traffic passing the
site, parking facilities, presence of competitors and possible opportunities to form new retailing
centres with other outlets. When two or more non-competing retailers agree to site outlets
together, the retailing centre can draw more customers than what each individual store would
have been able to do.

More than proximity to customers, the location of a store is important in terms of how often the
target customers are likely to visit the site as they live their lives. The lifestyle of the target
customers, and the goods and services that they buy will decide whether they will visit the site or
not, and how often.
Being in the place which the customer will visit in pursuance of his lifestyle will ensure that the
customer will walk into the store. This aspect is important because customers are combining
purchases of different genre of goods and combining purchases of goods and pursuance of
entertainment.
3. Product assortment and services:
A retailer has to decide on the breadth of its product assortment, and also its depth. A retailer
may have a broad product assortment, but within each product line, it can stock a shallow
product range. Or it can have a narrow product assortment, but within each product line, it can
stock a deep product range.
Therefore, a retailer’s choice of product assortment ranges from stocking one deep product line
to stocking a broad range of products including toys, cosmetics, jewellery, clothes, electrical
goods and household accessories. A retailer begins with one or limited product lines and
gradually broadens product assortment to be able to sell more products to customers who come
to its store.
Petrol stations start out as fuel providers, and expand by adding provision stores or food outlets
to maximize the revenue that can be obtained from the customer. Some stations on the highway
may also add a Cineplex to make their retail outlet a one-stop entertainment and utility centre for
the customer.
By expanding its product assortment, a retailer reduces price sensitivity of customers because a
traveller stops at a petrol station as he can buy an assortment of products, and not because its fuel
cost is low. A retailer’s decision of the product assortment that he will stock will depend on its
positioning strategy, the expectation that its customers have come to have of it, and also on the
profitability of product lines that it carries.

It may be prompted to drop slow moving unprofitable lines unless they are necessary to conform
with the range of products expected by its customers. A retailer also has to decide whether it will
sell only manufacturer brands, or it will have its own label or store brands. Most manufacturers
may sell own label brands products to compliment manufacturer brands.
Retailers need to consider the nature and degree of customer service. Degree of service can vary
from customers being expected to search for their items to elaborate displays and suggestions
from sales personnel. Retail outlets for expensive items like cars provide elaborate services in the
forms of product displays, test drives and arrangement of loans, whereas in a discount store,
customers would have to select their items, sometimes from heaps of merchandise.
Service levels have to be higher when customer knowledge levels are low, expertise is required
to buy the right product (that the customer lacks), the products are expensive (money spent in
relation to customer’s disposable incomes are high).
The retailer can also use service levels as a means of differentiating his offer when the product
assortment is similar to those of competitors. For instance, a cosmetics store can employ its
personnel as grooming advisors to help a customer choose relevant products from the store.
4. Price:
A retailer may choose to compete purely on price, but price can be a differential advantage only
when a retailer has immense buying power, and has been able to control cost. A retailer may
favour everyday low prices rather than higher prices supplemented by price discounts.
Such a retailer is patronized by customers who prefer predictable low prices rather than
occasional price discounts. A retailer may sell no-frill products, which are basic commodities
such as bread and soft drinks that are sold in rudimentary packaging at low prices. It appeals to
the price conscious shopper who wants standard products at low prices.
Some retail items may be priced very competitively to generate more demand for other items.
Such products may often be sold below cost and are called ‘loss leader’.

The idea is that the customers get attracted to the low price of the ‘loss leader’ and walk in the
store to buy the item but may end up buying many more items. The items chosen for inclusion
should be widely known and bought on frequent basis.
5. Promotion:
Retail promotion includes advertising, public relations, publicity and sales promotion. The goal
is to position the store in consumers’ minds. Retailers design ads, stage special events and
develop promotions aimed at their markets.
A store’s opening is a carefully orchestrated blend of advertising, merchandising, goodwill and
glitter. All the elements of an opening—press coverage, special events, media advertising and
store displays—are carefully planned.
Retail advertising is carried out at the local level, although retail chains can advertise nationally.
Local advertising by retailers provides specific information about their stores, such as location,
merchandise, hours, prices and special sales. In contrast, national retail advertising generally
focuses on image.
A popular retail advertising practice is cooperative advertising. Under cooperative advertising,
manufacturers pay retailers to feature their products in store mailers or the manufacturer
develops a TV or print ad campaign and includes the name of the retailers carrying the product at
the end.
Many retailers are avoiding media advertising in favour of direct-mail or frequent shopper
programmes. The frequent shopper programmes offer perks ranging from gift certificates to
special sales for most frequent shoppers. Direct-mail and catalogue programmes may be a cost
effective method of increasing store loyalty and spending by core customers.
6. Store atmosphere:
Store atmosphere is created by the design, colour and layout of a store. A retailer works on both
exterior and interior designs to create an appropriate store atmosphere. The store atmosphere

should prompt target customers to visit the store and stimulate them to buy once they are in the
store.
External designs include architectural design, signs, window display and use of colour that create
identity for a retailer. The image which is projected should be consonant with the ethos of the
store. For instance, a kids’ store is usually bright, vibrant (may be in the shape of Mickey Mouse)
and colourful to attract the child and make him want to buy things in the store. Such a store
should generally have lots of space for the child to move around and explore his world. Even the
salespeople should match the child’s temperament. They should be playful. Interior design like
store lighting, fixtures and fittings as well as layout, affect store atmosphere. If a store has
narrow aisles, it appears congested and unclean, the customers may not like to spend too much
time in such an environment. A poorly lit store is uninviting.
Colour, sound and smell affect mood of customers, and customers stay longer in stores which are
colourful, plays good music and smells good. People attribute different meanings to different
colours, and a retailer uses colours to create the desired atmosphere in the store. Music can be
used to create a relaxed atmosphere, and make the customers linger on in the store.
Thoughts to consider when considering a successful integrated marketing campaign:
Retail marketers recognize that to increase brand equity, shoppers must be led along a path to
purchase that results in more than just a product purchase, but also advocacy for the retail brand.
Integrated Marketing strategy plays an important role in delivering the right brand message, to
the right shopper, at the right time, via the right interaction channel to assist in a purchase
decision or build brand awareness. This strategy requires evaluation and investment in multiple
channels, including traditional, social, mobile, web/e-commerce and in-store.
Integrated marketing is about combining multiple marketing elements together to achieve an
objective more efficiently and effectively than by implementing any one element alone. Several
thoughts to consider when considering a successful integrated marketing campaign:
1. Clearly define your target audience. A good campaign begins with a segmented list.
Those segments are defined by attributes that tie to a product or service for which the
campaign is centered. Start by defining the target list, identifying channels/outlets for the

campaign, specific offers/treatments for each campaign and metrics to evaluate campaign
performance. If the target audience cannot be clearly defined, it is unlikely that the
campaign will be successful. Begin with the end in mind – who is your target shopper
and through which channels do they shop your aisles, shelves or pages?
2. Define measurable campaign objectives. Without measurable objectives, it will be
challenging to measure return on investment (ROI) or net benefit of a campaign on
product/service sales, sentiment or engagement. Many marketers get hung up in the
content and creative of a campaign and lose site of the original campaign objectives and
execution priorities. It's important to define and communicate objectives and to build
insights from past campaigns into the planning process for future campaigns thereby
shaping and sharpening objectives. From a mobile perspective, one of the main reasons
that retail marketers spend on mobile has traditionally lagged is because of the lack of
measurement, but marketers are increasingly interested in mobile since it is how shoppers
are managing and planning shopping trips.
3. Create clear, consistent and compelling content. Because it can take more than five
impressions for an individual to recognize a brand or specific marketing message, follow
the three "C's" for marketing messages. Communications must be clear, compelling and
consistent. As a starting point for your content strategy, it is important to assess how well
your content aligns with the behaviors and attitudes of your target consumer. Also, it can
be useful to review your competitor's content strategy to determine if any gaps exist
between your current content and the ideal set of content needed to become a credible
brand with consumers.
4. "Channel" your messaging. Some shoppers are on Facebook. Some shoppers are on
Twitter. Some shoppers shop online and avoid the brick-and-mortar store. Some only
shop the physical store. Some shoppers only shop your outlet store. Some shoppers buy
your products through a third-party retailer or online outlet. Effective integrated
marketing campaigns span retail touchpoints and deliver a customized, yet brand
consistent, message and offer to shoppers. When marketing to shoppers across channels,
it is imperative that the retailer set a consistent or brand-specific visual identity – an

overarching look and feel, photography and graphic style, logo treatment and
colors/fonts. Visual curation is a must and should be "Integrated Marketing 101" for your
marketing team.
5. Drive campaign decisions based on analytics. Integrated analytics are changing the
way brand marketers think about integrated marketing. As is typical in retail,
organizational silos limit coordination of brand-based integrated marketing campaigns. In
fact, for many retail organizations, individual brands have their own budgets, work with
their own agencies, collect and manage their own consumer data, and drive consumer
interactions solely focused on their brand proposition. Integrated analytics are changing
this as the concept of integrated shopper data reduces overall organizational marketing
spend for data. Also, improved insights and analysis tools provide cross-brand views of
shopper behavior and activity enabling new and different, dynamic marketing decisions
while establishing a consistent brand experience for the shopper.
6. Start with "WHY" when considering a loyalty program. Traditionally, retail
marketers had few options when it came to impacting purchase behavior other than
relying on costly in-store displays, extending a direct mail campaign, and/or buying spots
in traditional media outlets to grab shoppers' attention. Retailers also regularly purchased
shopper data to understand what's happening in store. Data latency, lack of cleanliness
and harmonization issues make it difficult for marketers to know which levers they can
pull to get more of their brands into the shopping basket at checkout.

SELF CHECK -I
• What is retailing and discuss about evolution and role of retailing?
• What is the importance of retailing in Indian economy?
• Explain the role of retailing in marketing system?
• What general services retailer provides to the customers?
• What is the wheel of retailing concept explain with example.
• Explain briefly about the classification of retail format and its flow chart.
• Discuss in detail about the retail marketing strategy with a line diagram.

UNIT
4

LAYOUT
AND
RETAIL
SITE
SELECTION

Outline of Chapter
• Layout and retail site selection
• Location needs of retail business
• Features of retail stores
• To study the retail store planning
• To understand the location need of retail business
• To study the layout and design of store
Few decisions that entrepreneurs make have as lasting and as dramatic an impact on their
businesses as the choice of a location. Entrepreneurs who choose their locations wisely—with
their customers’ preferences and their companies’ needs in mind—can establish an important
competitive advantage over rivals who choose their locations haphazardly. Because the avail-
ability of qualified workers, tax rates, infrastructure, traffic patterns, quality of life, and many
other factors vary from one site to another, the location decision is an important one that
influences the growth rate and the ultimate success of a company.
The location decision process resembles an inverted pyramid. The first level of the decision
is the broadest, requiring an entrepreneur to select a particular region of the country. Then an
entrepreneur must select the right state, then the right city, and, finally, the right site within the
city. The “secret” to selecting the ideal location lies in knowing the factors that are most
important to a company’s success and then finding a location that satisfies as many of them as
possible, particularly those that are most critical. For instance, one of the most important location
factors for high-tech companies is the availability of a skilled labor force, and their choice of
location reflects this. If physically locating near customers is vital to a company’s success, an
entrepreneur’s goal is to find a site that makes it most convenient for his or her target customers
to do business with the company.

The Final Site Selection
Successful entrepreneurs develop a site evaluation system that is both detailed and
methodical. Each type of business has different evaluation criteria, and experience has taught
successful entrepreneurs to analyze the facts and figures behind each potential location in search
of the best possible site. A manufacturer may need to consider access to customers, raw
materials, suppliers, labor, and suitable transportation. Service firms need access to customers
but can generally survive in lower-rent areas, whereas a retailer’s prime consideration is
customer traffic. The one element common to all three is the need to locate where customers
want to do business. The site location decision draws on the most precise information available
on the makeup of the area. Using the sources of published statistics described earlier in this
chapter, an entrepreneur can develop valuable insights regarding the characteristics of people and
businesses in the immediate community. After narrowing the list of potential locations using
statistics, entrepreneurs must visit each site for a firsthand view of its suitability. Many sites that
look good “on paper” may be unsuitable because of other factors. On-site visits to potential
locations are essential because they allow entrepreneurs to evaluate each site’s intangible
aspects. Rental or lease rates are an important factor when choosing a site. The location with the
lowest rental rate may not be the best deal, however. “Cheap” rental rates often indicate second-
class locations (and the resulting poor revenues they generate). Of course, entrepreneurs must be
sure that the rent or lease payments for a particular location fit comfortably into their companies’
financial structure.
Layout and retail site selection:
Great customer service isn’t just confined to what happens on the shop floor; it begins with the
location, format, and layout of your store. If your store is in the wrong location, or doesn’t meet
the specific needs of consumers then all the customer service in the world can’t make your retail
endeavour a success.
There are six key areas of retail store planning that need to be considered:

1. Store Formats
An effective store format provides the basis for delivering your products to the right type of
customer. Using the store format as a starting point allows you to build your retail plan and put
processes in place accordingly.
2. Site Selection
The best location for your store is one close to where your customers live or work, or one which
is easy to travel to by car or public transport.
3. Site & Building Planning
Once you’ve selected the ideal site for your store, the next step is to make the best use of the site
in terms of access, car parks, traffic flow, and the size of the building in relation to the site.
Beside this you also need to plan where to position the service, office, and staff areas.
4. Space Allocation
Certain product categories will perform better than others, and correct space allocation can add
15% to your sales and profits. It’s important to identify your best performers and work out how
much space to allocate to each department. For example if you are a supermarket, how much
space will you allocate to non-food, household items, and fresh food?
5. Store Layouts
In order to determine your retail store design layouts you need to get inside the heads of your
customers and identify their decision-making hierarchy. How does your customer move around
the store and decide which product to purchase? Each category should be placed in its ideal
position, with related categories adjacent to it.
6. Store Concepts
Once you have decided on your store format, layout, and space allocation the next step is to
finalise complete store concept, including all the latest design ideas and fixtures.

Location needs of retail business: The success of retail establishments is often predicated to a
large degree on their location. "Real estate professionals are fond of saying that the three most
important factors in choosing a business space are location, location, and location," wrote Fred S.
Steingold in Legal Guide for Starting and Running a Small Business. "For certain types of retail
stores and restaurants, this may be true. For example, a sandwich shop requires a location with a
high volume of foot traffic. Or maybe you'll benefit if you're near other businesses that are
similar to yours; restaurants often like to locate in a restaurant district."
Since location is so important to most retail operations, small business retailers often have to
make significant expenditures to secure a good site on which to operate. Property owners that
offer land or buildings or office space for lease or sale in already-thriving retail areas know that
they can command a higher price because of the volume and quality of business that the location
will bring to the company.
Features of store layout:
According to Barton A. Weitz, director of the centre for Retailing Education and research at the
university of Florida in Gainesville, a store layout should do these three things:
Stimulate impulse purchases
One way retailers use layouts to entice customers to buy more than they intended is to draw them
through the store so they will see as many of the products as possible.
Jewelry stores put their better products toward the back of the store to pull people in, he says,
and supermarkets tend to put popular departments- produce, meat, bakery, deli-along the
perimeter.
Make it easy to find goods
Gatto’s cycle shop is divided in to separate showrooms by product categories, such as kids’
bicycles or Harley- Davidsons. But displays also highlight products from other areas.

Retailors often have to make a trade-off, Weitz says for example, its more convenient for
supermarket customers if a deli is at the front of the store he says, but some markets place it in
the rear to stimulate sales. The ideal, according to Weitz, is “try to stimulate multiple – item sales
without making it difficult.
Create an image or a feeling
From the front door, you want to say what kind of store it is, what the product is, and what the
price is,” says Mark Bradin, of the Walker Group/CNI, a New York retail design consulting firm.
Image was in Gil Klein’s mind in the 70s when he designed Gil Klein TV & Appliance, in
Fairview Heights, III. Klein put the service department in a prominent location to the left of the
entrance “ to put customers at ease,” he says.

UNIT 5 RETAIL PROMOTION AND COMMUNICATION MIX

Outline of the chapter
• Retail promotion and communication mix
• Different Factors of Marketing Communications Mix
• Elements of Marketing Communications
Learning Objectives
After reading this chapter you will understand
• The promotional mix and how it deals with various promotional tools
• The factors that are important for Communications Mix
• The elements of Marketing Communications
RETAIL PROMOTION AND COMMUNICATION MIX:
An organization’s promotional mix consisting of various promotion tools like advertising, sales
promotion, public relations, personal selling, direct-marketing tools and online, digital and
integrated marketing methods is called the Marketing Communications Mix. It is the way to
communicate your brand value to the consumer and build long-lasting customer relationships.
Different Factors of Marketing Communications Mix
1. Identifying target audience – If you don’t know who your audience is, you can’t decide
on what to communicate, how to communicate, when, where and who will communicate
the company’s message. Therefore, the first step to building a marketing communication
mix is to identify your target audience.
2. Determine Communication Objectives – Companies must find out at what stage of
buyer-readiness their consumers are presently in. The six stages that consumers normally
go through before buying a product are – awareness, knowledge, liking, preference,
conviction and purchase. You must design your communication mix so as to address all

these aspects as well as the organization’s objectives in delivering the message and
moving the target audience towards a favorable stage.
3. Delivering the Message – Your promotional messages must not only be catchy and hold
the consumers’ attention but also compel them to like your product and make a purchase.
Putting the message content together and choosing the appropriate communication media
either through personal or non-personal channels is an important part of delivering the
right message at the right time.
4. Setting up Promotional Budget – While there are innumerable ways to attract the
customers, you need find out how much you can spend on promotions. Budgeting based
on the target consumers and industry requirements is key to achieving promotional
success.
5. Creating a Promotion Mix – Different companies have different marketing strategies
wherein they use several promotional tools like advertising, direct marketing, personal
selling or online marketing etc. Each tool has its own advantage and costs involved;
therefore it is important for you to choose the right marketing communications mix also
called as promotion mix.
Elements of Marketing Communications:
1. Advertising
This is widely used by companies to reach out to geographically distributed consumers in a large
scale. It could be through TV ads, paper and print ads, billboards, radio announcements etc. to
reach out to a mass audience. This is the mass media method of marketing communication and
provides exposure to the largest, most geographically dispersed audience at the lowest cost per
head, also happens to be a one-way communication with your potential customer. As well,
advertising on buses, benches, gas pumps and even public restrooms is in vogue today. Basically,
any medium which provides an opportunity to target "eyes and/or ears" can be a venue for
advertising and you can see examples of successful promotion in the most unlikely places.

2. Personal Selling
This is very effective in building customer relations and helping the consumer move from
awareness and knowledge stage to conviction and action. Your marketing personnel need to use
their people skills and learn to listen to the audience so that the consumer’s requirements are
addressed. You get immediate feedback and increase sales potential.
This is the most dreaded as well as the most expensive of all methods in the marketing
communication process. However, if you are a small business owner or otherwise have the
ability to personally sell and build relationships with customers, it can be one of the most
rewarding aspects of the marketing process, both personally and professionally.
Just as with traditional marketing, successful selling begins and ends with the customer. The
whole objective is to ascertain needs and create the best solution for customers. Along the way
you build relationships and continue to gather information about how you can better serve
customers which is your reason for being in business in the first place.
Sales and marketing are fundamental to the survival of any business and both involve creating
customers for the business value you have created. The former targets one person (or entity)
whereas the latter targets many. Both engage, inform and persuade through a variety of
communicational tools. Aligning both will increase your success regardless of conditions.
Successful sales and successful marketing both begin with an attitude and that attitude is
customers first.
3. Sales Promotion
Sales promotion simply refers to purchase incentives that you provide your customer with. These
can assume a number of forms including offering free goods or services, coupons and vouchers,
gifts and prizes, discounts, samples, financial incentives, charitable promotions and any other
value-add over and above your standard product or services.
Promotions tend to be short-term activities geared towards encouraging customers to try your
product for the first time, or to buy more than they might normally. Tactics include free samples,

discount coupons, or multi-buy offers such as "buy one, get one for free." Free samples and
coupons can be accurately targeted at your customers through channels such as direct mail to
households, or as cut-outs in local newspapers.
Sales promotions are generally short-lived, "one off" incentives intended to provide consumers
with that last "push" to buy. The main takeaway is that regardless of the size and type of your
business, you should continually look at ways in which to create additional value for customers.
Your customers will appreciate it and, in facts, customers have been shown to pay premium
prices for real value and real service.
4. Public Relations
You can use company news, promotional events, sponsorship programs etc. along with other
promotion tools to reach out to prospective customers. Such a campaign is very cost-effective
and economical while reaching out to a larger audience. PR, is the long-term process of building
public awareness through communicating regularly with your various target markets. At its heart
is the aim of building goodwill towards your company and products or services so that customers
will think more favorably of your company and be more likely to make a purchase. At its
simplest, it may take the form of press releases to key trade and consumer publications, often
centered around newsworthy events, such as product launches or celebrity endorsements. Don't
be fooled in thinking PR is free, though; good PR can be expensive, but can also deliver
powerful returns on investment, provided clear goals are set in advance.
5. Direct Marketing
This marketing communication competency enables companies to reach out directly to
consumers without intermediary channels such as those required for advertising. This component
of the marketing communication process includes direct mail, catalogs, coupons and inserts,
telemarketing, online marketing and television infomercials. Done correctly, Direct Marketing is
extremely effective in the long run and allows for a targeted marketing approach to specific
consumers to create valuable lasting relationships.

Direct Marketing is the marketing communication method that enables companies to interact
with a relatively large number of customers and encourage a "call to action" or "most wanted
response" which is usually a purchase. The downside of Direct Marketing is that it is usually
unsolicited and seen as a nuisance by the general public. Telemarketing, e-mail spamming and
junk mail are universally despised and so Direct Marketing tools should be used with thought
and caution.
6. Online Marketing
Internet and powerful mobile technologies have rapidly increased company efforts to market
their products and build customer relationships via social media, websites, mobile apps, e-
commerce, online promotions etc. Create your online presence and find out the best way to
communicate with your audience in a cost-effective, quick and reliable way.
These are the main tools of creating an effective marketing communications mix for your
business. However, while doing so, you should be aware of the various legal and ethical issues
surrounding marketing communications. Respect customer privacy and adhere to social norms
and government regulations while you build a powerful marketing communications mix for your
organizational growth.

UNIT 6 RETAILING AND BUYING SEASONS
Retailing and buying seasons
Have you noticed that even before the kids go back to school, many retail shelves are already
stocked with stationary items and school bags? To be successful in this industry, retail
professionals plan their product and marketing approaches months in advance.
The Retail Timeline
Laurie Karzen, a retail consultant from Emeryville, California, says retailers typically buy six
months or more in advance for their stores. "Buyers attend trade shows in January and February,
and then again in the summer," she says. "Retailers are geared up in July for what they need for
the second half of the year. By early October, stores are stocked for the holidays."
Six Months to One Year in Advance
Retail managers need to plan budgets and submit purchase orders to vendors long before
products appear on the sales floor. Advanced planning ensures that retailers have merchandise
assortments targeted to their specifics stores' customers. This means a clothing chain's stores in
Minneapolis offer heavy sweaters in August, while its stores in Phoenix and Honolulu carry
shorts in January. And when holiday merchandise appears in October, it can spur consumer
demand that picks up steam in November and December.
Accurate seasonal planning leads to improved sales, higher customer satisfaction levels, less
surplus stock at all levels of the supply chain, lower risk of running out of high-demand stock
and fewer markdowns. Long-range planning is tied to increased profitability.
How It's Done
Retailers navigate seasonal cycles and improve their bottom line through a process known as
collaborative planning, forecasting and replenishment (CPFR). Accurate forecasting generates
initial preseason merchandise plans based on various trends, demographics, store/customer

profiles, econometrics, etc. Forecasting also helps generate sophisticated in-season plans based
on actual versus plan results at a detailed (store or department) level.
Planning Ahead
Retail buyers have the main responsibility for seasonal merchandise plans. All year long, buyers
track the trends for their product types and analyze past sales figures for their stores. Many use
specialized software to build a greater understanding of consumer behavior into the merchandise
planning process. They become experts in their market, its demographics and the products they
buy.
Retailers commonly plan one to three seasons ahead while marketing the current season. Buyers
review and modify budgets three to four months in advance. Companies that import goods plan
further ahead. Buyers help corporate and store personnel plan promotions, marketing and
advertising aligned with the seasonal plans.
But that's not all. At the chain or store level, planners, transportation, and logistics specialists and
operations management personnel develop strategies for merchandise distribution and allocation.
This includes in-store stocking and off-site warehousing, delivery schedules, store maintenance
plans, merchandise displays, shelf setups and shopping themes.
For the holiday shopping season, retailers must have policies in place for price-matching, rain-
checks, special orders and returns. They need to hire and train staff before the holiday rush hits,
and then they have to prepare their after-holiday clearance strategies.
Getting into the Field
When a retail company hires or promotes a planning specialist, it looks for individuals who are
familiar with its merchandise as well as retailing practices. In-store experience is always
valuable. A bachelor's degree in business (with emphasis on finance, marketing or economics) or
merchandising can be helpful. Visual merchandising and display professionals, who contribute to
the development and execution of seasonal plans, usually have a background in graphic or fine
art.

Large retail chains have formal management-training programs for planning and merchandising
specialists such as buyers. These programs typically recruit recent college graduates.
If you're interested in obtaining a career in retail planning job, you need to be analytical and
organized. If you're on the sales floor or in the stockroom, pay attention to and ask questions
about seasonal plans. Find out about opportunities to become an assistant in the corporate
merchandising department.
If you're in school, check with the career services office about internships in retail management
or job fairs where retailers will be recruiting.


UNIT
7

RETAIL PRICING STRATEGIES

Retail Pricing Strategies
Speak to any average consumer and mention the names of some high quality, leading businesses.
The chances are high that one of the first words they will use is "expensive". Not "excellent
service", "marvelous range" or even "helpful staff". Possibly "Expensive but worth it", or "You
get what you pay for", but in the average consumer's mind, price is almost always a key factor.
Differentiating on price - good or bad move?
Let's take a quick look at popular traditional pricing strategies, as well as a new one - Access
Pricing - that overcomes many of the challenges that we've have had to deal with in the past.
Most pricing strategies clearly appeal to one category of shoppers but not to others. Everyday
low price (EDLP), for example, would appeal to time-poor/money-poor shoppers who have little
to spend and no time to shop around - it would make sense for them to choose a solid EDLP
store and do all their shopping there. Hi-Low pricing would appeal to cherry pickers - who fall
into the time-rich/money-poor category. But access pricing should appeal to all categories of
shoppers - a significant advantage. But what exactly is 'access pricing'? Well, it's a loyalty-based
pricing technique that allows a retailer to differentiate prices between regular customers and
occasional shoppers in an open, transparent way. It's the ultimately fair tiered pricing system.
Customers collect points on their purchases as usual - but throughout the store, key items are
priced at two levels: the price that the item would normally sell for, and a very much lower price
that's available in exchange for some of the customer's loyalty points.
The four key pricing strategies
There was a time when manufacturers recommended a price for each item, and retailers simply
charged that price. Any differentiation then was purely on convenience, ambience, product range
and quality of service of the retailer. Let's look at the four key strategies:

1. Hi-Low Pricing
In order to introduce another element of differentiation, some retailers started reducing the
prices of key products, in order to attract customers into their stores, where they would buy
other products as well as the reduced-price products. Hi-Low pricing was born, and fairly
quickly became the norm. The retailer made little profit, or even a loss, on the price-reduced
products, but recouped the revenue in the increased sales of other profitable lines. Hi-Lo pricing
also introduced an element of excitement into shopping - shoppers felt good when they had
bought an exceptional bargain, and this would tend to encourage them to return.
2. EDLP (Every Day Low Pricing)
To appeal to the more 'no-nonsense' shopper, and to simplify shopping for the time-poor
shopper, other retailers adopted a pricing strategy whereby they charged a fair, but low-as-
possible price for all products. While this is thought by some to be boring, it is very successful
to this day. To those for whom shopping is a chore to be handled as painlessly and quickly as
possible, EDLP is the perfect solution. No need to shop around, no need to clip coupons, no
need to waste time, simply buy what you need from the same place every week and know that
you're getting a square deal. However, EDLP presents a challenge to the retailer: in the absence
of other differentiators any loyalty exhibited is to the prices charged, not to the business. EDLP
shoppers will defect to a competitor who begins to charge slightly lower prices.
3. PUF (Profit Up Front)
Some thirty years ago, Hi-Lo pricing and EDLP were joined in the marketers' armoury by a new
weapon: Profit-up-front pricing. PUF pricing is seen in the warehouse club industry (for
example, Costco, SAM's, and BJ's) where qualified customers pay for the privilege of buying
items at bedrock prices which include extremely low profit margins. Usually, customers buy
membership by paying an annual fee in advance. This admits them to the warehouse, where
they can buy goods at 'wholesale' prices. The operator can sell goods at these low prices because
the revenue from these up-front membership fees account for about half of its pre-tax profits.

4. Access Pricing
Just lately, a fourth way, called 'Access Pricing' (brainchild of retail marketing guru Brian
Woolf) is making its appearance. Its unique feature is to differentiate prices on basic items
between regular customers and occasional shoppers in an open, transparent way. up until now
it's been very difficult to offer higher prices for casual customers and lower prices for regular
customers within the same retail store, without offending some customers. In countries with a
well-developed social conscience (the UK, for example) a policy of better prices for those who
spend more can result in quite vociferous negative publicity. "Why should the poor old
pensioner pay more than the rich young businessman?" would be a frequent cry. But Access
Pricing, using readily available technology and a points-based loyalty card programme now
make it possible.
How Access Pricing works
Customers collect points on their purchases, using a seemingly standard points-based loyalty
programme. There, the similarity ends. Throughout the store, key items are priced at two levels:
the price that the item would normally cost, and a second price, very much lower, but
supplemented by some of the buyer's loyalty points. For example, as expected, a product usually
priced at US$9.99 could be bought off the shelf for US$9.99. But alternatively, it could be
bought for US$3.99 plus 900 of the loyalty points that the customer has already collected. That
US$6 discount was earned (at 10 points for US$1 spent) by spending US$90 - not counting
bonus points; even then, it's a substantial reward. This means that the customers have control of
the prices they pay, and how they spend their loyalty points. For loyalty programme operators
this is excellent news: it maintains member interest, and gets customers interacting with the
programme on a frequent basis - every time they go shopping. As Woolf says, it's effectively
putting "Golden Handcuffs" on your best customers.

SELF CHECK-II
• Discuss the points which are important for layout selection of retail outlet.
• Explain briefly about the different factors of promotional mix.
• Describe the role of buying season in retail industry.
• What are the different retail pricing strategies?
• Write short notes on the following-
a. Public Relation
b. Tele Marketing
c. Location need of retail business
d. Hyper Markets
e. Convenience stores

Fashion retailing study material

Fashion retailing study material

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Fashion retailing study material