31 Retail Marketing

P. Santhi

epgp books

 

 

 

 

  1. INTRODUCTION

 

India has occupied a remarkable position in global retail rankings. The country has high market potential, low economic risk, and moderate political risk. India’s net retail sales are quite significant among emerging and developed nations. Among the emerging nations the country is ranked third after China and Brazil. The Indian retail sector is likely to grow at a CAGR of double digit and also accounts for double digit of GDP.

 

2. LEARNING OBJECTIVES

 

At the end of this lesson you will be able to

  • Analyse the identify various business functions of a retaile
  • Ascertain and appreciate the role of retailers in business promotion and role as touch point with customers

3. RETAIL MARKETING

 

Retail marketing is the process by which retailers promote awareness and interest of their goods and services in an effort to generate sales from their consumers. Retail is the sale of goods and services from businesses to an end user. The sale of goods is relatively in small quantities for use or consumption rather than for resale.

 

RETAILING

 

It is the last link in the chain of distribution. Any organisation selling to final consumers-whether it is a manufacturer, wholesaler, or retailer-is doing a retailing. The American Marketing Association defines retailing as “the activities involved in selling directly to the ultimate consumer for personal and non-business use. It embraces direct-to-customer sales activities of the producer, whether through his own stores or by house-to-house canvassing or by mail-order business”.

 

RETAILER

 

The retailer is an intermediary in the marketing channels and is a specialist who maintains contact with the consumer and the producer and is an important connecting link in the mechanism of marketing. The word ‘Retailer’ had been derived from the French word ‘Re-tailer’ which means ‘to-cut again’. It means to cut in small portions from large lumps of goods. A retailer is last middlemen in the chain of distribution of goods to consumers. He is a link between the wholesalers and the consumer.

 

Characteristics of Retailers

  • A retailer is the link between a wholesaler and the ultimate consumer and he is the last intermediary in distribution.
  • A retailer buys goods from wholesaler in bulk and resells them to consumers in small quantities.
  • A retailer maintains a personal contact with his customers.
  • A retailer makes sufficient shop display of his wares to attract customers.
  • Retailers perform all the marketing functions which a wholesaler performs and in addition emphasises on advertisement.

Functions of retailers

 

Every retailer performs the following functions:

  1. Buying: A retailer buys goods from a variety of wholesalers as he deals with a variety of merchandise. He buys the best, pays the most economical price, brings all the goods under one roof and displays them in shop. Thus retailer performs the twin functions of buying and assembling of goods.
  2. Storage: After assembling the goods, the retailer stores them in godown, held as reserve stocks for the future. It is necessary to store the goods in ready stock.
  3. Selling: The retailer employs efficient methods of selling to dispose off his products at a faster rate, in order to increase sales turnover in a period of time.
  4. Risk-bearing: The retailer bears the risk of physical damage of goods and price fluctuations. Moreover, risk of fire, theft, deterioration and spoilage of goods has also to be borne by him. Changes in fashions, tastes and demand of customers also have an adverse effect on sales. During the normal course of business the retailer bears all the trade risks.
  5. Packing: A retailer repacks goods in small packets and containers before making sale. Occasionally, the retailers may be required to grade the goods.
  6. Creating place utility: Retailers create place utility by transporting goods to the point of consumption.
  7. Stocking Varieties of goods: Retailers buy varieties of goods from various manufacturers or wholesalers. Thus, a retailer provides a wide range of choice enabling the consumers to select the products of their choice.
  8. Credit facilities to customers: Retailers grant credit facilities to consumers and thus increase their short-term purchasing power.
  9. Providing information to customers and wholesalers: Retailers act as a link between the buyers and wholesalers and manufacturers. In the distribution channel, retailers are in direct contact with customers. Retailers supply market information to manufacturers either directly or through wholesalers.
  10. Estimating the demand and arranging the purchase of the product: Retailers create demand for products by communicating with their customers. This demand creation is quite helpful for manufacturers and wholesalers.
  11. Acting as consumer’s agent: The retailers anticipate the wants of the consumers and then supply them the right kind of goods at a reasonable price. Their job is to make the consumer’s buying as easy and convenient as possible.
  12. Marketing functions: Retailers perform several marketing functions such as sales promotion, advertising and point of purchase display. They induce customers to buy products of reputed companies.
  13. Connecting link: The retailers are the connecting link between the wholesaler and the ultimate consumer.

Pre-Requisites of Retail Trade:

 

The success of retail trade is based on a proper combination of the following factors:

  1.  Location: The ultimate success of a retailer depends on the location of the shop. Proper selection of location is important for a retailer to establish his business.
  2. Price: A proper pricing policy can give better results for a retailer if he can combine low prices with good quality to attract consumers.
  3. Sales Promotion: A retailer must arrange for proper sales promotion campaigns in order to familiarise the customers of that area with his products.
  4. Prudent Buying Principles: Every retailer ought to be a shrewd purchaser; only then he can give his best to his customers. Careful buying earns rich dividends in retail trade.
  5. Knowledge of Merchandise: Modern business is so complex and the variety and quality of goods being so diverse, a retailer must have adequate and latest knowledge of the wares he sells. It would not only enable him to answer customer queries satisfactorily but also to handle the complications of his business. Thus adequate knowledge of merchandise is another pre-requisite feature of retail trade.
  6. Services: A retailer should concentrate on services. Courteous and prompt service on will help in attracting more and more customers and thereby flourish in business. Most retailers go in for after sale service also, where they cater to the needs of the customers after the latter has purchased a commodity from them. So efficient service should be the motto of every retailer.
  7. Efficient Management: Better planning, organisation and control by a retailer can offer efficient retail operations. A retailer should have a proper and adequate work-force to assist him in his business. He should always keep stocks ready for customers and even offer specialised comments on the products he deals in. If a retailer plans his inventories and works in advance, there is no doubt that he will achieve his targets and also attract more customers.
  8. Display of Goods: Since a retailer deals in a variety of products, he must display goods in a proper and orderly manner. This will enable him to get what is required by the customer quickly and also help in attracting customers. The retailer must go in for tastefully decorated interiors and also have proper and attractive window-dressing and display.

    The goods must be neatly and orderly stocked and the pattern of window display should be frequently changed for the better, so as to attract the customers’ eye. A retailer must not forget that a well laid out window display will help him to entice and attract customers from his rivals and competitors. Hence, proper care and attention ought to be given for display of goods out as well as in the retailer’s shop or showroom.

 

Types of Retailers

 

Retailers are mainly classified into Itinerant Retailers and Fixed Retailers.

 

Itinerant Retailers

  • Hawkers and Pedlars:

A hawker is an individual who sells goods by carrying them through the streets. The person’sordinary methods of attracting attention include addressing the public , using placards, labels, andsigns, or displaying merchandise in a public place. A p eddler is defined as a retail dealer who bringsgoods from place to place, exhibiting them for sale.

  • Cheap jacks: One who sells cheap and second-rate goods.
  • Market traders : A person who sells goods from a stall in a market
  • Street traders : A person who sells something in the street, either from a stall or van or with their goods laid out on the pavement.

Fixed Retailers are further classified into Small-scale and Large-scale retailers. Small-scale retailers

  • Street stall holders : A market stall is a typically immobile, temporary structure erected by merchants to display and shelter their merchandise in a street market or other setting. Stalls are used throughout the world by vendors selling street food.
  • Second hand goods dealers :There are various types of second-hand shop, generally specialising in  a  particular type of  merchandise
  •   General  shop  : A general store   is  a  rural or  small  town store that  carries a general line of merchandise.
  • Independent stores : An independent retailer is someone who is completely responsible for his or her own business.
  • Automatic  vending: It is  a  way of  selling  merchandise throug using vending machines.
  • Discount houses : Low priced less fashionable branded products are offered by this store.
  • Syndicate stores : A syndicate is a self-organizing group of individuals and companies form a Conglomerate

Large scale retailers

 

  • Departmental stores : A department store is a retail establishment offering a wide range of consumer goods. The department store offer products at various pricing levels and adds high levels of customer service along with convenience.
  • Multiple shops : A retail shop that has multiple locations but has common ownership and management. This is often called a retail chain
  • Mail order shops : Mail order is the buying of goods or services by mail delivery.
  • Hire purchase and instalment : A hire purchase is a method of buying goods through making instalment payments over time. Under a hire purchase contract, the buyer is leasing the goods and does not obtain ownership until the full amount of the contract is paid.
  • Co-operative stores : These stores are owned and managed by consumer-customers who supply the capital and share in the profits by patronage dividends.
  • Super markets : A self-service retail market selling especially foods and household merchandise. Supermarkets have significant buying power and therefore often retail goods at low prices.
  • Hyper markets : It is a superstore combining a supermarket and a department store with an expansive retail facility carrying a wide range of products under one roof.
  • E-tailer – Selling goods in on-line via the internet and  products bought are delivered to the  door step.

Services of Retailers

 

Services provided by retailers  to consumers and wholesalers are

 

Services to consumers:

 

  1. Ready or quick supply : to maintain regular availability of various products
  2. Wide variety : keeps stock of a variety of products of different manufacturers
  3. Guiding customers : provide the information of products to the customers through display of products and personal selling.
  4. After sales services : Services includes free home delivery, supply of spare parts and attending to customers.
  5. Home delivery :  An important aspect of after sale services .
  6. Convenient location : Situated very near to the residential areas and remain open for long hours

Services to wholesalers and manufacturers :

 

  1. Ready market: Retailers deal with individuals so the manufacturers and wholesalers will not make individual sales.
  2. Providing information : By undertaking personal selling efforts retailers relieve the producers of this activity of individual selling.
  3. Risk bearing : Less risk for the manufacturers as Retailers participates in the product promotional activities .
  4. Distribution of goods to distant places : Ensures distribution of goods to the final consumers and thus renders place utility.

Failure of Retail Business:

 

A retail trade may fail due to the following reasons:

  • Limited resources
  • No prior experience
  • Fault in credit policy
  • Unanticipated Change of customer’s preference.
  • Natural calamities
  • Personal factors
  • Unsuitable  location of shop.
  • Ineffective advertising and window display.
  • Impolite and discourteous behaviour of retailer.
  • Poor service .
  • Stiff competition from rivals.
  • Lack of foresight leading to faulty planning, organisation and control of the business.
  • Financial crisis
  • Unplanned spending .
you can view video on Retail Marketing

Web links

  • http://retail.economictimes.indiatimes.com/news/e-commerce/e-tailing
  • http://www.rai.net.in
  • https://www.ibef.org/industry/retail-india.aspx