Developments in Retail Services and Retail Marketing and Promotion - Assignment Example

Retail services & marketing DEVELOPMENTS IN RETAIL SERVICES & RETAIL MARKETING AND PROMOTION Developments in Retail Services & Retail Marketing And Promotion 1. Explain the external sources of finance available to a retail business A business can not be done without finance. However, the finance is available both internally and externally. But in case of retail business a good amount of external finance is always required. The few common types of external finance available to any business are debt, equity, grants and services. Also, available are the finance from banks, venture capitalists, family and friends. Debt is the commonest form of external business. It usually occurs on the contract between the third party and the business. The debt is referred as principal. Also, available are the long-term debts like mortgages or debentures. Overdraft facility from the bank is used for interim cash shortage. Debts are usually secured against the company’s assets. Equity is another common form of debt. By floating shares of the company in the market, substantial amount of debt can be availed from the market. But it will again depend on the company’s portfolio, growth prospects, profile of the promoters and the present financial situation of the company. For a retail company the equity or debt can be availed, basis the growth potential of the company. The growth of the company will be based on the quality of the company’s Retail services & marketing 2 management, the potential of the product and its brand strength. Also the external factors like competition and the product’s market share is also an important part while determining the growth of the company. The few major type of equity providers available for the retail companies are: a) Corporate partnering b) Business angels c) Angel syndicates d) Venture capital funds e) Corporate venture capitalist f) Initial Public Offering (IPO) The retail sector also attracts various types of grants and funding options from the retail sector associations and committees. And if the retail business is in the rural sector, then the government has several funding schemes which boost the company. 2. Explain the internal sources of finance available to a retail business A retail business is not dependent only on the external finance options, but also has the access to the internal financing. There is always some internal sources of funding, which is essential during the initial start up or during the lean phases, when the external finances run dry. The few common internal finance sources available to the retail business are: 1. Sublet properties or selling off the surplus assets. Retail services & marketing 3 2. Decrease the bad debts and also negotiate the credit terms. This will give additional time for the money to be in hand. 3. For the small retail business, the office can be from the home itself. This will curtail costs and help finance the business internally. 4. Negotiate with the suppliers to change the time of payment. This will ensure extra fund in times of need. 5. It is better to hire the required machines and equipments, rather than going for outright purchase. Almost all retail business has the access to the internal finance and this can mostly be achieved by streamlining operations and by increasing the efficiency of the business. This enhances the working capital. 3. Describe the different methods that can be used by a retailer to forecast future sales A retail business is based only on sales and only sales. But at the same time the volume of sales are also unpredictable. This creates the problem of unbalanced business. It will be really great if one can forecast the future sales. This can now be done with the latest technologies and mass of historical database. The ways the sales can be forecasted are: 1. The first work is to analyze the traffic of the products. How the volume is moving and what is the flow of the demand and supply. This can be done for a specific period to understand the trend. Retail services & marketing 4 2. Secondly the conversion rate needs to be analyzed, basis the advertisement and marketing efforts given into the business. The idea is to understand the how much result is derived against the effort given. 3. Next the order size of the purchase needs to be analyzed. The idea is to understand what the commodities are and the volume that is being purchased in each buy. The product and price mix has to be determined to give a shape to the sales forecast. 4. Lastly, the most important aspect that needs to be analyzed is the sales per visit. It means the volume of sales that is done on each visit to the retail store. Sales forecast is necessary so that the inventory can be controlled and the financial aspect can be planned accordingly. This ensures better flow of the products and higher profitability. 4. Describe the 3 different uses of finance in a retail business Retail business is very capital intensive and moreover it requires lot of cash for smooth function of the day to day operations. The finance is required for primarily three different uses. These are: 1. Retail space – The place of business from where the products and services will be sold or distributed. 2. Stock – Without adequate stock, the retail business will not grow. What is required is constant flow of stock and its availability. 3. Working Capital – The retail business requires enough working capital to have smooth flow of business Hence, adequate finance is necessary for this business. Retail services & marketing 5 5. Explain the ways in which a retail business can set targets and measure their performance. In retail business the industry is very competitive and it can change each and every day. The trends of business can be measured with accurate feedback from the market. While this is mostly predictive in nature but it all depends on how truly we can set the target and measure it. The key is to target and measure one’s performance, so that the analysis can be done on the lacuna and ways to overcome the same. Measuring the performance helps in determining the level of efficiency of the retail business. At times this performance is measurement is greatly ignored, but it does not cost much to undertake such a study. Moreover, a little expense is better than the major loss in the business. With the help of a good performance measurement the difference of a productive learning experience and an untested costly project will be of no real benefit. The target can be set and the performance can be measured, however, it has to be techniques and information technologies. The idea is to have a clear idea at the very beginning on what to achieve and how to achieve it. Once the goal and target is set, it becomes easier to analyze and measure it once the result is achieved. 6. Choose 2 different retail companies and complete the following for each one: i. Explain their Strategic marketing objectives and relate them to their identified target markets. ii. Identify the components of the retail mix and explain how these contribute to the image of the company. Retail services & marketing 6 To address this question, we have considered to companies from two very different industries. They are Procter & Gamble and Caterpillar. The former is an FMCG major, while the later is a giant in construction-equipment industry. Both the companies have their own set of marketing strategy and product mix to be the numero uno in their respective industries. P&G is solely in the business of FMCG, selling from soaps to packaged food items. It is in the true sense a retail organization. It is at the same time operates in a very competitive industry, with a dynamic customer base. Hence, for P&G the marketing strategy or objectives are: 1. Customer knowledge: It needs a detailed understanding of the consumer and the customer. 2. Long-term outlook: P&G is a long term and it as a foresight to estimate the future trends of the retail market 3. Product innovation: It has excellent R&D facilities which deals with nothing but, innovating, altering a product, to meet the changing needs of the customers 4. Brand-extension: It believes in using its successful brands to launch new product categories 5. Effective sales and marketing: With aggressive marketing, sales promotion and motivated sales force, P&G is always hared to compete with 6. Manufacturing efficiency: With excellent assembly line production and cost cutting techniques, the company knows the way to make more profit and make a stable revenue with quality products 7. Brand-management system: With diverse brands under its wings, P&G has an excellent brand management team to garner its brand strategy. Retail services & marketing 7 The path for Caterpillar is no different, but being in the construction-equipment industry, the customer base is very unique and different. It is truly a world leader in the market of construction-equipment. For them the marketing objectives are: 1. Premium performance: The Company produces premium quality engineering equipments and also charges a premium price to its customers for its excellent product range. 2. Efficient network of dealers: The Company almost hand picks its dealers and trains them extensively for providing superior service to the customers. 3. Superior service: Caterpillar believes in providing excellent after sales service and spare parts handling to make long-term commitment with its customers and clients. 4. Premium price: With A1 product and service, the customers are not wary of paying a premium. 5. Full-time strategy: The sole of business of Caterpillar is to make construction equipment of all kinds, varieties and sizes, hence the customers gets a one stop solution for all its needs 6. Financial help: To sale its premium equipments, Caterpillar also had made easy financing available to its customers, with easy terms and conditions. As mentioned earlier, the retail industry is ever so growing and burgeoning that the companies are always on their toes to keep the product line updated. Hence, the companies are changing their product line and marketing strategy to keep their brand image. From the warehouse to the logistics, and from store location to pricing, all the departments equally play a part to live up to the image set by the company to its customers and the market at large. Nobody will like a stale burger at McDonalds, or high priced product at Wal-Mart. Neither will anyone expect cheap products at Tiffany or Bloomingdale’s. It is all about the company’s USP (Unique Selling Retail services & marketing 8 Proposition). If the company is an up market retailer, its clientele base and shops will be at the up market districts of the city, whereas the discount stores service the general public at large and are located at convenient locations or at cross roads for easy availability. Any company’s retail mix is dependent on its product and price mix and the industry it caters to. 7. Describe with examples at least 2 ways in which a retail company has communicated its image and offer to its target market. There can be two scenarios to the above question. In the first scenario if an established company which has a reputed brand launches a retail company people will understand that this particular brand is associated with a well established company. On the other hand if a new company tries to build a retail brand it will take long term investments in people and skills, in store brand product development and quality control in marketing, in consumer research and in supplier relationships. For an established brand, it will get a head start as far as these are concerned. One area of concern that has surfaced for retailers is that retail profit margins have been lower, impacting brand building investments. Producers are becoming wary of the retailers capability to investment and manage their brands. It has been quite sometime now when big retailers are creating their own private labels and selling it to customers. This has also created a rift between the various stakeholders in the retail chain. Hence building a powerful retail brand has become difficult not only for new players in the arena but also for established players. If the company is a large FMCG manufacturer and trying to build a brand then they will start building their brand building efforts by primarily two concepts. The concepts are segmentation Retail services & marketing 9 and differentiation. Segmentation of the product is where you exactly want to place your product and differentiation is how to create a niche for your product from the many different brands that are present in the market. Both the concepts are equally important as they help to build customer loyalty and therefore brand leadership in the market. One of the most important components to build a product is to concentrate on segmentation. There are four dimensions to segmentation: they are product groups, customer groups, shopping occasions and price quality positioning. Once you have succeeded in achieving these there are good chances that you will create a good brand for your product. If you are having a chain of convenience stores you need to have products in all the different segments. You cannot afford to exclude any customer group and must have a wide range of quality and price. If you are keen on building a brand then there are four thumb rules that you must follow. They are building a powerful store brand. This is very similar to a product brand and customers will recognize the brand in the same way that they recognize the products. Develop a very effective Supply Chain. This requires investments in product development, technical support and a close relationship with suppliers. You need to have a mass marketing strategy. A shop on a popular street will have a mass appeal than a shop which is on the outskirts. Last but not the least you should have an effective customer relationship management. A loyal customer base will help you in building a brand fast and effectively. Following the above mentioned pointers you can have a retail brand which will give you returns on your investments in a short period of time. Retail services & marketing 10 8. Describe how in-store facilities and services add consistency to the communicated retail image, providing at least 2 examples of such activities. A company after the successful launch of a retail store needs to provide adequate in-store facilities to keep customers trickling in. It is important that the in-store facilities give adequate exposure to the products that is available in the store. Let us understand with a couple of examples how a music store provides store facilities to the customers. The particular store that we are discussing here has a selection of 150,000 albums. The store has around 70 helpful staff who are all experienced hands in the dance music, DJ and music business. The store also has a large range of turntables, Mixers, headphones, Cartridges and stylus, Amplifiers, Speakers and Lighting effects all available for instant demonstration. The store also has another selling point which says that they are just not another music store and has lots of unusual music and club culture related products. All these products are available and displayed in the DJ equipment showroom. The store also has a large range of DVD’s available. If we analyze the situation in respect of what the store has to offer we will find that they have offered products in various segments with a wide choice to the customers. There is one more point that retailers need to take care of. They should be aware that looks can kill. As a retailer you are aware that it costs you more to get new customers than to keep existing ones. Hence, you as an executive should be aware as to what made a customer buy from your store. Here are some of the questions that you need to ask yourself. Are the aisles blocked with cartons that stock clerks haven’t gotten to yet? How is the lighting of the store? Are customers able to see every nook and corner of the store? Does the temperature of the store make it a Retail services & marketing 11 pleasant experience for the shoppers? Is the music that is playing in your showroom enhances the shopping experience of the customers or intrudes it? Along with these in store facilities there are couple of other factors that may help a store to get in customers. One of the most important factors is customer relationship management. If you have a robust CRM system and add a human touch to it, then you have won over your customers. It also pays to have knowledgeable employees who are well aware of the products available in your store. Following these simple yet effective in-store techniques you can win over customers and help in building the brand. 9. Outline the relevant legislation and regulations with which retail marketing and promotional activities must comply The Government uses retailers to enforce its complex age related sales legislation, which restricts the sale of certain groups to certain age groups. For example, liqueur chocolates must not be sold to people under 16 – along with cigarettes and tobacco, lottery tickets, petrol, party poppers, knives while those under 18 cannot buy alcohol, fireworks or spray paints. Distance Selling is a rapid growth area for UK retailers. Those seeking to expand into multi-channel retailing are exploring avenues such as the internet, mail order and telephone sales in order to increase their offer over and above the traditional "bricks and mortar" store. These channels can offer the consumer increased choice and convenience. When expanding into distance selling channels retailers are met with a whole new raft of legislation over and above what is required to be compliant within a traditional store format and face complex legislative challenges such as the Distance Selling Directive and E-Commerce Regulations. The BRC Distance Selling Policy Retail services & marketing 12 Action Group identifies and addresses regulatory and operational issues that are specific to the distance selling arena. There is also a law on environment concerns which states that retailers need clarification from manufacturers and government on chemical safety issues. It is not for the individual retailer to make those decisions but if clear simple guidance is given then retailers will act upon it. The BRC recommends that the onus for providing the information should be with the manufacturers. We have asked for clarification of retailers obligations for testing products. The BRC is an active member of the Chemical Stakeholder Forum. The forum inter alia advises government on managing risks to the environment, and to human health from chemicals entering the environment through commercial production. There is more legislation now than in the past, particularly concerning claims that manufacturers and retailers make about their products. The increased use of credit cards has inevitably led to an increase in their misuse. Chip and PIN (introduced in February 2006) has already led to a fall in card fraud, although concerns have been expressed about its safety. Software is now more available to assist retailers to combat fraud in this area. 10. Write a report which describes, in detail 2 different in-store promotional techniques, designed to sell a particular product or product range, which you have observed and their impact on you as a customer. The world is now a galore of retail stores, boutiques and mega marts. Each has its own charm, quality and way to attract customers. At times, some become monotonous and repetitive, but some surely are really amazing. The retailers use a variety of promotional activities to increase Retail services & marketing 13 the volume and traffic in their retail stores. Advertisements, discount sales, reward programs are mostly used in the retail industry. Moreover, with increased competition from TV based and web based marketers, the marketing strategy of the retailers have gone a drastic change. In store promotions are a regular feature in the retail shops. The large mega marts go a step forward to make the shopping experience more relaxing and friendly. With separate kids section, coffee shops and life style stores, shopping in the retail stores has never been the same. The way McDonalds, sell their burgers, is a wonderful experience. Keeping detailed attention to the store’s ambience, quality of food and staffs’ behavior, the standardization and warmth is ever so unique. Moreover, the surprises for the kids add up to the fun and frolic to the entire family experience. Even with its widespread franchising mode the standardization is maintained all through; be it in China, India or the United States itself. The idea is to keep the customer satisfied and make them feel at home anywhere in the world. This idea is very friendly and warm for the customers, who put lot of faith and trust on this brand. Another retail business which has taken the world by storm is the Disneyland. The theme park concept is one of its kinds in the world. The entire package is so unique and beautiful that the visit to this place is an experience of a lifetime. The mammoth size and galore of activities can beat any production line of a factory. It sells happiness, emotion, togetherness and fun in the most sophisticated retail way. Disneyland has taken the advantage of the World Wide Web through Disney’s Daily Blast. This is a subscription based Web service which is targeted to the children aged 3 to 12, educating them about the pros and cons of the internet. It also sends email to the parents alerting them, if the child posts personal information on the internet. To include the Retail services & marketing 14 entire family to enjoy the theme park brings lot of bonding in them. It is a kind of “family” business. The retail industry is always full of surprises and hence, innovation is the key for the modern day retailers and to make them stay ahead for the race to the No. 1 position. One can attain the top slot, but it is always very hard to maintain it. But the above referenced companies have made outstanding efforts to maintain it. They do not keep any stone unturned at try to pace themselves along with the generation. Their foresightedness and understanding and analyzing the future is an extremely mind boggling experience. Read More