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ASSIGNMENTS

MK0003
(2 credits)
Set 1
Marks 30
Retail Marketing
Q.1 Explain various formats of retailing with example.
Ans:
Q.2 Describe various strategies that retailers use for their positioning in the market.
Ans:
Strategic Positioning:
Strategic positions that provide competitive advantage are based on the activities that a retailer
chooses to perform and on where it chooses to perform them. From these positions a firm can
deliver unique value to its customers. A position is based on a set of activities that combine to
create unique value for market. The three positions that retailers use as stratigy are:
• Variety-based positioning
• Need-based positioning
• Access-based positioning

Q.3 What are major considerations for a retailer while selecting location?
Ans:

Aretailer has to consider the following factors while selecting a site:


1. Kind of product sold:
For stores dealing in convenience goods, the quality of traffic is most important. The corner of an
intersection, which offers two distinct traffic streams and a large window display area, is usually
a better site than the middle of block. Convenience goods are often purchased on impulse from
easily accessible stores.
In general, the specialty goods retailer should locate in the type of neighborhood where the
adjacent stores and other establishments are compatible with retailer’s operations. Traditionally
the retail community placed great importance on owing the place since this was considered
prestigious in business community. With the emergence of new forms of retail formats such as
franchising, malls and departmental stores, the dependence on rent or lease is increasing.
2. Cost factor:
Location decision on cost consideration alone is risky. Space cost is a combination of rent or
mortgage payment, utilities, leasehold improvements, general decoration, security, insurance and
all related costs of having a place to conduct business operations. Traditionally, the retail
community placed great importance on owning the place since this was considered prestigious in
the business community. With the emergence of new forms of retail formats such as franchising,
malls and departmental stores, the dependence on rent or lease is increasing.
3. Competitor’s location:
The type and number of competitors is another important factor. The presence of major retail
centers, industrial parks, franchisee chains, and department stores should be noted. An excellent
location may be next or close to parallel or complementary businesses that will help to attract
customers.
4. Ease of traffic low and accessibility: These two are more important factors to some
businesses than others. Retailers selling convenience goods must attract business from the
existing flow of traffic. The flowing factors like parking availability, distance from residential
areas, side of the street, part of the block etc is to be considered.
5. Parking and major thoroughfares:
Parking is another site characteristic that is especially a cause for concern in densely populated
areas. When evaluating the parking that exists at a retail site, there are two considerations
parking capacity and parking configuration. The ideal parking ratio for a food store is 1:3 sq ft.
6. Market trends:
Evaluate the community from a broad, futuristic perspective. Local newspapers are a good
source of information.
7. Visibility:
Visibility has varied impact on a store’s sales potential. It is important when a shopper is trying
to find a store for the first or second time. Once the shopper has become regular customer,
visibility no longer matters.
ASSIGNMENTS
MK0003
(2 credits)
Set 1
Marks 30
Retail Marketing
Q.1 Write a short note on private branding.
Ans:
Private branding:
Product brands owned by a retailer or a wholesaler rather than the manufacturer; also called
house brands. They normally retail at a less expensive price than a National Brand.
Sometimes referred to as house brands, private brands are product brands that are owned by the
retailer instead of the entity that produces the product. The concept of private branding is not
new and is used in many different industries. Most people are used to seeing the private or store
brands displayed alongside national brands on the shelves of supermarkets, pharmacies and
many other retail chains.

The concept of private brands has been around for many decades. As early as the middle of the
19th century, there is evidence of the first major department stores contracting with suppliers to
private label some of the goods that were sold on store shelves. The trend has continued on to
this day, with some of the most well-known retailing entities sometimes attracting customers
based on the quality of their house or store brands as well as their selection of national brands.

Retailers who market private brands benefit from the activity in several ways. First, there is no
need to establish manufacturing facilities in order to produce the goods or services offered. The
retailer does not have to hire additional employees, deal with the acquisition of raw materials, or
arrange for storage space for finished goods until they are sold to a customer. Because someone
else is dealing with details of that type, the overhead for the retailer is significantly less than if
the business attempted to produce the goods on its own.

Another advantage to the use of private brands is that the retailer does not have to sink a great
deal of time and money into the research and development of new product lines. The
manufacturers who produce the goods and arrange for the private labeling engage in that type of
activity, then offer the retailer the opportunity to private brand any new products or services the
supplier decides to market. Often, the retailer is made privy to the results of field testing and the
identification of the niche market where the good or service is likely to generate interest, and can
determine if they wish to go after that particular market sector.

For the manufacturer, private brands also provide another outlet for distributing their products or
services. By producing the same goods as for their national brand distribution and labeling them
with private brands for various clients, the volume of production is often higher than it would be
otherwise. This translates into more net profit for the manufacturer in the long run, helping the
business to remain stable even in tough economic times.
Private branding is when a large distribution channel member (usually a retailer), buys from a
manufacturer in bulk and puts its own name on the product. This strategy is only practical when
the retailer does very high levels of volume. The advantages to the retailer are:

• more freedom and flexibility in pricing


• more control over product attributes and quality
• higher margins (or lower selling price)
• eliminates much of the manufacturer's promotional costs

The advantages to the manufacturer are:

• reduced promotional costs


• stability of sales volume (at least while the contract is operative)

Q.2 Explain discount orientation, upscale orientation and at-the-market orientation with
example.
Ans:

A retailer’s pricing strategy has to reflect it’s over all goals and be related to sales and profits.
There must also be specific pricing goals to be achieved with the integration of total retail mix.
Following are the strategies and the most commonly applied practices for retail pricing:

PRICING STRATEGY IN RETAILING: Retailer Prices Goods & Services to: - Achieve
Profitability - Satisfy Customers - Be Consistent with Overall Image, Sales, Profits, ROI Pricing
Options: -
1. Discount oriented pricing
2. At-the-market oriented pricing
3. Upscale oriented pricing

Discount Orientation: - Low pricing as competitive advantage - Low status Image, Fewer
shopping frills, Price based customers, Low operating costs, High Inventory T/O.

At-the-market Orientation: Middle Class shoppers - Offers excellent service, Good atmosphere
Profit margins > = Moderate - Quality > = Average - Price Range Difficult to Expand as
Competition from Discount Stores or Prestige Stores Squeezes the Range

Upscale Orientation: - Prestige Major Competitive Edge - Smaller Target Market, Higher
Operating Costs, lower Inventory T/O Means Customer Loyalty,

Q.3 Describe ‘The evolution of retail in India’ in your words, highlighting the latest trends in
Indian retail.
Ans:
The evolution of retail in India:
The origins of retailing in India can be traced back to the emergence of Kirana stores and mom-
and-pop stores. These stores used to cater to the local people. Eventually the government
supported the rural retail and many indigenous franchise stores came up with the help of Khadi
& Village Industries Commission. The economy began to open up in the 1980s resulting in the
change of retailing as India began to open up economy. The first few companies to come up with
retail chains were in textile sector, for example, Bombay Dyeing, S Kumar’s, Raymonds, etc.
Later Titan launched retail showrooms in the organized retail sector.
With the passage of time new entrants moved on from manufacturing to pure retailing. The latter
half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to pure Retailers.
Retail outlets such as Foodworld in FMCG, Planet M and Music world in Music, Crossword in
books entered the market before 1995. Shopping malls emerged in the urban areas giving a
world-class experience to the customers with facilities like car parking targeted to provide a
complete destination experience for all segments of society. Eventually hypermarkets and
supermarkets emerged with to provide customer with 3 Vs i.e. Value, Variety and Volume.
The evolution of the sector includes the continuous improvement in the supply chain
management, distribution channels, technology, back-end operations, etc. this would finally lead
to more of consolidation, mergers and acquisitions and huge investments. It also resulted in
expanding target consumer segment.
Phases in the evolution of retail sector

Weekly markets, village and rural meals

Convenience stores, mom-and-Pop


stores/Kirana Stores

Public distribution system, Khadi stores,


Co-operatives

Exclusive brand outlets, hyper markets


& supermarkets, departmental stores
&shopping malls

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