IMT-83: Retail Sales Techniques

IMT-83: RETAIL SALES TECHNIQUE

PART - A

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Q1. Explain the concept of retail sales? Examine the retail sales scenario in India and across the world.

Q2. Suppose you are a retailer of garments and have set up a new store in Delhi. How would you develop your retail strategy? Describe your planning process step by step.

Q3. What role does a centralized retailer play in retails sales operations?

Q4. 'Devising an efficient system of counting and maintaining a stock of inventory items has long been an arduous task for many retail managers.' Discuss some methods of inventory control in light of this statement.

Q5. As a retailer of telecom products outline the procedure you will follow to identify a target market.

PART - B

Q1. You are the owner of a retail store. What recommendations would you make to your employees to ensure good customer service?

Q2. Explain the gaps model of retail sales.

Q3. How can retail growth be measured? Discuss.

Q4. Discuss the different types of retail sales promotion techniques.

Q5. Discuss some pricing strategies that may be adopted by a retailer. As a retailer of groceries, what pricing strategy would you adopt?

PART - C

Q1. You wish to set up a cosmetics store. State where you will locate it after considering the merits and demerits of setting it up in rural, urban and suburban areas.

Q2. How are retail institutions classified on the basis of ownership?

Q3. Differentiate between discount stores and hypermarkets.

Q4. Differentiate between direct marketing and direct selling.

Q5. As a retailer of electronic goods, what types of retail thefts would you have to guard your store against? Explain.

CASE STUDY - 1

BRAND ON TOP?

To determine the influence of advertising spend on being a top brand.

Although there are many definitions of what a top brand is, in this context, it specifically refers to the Markinor/Sunday Times definition of a top brand, which comes in two forms: single, spontaneous questions like 'favourite brand' and 'favourite advertiser' and a neatly-packaged metric called the brand relationship score. The brand relationship score is an assemblage of three metrics: (i) spontaneous awareness (ii) level of trust and (iii) degree of differentiation.

So how does advertising spend influence a top brand status? Thanks to Neilson's ADEX data (advertising spend on all media types: TV, print, radio, cinema, direct mail, outdoor and the Internet), this relationship can be unpacked. To start simple, the 'favourite brand' question can be asked. This is a single, spontaneous question. On correlating advertising spend and the top ten brands in this category, the correlation was found to be fairly weak, even anaemic. The link to the 'favourite advertiser' question is stronger, however, the power of the almighty advertising brand is not as strong as expected, even here. Does advertising spend influence the status of the brand? It does, of course; however, the path is not as simple as one would hope. The answer lies in the unbundling of the brand relationship score and the appreciation of how the three weighted metrics interact to yield a strong brand. Customers cannot be expected to explain or convey how these three concepts work together in their minds.

Borrowing from Malcolm Gladwell's inimitable thinking on how lasting and fundamental decisions are made on the basis of the smallest sliver of encounters, the transitory manner in which people interact with brands indicates that they have become adept brand-spotters. Gladwell describes ornithologists' ability to correctly categorize birds from the briefest of glances as their unconscious detection of the bird's jizz - its essence (derived from the US slang GISS, meaning 'general impression of size and shape').

This instinctive identification of shapes, colours and angles resembles the way in which people are able to live (semi) sanely in the ubiquitous world of brands. Therefore, if people are incessantly thin-slicing brands and making decisions based on almost no conscious thought whatsoever, how can the brand's jizz be influenced and where does the intensity of advertising spend fit into all of this?

Beginning with top brands' third metric, differentiation-, which is a brand's ultimate end-state for this thin slicing to be successful- it is necessary to differentiate the brands effectively enough so that the most miniscule of servings beguiles the consumers. Differentiation, as is measured by us, means that it would not matter a great deal if a particular brand could no longer be bought. So how does ad spend influence the perception of differentiation? Unfortunately, there is no relationship whatsoever. This is intuitive, of course, because if moolah alone was the answer to differentiation, brands appearing in the single 'favourite brand' question would be closely correlated to spend.

So where is return seen on advertising? Now is the time to focus on a brand's keystone- spontaneous awareness. Of course, things like how early the brand is mentioned in response to this question matters. Determining the elasticity between the level of advertising expenditure and the level of achieved awareness does not reveal any new news. It was found once again that the likelihood of a person mentioning a brand spontaneously was closely correlated to the amount marketers spent on their brand's exposure. The link between spend and awareness is stronger in high-touch industries where the relationship is ongoing, such as telecom or retail banking, as opposed to the automotive industry, for example, where purchases are much more infrequent.

So what is the link? The ability of the consumers can be influenced to summon up a particular brand in their minds but what is the point if it is interchangeable with other brands? How does one ensure a dazzling jizz? This is where metric number two - the degree of trust and confidence consumers have in the brands - provides the answer. When correlated with differentiation, it was found that the relationship was strongly positive. Thus, the more trust people have in a brand, the more it makes a material difference to their lives if they cannot purchase that brand in the future.

Spontaneous awareness, as expected, has an impact on the level of trust in brands because meaning is infused into brands via advertising. This finding is also supported by something called the Zajonc effect, which talks of the fact that human beings do not initially like rare or unfamiliar things. The more they see the same thing, the more they like it and, hence, trust it. So trust becomes the adhesive between spend, awareness and differentiation.

The trick in the trust equation is that the yin to advertising's yang is delivery. A brand is a promise made and a promise kept (Interbrand Sampson). Essentially, all this culminates into some piercing questions. If the brand war is based on a consumer's coup d'oeil, or the power of glance, how is a consistent jizz ensured, and in what ways is it measured and leveraged?

Just like birders, people infer things from what they learn and what they experience, and if trust is the critical factor, which binds these two together, are people using this as a strategic filter in the business of brand building?

Questions:

Q1. Before reading the case, what was your perception of top brands? Did the case change your perception? Explain your answer.

Q2. Describe the relationship between ad spend, awareness and differentiation.

Q3. What message did the case study convey?

CASE STUDY - 2

LOYAL CUSTOMERS VS WANDERING CUSTOMERS

In January 2007, Panache Ltd announced a major sales promotion programme, "Target 2007". The objective of the programme was to increase the company's turnover from Rs 300 crore per annum to Rs 500 crore by the end of 2007. This had to be achieved without hiring any extra sales and promotion staff. As per the programme, the sales staff was trained with the latest promotional skills. Both in house and external training programmes were organized to enhance their working skills. The change drivers identified were excellent customer service, innovation, consumer grievance cells at the store and regional levels and addition of new customers.

The programme 'Target 2007' initially responded well. The Company's traffic flow in all of its 250 stores across the country showed a tremendous increase of 70 per cent due to excellent consumer response. The Company even decided to increase its working hours by one to two hours depending upon the location. At times, extra security had to be arranged to tackle the huge traffic in some of the stores. Company officials were optimistic of achieving the Rs 500 crore-turnover target well before the end of 2007.

In the month of September, Company officials discovered that despite huge customer traffic flow and increase in the stores' working hours, the company turnover had actually declined compared to the previous years. In the first two quarters (January to March and April to June) the Company turnover throughout the country was only 125 crore (compared to the previous year's 160 crore). This eye-opening and bitter fact forced the management to call an emergency meeting of all the 250-store managers the same week. After a few rounds of meetings with various store managers, the Managing Director (sales), Mr. R. S. Bindra, constituted a seven-member team to oversee the Target 2007 drive and directed that a report be submitted within fifteen days. Meanwhile the company decided to continue the Target 2007 drive as earlier.

As decided, on 10 October 2007, the enquiry team headed by Mr Rakesh Paul (Senior Regional Manager) submitted its report to the M.D (Sales). The report highlighted that there was nothing wrong with the Target 2007 drive as such however, the sales employees, in order to increase customer traffic flow within the stores, forgot to take care of their regular customers. Besides this, because of unmanageable customer traffic, the Company lost Rs 35 crore due to store stealing (theft by employees and customers).

By the end of October,2007, the Company decided to withdraw the Target 2007 drive and continue with the earlier selling practices where regular consumers were given due attention.

Further, instead of attracting new customers, the store employees started building relationships with the loyal customers (regular customers). Ultimately, by the end of December 2007, the Company accounts showed a turnover of Rs 350 crore (compared to Rs 300 crore for the previous year)

Questions:

Q1. Based on this case study, what do you feel is the central issue that a store manager must consider while implementing any sales promotion programme?

Q2. What needs to be done additionally to ensure the success of such promotional drives?

Q3. What exactly forced the company to withdraw a promotional programme that was providing huge customer traffic and for which the Company had to increase its stores' working hours?

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