1. A Study
On
“Customer perception towards the Marketing Mix on Big
Bazaar”
Dissertation submitted in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Of
BANGALORE UNIVERSITY
by
Mr. SUNIT GUPTA
Register No: 06KXCM6034
Under the Guidance of
Mr. RAMANATH
SURANA COLLEGE
CENTRE FOR POST GRADUATE STUDIES
Bangalore-560060
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2. DECLARATION
I, SUNIT GUPTA, hereby declare that this report titled
“Customer perception towards the Marketing Mix on Big Bazaar”
at BIG BAZAAR. Submitted by me to the department of management,
Bangalore University in partial fulfillment of requirements of Master of
Business Administration programme is a bonafide work carried by me under
the guidance of Mr.Ramanath. This has not been submitted earlier to any
other university or institution for the award of any degree or diploma
certificate or published any time before.
PLACE: BANGALORE
DATE:
SUNIT GUPTA
(06KXCM6034
2

3. ACKNOWLEDGEMENT
I extend my hearty thanks to all the following members for their kind co-
operation and valuable guidance provided by them during my project as a
part of MBA course.
I would like to thank Dr. Prabhu Dev Director, Surana College PG Centre
for his kind cooperation to complete this report.
I would like to thank my guide Mr.Ramanath for spending his valuable and
precious time in guiding and helping me to prepare my report.
I also thank my parents for their support.
SUNIT GUPTA
3

4. EXECUTIVE SUMMARY
Retail is the booming sectors of India in the present times. Retail, one of India’s largest
industries, has presently emerged as one of the most dynamic and fast paced industries of
our times with several players entering the market. Accounting for over 10 per cent of the
country’s GDP and around eight per cent of the employment retailing in India is
gradually inching its way toward becoming the next boom industry.
Big bazaar is the hypermarket discount store imitative of the company commissioned to
address the discount and bargain hunting tendencies of the Indian shopper. Big Bazaar
chain houses everything that one may need in house, under one roof, at the lowest prices.
It sells all items either branded or unbranded. This includes clothing, apparel, home
textiles & furnishing, white goods, provisions; etc. The merchandise will either be a part
of Big Bazaar goods or will be a part of the shop-in-shop. Big Bazaar, Pantaloon
promises 'more for less', addressing a wider range of product lines which are of interest to
the mass market. The high service levels, good ambience and implicit guarantees make
shopping at Big Bazaar a worry-free experience. Essentially this hypermarket concept is
well on its way to changing the very face of the Indian retailing industry.
Understanding shopping behavior is in shopping malls is one of the greatest problems of
the marketer. He has to fine tune his marketing mix strategies according to the market
needs. For this an in depth Analysis is necessary to understand the shopping behavior.
Big Bazaar is one of the well-known shopping malls in the city of Bangalore and has a
different kind of marketing strategy as compared to others.
The study conducted in Big Bazaar is focused on understanding the marketing mix
strategies of Big Bazaar from customers' point of view. The required data is collected
through questionnaire, analysis is made based on data collected and necessary
suggestions are given
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5. INDEX
ChapterN
o Contents Page No
1 Introduction 1-40
2 Research design 41-43
3 Company Profile 44-51
4 Data Analysis & Interpretation 52-77
5 Findings, Suggestion & Conclusion 78-81
6 Bibliography
LIST OF TABLES
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6. SL. TABLE TITLE PAGE
NO. NO. NO.
1 4.1. Frequency Of Visit 52
2 4.2 Preference Of Shopping Days 54
3 4.3 Preference Of Shopping Time 56
4 4.4 Accompanied By 58
5 4.5 Source Of Knowledge 60
6 4.6 Customer Perception Towards Big Bazaar 62
7 4.7 Product Satisfaction 64
8 4.8 Product Availability 66
9 4.9 Helpful Signage 68
10 4.10 Awareness Of Promotional Offers 70
11 4.11 Advantage Of Promotional Offers 72
12 4.12 Age 74
13 4.13 Marital Status 75
14 4.14 Monthly Family Income 76
INTRODUCTION
“Nothing happens in business until somebody sells something to someone”
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7. RETAILING
A retailer buys goods or products in large quantities from manufacturers or importers,
either directly or through a wholesaler, and then sells smaller quantities to the end-user.
Retailing can be defined as the buying and selling of goods and services. It can also be
defined as the timely delivery of goods and services demanded by consumers at prices
that are competitive and affordable.
Retailing consists of the sale of goods or merchandise, from a fixed location such as a
department store or kiosk, in small or individual lots for direct consumption by the
purchaser.
Retailing includes all the activities involved in selling goods or services directly to final
consumers for personal, non-business use. A retailer or retail store is any business
enterprise whose sales volume comes primarily from retailing. Any organization selling
to the final- whether it is manufacturer, wholesaler, or retailer- is doing retailing. It does
not matter how the goods or services are sold (by person, mail, telephone, vending
machine, or internet) or where they are sold (in the store, on the street, or in consumer's
home).
Retailing is a trading activity directly activity directly related to the sale of goods of
services to the ultimate consumer for personal, non-business use. A retailer is the last
middleman in the machinery of distribution and he is responsible to satisfy recurrent
wants of consumers, Retail trade is selling of varied goods in small quantities to the final
consumer. There are three distinguishing feature of retail trade. The retailer deals in small
quantities and his business are usually local in character. Secondly retail trade always
shows tendency towards variety as it has to satisfy innumerable wants of consumers. A
specialized retail shop is an exception. Thirdly a retailer, by predating near about the
residential areas of consumer, sells his wares directly to consumers. Manufactured goods
are worthless until they pass acid-test of retail distributions. The retailer alone can offer
safe and reliable goods to consumers.
Retail Sector in India
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8. Retail is the booming sectors of India in the present times. Retail, one of India’s largest
industries, has presently emerged as one of the most dynamic and fast paced industries of
our times with several players entering the market. Accounting for over 10 per cent of the
country’s GDP and around eight per cent of the employment retailing in India is
gradually inching its way toward becoming the next boom industry.
As the contemporary retail sector in India is reflected in sprawling shopping centers,
multiplex- malls and huge complexes offer shopping, entertainment and food all under
one roof, the concept of shopping has altered in terms of format and consumer buying
behavior, ushering in a revolution in shopping in India. This has also contributed to large
scale investments in the real estate sector with major national and global players investing
in developing the infrastructure and construction of the retailing business. The trends that
are driving the growth of the retail sector in India are
• Low share of organized retailing
• Falling real estate prices
• Increase in disposable income and customer aspiration
• Increase in expenditure for luxury items
Another credible factor in the prospects of the retail sector in India is the increase in the
young working population. In India, hefty pay-packets, nuclear families in urban areas,
along with increasing working-women population and emerging opportunities in the
services sector. These key factors have been the growth drivers of the organized retail
sector in India which now boast of retailing almost all the preferences of life - Apparel &
Accessories, Appliances, Electronics, Cosmetics and Toiletries, Home & Office Products,
Travel and Leisure and many more. With this the retail sector in India is witnessing a
rejuvenation as traditional markets make way for new formats such as departmental
stores, hypermarkets, supermarkets and specialty stores.
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9. The retailing configuration in India is fast developing as shopping malls are increasingly
becoming familiar in large cities. When it comes to development of retail space specially
the malls, the Tier II cities are no longer behind in the race. If development plans till 2007
is studied it shows the projection of 220 shopping malls, with 139 malls in metros and the
remaining 81 in the Tier II cities. The government of states like Delhi and National
Capital Region (NCR) are very upbeat about permitting the use of land for commercial
development thus increasing the availability of land for retail space; thus making NCR
render to 50% of the malls in India.
India is being seen as a potential goldmine for retail investors from over the world and
latest research has rated India as the top destination for retailers for an attractive emerging
retail market. India’s vast middle class and its almost untapped retail industry are key
attractions for global retail giants wanting to enter newer markets. Even though India has
well over 5 million retail outlets, the country sorely lacks anything that can resemble a
retailing industry in the modern sense of the term. This presents international retailing
specialists with a great opportunity. The organized retail sector is expected to grow
stronger than GDP growth in the next five years driven by changing lifestyles,
burgeoning income and favorable demographic outline.
Another cap to the retailing industry in India is allowing 51% FDI in single brand outlet.
The government is now set to initiate a second wave of reforms in the segment by
liberalizing investment norms further. This will not only favor the retail sector develop in
terms of design concept, construction quality and providing modern amenities but will
also help in creating a consumer-friendly environment. Retail industry in India is at the
crossroads but the future of the consumer markets is promising as the market is growing,
government policies are becoming more favorable and emerging technologies are
facilitating operations in India. And this upsurge in the retail industry has made India a
promising destination for retail investors and at the same time has impelled investments
in the real estate sector. As foreign investors cautiously test the Indian Markets for
investments in the retail sector, local companies and joint ventures are expected to be
more advantageously positioned than the purely foreign ones in the evolving India's
organized retailing industry.
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10. 3 million square feet of retail space spread across 25 cities where 12 crore Indians will
shop this year. This is Pantaloon Retail (India) Limited, (a Pantaloon Knowledge Group
Company) - India’s face of organized retail business.
Presently, in to five lines of businesses – fashion and footwear, food, general merchandise,
leisure & entertainment and home – the Indian Retail sector
An analysis of the company operates multiple delivery formats: the
fashion store format under the Pantaloons brand; the showcase seamless mall under the
Central brand; the hypermarket discount store format under the Big Bazaar brand; the food
& grocery retail format under the Food Bazaar brand, and apparel stores under Fashion
Station.
The Company plans entry in telecommunications retail and other lines of businesses such
as wellness and beauty as well as books and music, besides pantalooning a portal for e-
retailing in the near future as another delivery format.
Retailing sector
India is still in the nascent stage of organized retailing and is constantly evolving.
Pantaloon Retail (I) Limited is a front runner in India’s modern retail space and company
represent fashion ,food, general merchandise and other lines of business, through multiple
delivery formats, primarily catering to the lifestyle and value customers.
The company has stores in nearly 30 cities across the country, constituting over 2.7 million
square feet of retail space. The company has also signed close to 10 million sq. ft. of retail
space to be operational by end 2008, which represents 20-30 % of all modern retail space
coming up in the next three years. Over 200 million footfalls are expected in our stores by
2006-07.
They believe that consumption will be the next big driver of India’s economic growth.
Rising incomes and increased exposure to global products and global consumption patterns
have changed the average Indian’s attitude towards consumption and savings.
Consumption = Development. Increased and channelized consumption would lead to the
development of the nation through improved and better infrastructure facilities, greater
employment generation possibilities will emerge with increased consumption, leading to
people wanting to spend more on themselves. This cycle is what will fuel the consumption
boom in the country.
Company is in the process of constant evolution and firmly believes in creating the present,
with the future in mind. The company only one vision-to captures the highest share of the
consumer’s wallet.
This is what has led them to believe that apart from their core strengths in fashion, food and
general merchandise, they will operate through various formats in other lines of businesses;
complete home solutions, leisure & entertainment, wellness, communications and financial
products. Company also has two AMC’s. One that specializes in Property and the other is a
‘Consumer India Fund’. The property fund aims at sourcing high quality property at the
lowest possible rates, while the consumer fund will look at providing our retail pipeline and
expertise to national and regional brands, thereby enabling them with a wider coverage.
The major competitors and the market share of Big Bazzar.
Company operates in a competitive environment. For each line of business, company
would face competition from established national and regional companies. In the fashion
segment, they probably face competition from Shoppers Stop, Trent and Lifestyle. The
10
hypermarket business is relatively new, being just about three to four years old in the
country. They face competition from the likes of RPG (Spencer’s), Trent (Star India
Bazaar) and with Shoppers Stop too indicating their entry into the hypermarket segment. In
the Food business, they face competition from Subhiksha, Food World to name a few.

11. 1. An Overview of the Retail sector:
The Indian retail sector is highly fragmented with 97% of its business being run by the
unorganized retailers like the traditional family run stores and corner stores. The
organized retail however is at a very nascent stage though attempts are being made to
increase its proportion to 9-10% by the year 2010 bringing in a huge opportunity for
prospective new players. The sector is the largest source of employment after agriculture,
and has deep penetration into rural India generating more than 10% of India's GDP.
Source: Ernst &Young, the Great Indian Retail Story, 2006.
A look at the statistics shows that the retail sector in India is worth USD 394 billion and
is growing at the rate of 30% annually. An ICRIER study has found that retailing ($180
billion) contributes to 10 per cent of GDP and employs 7 per cent (21 million) of the
workforce. According to AT Kearney, India is given the top ranking as the next foreign
investment destination, as markets like China become increasingly saturated. India is the
4th largest economy as regards GDP (in PPP terms) and is expected to rank 3 rd by 2010
just behind US and China. Over the past few years, the retail sales in India are hovering
around 33-35% of GDP as compared to around 20% in the US. The table gives the
picture of India's retail trade as compared to the US and China.
Source: Economist, Let gradualism guide FDI in retail, 2006.
11

12. The last few years witnessed immense growth by this sector, the key drivers being
changing consumer profile and demographics, increase in the number of international
brands available in the Indian market, economic implications of the government
increasing urbanization, credit availability, and improvement in the infrastructure,
increasing investments in technology and real estate building a world class shopping
environment for the consumers. In order to keep pace with the increasing demand, there
has been a hectic activity in terms of entry of international labels, expansion plans, and
focus on technology, operations and processes. This has lead to more complex
relationships involving suppliers, third party distributors and retailers, which can be dealt
with the help of an efficient supply chain. A proper supply chain will help meet the
competition head-on, manage stock availability; supplier relations, new value-added
services, cost cutting and most importantly reduce the wastage levels in fresh produce.
Large Indian players like Reliance, Ambanis, K Rahejas, Bharti AirTel, ITC and many
others are making significant investments in this sector leading to emergence of big
retailers who can bargain with suppliers to reap economies of scale. Hence, discounting is
becoming an accepted practice. Proper infrastructure is a pre-requisite in retailing, which
would help to modernize India and facilitate rapid economic growth. This would help in
efficient delivery of goods and value-added services to the consumer making a higher
contribution to the GDP.
International retailers see India as the last retailing frontier left as the China's retail sector
is becoming saturated. However, the Indian Government restrictions on the FDI are
creating ripples among the international players like Wal-Mart, Tesco and many other
retail giants struggling to enter Indian markets. As of now the government has allowed
only 51% FDI in the sector to `one-brand' shops like Nike, Reebok etc. However, other
international players are taking alternative routes to enter the Indian retail market
indirectly via strategic licensing agreement, franchisee agreement and cash and carry
wholesale trading (since 100% FDI is allowed in wholesale trading).
2. How has the Indian consumer changed over the years?
In the past few years the whole concept of shopping has been altered in terms of format
and consumer buying behavior. With the increasing urbanization, the Indian consumer is
emerging as more trend-conscious. There has also been a shift from price considerations
to designs and quality as there is a greater focus on looking and feeling good (apparel as
well as fitness). At the same time, the Indian consumer is not beguiled by retail products
which are high on price but commensurately low on value or functionality. However, it
can be said that the Indian consumer is a paradox, where the discount shopper loyalty
takes a backseat over price discounts.
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13. Indians have grown richer and thus spending more on vehicles, phones and eating out in
restaurants. The spending is focused more outside the homes, unlike in other Asian
countries where consumers have tended to spend more on personal items as they grow
richer. Spending on luxury goods have increased twice as fast with 2/3 of India's
population is under 35, consumer demand is clearly growing. The mall mania has bought
in a whole new breed of modern retail formats across the country catering to every need
of the value-seeking Indian consumer. An average Indian would see a mall as a perfect
weekend getaway with family offering them entertainment, leisure, food, shopping all
less than one roof.
Source: Ernst & Young, the Great Indian Retail Story, 2006.
Indian consumer is also witnessing some changes in its demographics with a large
working population being under the age group of 24-35, there has been an increasing
number of nuclear families, increase in working women population and emerging
opportunities in the service sector during the past few years which has been the key
growth driver of the organized retail sector in India. The emergence of a larger middle
and upper middle classes and the substantial increase in their disposable income has
changed the nature of shopping in India from need based to lifestyle dictated. The self-
employed segment has replaced the employed salaried segment as the mainstream
market, thus resulting in an increasing consumption of productivity goods, especially
mobile phones and 2 - 4 wheeler vehicles. There is also an easier acceptance of luxury
and an increased willingness to experiment with the mainstream fashion, resulting in an
increased willingness towards disposability and casting out from apparels to cars to
mobile phones to consumer durables. Indians spend over USD 30,000 a year (in PPP
terms) on conspicuous consumption that represents 2.8% of the entire population (which
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14. is approx 30 million people) making it the 4th largest economy in PPP terms next only to
USA, Japan and China .
With reference to the map of India's income class, it can be noticed that the real driver of
the Indian retail sector is the bottom 80% of the first layer and the upper half of the
second layer of the income map. This segment of about 40 million households earns USD
4,000-10,000 per household and comprises salaried employees and self-employed
professionals and is expected to grow to 65 million households by 2010 1. In addition to
this, facilities like credit friendliness, availability of cheap finance and a drop in interest
rates have changed consumer markets. Capital expenditure (jewelry, homes, and cars) has
shifted to becoming redefined as consumer revenue expenditure, in addition to consumer
durables and loan credit purchases.
3. FDI in retail:
Global retailers have already been sourcing from India; the opening up of the retail sector
to the FDI has been fraught with political challenges. With politicians arguing that the
global retailers will put thousands of small local players and fledging domestic chains out
of business.
The only opening in the retail sector so far has been to allow 51% foreign stakes in single
brand consumer stores, private labels, high tech items/ items requiring specialized after
sales service, medical and diagnostic items and items sourced from Indian small sector
(manufactured with technology provided by the foreign collaborations). Parties
supporting the FDI suggest that the FDI in retail should be opened in a gradual/ phased
manner, such that it can promote competition and contribute to the growth of the Indian
economy. The impact of the FDI would benefit the end user of the consumer to a great
extent and will help to generate a decent amount of employment as more and more
entrepreneurs would be coming forward to invest and taste the new generation in retail
marketing. The opening of FDI should be designed in such a way that many sectors -
including agriculture, food processing, manufacturing, packaging and logistics would
reap benefits. The table below lists the pros and cons of allowing FDI into retail.
Benefits of FDI in retail
 Inflow of investment and funds.
 Improvement in the quality of employment.
 Generating more employment.
 Increased local sourcing.
 Provide better value to end consumers.
 Investments and improvement in the supply chains and warehousing.
 Franchising opportunities for local entrepreneurs.
 Growth of infrastructure.
 Increased efficiency.
 Cost reduction.
 Implementation of IT in retail.
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15.  Stimulate infant industries and other supporting industries.
Thus it can be said that this investment boom could change the face of Indian retail by
offering quality goods at lower prices to the consumers. In addition to this, the presence
of global retailers will further enhance exports from India as they would also source
Indian goods for their international outlets in a big way leading to a remarkable increase
in Indian exports.
4. Segment analysis:
The structure of Indian retail is developing rapidly with shopping malls becoming
increasingly common in the large cities and development plans being projected at 150
new shopping malls by 2008. However, the traditional formats like hawkers, grocers and
tobacconist shops continue to co-exist with the modern formats of retailing. Modern
retailing has helped the companies to increase the consumption of their products for
example: Indian consumers would normally consume the rice sold at the nearby kiranas
viz. Kolam for daily use. With the introduction of organized retail, it has been noticed
that the sale of Basmati rice has gone up by four times than it was a few years back; as a
superior quality rice (Basmati) is now available at almost the same price as the normal
rice at a local kirana. Thus, the way a product is displayed and promoted influences its
sales. If the consumption continues to grow this way it can be said that the local market
would go through a metamorphoses of a change and the local stores would soon become
the things of the past or restricted to last minute unplanned buying.
4.1 Food and grocery retail:
The food business in India is largely unorganized adding up to barely Rs. 40,000 crore,
with other large players adding another 50% to that. The All India food consumption is
close to Rs. 900,000 crore, with the total urban consumption being around Rs.330,000
crore. This means that aggregate revenues of large food players is currently only 5% of
the total Indian market, and around 15-20% of total urban food consumption. Most food
is sold in the local `wet' market, vendors, roadside push cart sellers or tiny kirana stores.
According to McKinsey report, the share of an Indian household's spending on food is
one of the highest in the world, with 48% of income being spent on food and beverages.
4.2 Apparel retail:
The ready-mades and western outfits are growing at 40-45% annually, as the market
teems up with international brands and new entrants entering this segment creating an
Rs.500 crore market for the premium grooming segment. The past few years has seen the
sector aligning itself with global trends with retailing companies like Shoppers' stop and
Crossroads entering the fray to entice the middle class. However, it is estimated that this
segment would grow to Rs. 300 crore in the next three years.
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16. 4.3 Gems and Jewellery retail:
The gems and jewellery market is the key emerging area, accounting for a high
proportion of retail spends. India is the largest consumer of gold in the world with an
estimated annual consumption of 1000 tones, considering actual imports and recycled
gold. The market for jewellery is estimated as upwards of Rs. 65,000 crores.
4.4 Pharma retail:
The pharmacy retailing is estimated at about Rs. 30,000 crore, with 15% of the 51 lakh
retail stores in India being chemists. According to Vikas Bali, Principal, A.T. Kearney
(India) Ltd, "Pharma retailing will follow the trend of becoming more organized and
corporatized as is seen in other retailing formats (food, apparel etc)". A few corporate
who have already forayed into this segment include Dr Morepen (with Lifespring and
soon to be launched Tango), Medicine Shoppe, Apollo pharmacies, 98.4 from Global
Health line Pvt Ltd, and the recently launched CRS Health from SAK Industries. In the
south, RPG group's Health & Glow is already in this category, though it is not a pure play
pharma retailer but more in the health and beauty care business.
4.5 Music Retail:
The size of the Indian music industry, as per this Images-KSA Study, is estimated at
Rs.1100 crore of which about 36 percent is consumed by the pirated market and
organized music retailing constitutes about 14 percent, equivalent to Rs.150 crore.
4.6 Book retail:
The book industry is estimated at over Rs. 3,000 crore out of which organized retail
accounts for only 7% (at Rs.210 crore). This segment is seen to be emerging with text
and curriculum books accounting to about 50% of the total sales. The gifting habit in
India is catching on fast with books enjoying a significant share, thus expecting this
sector to grow by 15% annually.
4.7 Consumer durables retail:
The consumer durables market can be stratified into consumer electronics comprising of
TV sets, audio
systems, VCD
players and others;
and
appliances like
washing
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17. machines, microwave ovens, air conditioners (A/Cs). The existing size of this sector
stands at an estimated USD 4.5 Billion with organized retailing being at 5%
Source: E&Y, the Great Indian Retail Story, 2006.
As noticed in the figure above, the organized retail penetration (ORP) is the highest in
footwear with 22% followed by clothing. Though food and grocery account for largest
share of retail spend by the consumer at about 76%, only 1% of this market is in the
organized sector. However, it has been estimated that this segment would multiply five
times taking the share of the organized market to 30 percent in the coming years.
5. Industry analysis of the Indian retail sector:
Modern retailing has entered India in form of sprawling malls and huge complexes
offering shopping, entertainment, leisure to the consumer as the retailers experiment with
a variety of formats, from discount stores to supermarkets to hypermarkets to specialty
chains. However, kiranas still continue to score over modern formats primarily due to the
convenience factor.
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18. The organized segment typically comprises of a large number of retailers, greater
enforcement of taxation mechanisms and better labour law monitoring system. It's no
longer about just stocking and selling but about efficient supply chain management,
developing vendor relationship quality customer service, efficient merchandising and
timely promotional campaigns. The modern retail formats are encouraging development
of well-established and efficient supply chains in each segment ensuring efficient
movement of goods from farms to kitchens, which will result in huge savings for the
farmers as well as for the nation. The government also stands to gain through more
efficient collection of tax revenues. Along with the modern retail formats, the non-store
retailing channels are also witnessing action with HLL initiating Sangam Direct, a direct
to home service. Network marketing has been growing quite fast and has a few large
players today. Gas stations are seeing action in the form of convenience stores, ATMs,
food courts and pharmacies appearing in many outlets.
In the coming years it can be said that the hypermarket route will emerge as the most
preferred format for international retailers stepping into the country. At present, there are
50 hypermarkets operated by four to five large retailers spread across 67 cities catering to
a population of half-a-million or more. Estimates indicate that this sector will have the
potential to absorb many more hypermarkets in the next four to five years.
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19. List of retailers that have come with new formats:
Retailer Current Format New Formats. Experimenting With
Shoppers' Stop Department Store Quasi-mall
Ebony Department Store Quasi-mall, smaller outlets, adding food retail
Crossword Large bookstore Corner shops
Piramyd Department Store Quasi-mall, food retail
Pantaloon Own brand store Hypermarket
Subhiksha Supermarket Considering moving to self service
Vitan Supermarket Suburban discount store
Food world Food supermarket Hypermarket, Food world express
Globus Department Store Small fashion stores
Bombay Bazaar Aggregation of Kiranas
Efoodmart Aggregation of Kiranas
Metro Cash and carry
Traditionally, the small store (kirana) retailing has been one of the easiest ways to
generate self-employment, as it requires minimum investments in terms of land, labour
and capital. These stores are not affected by the modern retailing as it is still considered
very convenient to shop. In order to keep pace with the modern formats, kiranas have
now started providing more value-added services like stocking ready to cook vegetables
and other fresh produce. They also provide services like credit, phone service, home
delivery etc.
The organized retailing has helped in promoting several niche categories such as
packaged fruit juices, hair creams, fabric bleaches, shower gels, depilatory products and
convenience and health foods, which are generally not found in the local kirana stores.
Looking at the vast opportunity in this sector, big players like Reliance and K Rahejas
has announced its plans to become the country's largest modern retainers by establishing
a chain of stores across all major cities.
A few facts:
 Rural India consists of 720 million consumers across villages
 17% of these villages account for 50% of the rural population
 60% of the rural wealth reaches out to almost 1000000+ villages to address just
50% of this opportunity
Apart from metro cities, several small towns like Nagpur, Nasik, Ahmadabad,
Aurangabad, Sholapur, Kolhapur and Amravati as witnessing the expansion of modern
retails. Small towns in Maharashtra are emerging as retail hubs for large chain stores like
Pantaloon Retail because many small cities like Nagpur have a student population, lower
real estate costs, fewer power cuts and lower levels of attrition. However, retailers need to
adjust their product mix for smaller cities, as they tend to be more conservative than the
metros.
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20. In order for the market to grow in modern retail, it is necessary that steps are taken for
rewriting laws, restructuring the tax regime, accessing and developing new skills and
investing significantly in India.
6. Business analysis of the Indian retail sector:
The size of modern retail is about US$ 8 Billion and has grown by 35% CAGR in last
five years. (KSA Technopak, June 2006). In modern retailing, a key strategic choice is
the format; retailers are coming up with various innovative formats to provide an edge to
retailers.
Most attractive developing markets for retail by region according to AT Kearney Study:
Source: AT Kearney, GRDI 2006.
A look at the graph above shows that the Asian markets are considered attractive for
retail as per the AT Kearney's report; India is being placed on the radar by the USA and
UK. Global giants like Tesco and Wal-Mart are experimenting with various options to
enter India. One possibility for Wal-Mart would be to open Sam's club wholesale
business through a joint venture and sell strictly to other retailers. This strategy skirts the
issue of not being able to sell directly to customers and establish a strong presence in the
local market. On the other hand, Tesco is planning to get into a partnership with Home
Care Retail Mart Pvt. Ltd expecting to open 50 stores by 2010. The government is taking
gradual steps in allowing the FDI into Indian retail, when it takes the final steps the peak
time will quickly pass giving the existing players a distinct edge.
20

21. 6.1 Merger and acquisition activity:
India witnessed a record number of M&A deals in the first half of 2006, which were
collectively worth USD 25.6 billion. A significant number of deals have being carried out
in the Indian retail sector in the past few months in order to acquire a larger share in the
growing domestic market and to compete against the prospective global and domestic
players. The table below shows some recent deals that have taken place in the Indian
retail sector:
Consideration
Acquired/ JV
Year Acquirer Nature of Business Stake
Company/ Target
(US$ million)
2005 Liberty Shoes Future group Retail (Footwear) 51% 3
Indus - League
2005 Future group Retail clothing 68% 5
Clothing
Leisure retail chain
2005 Odyssey India Deccan Chronicle Holdings 100% 14
(books, music, toys)
Books, music,
2005 Landmark Tata Trent 74% 24
accessories
TGI Friday's (a subsidiary of
2006 Bistro Hospitality Restaurant (Food retail) 25% N/A
Carlson Restaurant World-wide)
Indus League
clothing 50%
Lingerie and women's
2006 Etam group, France 8
wear retailing
(Future group (JV)
company)
Source: PricewaterhouseCoppers, Asia-Pacific M&A bulletin, mid year 2006.
21

22. 6.2 Business models for entry in Indian markets:
Due to the FDI restrictions the international players are looking for alternative avenues to
enter the Indian markets. The chart below shows the current formats permitted by the
Government of India for the international players.
Source: Ernst & Young, The great Indian Retail Story, 2006.
7. Employment opportunities in this sector:
The Indian retail sector offers an economic opportunity on a massive scale both as a
global base and a domestic market. This sector yields many positive results like
generating more jobs and bringing numerous goods to the consumers at reasonable prices.
According to Ernst &Young's report `The Great Indian Retail Story' this sector is
expected to create 2 million jobs by 2010.
About 4 crore people are employed in retail trade, assuming each person supports a
family of 5, this, implies that about 20 crore people are dependent on this sector. For a
vast majority of the households, retailing is a euphemism for a marginal existence.
Modern retail formats have generated huge employment for the young and even senior
citizens and women wanting to work part-time (even in small towns). People have greater
exposure to the technical aspects, training and also earn higher salaries along with
bonuses and incentives. With foreign companies opening expanding in India, employees
are being re-trained according to international standards and practices that are being
bought in. There is also an increase in the number of retail management programmes and
institutes. This will bridge the gap in availability of talented professionals at the middle
and lower levels. Successful Indian retailers are creating a robust second and third level
22

23. of management by hiring aggressively for these key roles. Talented professionals will put
increased pressure on wage costs. Therefore operating margins, especially for mid-sized
retailers, are becoming a poaching ground for international retailers once they enter India.
With private companies getting into retail, there are people employed from diverse
cultures (no room for reservations unlike government owned stores) where there is a
sense of unity in diversity. The companies are also employing people who are physically
handicapped. The next few years are expected will see the sector offering new jobs to
50,000 young graduates and diploma holders.
8. What makes foreign firms come to India?
A host of traditional `brick and mortar' companies such a Tata’s have entered the retail
business. With demographic changes like rising disposable incomes and rapidly
expanding middle class, the Indian retail sector is at an inflexion point where the growth
in consumption and growth of organized retailing are taking it towards higher growth.
Market liberalization and an increasingly assertive consumer population have attracted
bigger Indian and multinational operations to make investments, but are yet to achieve
success or reach break even.
The Indian consumption pattern and preference have undergone vast changes over the
years allowing the foreign retailers to play with the psyche of the brand conscious
modern Indian, who has no qualms spending a fortune on overhauling his wardrobe. This
led to the entry of up-market brands like Nautica and New Balance into the country to
cash in on this opportunity.
India has the youngest population in the world, with large population between 20-34 age
groups in the urban regions boosting the demand. All these factors have tempted the
foreign firms such as Wal-Mart, Tesco and Carrefour to enter India. India is now firmly
placed on the US and UK radars as US retailers are gradually realizing the potential of
the retail and consumer goods sector. The timing is the most important source of
competitive advantage for global and regional retailers in the globalization race. Knowing
when to enter emerging retail markets is the key to success.
AT Kearney's study on global retailing trends found that India is the least competitive as
well as least saturated of all major global markets. This implies that there are significantly
low entry barriers for players trying to setup base here, in terms of the competitive
landscape. The report further stated that global retailers such as Wal-Mart, Carrefour,
Tesco and Casino would take advantage of the more favorable FDI rules that are likely in
India and enter the country through partnerships with local retailers. Other retailers such
as Marks & Spencer and the Benetton Group, who operate through a franchisee model,
would most likely switch to a hybrid ownership structure.
However, in order to achieve breakthrough growth the global retailers might have to face
some glitches in India. High taxes, poor infrastructure, bureaucratic hurdles and high cost
23

24. of real estate are some of the challenges that overseas retailers may have to tackle in the
country.
9. IT and latest development:
Technology has played a key role in retailers' efforts to compete in this volatile market.
With e-tailing channels making its presence felt in India companies are using either their
own web portal or are tying up with horizontal players like Rediff.com and
Indiatimes.com to offer their products on the web 15 (www.alexa.com). IT has been used
by retailers ranging from Amazon.com to eBay, in order to radically change the buying
behavior across the globe.
Retailers worldwide are looking forward to increase their IT spending by almost 15% in
2006, allocating almost half of this increase to application software with a particular
focus on tools that facilitate multi-channel customer relationships, point of sale systems,
strategic merchandising and supply chain management 17. The last 2-3 years have seen
several retailers ranging from F&B operations to discount clothing implementing supply
chain management (SCM) solutions to improve core business processes such as global
sourcing, distribution, logistics, innovations, transparency and visibility in financials and
inventory, compliance and management of point of sale (POS) data. However, organized
retailers have not taken well to the concept of 3PL (third party logistics) due to their
apprehensions of losing control over the supply chain. Currently, the transportation is
carried out partly by organized service providers and partly by truckers and local
transporters.
In conclusion, it can be said that in order to deliver the levels of quality and service that
consumers are demanding; the organized retailers are in a pressing need for a single
enterprise wide IT platform to manage operations, which will become increasingly
complex once the market expands.
10. A look at the rural retailing:
More than half of retail market in India is in the rural areas (55%); although share of
urban market is increasing by almost 5% every 8-10 years 14. Accommodating almost
two-third of the country's consumers and generating almost half of the national income,
the rural India offers tremendous opportunities for organized retailers which many
companies have failed to access. According to the study conducted by NCEAR, the
number of `lower middle income' group in rural areas is almost double as compared to the
urban areas, having a large consuming class with 41% of the Indian middle class and
58% of the total disposable income.
Importance of rural markets
• The rural market accounts close to 70% of toilets soap users
• 38% of all two wheelers are purchased by the rural consumers
• The market for FMGC products is growing much faster than urban counterpart
24

25. • The rural market accounts accounts for half the total market for TV sets, fans,
pressure cookers, bicycles, washing shops, tea, salt and toothpowder.
A look at the demographics reveals that the highest income levels households in the rural
areas are 1.6 million as compared to 2.3 million in urban areas. It has also been forecasted
that the middle and the higher income households are expected to grow to 111 million by
2007 from the current levels of 80 million. Thus, it can be said that with 128 million
households, the rural population is nearly three times the urban. This vast demand base
and size offers a huge opportunity that MNCs cannot afford to ignore.
According to the ERNEST & YOUNG India retail report
• Hypermarkets to be preferred format for international retailers entering India.
• Malls to move beyond the metros, increase presence in tier II cities.
• Organized retail penetration highest across footwear, clothing segments.
• Franchising gaining steam with retailers.
In order to meet with this rapid growth in demand the government has shown its concern
by providing an induction of Rs.140 billion and Rs. 300 billion in the rural sector through
its development schemes in the Seventh and the Eight plan respectively. The large
players like ITC, HLL, BPCL are realizing the potential of this sector and are seen
experimenting with new ways to tap this segment.
ITC spent 3 years and Rs. 80 crore on R&D to come up with the concept of E-choupal
and Choupal Sagar-rural hypermarkets. Through this, the farmers can access latest local
and global information on weather and market prices, scientific farming techniques at the
village itself through a web-portal - all in Hindi. E-Choupal also facilitates supply of high
quality inputs as well as purchase of commodities at their doorstep. The hypermarket
(Choupal Sagar) provides them with another platform to sell their produce and purchase
necessary farm and household goods under one roof.
Next in line, HLL came up with Project Shakti in late 2000 to sell its products through
women self-help groups who operate like a direct-to-home team of sales women in
inaccessible areas where HLL's conventional sales system does not reach. Another step to
tap the rural market was `Operation Bharat' wherein low-priced sample packets of
toothpastes, fairness creams, Clinic Plus shampoos and Ponds face creams to 20mn
households.
As a part of their rural strategy, BPCL introduced Rural Marketing Vehicles (RMVs) that
move from village and village and filling cylinders on the spot for rural consumers
keeping in mind the low-income of the rural population. The Company also introduced a
smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill
cost.
Future outlook:
25

26. Investments in the range of US$ 20+ Billion are expected in the next 5 years in Retail &
its Supply Chain alone.
Size of modern retail likely to touch US$ 60+ Billion by 2011:
At least 2.5 Million additional direct jobs likely to be created in the next 5 years.
Hyper-competition is expected to set in by 2008-9 as the footprint of the top-5 players
starts significant overlapping in top 20 - 30 towns.
Significant impact on other retailers and branded good players
- creating new opportunities and threats:
According to Assocham, the overall retail market would grow by 36 per cent with the
organized sector expected to register three-fold growth to Rs 15,000 crore by 2008. The
total size of the market is also expected to increase to Rs 14, 79,000 crore from the
current level of Rs 5, 88,000 crore.
Challenges faced by this sector:
The industry is facing a severe shortage of talented professionals, especially at the
middle-management level.
Most Indian retail players are under serious pressure to make their supply chains more
efficient in order to deliver the levels of quality and service that consumers are
demanding. Long intermediation chains would increase the costs by 15%.
Lack of adequate infrastructure with respect to roads, electricity, cold chains and ports
has further led to the impediment of a pan-India network of suppliers. Due to these
constraints, retail chains have to resort to multiple vendors for their requirements,
thereby, raising costs and prices.
The available talent pool does not back retail sector as the sector has only recently
emerged from its nascent phase. Further, retailing is yet to become a preferred career
option for most of India's educated class that has chosen sectors like IT, BPO and
financial services.
Even though the government is attempting to implement a uniform value-added tax
across states, the system is currently plagued with differential tax rates for various states
leading to increased costs and complexities in establishing an effective distribution
network.
Stringent labor laws govern the number of hours worked and minimum wages to be paid
leading to limited flexibility of operations and employment of part-time employees.
Further, multiple clearances are required by the same company for opening new outlets
adding to the costs incurred and time taken to expand presence in the country.
26

27. The retail sector does not have 'industry' status yet making it difficult for retailers to raise
finance from banks to fund their expansion plans. Government restrictions on the FDI are
leading to an absence of foreign players resulting into limited exposure to best practices.
Non- availability of government land and zonal restrictions has made it difficult to find a
good real estate in terms of location and size. Also lack of clear ownership titles and high
stamp duty has resulted in disorganized nature of transactions.
Marketing
"Marketing is a management process whereby the resources of the whole organization are
27

28. utilized to satisfy the needs of selected customer groups in order to achieve the objectives
of both parties. Marketing them, is first & foremost an attitude of mind there than a
services of functional activities “McDonald.
Success and marketing depends upon the proper efficient and effective marketing mix.
INTRODUCTION
The marketing mix refers to the appointment of efforts, the combination, the designing
and the integration of the elements of marketing into a programme of mix which, on the
basis of an appraisal of the market forces will best achieve an enterprise at a given time".
According Stanton, "Marketing mix is the term used to describe the combination of the
four inputs which constitute the core of a company's marketing system the product, the
price structure, the promotional activities and the distribution system" - Borden.
Marketing mix is the policy adopted by the manufacturers to get success in the field of
marketing. Those days, when goods were matched with the market, have gone. The
modern market concept emphasizes the importance of the consumer's preference.
Manufacturers take various policies to get success in the market and the marketing mix is
one of the important policies in marketing planning, we make use of marketing
information to assess the situations. Therefore, a manufacturer first Analysis the nature of
the consumer's needs and then plans his product to give satisfaction to the consumers, AH
the marketing effort focuses attention around the consumer's need. The management
therefore is concerned with the markets and market behaviors to identify the target groups
of consumers through market information. Then the management plans to meet the
consumer's needs and to face the competitors. All these programmes involve a number of
functions, which are to be planned carefully: and planning need analysis of the market to
take a decision prediction and forecasting, to the future needs of the public, Marketing
departments perform the operations and the market offering mix is the result. Thus the
identification of demand and supply involves various functions of marketing to attain
success in the market and the combination of these functions is known as marketing mix.
Thus marketing mix is the combination of the product, the distribution system, the price
structure and the promotional activities, The term marketing mix is used to describe a
28

29. combination of four elements-the product, price, physical distribution and promotion,
These are popularly known as "four Ps" These four elements or sub-mixes should be
taken as instruments, by the management, when formulating marketing plans, As such,
marketing manager should have a thorough knowledge about the four Ps.. The marketing
mix will have to be changed at the change of marketing conditions like economical,
political, social etc. Marketing mix is developed to satisfy the anticipated needs of the
identified markets.
Four variables make up the marketing mix:
1. Product,
2. Price,
3. Place, and
4. Promotion,
A business person can controls, varies, and uses these variables to influence his
customers.
These variables are interrelated and form the total package that will determine the degree
of marketing success.
1. PRODUCT
The product is the most tangible and important single component of the marketing
programme. The product policy and strategy is the cornerstone of a marketing mix.
Without a product, there is nothing to distribute, nothing to promote, nothing to price. If
the product fails to satisfy consumer demand, no additional cost on any of the other
ingredients of the marketing mix will improve the product performance in the market-
place.
To the marketer products are the building blocks of a marketing plan, Good products are
key to market success, Product decisions are taken first by the marketers and these
decisions are central to all other marketing decisions such as price, promotion and
distribution, product is the vehicle by which a company provides consumer satisfactions.
It is the engine that puts the rest of the marketing programme.
The product may be a good, a service, a good plus service, a good plus service, or just an
idea, A product is all things offered to a market, Those things include physical objects,
29

30. design, brand, package, label price, services, supportive literature, amenities and
satisfaction not only from physical product and services offered but also from idea,
personalities and organizations. In short, a product is the sum total of physical, economic,
social and psychological benefits. Marketers must define their market in terms of product
functions-who the customer expects from the product.
As a product is designed to satisfy consumer needs, Product strategy includes decisions
about its uses; quality, features, brand name, style packaging, guarantees, designs, and
options, decisions about changes in the product characteristics are needed as the product
goes through its life cycle.
2. PRICE
Economist defines price as the exchange value of a product or service always expressed
in money. To the consumer the price is an agreement between seller and buyer
concerning what each is to receive; price is the mechanism or device for translating into
quantitative terms (Rupees and Paisa) the perceived value of the product to the customer
at a point of time. The buyer is interested in the "price" of the whole "package" consisting
of the physical product plus bundle of expectations or satisfactions. The consumer has
numerous expectations such as accessories, after-sale-service, replacement parts,
technical guidance, extra services, credit and many other benefits. Thus price must be
equal to the total amount of benefits (physical, economic, social and psychological
benefits). Any change in the price will also bring about alterations in the satisfaction side
of the equation. To the ultimate consumer, the price he pays for a product or service
represents a sacrifice of purchasing power, prices paid by resellers are also sacrifices.
Price is the only objective criteria (although an imperfect measuring rod) for the
consumer for comparing alternative items and making the final choice. To the consumers
price is a product disfeatures, i.e. a feature of which he disapproves. However, to the
seller price is a source of revenue and main determinant of profit to the seller is a product
feature most welcome.
Pricing is equivalent to the total product offering. This offering includes a brand name, a
package, product benefits, after sale service, delivery, credit and so on. From the
marketer's point of view, the price also covers the total market offering, i.e. the consumer
30

31. is also purchasing the information through advertising sales promotion and personal
selling and distribution method that has been adopted. The consumer gets these vales and
also covers their costs. We can now define price as the money vale of a product or service
agreed upon in a market transaction, we have a kind of price equation, where;
Money (price) = Bundle of expectations or Satisfactions.
Include in the bundle of expectations may be physical product plus other attributes
Such as delivery, installation, credit, return privileges, after-sales servicing and so on.
Besides being the amount you charge customers for your products, price involves
management policies on discounts, allowances, credit terms, payment periods, transit
payments, etc.
3. PLACE
Retailers are accustomed to saying that the three keys to success are "location, location,
and location." Customers generally choose the nearest bank and gas station. Department-
store chains, oil companies, and fast-food franchisers exercise great care in which to open
outlets, and then particular-cities, and then particular sites, retailer is adding stores in
spite of a sales decline.
Placing your product means providing it at the right place at the right time. Distribution
strategies involve decisions on such things as store location and territories, inventory
levels, shelf, location, type of shipments.
4. PROMOTIONS
Broadly speaking promotion means to push forward or to advance an idea in such a way
as to gain its acceptance and approval. Promotion is any communicative activity whose
main object is to move forward a product, service or idea in a channel of distribution, it is
an effort by a marketer to inform and persuade buyers to accept, resell, recommend, or
use the article, service or idea which is being promoted. Promotion is a form of
communication with an additional element of persuasion. The promotional activities
always attempt to affect knowledge attitudes, preferences and behaviour of recipients, i.e.
buyers, the element of persuasion to accept ideas, products, services, etc., is the heart of
promotion.
31

32. In any exchange activity, communication is absolutely necessary, you may have the best
product, package and so on. It may have fair price. But people will not buy your product,
if they have never heard of it, and they are simply unaware of its existence. The marketer
must communicate to his prospective buyers and provides them adequate information in a
persuasive language. People must know that the right product is available at the right
place and at the right price. This is the job of promotion in marketing. Sales do not take
place automatically without promotion or marketing communication, even though our
product it superb, it can precisely fill the consumer wants and we have appropriate
channels for distribution.
Promotion is the process of marketing communication involving information, persuasion
and influence, promotion has three specific purposes, it communicates marketing
information to consumers, users and resellers, it is not enough to communicate ideas.
Promotion persuades and convinces the buyers and enters into this consumer behaviour,
promotional efforts act as powerful tools of competition providing the cutting edge of its
entire marketing programme.
Types of Promotion:
Advertising It is defined as any paid form of non-personal presentation and promotion of
ideas, goods and services by an identified sponsor. It is impersonal salesmanship for mass
selling, a means of mass communication.
Publicity It is non-personal stimulation of demand for a product, service or a business
unit by placing commercial significant news about it in a publication or obtaining
favourable presentation of it upon radio, television, or stage that is not paid for by the
sponsor.
Personal Selling It is the best means of oral and face-to-face communication and
presentation with the prospect for the purpose of ranking sales. There may be one
prospect or a number of prospects or a number of prospects in the personal conversion.
Sales Promotions It covers those marketing activities other than advertising, publicity
and personal selling that stimulate consumer purchasing and dealer effectiveness. Such
32

33. activities are displays, shows, exhibitions, demonstrations, and many other non-routine
selling efforts, at the point of purchase. Sales promotion tries to complement the other
means of promotion given above.
Promotion is informing and persuading your target market of the value of your products.
The major promotional tools are advertising, personal selling, publicity and sales
promotion, which media you is also an important part of promotion.
RETAILING
Retailing includes all the activities involved in selling goods or services directly to final
consumers for personal, non-business use. A retailer or retail store is any business
enterprise whose sales volume comes primarily from retailing. Any organization selling
to the final- whether it is manufacturer, wholesaler, or retailer- is doing retailing. It does
not matter how the goods or services are sold (by person, mail, telephone, vending
machine, or internet) or where they are sold (in the store, on the street, or in consumer's
home).
Retailing is a trading activity directly activity directly related to the sale of goods of
services to the ultimate consumer for personal, non-business use. A retailer is the last
middleman in the machinery of distribution and he is responsible to satisfy recurrent
wants of consumers, Retail trade is selling of varied goods in small quantities to the final
consumer. There are three distinguishing feature of retail trade. The retailer deals in small
quantities and his business are usually local in character. Secondly retail trade always
shows tendency towards variety as it has to satisfy innumerable wants of consumers. A
specialized retail shop is an exception. Thirdly a retailer, by predating near about the
residential areas of consumer, sells his wares directly to consumers. Manufactured goods
are worthless until they pass acid-test of retail distributions. The retailer alone can offer
safe and reliable goods to consumers.
Levels of Service:
The wheel-of-retailing hypothesis explains one reason that new store types emerge.
Conventional retail stores typically increase their services and raise their prices to cover
33

34. the costs. These higher costs provide an opportunity for new store forms to offer lower
prices and less service. New store types meet widely different consumer preferences for
service levels and specific services.
Retailers can position themselves as offering one of four levels of service:
1. Self-service: Self-service is the cornerstone of all discount operations, Many
customers are willing to carry out their own locale-compare -select process to save
money.
2. Self -selection: Customers find their own goods, although they can ask for assistance.
3. Limited service: These retailers carry more shopping goods, and customers need more
information and assistance. The stores also offer services (such as credit and
merchandise-return privileges).
4. Full services: Salespeople are ready to assist in every phase of the locate-compare-
select process. Customers who like to be waited on prefer this type of store. The high
staffing cost, along with the higher proportion of specialty goods and slower-moving
items and the many service, results in high-cost retailing.
Trends in Retailing
1. New retail forms and combinations, some supermarkets include bank branches, Bookstores
feature coffee shops. Gas stations include food stores.
2. Growth of intertype competition, different types of stores-discount stores, catalogue
showrooms, and department stores-all compete for the same consumers by carrying the
same type of merchandise.
3. Growth of giant retailers. Through their superior information systems, logistical systems,
and buying power, giant retailers are able to deliver good service and immense volumes
of product at appealing prices to masses of consumers. They are crowding out smaller
manufacturers who cannot deliver enough.
4. Growing investment in technology Retailers are suing computers to produce better
forecasts, control inventory costs, order electronically from suppliers, send e-mail
between stores, and even sell to customers within stores. They are adopting checkout
34

35. scanning system" electronic funds transfer; electronic data interchange" in store
television, store traffic radar systems," and improved merchandise-handling systems.
5. Global presence of major retailers. Retailers with unique format and strong brand
positioning are increasingly appearing in other countries U.S retailers such as Me
Donald's has become globally prominent, Wal-Mart operates over 700 stores (outside
USA)
6. Selling an experience, not just goods Retailers are now adding him and community in
order to compete with other stores and online retailers. There has been a rise in
establishments that provide a place for people to congregate, such as coffee houses, tea
shops, juice bars, book-shops, etc.
INDIAN SCENARIO
Indian retail industry has the potential to grow to Rs 35,000 crore in three years.
Defining a new consumer culture, retailing beats everything else hollow. Though still at a
nascent stage, the rate at which retail outlets are mushrooming could give an amoeba a
complex.
From supermarkets and hypermarkets to department stores and convenience stores and
one-stop shops, a retailing wave is currently on in the country. And from food to music
and apparel to tea and coffee bars, companies of all hues are indulging in retail speak.
Organized retailing has grown three-fold from Rs 5,000 crore in 2000 to Rs 15,000 crore
today, with a potential to expand to Rs 35,000 crore in 2005.
The Indian consumer initially accepted everything that was offered to them but from the
nineties the trend changed and the market became more consumers driven. Consumers
became more specific about what they wanted and did not pick up anything and
everything that was given to them. In shot they became very choosy and needed
alternatives to choose from. These in turn made the Indian consumers more
knowledgeable about the products and facilities and they have now become tough critics,
savvy, purchasers, value driven spenders and practical thinkers when it comes to
shopping. The demand for their time at work and home has made the consumers
extremely selective about how they would spend their limited time on shopping.
35

36. The rate of growth in India has gradually picked up in the last two decades. Growth
prospects apart, India's very size acts as the fourth largest economy in the world. It is also
the second most populous nation in the world. This clearly indicates that within the broad
picture of a developing nation, there are segments to represent big enough to represent
large markets for organized retail.
Due to the increasing demand of consumers for variety and convenience less than one
single roof and the concept of shopping malls started taking shape in India. Though the
concept of shopping malls came from the west, when it was introduced in India is was
according to Indian taste and preferences.
Shopper's stop was the first Shopping mall to start in India. It was promoted by
Mr.K.Raheja , a prominent Mumbai-based builder, opened the first outlet in Andheri,
Mumbai in 1991, initially it underwent a fair share of growing pains but slowly it caught
on and has now been very well excepted by the masses.
In India there are a number of large towns and the population in these towns is also very
high. This acts as a very important factor to attract the large retailers in venturing into
these towns. In the ascending traffic congestion levels, the net result is overcrowded
towns and parking hassles, One-stop shops have become the places of choice in such a
scenario.
There has been an explosion of branded goods as a corollary to the receptive conditions
created by The new trend; For example: In the eighties there was only one brand of salt
available in the Indian market but today there are many brands that are available.
Garments, cosmetics, shoes, etc are no way different as a number of brands have entered
into the market.
Indian Retailing - On to Generation Mall:
The changing structure of the industry is in response to global forces. There is a
perspective of the existing opportunities and the future potential areas across various
segments of the retail industry. While this sector hasn't yet been thrown open to foreign
investments, the potential for the same in the future is huge. Technology is playing an
increasingly crucial role for the success of a retail venture. Retailers are scrambling to tap
36

37. the vast consumer information at their disposal using technological advancements. The
section on such initiatives in the Indian retail scenario is a must for any potential entrant
and for majors in the software industry wanting to tap the potential in this industry.
Today the Indian consumer wants everything under one roof.
PRODUCT CLASSIFICATIONS
Products and services fall into two broad classes based on the type of customers that use
them:
1. Consumer products
2. Industrial products
1. Consumer products:
Consumer products are products and services bought by final consumers for personal
consumption: Marketers usually classify these products and services further based on
how consumers go about buying them. Consumer products include convenience products,
shopping products, speciality products, and unsought products. These products differ in
the ways consumers buy them and therefore in how they are marketed.
Convenience Products: are consumer products and services that the customer usually
buys frequently, immediately, and with a minimum of comparison and buying effort.
Examples include soap, candy, newspapers, and fast food. Convenience products are
usually low priced, and marketers place them in many locations to make them readily
available when customers need them.
Shopping Products: are less-frequently-purchased consumer products and services that
customers compare carefully on suitability, quality, price, and style. When buying
shopping products and services consumers spend much time and effort in gathering
information and making comparisons, Examples include furniture, clothing, used cars,
major appliances, and hotel and airline services, shopping products marketers usually
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38. distribute their products through fewer outlets but provide deeper sales support to help
customers in their comparison efforts.
Speciality Products: are consumer products and services with unique characteristics or
brand identification for which a significant group of buyers is willing to make a special
purchase effort, Example include specific brands and types of cars, high priced
photographic equipment, designer clothes, and services of medical or legal specialists. A
Lamborghini automobile, for example, is a specialty product because buyers are usually
willing to travel great distances to buy one. Buyers normally do not compare specially
products. They invest only the time needed to reach dealer's carrying the wanted
products.
2. Industrial Products:
Industrial products are those purchased for further processing or for use in conducting a
business. Thus, the distinction between a consumer product and an industrial product is
based on the purpose for which the product is bought. If the same consumer buys the
same lawn mower for use in a landscaping business, the lawn mower is an industrial
product.
The three groups of industrial products and services include
Materials and parts,
Capital items, and
Supplies and services,
Material consist of farm products (wheat, cotton, livestock, fruits, vegetable) etc., and
natural products (fish, lumber, crude petroleum, iron ore). Manufactured materials and
parts consist of component materials (iron, yarn, cement, wires) and component parts
small motors, tires, castings. Most manufactured materials and parts are sold directly to
industrial users. Price and service are the major marketing factors branding and
advertising tend to be less important.
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39. Marketing strategies for various products:
1. Convenience Products:
Price: convenience products are usually low priced goods.
Distribution/Place: the distribution is widespread and the products are made to be
available easily. Convenient locations are also very essential. Promotion: the promotion
activities are usually mass promotion by the producer.
Examples: toothpaste, magazines.
2. Shopping Products:
Price: shopping products are usually high priced goods. Distribution/Place: the
distribution is selective and there are fewer outlets.
Promotion: the promotion activities are usually advertising and personal selling by both
producer and resellers. Examples: televisions, furniture.
3. Speciality Products:
Price: speciality products are usually high priced goods.
Distribution/Place: the distribution is exclusive and there are fewer outlets per market
area.
Promotion: the promotion activities are more carefully targeted these activities are
carried on by both producer and resellers.
Examples: Rolex watches, fine crystal.
CONSUMER BEHAVIOUR TOWARDS VARIOUS PRODUCTS
1. Convenience Products:
These products are frequently purchased by the consumer as they are required for daily
use. There is very little planning involved and there are very little comparisons between
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40. similar or subsidiary products. The shopping efforts are also very low and the customer
does not involve himself while shopping.
2. Shopping Products:
These products are purchased less frequently as they are usually durables. There is a lot
of planning involved while shopping and shopping efforts are also high. There is a lot of
comparison between brands, price, quality, style etc. and the consumer may postpone the
purchase to get a better product.
3. Specialty Products:
These products have strong brand preference and brand loyalty. There are special
shopping efforts made by the customer to get these products. There is low comparison of
brands and there is low price sensitivity.
THE INDIAN CONSUMER
Consumerism in India
In India, as a developing economy, it is felt that the plight of the consumers is not
different from that of their counterparts in the rest of the world, in spite of the Fact that
not all the Indian consumers are well educated and hence, unable to comprehend and
understand the complex methods of marketing, they are also exploited and very often
become victims of false claims for products, misled by deceptive advertisements, misled
by packaging, poor after sales service and so on. Because of the above felt abuses, there
is observed and seen a growing consumer awareness leading to the growth of
consumerism and an increasing demand for consumer protection in India.
Consumerism can be said to be still in its infancy stage, but the consumer movement is
slowly gathering momentum, it is a social force used to protect the consumers against the
unfair marketing practices occurring in the transaction between the sellers and buyers. At
times there is a deliberate attempt on the part of the marketer to adopt misleading, false or
deceptive advertisements, where only half truths are offered to the consumers so as to
give a difference impression and create a different image as compared to the actual fact.
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41. Since the 1980s, there have been certain changes taking place in the socio economic
environment, making it conductive for marketers to adopt unethical marketing practices.
Since the market was flooded with many goods, it was difficult for the customer to
ascertain the quality or utility of the goods and services. The manufacturers tried to
capitalize on the situation by adopting unfair and unethical marketing practices in the
form of fictitious pricing or price collusion, unsafe products, adulteration, misleading
advertisements, black-marketing, false warranties, etc., in 1990s also after liberalization
of the economy, the market was again flooded with varieties of goods and services. The
differences in the scene now as continuous entry of new competitors willing to make
enormous investments for long term market shares fast failing margins cutting into the
profitability of many marketers.
Rapid rise in the consumer earnings, fall in the savings rate resulting in generating
increasing amounts of disposable income to be spent on consumer products and services.
With the advent of information age bringing with it real time images of the global life
style; And thus making high spenders and budget shoppers spend lavishly on products
and services.
Under the above circumstances, "survival of the fittest" was the motto, this resulted in
marketers using wrong means to increase their market share rather than face the situation
of being wiped out from the, market place. The following situational factors also aided
the marketers,
 The vastness of a country like India along with an imbalance in the distribution of
income and wealth and backwardness of the people came in the way of organizing
consumer awareness and movements.
 The high rate of illiteracy and ignorance among the majority of the population
41

42.  Onslaught from the unscrupulous businessmen due to the traditional outlook of
the people to suffer in silence, lack of education and information.
 Unable to understand the technical complexity of the goods and thus accepting the
information given by the manufacturers or sales persons on face values.
 Indian consumers getting carried away by the clever advertising and promotion
tactics used by the marketers.
While on one hand the manufacture, distribute, advertise and price the product, the
consumer has got the right to decide whether or not to purchase the product. However,
the consumer is not in a position to exercise this power, while purchasing a product or
services. This is because of either the lack of information or excess of indigestible
information or conflicting information received from one or more competing firms. This
has resulted in the rise in consumerism.
The Indian Consumer
Consumerism today, as a collective action of the consumers to protect their own interests
indicates failure on the part of the business system, Which includes the public policy
makers and the government to guarantee and ensure the legitimate rights of the
consumers. This is also the reason being consumer seeking protection. To ensure
consumer protection, the onus of responsibility lies on the shoulders of three groups of
people namely: the business, the government and the consumers themselves.
There are several problems faced by the Indian consumers, thus making it necessary to
have an effective and more involvement from the government and consumer movements
to safeguard the consumer rights. The factors responsible for the sad plight of Indian
consumers are given hereunder:
1. Very often India faces a severe imbalance in the demand and supply of essential
commodities. This has produced evils in the form of hoarding and black marketing
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43. profiteering corruption, nepotism, red tapism irresponsibility and arrogance while dealing
will consumers.
2. With low literacy levels and incorrect & unsatisfactory information generated, many of
the Indian consumers are not consciously aware of their rights. This further encourages
businessmen to develop indifferent attitudes and behaviours towards their consumers.
3. Though the market is flooded with many goods and services, there is seen an imperfect
and ineffective competition, for, in a perfect (competition) market the buyer may be in a
position to substitute one product for another with visible differences in the quality
service and price of the products. But in the exciting scenario, apart from the lack of
general essential information, there are very few sellers available in the market, which
can keep the competition alive and also work to avoid the threat of potential competition
by offering equally good alternative products and services to consumers. Thus the Indian
consumer becomes a victim of ineffective competition and is forced to make a choice
from the available few alternative goods and services.
4. In the absence of proper information and unfamiliarity with some of the new Product
features, consumerism at times, become easy victims and accept substandard, inferior to
even defective products.
5. Consumerism is still in its infancy stage and hence not well organized and developed as in
the developed countries.
6. The legal framework and system in India is a time consuming and tiresome process, thus
consumers are hesitant to seek reprisal of their grievances by taking the help of the
judiciary.
7. The government had started the public sector undertakings to serve the public interest by
providing effective competition to the private sector, increase production, etc., however,
these units have yet to produce benefits that will commensurate with the investment. The
basic objective behind investing and encouraging the growth of public sector was to
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44. encourage the concept of consumer welfare. But as far as performance is concerned,
many of the public sector monopolies are making the life of consumers miserable. To
quote a few examples, the services provided by some of the state owned electricity boards
is very poor, very often, consumers are compelled to make hard payments for the services
hardly received by them. The state of the public roads in the various cities and towns are
always uneven with many pot holes, thus causing more inconvenience and harm to the
people and all the vehicle users, who make use of the road.
8. The existing laws which have been framed to protect and safeguard the interest of the
consumers at large, are not being effectively implemented and enforced to achieve the
said objectives.
From the above discussions we can see that many of the above pitfalls can be removed it
active participation is there from the business, government and consumers.
 The business comprising of all the manufacturers and intermediaries must take up
the responsibility to ensure efficiency in production and quality of the output.
They must also abstain from resorting to unhealthy practices like charging
exorbitant prices, or hoarding and black marketing thus voluntarily the
businessmen themselves should take up the responsibility to ensure that
qualitative goods and services reach the ultimate consumer in time and at
reasonable prices.
 The government can come to the help of the consumers and prevent them from
being exploited by passing certain legislation to protect the consumer and also by
having certain statutory bodies to prevent firms from exploiting the consumers.
The government has also included consumer protection as an item of the 20 point
programme, A consumer advisory council has been set up by agencies, including
state governments the textile committee and the department of science and
technology added to this the government is seeking to increase the awareness of
the consumers rights through various media. Doordarshan has been organizing
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45. programmes like Lok Samasyani, Jansad, Janavani etc.,
 And lastly consumers themselves should themselves assert their rights and protect
themselves from business malpractices. They should accept consumerism and
work towards making the businesses and government more responsive to the
rights of the consumer, various consumer movements have also been organized in
many parts of the county and there are as many as 237 or so consumer
organizations working towards consumer protection.
STATEMENT OF THE PROBLEM
Understanding shopping behavior is in shopping malls is one of the greatest problems of
the marketer. He has to fine tune his marketing mix strategies according to the market
needs. For this an in depth Analysis is necessary to understand the shopping behavior.
Big Bazaar one of the well-known shopping malls in the city of Bangalore has a different
kind of marketing strategy as compared to others. In this background an attempt is made
to understand the marketing mix strategies of Big Bazaar from customers' point of view.
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46. OBJECTIVES OF THE STUDY
The study is conducted with the main intention of understanding:
1. The shopping behavior of the customers.
2. Customers' perception about the marketing mix strategies of Big Bazaar.
3. Customers' preference for Big Bazaar.
4. Customers' expectation and satisfaction levels.
5. To offer suggestions based on findings.
NEED FOR STUDY
Retail market has come of age and is witnessing a global trend. Bangalore is one of the
cities witnessing this trend hence it attracts the attention of any researcher to understand
the shoppers behavior and strategies of the retailer in this regard.
SCOPE OF THE STUDY
The study confines itself in understanding the customers' view point of the marketing mix
strategies of Big Bazaar in Bangalore.
RESEARCH METHODOLOGY
DATA SOURCES:
1. Primary Data
Primary data is the information collected for research purpose at hand. Primary data was
collected through an interview with the help of a structured questionnaire, which
contained quires that were relevant to the purpose of the study as well as pertinent;
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47. industry related questions. The present study questionnaire makes use of both open ended
and close ended questions.
2. Secondary Data
Secondary data is the information which already exists. Secondary data is collected from
journals, magazines, books, dissertations etc. The secondary data for this research was
obtained from company profile, corporate magazines, corporate broachers, websites,
journals etc. Various books and other published matter were also referred to for sorting,
tabulating and analyzing the raw data collected. Very little research specific data was
available; hence much emphasis was given to primary data.
RESEARCH APPROACH
Survey method was adopted in order to collect the primary data required for the study.
RESEARCH INSTRUMENT
Questionnaire was designed with open-end and close-end questions. The Questionnaire
was designed in such a manner so as to cater to all the areas and aspects of the study.
SAMPLING PLAN
1. SAMPLING UNIT: A customer visiting Big Bazaar is identified as the sampling unit.
2. SAMPLING SIZE: The sampling size was 100.
3. SAMPLING PROCEDURE: Random Sampling
LIMITATIONS OF STUDY
 Due to time constraint the study was limited to Bangalore City and the number of
questionnaires was restricted to 100.
 It is assumed that the respondents understood the questions in the questionnaires
as they were supposed to. The chances of misunderstanding were remote but it
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48. cannot be ruled out.
 It is assumed that the information given by the respondents is true as per their
knowledge and hence the chances of biased information is remote but definitely
cannot be ruled out.
 Due to the limited number of respondents, the finding may not be the same for the
whole population.
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49. Company Profile
Incorporated in October 1987, Pantaloons ranks amongst the top five retailers in
India.
Pantaloon Retail (India) Limited (PRIL) was incorporated on October 12, 1987 as Man's
Wear Private Limited under the stewardship of Mr. Kishore Biyani. The Company was
converted into a public limited company on September 20, 1991 and on September 25,
1992 the name was changed to Pantaloon Fashions (India) Limited and the same time it
went public and today it has approximately 14,000 shareholders. It later changed its name
to Pantaloon Retail (India) Limited on 7th July 1999.
From a humble beginning in 1987, Pantaloon as today evolved as a leading manufacturer-
retailer in the country with 12 Pantaloon stores and 6 hypermarkets operational across the
country. It has been a remarkable journey for PRIL as it’s evolved from a manufacturing
to a completely integrated player controlling the entire value chain.
CORPORATE MISSION
"We share the vision and belief that by improving our performance through
innovative spirit and dedication, we shall serve our customers and stakeholders
satisfactorily."
PRIL believes that unconventional and innovative thinking will be the key ingredients to
attain leadership in the emerging retail sector where the rules of the game are still
evolving. Whereas serving the customers satisfactorily is the core focus, the company
also believes in adequately rewarding its shareholders though concerted efforts on
reducing cost and improving profitability. To implement the corporate mission, PRIL has
penned a well thought of corporate strategy and policy which will ensure rapid growth in
the coming years. This strategy can be best described in the following words 'Rewrite
Rules Retain Values'.
Seamlessly integrate businesses
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50. By seamlessly integrating business and disintermediation PRIL has advantage over other
retailers in the company. Managing the value chain retailing to manufacturing of
apparels, which helps it to deliver value to the company contains costs and reduces time-
to-market significantly. By capturing the value each level that company has also been
able to capture maximum value shareholders
Blending Strategies
To targeting higher share in customer shopping basket the Company has blending
strategies. By entering into multiple formats - departmental stop hypermarkets - PRIL has
effectively blended the multiple strategies and there has been successful in addressing a
high share of the customer's basket. Increase share has been primarily on account of
entering new product categories.
'Family focus' rather than 'individual focus'
PRIL strategy is to target family as its customer rather than individual. With audience
having social ethics and culture deeply rooted in them addressing the pulls more
customers into the store. Moreover, it ensures repeat purchase strategy of the company is
reflected in all its communications and product offerings.
Paradigm shift in "rapid roll-out'
The company has aggressive grow plan to achieve scale of economy leadership position
in this evolving industry. PRIL's ability to evolve from format into large format retail
stores is well proven. With aggressive growth p. company has identify many locations
across the company to roll out stores future. The company plans to increase the retail
space more than 1 million square feet over the next 3 years to emerge 'Godzilla' of the
Indian retail industry.
VALUES
Though unconventional in redefining the ways of doing business, PRIL has sacrificed on
its core values. It believes in retain its core values while redefining business rules.
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