Dharmik retail marketing

K.E.S. SHROFF COLLEGE Page 1
INDEX
Chapter
No.
TITLE Page No.
1 Introduction 02
2 Indian Retail Market 11
3 Today‘s Retail Market Management 16
4 Indian Insurance Market 23
5 Indian Food Market 26
6 Indian Organized Retail Market 28
7 Indian Automobile Market 29
8 India Telecom Market 31
9 Sales Promotion 33
10 Advertising 38
11 Conclusion 40
12 Bibliography 41

CHAPTER-1
INTRODUCTION
Retail
Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers
are part of an integrated system called the supply chain. A retailer purchases goods or products in
large quantities from manufacturers directly or through a wholesaler, and then sells smaller
quantities to the consumer for a profit. Retailing can be done in either fixed locations or online.
Retailing includes subordinated services, such as delivery. The term "retailer" is also applied
where a service provider services the needs of a large number of individuals, such as a public
utility, like electric power.
Shops may be on residential streets, streets with few or no houses or in a shopping mall.
Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or
full roof to protect customers from precipitation. Online retailing, a type of electronic
commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-
shop retailing.
Shopping generally refers to the act of buying products. Sometimes this is done to obtain
necessities such as food and clothing; sometimes it is done as a recreational activity.
Recreational shopping often involves window shopping (just looking, not buying) and browsing
and does not always result in a purchase.
Retail pricing
The pricing technique used by most retailers is cost-plus pricing. This involves adding
a markup amount (or percentage) to the retailer's cost. Another common technique is suggested
retail pricing. This simply involves charging the amount suggested by the manufacturer and
usually printed on the product by the manufacturer.
In Western countries, retail prices are often called psychological prices or odd prices. Often
prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly
displayed, there can be price discrimination, where the sale price is dependent upon who the
customer is. For example, a customer may have to pay more if the seller determines that he or
she is willing and/or able to. Another example would be the practice of discounting for youths,
students, or senior citizens.
Types of retail outlets
A marketplace is a location where goods and services are exchanged. The traditional market
square is a city square where traders set up stalls and buyers browse the merchandise. This kind
of market is very old, and countless such markets are still in operation around the whole world.
In some parts of the world, the retail business is still dominated by small family-run stores, but
this market is increasingly being taken over by large retail chains.

There are the following types of retailers by marketing strategy:
Department stores - very large stores offering a huge assortment of "soft" and "hard goods;
often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety
of categories and has broad assortment at average price. They offer considerable customer
service.
Discount stores - tend to offer a wide array of products and services, but they compete mainly
on price offers extensive assortment of merchandise at affordable and cut-rate prices. Normally
retailers sell less fashion-oriented brands.
Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on pallets or
steel shelves; warehouse clubs charge a membership fee;
Variety stores - these offer extremely low-cost goods, with limited selection;
Demographic - retailers that aim at one particular segment (e.g., high-end retailers focusing on
wealthy individuals)
Mom-And-Pop : is a retail outlet that is owned and operated by individuals. The range of
products are very selective and few in numbers. These stores are seen in local community often
are family-run businesses. The square feet area of the store depends on the store holder.
Specialty stores: A typical speciality store gives attention to a particular category and provides
high level of service to the customers. A pet store that specializes in selling dog food would be
regarded as a specialty store. However, branded stores also come under this format. For example
if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the
respective stores.
General store - a rural store that supplies the main needs for the local community;
Convenience stores: is essentially found in residential areas. They provide limited amount of
merchandise at more than average prices with a speedy checkout. This store is ideal for
emergency and immediate purchases.
Hypermarkets: provides variety and huge volumes of exclusive merchandise at low margins.
The operating cost is comparatively less than other retail formats.
Supermarkets: is a self service store consisting mainly of grocery and limited products on non
food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be
anywhere between 20,000 and 40,000 square feet (3,700 m2
). Example: SPAR supermarket.
Malls: has a range of retail shops at a single outlet. They endow with products, food and
entertainment under a roof.

Category killers or Category Specialist: By supplying wide assortment in a single category for
lower prices a retailer can "kill" that category for other retailers. For few categories, such as
electronics, the products are displayed at the centre of the store and sales person will be available
to address customer queries and give suggestions when required. Other retail format stores are
forced to reduce the prices if a category specialist retail store is present in the vicinity.
E-tailers: The customer can shop and order through internet and the merchandise are dropped at
the customer's doorstep. Here the retailers use drop shipping technique. They accept the payment
for the product but the customer receives the product directly from the manufacturer or a
wholesaler. This format is ideal for customers who do not want to travel to retail stores and are
interested in home shopping. However it is important for the customer to be wary about defective
products and non secure credit card transaction. Example: Amazon, Pennyful and eBay.
Vending Machines: This is an automated piece of equipment wherein customers can drop the
money in the machine and acquire the products.
Some stores take a no frills approach, while others are "mid-range" or "high end", depending on
what income level they target.
Other types of retail store include:
Automated Retail stores are self service, robotic kiosks located in airports, malls and grocery
stores. The stores accept credit cards and are usually open 24/7. Examples include Zoom
Shops and Red box.
Big-box stores encompass larger department, discount, general merchandise, and warehouse
stores.
Convenience store - a small store often with extended hours, stocking everyday or roadside
items;
General store - a store which sells most goods needed, typically in a rural area;
Retailers can opt for a format as each provides different retail mix to its customers based on their
customer demographics, lifestyle and purchase behaviour. A good format will lend a hand to
display products well and entice the target customers to spawn sales.
Transfer mechanism
There are several ways in which consumers can receive goods from a retailer:
Counter service, where goods are out of reach of buyers and must be obtained from the seller.
This type of retail is common for small expensive items (e.g. jewelry) and controlled items like
medicine and liquor. It was common before the 1900s in the United States and is more common
in certain countries like India.
Delivery, where goods are shipped directly to consumer's homes or workplaces. Mail order from
a printed catalog was invented in 1744 and was common in the late 19th and early 20th centuries.
Ordering by telephone is now common, either from a catalog, newspaper, television
advertisement or a local restaurant menu, for immediate service (especially for pizza
delivery). Direct marketing, including telemarketing and television shopping channels, are also
used to generate telephone orders. started gaining significant market share in developed countries
in the 2000s.

Second-hand retail
Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to
the shop to be sold. In give-away shops goods can be taken for free.
Another form is the pawnshop, in which goods are sold that were used as collateral for loans.
There are also "consignment" shops, which are where a person can place an item in a store and if
it sells, the person gives the shop owner a percentage of the sale price. The advantage of selling
an item this way is that the established shop gives the item exposure to more potential buyers.
Challenges
To achieve and maintain a foothold in an existing market, a prospective retail establishment
must overcome the following hurdles:
Regulatory barriers including
Restrictions on real estate purchases, especially as imposed by local governments and against
"big-box" chain retailers;
Restrictions on foreign investment in retailers, in terms of both absolute amount of financing
provided and percentage share of voting stock (e.g., common stock) purchased;
Unfavorable taxation structures, especially those designed to penalize or keep out "big box"
retailers Absence of developed supply chain and integrated IT management;
High competitiveness among existing market participants and resulting low profit margins,
caused in part by
Constant advances in product design resulting in constant threat of product obsolescence and
price declines for existing inventory; and
Lack of properly educated and/or trained work force, often including management, caused in part
by
Lack of educational infrastructure enabling prospective market entrants to respond to the above
challenges.
Sales techniques
Behind the scenes at retail, there is another factor at work. Corporations and independent store
owners alike are always trying to get the edge on their competitors. One way to do this is to hire
a merchandising solutions company to design custom store displays that will attract more
customers in a certain demographic. The nation's largest retailers spend millions every year on
in-store marketing programs that correspond to seasonal and promotional changes. As products
change, so will a retail landscape. Retailers can also use facing techniques to create the look of a
perfectly stocked store, even when it is not.
A destination store is one that customers will initiate a trip specifically to visit, sometimes over a
large area. These stores are often used to "anchor" a shopping mall or plaza, generating foot
traffic, which is capitalized upon by smaller retailers.

Customer service
Customer service is the "sum of acts and elements that allow consumers to receive what they
need or desire from your retail establishment." It is important for a sales associate to greet the
customer and make himself available to help the customer find whatever he needs. When a
customer enters the store, it is important that the sales associate does everything in his power to
make the customer feel welcomed, important, and make sure he leaves the store satisfied. Giving
the customer full, undivided attention and helping him find what he is looking for will contribute
to the customer's satisfaction.
Retail Market
The market for the sale of goods or services to consumers rather than producers or
intermediaries. For example, a retail clothing store sells to people who will (most likely) wear
the clothes. It does not include the sale of the clothes to other stores who will resell them. The
retail market contrasts with the wholesale market.
The market for the sale of securities to individual investors rather than institutional
investors or broker-dealers.
Selling of merchandise directly to the consumer. Retailing began several thousand years ago with
peddlers hawking their wares at the earliest marketplaces. It is extremely competitive, and the
failure rate of retail establishments is relatively high. Price is the most important arena of
competition, but other factors include convenience of location, selection and display of
merchandise, attractiveness of the establishment, and reputation. The diversity of retailing is
evident in the many forms it now takes, including vending machines, door-to-door and telephone
sales, direct-mail marketing, the Internet, discount houses, specialty stores, department stores,
supermarkets, and consumer cooperatives.
Importance of RetailMarketing
Through the years retailing has evolved, competition has gotten stiff and therefore marketing has
become more integral in the direct selling of wares. From specialty mom-and-pop shop to mass-
merchants, the methods by which stores are getting their products into the hands of customers are
evolving. Because customers have more choices, stores have to reach them with advertising,
entice them with promotions, and secure them with branding—hence the ever-growing need for
marketing in retail outlets.
Retail Marketing Techniques
There are new marketing methods and techniques being developed constantly as the retail price
war rages on. Retail marketing evolves and changes as the gap between the manufacturer and the
retailer gets smaller, and price becomes the only thing differentiating retailers. The value the
retailer can add becomes important.

Types of Retail Marketing
There are many great avenues to explore when you begin to plan your marketing campaign.
Marketing is a must for any business and retail businesses, especially, rely on many different
types of marketing in order for them to succeed. Choose several different marketing strategies
for a campaign that helps to grow your customer base and sell more products.
Internet Marketing
It is impossible to ignore the vast power of Internet marketing. It can be a very inexpensive
option or a very expensive option, determining on which method you choose. Either way,
though, it works:
Website - Your company website should have everything that your customers need to make a
purchase. All of the information about your product should be available to anyone looking at
your website.
Social networking site - This is a free marketing tool. All you have to do is set up an account
with Facebook, Twitter, Myspace or any other social networking site in order to have a presence
in the blogging community.
Email newsletters - Offer an informational e-letter available to anyone who signs up. Send out
weekly or monthly newsletters to keep you on your customers' minds.
Direct Marketing
A large part of creating a brand for your company is printed advertising. Everything from
business cards to postcard printing make a statement about your business:
Direct Mail - With postcard printing, you can send out regular timely alerts to let your customers
know about events and promotions. Although postcard printing is the least expensive form of
direct mail, letters and brochures are also a great way to market your product.
Catalogs - List your items with or without photographs. Include the pricing and a way to order
your product.
Posters and flyers - Single page advertisements are great for announcing new products or a sales
event.
Word of Mouth Marketing
Once you have created a good reputation, customers will happily pass along a good word to their
friends and family:
Customer Referral Programs - Give your customers an incentive for bringing in new business
with discounts or free gifts for every new customer they bring you.
Business Referral Programs - Swap advertising with other businesses that have a similar
audience to yours. Run cooperative promotions and give out information about your partnering
company.
Networking - Become known in your business community by joining the Chamber of Commerce
and other similar groups. Attend events and meetings and hand out your business cards.

Public Relations Marketing
You can place yourself in the eye of the public in a number of ways. Many times, this type of
marketing is free:
Press Releases - Get featured in the local newspaper by calling a press conference to announce
events, changes, contest winners and rewarded employees. You can also write press releases
yourself to send in to local papers.
Sponsor Charity Events - Connect yourself with a charity you believe in. Not only is sponsorship
inexpensive advertising, it also places your name in a good light.
Buy TV and Radio Ads - These ads reach a broad range of potential customers in a short amount
of time. Although ads can be expensive, they can make your name a well-known brand very
quickly.
The 7 Ps of Marketing
Traditionally, the marketing mix was developed for the fast moving consumer goods
sector, and there were 4 Ps: Product, Price, Promotion, and Place (or distribution).
As service sectors have become more aware of marketing, this marketing mix has
been developed to also include: People, Process and Physical Evidence.
Even if you think you only sell a product, so the original 4 Ps will suffice, it can be useful to
think how much of a service element there is to your business. Indeed, the goods-service
continuum demonstrates that very few products are purely goods and very few purely service.
Product
As seen in the goods-service continuum, your product can have both tangible and
intangible aspects, and is the thing you offer to satisfy your customers‘ wants and needs.
Within this element, you need to consider such things as your product range; its
quality and design; its features and the benefits it offers; sizing and packaging; and
any add-on guarantees and customer service offerings.
Price
Sound pricing decisions are crucial to a successful business and should be
considered at both long-term strategic and short-term tactical levels.
Within this element of the mix you should consider list price and discount price; terms
and conditions of payment; and the price sensitivity of your market. Worth
remembering is the connection of price to your position in the marketing – specifically
that only one operator in any market can be the cheapest. Jostling between
competitors for this position is rarely wise.

Promotion
This is the element of the marketing mix that most people mean when they talk about
‗marketing‘. But jumping straight into decisions about what promotional tools to use
without considering their relationship to the rest of the mix can be a sure-fire way to waste
money. There are many different promotional techniques, each with their own strengths but
essentially they can be broken down into four broad categories: Advertising; Public
Relations; Sales Promotions; and Direct Selling. These techniques are used to
communicate the specific benefits of your product to your customers.
Place
Marketers love models that explain the way they work; they love it even more when
elements of each model begin with the same letter – hence the use of the word
‗Place‘ to describe distribution channels. Your choice of such channels is important, as is the
variety of channels you use. For example, a common issue for businesses beginning to trade on-
line is how that will affect their off-line business, for example selling directly through the web
could alienate retail outlets that have been the mainstay of your business in the past.
People
The impact that your people can have on your marketing cannot be underestimated.
At its most obvious, this element covers your front line sales and customer service
staff who will have a direct impact on how your product is perceived.
You need to consider the knowledge and skills of your staff; their motivation and
investment in supporting your brand. Any element of the marketing mix will also
have its impact on other elements of your business, but the people element is one
where the importance of regarding marketing as an integral part of the way you do
business is crystal clear.
Process
The process part of the mix is about being ‗easy to do business with‘. If you‘ve ever
become frustrated at call centres that can‘t answer your questions, or annoyed when
you can‘t buy something in a shop because the computerised till doesn‘t recognise
that it exists, even when you can see it on the shelves, you‘ll know how important this element
can be.The more ‗high contact‘ your product, and the more intangible, the more important it
is to get your processes right. Remember to look at this from your customers‘ point
of view. The process problems that are most annoying to a customer are those that
are designed for the provider‘s convenience, not the customer.

Physical Evidence
When you sell tangible goods, you can offer your customer the chance to ‗try before
they buy‘, or at least see, touch or smell. With services, unless you offer a free trial,
your customer will often be buying on trust. And to help them do so you need to
provide as much evidence of the quality you will be providing as possible.
So physical evidence refers to all the tangible, visible touchpoints that your customer
will encounter before they buy, from your reception area and signage, to your staff‘s
clothing and they images you include in you corporate brochure.
-This is the intangible part of the business mostly concerned with services as they cannot be
seen.
-Intangible is often used to describe services as they cannot be touched like a product can be.
-This important because, fundamentally you are selling a product, but in order for you to be able
to price your goods at the right the level, you will also be selling the service the buyer will
receive.

CHAPTER-2
INDIAN RETAIL MARKET
Retailing in India
Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its
GDP. The Indian retail market is estimated to be US$ 450 billion and one of the top five retail
markets in the world by economic value. India is one of the fastest growing retail market in the
world, with 1.2 billion people.
India's retailing industry is essentially owner manned small shops. In 2010, larger format
convenience stores and supermarkets accounted for about 4 percent of the industry, and these
were present only in large urban centers. India's retail and logistics industry employs about 40
million Indians (3.3% of Indian population).
Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand
retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any
retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process.
In November 2011, India's central government announced retail reforms for both multi-brand
stores and single-brand stores. These market reforms paved the way for retail innovation and
competition with multi-brand retailers such as Walmart,Carrefour and Tesco, as well single
brand majors such as IKEA, Nike, and Apple. The announcement sparked intense activism, both
in opposition and in support of the reforms. In December 2011, under pressure from the
opposition, Indian government placed the retail reforms on hold till it reaches a consensus.
In January 2012, India approved reforms for single-brand stores welcoming anyone in the world
to innovate in Indian retail market with 100% ownership, but imposed the requirement that the
single brand retailer source 30 percent of its goods from India. Indian government continues the
hold on retail reforms for multi-brand stores.
In June 2012, IKEA announced it has applied for permission to invest $1.9 billion in India and
set up 25 retail stores. Fitch believes that the 30 percent requirement is likely to significantly
delay if not prevent most single brand majors from Europe, USA and Japan from opening stores
and creating associated jobs in India.
On 14 September 2012, the government of India announced the opening of FDI in multi brand
retail, subject to approvals by individual states. This decision has been welcomed by economists
and the markets, however has caused protests and an upheaval in India's central government's
political coalition structure. On 20 September 2012, the Government of India formally notified
the FDI reforms for single and multi brand retail, thereby making it effective under Indian law.
Local terms
Organised retailing, in India, refers to trading activities undertaken by licensed retailers, that is,
those who are registered for sales tax, income tax, etc. These include the publicly
traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately
owned large retail businesses.

Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing,
for example, the local mom and pop store, owner manned general stores, paan/beedi shops,
convenience stores, hand cart and pavement vendors, etc.
Organised retailing was absent in most rural and small towns of India in 2010. Supermarkets and
similar organized retail accounted for just 4% of the market.
Background
Most Indian shopping takes place in open markets or millions of small, independent grocery and
retail shops. Shoppers typically stand outside the retail shop, ask for what they want, and can not
pick or examine a product from the shelf. Access to the shelf or product storage area is limited.
Once the shopper requests the food staple or household product they are looking for, the
shopkeeper goes to the container or shelf or to the back of the store, brings it out and offers it for
sale to the shopper. Often the shopkeeper may substitute the product, claiming that it is similar or
equivalent to the product the consumer is asking for. The product typically has no price label in
these small retail shops; although some products do have a manufactured suggested retail price
(MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and household
products arbitrarily, and two consumers may pay different prices for the same product on the
same day. Price is sometimes negotiated between the shopper and shopkeeper. The shoppers do
not have time to examine the product label, and do not have a choice to make an informed
decision between competitive products.
India's retail and logistics industry, organized and unorganized in combination, employs about 40
million Indians (3.3% of Indian population). The typical Indian retail shops are very small. Over
14 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2
)
in size. India has about 11 shop outlets for every 1000 people. Vast majority of the unorganized
retail shops in India employ family members, do not have the scale to procure or transport
products at high volume wholesale level, have limited to no quality control or fake-versus-
authentic product screening technology and have no training on safe and hygienic storage,
packaging or logistics. The unorganized retail shops source their products from a chain of
middlemen who mark up the product as it moves from farmer or producer to the consumer. The
unorganized retail shops typically offer no after-sales support or service. Finally, most
transactions at unorganized retail shops are done with cash, with all sales being final.
Until the 1990s, regulations prevented innovation and entrepreneurship in Indian retailing. Some
retails faced complying with over thirty regulations such as "signboard licences" and "anti-
hoarding measures" before they could open doors. There are taxes for moving goods to states,
from states, and even within states in some cases. Farmers and producers had to go through
middlemen monopolies. The logistics and infrastructure was very poor, with losses exceeding 30
percent.
Through the 1990s, India introduced widespread free market reforms, including some related to
retail. Between 2000 to 2010, consumers in select Indian cities have gradually begun to
experience the quality, choice, convenience and benefits of organized retail industry.

Growth over 1997-2010
India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale. Then, it
required government approval. The approval requirement was relaxed, and automatic permission
was granted in 2006. Between 2000 to 2010, Indian retail attracted about $1.8 billion in foreign
direct investment, representing a very small 1.5% of total investment flow into India.
Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were approved
and implemented. For a country of 1.2 billion people, this is a very small number. Some claim
one of the primary restraint inhibiting better participation was that India required single brand
retailers to limit their ownership in Indian outlets to 51%. China in contrast allows 100%
ownership by foreign companies in both single brand and multi-brand retail presence.
Indian retail has experienced limited growth, and its spoilage of food harvest is amongst the
highest in the world, because of very limited integrated cold-chain and other infrastructure. India
has only 5386 stand-alone cold storages, having a total capacity of 23.6 million metric tons.
However, 80 percent of this storage is used only for potatoes. The remaining infrastructure
capacity is less than 1% of the annual farm output of India, and grossly inadequate during peak
harvest seasons. This leads to about 30% losses in certain perishable agricultural output in India,
on average, every year. Indian laws already allow foreign direct investment in cold-chain
infrastructure to the extent of 100 percent. There has been no interest in foreign direct investment
in cold storage infrastructure build out. Experts claim that cold storage infrastructure will
become economically viable only when there is strong and contractually binding demand from
organized retail. The risk of cold storing perishable food, without an assured way to move and
sell it, puts the economic viability of expensive cold storage in doubt. In the absence of
organized retail competition and with a ban on foreign direct investment in multi-brand retailers,
foreign direct investments are unlikely to begin in cold storage and farm logistics infrastructure.
Until 2010, intermediaries and middlemen in India have dominated the value chain. Due to a
number of intermediaries involved in the traditional Indian retail chain, norms are flouted and
pricing lacks transparency. Small Indian farmers realize only 1/3rd of the total price paid by the
final Indian consumer, as against 2/3rd by farmers in nations with a higher share of organized
retail. The 60%+ margins for middlemen and traditional retail shops have limited growth and
prevented innovation in Indian retail industry.
India has had years of debate and discussions on the risks and prudence of allowing innovation
and competition within its retail industry. Numerous economists repeatedly recommended to the
Government of India that legal restrictions on organized retail must be removed, and the retail
industry in India must be opened to competition. For example, in an invited address to the Indian
parliament in December 2010, Jagdish Bhagwati, Professor of Economics and Law at the
Columbia University analysed the relationship between growth and poverty reduction, then
urged the Indian parliament to extend economic reforms by freeing up of the retail sector, further
liberalisation of trade in all sectors, and introducing labor market reforms. Such reforms
Professor Bhagwati argued will accelerate economic growth and make a sustainable difference in
the life of India's poorest.

A 2007 report noted that an increasing number of people in India are turning to the services
sector for employment due to the relative low compensation offered by the traditional agriculture
and manufacturing sectors. The organized retail market is growing at 35 percent annually while
growth of unorganized retail sector is pegged at 6 percent.
The Retail Business in India is currently at the point of inflection. As of 2008, rapid change with
investments to the tune of US $ 25 billion were being planned by several Indian
and multinational companies in the next 5 years. It is a huge industry in terms of size and
according to India Brand Equity Foundation (IBEF), it is valued at about US$ 395.96 billion.
Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75
billion) in the next 5 years.
India has topped the A.T. Kearney‘s annual Global Retail Development Index (GRDI) for the
third consecutive year, maintaining its position as the most attractive market for retail
investment. The Indian economy has registered a growth of 8% for 2007. The predictions for
2008 is 7.9%. The enormous growth of the retail industry has created a huge demand for real
estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300
malls are estimated to be operational in the country.
Growth after 2011
Before 2011, India had prevented innovation and organized competition in its consumer retail
industry. Several studies claim that the lack of infrastructure and competitive retail industry is a
key cause of India's persistently high inflation. Furthermore, because of unorganized retail, in a
nation where malnutrition remains a serious problem, food waste is rife. Well over 30% of food
staples and perishable goods produced in India spoils because poor infrastructure and small retail
outlets prevent hygienic storage and movement of the goods from the farmer to the consumer.
One report estimates the 2011 Indian retail market as generating sales of about $470 billion a
year, of which a miniscule $27 billion comes from organized retail such as supermarkets, chain
stores with centralized operations and shops in malls. The opening of retail industry to free
market competition, some claim will enable rapid growth in retail sector of Indian economy.
Others believe the growth of Indian retail industry will take time, with organized retail possibly
needing a decade to grow to a 25% share. A 25% market share, given the expected growth of
Indian retail industry through 2021, is estimated to be over $250 billion a year: a revenue equal
to the 2009 revenue share from Japan for the world's 250 largest retailers.
The Economist forecasts that Indian retail will nearly double in economic value, expanding by
about $400 billion by 2020. The projected increase alone is equivalent to the current retail
market size of France.
In 2011, food accounted for 70% of Indian retail, but was under-represented by organized
retail. A.T. Kearney estimates India's organized retail had a 31% share in clothing and apparel,
while the home supplies retail was growing between 20% to 30% per year. These data
correspond to retail prospects prior to November announcement of the retail reform. The Indian
market offers endless possibilities for investors.

The Indian Retail Market
Indian market has high complexities in terms of a wide geographic spread and distinct consumer
preferences varying by each region necessitating a need for localization even within the
geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail
space per capita at 2 sq ft (0.19 m2
)/ person is lowest in the world Indian retail density of 6
percent is highest in the world. 1.8 million households in India have an annual income of over
45 lakh (US$85,050).
While India presents a large market opportunity given the number and increasing purchasing
power of consumers, there are significant challenges as well given that over 90% of trade is
conducted through independent local stores. Challenges include: Geographically dispersed
population, small ticket sizes, complex distribution network, little use of IT systems, limitations
of mass media and existence of counterfeit goods

CHAPTER-3
TODAY’S RETAIL MARKET MANAGEMENT
Entry of MNCs
The world's largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittal's Bharti Enterprises
have entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-
carry facilities over seven years. The first of the stores, which will sell groceries, consumer
appliances and fruits and vegetables to retailers and small businesses, is slated to open in north
India by the end of 2008. see also for more Detail Pick.
Carrefour, the world‘s second largest retailer by sales, is planning to set up two business entities
in the country one for its cash-and-carry business and the other a master franchisee which will
lend its banner, technical services and know how to an Indian company for direct-to-consumer
retail.
The world‘s fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for its
warehouse club model is also interested in coming to India and waiting for the right opportunity.
Tesco Plc., plans to set up shop in India with a wholesale cash-and-carry business and will help
Indian conglomerate Tata group to grow its hypermarket business.
Challenges
A McKinsey study claims retail productivity in India is very low compared to international peer
measures. For example, the labor productivity in Indian retail was just 6% of the labor
productivity in United States in 2010. India's labor productivity in food retailing is about 5%
compared to Brazil's 14%; while India's labor productivity in non-food retailing is about 8%
compared to Poland's 25%.
Total retail employment in India, both organized and unorganized, account for about 6% of
Indian labor work force currently - most of which is unorganized. This about a third of levels in
United States and Europe; and about half of levels in other emerging economies. A complete
expansion of retail sector to levels and productivity similar to other emerging economies and
developed economies such as the United States would create over 50 million jobs in India.
Training and development of labor and management for higher retail productivity is expected to
be a challenge.
To become a truly flourishing industry, retailing in India needs to cross the following hurdles:
Automatic approval is not allowed for foreign investment in retail.
Regulations restricting real estate purchases, and cumbersome local laws.
Taxation, which favours small retail businesses.
Absence of developed supply chain and integrated IT management.
Lack of trained work force.
Low skill level for retailing management.
Lack of Retailing Courses and study options
Intrinsic complexity of retailing – rapid price changes, constant threat of product obsolescence
and low margins.

In November 2011, the Indian government announced relaxation of some rules and the opening
of retail market to competition.
India retail reforms
Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand
Indian retail, forbidding foreign groups from any ownership in supermarkets, convenience stores
or any retail outlets, to sell multiple products from different brands directly to Indian consumers..
The government of Manmohan Singh, prime minister, announced on 24 November 2011 the
following:
India will allow foreign groups to own up to 51 per cent in "multi-brand retailers", as
supermarkets are known in India, in the most radical pro-liberalisation reform passed by an
Indian cabinet in years;
single brand retailers, such as Apple and Ikea, can own 100 percent of their Indian stores, up
from the previous cap of 51 percent;
both multi-brand and single brand stores in India will have to source nearly a third of their goods
from small and medium-sized Indian suppliers;
all multi-brand and single brand stores in India must confine their operations to 53-odd cities
with a population over one million, out of some 7935 towns and cities in India. It is expected that
these stores will now have full access to over 200 million urban consumers in India;
multi-brand retailers must have a minimum investment of US$100 million with at least half of
the amount invested in back end infrastructure, including cold chains, refrigeration,
transportation, packing, sorting and processing to considerably reduce the post harvest losses and
bring remunerative prices to farmers;
the opening of retail competition will be within India's federal structure of government. In other
words, the policy is an enabling legal framework for India. The states of India have the
prerogative to accept it and implement it, or they can decide to not implement it if they so
choose. Actual implementation of policy will be within the parameters of state laws and
regulations.
The opening of retail industry to global competition is expected to spur a retail rush to India. It
has the potential to transform not only the retailing landscape but also the nation's ailing
infrastructure.
A Wall Street Journal article claims that fresh investments in Indian organized retail will
generate 10 million new jobs between 2012–2014, and about five to six million of them in
logistics alone; even though the retail market is being opened to just 53 cities out of about 8000
towns and cities in India.
It is expected to help tame stubbornly high inflation but is likely to be vehemently opposed by
millions of small retailers, who see large foreign chains as a threat. The need to control food
price inflation—averaging double-digit rises over several years—prompted the government to
open the sector, analysts claim. Hitherto India's food supplies have been controlled by tens of
millions of middlemen (less than 5% of Indian population). Traders add huge mark-ups to farm
prices, while offering little by way of technical support to help farmers boost their productivity,
packaging technology, pushing up retail prices significantly. Analysts said allowing in big
foreign retailers would provide an impetus for them to set up modern supply chains, with
refrigerated vans, cold storage and more efficient logistics. "I think foreign chains can also bring
in humongous logistical benefits and capital," Chandrajit Banerjee, director-general,

Confederation of Indian Industry, told Reuters. "The biggest beneficiary would be the small
farmers who will be able to improve their productivity by selling directly to large organised
players," Mr Banerjee said.
Indian retail reforms on hold
According to Bloomberg, on 3 December 2011, the Chief Minister of the Indian state of West
Bengal, Mamata Banerjee, who is against the policy and whose Trinamool Congress brings 19
votes to the ruling Congress party-led coalition, claimed that India‘s government may put the
FDI retail reforms on hold until it reaches consensus within the ruling coalition. Reuters reports
that this risked a possible dilution of the policy rather than a change of heart.
India Today claimed that the resistance to Indian retail reforms is primarily because it has been
badly sold, even though it can help fix the exploitation of Indian farmers by the decades-old
"arhtiya" and "mandi" monopoly system. India Today claims the policy is good for the small
Indian farmer and the Indian consumer.
Pratap Mehta, president of the Centre for Policy Research, claimed any U-turn or postponement
of retail reforms will cause an immense loss of face to the Congress-led central government of
Manmohan Singh. The mom-and-pop farmers of India support these reforms. The consumers of
India want the reforms. The government has already annoyed those who oppose change and
innovation in retail. By putting retail reforms on hold, the government will additionally alienate
much larger segment of India's population supporting FDI. So they will now have the worst of
both worlds, claims Mehta.
Deepak Parekh, Ashok Ganguly and other economic policy leaders of India, on 4 December
2011, called placing investment and innovation in retail on hold for the sake of vested interests
as unfair and detrimental to vast majority in India. They urged farmers, consumers and the
common people to raise their voice against this false drama of apprehension against investment
and modernising trade in organised retailing. They called upon Indians to come out and strongly
support progressive measures and reforms with the same spirit and gusto with which we take the
liberties to criticize policies or issues we do not appreciate.
Several newspapers claimed on 6 December 2011 that India parliament is expected to shelve
retail reforms while the ruling Congress party seeks consensus from the opposition and the
Congress party's own coalition partners. Suspension of retail reforms on 7 December 2011 would
be, the reports claimed, an embarrassing defeat for the Indian government, suggesting it is weak
and ineffective in implementing its ideas.
Anand Sharma, India's Commerce and Industry Minister, after a meeting of all political parties
on 7 December 2011 said, "The decision to allow foreign direct investment in retail is suspended
till consensus is reached with all stakeholders."
Single-brand retail reforms approved
On January 11, 2012, India approved increased competition and innovation in single-brand retail.
The reform seeks to attract investments in production and marketing, improve the availability of
goods for the consumer, encourage increased sourcing of goods from India, and enhance
competitiveness of Indian enterprises through access to global designs, technologies and
management practices. In this announcement, India requires single-brand retailer, with greater

than 51% foreign ownership, to source at least 30% of the value of products from Indian small
industries, village and cottage industries, artisans and craftsmen.
Mikael Ohlsson, chief executive of IKEA, announced IKEA is postponing its plan to open stores
in India. He claimed that IKEA's decision reflects India‘s requirements that single-brand retailers
such as IKEA source 30 percent of their goods from local small and medium-sized companies.
This was an obstacle to IKEA's investment in India, and that it will take IKEA some time to
source goods and develop reliable supply chains inside India. Ikea announced that it plans to
double what it sources from India already for its global product range, to over $1 billion a year,
within three years. IKEA in the near term, plans to focus expansion instead in China and Russia,
where such restrictions do not exist.
Controversy over Indian retail reforms
Critics of the Indian retail reforms announcement are making one or more of the following
points:
Independent stores will close, leading to massive job losses. Walmart employs very few people
in the United States. If allowed to expand in India as much as Walmart has expanded in the
United States, few thousand jobs may be created but millions will be lost.
Walmart's efficiency at supply chain management leads to "direct" procurement of goods from
the supplier. In addition to eliminating the "middle-man", due to its status as the leading retailer,
suppliers of goods also bend over backwards to drop prices in orderto assure consistent cash
flow. There is the fear that this may not benefit the farmer, or the suppliers of Walmart.
The small retailer and the middle man present in the retail industry plays a large part in
supporting the local economy, since they typically themselves procure goods and services from
the area they have their retail shops in. This leads to increased economic activity, and wealth
redistribution. With large, efficient retailers, the corporate profits are not spent in the areas where
they're generated, hence killing the local economy.
Walmart will lower prices to dump goods, get competition out of the way, become a monopoly,
then raise prices. We have seen this in the case of the soft drinks industry. Pepsi and Coke came
in and wiped out all the domestic brands.
India doesn't need foreign retailers, since homegrown companies and traditional markets may be
able to do the job.
Work will be done by Indians, profits will go to foreigners.
Remember East India Company. It entered India as a trader and then took over politically.
There will be sterile homogeneity and Indian cities will look like cities anywhere else.
The government hasn't built consensus.
Opposition to retail reforms
Within a week of retail reform announcement, Indian government has faced a political backlash
against its decision to allow competition and 51% ownership of multi-brand organized retail in
India.
Despite the fact that Salman Khurshid, India‘s law minister, claiming that many opposition
parties, including the Bharatiya Janata Party, had privately encouraged the government to push
through the retail reform, the intense criticism now targets Congress-led coalition government,

and its decision to push through one of the biggest economic reforms in years for India.
Opposition parties claim supermarket chains are ill-advised, unilateral and unwelcome.
The opposition claims the entry of organized retailers would lead to their dominance that would
decimate local retailers and force millions of people out of work.
Mamata Banerjee, the chief minister of West Bengal and the leader of the Trinamool Congress,
announced her opposition to retail reform, claiming ―Some people might support it, but I do not
support it. You see America is America … and India is India. One has to see what one‘s capacity
is.‖
Other states whose Chief Ministers have either personally announced opposition or announced
reluctance to implement the retail reforms: Tamil Nadu, Uttar Pradesh, Bihar and Madhya
Pradesh.
Chief Ministers of many states have not made a personal statement in opposition or support of
India needing retail reforms. Gujarat, Kerala, Karnataka and Rajasthan are examples of these
states. Both sides have made conflicting claims about the position of chief ministers from these
states.
A Wall Street Journal article reports that in Uttar Pradesh, Uma Bharti, a senior leader of the
opposition Bharatiya Janata Party (BJP), threatened to "set fire to the first Wal-Mart store
whenever it opens;" with her colleague Sushma Swaraj busy tweeting up a storm of
misinformation about how Wal-Mart allegedly ruined the U.S. economy.
On 1 December 2011, an India-wide "bandh" (close all business in protest) was called by
political parties opposing the retail reform. While many organizations responded, the reach of the
protest was mixed. The Times of India, a national newspaper of India, claimed people appeared
divided over the bandh call and internal rivalry among trade associations led to a mixed
response, leaving many stores open day-long and others opening for business as usual in the
second half of the day. Even Purti Group, a network of stores owned and operated by Nitin
Gadkari were open for business, ignoring the call for bandh. Gadkari is the president of BJP, the
key party currently organizing opposition to retail reform.
The Hindu, another widely circulated newspaper in India, claimed the opposition's call for a
nation wide shutdown on 1 December 2011, in protest of retail reform received a mixed
response. Some states had strong support, while most did not. Even in states where opposition
political parties are in power, many ignored the call for the shutdown. In Gujarat, Bihar, Delhi,
Andhra Pradesh, Haryana, Punjab and Assam the call evoked a partial response. While a number
of wholesale markets observed the shutdown, the newspaper claimed a majority of kirana stores
and neighborhood small shops — for whom apparently the trade bandh had been called —
remained open, ignoring the shutdown call. Conflicting claims were made by the organizers of
the nation wide shutdown. Contrary to eyewitness reports, one Trader union's secretary general
claimed traders across the country participated wholeheartedly in the strike.
The political parties opposing the retail reforms physically disrupted and forced India's
parliament to adjourn again on Friday 2 December 2011. The Indian government refused to cave
in, in its attempt to convince through dialogue that retail reforms are necessary to protect the
farmers and consumers. Indian parliament has been dysfunctional for the entire week of
November 28, 2011 over the opposition to retail reforms.

Support for retail reforms
In a pan-Indian survey conducted over the weekend of 3 December 2011, overwhelming
majority of consumers and farmers in and around ten major cities across the country support the
retail reforms. Over 90 per cent of consumers said FDI in retail will bring down prices and offer
a wider choice of goods. Nearly 78 per cent of farmers said they will get better prices for their
produce from multi-format stores. Over 75 per cent of the traders claimed their marketing
resources will continue to be needed to push sales through multiple channels, but they may have
to accept lower margins for greater volumes.
Current supermarkets
Existing Indian retail firms such as Spencer's, Foodworld Supermarkets Ltd, Nilgiri's and
ShopRite support retail reform and consider international competition as a blessing in disguise.
They expect a flurry of joint ventures with global majors for expansion capital and opportunity to
gain expertise in supply chain management. Spencer's Retail with 200 stores in India, and with
retail of fresh vegetables and fruits accounting for 55 per cent of its business claims retail reform
to be a win-win situation, as they already procure the farm products directly from the growers
without the involvement of middlemen or traders. Spencer‘s claims that there is scope for it to
expand its footprint in terms of store location as well as procuring farm products. Foodworld,
which operates over 60 stores, plans to ramp up its presence to more than 200 locations. It has
already tied up with Hong Kong-based Dairy Farm International. With the relaxation in
international investments in Indian retail, India‘s Foodworld expects its global relationship will
only get stronger. Competition and investment in retail will provide more benefits to consumers
through lower prices, wider availability and significant improvement in supply chain logistics.
Components of the Indian retail Market
Banks, capital goods, engineering, fast moving consumer goods (FMCG), software services, oil
marketing, power, two-wheelers and telecom companies - they are the main driving force in the
retail growth of India. Global retailers still now find India to be among the most attractive
destination. On July 2009, the foreign direct investment (FDI) inflows, in single-brand retail
trading, touched approximately US$ 46.60 million.
Size of Indian retail market
India's retail sector is estimated to touch US$ 833 billion by 2013 and US$ 1.3 trillion by 2018,
with a compound annual growth rate (CAGR) of 10% - which is quite lucrative. Al these
estimations are due to the fact that the consumer spending has seen a rise of around 75%, in the
past four years. The organized Indian retail market is slated to grow at a CAGR of 40%,
touchingUS$ 107 billion by 2013.
5% of the Indian retail market is occupied by the organized retail sector, which is all slated to
witness the majority number of large format malls and branded retail stores. The increase in the
number of such malls would be first seen in South India, followed by North, West and the East
over the coming two years.

Another latest research shows that more than 100 malls spanning a space of over 30 million sq
feet is estimated to open in India between 2009 and 2010 end. Investment in the organized retail
market would be around US$ 503.2 million in 2009. This could go further up to US$ 1.26 billion
in the next four to five years, at a CAGR of 40%.
India has emerged as the third most attractive market destination for apparel retailers over the
years. In India, apparel is the second largest retail category and will have a 12-15% growth rate
every year. Apparel, food and grocery is expected to lead the organized retail sector in India.
The Indian retail market has been witnessing exponential growth with developments taking place
not only in major cities and metros but tier-II and tier-III cities in India are also on the focus.
Developments in the Indian retail market
Carrefour SA, the largest retailer of Europe, is expected to start wholesale operations in India by
2010 and also has shared its plan for setting up the first cash-and-carry outlet in the National
Capital Region. The present status looks alluring with Carrefour exporting goods valued US$
170 million from India to Europe, UAE, Indonesia, Europe, Thailand, Singapore and Malaysia.
Jewellery manufacturer and retailer, Gitanjali Group and MMTC will set up a chain of exclusive
retail outlets jointly known as Shuddi-Sampurna Vishwas. This joint venture will see 60 stores
across India by end of 2009. They will retail hallmarked gold and diamond Jewellery.
Mahindra Retail, a part of the Mahindra Group, is hopeful about its investment plans to the tune
of US$ 19.8 million. This investment will help them come out with a specialty retail concept by
2010 known as 'Mom and Me'.
Pantaloon Retail India (PRIL) has investment plans of more than US$ 103.3 million for
expanding its seamless mall Central and the value fashion format Brand Factory in the next two
years.
Bharti Retail has launched eight Wal-Mart private labels-including two large labels 'Great Value'
and 'George'- in its supermarket chain Easyday. It is all set to attract more consumers because of
their international design and packaging.
Italian sportswear brand Lotto is all set to launch two new footwear brands Sabots and Calcetto
in India very soon. By March 2010, they will have at least 50 exclusive outlets.
Steel players such as JSW Steel and Essar Steel are focusing on opening up more retail outlets
across the Indian market. JSW Steel presently has 50 steel retail outlets known as JSW Shoppe
and the target is to increase the number to around 200 by March 2010. Similarly, Essar Steel has
retail outlets known as Essar hypermarts. With around 150 such outlets, this segment is
responsible for about 20-25% to the Essar's total revenue.
Expansion mode for the large retailers - Aditya Birla Retail, Reliance Retail and Shoppers Stop,
and food chains like McDonald's as the rentals are dropping sharply.
Few of the major international brands are aiming to establish a strong foothold in India. Few of
such brands are The Pizza Company and Spicchio Pizza (from Thailand), Coffee Club from
Australia, Japanese brand Lolita Fashion, Revive Juice Bars from the UK, Mrs Fields Cookies
and Jamba Juice from the US, and French fashion brand Jules.

CHAPTER-4
INDIAN INSURANCE MARKET
Insurance In India
The Confederation of Indian Industry states that the insurance sector of the country has been
witnessing a consistent growth rate of late and its present worth is 41 billion US dollars.
The industry has of late achieved a yearly growth rate within 32 and 34 percent and this makes it
the 5th
best among emerging economies around the world. The various entities of the industry are
also bringing out newer products on a regular basis to attract their customers.
As per rules, the upper limit of foreign direct investment permitted in this sector is 26 percent.
However, this has to be done through the automatic route and the investor needs a license from
Insurance Regulatory and Development Authority (IRDA).
At present there are 22 life insurers in India. The IRDA has recently taken away the tariffs of the
interest rates and this has provided insurers greater independence when it comes to deciding the
price of their insurance policies. The insurance industry has also become more competitive as a
result.
Yet another important factor affecting this sector has been the recent financial meltdown.
India insurance industry growth in last few years
The life insurance companies have performed the best when it comes to growth with an increase
of almost 70% in new premium that has been collected in the initial 5 months of 2012.
As per IRDA data, in April-August 2010 the insurance companies earned $11.73 billion in new
premium - in the corresponding period in the previous year the amount stood at 6.9 billion
dollars.
LIC, a state held insurer, had been the biggest profit maker at that time with an addition of 88%
to their existing business. The privately owned insurers together had seen a leap of 34% to their
policy sales.
ICICI Prudential earned 576.60 million dollars at that time. During April-August 2009 SBI Life
had earned $379.20 million in sales of new policies and that figure went up to $531.87 million in
the corresponding period in 2010 making it an increase of 40%. HDFC Standard Life also
experienced a good growth of 54% in new sales.
IRDA data shows that between April and October 2010 the general insurance industry
experienced a year-on-year growth of 22.76% with regards to underwritten gross premium.

The total value of that premium was 5.29 billion dollars while the same figure stood at $4.31
billion in April-October 2009. For the public sector companies the year-on-year growth rate was
21.09 percent between April-October 2010 and April-October 2009.
In the same period the privately held insurers saw an increase of 25.19 percent in terms of
premium collected. Among the publicly owned entities, New India Insurance was one of the
better performers with a premium income of 916.77 million dollars in April-October 2010.
At the same period in 2009 they had earned 770.25 million dollars which implies a growth rate
of 19.04%. The IRDA Summary Report of Motor Data of Public and Private Sector Insurers
2009-10 states that in the same period almost 28.4 million policies were sold and the aggregate
worth of premium collected was $2.31 billion.
The health insurance sector, according to the RNCOS' research report named "Booming Health
Insurance in India" posted unprecedented growth rates in 2008-09 and 2009-10. The report also
estimates that between the 2009-10 and 2013-14 the sector would see a compound annual growth
rate (CAGR) of at least 25%.
India insurance industry - some key findings
Following are some important findings from World Bank regarding the
condition of insurance industry in India:
Between 2005 and 2010 the yearly GDP growth was approximately 8.56%
At the same time, the ratio of gross savings to GDP was 33%
Middle class saw the quickest growth
The life expectancy rate of people went up and urban development happened at almost 54%.
In 2010 rate of premium growth came down to 4.2% and compared to global standards the
premium share was pretty low
Major operational issues for insurers were expenditure control, claims settlement procedures,
improving investment yields, and capital requirements
In the 2010-11 fiscal the life insurance industry grew by 4.20% while the general insurance
industry increased by 8.10%.
During that time the paid-up capital (private total) for the life insurance sector was INR 236.57
billion while the paid-up capital (industry total) was INR 236.63 billion.
In 2010-11 the paid-up capital (private total) for the general insurance sector was INR 39.56
billion while the paid-up capital (industry total) was INR 67.06 billion.
In 2010-11 the operating costs of privately owned life insurers was INR 159.62 billion while the
total life insurance industry expense was INR 329.42 billion.
In the same time the privately owned general insurers spent INR 39.32 billion from an industry
total of INR 106.20 billion.
In 2010-11 the privately held life insurers paid benefits and claims worth INR 312.51 billion
while the industry aggregate was INR 1425.24 billion.
At the same time the private general insurers paid benefits and claims worth INR 99.37 billion
while the industry total was INR 295.36 billion.

India insurance industry contribution to GDP
Experts are of the opinion that around the world the insurance industry contributes around 4.5%
to national GDPs. They have questioned the logicality of opinions that in India the contribution
can be higher saying that there are other important sectors like education, defense, and health
that cannot be undermined in this context.
They have ruled out possibilities that the sector can contribute 10% to India's GDP. The
Chairman of IRDA, Hari Narayan has ruled out any such possibility asking if India's GDP
growth will be that much in the next few years ahead.
The IRDA states that in India land and gold are more preferred as forms of investment. Narayan
feels that if the insurance sector is to do well in terms of contribution to GDP then more people
should be convinced about its capability to provide good ROI (return on investment).

CHAPTER-5
INDIAN FOOD MARKET
Introduction
The Indian food market has experienced a good growth over the years. The economic liberation
and high growth rate of economy has put a positive impact on the food and agriculture market in
the country. This has led to lesser imports and high rate of exports in terms of quality and
quantity.
With the advancements in the field of technology, more and more innovative techniques are
being implemented in the field of agriculture. This has led to high yield of food and crops which
has really increased the output and led to the growth of the food industry in India. The growth of
the food industry has also led to the introduction of other allied industries such as food
processing, food packaging and so on.
Development of the Indian food market
After independence, the government put emphasis on making the country self sufficient through
increased food and farm production. Emphasis was given on the development of agriculture
through better farming techniques, increased irrigation facilities, more use of fertilizers and so
on. This really put a positive impact on the food processing industry which resulted in better
yields.
In the 1960s, the government initiated the Green Revolution' movement to increase the food
grain production. Emphasis was given on aforestation, irrigational projects, use of better quality
seeds, improvised farming techniques and so on. This increased the food exports of India in
terms of both quantity and quality.
The market liberalization policies in the 1990s led to the favorable growth of the economy of
India which also improved the food industry in the country. Since then, the food industry has
really developed to a great extent. More segments are coming up and also plenty of foreign
companies are entering the Indian food market.

Recent trends in the India food market
According to the recent survey, the Indian food market is all set to be double by the year 2025.
The rapid economic development, innovative technology and food production, growing
consumerism and improved lifestyle are the main reasons behind this growth. Today, Indian
consumers are paying for branded and value added food products which have led to the
introduction of new segments in the manufacturing and retail market. Over the last few years, the
annual output of the food market in India has been around $155 billion which is expected to
reach around $344 billion by the year 2025. The annual rate of growth is expected to be around
4.1 %.
The market share of the Indian snacks is around US$ 3 billion with a growth rate of around 15-
20 %. The unorganized snacks market is worth around US$ 1.56 billion with a 7-8 % growth
rate. Today, there are around 1,000 types of snacks that are available in the market. The most
popular snacks are potato based items and chips. Some of the main companies in the organized
snacks market in India are Pepsi and Haldiram's.

CHAPTER-6
INDIAN ORGANIZED RETAIL MARKET
Introduction
Indian organized retail market is growing at a fast pace due to the boom in the India retail
industry. In 2005, the retail industry in India amounted to Rs 10,000 billion accounting for about
10% to the country's GDP. The organized retail market in India out of this total market
accounted for Rs 350 billion which is about 3.5% of the total revenues.
Retail market in the Indian organized sector is expected to cross Rs 1000 billion by 2010.
Traditionally the retail industry in India was largely unorganized, comprising of drug stores,
medium, and small grocery stores. Most of the organized retailing in India have started recently
and is concentrating mainly in metropolitan cities.
The growth in the Indian organized retail market is mainly due to the change in the consumers
behavior. This change has come in the consumer due to increased income, changing lifestyles,
and patterns of demography which are favorable. Now the consumer wants to shop at a place
where he can get food, entertainment, and shopping all under one roof. This has given Indian
organized retail market a major boost.
Retail market in the organized sector in India is growing can be seen from the fact that 1500
supermarkets, 325 departmental stores, and 300 new malls are being built. Many Indian
companies are entering the Indian retail market which is giving Indian organized retail market a
boost. One such company is the Reliance Industries Limited. It plans to invest US$ 6 billion in
the Indian retail market by opening 1000 hypermarkets and 1500 supermarkets.
Pantaloons is another Indian company which plans to increase its retail space to 30 million
square feet with an investment of US$ 1 billion. Bharti Telecoms an Indian company is in talks
with Tesco a global giant for a £ 750 million joint venture. A number of global retail giants such
as Walmart, Carrefour, and Metro AG are also planning to set up shop in India. Indian organized
retail market will definitely grow as a result of all this investments.
Indian organized retail market is increasing and for this growth to continue the Indian retailers as
well as government must make a combined effort.

CHAPTER-7
INDIAN AUTOMOBILE MARKET
Introduction
Besides a steady growth in India's fiscal system, the expansion of Indian middle class has also
played a major role in drawing the attention of international auto manufacturers towards the
Indian Automobile Market. Moreover, India is one nation which provides skilled workforce at
cutthroat prices making itself a preferable manufacturing centre.
The magnetism of the Indian markets and the decline of global auto industries such as Japan,
Europe and US have triggered the influx of new conglomerates along with huge capital
investments in the sector. Overseas auto players like Suzuki, Hyundai, Honda, etc have their
manufacturing units in India and are maximum utilization of their Indian functions to expand
their business.
As per a recent research conducted by Deloitte, 2020 will witness the emergence of at least one
Indian auto firm that would not only feature among the best six car manufacturers but would also
dominate the international auto sector. Moreover, the global car sector would witness an
enormous competence building in low-priced nations like India and China as most of the
producers would alter base from industrial regions.
Domestic Automobile Market
As per statistics launched by Society of Indian Automobile Manufacturers (SIAM), the
passenger car transactions in domestic market have surged to 145,905 units in January 2010
against the 2009 sales of 110,300 units. This indirectly refers to the 32.28% growth in the
domestic car sales. In January 2010, the total sales of automobiles grew to 1,114,156 units as
compared to the previous fiscal year's 768,698 units sales.
Segments of Indian Automobile Market
Two-wheeler automobile segment
In this segment, motorcycles accounts for major Indian Automobile market share. The chief
players in this segment is Hero Honda which delivers 50% motorbikes to the Indian market
besides sharing 46% in scooter market and TVS for 82% in moped market.

Three-wheeler automobile segment
Around 41% of the three-wheelers in India are utilized for merchandise transfer purpose. In this
segment Piaggio and Bajaj are the leading players with 40% and 68% of market share
respectively.
Car segment
Accounting to 79%, Cars rule the passenger automobile in India. The chief players in this
segment are Maruti Suzuki and Mahindra. While Maruti Suzuki enjoys full-fledged monopoly in
multi-purpose automobiles sector with 52% of market share, Mahindra have 42% market share in
utility vehicles. However in the area of commercial automobiles, Tata Motors rule the
Automobile Industry of India with 60% of market share besides being the fifth biggest producer
in the world of medium & heavy marketable vehicles.

CHAPTER-8
INDIA TELECOM MARKET
Introduction
The India telecom market ranks among the fastest growing industries in the country. The
improvement in the standard of living and the development of infrastructure and connectivity are
some of the mains reasons for the significant growth of the telecom industry. The growth is
expected to be more over the years.
Presently, there are around 200 million telephone lines in India which make it the third largest
phone network in the world after China and the US. Today, the telecom market in India enjoys a
growth rate of around 45 % which is the highest in the whole world.
History of India telecom market
It was in the year 1851 that the British first introduced telecommunication services in India
through operational land lines near Calcutta. Gradually, the telephone service was made
operational in the year 1881. After independence, the foreign telecommunication companies
were nationalized and the Posts, Telephone and Telegraph (PTT) Company was set up by the
Ministry of Communications.
In the year 1985, the Department of Telecommunications (DOT) was set up to provide domestic
and long distance telephone services. In the year 1986, the government established two
companies namely Mahanagar Telephone Nigam Limited (MTNL) for metropolitan telephone
services and Videsh Sanchar Nigam Limited (VSNL) for international telephone services.
With the economic liberalization in the 1990s, the telecom market in India was also benefited to
a great extent. The service was improved and the tariffs were also significantly lowered. In the
year 1997, the government set up the Telecom Regulatory Authority of India (TRAI) to provide
a comprehensive telecom service in the country. In 1999, modification was brought to the policy
and the cellular services were introduced.

Telecom segments in India
India telecom market is mainly divided into two major segments namely, the Fixed Service
Provider (FSPs) and the cellular services. Fixed Service Provider network comprises land lines,
basic services, domestic and long distance call service. The two major basic operators BSNL and
MTNL comprise almost 90 % of the FSPs in the country. Around 5 % are operated by private
firms and are mostly scattered in the urban areas. In most cases, the private basic service
telephone operators cater to offices, business firms, schools and the corporate sector.
In case of the cellular services, there are mainly two sub divisions: Code Division Multiple
Access (CDMA) and Global System for Mobile Communications (GSM). In the GSM sector, the
major players are Vodafone, Airtel, Idea Cellular, and Aircel and so on. The national company
BSNL also has its GSM service named "Cellone" which has a major share in the semi urban and
rural areas. The major companies which dominate the CDMA scenario are Reliance
Communications and Tata Indicom. In both the sectors of cellular services, perfect competition
exists according to the demand supply chains.
Recent trends in the India telecom market
The Indian economy is greatly benefited by the growth of the telecom industry in the country.
With the growth in the demand and customer base, more and more multinational companies are
entering the telecom market. The India telecom market is expected to grow by Rs 344,921 crore
by the year 2012. The rate of growth will be around 26 % and the sector will also generate
employment to around 10 million people.
The number of telephone subscribers is expected to grow by around 650 million by 2012 from
the current number of 250 million.

CHAPTER-9
SALES PROMOTION
INTRODUCTION TO SALES PROMOTION
Sales promotion refers to many kinds of incentives and techniques directed towards consumers
and traders with the intention to produce immediate or short-term sales effects.
Definition
―Sales promotion includes incentive-offering and interest-creating activities which are generally
short-term marketing events other than advertising, personal selling, publicity and direct
marketing.
The purpose of sales promotion is to stimulate, motivate and influence the purchase and other
desired behavioral responses of the firm‘s customers.‖
More on it...
Sales promotion offers a direct inducement to act by providing extra worth over and above what
is built into the product at its normal price. These temporary inducements are offered usually at a
time and place where the buying decision is made. Not only are sales promotions very common
in the current competitive market conditions, they are increasing at a fast apace. These
promotions are direct inducements. In spite of the directness, sales promotions are fairly
complicated and a rich tool of marketing with innumerable creative possibilities limited only by
the imagination of promotion planners. Sales promotion is often referred to by the names of
‗extra purchase value‘ and ‗below-the-line selling‘.
Used to achieve short-term sales
Sales promotion is a separate and distinct element in the promotion mix and is an important and
powerful tool of marketing. The aim of sales promotion is goal-oriented to achieve
sales/marketing objectives which are short-term and immediate.

Becoming too common
Today we find companies in almost all sectors offering some sort of a promotion scheme. These
sectors range from automobiles to beverages, from financial services to foods, from household
durables to services, from household products to business products, from personal care to textiles
and apparel.
Writing about sales promotion tools, Prof. Philip Kotler observes – ―they have 3 distinctive
characteristics.‖
Communication: they gain attention and usually provide information that may lead the customer
to the product.
Incentive: they incorporate some concession, inducement, or contribution that gives value to the
consumer.
Invitation: they include a distinct invitation to engage in the transaction now (offer valid till
…or till stocks last)
Major users of sales promotions are marketers of soaps, detergents, toiletries, soft drinks,
toothpastes, tea, coffee, footwear, textiles, readymade garments, consumer durable goods, music
systems, autos, televisions, washing machines, microwave ovens, refrigerators, magazines and
many other household items. In fact the list of product categories using sales promotion is ever-
increasing, no matter what the product category, it could be staples, impulse goods, emergency
goods shopping goods, speciality goods, unsought goods, industrial products, or different types
of services.
Sales promotion is now established as an important and increasingly respectable element of the
marketing communication tools. Sales promotion expenditures are increasing dramatically, and
economic recession is most likely to fuel this trend further.

Advantages of sales promotion
Sales promotions have a significant effect on the behaviour of consumers and trades people.
Such promotions can bring in more profits for the manufacturers because they permit price
discrimination.
Price discrimination
Producers can introduce price discrimination through the use of sales promotions. They can
charge different prices to different consumers and trade segments depending on how sensitive
each segment is to particular prices. Coupons, special sales events, clearance sales and discounts
are examples to explain the phenomenon. Often such price discrimination is offered in specific
cities in the country.
Such price discriminating sales promotions that enable consumers and traders to pay less in
certain market area or stores usually bring in more contribution than if one price is charged to
all. Such price discrimination also held in adjusting to fluctuations in demand and supply
situation without affecting any changes in the list price.
Effect on consumer behavior
As sales promotions are mostly announced for a short period, customers may feel a sense of
urgency and stop comparing the alternatives. They are persuaded to act now rather than later.
With every 500g pack of Bournvita, you get a free mug . Offer valid only till stocks last.
In our over communicated society and because of selective attention, it is not uncommon to
ignore many advertisements. Sales promotion deals such as discounts, debates, coupons,
premiums, etc also increased the attention getting power of advertisements and convey the
advantages and benefits of the brand, including price information. By using promotions,
marketers can reach the deal prone customers and encourage brand switching.
Effect on trade behavior
Short-term promotions present an opportunity and encourage dealers to forward by. This forward
buying ensures that retailers won‘t to go out of stocks. As dealers have more than the normal
stocks, they think it advisable to advertise in local media, arranged displays and offer attractive
promotion deals to consumers. These actions help in increasing the store traffic.
Retailer promotion: Buy Cadbury‘s products worth Rs.3000/- and get any 30 chocolates worth
Rs.5 each free.
Buy a box of Munch and get 1 Munch free.

Regional Differences
The South is generally characterised by greater degree of going out and people tend to drink
outside the house. The Tamilian, consumer in particular, is value oriented, rational and looks up
to film stars, while the Keralite is more international in his outlook. The Bangalorean is as
cosmopolitan as his Mumbai or Delhi counterpart."
That sort of diversity believes Coca-Cola, calls for a corresponding variety in promotions. The
place to attract is the retail zone. Coca-Cola recently launched a promotion called ' world of
Coca-Cola' covering Chennai in Tamil Nadu and Bangalore and Mysore in Karnataka. It was a
value deal, aimed at the consumer disposed towards global- style outings. The consumer pays
Rs 20 along with a label of a 500 ml of PET bottle to get a card that entitles him to gifts and
discounts at 29 outlets, including those of global chains such as TGI Friday and Baskin and
Robbins this, in these cities. About four years ago, Pepsi had a similar promotion with its Pep
cards. This, however was on a national level, while the Coca-Cola promotion is South based
build retail level activity matters more than it does in the North. The primary aim is to help the
retail raise volumes.
Disadvantages of sales promotions
While sales promotion is a powerful and effective method to produce immediate short term
positive results, it is not a cure for a bad product or bad advertising. In fact, a promotion is speed
up the killing of a bad product.
Increased price sensitivity
Frequently promoted brands in the product category, especially on the basis of price, make
consumers and traders more price sensitive not only for the promoted brands but for other brands
as well in the same product category.
Consumers wait for the promotion deals to be announced and then purchase the product. This is
true even for brands where brand loyalty exists. Customers wait and time their purchases to
coincide with promotional offers on their preferred brands.
Quality image may become tarnished
If the promotions in a product category have been rare, or the product happens to be of high
involvement category, the promotions could have a negative effect about its quality image.
Consumers may start suspecting that perhaps the product has not been selling well, the quality of
the product is true compared to the price or the product is likely to be discontinued because it has
become outdated.

Dealers forward buy and divert stocks
In case of deals for the trade, many dealers forward buy, in excess of their inventory
requirements. This is particularly happens if a product is low bulk, much in demand and the
inventory holding costs are favourably low. This is true both for wholesalers as well as retailers.
Forward buying of excessive stocks on deals or quantity discounts can lead to diversion of some
of the stocks in non-deal areas. Forward buying of excessive stocks on deals or quantity
discounts can lead to diversion of some of the stocks in non- deal areas. Wholesalers and
retailers do not hesitate in selling these excess stocks in non- deal areas on prices that are less
than the list price, but keeping some reasonable margin for themselves. This is likely to have a
negative effect on price discrimination efforts of the company as dealers and those areas would
not be buying even the normal requirements from the company.
Merchandising support from dealers is doubtful
One of the trade promotions tool is to offer promotional allowances to trade people to motivate
them to provide merchandising support and to pass on some benefit to consumers. This generally
is the condition attached with such promotional allowances. In many cases, the dealers do not
cooperate in providing the merchandising support nor do they pass on any benefit to consumers.
The retailer might not be willing to give support because he does not have the place, or the
product does not sell much in his shop, or may be he thinks the effort required is more than the
commission/benefit derived.
Short-term orientation
Sales promotions are generally for a short duration. This gives a boost to sales for a short
period. This short-term orientation may sometimes have negative effects on long-term future of
the organization. Promotions mostly build short-term sales volume that is not maintained.
Heavy use of sales promotion, in certain product categories, may be responsible for causing
brand quality image dilution.
The argument given in favour is that companies should develop superior products or services
which are better than competitors and consumer should be convinced through appropriate and
focused advertising about the superiority of the product and its image.
This will result in lasting brand identities reflecting brand image will keep customers loyal to the
brand.

CHAPTER-10
ADVERTISING
Role of Advertising in Retail
The retailer through various ways of advertising strives hard to promote his brand amongst the
masses for them to visit the store more often.
Advertisements attract the customers into the store. They act as a catalyst in bringing the
customers to the stores.
The advertisement must effectively communicate the right message and click on the customers.
It should be a visual treat and appeal the end-users.
Advertisements have taglines to create awareness of a product or service in the most effective
way.
The tagline has to be crisp and impressive to create the desired impact.
The tagline should not be lengthy else the effect gets nullified.
It has to be catchy.
It should be simple to memorize.
The moment an individual hears ―Just Do it‖, he knows he has to visit a ―Nike Store‖. That‘s the
importance of a tagline.
Modes of Advertising
Nothing works better than promoting a brand through signboards, billboards, hoardings and
banners intelligently placed at strategic locations like railway stations, crowded areas, heavy
traffic crossings, bus stands, near cinema halls, residential areas and so on. Such advertising is
also called as out of home advertising.
Out of home advertising is a way to influence the individuals when they are out of their homes.
The hoarding must be installed at a height visible to all even from a distance.
Make sure it catches the attention of the passing individuals and influences them to visit the
store.
Keep it simple and make sure it doesn‘t confuse the customers; instead it should convey the
information in its desired form.
Print media is also one of the most effective ways to promote a brand. Newspapers, magazines,
catalogues, journals make the brand popular amongst the individuals. Retailers can buy a small
space in any of the leading newspapers or magazines; give their ads for the individuals to read
and get influenced.
Television also helps the brand reach a wider audience. Now a days retailers also use celebrities
to endorse their products for that extra zing. Celebrities are shown using the particular brand and
thus making it a hit amongst the masses.
Sachin Tendulkar - the famous Indian cricketer endorses Castrol India, MRF tyres, Adidas,
Boost etc.A child gets influenced to drink Boost because his favourite cricketer drinks the same.
Radio Advertisements also help in creating brand awareness.
Social networking sites have also emerged as one of the easiest and economical ways to promote
a product or brand.

Difference Between Advertising And Sales Promotion
Advertising Sales Promotions
By using a variety of persuasive appeals,
it offers reasons to buy a product or
service.
Besides giving reasons in the form of
different appeals, they offer incentive to
the consumers to buy the product or
service now.
Appeals are emotional or functional in
nature
Appeals are rational
Time-frame is long term Time frame is short term
The primary objective is to create an
enduring brand image
To get sales quickly or to induce trial.
Indirect and subtle approach towards
persuading customers to buy a product or
service
Direct in approach to induce consumers
to buy a product or service immediately
by temporarily changing the existing
price-value relationship of the product or
service.
But both advertising and sales promotions go hand in hand. Both are very essential to achieve
success. Both are complementary to each other.

CHAPTER-11
CONCLUSION
In the growing market, retail marketing has become one of the major emerging trends in the
entire economical cycle. It is the retail market only which provides the consumer a basic
platform to encounter with goods and a shop keeper for the first time. Retail market consists of a
fixed location like boutique, store, departmental store etc, here in these location consumers meets
the shop keeper and purchase goods in return of certain value. Maintaining a certain profit
margin, these shop keepers sell goods to their consumers. The basic motive of these shopkeepers
is to satisfy the consumers and fulfill their needs and demands.
Retail marketing strategy has become one of the basic elements of marketing strategy which
includes a lot of planning and proper execution of this planning. Now let us first focus on the
basic nature of retail. Firstly in retail, a marketer needs to focus primarily on the needs and
desires of the customers.
Retail marketing even focuses on satisfying the customers, maintaining a proper profit margin
for the owner of the goods. Customer needs are the basic key factors of retail. Retail marketing
consists of 5 basic pillars, first is saving the precious time of the customers. Second is setting the
right prices of the goods, third is creating a proper connection with the emotions of the
customers, fourth pillar is paying the right respect to the customers and lastly solving the
problems of the customer is another pillar of retail.

CHAPTER-12
BIBLIOGRAPHY
Books Referred
1. Marketing management
2. Principle of marketing
Internet Sites
www.google.com
www.thehindubusinessline.com
www.slideshare.net
www.business.mapsofindia.com

Dharmik retail marketing

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