The module will help to draw a relationship between retail merchandising, marketing communication, CRM & retail success. You will also be in a position to predict the impact of changing trends in the Indian market scenario on retail business

1. By
Prof. Nikhil Bangde
(S. B. Jain Institute of Technology, Research &
Management)
Retail Sales Management & Services
Marketing
Module III- Retail Merchandising

2. This Unit will help You
[Course Outcome (CO)]
To draw relationship between retail
merchandising, marketing
communication, CRM & retail
success. They will also be in a
position to predict impact of
changing trends in Indian market
scenario on retail business
2 Prof. Nikhil Bangde, Asst. Professor

3. Retail Merchandising
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Professor
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 Process of developing, securing, pricing, supporting
& communicating the retailer’s merchandise offering
 It means offering the right product at the right time
at the right price with the right appeal in order to
satisfy the needs of target customer
 It is an integral part of retailing and is also one of he
most challenging functions
 Since consumer is the focal point of retail, the
success of a retailer will depend on customer
satisfaction

4. Concept of Retail
Merchandising
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Professor
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 Retail industry is dynamic, the retailer has to adapt
to changes in order to be competitive
 Since product is the most important aspect of
marketing mix thus, merchandise assortment
available at a store is extremely crucial & a key
driver of success
 Effective merchandising will push improvements by
increasing sales revenues, gross margins &
drastically reduce inventories

5. Merchandising
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Professor
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i. Size of Retail Organization: Single store or
Chain store
ii. Type of Retail Format: Online, Mail order or Brick
& Mortar store
iii. Merchandise to be carried: Basic or fashion
product
iv. Organization structure

6. Merchandising
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Professor
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i. Size of Retail Organization
• Function of retailing varies depending on size of
retail business
• Needs of an independent retailer varies
considerably from those of large chain operation
• In single store, owner or manager is assisted by
sales person
ii. Type of Retail Format
• Nature of the store affects the function of
merchandising. Retail store format affects every
aspect of marketing mix & merchandising
decisions
• Buying for a mail order catalogue or for direct

7. Merchandising
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Professor
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iii. Merchandise to be carried
• It determines the responsibilities of the retailer.
• Buying for basic merchandise is different from that
of fashion merchandise because basic products
are always in demand
• Fashion products are those that may sell very well
in one season & may not in next season
iv. Organization structure
• Organization structure that retail organization
adopts, also affects the merchandising function. It
is usually dependent on the size of organization

8. Process of Merchandise
Planning
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Professor
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1. Developing the sales forecast
• Review past sales
• Analyze economic conditions
• Analyze the changes in sales potential &
marketing strategies
2. Determining the merchandise requirements
• Types of merchandise
• The creation of Merchandise Budget by estimating
:
* The sales plan * The stock support plan
* The planned reductions * The planned purchase

9. Process of Merchandise
Planning
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Professor
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3. The Merchandise Control
Open to buy
4. Assortment Planning
• Determine the quantity of each product
• Details of color, size, brand, materials

10. Importance of Merchandising
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 Merchandising is a global occupation today &
encompasses the day-to-day business of all retailers
 Merchandising function generates profit & is the core of
retail management
 Merchandising constitutes the manner in which retail
outlets and marketers present products for sale to the
consumer, both in form & content
 Merchandising impacts business & employees
 Poor merchandising means poor sales

11. Types of Brands
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Professor
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i. Store Brands
• Carry the retailers name itself, thus the
consumers perception of the store brand is
dependent on their perception of the store itself
Eg: Westside, Big Bazaar
ii. Umbrella/Family brand
• Umbrella /family brand is a common brand name
used for multiple product categories
• It is associated with a company and may have a
sub-brand.
Eg: Colgate Total toothpaste (Colgate-company name &
Total- sub brand)

12. Types of Brands
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Professor
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iii. Individual Brands
• Individual Brands are specific brand names created
for a specific market segments.
• These are used for different products without
associating them with a company.
Ex: Lux, Hamam, Surf, Lakme products are all individual brands of
HUL
iv. National Brands/Manufacturers brands
• Designed, produced & marketed by manufacturer
and then sold to different retailers.
• Mass produced, huge quantities; Marketed by
manufacturer and not retailer
• Wide distribution in different retail formats
• Manufacturer is responsible for product quality

13. Private Label
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 Private label consists of products or a line of
merchandise which is owned, controlled & sold by a
specified retailer in his own store or chain of stores
 Private label brands are also referred as own
brands or store brands
 Private labels are widely used in all product
categories, be it apparel, beauty, cosmetics, food &
health
Characteristics of Private labels
• Production quantity for private labels maybe small.
• These are marketed by retailer and sold only in that
retailers stores

14. Private Label Examples
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Professor
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Big Bazaar
* Renuka (Sugar) * Fresh n Pure (Ghee)
* Clean Mate (Detergent) * John Miller (Apparel)
* Koryo (Electronics)
Pantaloons
RIG, Lombard, Ajile, Rangmanch, Annabelle
Shoppers Stop
Austin Reed, KAshish, Tantra, Veda, T Base

15. Types of Private Labels
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Professor
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Exclusive Brand
Premium Private
Label
Generic Brands Copycat Brands
Private
Labels

16. Type of Private Labels
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Professor
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i. Exclusive brand
 Sold exclusively by retailer even though it may be
designed & manufactured by National brand.
 Having slightly different features & model numbers
for the same product being sold in different retail
stores. Thus consumers cannot compare features
and prices.
Eg: Mainly happens in Cameras
ii. Premium Private Label
Is comparable to a manufacturers brand quality but
may be slightly lesser priced

17. Type of Private Labels (Contd..)
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Professor
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iii. Generic Brands
• Offer a no frills product at lower price for price
sensitive customers.
• They are perceived as low in quality & price,
receives secondary shelf locations, have little or no
promotions and have plain packaging.
• Are usually in basic products like milk, eggs, flour
iv. Copycat Brands
 Imitate the manufacturers brand in a number of
ways, especially appearance and packaging
 These are perceived to be of lower quality & priced
lower. Retailers modify new national brands thus
looking similar to the national brand

18. Benefits of Private Labels
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Professor
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Benefits
of
Private
Labels
Branding
Filling the
Need Gap
Unique
Product
More variety
Better
margins
Fast
customization
Customer
loyalty

19. Benefits of Private Labels
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Professor
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• Filling the need gap
Enables the retailer to clearly see gaps in the
market & design product accordingly.
• Unique product
Retailer offer a unique and differentiated product by
introducing a private label, which is exclusive
thereby creating a competitive advantage
 Fast customization
Retailer can respond to changes in consumers
tastes and preferences faster and customize
products because it has direct control over its
marketing mix.

20. Benefits of Private Labels
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Professor
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• More variety
Private labels offer allow the consumer more
choice to purchase same or comparable product as
the national brand
• Better margins
Due to reduced costs, elimination of middlemen and
freedom with pricing decisions
• Branding
A private brand ensures a strong brand identity for
a retailer
• Customer Loyalty
Offering more variety in a unique product that is

21. Disadvantages of Private
Labels
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Professor
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Cons of
Private
Labels
Conflict with
other
brands in
the
category
Higher
R&D
Expense
Higher
Marketing
Expense
Inventory
Risk
Product
fails will
create
negative
image

22. Global & Indian Scenario of Private
Labels
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Professor
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• Globally, private label brands contribute to 17 % of
retail sales with a growth of 5 % per annum
• Trend of private labeling has caught up in Indian
retail
• Share of private labels in India is about 7%
• Food segment dominates the private label market
• Online retailers are also launching private labels

23. Private Labels of Future Group (Big
Bazaar)
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Professor
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• Apparels: John Miller, Bare, DJ&C, Indigo Nation,
RIG
• FMCG: Tasty Treat, Fresh n Pure, Premium Harvest
• General Merchandise: Dream-line
• Homecare & Toiletries: Cleanmate, Caremate
• Consumer Durables & Electronics: Sensei & Koryo
• Future Brands, the group’s wholly-owned subsidiary,
plans to launch sportswear, lingerie & beauty
products

24. CRM in Retail
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Professor
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• Customer Relationship Management (CRM) is
business philosophy & set of strategies, programs,
systems that focuses on identifying & building
loyalty with retailer’s most valued customers
• Retailer’s goal of CRM-
Develop base of loyal customers & increase share
of wallet (% of customers purchases made from the
retailer) by providing more value to best customers
by targeted, personalized promotions & services
• Retailers are more profitable when they focus on
retaining & increasing sales to their best customers
rather than generate sales from new customers

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Professor
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26. Customer Database
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Professor
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• Transactions: Complete history of purchases made by the
customer i.e. purchase date, price paid & whether
merchandise was purchased in response to special
promotion
• Customer Contacts: Record of interactions that customer
has had with retailer, including visits to the retailer’s web site,
telephone calls made to retailer’s call center etc.
• Customer Preferences: Customer likes & preference i.e.
favorite colors, brands, fabrics, size, flavors etc.
• Descriptive Information: Demographic & psychographic
data describing the customer that can be used in developing
market segments.
• Responses to Marketing Activities: Analysis of
transaction & contact data providing information about
customer’s responsiveness to marketing activities

27. How Retailer Benefited By
CRM
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Professor
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• Generate Maximum Sales by repetitive purchase
• Greater sales ensures Maximum profit level
• By applying CRM concept, retailer can ensure
Customer Satisfaction which lead to positive
Word of Mouth
• Cross selling- Retailer suggests additional
Products to loyal customers during a buying
process to increase revenue
Aspects for CRM
i. Customer Satisfaction
ii. Customer Retention

28. Process of CRM in Retail
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• CRM is an iterative process that turns customer data
into customer loyalty through different type of
activities
• Levy & Weitz described CRM in retailing via
systematic process

29. Process of CRM in Retail (Contd..)
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Step I: Collecting Customer Data
By constructing a customer database or Customer data
warehouse
• CustomerDatabase
Histories ofpurchases
Customer contact
Customer preferences
• Approaches for collectingInformation
Asking forinformation
Using frequent shopper card and creditcard information

30. Process of CRM in Retail (Contd..)
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Step II: Analyzing Customer Data & Identifying
customer
Targets
By analyzing customer database & using the
information retailers develop programs for building
customer loyalty
• Techniquesto analyzeCustomer-
Data Mining
Market basketanalysis
Identifying marketsegments
Identifying best customers–
 Lifetime value
 Customer PyramidApproach
 RFM analysis (Recency, Frequency,Monetary)

31. Process of CRM in Retail (Contd..)
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Step III: Developing CRM programs
• Retaining the best customer (Customer retention)
Providing incentives ordiscounts
Special customerservice
Personalization
Informalcommunication
• Converting good customers into bestcustomers
Cross selling
Add-on selling
• Dealing with unprofitablecustomer

32. Process of CRM in Retail (Contd..)
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Step IV: Implementing CRM programs
Stage I – Collecting information
Stage II – Storing information
Stage III – Accessing information
Stage IV – Analyzing consumer behavior
Stage V – Marketing more effectively
Stage VI – Enhancing the customer experience

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Professor
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34. Successful CRM
Implementation
Ways of Successful
CRM Implementation
Reasons for CRM
Implementation
Failure
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 More emphasis on customer
satisfaction
 Use of IT to collect information
timely
 Retailer should be flexible to
bend its rules & procedures in
customer favor
 Retailer need to focus on
informal relationships &
communications with customers
 Retailer must know the drivers
for customer satisfaction &
dissatisfaction
 Retailers need to develop
 Lack of Customer Focus
 Weak management
 CRM Project Management
is not proper
 Non Supportive Team
members
 Improper Data &
Warehouse Requirements

35. New Trends in CRM
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Professor
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 Products in accordance with customer's mindset
 Multi-channel CRM
 Smart shopping
 Mobile CRM
 E-mail marketing and CRM
 Social CRM

36. This Unit will help You
[Course Outcome (CO)]
To draw relationship between retail
merchandising, marketing
communication, CRM & retail
success. They will also be in a
position to predict impact of
changing trends in Indian market
scenario on retail business
36 Prof. Nikhil Bangde, Asst. Professor