91722255 strategic-retail-management-a-case-study-on-simple-call

2011

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Assignment on Strategic Retail Management

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A Case Study on Simplecallwww.simplecall.com



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Assignment on Strategic Retail Management- A case study on Simplecall

Table of Contents

1.0 Introduction:.........................................................................................................................4

1.1 Mission of Simplecall:......................................................................................................5

1.2 Vision of Simplecall:........................................................................................................5

2.0 Retailing concept:.................................................................................................................6

2.1 Customer Orientation:......................................................................................................7

2.2 Coordinated effort:.........................................................................................................10

2.3 Value driven:..................................................................................................................12

2.4 Goal orientation:.............................................................................................................13

3.0 Comprehensive awareness of strategic implication:..........................................................14

3.1 The effect of recession:..................................................................................................17

3.2 Strategic option for retailers at the time of recession:....................................................17

4.0 Conclusion:........................................................................................................................18

5.0 Recommendations:.............................................................................................................19

References:...............................................................................................................................20

Bashir Jaman copyright:[email protected]

Prepared by:


List of Figures

Figure No:

Figure Name Page No

1 Retailing Concept 07

2 Customer store loyalty model for retail service 09

3 Porter’s value chain for retail store 13

4 Elements of retail Mix 15

5 Competition with Simplecall 16

6 Strategic Direction for Simplecall 17



1.0 Introduction:

Retail comes from the French word ‘’Retaillier’’ which means ‘’sale in small quantities’’.

Retailing is therefore defined as ‘’ buying in large quantities from manufacturer or importers

and selling in small quantities directly to consumers’’ (Mathur,U.C.,2010). A retailer cans

sell tangible goods such as food or clothes or intangible goods such as hotel accommodation,

Voice over internet protocol (VOIP).

Management is a systematic process which is consists of planning, organizing, implementing

and controlling to achieve organizational objectives through efficient use of people and

resources (Tripathi and Reddi, 2008). The word ‘Strategy’ means techniques, process, skills

which is somehow linked with leadership, vision and long term objectives. Therefore

strategic management means not only managing day to day business activities but also taking

the organization forward with right mission and vision for long term success. Olsen et al

(2008) defines strategic management as “the ability of the management of the firm to

properly align it with the forces driving change in the environment in which the firm

competes”. Robert J. Harrington & Michael C. Ottenbacher (2011) has divided strategic

management process into four main steps:

(1) situation analysis;

(2) strategic direction;

(3) strategy formulation; and

(4) strategy implementation

From the above definition it can be said that strategic retail management is managing retail

business with a long term vision which influences firm’s business activities, its responses to

market and completion and economic condition. Berman et al (2010) has proposed to follow

six steps for strategic retail management which is given below:

1. Defining types of business in terms of goods and services.

2. Setting short and long term objectives to achieves sales, revenue or brand image.

3. Deciding the target market

4. Devising long term plan which will guide firm and its employees

5. Implement an integrated strategy which may consist of product location, packaging,

pricing, advertisement or overall marketing activities.



6. Managing and controlling performance regular basis.

In this report, theory and practice of retailing concept along with effect and options of

recession will be discussed and analyzed in light with the case study on Simplecall. Details

recommendation will be given with appropriate solutions to the management of Simplecall.

Simple call is a subsidiary of Zamir Telecom based in London. It is a telecommunication

company serving ethnic minority, especially Bangladeshi community for international calls.

Simplecall is focused on providing cheap and quality international calling services. Simple

call’s mission and vision is presented here.

1.1 Mission of Simplecall:

To create a world-class telecommunication organisation where our talented people team up

with our business partners to continually drive down costs and deliver superior value

propositions to our customers.

1.2 Vision of Simplecall:

To be the global leader in providing Telecommunications service to the

international ethnic community

To delight our customers by providing low cost, high quality products and services.

Making sure all our relation are built on trust

Always be empathetic to the needs of ethnic minority

To be the best place to work with multicultural background.

Simplecall’s main business is online. Customer register their mobile number, top up online

and dial access number given by simplecall to make international calls. Simple call also has

retail outlet to register new customer and help customer top up offline. Both online and

offline activities are subject of this report.

With this brief introduction of Simple let’s look at retailing concept in light with Simplecall.



2.0 Retailing concept:

No matter where customers go for shopping in a mega super store or a neighbourhood small

grocery store, the common thing of all these shoppers is the retail experience. How does a

shopper fell before and after shopping? The retailing concepts make sure customer have a

very good experience while shopping. Because of this experiences customer actually decide

whether to visit that store second time or not. Retailing concepts has four ingredients:

Customer Orientation

Coordinated effort

Value driven

Goal orientation

The retailing concept works as a strategic guide to help broader planning framework.

Figure 1: Retailing Concept

Above points are explained and analysed in relation with case study of Simplecall.


Customer Orientation

Coordinated Effort

Value-driven

Goal Orientation

RetailingConcept

RetailStrategy


2.1 Customer Orientation:

Customer orientation means focusing on customer’s needs and wants. A retail firm

differentiate new customer, member and loyal customer in its activities; to be able to

understand their demand differently and meeting their demands personally. Customer service

orientation is affected by customer service and relationship retailing. Customer service

activities include:

Store hours

Parking

Shopper friendliness

Sales people

Rest room

Delivery policy and

Time at billing

Along with the above factors, Candice Ng-Chee (2004) has suggested to follow three critical

steps in order to ensure customer satisfaction.

Step One: Understanding customers

Almost every person loves to be remembered, respected and wants to have special treatment.

Different customers have different choices, likings and dislikes. Therefore retailers should

keep record of customer’s previous interaction with store to be able to offer personalized

items and environment.

Step Two: Aligning Organizational Capabilities:

Having understood customer’s needs and peculiarities, retailers should focus on its resources

to optimize value of correct delivery. Challenge of any organization is to stay relevant to

customers throughout his/her lifetime. Understanding different ways that customer

experiences the retailers, retailer should be able to make customer happy

At different relationship stage

At different life stage and

At different touch points



Step Three: Empowering employees

Knowing customers and aligning capabilities set off to a good start to providing a

differentiated customer experience. But real customer-centricity happens real-time at the

point of customer interaction with the people giving the services. Therefore organizations

need to empower their people – the very medium for building customer relationship. Shu-

Ching Chen and Pascale G. Quester, (2006) and Mark E. Cross et al (2007) has shown on

their research that there is a positive correlation between employee performance and

customer satisfaction and between customer satisfaction and customer loyalty in retail stores.

It shows attitudes, behaviour and prompt helping attitude of store staffs helps buy customer

loyalty.

Figure 2: Customer store loyalty model for retail service

Source: Shu-Ching Chen and Pascale G. Quester (2006)

Simplecall being an online web based retailer enjoys giving service 24/7. Its customer service

is excellent both online and offline. Simplecall has ethnic based customer service work force

who speaks in English, Bangla and Hindi to align with its customer based from Bangladeshi,

Pakistani and Indian ethnic background. Though it is a UK based company but it sells

products worldwide. Simplecall has its own call centre in Bangladesh and customer service



team in UK make sure customer can call them anytime from anywhere without any charge.

On top of that it has online chat support continuously 24 hour.

Simplecall has a user friendly website. Musfiq Mannan Choudhury and Abdul Mannan

Choudhury (2010) have identified characteristics unique to e-commerce websites (i.e. online

stores). There research shows that an user friendly website should have 13 characteristics,

which include: security, appearance, adequate information about products and services, speed

in downloading the pages, navigation friendly, search option/search engine, hyperlinks to

other information, information on member facilities, history and profile of the company,

ability to obtain information in limited number of pages instead of browsing several pages,

option for providing feedback from customers, visitor statistics, and availability of interactive

online activities. Comparing this research result with the interaction of Simplecall website it

is seen that:

Simplecall has highest security which is certified by GoDaddy.com Web Server

Certificate. GoDaddy.com ensures transactions on the site are protected with up to

256-bit Secure Sockets Layer encryption.

It has an online payment system with HSBC, Moneybooker and Paypal giving options

to consumers to choose different gateways of buying top up.

Simplecall’s home page is simple to navigate. Appearance is simple with a mixture of

white and navy blue colour layout.

It has FAQ (frequently asked question) page giving answer to frequently asked

question as well as giving information about company’s background.

On the other hand offline stores of Simplecall in different locations at London have been

designed with same colour branding of website as well as customer friendly sales force. Sales

people are selected from ethnic minority background and trained to give best support.

Whether customer pays online or offline for top up, their account is recharged with click of

mouse which brings 100% customer satisfaction. Simplecall’s core business is retailing voice



(VOIP). Therefore, it ensures clear voice quality by using fibre optic line which gives noise

free exchange of voice in both ends.

Simplecall has a free call service without needing to top up for first time user in order to test

the call quality before the purchases. Therefore, it makes easy for customer to decide and

welcome new customer with confidence, comfort and ensures peace of mind.

Simplecall rewards customer for their loyalty. Any customer referring to his friends will get

10% of his friend’s top up. Simplecall has recruited 14795 customers through referral service

up to date and it has rewarded referee for this work. Simplecall also have a emergency top up

service of £1 credit to customer who is unable to top up instantly which shows Simplecall

trust its customer. All these activities bring customer satisfaction and loyalty.

2.2 Coordinated effort:

In this stage retailer combined all its effort and resources to maximize efficiency. Integrated

strategy includes

Location

De’cor

Selection

Prices

Promotion

Simplecall’s website is online at all the time. Its offline retail stores are located in East ham,

Upton park and whitechapel in London where its most of the customer are based. 2011

census shows that Newham council is highly populated with Asians and Tower hamlet is the

place of Bangladeshi origin ethnic minority. Therefore Simplecalls selection of places for its

retail outdoor stores is appropriate. Though it has a very cheap and competitive rate for India,

it has failed to recruit a good number of Indian customers. Therefore, it should concentrate on

Indian market.

A customer can top up both online and offline. It has partnership with both epay and paypal

to ensure customer can top up from 30,000 retail stores in UK with Simplecall’s top up card.



Simplecall’s price for Bangladeshi, Pakistani and Indian are competitive. But it has presented

its rate inclusive of VAT which may distract customer while comparing prices with its

competitor such as Rebtel or Localphone. Because competitor’s pricing strategy is excluding

VAT. For instances Rebtel shows 2.2p/minute and Local phone shows 2.3p a minute

(excluding VAT which is hidden) for Bangladesh. On the other hand, Simplecall’s shows

2.4p/minute for same country but it is actually 2.1p/minute without VAT. Therefore,

Simplecall should change its pricing strategy. Another advantage of VAT excluded pricing is

that retailers do not have to change price tag in case government increases VAT.

Gordon Mills (2002) has pointed out two strategies for retail pricing:

Price dispersion: Price dispersion is difference of prices for same kind of item in

different stores. Gordon Mills (2002) argues that it is costly for customer to compare

prices therefore retailer can charge different prices at different stores. But he ignores

the fact that internet technology and search engine has made is easy and costless for

consumers for comparing prices. Therefore price dispersion is not a best choice.

Price discrimination: Retailers can discriminate on pricing on low quality products

and buying bundles together.

Price discrimination for quality difference

Price discrimination for Quantity discount

Simplecall with the core value of giving superior quality voice do not compromise with

quality. However it has a bonus system for bundle buyers in most of time. For instances,

customer who top up £20 at a time will get £2 free call credit.

A retailer should inform, persuade and remind customers about its products and offers

through different promotional activities such as advertisement, direct sales, referral and sales

promotion (Cant, MC,2005). Simplecall is active throughout the year with different

innovative promotional activities. It advertise in ethnic TV and newspaper to reach target

market as well as online banner advertisement thorough different websites such as Google

and Youtube. It has referral service which gives 10% call credit for referral. In different

occasions like Eid festival and Baishak (Bangali and Islamic festival) simplecall do sales

promotions with reduced price. Simplecall is active in community activities and pubic



relation. This year it has donated 5% of its total sales to African people to help them face

hunger and disease.

2.3 Value driven:

Value is the perception the customer has about set of activities that is meant to add value to

the customer. Series of value added activities is known as value chain. Retailer can add value

to the product in different ways. For instance, offering appropriate price for level of goods or

services. Customer demands more for less. Therefore retailer should be able to create win-

win situation for both him and customer.

A retailer product should be a good value for money. It’s branding and experiences of users

should be able to have a positive implication on prospective customers on how they perceive

the value of the product. Ruiz-Molina, M, & Gil-Saura (2008) has found in their research that

perceived value of a retail customer has a positive influence on customer attitude and loyalty

in long run. Therefore, retailer should invest behind creating positive perception about their

products. Ken Mathie (Undated) has some suggestions on how to create perceived value

Partial use of goods before purchase

Testimonials from current customers

Simple, informative and attractive packaging

Service provided as promised.

Simplecall gives 50p free credit customer to try the international call for free. It does not have

any testimonials from its users.


Value Based

Pricing

Product

Quality

Service

Quality

Total

Customer

Value

Figure3: Porter’s value chain for retail store


However it shows 14795 people have referred simple call to their friends. Because simplecall

is an intangible product, packaging is not relevant. But appearance of its website, video

advertisement and FAQ is informative enough to help customer take decision. Porter’s value

chain for retail store shows that value based pricing, product quality and service quality

together form total customer value. Simplecall’s pricing is competitive, good value for

money, excellent product quality with fibre optic line and multilingual customer service

brings good value for customers.

Simplecall’s per second billing and online call history to keep track of spending and call cost

brings confidence in existing customers about Simplecall’s honestly which buys customer

loyalty. It does not do any false billing, no hidden charge or connection fee to ensure it billed

as it advertise.

2.4 Goal orientation:

Retailer sets short and long term goals and craft strategy to achieve it. Goal can be for

increasing short term sales or long term brand images. Simplecall has following objectives

for next five years:

Reaching all the major communities in UK, Specially, Indian, Pakistani, Bangladeshi

and Caribbean. Simplecall wants to recruit 20,000 Indian, 30,000 Bangladeshi 25,000

Pakistani and 15,000 Caribbean customers within next five years time.

To grow geographically to USA, Australia and Canada starting with USA first.

To increase profit margin by 20% within next five years.

To decrease operational cost by 10% within next five years.

Getting strong distribution and supplier channel within UK to reduce sales and

production cost.

Developing website from global perspectives, different language and timing for

different countries and different geographic areas.

Innovative product and hence differentiating Simplecall from other competitors. For

instance, Creating mobile dialer for Iphone.

Recruiting and developing strong sales and marketing team with ethnic background

within UK and globally at the long run.



3.0 Comprehensive awareness of strategic implication:

Retail organization should follow step by step process to design strategy. Strategy

development starts with situation analysis, setting objectives, Identification of consumers,

specific strategy and control. Situation analysis can be done both internally and externally.

Internal analysis can be done with SWOT model (Strength, Weakness, Opportunity and

Threat) and external analysis can be done by PESTEL model (Political, Economical, Social,

Technological, Environmental and Legal factors) analysis. Organization has no control over

PESTEL factors but it has to accommodate and design strategies around these factors.

Along with this internal and external analysis, retailer should also be aware of competition

within the industry. Following figure shows competition that Simplecall facing in the

market.


Situation

Analysis

Objectives

Identification of

Consumers

Overall Strategy

Specific

Strategy

Control

Figure 4: Elements of retail Mix, Source: Berman et al (2010),


After situation analysis retailer need to set its objectives. Simplecall’s objectives have been

mentioned earlier in this report for next five years. It has identified its target customers which

are Ethnic Minority of Indian, Bangladeshi, Pakistani and Caribean people. In order to

achieve above objectives, Simplecall has taken following strategy which is depicted in the

diagram below. In this strategy, simplecall will be penetrating existing market as well as

develop market both locally and globally.


SIMPLE

CALL

ISD Mobile operator

Lycatel, Libara,Nowmobile & Vectone

Web-Based VOIP provider

Rebtel, Localphone, 1pinless etcCalling Cards/Access number

Lycatel, Nowtel, Pure minute,Talkhome.

Access number

Dial a code, O2, Vodafone, BT etc

Figure 5: Competition with Simplecall


Opening outlet in Slough

Internet Café Agent

New product development

New York office

Direct shop

Calling Card agent

Search engine optimization

User friendly website

Social network marketing

Figure 6: Strategic Direction for Simplecall


Strategic

Direction

For

Simple

call

Market

Pene

tration

UK

Market

Development

USA

Global

Market

Development


3.1 The effect of recession:

While planning for the strategy retailer should also consider economic condition. Economic

downturn can have significant affect on the performance of any firm specially retailing. But

not all retailers are equally effected by recession. Some even sees it as an opportunity to grow

(Sean S.,and Carla F., (2010), Peter J. W., and Ming Z.,(2009)). Recent recession has

significant influence on consumer’s shopping pattern. Therefore, retailer’s strategy must go

along with customer’s ability and demand in recessional period. Research shows that despite

recession sales volume for non food item has not been affected, though sales volume of food

item has been significantly affected. In the last recession, there was a sharp contraction in the

volume of sales in non food stores and non-store retailers, while food store sales recorded

positive growth. In the current recession, food stores have, on average, shown a much weaker

level of sales than observed in the 1991 recession. In addition non food store retailers have

shown positive growth in retail sales in the first months of the current recession, a contrast to

what was observed in the previous recession. It shows that so far, for the most part of the

current recession, the total volume of retail sales has continued to show positive growth,

which has mostly been driven by the non-food retailing sector (Office for national statistics,

2009).

3.2 Strategic option for retailers at the time of recession:

Smart companies perceive not just threats in a recession but also opportunities. Their goal is

to grow so they can emerge stronger from the downturn. Peter J. W., and Ming Z. (2009) has

advised three types of cost innovation during recession to bring value for money for

consumers which are:

Selling cutting-edge technology at mass market prices

Offering a large choice or customizing products and

Blowing up niches into mass markets

There are mainly three types of retail strategies which are:

Expected Retail Strategy- It gives minimum facility to the customers such as

Cleanliness

Speed Delivery

Informed employee

Product in stock and



Parking facility etc

Augmented Retail strategy- Extra elements in the value chain which differentiated by

Loyalty reward

Trained and motivated superior sales people

Valet Parking etc

Potential Retail Strategy- Any new service that add value to the customer such as

Best customer service

Modern Technology

etc

According to the above research Simplecall being a non-food product should not be affected

by recession. But still it should take pre cautionary actions against recession. It should

innovate products to be able to offer its product with less price. Innovation of iphone dialler

or PC dialler will enable customer to make international call from mobile and PC which wil

save customer’s free minutes. On the other hand, Simple call can introduce different product

with grey line for the customer who wants more minutes with less price and does not bother

about quality. From the above three types of strategy options, Simplecall should choose

augmented retail strategy to balance between quality and price.

4.0 Conclusion:

Any retailer who understand its customer and market, and can design its strategy efficiently

to offer all the four elements of retailing mix will be successful with periodic correction and

control of its strategy. Simplecall being a web based service provider should implement

following recommendation which will enhance its value proposition and will bring

competitive advantage for it.



5.0 Recommendations:

From above analysis and findings, Simplecall has been given following recommendations:

To recruit sales people from Indian ethnic minority

Open new retail stores in Southhall and Haunslow in London to attract Indian

consumers.

To display call rate excluding VAT.

To add testimonials from its users both in text and video format at home page of

Simplecall.

Innovate technological product to be able to offer more minutes with less price or by

use of technology such as pc dialler to save free minutes of customers.

To introduce step by step registration process like Local phone and Rebtel for new

customer.



References:

Berman et al (2010), Retail Management: A strategic Approach, Canadian edition.

Candice Ng-Chee (2004) Three critical steps to customer centric business organization,

Metacore asia, Available at: http://www.mcore-asia.com/PDF/Three-2520Critical-2520Steps-

2520to-2520Customer-centric-2520Business-2520Orientation.pdf, Accessed 23rd of

Sept’2011.

Cant, MC (2005) Introduction to retailing,1st ed: Juta & Company Ltd, South Africa.

Gordon Mills (2002) Retail Pricing Strategy and Market Power,1st ed: Melbourne University

Press, Australia.

Ken Mathie (Undated) Creating Perceived Value, Available online at

http://www.thewritemarket.com/articles/index.php?art=creating-perceived-

value&title=Creating%20Perceived%20Value, Accessed on 21nd Sept’2011.

Mark E. Cross et al (2007) Customer orientation and salesperson performance, European

Journal of Marketing, Vol. 41 Issue: 7/8, pp.821 – 835

Mathur,U.C.,(2010) Retail management-Text and cases, International publishing house,

Delhi.

Musfiq Mannan Choudhury and Abdul Mannan Choudhury (2010) Identification of the

characteristics of e-commerce websites, Journal of Webology, Vol.7 Yr.1

Office for national statistic (2009) The impact of the recession on retail sales volumes,

Economic & Labour Market Review | Vol 3 | No 8 | August 2009


http://www.doaj.org/doaj?func=openurl&issn=1735188X&genre=journal&uiLanguage=en

http://www.thewritemarket.com/articles/index.php?art=creating-perceived-value&title=Creating%20Perceived%20Value

http://www.thewritemarket.com/articles/index.php?art=creating-perceived-value&title=Creating%20Perceived%20Value

http://www.mcore-asia.com/PDF/Three-2520Critical-2520Steps-2520to-2520Customer-centric-2520Business-2520Orientation.pdf

http://www.mcore-asia.com/PDF/Three-2520Critical-2520Steps-2520to-2520Customer-centric-2520Business-2520Orientation.pdf


Olsen, M.D., West, J.J. and Tse, E.C.Y. (2008), Strategic Management in the Hospitality

Industry, 3rd ed., Pearson Prentice-Hall, Upper Saddle River, NJ.

Peter J. W., and Ming Z.,(2009) Value for money-Strategies for recessionary times, Harvard

Business Review, March 2009 Issue

Robert J. Harrington and Michael C. Ottenbacher (2011) Strategic management: An analysis

of its representation and focus in recent hospitality research, International Journal of

Contemporary Hospitality Management, Vol. 23 Iss: 4, pp.439 – 462

Ruiz-Molina, M, & Gil-Saura (2008) Perceived value, customer attitude and loyalty in

retailing, Journal of Retail & Leisure Property, 7, 4, pp. 305-314, Hospitality & Tourism

Complete, EBSCOhost, viewed 22 September 2011.

Sean Sands and Carla Ferraro (2010) Retailers' strategic responses to economic downturn:

insights from down under, International Journal of Retail & Distribution Management, Vol.

38 Iss: 8, pp.567 - 577

Shu-Ching Chen and Pascale G. Quester (2006) Modeling store loyalty: perceived value in

market orientation practice, Journal of Services Marketing, Vol. 20 Iss: 3, pp.188 - 198

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