unit 4 retailing
TRANSCRIPT
retailingMBA IV Semester [MBA MK 03]
Dr. Rahul Pratap Singh Kaurav
Syllabi
Syllabi
What is merchandising?
The functions of merchandising is an integral part of retailing and is also one of the most challenging functions as retailer often say ‘good well bought are half sold’.
The biggest challenge in merchandising are: Having the right product, In the right quantity, Available at right place, At the right time, And with the right price.
Types of merchandise products - I
Basic Products These products are bought and consumed in a routine manner. These goods are usually purchased for their functional values. Generally, low priced. Available at many locations. Generally includes Staple goods, Convenience goods, Emergency
goods, and some Impulse goods also.
Types of merchandise products - II
Specialty Product These needs special purchase efforts by the customers. Having certain unique characteristics. Usually have some brand identification. These items are available only at selected purchase locations.
Types of merchandise products - III
Shopping Products These are bought less frequently. The customers tend to gather more information about the product. These are available at fewer purchase locations. These compared for quality, suitability, price and style.
Types of merchandise products - IV
Unsought Products These are new innovative products. These products are not readily acceptable in market. These items require much advertising and personal selling to gain
acceptance.
Process of merchandise procurement
Identification of customer needs and product specification.
Specify demand.
Searching and deciding about product suppliers.
Evaluation of alternatives.
Specifying the orders.
Evaluating the performance of product and supplier.
Example: Merchandise Hierarchy
Syllabi
Factors affecting pricing - I
Macro environment factor Dynamics of demand and supply Price of key products Market structure and nature of competition Govt. policies Increased consumer awareness Seller concentration ratio Macro environment
Factors
Supplier-Retailer factor
Retail Price
Factors affecting pricing - II
Supplier-Retailer factor Business strategy of retailer Type of merchandise and seasonal factors Retail format and customers services Type of buyer Quantity of purchase Quality functional feature and packaging of products Quality certification
BIS, BEE, AGMARK, FDA etc. Manufacturer suggested retail prices
Macro environment Factors
Supplier-Retailer factor
Retail Price
Approaches of pricing - I
Cost-based pricing
Competition-based pricing
Psychological pricing
Discount pricing
Market penetration pricing
EDLP (Every day low pricing)
Value based pricing
Dynamic pricing
Syllabi
The Concept Of Internationalisation
Retail Internationalisation-the process of a retailer transferring its retail operations, concept, management expertise, technology and/ or buying function across national borders
Multinational Retailers-those firms that are in some way, responsive to the headquarters located outside the country, or colony, in which retail sales are made
International Retail Operations-the operation, by a single firm, of shops, or other forms of retail distribution, in more than one country
Treadgold’s Typology Of International Retailers
Cautious Internationalists
Emboldened Internationalists
Aggressive Internationalists
World Powers
Parameters of International retailing & kinds of International retailers
International Global Transnational Multinational
Geographic scope
Cultural spread
Cultural orientation
Marketing
Management
One continent
One cultural zone
Ethnocentric
Expansion of home format or international alliances
Domestic HQ
Two or more continents
Two or more cultural zones
Mixed
Minimal adaptationHomogeneous Markets
Centralised control
One or more continents
Two or more cultural zones
Geocentric
Medium adaptationHeterogeneous Markets
Integrated network
One or more continents
Two or more cultural zones
Polycentric
Major adaptation or diverse formatsHeterogeneous markets
Independent units
Determining The Market Of Entry
Proximity to the domestic market Similarity in culture The size of the market The laws and the regulations of the land Trade relations between the countries Strength of the local players in the market
Syllabi
Which Market To Enter- Retail Decisions?
Domestic/ Export Market Expansion?
Which Markets?
Which Market Entry Strategy?
Operationalising the Market Strategy?
Different Modes To Enter A Foreign Market For Retail
Supply of goods Franchising Joint Ventures Acquisition of stake (major/minor) in existing retailers
Reasons for failure in International Retail
Incomplete understanding of- the consumers constraints of local environment cultural distinctions
Syllabi
INTRODUCTION
According to Dawson (1994), ‘International Retail operations may be defined as the operation, by a single firm or alliance, of shops, or other forms of retail distribution, in more than one country’. It focuses on the operation of outlets of single retail organizations in multiple countries.
FOUR ROUTES TO SEEK PROFITS
Expanding the product rangeDiversifying into new formatsIncreasing the range and value of private level brands
to increase profitabilityInternationalization
INTERNATIONAL RETAIL STRUCTURE
The development and sophistication of the retail industry in a country can be measured by an analysis of the prevailing retail structure there.
In developed markets, a large share of retail activity is carried on by a relatively few enterprises. Large retailers have the ability to invest in sophisticated technology to improve supply chain process.
PROCESS OF INTERNATIONALIZATION
Retailers seeking expansion generally have these options:
Penetrate the existing markets where it is already operating
Expand into new product linesMaintain its existing product lineExpand simultaneously into new product areas and
markets.
BORROWED AND INNOVATIVE CONCEPT
According to Alexander (1997):Establishment Domestic expansionSaturationDiversificationinternationalization
PATTERNS FOR INTERNATIONAL EXPANSION
On the basis of size and retail structure of domestic economy Alexander and Doherty (2004) has identified certain patterns:
Global market of origin to global market of destinationRegional market of origin to regional market of
destinationRestricted markets of origin to restricted markets of
destinationDormant markets
CHALLENGES IN INTERNATIONALIZATION
There are certain challenges for global retailers:The reliance on domestic sourcing at times creates
problems for mass market retailers when they globalize.
There is a possibility of creating confusion while positioning in different countries.
They may face the problem of mismatch of culture, weak financial position, etc.
DETERMINANTS
Regulatory, economic, social and cultural environment have an impact on international development. RegulatoryEconomicalSocialCultural
Regulatory
NAFTA, ASEAN,etc.
Economical Demographic
factors Market growth Economic output
Social
These characteristics are the products of economic and cultural influences. It is measured by the articrafts of everyday existence, the physical representation of economic wealth.
Cultural
It is the part of the conditioning that deals with nation, region, or group, language, etc .
MARKET SELECTION
Some key factors to be considered to select the markets:Per capita GDP of the countryPopulation sizeUrbanization: higher the urbanization , the greater the
attractiveness of the marketPolitical stabilityCultural factorsLabor relations in the country
MARKET ENTRY METHODS
Flagship storesOrganic growthMergers and acquisitionsJoint ventures FranchisingConcessionsExporting and wholesaling
INTERNATIONAL RETAIL DIVESTMENT
The process of selling off subsidiary business interests or investments. The key factors are:
Link between entry mode and divestment Market performanceCompetition in the international market Lack of strategic fit and re-focus on core businessMarket leader performanceDivestment as a consequence of acquisition International retail divestment