Dharmik retail marketing

Dharmik retail marketing

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  K.E.S. SHROFF COLLEGEPage 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
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  K.E.S. SHROFF COLLEGEPage 2 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.
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  K.E.S. SHROFF COLLEGEPage 3 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.
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  K.E.S. SHROFF COLLEGEPage 4 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.
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  K.E.S. SHROFF COLLEGEPage 5 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.
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  K.E.S. SHROFF COLLEGEPage 6 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.
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  K.E.S. SHROFF COLLEGEPage 7 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.
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  K.E.S. SHROFF COLLEGEPage 8 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.
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  K.E.S. SHROFF COLLEGEPage 9 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.
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  K.E.S. SHROFF COLLEGEPage 10 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.
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  K.E.S. SHROFF COLLEGEPage 11 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.
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  K.E.S. SHROFF COLLEGEPage 12 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.
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  K.E.S. SHROFF COLLEGEPage 13 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.
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  K.E.S. SHROFF COLLEGEPage 14 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.
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  K.E.S. SHROFF COLLEGEPage 15 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
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  K.E.S. SHROFF COLLEGEPage 16 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.
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  K.E.S. SHROFF COLLEGEPage 17 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,
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  K.E.S. SHROFF COLLEGEPage 18 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
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  K.E.S. SHROFF COLLEGEPage 19 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,
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  K.E.S. SHROFF COLLEGEPage 20 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.
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  K.E.S. SHROFF COLLEGEPage 21 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.
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  K.E.S. SHROFF COLLEGEPage 22 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.
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  K.E.S. SHROFF COLLEGEPage 23 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.
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  K.E.S. SHROFF COLLEGEPage 24 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.
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  K.E.S. SHROFF COLLEGEPage 25 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).
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  K.E.S. SHROFF COLLEGEPage 26 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.
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  K.E.S. SHROFF COLLEGEPage 27 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.
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  K.E.S. SHROFF COLLEGEPage 28 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.
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  K.E.S. SHROFF COLLEGEPage 29 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.
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  K.E.S. SHROFF COLLEGEPage 30 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.
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  K.E.S. SHROFF COLLEGEPage 31 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.
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  K.E.S. SHROFF COLLEGEPage 32 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.
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  K.E.S. SHROFF COLLEGEPage 33 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.
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  K.E.S. SHROFF COLLEGEPage 34 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.
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  K.E.S. SHROFF COLLEGEPage 35 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.
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  K.E.S. SHROFF COLLEGEPage 36 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.
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  K.E.S. SHROFF COLLEGEPage 37 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.
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  K.E.S. SHROFF COLLEGEPage 38 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.
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  K.E.S. SHROFF COLLEGEPage 39 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.
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  K.E.S. SHROFF COLLEGEPage 40 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.
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  K.E.S. SHROFF COLLEGEPage 41 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