R ETAILING Distribution Management M Wahidul Islam Spring 2015 LECTURE 4 Video Lecture

Elements of Distribution Management Planning, Forecasting & Budgeting Sales Force Management Product Pricing and Promotion Product Visibility Distribution Channels Channel Information Systems Warehousing and Logistics

P REPARATION Review Lecture – 3 DISTRIBUTION CHANNELS Cope of Lecture – 4 slides RETAILING (this lecture) Copy of the handout (book extract) Note pad

Producer Direct Marketing Team Central Distributor Regional / Market Specific Distributor WholesalersRetailers Customers Authorized Reseller CSAs / GSAs Own Branded Store

W HAT IS R ETAILING ?

Any business entity selling products / services to consumers / customers is “retailing” Goods may be sold In shop In person By mail On the internet Telephone Vending machine And so on Most retail stores are independent of producer What does a retailer do?

F UNCTIONS OF R ETAILING / A R ETAILER Helps create utility Time Place Possession Value additions Customization Credit facility Home delivery Extended hours Marketing function – acting as a product representative by Disseminating brand / product messages Creating product’s image Acting as a Salesman Which one is a Retailer’s most important task for the company?

R ETAILER A CTING AS A S ALESMAN A Retailer can influence the purchasing decision of the Customer Direct contact with Customer Assisting to eliminate customer's confusions Identifying alternatives Rural Markets Stocks limited items Buyers heavily depend on the retailer’s advise

R ETAILER A CTING AS A S ALESMAN (C ONTD.) Industry specific roles FMCG products Promotes brand and conveys messages Over the counter medicines Point out alternatives and advise from user feedbacks Low end electric items like electric bulbs, batteries Point out alternatives and advise from user feedbacks Electronic appliances Communicate benefits / pros Direct customers to the product that matches his / her need Is the Retailer the most powerful channel partner of all?

D IFFERENT V ARIATION OF R ETAILS BATA, TITAN, Sport Shop Kamal Store, GEC AGORA, K-MART ARGOS UK AMAZON Right around the corner. For daily needs Convenience Retail Specializes on a specific product types Specialty Shop / Boutique Shop Slightly bigger in size than convenience store Goods usually kept in different sections Departmental Store Bigger in size. Product Stock high Products organized in terms of category Superstore Sells through catalogues with inventory store backing up Can be through paper catalogue or online Catalogue Shop Your Neighborhood Shop

D IFFERENT V ARIATION OF R ETAILS (C ONTD.) Nike BATA Vegetables Walmart Shwapno Coca- cola Usually sells additionally (i.e. export- surplus) produced items Sometimes for a cut price Factory Outlet Buying in bulk from the producer and selling at a discounted price Discount Stores Kiosks / Vending Machines Common for Bangladesh Hawkers Smaller set-up of retail function Usually no sales person

Convenience Retail

Departmental Store / Superstore Specialty Shop / Boutique Shop

Catalogue Shop

Catalogue Shop / Teleshope

Catalogue Shop / Online Shopping

Kiosks / Vending Machine Facebook Vending Machine

Price Location Product Selection Special Services Helpful Salespeople Fairness in Dealings How does a customer decide from which retailer to buy?

S O, HOW DOES A RETAIL GROW TO ATTRACT MORE CUSTOMERS ?

Price Location Product Selection Image in Customer’s Mind Store Design Critical Factors in Retail Growth Strategy

R ETAIL G ROWTH S TRATEGY Market Penetration Market Penetration Format Development Market Expansion Market Expansion Diversification (unrelated / related) ExistingNew Existing Target Markets Retail Format

R ETAIL G ROWTH S TRATEGY M ARKET P ENETRATION Directing efforts towards existing customers by using the present retail format Attracting customers who do not shop or increase frequency of visits Approaches Opening more stores Keeping stores open for longer Displaying merchandizing to increase impulse purchase Cross-sell Example: Aarong opening another store in Chittagong.

R ETAIL G ROWTH S TRATEGY M ARKET E XPANSION Employs existing retail format in new market segments New geographic locations New product variety Example: KFC introducing ice-cream Handi Bistro introducing Thai Menu

W HAT IS THE DIFFERENCE BETWEEN M ARKET E XPANSION & M ARKET P ENETRATION ? Discussion Question: CP Chicken opening new branches in Chittagong. Will it be Market Expansion or Market Penetration? It entirely depends on how do we define “market” or “target market” If the “market” or “target market” in the beginning was total Chittagong, then they are following a Market Penetration when they open another new outlet. If the “market” or “target market” in the beginning was lets say only GEC More, then they are following a Market Expansion model when they open another new outlet.

R ETAIL G ROWTH S TRATEGY R ETAIL F ORMAT D EVELOPMENT Different format / different retail mix to the same target market Can also be adding new categories Exploring new way of retailing Example: Chaldal.com Joss Burger

R ETAIL G ROWTH S TRATEGY D IVERSIFICATION New retail format for a market segment not currently served Can be, Related - Has some common elements, like using same channel, same vendor, same distributor Unrelated - Lacks common elements It can be done through Vertical / Backward Integration When retail also starts gets into wholesaling or manufacturing Example: Meena Bazaar Organic Shop Forward Integration Manufacturer performing retailing or other channel members role Example: RFL Branded Shops

Y OUR TASK AS A D ISTRIBUTION M ANAGER Identify the proper Retail Shop type where you will be able to reach out to your target customer To identify those retail shops who will give you access to the discussed critical factors for Retail Growth without having to open up your own Retail Shop Motivate Retailers to support the company’s objectives and gain competitive advantage in the Distribution Channel

R EFERENCES Chapter 10 – Channel Institutions: Retailing Havaldar K. and Cavale V. M. (2011) Sales and Distribution Management – Text and Cases (2 nd Edition) Delhi: Tata McGraw-Hill Education Private Limited Chapter 5 – Retail Market Strategy Levy M. and Weitz B. A.(2004) Retailing Management (5 th Edition) New York: McGraw- Hill Companies, Inc.

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