INSTITUTE –University

School of Business
DEPARTMENT -Management
M.B.A
RETAIL MANAGEMENT-BAT 731
By : Jayanta Chakraborti
(Associate Professor)

UNIT-1 DISCOVER . LEARN .

Retail Mgmt. EMPOWER

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www.cuchd.in Campus: Gharuan, Mohali
SR. OUTCOMES
NO
.
To understand the Theories
of Retail Development;
Global and Indian Retail
1
Scenario;
Information Gathering in
Retail.
To understand the
Merchandise Management
2 Process, Sales forecasting,
Merchandise Budget,
Assortment Plan.
To understand the Store
Management & other
issues: Store Layout,
Design & Visual
3
Merchandising,
Atmospherics,
Responsibilities of a Store
Manger. 2
 The word ‘Retailer’ had been derived from the French
word ‘Re-tailer’ which means ‘to-cut again’. Obviously
then, retailing means to cut in small portions from large
lumps of goods.
 Retailing is a distribution function of selling goods to the
ultimate customer.
 Retailing encompasses the business activities involved in
selling goods and services to consumers for their
personal, family, or household use. While retailing can be
defined as including every sale to the final consumer
(ranging from cars to apparel to meals at restaurant.

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According to William J Stantons,
 “ A Retailer or Retail store is a business enterprise which
sells primarily to the ultimate consumers for non business
use.”
According to Cundiff and Still,
 “Retailing consist of those activities involved in the
selling directly to ultimate consumers. ”
According to Mc. Carthy,
 “ Retailing is selling to final consumer products to
households.”

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 According to Philip Kotler “retailing includes all the
activities involved in selling goods or Services directly
to final consumers for personal , Non business use”.
 “Every sale of Goods and Services to final consumer” –
Food products, apparel, movie tickets; services from
hair cutting to e-ticketing.

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 A retailer sells goods to final consumers.
 These consumers may be individual or institutional consumers.
 A retailer purchases goods directly from the manufacturer or
wholesaler and then sells it to the customers in smaller lots.
 The place where he sells his merchandise is known as retail store or
retail outlet.
 These retail stores may be located in residential areas, streets, malls
etc.
 Types of products offered

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 It offers direct interaction
 Sale volume is comparatively large in quantities
 Customer service
 Sales promotions are offered at this point only
 Different forms
 Location and layout are critical factors
 More employment opportunities

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• Sorting
• Breaking Bulk
• Holding stock
• Communications
• Assist small suppliers
• Customer service

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 A retailer performs the dual functions of buying and assembling of goods.
 The retailers perform the functions of warehousing and storing.
 The primary function of a retailer is selling the products to the customers
 The prime focus of a retailer is on maximizing customer satisfaction by
delivering quality products and services both on cash as well as credit basis.
 A retailer needs to have robust risk management capabilities
 The retailers are the direct point of contact or communication with the
customers; hence they gather information regarding the changing tastes and
preferences of the consumers
 The retailers are responsible for the product promotion and advertisement
by planning the product displays and visual merchandising for attracting the
customers.

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 To Customers:
 A Retailer ensures ready stock availability of goods for the customers in sufficient
quantities and sells the goods to the customers as per their quantity specifications.
 A retailer ensures availability of a wide variety of choices of products for the customers
by keeping different varieties at various prices and also different brands as well.
 A retailer can provide credit facilities and heavy cash discounts on the purchase of
different products to the customers.
 Retailers can provide customized services and pay personalized attention to the
customers for achieving a higher level of satisfaction with the delivery of product or
service.
 Retailers introduce new products to the customers and also guide them with the usage
of the products.
 Retailers can provide additional services like free home delivery or after sales services.
 Retailers purchase and maintain a stock of those products which are mostly demanded
by the customers. They aim at catering to the requirements of all kinds of customers
with varied buying capacities.

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 To Wholesalers:
 Retailers are a valuable source of information and feedback for the
wholesalers who in turn pass on the same information to the producers of
the products.
 A retailer absorbs most of the burden of the wholesaler and also of the
manufacturer by selling the goods in small quantities to the customers.
 Retailer supports the wholesaler by acting as a channel for distributing
the goods to the customers.
 Retailer acts as the point of contact between the customer and the
wholesaler.
 Retailers act as a major source of funding for the wholesale trade by
placing the orders and making payments in advance to the wholesalers for
those goods.

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 According to the latest report, India, at the moment, is the fifth
largest retail destination around the world on the basis of a
number of total customers. Due to rapidly increasing of
purchasing power of Indian, customers, domestic as well as
International retail players are ready to invest a huge amount in
India. That’s why retail management has a wide scope and job
opportunities.
 Indian Retailers Association of India (RAI) has also admitted
in its latest ‘Vision Report’ that market of Indian Retail industry
will increase by 50% and reach to $650 billion till 2020. The
government of India has now decided to open the doors for
foreign retail players by allowing 100% direct FDI (Foreign
Direct Investment). After this, there will be lots of employment
opportunities hit the doors for the youngsters.

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Services to Wholesalers and Producers.
 a) Advertisement of new products.

 b) Arrangement to sell the goods.

 c) Information about consumer habits, tastes and needs.

 d) Sharing of Risks.

Services to consumers.
 F) Variety of goods.

 g) Demand creation.

 h) Distribution.

 i) Credit Facility.

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• Independent Retailers: They own and run a single shop, and
determine their policies independently. Their family members can
help in business and the ownership of the unit can be passed from
one generation to next. The biggest advantage is they can build a
personal rapport with consumers very easily.
For example, stand-alone grocery shops, florists, stationery
shops, book shops, etc.
• Chain Stores: When multiple outlets are under common
ownership it is called a chain of stores. Chain stores offer and
keep the similar merchandise. They are spread over cities and
regions. The advantage is, the stores can keep selected
merchandise according to the consumers’ preferences in a
particular area.
For example, Westside Stores, Shopper’s Stop, etc.

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 • Franchises: These are stores that run a business under an
established brand name or a particular format by an agreement
between the franchiser and a franchisee. They can be of two types:
 Business format. For example, Pizza Hut.
 Product format. For example, Ice cream parlours of Amul.
• Consumers Co-Operative Stores: These are businesses owned
and run by consumers with the aim of providing essentials at a
reasonable cost as compared to market rates. They have to be
contemporary with the current business and political policies to
keep the business healthy.
For example, Sahakar Bhandar from India, Puget Consumers
Food Co-Operative from the north US, Dublin Food Co-Operative
from Ireland.

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 • Convenience Stores: They are small stores generally located
near residential premises, and are kept open until late night or
24×7. These stores offer basic essentials such as food, eggs, milk,
toiletries, and groceries. They target consumers who want to make
quick and easy purchases.
For example, mom-and-pop stores, stores located near petrol
pumps, 7-Eleven from the US, etc.
• Supermarkets: These are large stores with high volume and
low-profit margin. They target mass consumer and their selling
area ranges from 8000 sq.ft. to 10,000 sq.ft. They offer fresh as
well as preserved food items, toiletries, groceries and basic
household items. Here, at least 70% selling space is reserved for
food and grocery products.
For example, Food Bazar and Tesco food.

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 • Hypermarkets: These are one-stop shopping retail stores with
at least 3000 sq.ft. selling space, out of which 35% space is
dedicated towards non-grocery products. They target consumers
over the large area and often share space with restaurants and
coffee shops. The hypermarket can spread over the space of
80,000 sq.ft. to 250,000 sq.ft. They offer exercise equipment,
cycles, CD/DVDs, Books, Electronics equipment, etc.
For example, Big Bazar from India, Walmart from the US.
• Speciality Stores: These retail stores offer a particular kind of
merchandise such as home furnishing, domestic electronic
appliances, computers and related products, etc. They also offer
high-level service and product information to consumers. They
occupy at least 8000 sq.ft. selling space.
 For example, Gautier Furniture and Croma from India, High &
Mighty from the UK.

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 • Departmental Stores: It is a multi-level, multi-product retail store spread across
average size of 20,000 sq.ft. to 50,000 sq.ft. It offers to sell space in the range of
10% to 70% for food, clothing, and household items.
For example, The Bombay Store, Ebony, Meena Bazar from India, Marks &
Spencer from the UK.
• Factory Outlets: These are retail stores which sell items that are produced in
excess quantity at discounted price. These outlets are located in the close
proximity of manufacturing units or in association with other factory outlets.
For example, Nike, Bombay Dyeing factory outlets.
• Catalogue Showrooms: These retail outlets keep catalogues of the products for
the consumers to refer. The consumer needs to select the product, write its product
code and handover it to the clerk who then manages to provide the selected
product from the company’s warehouse.
 For example, Argos from the UK. India’s retail HyperCity has joined hands with
Argos to provide a catalogue of over 4000 best quality products in the categories
of computers, home furnishing, electronics, cookware, fitness, etc.

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 It is the form of retailing where the retailer is in direct contact with
the consumer at the workplace or at home. The consumer becomes
aware of the product via email or phone call from the retailer, or
through an ad on the television, or Internet. The seller hosts a
party for interacting with people. Then introduces and
demonstrates the products, their utility, and benefits. Buying and
selling happen at the same place. The consumer itself is a
distributor.
For example, Amway and Herbalife multi-level marketing.
Non-Store based retailing includes non-personal contact based
retailing such as:
• Mail Orders/Postal Orders/E-Shopping: The consumer can
refer a product catalogue on internet and place order for
purchasing the product via email/post.

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 • Telemarketing: The products are advertised on the television.
The price, warranty, return policies, buying schemes, contact
number etc. are described at the end of the Ad. The consumers can
place the order by calling the retailer’s number.
The retailer then delivers the product to the consumer’s doorstep.
For example, Asian Skyshop.

• Automated Vending/Kiosks: It is most convenient to the

consumers and offers frequently purchased items round the clock,
such as drinks, candies, chips, newspapers, etc.
The success of non-store based retailing hugely lies in the timely
delivery of the appropriate product.

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 These retailers provide various services to the end
consumer. The services include banking, car rentals,
electricity, and cooking gas container delivery.
The success of service based retailer lies in service
quality, customization, differentiation and timeliness of
service, technological up-gradation, and consumer-
oriented pricing.

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 As the needs the consumers grew and changed, one saw the
emergence of commodity specialized mass merchandisers in the
1970s. The seventies were also witness to the use of technology
entering retail sector with the introduction of the barcode.
Specialty chains developed in the 80s as did the large shopping
malls.
 Shopping malls, a late 20th century development were created to
provide for the consumer’s need in single, self contained
shopping area.
 The world of retail changed yet again, when in 1995,
Amazon.com opened its doors to a worldwide market on the web.
With the growth of the worldwide web, both retailers and
consumers can find suppliers and products from anywhere in the
world.
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Retail development can be looked at from the theoretical
perspective. No single theory can be universally applicable or
acceptable. The application of each theory varies from market to
market, depending on the level of maturity and the socio-
economic conditions in that market.
The theories developed to explain the process of retail
development revolve around the importance of competitive
pressure, the investments in organizational capabilities and the
creation of a sustainable competitive advantage, this requires the
implementation of strategic planning by retail organizations.

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 Theories of retail development can broadly be classified as:
1) Environmental – where a change in retail is attributed to the
change in the environment in which the retailers operate.
2) Cyclical – where change follows a pattern ad phases can have
definite identifiable attributes associated with them.
3) Conflict – the competition or conflict between two opposite
type of retailers leads to a new format being developed.

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 Environmental Theory (Natural Selection):
 It is based on Darwin’s theory of survival: “The fittest would
survive the longest”. The retail sector comprises consumers,
manufacturers, marketers, suppliers, and changing technology.
Those retailers that adapt to changes in demography,
technology, consumer preferences, and legal changes are more
likely to survive for long and prosper.
 Example:
 Decline of Departmental stores
 ----non adaptability of transforming to Super/ Hyper markets.
 ABILITY TO ADAPT TO CAHNGES IS THE SUCCESS
FACTOR.

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 Cyclical Theory :
 McNair represents this theory by Wheel of Retailing that
explains the changes taking place in retailing.
 According to him, the new entrant retailers are often into low
cost, low profit margin, low structure retail business, which
offers some unique, real benefit to the consumers. Over some
time they establish themselves well, prosper, and expand their
products with more expensive facilities, without losing focus
on their core values.
 Example:
 Departmental stores started as successful stores, but were cut
by supermarkets and discount stores.

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  Cyclical Theory :

This creates a
place for yet
new entrants in
the market
thereby creating
threat of
competition,
substitution, and
rivalry.

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 By Karl Marx and Friedrich
 Within a broad retail category, there is always a
conflict between the retailing of similar formats,
which leads to the development of new formats.
Thus, the new retail formats are evolved through
dialectic process of blending two formats.

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 Thesis
 Individual shop owners open shops throughout India.
Antithesis
 Opposed to Thesis. Departmental stores comes up as competitors to challenge
the small shops throughout India.
Synthesis
 Blending of Thesis & Antithesis. Supermarkets & hypermarkets have come up.
 Synthesis becomes Thesis for another round of revolution.

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 Increased disposable income
 New business opportunities
 FDI in retail
 Fast changing Indian consumer
 Availability of skilled labour
 E-Commerce
 Increased credit friendliness
 Socio-Economic Factors

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 The concept of product life cycle is also applicable to
retail organizations.
 This is because retail organizations pass through
identifiable stages of innovation, development,
maturity and decline.
 The ‘Retail Life Cycle’ is a theory about the change
through time of the retailing outlets.

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 Multichannel retailing is when a company provides
numerous ways for customers to purchase goods and
services.
 Multi-channel retailing is a marketing strategy that offers
customers a choice of ways to buy products.

 A true multi-channel strategy covers purchases from a

store, purchases from a website, telephone ordering, mail
orders, interactive television and comparison shopping
sites.

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 It includes multiple ways of interacting and selling to
customers.
 Makes use of multiple channels.
 Multichannel retailing is a way to build a brand and
reach a lot of consumers.
 Main aim is to maximize revenue and customer
loyalty by offering them choice and customers.

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 Flexibility for customers during purchase & payment
 24 hours access
 Higher sales and profits for the retailer
 Competitive advantage
 More Convenience to the customers
 Better interaction with customers
 Builds customer loyalty

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 Evolution: Barter system, weekly fairs (Melas), Kirana Stores, Khadi
outlets and now supermarkets, specialty stores, shopping malls etc.
 India is known as the nation of shops.
 After agriculture, retail is the 2nd largest employer.
 Retailing in India is one of the pillars of the Indian economy, accounting
for 22% of its GDP.
 Indian retail market is estimated to be US$ 500 billion and one of the top
5 retail markets in the world.
 It is one of the fastest growing retail markets in the world.
 The Indian retail sector is divided into the organized and unorganized
retail sector.

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 There are around 14 millions shops in various parts of India
 In 2015, the organized retail sector was amounted at 3000
million.
 Most significant growth period was between 2000-2006,
when the revenues increased by 93.5%.
 Majority of the revenue came from the sale of clothes,
textiles, fashion accessories, mobiles, durable products,
food and grocery items, footwear, jewelry, books, music and
toys.
 Organized retailing is mostly present in the metro cities.
 The organized retail sector has a share of just 3% in the
total revenue generated by the Indian retail sector.
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 The unorganized retail sector contributes to around 97% of
the total retail revenue.
 Mostly includes kirana stores, melas and other small shops
in residential areas.
 The unorganized sector dominates the India retail sector.

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 Pantaloon Retail  Food Retailers
 K Raheja Group  Health and beauty Products
 Tata Group  Clothing and Footwear
 RPG Group  Home Furniture & Household
 Land Mark Group goods
 Durable goods
 Piramal Group
 Electronic Products
 Subiksha  Leisure & Personal Goods
 Bharati- Walmart
 Reliance
 AV Birla Group

CLASSIFICATION OF
TOP 10 PLAYERS IN RETAIL SECTOR IN
RETAILING BUSINESS
INDIA 40
SEGMENT COMPOSITION SIZE KEY PLAYERS
1. Food & Fast food centers, 6,42,200 crores Food Bazaar,
Grocery restaurants, catering Subiksha, Spensers,
services, fresh groceries, Nilgiris, Reliance
dry groceries, packaged Fresh
foods.
2. Clothing & Readymade garments. 1,13,500 crores Raymond, Park
Textiles Fabrics, apparels and all Avenue, Arvind
wears Brands, Century
Textiles.
3. Consumer TVs, Fridge, ACs, 41,500 crores Videocon, Onida,
Durables Microwaves etc LG, Sony etc
4. Footwear Shoes, Boots, Slippers for 13750 crores Bata, Metro,
all. Adidas, Reebok,
Nike
5. Jewellery Jewellery, Diamonds, 52000 crores Tanishq, Gili
Gemstones
6. Books, Music Books, CDs, instruments 11,500 crores Landmark,
& Gifts & Gifts Crossword 41
 India is an attractive hub for FDIs, particularly in the
retail sector.
 FDI up to 100% is allowed for e-commerce activities.
 Entry modes into Indian market are franchising, licensing
and joint ventures.
 FDI in the Indian retail sector is still debatable.
 Up to 2011, the Indian Govt denied FDI in multi brand
retailing, forbidding foreign groups from ownership in
any form of retail outlets.
 Even single brand retailing was restricted to 51%
ownership.
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 In November 2011, India's Central Govt announced retail
reforms for both multi-brand stores and single-brand stores.
 This market paved the way for retail innovation and
competition among single and multi brand retailers.
 However, there was a lot of opposition both for and against
this reform, thus placing the reform on hold till a consensus
could be reached.
 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.

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 Indian government continues the hold on retail
reforms for multi-brand stores.
 In June 2012, IKEA announced it had applied for
permission to invest $1.9 billion in India and set up 25
retail stores.
 On 14 September 2012, the government of India
announced the opening of FDI in multi-brand retail,
subject to approvals by individual states.
 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
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 On 7 December 2012, the Government of India allowed
51% FDI in multi-brand retail in India.
 The government managed to get the approval of multi-
brand retail in the parliament despite heavy uproar from
the opposition.
 Some states will allow foreign supermarkets
like Walmart, Tesco and Carrefour to open while other
states will not.

 Advantages & Disadvantages of FDI in retail

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 Retail has played a major role in the economic development
of many nations.
 Countries like USA, UK, Mexico, China, Thailand, Dubai,
Singapore, Malaysia have been assisted by the retail sector.
 Retail industry employs more than 22 million Americans.
 Walmart is the world’s largest and the world’s most
successful retailer.
 80% of all retail sales in USA, is by the organized retailers,
while in Europe it is 70%.
 However, economic recessions slows down the growth of
the retail sector.

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 The world of retail is changing fast.
 Global retailers need to study customer behavior and their
changing needs and also gain competitive advantage over
its rivals.
 Franchising & Joint ventures are emerging modes of entry.
 China & India are the emerging marketplaces in Asia.
 According to a Global Emerging Markets Survey; India,
Russia & Ukraine are the most active emerging retail
markets, with India having a share of 27%.
 Digitized retailing is the way of the future.
 Walmart, Carrefour, Home Depot are the top 3 key players
in the world of retail.
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Information Gathering and
Processing in Retailing

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Information Information Information
Supplier Retailer Consumer

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From the Retailer From the Customer
 Estimates of  Attitudes toward
category sales styles and models
 Inventory turnover  Extent of brand

 Feedback on loyalty
competitors  Willingness to pay a

 Level of customer premium for

returns superior quality

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From the Supplier From the Customer
 Advance notice of  Why people shop there
new models and  What they like and
model changes dislike
 Training materials  Where else people
 Sales forecasts shop
 Justifications for
price changes

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From the Supplier From the Retailer
 Assembly and  Where specific
operating merchandise is
instructions stocked in the store
 Extent of warranty  Methods of payment
coverage acceptable
 Where to send a  Rain check and other
complaint policies

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 Anticipates the information needs of
retail managers
 Collects, organizes, and stores relevant
data on a continuous basis
 Directs the flow of information to the
proper decision makers

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The objective of the retail information systems is as follows:

 An information system should provide relevant information to

retail manager regularly.
 An information system should anticipate needs and
requirement of the retail manager.
 An information system should be able to capture, store and
organize all the relevant data on a regular and continuous
basis.
 The retail Information systems should be aligned with
strategic and business plans of the organization.

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 Retail information system should support
basic retail function like material
procurement, storage, dispatch, etc. It should
allow the manager to monitor sales of
product mix and daily sales volume. An
information system should help in inventory
management.


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The collection and analysis of
information relating to specific
issues or problems facing a retailer

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Advantages Disadvantages
 Inexpensive  May not suit current

 Fast
study
 May be incomplete
 Several sources
and perspectives  May be dated

 Generally credible  May not be accurate or

 Provides
credible
background  May suffer from poor

information collection techniques

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Internal External
 Sales reports  Government

 Billing reports
◦ Retail Trade
◦ Statistical Abstract of
 Inventory
the Public records
records
 Performance
reports

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Advantages Disadvantages
 Collected for  May be more expensive

specific purpose  Tends to be more time

 Current consuming
 Relevant  Information may not be

 Known and
acquirable
controlled source

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 In-house or outsource?
 Sampling method?
◦ Probability
◦ Nonprobability
 Data collection method?
◦ Survey
◦ Observation
◦ Experiment

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 In-person
 Over the telephone
 By mail
 Online

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 Retailers hire people to pose as
customers and observe operations
from sales presentations to how well
displays are maintained to service
calls

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Define & Select
a Target Market

Develop the
“Six Ps”

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 Demographics

STEP 1:
Geographics
Segment the Market

Psychographics

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 Product Place

STEP 2:
Choose the Price Personnel
Retailing Mix

Promotion Presentation

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 Product

Personnel Place

Target
Market

Presentation Promotion

Price

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Product The mix of products offered to
Offering the consumer by the retailer;
also called the product
assortment or merchandise
mix.

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 Advertising

Public Relations

Publicity

Sales Promotion

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Choosing a Community Choosing a Site

Economic growth Freestanding Store

potential

Competition Shopping Center

Geography Mall

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 Neighborhood
socioeconomics
 Traffic flows
 Land costs
 Public transportation
 Site’s visibility, parking,
entrances and exits,
accessibility, and safety
 Fit with other stores

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 Advantages Disadvantages

 Design attracts
 Expensive leases
shoppers
 Activities and anchor  Failure of common
stores draw customers promotion efforts
 Ample parking  Lease restrictions
 Unified image
 Hours of operation
 Sharing of common
area expenses  Direct competitors
 Consumer time limits

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 Low Price High Price

Good Value Quality

Single Price Point Image
EDLP

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 The overall impression
Atmosphere
conveyed by a store’s
physical layout, decor, and
surroundings

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 Employee type and density

Merchandise type and density

Fixture type and density

Sound

Odors

Visual factors

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 Trading Up
Two Common
Selling
Techniques
Suggestion Selling

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Easy-to-use Web site

Product availability

Simple returns

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 Developing a
Retail Marketing
Strategy

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 Finance is the backbone of any successful
business. Be it manufacturing, whole selling or
even retailing, without finance no business can
survive for long.
 The financial aspects of a retail business
(operations Management) cover budgeting,
forecasting, profit planning, leverage management,
asset management, and optimum resource
allocation.

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 What is the retailer financial strategy.
 Retailer financial strategy integrate the retailer financial
objective and goal, which retailer develop their strategy to
build a sustainable competitive advantage to generate a
desirable profit.
 The first step in retailer strategic planning is to set objective,
Goals ‘“goal are long-term aims that they want to accomplish.
Objectives ‘“ that can be achieved by following a certain
number of steps there are different objective which retailer
set it in the planning stage. (1) Financial objective..when
assessing financial performance, most business focus to earn
profit, what were the retailer profit ,such as profit of the last
year and what will they be this year and into the future.

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 2) Societal object of the retailer related to broader
issue about providing benefits to society, for
example retailer might be concerned about
providing job opportunity for people in a particular
area. Other societal objective might include
offering unique merchandise, as well as providing
innovative services which improve personal health,
such as weight reduction program .

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 (3) Many retailer particular owner of small,
independent businesses, have important
personal objective, including self
gratification, status, and respect., whereas
personal and societal objectives are
important but the primary focus of any
retailer to achieve their financial object.

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 The strategic profit model is a method which
summarizing the factor that affect a firm
financial performance. these factor are:
 (1) Net profit margin…… simply how much
profit (after tax) a firm earn it.
 (2) Assets turnover……… assets turnover is
the retailer net sales divided by its total
assets. This financial arrangement measuring
the productivity of a firm. It means how many
sales dollar are generated by this total
amount of assets.
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 Modern retailing is full of competition, uncertainty and exposed to different types of
risks. The complexity of retailing business has led to the development of various
managerial tools, techniques and procedures useful for retailers in managing their
business successfully.
 Budgeting is the most popular financial device to control the various activities of
retailing business. The budgeting outlines a retailer’s planned expenditures for a certain
period of time. The budgetary control has now become an essential tool of the
management for controlling various costs and increasing profit base.
 Retail Budget:
 A retail budget is a financial plan or blue print of overall financial transactions that
shows how the resources will be acquired and used over a period of time.
 Budgetary Control:
 It is the use of budgets as a means of controlling financial activities.
 Budgeting:
 Budgeting refers to the management’s action of formulating budgets to facilitate various
departments to operate efficiently and economically. In short, a plan showing how
resources will be required and used over a specified time interval is called Budget. The
act of preparing a budget is called budgeting and the use of budgets as a means of
regulating financial operations is Budgetary Control. Budgetary control starts with the
budgeting and ends with control.

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 Outline
 I. What is customer service?
 II. The Importance of Good Customer Service In a Retail Store
 III. Types of customers
 IV. Top 10 Ways to Turn Off Customers
 V. 21 Tips for Excellent Retail Customer Service
 VI. Appealing to Repeat (Loyal) Customers
 VII. Telephone Handling
 VIII. Dealing with the Disgruntled Customer
 IX. G.U.E.S.T

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 "Customer service is the sum total of what an
organisation does to meet customer
expectations and produce customer
satisfaction".

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 There are many models of customer service but all
agree that organisations should have clear answers
to the following basic questions:
 Do customers have a clear idea of the service they
can expect from you?
 Do you gather high quality information about your
customers and what they want on a regular basis?
 Can you be contacted easily?
 Do you have competent and well trained staff?
 Do you respond quickly to queries and requests?
 Have you made it easy for customers to complain
and make suggestions about the quality of your
services?
 Do you involve your customers in the development
of products and services?
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 Store Good Customer service in a retail store
goes far beyond making that one sale to that
one customer.
 Here are 4 reasons why good customer
service will increase your business and bad
customer service can put you out of business.
 1. Making or increasing the Sale.
 2. Return Visit by the Customer.
 3. Word of mouth advertising
 4. Controlling Shrink.

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 Loyal customers – 20% providing 50%
business.
 Discount customers
 Impulse customers
 Need-based customers
 Wandering customers

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 1. Dirty Bathrooms
 2. Messy Dressing Rooms
 3. Loud Music
 4. Handwritten Signs
 5. Stained Floors or Ceiling
 6. Burned-out or Poor Lighting
 7. Offensive Odors
 8. Crowded Aisles
 9. Disorganized Checkout Counters
 10. Lack of Shopping

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 1. Smile when greeting a customer in person and on the
phone (and yes, they can tell if you are smiling over the
telephone!).
 2. Use age-appropriate greetings, and avoid referring to older
customers and women as ―guys.
 3. Be proactive and ask how you may be of service.
 4. Stay visible and available, but don’t hover.
 5. Don’t turn away, walk away, start to make a phone call, or
duck beneath the counter as a customer approaches. (We’ve
all had it happen to us.)
 6. The live customer standing in front of you takes
precedence over someone who calls on the phone.

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 7. Never judge a book by its cover—all customers deserve
attention regardless of their age or appearance.
 8. Leave food and beverages in the break room.
 9. A customer doesn’t want to hear about your upcoming
break.
 10. Makes any personal calls when you’re on a break and
out of earshot.
 11. The correct answer is never ―I don’t know‖ unless you
add to it, ―but I can find out for you.
 12. If a customer wants something that isn’t on display, go
to the stock room and try to find it.
 13. If the item isn’t in the stock room, offer to call another
store or order it.
 14. Learn to read body language to see if a customer could
use some help.

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 15. Don’t let chatty customers monopolize your time if
others are waiting.
 16. Call for backup support if lines are forming.
 17. Be discrete if a customer’s credit card is declined by
asking if there is another method of payment he or she
would like to use.
 18. Never discuss customers in front of other customers
(they’ll wonder what you’re saying about them once they
leave).
 19. Inspect merchandise before bagging it to make sure
it’s not defective or the wrong size.
 20. Make sure customers receive everything they’ve paid
for before they leave your store.
 21. Smile as you are saying goodbye and encourage the
customer to come again.

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 It is more efficient to serve repeat customers than to heavily
promote to lure new ones.
 Often, new customers are lured because of a special sale, buy
goods that have a low markup to the retailer, and then switch
to another store when it runs a sale event. Repeat customers
are more apt to buy a full range of merchandise, not merely
discounted items. This means that the retailer can reach its
profit margin goals.
 Revenues can be increased (not just maintained) by placing
greater attention on repeat customers. They can be
encouraged to shop more often and to purchase more on
each trip to the store.

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 Develop a data base with the appropriate customer information.
 Set up some type of frequent-shopper program that can reward
people for their continued patronage. The program does not have to
be complex.
 Communicate with repeat customers on a regular basis. Mail them a
letter at least quarterly. Call them at least once per year. Customers
are often quite impressed when they receive 'friendship' rather than
"sales pitch" letters and calls. People like to feel appreciated.
 Run special events for good customers. This also lets them know
how important they are to the firm.
 Offer extra services, such as free delivery or more liberal return
policies, for good customers.
 Do not reward your new customers at the expense of the current
ones. Think carefully about having promotions that offer benefits to
new customers that are not available to current ones.

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 As we deal with customers over the telephone, we need to
remember that:
 It is a substitute for face-to-face conversations.
 Therefore we need to work at finding ways to compensate for
what we are missing out on:
◦ we cannot see facial expressions, manners, reactions
◦ we cannot see what the other person is doing
◦ we cannot lip-read what the other person is saying
◦ we cannot use illustrations to help them understand

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 Answer the phone within 3 rings
 Use the four answering courtesies:
◦ Greet the caller
◦ State your organisation (or department)
◦ Introduce yourself
◦ Offer your help
 Show enthusiasm when you answer. Help make the caller feel
welcome
 Use friendly phrases as part of your greeting.
◦ -Thanks for calling.”
◦ -“May I help you?”
 Remember to smile as you pick up the receiver.

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 1. Thank the caller.
 2. Let the caller know you appreciate his/her business.
 3. Provide assurance that any promises will be fulfilled.
 4. Leave the caller with a positive feeling

 Some courteous closing statement examples:

◦ “Thank you for calling. We appreciate your business “
◦ “Thanks for your order.”
◦ “Feel free to call us anytime.”
◦ “I’m glad we were able to help.”
◦ “Goodbye and thanks for calling.”
◦ “I enjoyed talking with you.”
◦ “If you have any additional questions please call me.”

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 Ask them if you can put them on hold.
 Tell them how long they will be on hold.
 Assure them that you will be working for them
while they are on hold (tell them what you will be
doing away from the phone).
 Wait for their response.
 When you get back to them, thank them for
holding.

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 Stay Calm and Remember It's Not Personal
◦ 1. Listen carefully to what the customer has to say, and let them
finish.
◦ 2. Ask questions in a caring and concerned manner.
◦ 3. Understand the customer’s issue completely
◦ 4. Don’t be defensive
◦ 5. Apologize without blaming and empathise
◦ 6. Ask the customer, "What would be an acceptable solution to
you?
◦ 7. Solve the problem, or find someone who can solve it— quickly!
 Resolve Their Problem, Not Yours
 Contain the problem
 Explain the company’s desire to improve
 Follow Up with a short Turn Around Time

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 Educate your customer
 Satisfy the Customer
 Acknowledge the Customer
 Reward the Customer
 Follow Up with the Customer even after
the closure of the issue
 Send personalized mailings
 Invite them to special in-store events as a VIP
shopper
 Ask about their family or events in their life
 Learn From Mistakes
 Recover

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 GREETING
 Acknowledge the customer as soon as they enter
 Smile, enthusiasm and friendliness
 Time appropriate greeting
 Title
 Welcome
 Introduction and opening statement
 UNDERSTANDING
 Asking open ended questions
 Gaining clarity
 Understanding the type of customer [Customer
profiling]

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 EXPLAINING THE PRODUCT
◦ Matching the product to the customer’s requirements
◦ Talk points of the product
◦ Suggesting alternatives
◦ Talking about offers, discounts or promotions
 SELLING
◦ Suggestive selling
◦ Upselling
◦ Cross selling
◦ Closing the sale
 THANKING
◦ Capturing customer data
◦ Smooth and pleasant transition from the POS to Exit Thanking the
customer
◦ Endorsing the brand
◦ We look forward to seeing you again. Have a great day sir.

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 A sound and well-rounded customer
relationship management system is an
important element in maintaining your retail
business. Not only is customer relationship
management in retail a business strategy, but
it is also a powerful tool to connect retailers
with their consumers. Developing this bond is
essential in driving your business to the next
levels of success.

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 Today’s retail marketing landscape is changing and
retail industry organisations struggle to achieve or
maintain good marketing communications with
existing consumers as well as prospective
customers.
 How do you do this? You need to identify consumer-
related issues, better understand your customers
and meet their needs with the company’s products
and services. By making accurate estimates
regarding product or service demands in a given
consumer market, one can formulate support and
development strategies accordingly.

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 Contrary to misconception, CRM for the retail industry is more
than just building good customer relationships. It should:
 Reach shoppers at the right time, in the right channel with a
personalised offer. Ensure the best use of communications
channels, such as email, SMS, and social.
 Support a seamless omnichannel retail strategy.
 Measure the value of different market segments and their lifetime
value to the business.
 Manage loyalty programs that drive long-term retention and
share of wallet.
 Support customers after they purchase products and gather
feedback for continual improvement.
 Track the effectiveness of marketing campaigns to increase foot
traffic and sales.
 Analyse performance to aid planning.
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 Kotler (2003) asserts that total customer
value is the perceived monetary value of the
bundle of economic, functional, and
psychological benefits customers expect from
a given market value.
 Kotler (2003) defined satisfaction as a
person’s feelings of pleasure or
disappointment resulting from comparing a
product’s perceived performance in relation
to his or her expectation.

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 Customer satisfaction = Your performance
Customer expectations

 Zeithaml and Bitner (2002) defined

Expectations as a level of service which the
customer hopes to receive.

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 Not knowing what customers expect
 refers to the difference between consumer
expectations and management perceptions of
consumer expectations. This gap is pertinent
to a critical assertion. Management
perceptions about what customers expect
from service quality should ideally be
congruent with the expectations expressed
by customers.

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 Most senior management executives have the
authority and responsibility for setting service
priorities and for designing and developing
service quality standards, so, if they do not
fully understand what customers expect, they
might trigger a chain of bad decisions,
resulting in poor perceived service quality.
 An important cause in many firms for not
meeting customers’ expectations is that the
firm lacks accurate understanding of exactly
what those expectations are. The reasons
could be that:

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 The organisation might not be interacting
directly with customers.
 The organisation might be unwilling to ask
about expectations, or
 They might be unwilling to address them

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 Not selecting the right service designs and
standards.
 the difference between management
perceptions of consumer expectations and
service quality specifications. In other words
it is the difference between manager’s
expectations of service quality and service
quality specifications.

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Poor service design
 Lack of market segmentation
 Focus on transaction rather than on relationship
 Focus on new customers rather than relationship
with customers

Absence of customer driven standards

 Lack of customer driven standards
 Absence of management process to focus
customer requirements
 Absence of formal process for setting service
quality goals

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Inappropriate servicecape
 Failure to develop tangibles in line with
customer expectations
 Servicecape design that does not meet
customers’ and employees’ needs.
 Inadequate maintenance and updating of the
servicecape.

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 1)Goal setting- An organisation should more
emphasize on setting the goal to deliver high
standard quality rather than cost reduction or making
profit. To set the high goal will not only help to
improve company performance but also it will
increase the overall control of company on quality
standards.

 2)Task standardization- A company should improve

their work method and it should standardise the
specific rules and task and then they should work
according to it. Every company should clarify the job
or working task to its employees and according to the
performance of employees, they should be given
regular feedback.

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 Means not delivering to service designs and
standards.
 measures the difference between service
quality specifications and the service actually
delivered. Poor delivery of service is a result
of this gap.
 Once service designs are in place it would
seem that the firm is well on its way to
delivering high quality service.
 This assumption is true but it is not enough
to deliver excellent service.

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 The firm must have systems, processes, and people
in place to ensure that service delivery actually
matches (or is even better) than the designs and
standards in place.
 Employees must be measured and compensated on
the basis of performances along those standards.
 If an organisation does not facilitate, encourage, and
require achievement of set standards , standards
alone won’t produce good results.
 When the level of service delivery falls short of the
standards, it falls short of what customers expect as
well.
 This gap can be narrowed by ensuring that all
resources needed to achieve set standards are in
place.
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Deficiencies in human resources policies
 Ineffective recruitment
 Role ambiguity and role conflict
 Poor employee-technology-job fit
 Inappropriate evaluation and compensation
systems.
 Lack of empowerment, perceived control, and
teamwork
Customers who don’t fulfill roles
 Customers who lack knowledge of their roles and
responsibilities
 Customers who negatively impact each other

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Problems with service intermediaries
 Channel conflict over objectives and
performances
 Difficulty controlling quality and consistency
 Tension between empowerment and control

Failure to match supply and demand

 Failures to smooth peaks and valleys of
demand
 Inappropriate customer mix (Marketing mix)
 Over reliance on price to smooth demand

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 Not matching performance to promises.
 the difference between service delivery and what
is communicated about the service to consumers.
 Promises made by a service firm through its
media i.e advertising, sales force, and other
communications may potentially raise customer
expectations , the standards against which
customers assess service quality.
 The discrepancy between actual and promised
service therefore has an adverse effect on the
customer gap.

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 Overpromising in advertising or personal selling.
 Inadequate coordination between operations and
marketing
 Differences in policies and procedures across
service outlets.
 Though less obvious, salespersons may fail to
educate customers to use services appropriately
 They also neglect to manage customer
expectations of what will be delivered in service
transactions and relationships.

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 The difference between customer expectations of
service quality and customer perceptions of the
organization's performance. Customer
perceptions of service, quality Measurement of
the gap (Gap 5) between consumers'
expectations and their perceptions of service
quality delivery has become the principal focus of
research recently. This analysis may provide
management with important insights about how
well actual service performance compared with
the expectations of the consumers.

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 The GAPS model places the key concepts,
strategies and decisions in services marketing
in a manner that begins with the customer
and builds the organization's tasks around
what is needed to close the gap between
customer expectations and perceptions.

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 1. Define customer service and discuss its
strategic advantages to a retailer.
 2 Discuss the usefulness of the gaps model in
improving service quality.
 3. Using a diagram , explain the gaps model.
 4. Identify and explain the 10
commandments of customer service.

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 Amazon.com provides books, movies, music
and games along with electronics, toys,
apparel, sports, tools, groceries and general
home and garden items. Amazon is a good
example of an online business that tries to
close the service gaps in order to thoroughly
meet consumer expectations.

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 From the time the consumer starts to shop at
Amazon’s online store, Amazon will attempt
to understand their expectations. From when
a customer first makes a product selection
Amazon creates a consumer profile and
attempts to offer alternative goods and
services that may delight the consumer. The
longer the consumer shops at Amazon, the
more the company attempts to identify their
preferences and needs.

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 When a consumer buys a product from Amazon they selects
the mode of delivery and the company tells them the
expected number of days it will take to receive their
merchandise. For example: standard shipping is three to five
days but shipping in one or two days is also available. The
company has set standards for how quickly customers are
informed when a product is unavailable (immediately), how
quickly customers are notified whether an out of print book
can be located (three weeks), how long customers are able to
return items (30 days) and whether they pay return shipping
costs. These standards exist for many activities at Amazon
from delivery to communication to service recovery.

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 Apart from defining their service delivery, Amazon goes one step
further and delivers on its promises. Amazon performs! Orders often
arrive ahead of the promised dates; orders are accurate and are in
excellent condition because of careful shipping practice. Customers
can track packages and review previous orders at any time.
 Amazon also makes sure that all its partners who sell used and new
books and other related items meet Amazon’s high standards. The
company verifies the performance of each purchase by surveying the
customer and posting scores that are visible to other customers.
 Managing promises is handled by clear and careful communication on
the website.
 Every page is very easy to understand and to navigate. For example
the page dealing with returns eliminates customer misunderstanding
by clearly spelling out what can be returned. The page describes how
to repack items and when refunds are given. The customer account
page shows all previous purchases and exactly where every ordered
item is in the shipping process Amazon strategy has been well
received by its customers and the Amazon brand is known worldwide.

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 Effective product management is a complex undertaking which
includes many different strategies, skills and tasks. Product
managers plan for creating the best products and operational
excellence to maximize customer satisfaction, loyalty and
retention. Recognising and closing gaps offers high quality
customer service to the consumer and helps them to achieve
their goal whilst maximising market position, market share
and financial results through customer satisfaction.
 It also helps managers to identify areas of weakness and make
improvements to a company’s service delivery. Check out our
blog post on “The Value Curve: visualising the value
proposition”. This tool allows product managers to take
information gleaned from gap analysis to develop or refine
products that are both compelling to customers and distinct
from competitors.

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 Rural Marketing - Pradeep Kashyap &
Siddhartha Raut, Biztantra .
 Rural Marketing - Gopal Swamy T. P, Vikas
Publishing House.
 Rural Marketing – Mathur U. C, excel books.
 Rural Marketing – Krishnamacharyulu C. G &
Lalitha Ramakrishnan, Pearson Education.
 Rural Marketing – Sukhpal Singh, Vikas
Publishers.

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www.cuchd.in Campus: Gharuan, Mohali
THANK YOU

For queries
Email: [email protected]

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