SCDL MBA PROJECT - Analysis of fans in the retailing sector for Crompton Greaves Limited.

SCDL MBA PROJECT - Analysis of fans in the retailing sector for Crompton Greaves Limited. 

1.1 INTRODUCTION

In India the present day education is based upon the theory-oriented programme.  The students are receiving only that education which lies in the books and never go beyond that.  But, the present day organization demand practical exposure in various areas so as to fit into a job in its right perspective.  Generally, there is a wide difference between what we preach and what we practice.  To avoid such a gap students are given training in some specialized areas which becomes a part of the curriculum.   This was in practice only in professional courses such an institutional training helps the students to get an idea about what an organization is and how it effectively and efficiently functions.

The subject of institutional training may be described as the connecting link between theory practice.  Such as institutional training helps the students to get an idea about what an organization and how it effectively and efficiently functions.

RETAILING AND MARKETING:

            Retailing in its various guises can be traced back for centuries but because the elements of retailing and conditions of the market place have changed substantially there has been a requirement for a corresponding change in both techniques and approaches. Retailing comprises all the activities involved in the marketing and distribution of goods and services.  Therefore, marketing is a core area for any retail operation as the success or failure of retailers is based upon how well they understand and serve the needs of their customers.

            The study is based on the Analysis of fans in the retailing sector for Crompton Greaves Limited.  The report is fully based on the complete study of the fans dealing in the retailing sector.

           

1.2  COMPANY PROFILE

INTRODUCTION:

            For the last sixty-eight years, Crompton Greaves (CG) has become synonymous with electricity in India.  In fact, the first unit of electricity was generated on a “Crompton Dynamo” at Calcutta in 1899.  A pioneering leader since 1937 in the management and application of electrical energy, Crompton Greaves, today, is India’s largest private sector enterprise, extensively engaged in designing, manufacturing and marketing high technology electrical products and services related to power generation, transmission, distribution as well as executing turnkey projects.  The company is customer centric in its focus and it is the single largest source for a wide variety of electrical equipments and products.  Further, the company is emerging as a first choice global supplier for high quality electrical equipments.

HISTORY:

            The history of Crompton Greaves goes back to 1878 when Col.R.E.B.Crompton Founded R.E.B. Crompton & Company. The company merged with F.A.Parkinson in the year 1927 to form Crompton Parkinson Ltd., (CPL).  Greaves Cotton and Co (GCC) was appointed as their concessionaire in India.  In 1937, CPL established, its wholly owned Indian subsidiary viz. Crompton Parkinson Works Ltd., in Bombay, along with a sales organization, Greaves Cotton & Crompton Parkinson Ltd., in collaboration with GCC.  In the year 1947, with the dawn of Indian Independence, the company was taken over by Lala Karamchand Thapar, an eminent Indian industrialist. Crompton Greaves is headquartered in a self-owned landmark building at Worli, Mumbai.

PRODUCTS AND SERVICES OFFERED:

            The company is organized into three business groups viz., Power Systems, Industrial Systems, Consumer Products. Nearly two-thirds of its turnover accrues from products lines in which it enjoys a leadership position.  Presently, the company is offering wide range of products such as power & industrial transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors, alternators / generators, railway signaling equipments, lighting products, fans, pumps and public switching, transmission and access products.  In addition to offering broad range of products, the company undertakes turnkey projects from concept to commissioning.  Apart from this, CG exports its products to more than 60 countries worldwide, which includes the emerging South-East Asian and Latin American markets.  Thus, the company addresses all the segments of the power industry from complex industrial solutions to basic household requirements.  The fans and lighting businesses acquired “Superbrand” status in January 2004.  It is a unique recognition amongst the country’s 134 selected brands by “superbrands’, UK.

            Pauwels Acquisition – an Indian MNC Crompton Greaves has completed the acquisition of the Belgium – based Pauwels on 13^th May 2005.  The group has manufacturing facilities in Belgium, Ireland, Canada, USA and Indonesia and well spread distribution network across the globe.  The acquisition catapults the company amongst top ten transformer manufacturers in the world.  It has truly transformed into an Indian MNC making a long cherished dream finally come true.

            Apart from strengthening its foothold in the Indian market, Crompton Greaves acquisition of the Pauwels Group and its transformer manufacturing facilities in five countries is expected to provide a significant impetus to the company’s  international presence.

            The additional turnover of approximately Rs.1,380 crore of Pauwels Group for its last financial year is expected to increase Crompton Greaves’ International business to around 50% of its turnover, making the company a force to reckon with, in the international market.  CG’s business operations consist of 22 manufacturing divisions spread across in Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka, supported by well knitted marketing and service network through 14 branches in various states under overall management of four regional sales offices located in Delhi, Kolkata, Mumbai and Chennai.  The company has a large customer base, which includes State Electricity Boards, Government bodies and large companies in private and public sectors.

FUTURE OUTLOOK:

            The quality of households is enhanced when their money is invested into products such as fans and lighting for basic comforts.  Their lives are literally touched by delight.  Similarly, Crompton helps electricity boards and other utilities to reach electricity to the last home and factory.  Therefore, every individual in India who uses electricity can be considered as Crompton customer.  Hence the company continues to further and consolidate the initiatives that Colonel Crompton set into motion by focusing on meeting increasing customer demands for products that are eco-friendly, energy efficient and with intelligent monitoring and control systems. 

            All economic indicators point towards the manufacturing sector being the future driver of India’s economic growth.  India is today preferred destination for sourcing various engineering goods not only due to low cost but also due to high quality of products.  Although, the climate for the manufacturing sector is bright, the concern is the threat of imminent competition from global players who are already in the process of setting up manufacturing facilities in India.  The market is expected to remain competition with an added element of competition from imported products.

            However, several measures that the company has already taken and its plan for the future, together with business impact of the Pauwel’s acquisition, will equip the company to respond in adequate measure to this competitive pressure.

Stepping up the quality initiatives:

            At Crompton Greaves there is always a passion for quality.  A quality trust mark has emerged as Crompton’s biggest brand ambassador.  In fact, this is reflected through quality certifications for its products and services.  Further, the commitment to responsible business through quality, technology and productivity has helped the company to achieve a turnover of over Rs.2000 crore and receive many certifications in the ISO 9000/9001:2000/14001 series.  The company has the unique  distinction of being the first one to receive an ISO 9000 certification for Finance and Administration.

            The company has made considerable progress towards integration of Six Sigma Methodology in its manufacturing processes with the ultimate aim of achieving ‘Product Quality as Perceived By Consumer’.

            In addition to this, the company has also introduced stringent control measures with suppliers to ensure that inputs support the Six Sigma quality.  In fact, all these measures have resulted in manifold improvement in the CTQs with substantial reduction in defects.

1.3  PRODUCT PROFILE

WINDS OF DOMINATION:

            The Fans Division of Crompton Greaves is the market leader in India and has been so for over a decade.  It’s dominance of the market is comprehensive and it manufacturers fans for all sections of the market and for all applications of air delivery – be it domestic or industrial.  In the international market, the company is one of the leading exporters to countries like USA, Italy, S.Africa, Ghana, Fiji, Singapore, Bahrain, UAE, Sri Lanka, UK, France, Oman, Sudan, etc.

            CG fans are available in all different price points and cater to all buyer segments.  The division also manufacturers and markets a wide range of instant and storage water heaters under the CG brand.

            The division has two modern manufacturing facilities in Goa at Bethora and Kundaim and its products are known for consistent quality, low current consumption and high volume air delivery.  Crompton Greaves Fans are the preferred supplier for two important Govt. of India departments – Defense and Directorate General of Supplies and Disposal (DGSD).

            The Indian Standards Institute (ISI) has certified the quality of the range of Crompton Greaves fans and the brand has been awarded the ISI mark.  The range is also certified by a variety of International Quality Certification boards.

FANS & APPLIANCES – CEILING FANS:

Product Catalogue

            Select one Ceiling Fans, COOLER KIT, Domestic Exhaust Fans, Industrial Fans, Portable Fans, Speciality Fans, Water Heaters.

            Crompton Greaves fans incorporate power and performance, safety and durability, comfort and style and offer both decorative and economy models to suit individual needs. Crompton Greave’s commitment to EVERYDAY SOLUTIONS has made millions of homes and workplaces comfortable heavens to total relaxation.

           

Decorative Fans:

            Showcasting the most advanced designs and technology available, Crompton proudly unveils its exclusive collection of designer ceiling fans.

Commercial Fans:

            Crompton Greaves brings to you affordable fans that give a long lasting performance at low voltages.  The range includes Ecom\nomy Range and Medium base range fans.

Base models:  HIGH BREEZE, HIGH SPEED.

            Economy models:  COOL BREEZE, WHIRL'WIND.

Decorative 3 & 4 Blade Fans:

            THREE STAR, AURA, DEC’AIR, FLORA, GOLD AIR, SENORITA.

Under Light Fans:

            Underlight fans are with light arrangement and air delivery arrangement, both of which are independent of each other. These fans are ideal for dinner table, bedroom and drawing rooms.

            CHANDEL’AIR, EXOTICA, GOTHICA.

Domestic Exhaust Fans:

            Sleek, international design with lightweight, rust proof body noiseless operations, easy to clean, cross air model with self opening louvers giving total protection from birds and direct rain, available in economy and premium models.

Industrial Fans:

            HEAVY DUTY EXHAUST FAN

            AIR CIRCULATOR

PORTABLE FANS:

            Enter the exclusive world of Crompton table fans, pedestal fans and wall mounted fans.

            Whether it is the minimalist look you are trying to achieve or a more elaborate one, Crompton’s collection of table, pedestal and wall mounted fans are sure to recreate the exact mood and look you desire.

Pedestal Fans:

            Crompton Greaves pedestal fans are available in plastic and non-plastic models, to suit the customer’s choice.

            Portable, oscillating, indexing, height adjustment, fitted with castor wheels for easy mobility.   Recommended for use in offices, bigger rooms, large houses, lobbies and clubs.

Non PL:  CLASSIC, SAPPY AND CLASSIC MINI, SUPER DELUX 2000, SUPER DELUC GOLD, SUPER DELUX MARK.

Table Fans:

            Crompton Greaves table fans are available in non-plastic and plastic models to suit individual requirements. 

            Portable, oscillating, indexing, recommended for use in veranda, terrace, small houses and temporary structures.

NON PL:

                        GALAXY

                        SUPER DELUX 120

                        SUPER DEULUX 120 BLACK GOLD

                        WINDMILL

            PL FAN:

            HIGH FLOW

            Blade Colour:  Transparent, Base colour:  Light Grey.

            No. of spokes: 120

            Blades and base are made of plastic.

WALL FANS:

            Crompton Greaves offers wall mounted fans in plastic and non-plastic range. Oscillating, indexing, no hindrance in house keeping, versatile.  Recommended for use in combination with ceiling or table or pedestal fans for cross circulation of air.

            PL FAN:

            CROM’AIR

            WM HIGH FLOW

NON PL:

            WM GOLD

            WM CLASSIC

            WM MARK

            WM SUPER WHITE

SPECIALITY FANS:

            CABIN FAN

            FARATTA FAN

            PERSONAL FAN

            TOWER FAN

Cabin Fan:

            CABIN / TOWER FAN

            12" / 16" THRUST AIR

            Base and frame colour: Ivory.

            Rust proof, powder coated, ivory colour, aluminium blades.

            Multidirectional, versatile use.

            Suitable for Ceiling and Wall mounting.

Faratta Fan:

            FARRATA

            Blade Colour: Dark Grey Base colour

            Black. Sweep: 500mm

            No. of spokes:  100

            Blades are made of aluminium and base is made of cast iron.

Personal Fan:

            9” / 12" PERSONAL FAN

            Blade colour:  Blue, Red, Black, Yellow, Base colour: White

            Unique moulded ABS blade for high speed blast of air with heavy base for better stability and universal mounting facility.

Tower Fan:

            DELUXE TOWER FAN

            Body Colour:  Silky Grey, Deluxe Tower fan has auto swing grills.

WATER HEATERS:

            Water Heaters are available in 2 models.

            Instant Water Heater

            Storage Water Heater

Instant Water Heater:

            Solarium Instant Water Heater

            Superior grade copper tank

            Moulded PUF insulation for less energy consumption

            With safety devices like Pressure Relief Valve, snap action automatic Thermostat, Thermal cut out, Fusible plug and Non return device.

            Incoloy heating element.

            Sleek and compact PP body.

Storage Water Heater:

            Plastic Body

            Metal Body

 

 

1.4  OBJECTIVE OF THE STUDY

Primary Objective:

• To analyse the retail market of fans manufactured by Crompton Greaves in Chennai.

Secondary Objective:

• To identify the model of fans, analyse and find methods to increase volume of business of Crompton Greaves at retail outlet.
• To evaluate the satisfaction level of the retailers of Crompton Greaves and its competitors.
• To highlight the reasons why a retailer are not looking at Crompton Greaves fans and to suggest various schemes and promotional strategies to solve various persistent issues.

 

1.5  SCOPE OF THE STUDY

Þ    The research has been conducted to ascertain the retailer’s opinion towards various brands of fans in Chennai city with special reference to Crompton Greaves Limited.  This will be helpful to identify the performance of various brands of fans and also Crompton Greaves fans specifically.

Þ    To ascertain the factors which influence the retailers in purchase of fans.

Þ    To identify the performance of different promotional schemes, satisfaction of level about the fan brands.

Þ    To identify the various brands of fans prevailing in the market and to suggest improvement in the sales of CG fans.

 

1.6  LIMITATIONS OF THE STUDY

Þ    The survey is being conducted in parts of Chennai city only. So the result cannot be applied to other places.

Þ    The sample size limited to 150 samples only.

Þ    False information was provided by retailers in certain areas.

Þ    The retailers perception of the products was inadequate.

Þ    Time constraints and non co-operations of the customers.

 

 

1.7  REVIEW OF LITERATURE

 

 

SALES CONCEPT

            The sales concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has available a whole battery of effective selling and promotion tools to stimulate more buying.

            The selling concept is practiced most aggressively with unsought goods, those goods that buyers normally do not think of buying, such as insurance, encyclopedias, and funeral plots.  These industries have perfected various sales techniques to locate prospects and hard-sell them on their product’s benefits.

            The selling concept holds that consumers, if left alone, will ordinarily not buy enough of the organization’s products.  The organization must therefore undertake an aggressive selling and promotion effort.

THE MARKETING CONCEPT:

            The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.

            The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability.  The selling concept takes an inside-out perspective.  It starts with the factory, focuses on the company’s existing products, and calls for heavy selling and promoting to produce profitable sales.  The marketing concept takes an outside-in perspective.  It starts with a well-defined market, focuses on customer needs, integrates all the activities that will affect customers, and produces profits by satisfying customers.

SALES PROMOTION:

            Although sales-promotion tools – coupons, contests, premiums, and the like – are highly diverse, they all offer three distinctive benefits:

• Communication:  They gain attention and usually provide information that may lead the consumer to the market.
• Incentive:  They incorporate some concession, inducement, or contribution that gives value to the consumer.
• Invitation:  They include a distinct invitations to engage in the transaction now.

Companies use sales-promotion tools to create a stronger and quicker response.  Sales promotion can be used to dramatize product offers and to boost sagging sales. Sales-promotion effects are usually short run, however, and not effective in building long-run brand preference.

PUBLIC RELATIONS AND PUBLICITY:

            The appeal of public relations and publicity is based on their three distinctive qualities.

• High credibility:  New stories and features are more authentic and credible to readers than ads.
• Ability to catch buyers off guard:  Public relations can reach many prospects who prefer to avoid salespeople and advertisements.  The message gets to the buyers as news rather than as a sales – directed communication.
• Dramatization:  Like advertising, public relations has the potential for dramatizing a company or product.

EXCLUSIVE DISTRIBUTION:

            Exclusive Distribution involves severely limiting the number of intermediaries handling the company’s goods or services.  It is used when the producer wants to maintain a great deal of control over the service level and service outputs offered by the resellers. Often it involves exclusive dealing arrangements, in which the resellers agree not to carry competing brands.

SELECTIVE DISTRIBUTION:

            Selective distribution involves the use of more than a few but less than all of the intermediaries who are willing to carry a particular product.  It is used both by established companies and by new companies seeking to obtain distributors.

INTENSIVE DISTRIBUTION:

            In an intensive distribution strategy, the manufacturer places the goods or services in as many outlets as possible.  When the consumer requires a great deal of location convenience, it is important to offer greater intensity of distribution.

ADVERTISING:

            Because of the many forms and uses of advertising, it is difficult to make all-embracing generalization about its distinctive qualities as a component of the promotion mix.

• Public presentation:  Advertising is a highly public mode of communication.      Its public nature confers a kind of legitimacy on the product and also suggests a standardized offering. Because many persons receive the same message, buyers know that their motives for purchasing the product will be publicly understood.
• Pervasiveness:  Advertising is a pervasive medium that permits the seller to repeat a message many times.  It also allows the buyer to receive and compare the messages of various competitors.  Large-scale advertising by a seller says something positive about the seller’s size, power, and success.
• Amplified expressiveness:  Advertising provides opportunities for dramatizing the company and its products through the artful use of print, sound, and color.  Sometimes, however, the tool’s very success at expressiveness many dilute or distract from the message.
• Impersonality:  Advertising cannot be as compelling as a company sales representative.  The audience does not feel obligated to pay attention or respond.  Advertising is able to carry on only a monologue in front of, not a dialogue with, the audience.

ADVERTISING RESEARCH TECHNIQUES:

Print Ads: 

            Two widely used print pretesting services in which test ads are placed into magazines.  The magazines are then circulated to consumers.  These consumers are contacted later and interviewed concerning the magazines and their advertising.  Recall and recognition tests are used to determine advertising effectiveness.

Broadcast Ads In-home tests:

            A small screen projector is taken into the homes of target consumers.  These consumers then view the commercials.  The technique gains a subject’s complete attention but creates an unnatural viewing situation.

Trailer tests:

            To get closer to the consumers’ actual decision point, pretesting is conducted in a trailer in a shopping center.  Shoppers are shown the test products and given an opportunity to select a series of brands in a simulated shopping situation.

Theater tests:

            Consumers are invited to a theater to view a potential new television series along with some commercials.  Before the show begins, the consumers indicate their preferred brands in different categories.

On-Air tests:

            These tests are conducted on a regular TV channel.  Respondents are recruited to watch the program during the test commercial or are selected based on their having viewed the program.

RETAILING AND MARKETING:

            Retailing in its various guises can be traced back for centuries but because the elements of retailing and conditions of the market place have changed substantially there has been a requirement for a corresponding change in both techniques and approaches. Retailing comprises all the activities involved in the marketing and distribution of goods and services.  Therefore, marketing is a core area for any retail operation as the success or failure of retailers is based upon how well they understand and serve the needs of their customers.

THE MARKETING ENVIRONMENT OF THE COMPANY:

            In 1995 Argyll (ASDA) tried to reinvent itself to counteract the way it had been caught in the increasingly competitive environment of grocery retailing.  The Safeway supermarket group announced 124 store closures and 4800 job losses (Cope, 1995) as part of a major restructuring intended to allow the company to become more competitive with the market leaders Sainsbury and Tesco.  At the time, the Chairman Sir Alistair Grant said, “I want Safeway too be a leader rather than a follower so that we are in a better position to come up with new initiatives”.  The environmental forces of competition and change can be seen to have caused major problems for the group.

            The company marketing environment can be considered to be related to four levels.

• Retail marketing operates as a demand management function within an organization context (level 1) and as such it needs to be adequately resourced and managed in order to be effective.
• A small retailer may have grown (level 2) through supplying to a local consumer market and using superior service and knowledge of customer needs over the competitors. However, later growth may require a more sophisticated development of new markets and a fuller understanding of the range of customer requirements.
• The stakeholder system (level 3) involves all those participants in the company’s value chain – a system within which different relationships have to be carefully fostered and reinforced.
• The wider macro-environment (level 4) places pressures on a company which are beyond the control of management. The broad categories of Political, Economic, Social and Technological (mneumonics PEST analysis) involve a series of different levels of aggregation – regional, national and international – related to business constraints and opportunities. 

THE MARKETING MIX

            It is customer to accept the classic marketing mix to be made up from the four Ps of product, price, promotion, and place (channel service).

1. The product is the totality of the offer which will normally include the services, store layout, merchandise.  It will also include the company, and own product, brand name.
2. The price is what the customer has to be willing to pay in exchange for the benefits of the product and channel service.  The price is related to a perception of value based upon the way the whole of the marketing mix creates an image of the transaction experience.
3. The promotion is the means by which the retail offer is communicated to the target groups in order to inform and persuade different segments of the benefits of utilizing a specific retailer’s outlet or to make a purchase.
4. The place is based on the retailer’s activities in supplying a channel service.  This includes the logistics of inventory management systems.

The marketing mix

 

Product                       Price                                        Promotion                               Place

         (Channel service)

Target market

A BREAKDOWN OF RETAILING AS A PRODUCT:

            The formulation of a successful retailing operation involves a combination of:

• Service;
• Quality;
• Merchandise;
• Brand names;
• Features and benefits.

Service:

            An agreement to service provision is concerned with creating the level of services to be offered.  In a store, how much of the service should the client be expected to perform and how much should be provided by staff?

Quality:

            A decision regarding quality involves deciding on quality standards and implementing a method of assurance on the performance level of staff and facilities.  The management of quality is becoming an increasingly important management function.  It is  important to create a good quality reputation for the product and service offered as this provides a positive image for the company or organization and is a major advantage in countering the perception of risk  which, for many retail consumers, is high. Retail service providers are more likely to be successful if they can be depended upon to delivery higher quality service levels than their competitors.  Success through quality is often seen as, for certain product categories, the outcome of a relationship between a customer’s prior expectations of service delivery and the perception of the actual service experience.  Quality is also used strategically; as a way of differentiating merchandise and of positioning the offer or retail outlet in an exclusive way.  However, an exclusive position does bring with it the added problems of needing to source more widely to continue to find unique merchandise and having to bear additional overhead costs as a consequence of exclusivity.

Merchandise:

            Retailers need to decide on the merchandise to offer by engaging in the sorting process of assembling a range of goods and services from a variety of suppliers.  The depth and width of this range will depend on the specific strategy of each retailer, who must decide how different products will fit into the overall range of products they offer to the market place.

National Brands:

For the retailer the problem in offering such a range is that they have no exclusivity and are open to price competition from those discounting national brands.

Own Label:

            A retailer can offer the advantage of exclusivity and have more control over the product.  They thus need not enter into heavy advertising, which may give the flexibility of being able to offer lower unit prices.

Licensed Merchandise:

            The important of TV or film characters has led to the addition of images and symbols on a range of merchandise from everyday items to clothing.

Franchised products via concessions in a store:

            An advantage may be gained through an exclusive deal with a manufacturer (for example, Clinique, Principles, Alexon, etc).

            The pricing policy selected by a retailer will usually be directly related to the resultant level of demand over a period of time and, with the right margins, to the profitability of the enterprise. For the retailer, pricing decisions are critical because without adequate margins the business will not survive for long.  As a business, the retailer has to seek cash flow, profitability and growth in order to improve their market position.

MARKDOWN POLICY CONSIDERATIONS FOR RETAILERS:

            Price competition is an important feature of the grocery marketplace.  Prior to its merger with Somerfield, Kwik Save sparked off a grocery price war in 1995 when it announced a nationwide promotion cutting up to 15 percent off the price of one in ten of its top brands (Cope, 1995).  While rivals such as Asda dismissed Kwik Save’s actions as a ‘panic move’, other promised to retaliate.  Netto, a Danish discount operator, said it would match the prices if any of its lines were directly undercut.  Kwik Save had been under pressure in the grocery market where it was caught between the larger superstore operators and the aggressive Continental discounters such as Aldi, Netto and Lidl.

            Virtually all retailers will have occasion to utilize price markdowns.  It is typical for markdowns to be used as part of a clearance sale in order to provide space for new merchadise.  However, while the list below indicates there are a number of reasons to use markdowns, it should be remembered that other elements of the marketing mix can be used to increase sales, or alternatively merchandise may be carried over into the new season.  In the use of price to increase demand, markdown reductions of the original price may be necessary due to a number of reasons:

• Competitor activity affecting demand;
• Inadequate original pricing policy;
• Merchandise did not meet consumer needs or preferences;
• Economic or seasonal problems;
• Overstocking of merchandise or poor stock keeping;
• Quality of merchandise inferior due to manufacture or damage;
• Problems of seasonality and poor timing of suffer;
• Merchandise became shop-soiled or damaged on the shop floor;
• Need to release the display space for other merchandise;
• The selling space or display of the merchandise had been inadequate or in the wrong location;
• A policy decision taken to develop improved customer goodwill through markdowns;
• An error by the buyer with regard to style, fashions, research of market, etc.;
• An initial markdown being too small to achieve desired sales results;
• Sales staff not being briefed properly or encouraged to sell old as well as new lines.

RETAIL PROMOTION:

            Retail promotion is the descriptive term for the mix of communication activities which retail companies carry out in order to influence those publics on whom their sales depend.  Retailing promotion will have the main objective of influencing consumer perceptions, attitudes and behaviour in order to increase store loyalty, store visits and product purchase.  However, the important groups which need to be influenced are not simply the target market group of current and potential customers. There is a need to influence trade contracts such as agents and suppliers as well as opinion formers such as journalists and writers.

DEVELOPMENT OF PROMOTIONAL OBJECTIVES

 

ADVERTISING

            The term advertising includes any paid form of non-personal communications through the media about a product, that has an identified sponsor.  The use of payment differentiates advertising from public relations for which no payment is made for the time or space to convey a message.  The media may include telephone directories, guides, newspapers, magazines, radio, television, direct mail, Web pages and billboards.  It is normally associated with mass communication, where a broad target market is to be contacted. 

TYPES OF ADVERTISING:

Product advertising:

            Product advertising is aimed at enriching people to the store in order to consider specific merchandise.  Product advertising will feature the promotion of merchandise that is new, exclusive, and superior in aspects of quality and design as well as creating awareness of complete assortments or special merchandise events.

Markdown event advertising:

            This is used to create some excitement about a special period of lower cost offers for products.  It is likely to be more successful if the reduction is believed to be part of a genuine sale of products which in the past had been fairly faced.

Institutional advertising:

            This type of advertising is used to sell the store or shopping mall as a pleasing place to shop.  With the use of institutional advertising, the store attempts to reinforce the image of one or more of the following: a leader in fashion, fair prices, wide merchandise selection, superior service or quality, a leisure experience or somewhere to enjoy visiting.

Co-operative advertising:

            This is used where manufacturers fund part of a promotion by supplying leaflets or advertising material for use by the store. The store can add its own address to ready prepared printed material and carry out mail drops or other methods of distribution.  Alternatively a manufacturer may agree to share equally the costs of an advertising campaign.

SALES PROMOTION

            Sales promotion involves any paid non-personal marketing communication activity, other than advertising, which offers an incentive to induce a desired result from potential customers, trade intermediaries, or the sales force.  This is sometimes referred to by the term sales incentive.  Sales promotion campaigns will add value to the product because the incentives will generally not accompany the product but will typically be offered as mail drops or as coupons to be cut from newspapers, etc.  It is usual for a sales promotion campaign to be used as a temporary offer to the customer in order to stimulate an immediate response.

THE STRUCTURE OF THE MARKETING PLAN:

            The construction of the marketing plan is characterized by a range of headings which have been developed by different theorists.  Some authors offer a list of sections with the first headed SWOT issues or situational analysis, the second headed statement of objectives and goals or setting objectives, the third is strategy or marketing programming, and the last is monitoring or control.

           

SUPPLY CHAIN MANAGEMENT