UNIT 1: RETAIL ENVIRONMENT

WHAT IS THE ORGANIZATIONAL ENVIRONMENT?

A. The organizational environment is a set of forces and conditions, such as
technology and competition, that are outside the organization’s boundaries and
have the potential to affect the way the organization operates and the way
managers engage in planning and organizing.
B. The internal environment consists of the forces operating within an organization
and stemming from the organization’s structure and culture.
C. An organization’s external environment can generally be divided into two major
categories: the task environment and the general environment.

THE RETAILER’S ENVIRONMENT

• EXTERNAL ENVIRONMENT

– Everything outside a retail organization’s boundaries-economic, legal, political,

socio-cultural, international, and technical forces.

– General environment is a set of broad dimensions and forces in an organization’s

surroundings that determine its overall context.

– Task environment is composed of specific groups and organizations that affect

the firm.

INTERNAL ENVIRONMENT

– Conditions and forces within an organization.

– Specific & general forces –It includes both

– Specific forces General forces

– Investors, customers Social, political, legal &

– & suppliers technological conditions

– They affect a firm They affect a firm

– directly indirectly
THE GENERAL ENVIRONMENT

Demographic Environment

 Demography focuses on population structure, processes and dynamics.

 Retailers monitor the population, because population make up markets.

 They are interested in the size and growth rate of population in cities, regions and
nations; age distribution and ethnic mix, educational levels, household patterns, and
regional characteristics and movements.

Demographics involve study of :

• Population size

• Age structure

• Geographic distribution

• Ethnic mix

• Income distribution

Each group has certain specific wants and buying habits. Food,

Clothing, furniture etc.retailers direct their products and promotions to one or more of
these groups.

 Demographic structure is seldom static for long and changes in its composition often
test the residency of a marketing firm. Further, these changes influence the
behaviour of consumers which, in turn, will have a direct impact in the retailer’s
business.
  The ripples of these changes will reach the organisation forcing it to alter or amend
the existing marketing practices in vogue. In short, Retail firms, will have to
continuously measure the changes - qualitative as well as quantitative - that are
taking place in the population structure.

 To avoid negative consequences brought on by active consumer groups, a retailer

must communicate with consumers, anticipate problems, respond to complaints and
make sure that the firm operates properly.

Political-Legal Factors

The political arena has a huge influence upon the regulation of businesses, and the spending
power of consumers and other businesses. Issues to be

considered are:

1. How stable is the political environment?

2. Will government policy influence laws that regulate or tax the retail business?

3. What is the government's position on retail ethics?

4. What is the government's policy on the economy?

5. Does the government have a view on culture and religion?

6. The government rules and policies are must be followed for existing in the market.

The basic legal conditions considered in environmental appraisal are:

1. Antitrust regulation- Antitrust laws are regulations that monitor the distribution
of economic power in business, making sure that healthy competition is allowed to
flourish and economies can grow. Antitrust laws apply to nearly all industries and
sectors, touching every level of business, including manufacturing, transportation,
distribution, and marketing.

2. Protection laws- laws that protect the rights of consumers and ensure fair trade

competition.

3. Environmental laws-environmental regulations that apply to businesses

4. Tax laws

5. Foreign trade regulations

Changes in government rules have been major effect to the future of many
organizations.
  Retail marketing decisions are substantially impacted by developments in the
political / legal environment.

 This environment is composed of laws, government agencies and pressure groups

that influence and constrain various organisations and individuals in society.

 Legislation affecting retail business has steadily increased over the years. The
legislation has a number of purposes.

 The first is to protect from each other. So laws are passed to prevent unfair
competition.

 The second purpose of Government regulation is to protect consumers from unfair

retail practices. Some firms, if left alone, would adulterate their products, make false
claims in their advertising, deceive through their packages and attraction through
their prices. Unfair consumer practices have been defined and are enforced by
various agencies.

 The third purpose of Government Regulation is to protect the larger interest of

society against uncontrolled business behaviour. The retail marketing executive
needs a good working knowledge of the major laws protecting competition
consumers and the larger interests of society.

Economic Factors.

 Retailers need to consider the state of an economy in the short and long-terms. This is
especially true when planning for international retailing.

 Retail markets consist of purchasing power as well as people. Total purchasing power is
a function of current income, prices, savings and credit availability.

 The changes in economic conditions can have destructive impacts on business plans of a
firm.

 Economic forecasters looking ahead through the next decade are likely to find their
predictions clouded by the recurrent themes of shortages, rising costs and up and down
business cycles. These changes in economic conditions provide marketers with new
challenges and threats.

 The stronger the economy of the country is, the more money is being filtered back
within a given community.

1. Consumer Income
 Amount of income remaining after taxes and living expenses have been deducted
from wages. This represents the amount of money a person has to spend, save or invest.
It is also known as discretionary income or expendable income.

 This income decides the purchasing power for goods. Depending upon the Consumer
income, a consumer is going to decide whether he will buy a T Shirt from a department
store or a branded designer T shirt

2. Purchasing power 

 Purchasing power is the ability of consumers to purchase goods and services with a

specific amount of currency or credit. The more goods and services that can be
purchased with the same amount of money in any form, the higher the purchasing
power of the individual, business, or other entity. Attempting to maximize this buying
power is a common goal for just about any entity, from individuals who are attempting
to organize a household budget to best effect to large multinational corporations that
are seeking to maximize the returns on the proper use of their resources.The rate of
inflation, taxes and recession has a negative impact on the fashion demand. Scarcity of
money leads to simpler and practical styles with subdued colors and accessories. During
recession consumers will have to learn to deploy their limited resources economically, to
continually set new priorities and to increasingly balance their actual commitments
versus luxury requirements.

Population

 The rise in population means an increasing number of people. They all are going to need
a fulfillment of their basic requirements. The impact on fashion in this case would
depend on the economic condition of the respective country. For instance the effect is
going to be different for developing, and developed nations. E.g.The demand for fashion
goods will be lesser in Third World Countries. The age mix of a society also decides the
fashion interests. More number of younger generations will have different requirements
as compared to a population where the majority is of old people.

Socio-cultural Factors

 The social and cultural influences on business vary from country to country. It is very
important that such factors are considered.

1.What is the dominant religion?

2.What are attitudes to foreign products and services?

3.Does language impact upon the diffusion of products onto markets?

4.How much time do consumers have for leisure?

5.What are the roles of men and women within society?

6.How long are the population living? Are the older generations wealthy?

1. Status of Women

  At the beginning of the 20th century, women could not vote, rarely worked outside
the home or attended college, and enjoyed little social freedom. As the century
progressed, advanced education became available to increasing numbers of women.
More than half of today’s college students are female. As women’s rights advanced
throughout the 20th century the marketing of fashion evolved. Since now-a-days
more women are working outside the home and for this they need comfortable,
easy to wash, east to care yet trendy clothing styles. Working women require
FORMALS and a vast collection of apparels to suit every occasion and situation

 2. Recreation and Fitness

The need for recreation and physical fitness has opened up gates to a society
requiring casual and sportswear. It requires clothes that allow ease for movement.
Generally speaking, the amount of available leisure time continually increased from
the mid-19th century onward. The available leisure time presents a framework for a
very wide scope of individual leisure activities that often reflect contemporary
changes. All this creates a scope for:

 Sportswear

 Active sportswear

 Gym gear

 Accessories

 Loungewear etc.

3. Retirement Leisure

 The number of healthy and economically sound retired people is growing due to high
life expectancy and great retirement benefits. This segment of people offers new
opportunities for the retail industry, as they require products that suit their age and
personality.

4. Social Status

 People indicate their social status through the products that they adopt. Different
people at different Social strata have separate Requirements. Through our dress we all
signal our affiliation with a social group: this is true whether your group is a tribal from
Africa, or undergraduate students at a prestigious institute.
5. Expression of gender indicators in different cultures through clothing norms:

In Western culture many traditional garment forms were specifically reserved for one
gender e.g. trousers for men and skirts for women. With the relaxation of the earlier
rigid social attitudes since 20th century, the roles of men and women have changed.
Over a period of time, conventional barriers have been breached wherein fashion for
one gender has 'borrowed' components from the other's wardrobe e.g. trouser suits for
women. In recent years, the concept of social responsibility has entered into the
marketing literature as an alternative to the marketing concept. The implication of
socially responsible marketing is that retail firms should take the lead in eliminating
socially harmful products such as cigarettes and other harmful drugs etc. There are
innumerable pressure groups such as consumer activists, social workers, mass media,
professional groups and others who impose restrictions on marketing process and its
impact may be felt by retailers in doing their business. The society that people grow up
in shapes their basic beliefs, values and norms. People live in different parts of the
country may have different cultural values - which has to be analysed by retail business
people/firm. This will help them to reorient their strategy to fulfill the demands of their
consumers. Retail marketers have a keen interest in anticipating cultural shifts in order
to spot new marketing opportunities and threats.

Technological Factors

Technology is vital for competitive advantage, and is a major driver of globalization.

Retailers consider the following points:

1. Does technology allow for products and services to be made more cheaply and to a
better standard of quality?

2.Do the technologies offer consumers and businesses more innovative products and
services such as Internet banking, new generation mobile telephones, etc.?

3.How is distribution changed by new technologies e.g. books via the Internet, flight
tickets, auctions, etc.?

4.Does technology offer companies a new way to communicate with consumers e.g.
banners, Customer Relationship Management (CRM), etc?

Information and communication technology has been utilized in retail section also. Some
of them are discussed below.

a. Online purchase. Online shopping or e-shopping is a form of electronic commerce

which allows consumers to directly buy goods or services from a seller over the Internet
using a web browser. Alternative names are: e-web-store, e-shop, e-store, Internet
shop, web-shop, webstore, online store, online storefront and virtual store. Mobile
commerce (or mcommerce) describes purchasing from an online retailer's mobile
optimized online site or app. Amazon, flipkart, bluedart are the leading online stores in
our country.

b. Credit Cards Payment through credit cards has become extremely widespread and
enables an easy payment process. Electronic cheque conversion, a recent development,
processes a cheque electronically by transmitting transaction information to the retailer
and. the customer's bank. The retailer then voids the cheque and hands it back to the
customer along with a receipt.

c. Electronic Data Inter change (EDI) This is the computer to computer exchange of
information, and business documents, from retailer to vendor and back. In addition to
sales data, information regarding purchase orders, invoices and returned merchandise
are transmitted from the retailer to the vendor.

d. Quick Response (QR) System In today's retailing environment "you are either quick or
you are dead". Many vendors have developed retail specific ERP systems which help to
integrate all the function from warehousing to distribution, front and back office store
system and merchandising. Such an integrated supply chain, Figure helps the retailer in
maintaining his stocks, receiving supplies on time, preventing stock outs and thus
reducing his costs and servicing the customer better.

Natural Environment

Retailers need to be aware of the threats and opportunities associated with four trends
in the natural environment:

1. The shortage of raw materials, especially water.

2. The increased cost of energy

3. Increased pollution levels

• The soap industry had to increase its product’s biodegradability; the automobile
industry had to introduce expensive emission controls in cars.

• Fashion Industry for apparels and footwear are moving towards for sustainable
products.

The Task Environment

Specific groups affecting the organization

• Competitors seeking the same resources as the retailer.

• Customers who acquire a retailer’s products.

• Suppliers that provide resources for the retailer.

• Regulators (agencies and interest groups) that control, legislate, or influence the
retailer’s policies and practices.

Strategic partners (allies) who are in a joint venture or partnership with the retailer

1.Suppliers – are business firms and individuals who provide resources needed by the
retailer. For example a retail store must obtain various products from different suppliers
so that as and when customers come and ask the product, he will be in a position to sell
them on tome.

2. Intermediaries – are firms that aid the retail shop in promoting selling and distribution
goods to final buyers.

3. Customers – are the end users of the product or services and they are the last link in
the business process.

4. Competitors – the retailers marketing system is surrounded and affected by a host of

competitors. These competitors have to be identified , monitored and outmaneuvered
to captured and maintain customer loyalty

INDUSTRY ENVIRONMENT

• Five competitive forces directly influence a retailer and its competitive actions and
responses.

• There are five basic competitive forces, which influence the state of competition in
an industry. Some industries have a bigger profit potential than others, since
stronger competition means lower profits.

Interaction among these factors determine an industry’s profit potential

Five forces are:

• Threat of new entrants

• Power of suppliers

• Power of buyers

• Product substitutes

• Intensity of rivalry
Threat of New Entrants

The retailer experiences reduced threat if barriers to entry are present.

1. The strength of the barriers of entry.

2. The likely response of existing competitors to the new entrants.

Barriers to entry exist if there are/is:

• Economies of scale

• No Product differentiation

• High capital requirements

• High experience or learning curve

• High switching costs

• Firm’s control access to distribution channels

• Firm’s control access to raw materials

• Government policy
 The easier it is for a new company to enter the industry, fiercer is the competition. Any
new entrant poses a threat to the existing players as it can decrease the profit share of
existing players. The factors that limit new entrants are:

· How loyal are end consumers in the industry?

· How difficult it is for the consumer to switch to the new product? · How large is the
amount of capital required to enter into the industry?

· How difficult it is to access distribution channel?

· How hard it is to acquire new skills for the staff?

For example, Pizza Hut, an old player in food services retail, was founded in 1958 at
Kansas, US. The entry of Dominos in 1960 at Michigan posed a threat of competition to
it. But following their different marketing policies, they both have acquired prominent
places in the market.

Bargaining Power of Suppliers

Supplier power is high when:

• Products in the selling industry are unique (high switching costs, no

substitutes)

• The selling industry is concentrated

The ability of suppliers to get prices depends on the following factors:

  Whether there are just one or two dominant suppliers to the industry able to
change monopoly prices.

 Whether the suppliers are threatened by new entrants to the market, or by

substitute products.

 Whether the suppliers have other customers outside the industry, and do not
rely on the industry for the majority of their sales.

 The importance of supplier’s products to the customer’s business.

 Whether the supplier has a differentiated product which buyers need to

obtain.

 Whether switching costs for buyers would be high.

It is the ability of the supplier to control the cost and supply of the products in the market. If
the suppliers are at a dominating position over the company while product pricing,
threatening to raise price or reduce supply, then that retail industry is said to be less
attractive. The retail managers need to find out answers for the following:

· What are the substitute products other than what the supplier provides?

Is the supplier providing goods to multiple industries?

· Is the supplier-switching cost high?

· If the supplier and the company are capable of entering into one another’s business?

Bargaining Power of Buyers (Customers)

The profitability of an industry depends on the customers’ bargaining power. Just how
strong the position of customers will depend on a number of factors:

 If the customers’ purchase represent a substantial proportion of total sales by the

producer, the customer will be in a strong position relative to the seller.

 In most of a customer’s supplies come from a single industry, the customer will be in
a weaker bargaining position than if only a small proportion did so.

 Whether switching costs are high or low.

 Whether the products supplied by the industry are standard items and
undifferentiated. Suppliers will try to increase their bargaining power over customers
by creating a strong brand image.
  A customer who makes low profits will be forced to insist on low prices from
suppliers.

 The treats that customers might take over sources of supply, if suppliers charge too
much.

 The skills of the customers’ might take over sources of supply, if suppliers charge too
much.

 The skills of the customers’ purchasing staff, or the price-awareness of customers.

 When product quality is important to the customer, the customer is less likely to be
price sensitive and so the industry might be more profitable as a consequence.

 It is the position of buyers and likelihood of their ability to gain benefit while buying.
If there are many suppliers and few buyers, the buyers are at advantageous position
while pricing and they generally have the last word. The retail managers need to
think of the following:

 · How large market share the retail company has?

 · What size of consumers is the company depending upon for its sales?

 · Are buyers buying in large volumes?

 · How many other retail competitors are in the same product line?

Threat of Substitute Products

Substitute products are a threat when:

 There are low switching costs

 Substitutes have high performance or value/price

 The substitute product is lower priced

 The products or services that are produced in one industry are likely to have
substitutes that are produced by another industry, which satisfy the same
customer’s need.

 Which firms in an industry are faced with threats from substitute products,
they are likely to find that demand for their products is relatively sensitive to
price.

 An important threat they must watch out for is any improvement in the
price-performance characteristics of these substitutes.
  Substitutes are the products or services that provide the same functionality. A
successful product leads to creating other similar products. While entering into
retail, one should think of:

 · How many near substitutes are available in the market?

 · What is the price of the substitute?

 · What is the consumer perception about those substitutes?

 Threat

 By advertising, marketing, and investing in R&D for the product or service, a retail
business can elevate its position in the industry.

For example, Google+ and Facebook both are social platforms the consumers use for
socializing. They provide similar features such as posts, chat, share text, graphics and media
content, forming groups, etc.

Intensity of Rivalry among Competitors

Rivalry is high when:

• There is low industry growth

• There is equality of size and power product

 • The product lacks differentiation

• There are high exit barriers

• There are high fixed costs

• The intensity of competitive rivalry within an industry will affect profitability of the
industry as a whole.

• Competitive action might take the from of price competition, advertising battles,
sales promotion campaigns, introducing new product from the market, improving
after sales services or providing guarantee or warranties.

• The rivalry is intense when there are more or less equal sized competitors in the market and
there is no unparalleled market leader.

Conditions and stakeholder forces within an organization.

– Owners with legal property rights to a business.

– Board of directors elected by the stockholders to oversee the general

management of the firm to best serve the stockholders’ interest.

– Employees who work for the retailer and have a vested interest in its
continued operation and existence.

– Physical work environment of the organization and the work that people do.

KEY ASPECTS OF INTERNAL ENVIRONMENT

RESOURCES

Tangible and intangible assets that the company uses to implement strategy.
Tangible resources

• Observable assets and easily quantified

• Plants, offices, raw materials, etc.

Intangible resources

• Harder to observe and more difficult to quantify

• Knowledge, organizational culture, R&D, Patents etc.

Tangible Resources

• Financial resources

• Physical resources

-Plants, equipment etc.

• Technological resources

-Machinery,

• Organizational resources

Intangible Resources

• Human resources

-Refers to knowledge, trust and talents.

• Innovation resources

-Skills needed to develop new and innovative products

SWOT ANALYSIS

Strengths, Weaknesses, Opportunities and Threats (SWOT).

SWOT analysis is a tool for auditing a retailer and its environment.

It is the first stage of planning and helps retailers to focus on key issues.

SWOT stands for strengths, weaknesses, opportunities, and threats.

Strengths and weaknesses are internal factors.

Opportunities and threats are external factors.

In SWOT, strengths and weaknesses are internal factors.

A strength is something a retailer does well or an attribute that

enhances its competitiveness.

For example: A strength could be:

• Specialist marketing expertise.

• A new, innovative product or service.

• Location of business.

• Quality processes and procedures.

• Any other aspect of business that adds value to product or service.

A weakness is something a firm lacks, does poorly, or a condition

placing it at a disadvantage.

A weakness could be:

• Lack of marketing expertise.

• Undifferentiated products or services (i.e. in relation to competitors).

• Location of business.

• Poor quality goods or services.

• Damaged reputation.

In SWOT, opportunities and threats are external factors.

For example: An opportunity could be:

• A developing market such as the Internet.

• Mergers, joint ventures or strategic alliances.

• Moving into new market segments that offer improved profits.

• A new international market.

• A market vacated by an ineffective competitor.

A threat could be:

• A new competitor in home market.

• Price wars with competitors.

 • A competitor has a new, innovative product or service.

• Competitors have superior access to channels of distribution.

• Taxation is introduced on product or service.

UNIT 2: IDENTIFYING AND UNDERSTANDING RETAIL CONSUMERS

The quality of a retail strategy depends on how well a firm identifies and understands its
customers and forms its strategy mix to appeal to them.

This entails identifying consumer characteristics, needs, and attitudes, recognizing how
people make decisions; and then devising the proper

target market plan.

Consumer versus Customer

A consumer is a user of a product or a service whereas a customer is a buyer of the product

or service. The customer decides what to buy and executes the deal of purchasing by paying
and availing the product or service. The consumer uses the product or service for oneself.
For example, the customer of a pet food is not the consumer of the same. Also, if a mother
in a supermarket is buying Nestlé Milo for her toddler son then she is a customer and her
son is a consumer.

FACTORS THAT RETAILERS CONSIDER IN DEVISING SUCESSFUL RETAIL STRATEGIES

 1. CONSUMER DEMOGRAPHICS

 Demographics are objective, quantifiable, easily identifiable and measurable

population data.

 Lifestyle are the ways in which individual consumers and families ( households) live
and spend time and money.

Consumer Demographics

A retailer should have some knowledge of overall trends, as well as the demographics of its
own target market.

For a given business and location, the characteristics of the target market can be studied on
the basis of some combination of these demographic factors- and a retail strategy planned
accordingly-

• Market size-The Market size: Is the market relatively small or large, and can it be
broadly characterized by its stage of development (start-up, emerging, growth,
maturing, declining)?

• Household size

• Marital and family status

• Income

• Birth rate

• Mobility

• Place of residence

• Employment status

• Education, and,

• Ethnic/ racial background.

These factors affect people’s retail shopping and retailer’s actions.

Gender: Men and women differ in their perspective, objective, and habits while deciding
what to buy and actually buying it. Researchers studied men and women on shopping and
found that men buy, while women shop. Women have an emotional attachment to
shopping and for men it is a mission. Hence, men shop fast and women stay in the shop for
a longer time. Men make faster decisions, women prefer to look for better deals even if they
have decided on buying a particular product.

Age: People belonging to different ages or stages of life cycles make different purchase
decisions. People change the goods and services they buy over their lifetimes. Tastes in
food, clothes, furniture, and recreation are often age related. Buying is also shaped by the
stage of the family life cycle

Occupation: The occupational status changes the requirement of the products or services.
For example, a person working as a small-scale farmer may not require a high-priced
electronic gadget but an IT professional would need it.

Lifestyle: Customers of different lifestyles choose different products within the same
culture. Life Style is a person’s pattern of living, understanding these forces involves
measuring consumer’s major AIO dimensions, i.e. activities (Work, hobbies, shopping,
support, etc.) interest (Food, fashion, family recreation) and opinions (about themselves,
Business, Products)

Nature: Customers with high personal awareness, confidence, adaptability, and dominance
are too choosy and take time while selecting a product but are quick in making a buying
decision.

2. Consumer Lifestyles

Consumer lifestyles are based on social and psychological factors, and influenced by
demographics. As with demographics, a retailer should first have some knowledge of
consumer lifestyle concepts and then determine the lifestyle attributes of its own target
market.

Social factors used in understanding consumer lifestyles

A.Culture- a distinctive heritage shared by a group of people that passes on a series of

beliefs, norms and customs.

Cultural factor divided into:

 Culture:

 The set of basic values perceptions, wants, and behaviours learned by a member of
society from family and other important institutions.

 Culture is the most basic cause of a person’s wants and behaviour.

 Every group or society has a culture, and cultural influences on buying behaviour
may vary greatly from country to country.
  Sub Culture: A group of people with shared value systems based on common life
experiences and situations.

 Each culture contains smaller sub cultures a group of people with shared value
system based on common life experiences and situations.

 Sub culture includes nationalities, religions, racial group and geographic regions.

 Many sub culture make up important market segments and marketers often design
products.

B. Social class- involves an informal ranking of people based on income, occupation,

education and other factors.

 Almost every society has some form of social structure, social classes are society’s
relatively permanent and ordered divisions whose members share similar values,
interests and behaviour.

C. Reference groups- influence people’s thoughts and behavior. It can be two or more
people who interact to accomplish individual or mutual goals. A person’s behaviour is
influenced by many small groups

Groups that have a direct influence and to which a person belongs are called
membership groups. Some are primary groups includes family, friends, neighbours
and coworkers. Some are secondary groups, which are more formal and have less
regular interaction. These include organisations like religious groups, professional
association and trade unions.

 Family: Family members can strongly influence buyer behaviour. The family is the
most important consumer buying organisation society and it has been researched
extensively. Marketers are interested in the roles, and influence of the husband, wife
and children on the purchase of different products and services.

 Roles and Status: A person belongs to many groups, family, clubs, and organisations.
The person’s position in each group can be defined in terms of both role and status.

D. Time utilization- refers to the activities in which a person is involved and the amount of
time allocated to them.

Psychological factors used in understanding consumer lifestyles

1. Motivation: Customers often make purchase decisions by particular motives such as

natural force of hunger, thirst, need of safety, to name a few.
2. Perception: Customers form different perceptions about various products or services of
the same category after using it. Hence perceptions of customer leads to biased buying
decisions.

2. Learning: Customers learn about new products or services in the market from various
resources such as peers, advertisements, and Internet. Hence, learning largely affects their
buying decisions.

For example, today’s IT-age customer finds out the difference between two products’
specifications, costs, durability, expected life, looks, etc., and then decides which one to buy.

4. Beliefs and Attitudes: Beliefs and attitudes are important drivers of customer’s buying
decision. Belief is a descriptive thought that a person holds about something. Attitude, a
person’s consistently favourable or unfavourable evaluations, feelings, and tendencies
towards an object or idea.

Retailing Implications Of Consumer Demographics And Lifestyles

Demographics and lifestyle factors need to be considered from several perspectives:

• Changing gender roles- more confident, knowledgeable and demanding working

women, and more cooperative, adjusting men.

• Consumer sophistication, awareness and confidence

Some characteristics of ‘new consumers’ that are still evident today:

 They no longer conform to traditional stereotypes – they are demanding, fickle,

disloyal, individual and easily bored.

 They are better informed and more sophisticated, and are prepared to complain
when they get poor service.

 They have less time for shopping.

 They feel greater uncertainty about future personal prospects.

 They express a growing concern for the environment.

 They have lost faith in traditional institutions such as the police, church and state.

3. CONSUMER NEEDS AND DESIRES

Needs are a consumer’s basic shopping requirements consistent with his or her present
demographics and lifestyle.

Desires have an direct impact on attitudes and behavior.

When a retail strategy aims to satisfy consumer needs and desires, it appeals to consumer
motives, the reasons for their behavior.

Few questions to resolve:

• How far will the customer travel to get the retailer?

• How important is convenience?

• What hours are desired?

• What level of customer service is preferred?

• How extensive a good/ service assortment is desired?

• What level of goods/ service quality is desired?

• How important is price?

• What retailer actions are necessary to reduce perceived risk?

• Do different market segments have special needs?

4.SHOPPING ATTITUDES AND BEHAVIOR

Attitudes towards shopping

Attitudes have a big impact on the ways in which people act in a retail setting .

Shopping enjoyment

People shop for various reasons:

• Bargain hunting

• Recreational browsing

• Being pampered by sales people, and ,

• The opportunity to get out of the house or office.

Why people buy or do not buy on a shopping trip:

• Is it prices?

• A rude salesperson?

• Not accepting the consumer’s credit card?

• Not having an item in stock?

 • Or some other factor?

Attitudes toward Private brands

• Many consumers believe private (retailer) brands are as good as or better than
manufacturer brands.

• Consumer attitude may be defined as a feeling of favorableness or unfavorableness

that an individual has towards an object.

• As we, all know that an individual with a positive attitude is more likely to buy a
product and this results in the possibility of liking or disliking a product.

• Consumer attitude basically comprises of beliefs towards, feelings towards and

behavioral intentions towards some objects.

Belief plays a vital role for consumers because, it can be either positive or negative towards
an object. For example, some may say tea is good and relieves tension, others may say too
much of tea is not good for health. Human beliefs are not accurate and can change
according to situations.

Consumers have certain specific feelings towards some products or brands. Sometimes

these feelings are based on certain beliefs and sometimes they are not. For example, an
individual feels uneasy when he thinks about cheese burst pizza, because of the tremendous
amount of cheese or fat it has.

Behavioral intentions show the plans of consumers with respect to the products. This is
sometimes a logical result of beliefs or feelings, but not always. For example, an individual
personally might not like a restaurant, but may visit it because it is the hangout place for his
friends.

The Consumer Decision Process

Consumer behavior is the process by which people determine whether, what, when, where,
how, from whom, and how often to purchase goods and services. Such behavior is
influenced by a person’s background and traits.

The consumers decision process must be grasped from these different perspectives:

(a) what good or service the consumer is thinking about buying ,and,

(b) where the consumer is going to purchase that item (if the person opts to buy).

In choosing whether or not to buy a given item (“what”) the consumer considers features,
durability, distinctiveness, value, ease of use, and so on.

In choosing the retailer to patronize for that item (“where”), the consumer considers
location, assortment, credit availability, sales help, hours, customer service, and so on.

The best retailers assist consumers at each stage in the process: stimulus (news paper ads)
problem awareness (stocking new types of goods),

Information search ( point- of-sale displays and good salespeople), evaluation of alternatives
(clearly noticeable differences among products), purchase (acceptance of credit cards), and
post purchase behavior (extended warranties and money- back returns).

 Consumer decision making process involves the consumers to identify their needs,
gather information, evaluate alternatives and then make their buying decision.

 The consumer behavior may be determined by economic and psychological factors

and are influenced by environmental factors like social and cultural values.

 The consumer decision making behavior is a complex procedure and involves

everything starting from problem recognition to post-purchase activities.

 Every consumer has different needs in their daily lives and these are those needs
which make than to make different decisions.

 Decisions can be complex, comparing, evaluating, selecting as well as purchasing

from a variety of products depending upon the opinion of a consumer over a
particular product.

 This renders understanding and realizing the basic problem of the consumer decision
making process for marketers to make their products and services different from
others in the marketplace.

5 Stages of Consumer Decision Making Process

  The buying behavior model is one method used by marketers for identifying and
tracing the decision making process of a customer from the start to the end. The
process is categorized into 5 different stages which are explained as follows:

1. Need recognition occurs when a consumer exactly determines their needs.

Consumers may feel like they are missing out something and needs to address this
issue so as to fill in the gap. When businesses are able to determine when their
target market starts developing these needs or wants, they can avail the ideal
opportunity to advertise their brands. An example who buys water or cold drink
identifies their need as thirst. Here; however, searching for information and
evaluating alternatives is missing. These consumer decision making steps are
considered to be important when an expensive brand is under buying consideration
such as cars, laptops, mobile phones, etc.

Information Search

The information search stage in the buyer decision process tends to change
continually as consumers require obtaining more and more information about
products which can satisfy their needs. Information can also be obtained through
recommendations from people having previous experiences with products. At this
level, consumers tend to consider risk management and prepare a list of the features
of a particular brand. This is done so because most people do not want to regret
their buying decision. Information for products and services can be obtained through
several sources like:

 Commercial sources: advertisements, promotional campaigns, sales people or

packaging of a particular product.

 Personal sources: The needs are discussed with family and friends who provided
product recommendations.

 Public sources: Radio, newspaper and magazines.

 Experiential sources: The own experience of a customer of using a particular brand.

Evaluation of Alternatives

 This step involves evaluating different alternatives that are available in the market
along with the product lifecycle.

 Once it has been determined by the customer what can satisfy their need, they will
start seeking out the best option available.

 This evaluation can be based upon different factors like quality, price or any other
factor which are important for customers.
  They may compare prices or read reviews and then select a product which satisfies
their parameters the most

Purchase Decision

When all the above stages have been passed, the customer has now finally decided
to make a purchasing decision. At this stage, the consumer has evaluated all facts
and has arrived at a logical conclusion which is either based upon the influence from
marketing campaigns or upon emotional connections or personal experiences or a
combination of both.

Post Purchase Behavior

 The purchase of the product is followed by post-purchase evaluation which refers to

analyzing as to whether the product was useful for the consumer or not.

 If the product has matched the expectations of the customer, they will serve as a
brand ambassador who can influence other potential consumers which will increase
the customer base of that particular brand.

 The same is true for negative experiences; however, it can halt the journey of
potential customers towards the product.

5. RETAILER ACTIONS

In mass marketing, a firm sells to a broad spectrum of consumers; it does not really focus
efforts on any one kind of customer.
In concentrated marketing, a retailer tailors its strategy to the needs of one distinct
consumer group, such as young working women, it does not attempt to satisfy people
outside that segment.

With differentiated marketing, a retailer aims at two or more distinct consumer groups,
such as men and boys, with a different strategy mix for each.

In deciding on the target market approach, a retailer considers its goods/ service category
and goals, competitor’s actions, the size of various segments, the efficiency of each target
market alternative for the particular firm, the resources required, and other factors.

After choosing a target market method, the retailer selects the target market(s) to which it
wants to appeal; identifies its characteristics, needs, and attitudes of the target market(s);
seeks to understand how its targeted customers make purchase decisions; and acts
appropriately.

6.ENVIORNMENTAL FACTORS AFFECTING CONSUMERS

Environmental factors influencing shopping attitudes and behavior:

• State of economy-An economy’s overall economic activity is summarized by a

measure of aggregate output. As the production or output of goods and services
generates income, any aggregate output measure is closely associated with an
aggregate income measure.

• Rate of inflation- The inflation rate is defined as the rate of change in the price level.
Most economies face positive rates of inflation year after year. The price level, in
turn, is measured by a price index, which measures the level of prices of goods and
services at given time.

• Infrastructure where people shop, such as traffic congestion, crime rate and ease of
parking.

• Price wars among consumers.

• Emergence of new retail formats.

• Trend towards more people shopping at home

• Government and community regulations regarding shopping hours, new

construction, consumer protection etc.

• Evolving societal values and norms.

 UNIT3: ETHICAL AND LEGAL ISSUES IN RETAILING

Like quality, customer focus and responsiveness, business ethics has also become a
source of competitive advantage that retailers aspire for, in order to improve the
company’s image and to attract new customers.

The challenge of retailers’ earning goodwill of the customers lies in being sensible
and projecting a truthful and caring attitude through ethical practices, community
development programs and other forms of voluntary services.

BROAD AREAS OF RETAIL BUSSINESS ETHICS

1. Compliance with Laws, Rules and Regulations:

The retailers and their employees are require to comply with all of the applicable laws, rules
and regulations of the country and other countries where the company conducts its
business. This includes labour laws governing employment of people, Acts like the Shops
and Establishments Act, Weights and Measures Act, Companies' Act etc.

2. Protection of Customers' Interests: Retailers and their employees are required to deal
fairly with the customer, and ensure that customers" interests, safety and security, and
consumer rights are not violated in the pursuance to profit or any other objectives the
retailer may have. This covers areas such as deceptive advertising, deliberately giving wrong
information to the customer, invading customers' privacy, questionable pricing policies, lack
of quality control of products presented to the customer, rudeness to customers etc.

3. Avoiding Conflicts of Interest between Employee and Retail Company: A conflict of

interest is any circumstance where an individual's personal interest interferes or even
appears to interfere with the interests of the retail company. Employees have a duty to
avoid financial, business or other relationships that might be opposed to the interests of the
Company or might cause a conflict with the performance of their duties.

Some of the areas where a conflict could arise include:

 Employment by a competitor, regardless of the nature of the employment, while

employed by a retail company.

 Conflicts also may arise when an employee, or a member of his or her family,
receives improper personal benefits as a result of his or her position in the retail
company.

 Processing a transaction on the employees‘ or managers' personal account(s), or his

or her friends' or family members' account(s), through the retailer internal systems
without first obtaining permission.
  Disclosing the retail’s company's confidential information to a third party without
the prior consent of senior management

4. Gifts and Entertainment : The retail company's aim is to deter providers off gifts or
entertainment from seeking or receiving special favours from employees. The
concern is that gifts of more than a nominal value may cause employees to feel
placed in a position of "obligation". Employees should not ask any third party for any
gift, gratuity, entertainment or any other item regardless of its value.

5. Confidentiality : Employees are responsible for maintaining the confidentiality of

information entrusted to them as a result of their roles with the Company and must
safeguard the Company's confidential information and not disclose it to a third party
without the prior consent of senior management.

6. Fair Dealing : Employees are expected to deal fairly with the Company's customers,
suppliers, and competitors and to take unfair advantage of anyone through
manipulation, abuse of confidential information, misrepresentation of material facts
or any other unfair dealing practice.

7. Standards of Business Conduct

a) Respectful Work Environment : Individual retail companies have a desired work

ethics code/ a work environment in which all individuals are treated with respect
and dignity. Each individual should be permitted to work in a business- like
atmosphere that promotes equal employment opportunities.

Some example of values that a company may require employees to uphold are:

 Trustworthiness: honesty, integrity, promise-keeping, loyalty.

 Respect: autonomy, privacy, dignity, courtesy, tolerance, acceptance.

 Responsibility: accountability.

 Caring: compassion, consideration, giving, sharing, kindness, loving.

 Justice and fairness: practical fairness, impartiality, consistency, equality.

 Civic virtue and citizenship: law abiding, community service, protection of

environment

b) Prohibited Conduct: Individual companies have their own list of prohibited conduct, which
could result in disciplinary action, including termination.

Examples of prohibited conduct are:

  Any act which causes doubt about an employee's integrity, such as the falsifying of
company records and documents, competing in business with the company,
divulging trade secrets or engaging in any criminal conduct.

 Any act which may create a dangerous situation, such as carrying weapons, firearms
or explosives on company premises or surrounding areas, assaulting another
individual or disregarding property and safety standards

 The use, sale or purchase or attempted use, sale or purchase of alcohol or illegal
drugs while at work or reporting to work in a condition not fit for work, such as
reporting to work under the influence of alcohol or illegal drugs.

 Harassment of any form including threats, intimidation, abusive behaviour and/or

pressure of any other person in the course of doing business.

 Failure to perform work, which meets the standards expectations of the employee's
position.

 Excessive absenteeism, consecutive absence without notification or authorization.

8. Corporate Social Responsibility: Many organizations often institute policies such as

recycling waste, donating to local charities, or paying employees to participate in
community events, donating or participating in events to improve "Green" and
environmental awareness etc.

9. Theft, Fraud or Misappropriation: A very important organizational value for most

retailers, misuse or theft of money, cash and merchandise is treated very seriously and
disciplinary action is usually take

ETHICAL DIMENSIONS OF RETAILING

Every retail business is customer centered, but customers wants and needs can
lead to often conflict with society's long-term interest.

Ethical Standards
It is the basic duty of every retailer to have some ethical values incorporated into his
organization. These should guide his employees and managers in differentiating the right
from wrong, fair from unfair, loyal from un-loyal, trustworthy from untrustworthy and a host
of other ethical issues and value distinctions.
Relative standards: Ethical implications of actions can be viewed from two broad
perspectives:
 Utilitarianism
 Intuitionism

 Utilitarianism
Where we judge not the act but the consequences of the act. If the results mean a net
increase in society's happiness or welfare, then the act is believed to be morally right.
Broadly it accepts that end justifies the means.
 Intuitionism:
A decision is considered right if the individual's intuition or conscience tells him or her that it
is right. If the person's sixth sense or gut feeling says that an action is okay, that his or her
motives are good, and he or she does not intend to hurt any one, then he/she can go ahead
with the action.

Ethical Practices in Retailing Functions

Retailer should ensure that ethical practices are followed in following functions:

i. Product Development

 Ensure disclosure of all substantial risks associated with the product or service usage to the
customer.

 Identification of any component substitution that might materially change the product.

 Identification of extra-cost added features.

ii. Promotions

 Retailers should avoid false and misleading advertising.

 Reject high pressure manipulation or misleading sales tactics.

 Avoid sales promotions that use deception or manipulations.

iii. Distribution

 Retailers should not manipulate the availability of a product for purpose of exploitation.

 Retailers should not use pressure or force in negotiations with the channel partners.

 Retailers should not exert undue influence over resellers' choice to handle the product.

iv. Pricing

 Retailer should not engage in price fixing which means entering into informal agreements
with other retailers in the area to fix artificially high prices.

 It should not indulge in predatory pricing which means pricing very low to drive out
competition.

 Retailer should disclose the full price associated with any purchase.

v. Market Research

 Retailer should not indulge in selling or fund raising under the disguise of market research.
  Retailer should avoid misrepresentation and omission of pertinent research data.

 Treat outside clients and suppliers fairly.

Ethical Responsibilities of a Retailer

A retail professional conduct must be guided by the following:

 The basic principles of professional ethics.

 The adherence to all applicable laws and regulations.

 The accurate representation of their education, training and experience

 Pro-active, practice and promotion of the code of ethics.

The marketers shall uphold and advance the integrity, honour and dignity of retailing profession by:

 Being honest in serving customers, clients, employees, suppliers, distributors and the public.

 Not knowingly participate in conflict of interest without prior notice to all parties involved.

 Establishing equitable fee schedules including the payment or receipt of usual, customary
and legal compensation for marketing exchanges

 Participants in the marketing exchange process should be able to expect that:

 Services offered are safe and fit for their intended uses. Communication, in all respects,
about offered products and services are not deceptive.

 Ensure that both parties discharge their obligations - financial and otherwise, in good faith.

 Appropriate internal methods just for equitable adjustments and/or redressal of grievances
concerning purchases

NON-ETHICAL BEHAVlOUR IN RETAIL BUSINESS

• Retailers who keep the retail stores open beyond the time prescribed by the law.

• Retailers employing young persons or children in shops or offices (against the law).

• Improper price stickering on products (to deliberately mislead the customer).

• Deliberately withholding information regarding a product from the customer, such as

ingredients in food stuff.

• Misuse of company assets /money by employed managers.

• Employee Theft of either cash or merchandise.

• Salespersons charging full price for a sale item without customers' knowledge.

• Retailer knowingly selling merchandise not of good quality.

 • Hoarding free samples meant for customers by salespersons.

• Sales persons collect free gifts meant for customer, and use it themselves.

• The privacy of information collected by a retailer about its customers during the course of
transactions with those customers should be maintained with the degree of confidentiality.
Selling this information amounts to non-ethical behaviaur.

• A retailer being environmentally' irresponsible in actions, for example using plastic bags
which are not permissible by law (environment unfriendly) to bag their merchandise. Many
large retailers are switching to biodegradable paper/cloth bags /recyclable paper or reusable
cotton and jute bags

• Not telling the customer the complete truth about a product's characteristics.

• Retail employees giving in to pressure from a friend to give them employee discounts, not
due to them.

• Deceptive Pricing: Occurs when a misleading price is used to lure customers into the store;
usually there are hidden charges or the item advertised may be unavailable.

LEGAL FRAMEWORK IN RETAILING

Legal enforcement is continuously being increased in order to protect customers from being cheated
by deceptive claims and monopolistic practices of the retailers.

The retailers need to understand trade regulations like central laws, state laws and local laws that
affect them in order to make business decisions relating to products, pricing, promotions, credits,
customers, competitors, employees and society.

Legal laws cover a wide range of issues, namely,

 • Location of the store

• The building structure

• Its business practices

• Mergers and acquisitions

• Pricing

• Product and promotional activities

• Trademark infringements etc.

LEGAL IMPLICATIONS OF LAW

I. On Supplier Relations
There are legal regulations concerning the relationship between retailers and
suppliers in the areas of pricing, product promotion and channel constraints.
1. Issues related to Pricing
The major government rules with regard to pricing in retail are horizontal price
fixing, vertical price fixing, price discrimination, minimum price levels, unit
pricing, item price removal, and price advertising.

i. Horizontal Price Fixing- This is an agreement among manufacturers or among wholesalers or

among retailers to set prices of certain items is called horizontal price fixing.

 Such kind of unwritten or written understanding among retailers is construed as illegal,

regardless of whether such prices are reasonable or not. In the Indian scenario such
practices are restricted under the Monopoly Restrictive Practices Act.

 It is also illegal for retailers to join hands on the use of any coupons or rebates or other price
fixing tactics.

 In US the punishment for price fixing act is very severe and the accused could be jailed
besides payment of severe monetary penalties and legal damages

ii. Vertical Price Fixing

 Vertical price fixing occurs when manufacturers or wholesalers seek to control the retail
prices of their goods and services by disallowing retailers from selling their concerned items
below the minimum prices fixed by them.

 In India under the Maximum Retail Price (MRP) rules retailer are asked to sell the goods at
the maximum retail price fixed by the suppliers or manufacturers, and has to be inclusive of
all taxes.

 The retailers cannot sell the merchandise above the MRP prices under any pretext
  The retailers are allowed to sell the goods and services below the MRP prices, if they desire
to, and no manufacturer or wholesaler can restrict them. This is done to keep the spirit of
competition and fair price at play.

 Printing of MRP prices, so that consumers are aware of the prices to be charged by the
retailer.

 Suppliers or manufacturers can refuse to sell to retailers that advertise discount prices in
violation of the written policies.

iii. Price Discrimination

 Price discrimination occurs when a vendor sells the same merchandise at different prices to
two or more retailers. Retailers cannot be charged with price discrimination if:

• The cost of selling to a particular retailer is less.

• If a change in market conditions affect the marketability of a particular merchandise.

• They have to match local competition.

• Under this laws manufacturers and wholesalers cannot discriminate on price or purchase
terms in selling to individual retailers if these retailers are buying the same or ‘like quality’
items; and the effect of such discrimination is to injure fair competition.

• The purpose of this legislation is to ensure that large format retailers with chain of stores do
not force the suppliers or manufacturers from giving them unfair rebates or discounts that
could harm the other small retailers.

• There are exceptions that allow price discrimination under justifiable conditions as listed
here below: -

• Different prices can be charged to different retailers when there is a difference in

the manufacturing, sale and delivery costs due to differences in the order volume.

• Products are physically different.

• The retailers paying for the same product different prices are not competitors.

• Price differences are on account of differences in supplier costs.

• Change in market conditions- forcing suppliers to change their prices as per their
costs.

• Discounts to retailers from the manufacturer or suppliers are not illegal if they follow the
above rules, and ensure that such discounts are available to all competing retailers on an
equitable basis, and offer discount schemes in a manner so even small retailers can make
use of them.

iv. Unit Pricing: In case of unit pricing law, the manufacturer or supplier of packaged commodities
are required to specify the per unit price along with the price of the total packaged goods. This is
done basically to make consumer understand at what unit price he is buying the concerned package
as against the other packages of the same item available from other competing brands.

For example if a 2 litre bottle of Coke is available at Rs 65 as against a one litre bottle of Coke at Rs
25 the consumer is able to make a decision whether to buy a two litre bottle with per litre cost being
Rs 32.5 or go for one litre bottle with per litre cost works out at Rs 25 per litre. In India few select
grocery items this practice is followed.

2. Issues related to Product

 Counterfeiting has become a serious problem in India especially in the unorganized retail
sector, where, for every successful product like

 Fair and Lovely and Vaseline, there are at least two or three duplicates being released into
the market with almost the same kind of name and packaging. If the brand being
counterfeited trademarked, the act is punishable under the Trade Mark Act of 1999. It is
illegal for the retailer to sell such merchandise.

 Under the Anti-Counterfeiting Act, counterfeited trademarked or branded products are

banned. Many countries particularly India, US and European countries face loss of customs
revenues due to sale of fake products and brands popular in these countries

3. Issues related to Purchasing

Firms in the retailing business face more ethical dilemmas while buying merchandise. These include
issues related to:

• Merchandise quality check

• Sourcing from an authentic vendor

• Bribery while buying the merchandise.

1.Ethical Behaviour in Merchandise Buying

While buying merchandise retailer needs to set certain ethical standards with respect to: Product
Quality, Source of Manufacture, and Environmental Considerations, though there may or may not be
necessity by law.

i) Product Quality: It is expected by consumers that the product he is purchasing from the
retail outlet will meet certain standards as publicized by the manufacturer or the retailer.
Further the consumers enter into a retail outlet with certain trust in a retail outlet for
maintaining reasonable quality of the products sold by the retailer so that the product is
truly merchantable. Thus, many retailers take it on themselves to make reasonable check of
the products sold in their outlet for ensuring their merchantability. Such checks may be done
even for known branded products as well as for its own private labels.

ii) Source of Manufacture:

 With the European and US buyers insisting to know whether the factories where they make
purchases from are compliant with child labour laws and fair labour practices laws, have
made the source of supply an important part of the ethical behaviour. Though in many of
the Western European countries and in US buying from the sources which employ child
labour or have unfair labour practices (like late working hours, no holidays, disallowing union
formation , etc.) is considered illegal. Certain retailers in under-developed countries too may
as part of ethical behaviour consider these practices as unethical behaviour and may refuse
to purchase merchandise from such sources even if these practices are not against the
country laws or the merchandise may be most economical.

Nowadays, due to persistent publicity to sweatshops employed by developing countries like

India, Pakistan, Bangladesh, Vietnam, Cambodia, etc., consumers who believe in ethical
standards insist on knowing the sources of supply, before making their purchases from a
retail outlet.

Many well- known retail outlets have also made it part of their ethical practice not to buy
from sweat-shops, and give due publicity to their ethical practices for gaining public support
and image build-up in the minds of their customers.

Sweatshop (or sweat factory) is a term for a workplace with very poor, socially unacceptable

or illegal working conditions. The work may be difficult, dangerous, climatically challenging
or underpaid. Workers in sweatshops may work long hours with low pay, regardless of laws
mandating overtime pay or a minimum wage; child labor laws may also be violated.

iii. Environmental Consideration:

In the present circumstances and that for the many decades hereafter environmental
considerations are going to become the most talked about point at all levels and in all kinds
of businesses too. Retail business being the most important part of the selling channel,
before the product pass on to the consumer, the role of retail has assumed great importance
in taking care of the environmental concerns.

In developed countries of Europe as well as in US it has been made illegal to use

manufacturing processes that deteriorate the environment by creating excessive harmful
industrial affluent or green-house effect in the environment. Retailers in many countries on
their part as a matter of their ethical practice do not buy products that are manufactured by
the manufacturers who violate the green environment. Now a day some well-known brand
marketers print specifically on the product packaging that the product is manufactured with
“environment friendly processes

4. Issues related to Channel Constraints

There are many laws that govern the retailers’ relations with other members in the distribution
channel. According to Competition Act, 2002, it is illegal for enterprise or association of enterprises
or person or association of persons to enter into agreement in respect of production, supply,
distribution, storage, acquisition or control of goods or provision of services, which causes or is likely
to cause an appreciable adverse effect on competition within India.
There are four areas into which these restrictions could be categorized:

1. Territorial Restrictions

This is a common mechanism used by many wholesalers or manufacturers of branded items

to restrict the number of retailers to whom the concerned branded items being sold in a
given territory or market area. The idea is to ensure a protected customer base for the
concerned retailers and to protect them from cannibalizing customers of each other. But
these kinds of practices are being frowned upon by court of laws as they are considered to
be adverse to the spirit of free competition among retailers in a given territory. But under
the exclusive franchise agreements there could be an agreement clause between the
franchisor and the franchisee - not to appoint another franchisee in the nearby zone of say
two kilometres - if the said store is giving reasonable performance as defined by mutually
agreed sales targets between them.

2. Dual Distribution:

Dual distribution is a system under which manufacturer of a brand may decide to sell its
products both through independent retailers or multi-branded outlets (MBOs), as well as
through its own exclusive chain of stores.Though law do not restrict such a practice, as it
thinks the dual distribution promotes competition, but retailers have greatest objection to
such an arrangement.

MBOs think that they are put to disadvantage by the manufacturer by putting up its own
outlet in the same market where they operate, as the tendency of the consumers is to go to
an exclusive branded outlet, if possible, to get to see a wider range of choices for their
selection, besides being assured that they will not be mis-guided on the issue of quality or
price, and if possible could extract special benefits being offered by manufacturer to its
exclusive outlets. But the court of law may view dual distribution arrangement unfair if it is
proved by independent retailers/ MBOs that they are not treated as equal partner by the
manufacturer in the supply of products or in charging prices for different products or
support in terms of promotion and advertising.

3. Exclusive Dealing

Exclusive dealing refers to when a retailer or wholesaler is ‘tied’ to acquire from a supplier
on the understanding that no other distributor will be selected or receive supplies in a given
area.

 There are two kinds of exclusive dealings

  Under one way exclusive dealing, a manufacturer may agree to sell its certain range of
products exclusively to a certain retailer only in a particular territory. But in this
arrangement the retailer is not bound to do anything particular for the manufacturer, and
that is the reason the arrangement is termed one way. There is nothing illegal in this type of
arrangement.

 Under the two-way exclusive dealing both the retailer and manufacturer agree to work for
each other benefits. In such a case normally the manufacturer agrees to give exclusive right
to sell its products to a retailer in a certain territory and in turn the retailer agrees not to
carry the products of the manufacturer’s main competitors. This kind of arrangement may
come under Monopoly Restrictive Trade Practices Act (MRTP), as the said arrangement
violates the free competitive spirit and may favour a particular brand to grab largest share of
the market which may lead to unfair practices

4. Tying Agreements

Under the tying agreement a retailer may be asked by a manufacturer of a well-known

brand to also keep its weak branded products in order to receive supplies of its popular
brand. Some multi-national brands with popular line of well-established products generally
ask their retailers to also keep their newly launched brands thus, trying to acquire certain
percentage of shelf space for their newly launched brands, thereby helping the brand to get
the required exposure. Tying arrangement may not be legal if such arrangements are found
to be detrimental to free competition.

Franchise agreements are also a kind of tying agreement whereby the retailer is asked to
keep exclusively the complete range of manufacturer’s product line, as well as buy all raw
material and supplies from the franchisor only.

This type of arrangement is seen with fast food chains and bottlers of cold-drinks, who are
asked to buy all supplies from the franchisor or its appointed suppliers. This arrangement is
considered legal if it is meant to control quality of the finished product.

II. On Competitor Relations

 The survival and success of retailers depend on the level of competition, but the competitive
practices are very often determined and constrained by rules and regulations, which try to
maintain healthy competition and protect customers from deceptive business claims.

1. Pricing

Horizontal price fixing occurs when two or more retail competitors agree to sell their
products for the same price, or according to some set formula.

Such a practice is considered illegal by law. It is illegal for competitors to enter into any
agreements for raising, stabilizing or otherwise affecting prices.

2. Promotion

A retailer trying to harm competitors by attracting customers through false claims, either verbally or
symbolically, can be said to be violating the law as per the Consumer Protection Act, 1986. But to
claim such a suit, the competitor needs to provide evidence of the damage caused.

1. Deceitful Diversion of Patronage

Under this if a retailer makes wrong claim or publishes falsehood about its competitor in
order to divert competitor’s patrons then the retailer is said to be indulging in deceitful
diversion of patronage.

When a retailer purchases certain fashionable merchandise at discounted prices and then
removes the existing labels and attaches a designer label is called palming off. This is another
form of deceitful diversion of patronage due to deception of source of origin. The designer
label if it is a registered trade mark then can initiate infringement action against the retailer.

3. Trademarks

Retailers can register their store names, logos and private labels through trade mark
registration laws. But it is the responsibility of the retailer to keep an eye on the market to
check whether its trademarks are being used by anyone else.Such infringements are
punishable offence. New retailers use trademark search teams to check whether the brand
name or logo that they plan to use already exists.

Federal authorities are also checking if the trademark laws are being violated when fake
products are auctioned on the internet.

III. On Consumer Relations

Consumers today, are wary of tantalizing offers from retailers. They are intelligent enough to
differentiate between genuine offers and fake sales tactics. Moreover, the law is actively
making rules to safeguard the interests of the consumers.

1. Pricing

Pricing rules are concerned with a retailer’s deceptive and predatory pricing practices:
  Deceptive Pricing: Advertising incorrect prices to attract customers in the store, and later
adding on some hidden charges to the price advertised, or terming the product as
unavailable, comes under deceptive pricing.

 Predatory Pricing: Predatory Pricing occurs when a dominant firm sells products below cost
for a long period of time to drive away competitors from the market.

Under the predatory pricing policy large stores sell items at very low prices so as to reduce
competition – by way of eliminating small retailers who cannot afford to sell goods below a
certain price, forcing such retailers to go out of business.

Price Advertising: As per laws, misleading advertising on prices of items is prohibited. For
example, a retailer cannot claim to offer lower prices than a former price of a certain item, if the
said item has not been actually offered for sale at a given price for a substantial period of time
and if the said price had not been offered in recent times.

2. Promotion

Unlawful promotional activities constitute deceptive advertising and deceptive sales practices.

Deceptive Advertising: The retailer can easily be held responsible for material claims if the
advertising is found misleading in nature, that is, it is found to be making false claims about the look
or taste of the ingredients, or the uses and benefits of buying it.

When a retailer makes a false claim or misleads customers by making misleading advertisement
about the physical features of the product, or its benefits or the usage of the product then this is
termed as deceptive advertising

Deceptive Sale Practices: Several kinds of sales practices are considered illegal.

• Omitting key facts in advertisements or in promotions.

• Using deceptive credit contracts.

• Superficial discounting.

• Deceptive advertising, also known as false or misleading advertising, can be defined as a

message that omits information that is important in influencing a consumer’s buying
behavior and is likely to mislead consumers acting “reasonably.” It is important to be able to
distinct what is being done intentionally or mistakenly by advertisers.

• Under the federal laws it is necessary for the company to reveal its credit terms so that the
consumer is able to make meaningful comparisons among the different credit terms
available to him/her for the same product from different retailers/suppliers.

• For example the retailer may declare a selling price for a durable item (such as AC, Fridge,
TVs etc.) as very low but will charge high finance fees for installment payments hidden in the
EMIs (equated monthly payments).
 • In order to ensure customers are not deceived, it has been made necessary under Federal
laws to reveal important details by the retailers as follows:

• Total amount to be financed if bought under installment payment method;

• Cash price of the product;

• Important information on early repayments, and charges applicable for the same,
number of installments, due dates, etc.

• Disclosure on any other terms like late payment charges, repair charges, insurance,
etc.

Bait and Switch Advertising:

This is an illegal practice, whereby the retailer advertises very low prices for certain items in
order to lure the consumers to the retail store. Once the consumer is inside the store or
contacts the retailer over the toll-free number is being told that the said item is out of stock
or is of inferior quality and is being offered a substitute at higher prices than the advertised
price for the said item. The intention of the retailer is not to sell the concerned items at the
advertised price

3. Product

A retailer selling any kind of merchandise in his stores must provide information to the
customers about its safety and capability to serve their needs. Retailer needs to be careful
about not only consumer safety but also to ensure that the product purchased will perform
as per the promise made or as per the expected performance criteria for a given product.

The three areas of law viz. product safety, product liability, and product warranties that have
impact on retailers’ decision about the product to be kept in the store, and necessary
precautions to be taken at the time of selling the product

1. Warranty related Laws

Under the warranty laws retailer or manufacturer of the concerned product is responsible
for product performance as well as safety of the product. Though normally consumers may
file suit against the manufacturer of the product for warranty related issues, the retailer
cannot absolve itself from the issue, as the retailer is also responsible for merchantability
and fitness of the product. There could be two types of warranties

i. Expressed Warranties: These are the warranties that result from negotiation between the
consumer and the retailer, or manufacturer of the concerned product; or these are based on
standard terms of warranty as offered by manufacturers of such products. Generally
expressed warranties are in writing. Such warranties may cover only one aspect of
performance or may cover all important aspects of product performance.

For example a seller of Air conditioner may say three year warranty for all technical faults
including motor, and seven year warranty for the performance of the motor. So the
 manufacturer or retailer is guaranteeing the consumer that it will be responsible for all
aspects of performance of the machine for next three years, while it will be responsible for
seven years for the performance of the AC motor.

Expressed warranties happen even if the same is not in writing and the words warranty or
guarantee are not used. For example if a sales person assures the customer that the product
would not fail for next three years, then the expressed warranty has been created.

ii. Implied Warranties: Implied warranties are not given in writing or expressed by the retailer
but are understood and taken for granted based on the custom, norms or as per reasonable
expectations.

There are two types of implied warranties, a) Implied warranty of merchantability, and b) Implied
warranty of fitness for a certain purpose.

 All retailers who are involved in sale of merchandise makes an implied warranty of
merchantability. The word merchantability itself implies the fitness of the merchandise for
normal use for which such merchandise are intended for. For example, the retailer cannot
pass on the responsibility to supplier or manufacturer of apparel if the apparel gets torned
off during the first normal wash as explained in the wash-care label of such merchandise or
loses its colour. It will be the responsibility of the retailer to give a replacement of the
apparel of similar design or of the same value.

 The implied warranty of fitness for a particular purpose occurs when the customer makes a
purchase of a certain item for specific use on expert advice of the retailer. For example if the
customer approaches the retailer for a blanket that will maintain warmth during winter
season in a temperature of -2 degree Celsius, and the retailer suggest a particular brand of
blanket for the same purpose then insuch cases the retailer is providing an implied warranty
of product fitness for a given purpose and cannot ignore its responsibility in case the
customer returns the product with dissatisfaction.

 Generally it is expected of the retailer to provide prospective customers with the written
terms of the warranty for review prior to actual sale of the product. Many retailers may
conspicuously display warranties for high priced items close to the product display or may
put a sign near product display advising customers about availability of warranties for
perusal prior to actual sale of the product.

2. Safety related Laws

Retailers generally as a norm are expected to take all precautions while selecting the
product and its suppliers or manufacturers with respect to the product safety norms.
Though retailers may think that they are only sellers of the products or items and hence are
not responsible for safety of products, are totally wrong.

For example on all Toys for small children it is mentioned that the product is non-toxic and
safe for the concerned age-group. Similarly earlier the plastic bag packaging were disallowed
for children items as it was found to be hazardous for children in case they chew it or put it
over their head covering their face.
 Retailers will be also party to the product safety norms if unknowingly or knowingly sell
food, health products or medicines that have crossed the expiry dates as marked on the
product packaging or do not conform to health standards.

Few years back there was a case in US court of law where a consumer of McDonald claimed
that due to regular consumption of burgers prepared by McDonald fast food joint his health
suffered and caused obesity and other obesity related health problems. Thus, store
managers need to be fully aware of laws related to product safety that needs to be taken
care of while selling certain types of products.

3. Product Liability related Laws

Under the product liability law the retailer or the manufacturer of a product should foresee
the probable misuse of the product and should fore-warn the customers about the same.
For example all manufacturers of mobile, lap-tops, desk-tops, and similar such electronic
products warn customers from keeping the product close to fire or in very hot temperature
environment. Similarly for children related toys/products the retailers need to be careful
about their misuse, such as chewing by the children. Few years back Barbie dolls
manufactured in China were banned by Mattel Inc. when it was noticed that the colours
used for dolls were toxic in nature.

Thus, product liability laws may put both the retailer and manufacturer in to trouble if the
foreseeability of the misuse of the product is not taken into account and accordingly warned about
to the customer.

4. Selling

The ethical questions in selling merchandise to customers are related toproducts that are
being showcased and sold in retail stores as well as the selling practices adopted by the
salespersons in the store.

 Products: In some cases, the very nature of the product being sold would pose an unethical
question to the retailer. Some questions are: whether to sell wine near a place of worship,
whether to sell cigarettes near a school etc.

 Selling Practices: Usually, retailers pay a commission to sales staff in proportion to the
merchandise they sell. This practice motivates the sales personnel to push the wrong
products to the customer, even if they do not meet the customer’s needs. Even if the
salespersons are not giving any false information to the customers, they are concealing
some information. Example, Mc Donald’s beef fries controversy.

2. Ethical Behaviour in Merchandise Selling

In the Indian scenario the retailers need to be careful about the way and the type of
merchandise sold.

i. Product Sold: As we all know there are certain products which cannot be sold to
customers of certain age or on certain days. For example in India selling cigarettes to
 customers of below 18 years age-group is banned by law, still certain restaurants,
panwallahs, and small retail outlets may break this rule.

Also the wine and alcohol retailers are banned from selling alcohol/beers to clientele below
18 years age group. There is also a legal requirement that sale of alcohol drinks are banned
on national days like 15th August, 26th January, Gandhi Jayanti, etc., hence, retailers of
alcohol sellers need to follow this rule, but still many retailers go against their ethics and sell
alcohol drinks to customers below 18 years age-group as well as on the concerned national
days.

Retailers also need to deal with the ethics of selling non spurious products and only good
quality products.

ii. Product Selling Process:

Many retailers also need to deal with the ethical process of selling, whereby it will not allow
its sales person to make wrong sales pitch. Retailers, particularly those who pay major
portion of salary in the form of sales commission as a percentage of sales value of the
product. In such cases the sales staffs are more concerned with making income from making
sales to customers by hook or crook, which may drive the sales staff from making wrong or
false statements about the product being sold. Thus, imbibing the sales staff with good
selling ethics and ensuring that sales staffs are discouraged from making wrong/ false
statements will help the retailer in the long term with the goodwill of happy customers.

There are other ethical practice issues the retailer may be required to deal with, such as
slotting fees and under the table or bribe. Under the slotting fees some vendors and
manufacturers may try to influence the front staff of their respective product counters, by
paying special cash incentives to the staff for placing their products in slots on the shelves or
product racks that are at the customer eye-level, which can be easily noticed by the
customers, thereby influencing their product sale.

Some manufacturers/vendors may also pay covert commissions or bribes to the retailer’s
front staff for promoting their respective brands/products. Some manufacturing
companies/vendors may pay bribe to the retailer’s buyers for procurement of their
products, even sometime of doubtful quality.

Consumerism: The efforts made by the government and business organizations to

protect the basic rights of the consumer is referred to as “consumerism”. The

Consumer’s basic rights, as framed by the Consumer Guidance Society of India,

are as follows:

• The right to satisfaction of basic needs.

• The right to safety.

• The right to be informed.

 • The right to choose.

• The right to be heard.

• The right to redress.

• The right to consumer education.

• The right to a healthy environment.

• The highly informed consumers patronize those firms that give utmost importance to them
and their interests.

• IV. On Employee Relations

• The way employers treat their employees is governed by certain laws, which are common to
all kinds of establishments in the country.

• The Minimum Wages Act, 1948, addresses the primary concern of workers by setting
minimum wages for employees- those working on temporary basis or daily wages.

• Untouchability, a legal and moral offence which is still committed in many places of some
states in India, is a problem that affects the unorganized retailers. The Protection of Civil
Rights Act, 1955, prescribes “punishment for the preaching and practice of untouchability
for the enforcement of any disability arising there from and for matters connected
therewith”.

• The standards for health and safety of workers in various establishments are set by 1987
amendment of the Factories Act.

• Child Labour Prohibition and Regulation Act, 1986, prohibits employers from employing
children below 14 years of age.

• The Disabilities Act, 1995, aims at reducing discrimination against people with physical and
mental disabilities while recruiting, so that they can also be provided with equal
employment opportunities.

Ethical Behaviour in Retailer- Employee Relationship

There are some common ethical issues which need to be dealt by the retailer’s employees
which mainly pertains to mis-use of retailer’s asset, job-switching, and employee-theft.

i. Mis-use of Retailer’s Assets:

This is one of the common problems many retailers face. In such cases the employee may
make use of telephones for making long distance calls, or just chit-chatting with friends,
some-times even to the detriment of customer service. Some employees may take in-
between long breaks to do their personal work without taking due permission of their
seniors. Many store managers also make mis-use of internet facility for web-surfing and
doing job-search and emailing their CVs to different Job-sites.
 All such mis-uses are unethical and also affect retailer’s performance due to low customer
service.

ii. Job Switching:

In this cases the employee who switches job may pass on valuable information about the
retailer’s customer data bases, or may share confidential information about the product
range, its pricing policy, cost of purchase, sources of purchase, purchasing terms, and other
valuable information. Besides, this valuable information, the retailer who has spent
substantial resources and time in training of employees is at a loss, when the employee
switches the job, particularly when the employee joins retailer’s close competitor.

Similarly, it needs to be understood by the retailer that when it replaces its old employee
with a young one the older employee does feels the pain.

iii. Employee Theft:

This is another important issue the retailer has to deal with. Employee theft is most common
in departmental stores, supermarkets, and discount stores, where the size of the store,
number of employees, sales turnover makes the security job difficult. Employees being
aware of the internal working and the operational loopholes are easily able to skip the
security checks including the in-store cameras. It is only through proper training, motivation,
incentive schemes, and building of ethical values the retailer could bring down the employee
theft.

For example, Wal-Mart through provision of bonus to its employee for achieving profit goals
as well as keeping shrinkage percentage within the pre-decided limit is able to ward off
employee theft to a large extent

Ethical problems of retail sales personnel

 Assuming Social Responsibility

Retailers make social contributions for several reasons, and not always

in anticipation of some kind of benefit for the organization. These may

be:

• The urge to serve the society.

• Appreciation of the credible work done by the charities.

• Wish to help people struck by a calamity.

• Desire to sponsor events in the performing arts.

• Urge to give donations to government programs

• A desire to build positive image in the society and the corporate world.

Corporate social responsibility activities of grocery stores

 4. Retail Seasons
What Is Seasonality?

• Seasonality is a characteristic of a time series in which the data experiences regular and
predictable changes that recur every calendar year. Any predictable fluctuation or pattern
that recurs or repeats over a one-year period is said to be seasonal.
 Seasonal effects are different from cyclical effects, as seasonal cycles are observed within
one calendar year, while cyclical effects, such as boosted sales due to low unemployment
rates, can span time periods shorter or longer than one calendar year.

Seasonality involves predictable and uncontrollable variations in demand over time. The
predictability usually follows from a recurrent pattern associated with events or activities.
The precise pattern and the relevant time interval, however, can vary dramatically from
industry to industry. Seasonal patterns can be associated with, for example, peak demand
that lasts for hours, days, weeks, months, years or some combination of time periods. These
demand peaks can recur following almost any predictable and uncontrollable pattern.

• Health clubs, for example, experience hourly seasonal patterns of demand, peaking in the
evening and early morning when many members are not working. Motion picture exhibitors
can experience daily seasonal patterns in demand, finding that most moviegoers visit on
weekends. Airlines experience monthly seasonality with demand-peaking during the
summer season. The Olympic games cause shifts in demand in sports related industries
every four years. Still another example is restaurants who experience multiple seasonal
patterns in demand. The restaurant industry, for example, experiences hourly seasonal
patterns reflecting times of meals: breakfast, lunch and dinner. The restaurant industry
experiences daily seasonal demand with demand peaking on weekends or with holidays .

Understanding Seasonality

 Seasonality refers to periodic fluctuations in certain business areas and cycles that occur
regularly based on a particular season. A season may refer to a calendar season such as
summer or winter, or it may refer to a commercial season such as the holiday season.
Companies that understand the seasonality of their businesses can predict and
time inventories, staffing, and other decisions to coincide with the expected seasonality of
the associated activities, thereby reducing costs and increasing revenue.A business that
experiences higher sales during certain seasons may appear to make significant gains during
peak seasons and significant losses during off-peak seasons.

Importance of Seasonal Marketing

 Changing times requires changed tools and strategies, and seasonal marketing helps
companies to adapt to changes of seasons based on the existing traffic and planning.

 Marketers usually leave no opportunity to build healthy relations with their customers and
in the present era of social media, CRM is gaining unmatched popularity.

 Some of the most prominent advantages of Seasonal marketing are:

1. Increase in Sales

Whenever there are promotions and festivities, buyers go weak and end up purchasing
products in high spirits. Seasonal marketing thus acts as a catalyst to increased sales and
ensures that the cost of marketing is fetched through such an increase.

For example, during Diwali most electronic companies offer large number of deals as its an
auspicious time of festivities. Greeting cards, confectionaries have their maximum sales
around the festive seasons.

2. Showcase of the Product

Marketing is a great tool to display what is available to be offered. So with seasonal

marketing hoardings, there can be a display of the various things that the customers can
purchase and hence it acts as informational campaign too.

For example, most companies near the year closing distribute their respective calendars
which showcase their products along with greetings to the customers. Or Halloween is the
only time of the season when such costumes can be displayed, promoted and sold. Dastkar
Winter Crafts Mela is another example of showcase and display of hand woven crafts
products, an initiative of Delhi Tourism.

3. Thanking the Loyal Customers

Loyalty is most precious to any company for ensuring continuous and future sales, so most
marketers take this opportunity to thank these buyers in form of different marketing
techniques. For example, during Dhanteras most jewellers provide a gold coin free or
provide discounts on making charges.

4. Engage and Promote Promotion

 Seasonal marketing gives companies and it sales just the right push and also engages their
customers in the purchase process of the product. For example, Valentine’s Day involves
gifts for partners. Valentine’s Day promotions promotes purchases for and by loved ones
and creates an emotional value of the same. This not only promotes the product or gifts but
also engages the customers. Or whenever there are movie releases around a particular
season, popular Bollywood stars make their movies release on Eid or patriotic films are
released near Independence or Republic Day.

5. Automatic Buying Pressure

Winters is a season of heaters, shawls and knits, similarly summers is the season of cottons,
linens and Air conditioners. Festivals are happy occasions and usually involves excessive
spending for the purpose of shopping for personal use or gifting. In India there is a trend of
Diwali parties, abroad there is a trend of New Year and Christmas parties. Usually parents
tend to be under an automatic pressure to buy in such festive seasons. When the
temperatures drops.

6. Spontaneous Purchases

Recently ALDO India had launched a winter special promotional scheme by offering a 1+1
offer on its Bags, Footwear and accessories. This offer was seen in most major malls across
India and laid to spontaneous purchases in huge numbers from the footfall in the mall by
people who spontaneously purchased these items. Such kind of promotions lead to a varied
unplanned purchases and hence increased sales to the company as most purchasers are deal
breakers and welcome such marketing agendas with open arms for personal benefits.

The most common seasons for marketing universally are :

 New Year’s, Christmas, Easter, Mother’s Day, Valentine’s Day, Halloween.

 In India, domestic festivals take a place such as Diwali, Holi, Raksha Bandhan, Ganesh
Chaturthi, Eid and then there are regional festivals such as Pongal, Baisakhi, Durga Puja etc.

 Indians thus get the advantage of being a diverse nation which provides great opportunity
to marketers of domestic and MNCs.

 Some companies have come up with auspicious buying such as AkshayaTritya for Jewellery,
Dhanteras for utensils, etc. It’s very necessary to understand web traffic seasonality to be
crystal clear and effective. Web traffic seasonality is the predictable, yearly upward and
downward trends in the search results that continually fluctuates in annual cycle.

 Hence, seasonal marketing requires homework and planning actions in advance to be ready
for the upcoming season.

Common Seasons of Marketing and Marketing Strategies for Them

 New Year’s
 New year usually symbolises new beginnings, and is a great opportunity to promote new
things as people indulge in new year resolutions.

Some of the most common resolutions are being healthy and fit and weight reductions.
Hence January can be a good season to promote Gym memberships, sporty wear and
healthy diet oriented food products such as oats, or low fat milk etc.

 Valentine’s Day

Valentine’s Day is a day where people take an opportunity to shower their loved ones with
surprises and gifts. Restaurants, florists, greeting card companies usually take this day a
massive sales day. Marketing of this day is styled in such a fashion that love is made the
theme to promote their product or service.

Archies, Hallmark have maximum sales around this season. Also certain companies promote
couple offers on things like wallets, perfumes and watches.

 Mother’s Day

Everybody is emotional about their mother and this day provides a great opportunity for
everyone to express their gratitude to their mother. It is a great retail holiday and helps
marketers plan their promotions to things that every mother or lady may like. Jewellery,
handbags, and clothes see a boom. Special discounts can be offered through posting a selfie
with the mother, or getting her along to the retail store.

 Summer vacations

Indian schools or universities see a break during summer months of May to June, this is
usually called as the vacation season. Holiday websites and Travel agents seldom capitalise
on this time with the best marketing strategies, also certain experience based events such as
carnivals, food or youth festival see a great footfall due to summer break.

 Independence Day

o This is a great opportunity to promote the national flag, jerseys or movies related to
patriotism. Some companies also offer discounts based on the Date or the number of years
of independence of the nation such as for clothes, jewellery, appliances etc.

Some Famous Seasonal Marketing Campaigns

 Some of the most famous seasonal marketing campaigns are:

  Starbucks Red cups The red cups of Starbucks marks the arrival of its festive winter range
such as winter cakes, ginger bread latte.

  “12 Days of Donuts” By Krispy Kreme With special packaging, promotional videos and gift
coupons, this seasonal marketing campaign was quite a hit.
   “Wishes Across America” By Macy’s This campaign launched in 2016 was in tie up with
Make-A-Wish foundation, involved writing to Santa Clause for the Christmas season. Same
concept was used by Hamleys in Dec 2019 in India in Mall of India Mall.

Seasonality differs for each online company

• Taking into account that each ecommerce store will likely sell a specific type of product,
spikes and slumps in sales are going to happen at different points of the year.

• For instance, online flower shops and candy stores will likely see a major jump in sales
during Valentine's Day and Mother's Day, but they might not see much action during the
Fourth of July.

Whatever the ecommerce store specializes in, it needs to figure out when their seasonal slumps
occur so that they can effectively figure out the cause. That's the first step in finding a solution
and making certain that holidays aren't the only time your ecommerce store sees business

Special Considerations

1. Seasonality and Temporary Workers

o Large retailers, including e-retail giant Amazon, may hire temporary workers to respond to
higher consumer demand associated with the holiday season. In 2018, the company said it
would hire approximately 100,000 employees to help offset the increased activity expected
in stores. Meanwhile, retailer Target said it would hire 120,000 for the same holiday period.

o Like most retailers, these decisions were made by examining traffic patterns from previous
holiday seasons and using that information to predict what may be expected in the coming
season. Once the season is over, many temporary employees are no longer needed based on
the post-season traffic expectations.

MEASUREMENT OF SEASONALITY

The measurement of seasonality in any phenomenon is achieved through time series which is
defined as the numerical record or values of the given variable at successive intervals of time. A time
series usually consists of the following four components:

1) Trend - It is the general tendency of the series to gradually increase or decrease over a period of
time. For example the international tourist arrivals in India were increasing steadily over the
years from a low base during 1951.

2) Cyclic Movement - It represents oscillations of greater or lesser regularity about the trend. The
oscillation or booms and depressions occur at large intervals of time.

3) Seasonal Movement - It represents the fluctuations in the series which occur at regular intervals
of time, not exceeding an year. For example, the international tourist arrivals are usually the highest
during December and the lowest during May in India.

4) Random Component or Irregular Fluctuations - The fluctuations which are not governed by any
law or regularity and are purely haphazard are referred to as random component.
To everything there is a season, goes the saying.

 Seasonal change is a fact of life for most human beings, and easily visible from calendars and
traditions.

 Seasons affect the clothes we wear, what we eat and drink, what sports we practice, and
what social rites we engage in.

 Seasonality can be said to affect more or less any and every industry, as all products and
services experience fluctuations in demand.

SEASONALITY VERSUS SEASONS

 “Seasonality” and “seasons” may refer to different concepts and time frames .

 Seasonality involves predictable and uncontrollable variations in demand over time. The
concept of seasonality can refer to a certain period of time – hours, days, weeks, months, or
some combination of these frames.

 Multiple seasonal patterns can co-exist: for example the food and beverage retailers are
simultaneously affected by holiday celebrations, weather phenomena and time of day.

The historic cause for seasonality has been the transition between the four divisions of the
year: Summer, Fall, Winter and Spring.

 These seasons were predictable as each begins at an equinox or solstice. The seasons
brought specific climatic changes and dramatic effects on industries such as agriculture.

 Given that many early economies were primarily agricultural, and some continue to be so
today, seasonality played and continues to play an important role in many economies.

 As seasons approach, some products or services may become unavailable or available only
at lower quality levels.

 For example, fruits and vegetables may become unavailable and the quality of certain fish,
Lobster and other seafood may vary from season to season. Moreover, the types of
customers may change. A hotel in Hill Station may be, for example, the destination for
families with children during the summer and a destination for business travelers or
conventions during the winter.

 When seasons are related to natural events, they are usually predictable and usually readily
observable. For example, the sales of many sporting goods that are dependent on the
weather, such as baseballs, gloves, bats and helmets, parallel the season for the associated
sport.

YEARLY SEASONS

A natural cause of seasonality is the division of the year into four parts:

1. Winter
 2. Spring

3. Summer, and,

4. Fall.

SEASONS OF FASHION RETAIL INDUSTRY

Traditionally, there were only two seasons in the fashion retail year. Many retailers still follow the
two seasons:

Spring Summer- includes the warmer seasons. The collections run from 

February to June. July, at the end of the season, is the biggest sale month.

Autumn (or Fall) Winter- includes the cooler months. The collections run

From August to December and January is the big Sale month.

Seasonal basis of Fashion Collections:

• The two main seasons for fashion collections. They are Spring/Summer and Autumn/Winter.
These two collections are showcased at the major fashion weeks around the world, six
months prior to when they appear in store for the benefit of Buyers and Fashion Press.
Buyers need time purchase the pieces they would like to stock at their respective retailers
and the brand needs time to produce this stock. Even with the immediacy of online media,
traditional media including fashion magazines such as;

• Vogue and Harper's Bazaar have long lead times (three to four months), so the Journalists
and Editors at these publications need access to imagery from the fashion weeks to include
in the editions due out two months prior to the upcoming season.

Fashion Calendar

• January - Autumn/Winter MENS Fashion Weeks Ready-To-Wear collections in New York,

London, Milan and Paris

• January - Spring/Summer WOMENS Haute Couture Shows in Paris

• February – Autumn/Winter WOMENS Fashion Weeks Ready-To-Wear collections New

York, London, Milan and Paris

• June - Resort/Cruise WOMENS collection showings Paris

• June – Spring/Summer MENS Fashion Weeks Ready-To-Wear collections in New York,

London, Milan and Paris

• July - Autumn/Winter WOMENS Haute Couture Shows in Paris

 • September - Spring/Summer WOMENS Fashion Weeks Ready-To-Wear collections in New
York, London, Milan and Paris

• December - Pre-Fall collection showings

EVOLUTION OF SEASONS IN RETAIL

From the traditional two seasons – spring- summer and autumn-winter –

the number of seasons have grown as fashion brands were discovered or invented.

Many organizations have FOUR major seasons in a year:

• Spring

• Summer

• Autumn

• Winter

Sub-seasons create and satisfy distinct demand in specific time periods.

For many organizations, the number of “seasons” has grown to 10-12 now including transitions and
“promo season” series.

Holidays create extreme seasonality –Many retailers have peak sales, for example confectionaries
and greeting cards.

Winter holiday season is a late-year season that surrounds Christmas, as well as other holidays
during the November – early January timeframe (e.g. New Year, Lohri).

It is generally regarded as heavily consumption-linked.

EXAMPLES OF SEASONAL PROMOTIONS

• Events such as the “Sabse Sasta Din” (“the cheapest day”) on the 26th January (India’s
Republic Day) created by Big Bazaar

qualify as seasons, due to huge sales upsurge during the event.

• Many retailers and brands have sized the opportunity of citizens’ awakening interest in
voting by offering up to 20% discounts to those who have voted.

• Other occasions include Woman’s Day, Independence Day, Father’s Day, Mother’s Day,
Daughter’s Day, Valentine Day etc.

• Retailers attempt to fill in the season-gaps by stretching seasonal events:

Diwali items are offered as early as in the beginning of September, right after Raksha
Bandhan promotions (another seasonal event), and Christmas marketing .
 SEASONAL INFLUENCES IN CONSUMER BUYING BEHAVIOR

Seasons live strong in people’s minds and produce powerful retail

Marketing communications elements: Santa Claus, candles and diyas are easily
recognizable signs that guide consumption.

SEASONALITY IN RETAIL SALES

• Seasonality of demand has been a concern in the retailing business.

• The objective of most retailers is to maximize sales with the highest possible margin
throughout the year.

• Retailers try to adopt innovative ideas to smoothen the sales throughout the year. Selling
Gift cards during charismas season is designed to generate sales in the month of January
and onwards. A few regular techniques are:

 Off season promotions

 Selling seasonal products, and ,

 Arranging special events/festivals

Use Seasonal Marketing Campaign Ideas

Adjusting marketing messages to reflect changing tastes, attitudes and buying habits keeps
campaigns fresh. They also have a higher potential to engage more customers than putting out the
same messages year round. Use familiar imagery to invoke the best of each season:

Spring: Flowers, budding trees, baby animals and Easter themes

Summer: Beaches, camping, picnics and July Fourth

Fall: Changing leaves, pumpkins and Thanksgiving

Winter: Snow sports, crackling fires, family holidays and Christmas

Re-branding for the seasons

While most retailers are already aware of the effects of seasonal influences on consumer behaviour,
there are some stores and items that struggle to re-brand during these transitioning periods.

• Businesses that carry only season-specific products such as ice cream, swimwear or certain
sporting equipment may have to work hard to keep consumers visiting their store.

• Strategies can involve offering attractive sales during the ‘off-season’, or stocking alternative
products that complement the season.
• An example of this could be an ice cream parlour selling warm desserts, such as apple
crumble or chocolate brownies – served with a scoop of ice cream, of course.

FACTORS AFFECTING SEASONALITY

• Culture

• Customs &Traditions

• Family Togetherness

• Availability of disposable income

• Climate

• Price deals/ discounts

1. Culture and festivals have a huge impact on the Indian market.

• Festivals constitute the main buying period across India. Shopping malls and companies
marketing durable products offer heavy discounts during the festive season.

An article written by Mukherjee in Economic Times (2012) points out that “Indian consumer
durable industry starts building their product pipeline and increases production well in
advance for the " festive season, which starts with Onam in Kerala in August and continues
till Diwali in November. Festival Buying Festivals are cultural celebrations and have always
occupied a special place in societies.

There is a tremendous rise in the influence of religion in the public sphere in recent times.
An increase in the number of religious institutions and the large-scale participation of people
in religious festivals like Makar Sankranti, Pongal, Sabarimala, Ganga Sagar Mela, Sangam
Mela, etc., are also indications of the greater hold of religion on society.Festival season is a
time for upgradation and renewal, and also an occasion to uphold traditional Indian values.

Festival is a time to have good deals. Most markets including consumer durable goods
markets are characterized by sales, that were temporary prices decreases employed, to
increase quantity sold

• In India, shopping malls and companies marketing durable products offer heavy discounts
during the festive season. (Ramanuj Majumdar 2010). Promotions include price reductions,
coupons, samples, games. Promotions significantly increase sales and that advertised
promotions increase store traffic.

According to Panasonic India Managing Director Manish Sharma, the reason for this being
that the Indian consumers consider the festive season as a very auspicious time for the
purchase of new goods for home and it links very closely to the country's culture. With the
onset of the festive season, vibrancy had been felt in the market.
2. Custom & Tradition-

• Buying new things is a festival ritual Festivals are essentially a part of Indian culture and are
assessed as vigorous ritual occasions. The goods, which are visible part of culture, construct
the way of our life. In human systems ritual behavior is culturally as well as genetically
inherited.

• An article written in Times, describes that during festivals like Akshaya Tritiya in April and
Diwali in November, when buying gold is a ritual in India, there is an almost 500% increase in
footfall at stores across the country.

• Festivals are auspicious time for purchase

• Shashank Srivastava, Chief General Manager Marketing at Maruti Suzuki India, Advertising
India opined that the inauspicious time in the calendar should be the real worry for Indian
marketers.

• Logically the promotions should be done in the inauspicious period, but irrespective of the
offers, consumers who have religious sentiments would not buy during inauspicious period.

• The need to go all out during the festival season is because of competitive pressures as it is
considered as auspicious time for purchase.

• Akshaya Tritiya was an alien festival to Kerala, but now it is considered an auspicious time
not just to buy gold, but to buy anything. In a study it was found that, buying gold has been
subsumed as auspicious during the religious festivals in India.

Gold has been mainly acquired all over India for the Diwali (around October-November)
festival. Regional festivals are also very important occasions for the purchase of gold, for
example Onam and Pongal in the South, and Durga Pooja in the East (Jeni Branson, 2014).

In India, the festivals are considered to bring with it good luck and therefore, 'auspicious.'

3. Family Togetherness-

• Festival shopping is an occasion of family togetherness

• People perceive the festival seasons as a time when family members are brought together.
Hence the festival served as a medium through which family relationships could be
enhanced or enriched.

• This enhancement is often facilitated by long drives in an automobile, visiting religious

places, taking part in rituals or buying something, which is very important in the family
because family members are physically put together.

4. Availability of disposable income

 A study conducted on the seasonal effects on Indian stock market reveals that most of the
jobs in India pay a bonus to employees in the months of November or December depending
on the company. These jobs include government jobs, company jobs, and even domestic or
labour intensive jobs. Even the poorest people in the country save their meager earnings all
year to celebrate festivals.

This means that consumers have extra cash in hand during this period. Due to high cash in
hand and the festive season, consumer sales shoot up significantly.

5. Price deals/ discount

• Influenced by increased promotional campaigns during festivals. In a study conducted by the

researcher, it was revealed that the entire promotional plans of consumer durable
companies are revolving around the major festivals in the respective region.

It was also noted that maximum advertisements were launched in the month of August and
then September and July, during “ONAM” season. The promotion campaign started in July,
i.e. one month ahead of Onam and ended in September one month after Onam.

• The second highest number of advertisements was launched in the month of December and
then January. It was due to Christmas and New Year promotions of the industry. The third
highest was in the month of May and it was due to Akshya Thritheeya.