Retail Profiling

Typically products are found in more than one format

Ex : Madura garments

1.Exclusive Madura garments showroom called Planet Fashion and Trouser town
2.Showrooms : In addition to these, there are stores which stock only Allen Solly and
Louise Philippe - Franchisee stores
3.Retail Stores : Madura garments are sold in multi brand outlets
4.Internet channel : Through sites such as rediff.com, indiainfo.com and
indiatimes.com. In addition to these, there is a site for e-tailoring set up especially for
Allensolly, Van Hesuen AND Louis Philippe

30 TO 35 % of company sales come through exclusive outlets

65% through multi brand outlets (MBOs)
 Factors affecting the consumer choice of Store

Average score
Brand 6.1
Advertising 4.1
Quality 5.6
Availability 4.7
Display 5.2
Price 4.2
Available sizes 5.7
1- least important 10 most important
 Retail Profiling

As consumers rate different formats differently on these parameters, a detailed retail

profile is necessary for the company to identify types of retailer outlets suitable for
marketing their products to target segment

Retailing profile will help identify the type of outlet suited to target segment and also
understand the extent of service the company has to provide to maximize retailer and
consumer satisfaction

The process of developing retails of different formats selling the same product would
require an understanding of :
1.Types of outlets that sell the product ( for ex lubricant, the outlets could be petrol
pumps, service stations, and outlets selling auto accessories )
2.The type of customers they cater to and the expectations of the consumer
3.The behavior of the retailer with respect to displays, inventory, and so on
 Retail Profiling

Retail profiling would be developed based on an understanding of the consumers

behavior and its impact on
1. Cost of stock out : cumulative loss to the company/brand caused by loss of sales,
profits and goodwill due to non availability of material when consumers wanted
it
2. Bargaining power of the outlet : the share of economic surplus that the player
can demand. Greater retailer power reduces manufacturers share of the total
channel margins.
Higher cost of stock out could also convert into a higher bargaining power for the
retailer
A brand having a higher pull would have a higher bargaining power for the
manufacturer and hence retailer would have to maintain the brand at the terms
specified by the company
Conversely a brand having low popularity will have higher bargaining power for the
retailer because sales may depend on push by retailer
 Brand Decision Process

The brand decision process influences the :

- Time utility ( the increased satisfaction through making products available at the
time consumers want them )
- The place utility ( the increased usefulness created by marketing thorough making a
product available the place consumers want )

When the decision process is governed by low uncertainty with untried brands ( as in
the case of picking, impulse, and variety seeking), the time period between the brand
decision and purchase is very short and cannot be extended
Under these situations companies should ensure that the product is available when the
consumer wants them
In other words the stock at individual outlets should be as per demand
If the stock is unavailable, then the consumer would purchase another brand
Therefore the cost of stock for the company is high
The bargaining power of the retailer is high as he could push any brand
 Brand Decision Process

When the decision process is governed by high uncertainty with untried brands ( as in
the case of habit, subcontracted and extended problem solving processes ), the time
period between the brand decision and purchase can be extended
Here the consumer would be willing to wait for the product
In such situations the company need not maintain stocked at the retail outlet as per
demand

The decision process also influences the place utility

When the uncertainty untried Brands is low, the consumer looks for outlets which are
convenient
When it is high, the consumer would be willing to travel for the brand
 Brand Decision Process

Time Utility and Place utility for different decision processes

Decision process Uncertainty of Place utility Time utility

of untried brands

Picking Low Nearest Cannot wait

Impulse Low Nearest, but a Need to purchase
Variety seeking Low multibrand outlet immediately

Extended problem solving High

Subcontracted High Wiling to travel can wait for the
Habit High to another outlet product
 Store Decision

Store decision is another important decision that the consumer makes as a part of his
purchase decision process
Store decision determines where the purchase would be made from
Studies on consumer behavior have shown that consumers use specific criteria for
selecting retail stores
1. Location
2. Reputation of the store
3. Physical characteristics of the store
4. Products offered
5. Prices charged
6. Store personnel
7. Sales promotions by the store
8. Friends perception of the store
 Relative importance of Store and Brand Decision

After a customer makes a Brand decision and a store decision, he/she would go top the
store to execute the brand decision
Incase the brand is not available, the customer would have the option buying another
product/brand from that store or go to another store to buy the brand decided upon
The decision to go to another store would depend on the relative importance of the
store decision and the brand decision
If the Store decision dominates the Brand decision then the consumer would buy
another Brand from the same store
If Brand decision dominates Store decision the consumer would go to another Store
Another factor which influences the relative strength of the store and brand decisions is
the degree of spurious products available in the market, then the store decision
dominates
If it is large, consumers prefer to purchase from the outlet with a reputation –
guaranteeing the brand, not the brand just by itself
 Competition

The time utility and the place utility for a brand would influence the service provided by
the competition which could also influence the cost of stock out for the company
However this would also depend on the level of uncertainty of untried brands

When it is high, the consumer may wish to visit another shop and so the service levels of
the competitor would not affect demand for the brand

It is low, then the extent of service provided by competition would determine the extent
of service that the company has to provide as the cost of stock out would be high for the
company and the retailer would have a higher bargaining power
Framework for understanding cost of stock out and bargaining
power for a store

Place utility Cost of stock out

Brand decision
Service provided Bargaining
vs. power of the
by competitor outlet
store decision

Time utility Service to be provided by

the company