FINANCIAL MERCHANDISING MANAGEMENT

1. To describe the major aspects of financial merchandise planning and management 

The purpose of financial merchandise management is to stipulate which products are bought by the retailer, when, and in what quantity. Dollar control monitors inventory investment, while unit control relates to the amount of merchandise handled. Financial merchandise management encompasses accounting methods, merchandise forecasts and budgets, unit control, and integrated dollar and unit controls.

2. To explain the cost and retail methods of accounting  

Two accounting techniques for retailers are the cost and retail methods of inventory valuation. Physical and book (perpetual) procedures are possible with each. Physical inventory valuation requires counting merchandise at prescribed times. Book inventory valuation relies on accurate bookkeeping and a smooth flow of data.

The cost method obligates a retailer to have careful records for each item bought or code costs on packages. This must be done to find the exact value of ending inventory at cost. Many firms use LIFO accounting to project that value, which lets them reduce taxes by having a low ending inventory value. In the retail method, closing inventory value is tied to the average relationship between the cost and retail value of merchandise. This more accurately reflects market conditions, but is more complex.

3. To study the merchandise forecasting and budgeting process  

This is a form of dollar control with six stages: designating control units, sales forecasting, inventory-level planning, reduction planning, planning purchases, and planning profit margins. Adjustments require all later stages to be modified.

Control units -- merchandise categories for which data are gathered -- must be narrow enough to isolate problems and opportunities with specific product lines. Sales forecasting may be the key stage in the merchandising and budgeting process. Through inventory-level planning, a firm sets merchandise quantities for specified periods through the basic stock, percentage variation, weeks’ supply, and stock-to-sales methods. Reduction planning estimates expected markdowns, discounts, and stock shortages. Planned purchases are linked to planned sales, reductions, ending inventory, and beginning inventory. Profit margins are related to a retailer’s planned net sales, operating expenses, profit, and reductions.

4. To examine alternative methods of inventory unit control  

A unit control system involves physical units of merchandise. It monitors best-sellers and poor sellers, the quantity of goods on hand, inventory age, reorder time, and so on. A physical inventory unit control system may use visual inspection or a stock counting procedure. A perpetual inventory unit control system keeps a running total of the units handled through recordkeeping entries that adjust for sales, returns, transfers, and so on. A perpetual system can be applied manually, by merchandise tags processed by computers, or by point-of-sale devices. Virtually all larger retailers conduct regular physical inventories, two-thirds use a perpetual inventory system.

5. To integrate dollar and unit merchandising control concepts  

Three aspects of financial inventory control integrate dollar and unit control concepts: stock turnover and gross margin return on investment, when to reorder, and how much to reorder. Stock turnover is the number of times during a period that the average inventory on hand is sold. Gross margin return on investment shows the relationship between the gross margin in dollars (total dollar operating profits) and average inventory investment (at cost). A reorder point calculation – when to reorder – includes the retailer’s usage rate, order lead time, and safety stock. The economic order quantity – how much to reorder – aids a retailer in choosing how big an order to place, based on both ordering and inventory costs.

RETAIL BRANDING

Def : Brand is the product’s essence, its meaning and its direction. It defines its identity in time and space.

Successful Retail Branding starts with:

• 1.      A clear definition of what the retailer stands for
• 2.      An identification of what the customers associate it with
• 3.      When customers think the brand is a reflection of them
• 4.      When the retailer is in the minds of the customer when he think of brand.

Brand

True branding effort

• 1.      Communication that inspires emotional reaction
• 2.      Customer Service
• 3.      How salespersons greet customers
• 4.      How fast product is shipped and delivered
• 5.      Involves every single contact occurring between any product and a human

• Role of Brand
• 1.      Successful Retail Branding ensures Stable long term demands
• 2.      Better margins
• 3.      Differentiation by way of creating long term association
• 4.      Adds value to the product
• 5.      Trust of fulfillment of service expectations
• 6.      Protection from growing competition
• 7.      Image as a company attractive enough to work for
• 8.      Negotiation with suppliers from a position of improved strength

Brand Loyalty

Brand or store loyalty will ensure

• ·         Positive disposal to the brand based on brand loyalty
• ·         Brand preference : Frequent utilization of the store over other stores
• ·         Brand allegiance: Continuous utilization of the store overtime 

Brand loyalty may be expressed for one or more brands

• 1.      Hard core loyalty : Buying one brand all the time
• 2.      Soft core loyalty : Buying a combination of two competing brands
• 3.      Shifting loyalty : Buying preference shifting from one brand to another
• 4.      Switchers: No loyalty to any one brand based on the deal given.

Positioning of brands Determined on the basis of

·         Product usage

·         Price

·         Price

For successful brand positioning Brand Managers should

• ·         Regularly assess the customer’s opinions
• ·         Clearly identify the target
• ·         Plan the brand
• ·         Differentiate the brand from others in the sub group

Differentiate the brand from others in the sub group

Personality of the brand

• ·         It is created by way of adding psychological values through
• ·         Packaging
• ·         Advertising
•     Other aspects of the marketing mix

Importance

• ·         Encourages customers to build a relationship with a brand
• ·         Gives strength to the brand
• ·         Ensures the staying power of the brand

Concept has two non-functional aspects of brands

• 1.      Brand image
• 2.      Brand identity

Brand image

• ·         Customers regard brands possess human-like characteristics
• ·         Customers experience brands as bundles of association
• ·         Customers see, hear, smell, taste and get gut feelings about different brands
• ·         This profile or essence is called brand image

Retail Promotional Strategy

•  Any communication by a retailer that informs, persuades, and/or reminds the target market about any aspect of that firm

Elements of the Promotional Mix

Advertising Sales promotion Store atmosphere Web site SEM	Personal selling E-mail marketing
Publicity SEM	Word of mouth

Planning a Retail Promotional Strategy

Promotional Objectives

•          Increase sales

•          Stimulate impulse and reminder buying

•          Raise customer traffic

•          Get leads for sales personnel

•          Present and reinforce the retailer image

•          Inform customers about goods and services

•          Popularize new stores and Web sites

•          Capitalize on manufacturer support

•          Enhance customer relations

•          Maintain customer loyalty

•          Have consumers pass along positive information to friends and others

Public Relations

•          Public Relations - Any communication that fosters a favorable image for the retailer among its publics

–        Nonpersonal or personal

–        Paid or nonpaid

–        Sponsor-controlled or not

–        Publicity – Any nonpersonal form of public relations whereby messages are transmitted through mass media, the time or space provided by the media is not paid for, and there is no identified commercial sponsor

Advantages

•          Image can be presented or enhanced

•          More credible source

•          No costs for message’s time or space

•          Mass audience addressed

•          Carryover effects possible

•          People pay more attention than to clearly identified ads

Disadvantages

•          Some retailers do not believe in spending on image-related communication

•          Little control over publicity message

•          More suitable for short run

•          Costs for PR staff, planning activities, and events

Advertising

•          Paid, nonpersonal communication transmitted through out-of-store mass media by an identified sponsor

•          Key aspects

–        Paid form

–        Nonpersonal presentation

–        Out-of-store mass media

–        Identified sponsor

        Advantages

•          Attracts a large audience

•          Gains pass along readership (for print)

•          Low cost per contact

•          Many alternatives available

•          Control over message content; message can be standardized

•          Message study possible

•          Editorial content surrounds ad

•          Self-service operations possible

Disadvantages

•          Standardized messages lack flexibility

•          Some media require large investments

•          Geographic flexibility limited

•          Some media require long lead time

•          Some media have high throwaway rate

•          Some media limit the ability to provide detailed information

Personal Selling

Oral communication with one or more prospective customers for the purpose of making a sale

Advantages

•          Message can be adapted

•          Many ways to meet customer needs

•          High attention span

•          Less waste

•          Better response

•          Immediate feedback

Disadvantages

•          Limited number of customers handled at one time

•          High costs

•          Doesn’t get customer in store

•          Self-service discouraged

•          Negative attitudes toward salespeople (aggressive, unhelpful)

Sales Promotion

Encompasses the paid communication activities other than advertising, public relations, and personal selling that stimulate consumer purchases and dealer effectiveness

Advantages

•          Eye-catching appeal

•          Distinctive themes and tools

•          Additional value for customer

•          Draws customer traffic

•          Maintains customer loyalty

•          Increases impulse purchases

Fun for customers

Disadvantages

•          Difficult to terminate

•          Possible damage to retailer’s image

•          More stress on frivolous selling points

•          Short-term effects only

•          Used as a supplement

EMERGING TRENDS IN INDIAN ORGANIZED RETAIL SECTOR

The emerging trends in the Indian organized retail sector would help the economic growth in India.

There is a fantastic rise in the Indian organized retail sector in a very short period of time between 2001 and 2006. Eventually, out of the shadows of the unorganized retail sector, India has a chance of tremendous economic growth, both in India and abroad. 

The emerging trends in the Indian organized retail sector are also adding up to the development of the Indian organized retail sector. The relaxation by the government on regulatory controls on foreign direct investments has added to the process of the growth of the Indian organized retail sector.

The infrastructure of the retail sector will evolve radically in the recent future. The emergence of shopping malls is increasing at a steady pace in the metros and there are further plans of expansion which would lead to 150 new ones coming up in India by 2008. As the count of super markets is going up much faster than rate of growth in retail sector, it is taking the lions share in food trade.

The growth of the Indian organized retail sector is anticipated to be heavier than the growth of the gross domestic product. Alterations in people's lifestyle, growth in income levels, and encouraging conventions of demography are proving favorable for the new emerging trends in the Indian organized retail sector.

The success of this retail sector would also lie in the degree of penetration into the lower income strata to tap the possible customers in the lowest levels of society. The demands of the buyers would also be enhanced by more access to credit facilities.

With the arrival of the Transnational Companies (TNC), the Indian retail sector will undergo a transformation. At present the Foreign Direct Investments (FDI) is not encouraged in the Indian organized retail sector but once the TNC'S get in they inevitably try to oust their Indian counterparts. This would be challenging to the retail sector in India.

The trends to follow in the future:

• The Indian Organized retail sector will grow up to 10% of total retailing by 2010. 
• No one single format can be assumed as there is a huge difference in cultures regionally.
• The most encouraging format now would be the hyper marts.
• The hyper mart format would be further encouraged with the entry of the TNCs.

Right to Consumer Education

Right to Consumer Education means right to acquire knowledge and skill needed to become an informed service receiver for or on behalf of persons with disabilities, their caregivers or families throughout their lives. Ignorance of consumers, particularly the illiterate and rural service receivers, is mainly responsible for their exploitation. Appropriate forum for consumer education, enlightenment and protection of their rights is therefore mandatory to prevent such unhealthy practices in the service delivery organization for persons with disabilities.

Consumers must demand information and details on their rights, ongoing service activities for their own benefit or for benefit of their wards on a continual basis through group meetings, discussions, symposia, seminars, debates and declamations. There must be transparency in the practice or procedures of therapeutic planning, programming, implementation or execution of service delivery for persons with disabilities. Wherein the Institute is professedly a center for specialized manpower training, consumers must appreciate the genuineness of the efforts made by student-clinicians under the direct supervision of rehabilitation professionals. 

CONSUMER MOVEMENT IN THE MODERN PERIOD

Consumer movement in the present form came into being only in the 1930's in the West and only in the 60's in India.

The basic objectives of consumer movement world wide are as follows :

· To provide opportunity to the consumers to buy intelligently

· Recognition of reasonable consumer requests

· Protection against fraud, misrepresentation, unsanitary and unjust products

· Participation of consumer representatives in management of aspects affecting

  consumers

· Promoting consumers interests

The basic reason for the development of consumer movement in India are different from those in the West. In western countries, consumer movement was the result of post-industrialization affluence-for more information about the merits of competing products and to influence producers especially for new and more sophisticated products.

In India, the basic reasons for the consumers movement have been:

• Shortage of consumer products; inflation of early 1970's
• Adulteration and the Black Market.
• Lack of product choices due to lack of development in technology
• Thrust of consumer movement in India has been on availability, purity and prices

The factors which stimulated the consumer movement in recent years are:

• Increasing consumer awareness
• Declining quality of goods and services
• Increasing consumer ,expectations because of consumer education
• Influence of the pioneers and leaders of the consumer movement
• Organized effort through consumer societies

Extra topics related to consumer education

The consumer is the center of all business activities. In modern days, it is said that the consumer is the king of the market. Business activities are carried out to satisfy, the wants of consumers. A commercial organization totally depends on the customer not only for its survival but also for its growth. At present customer is given top most importance and every attempt is made to satisfy the customer. 

But in reality, the position of the consumer is different. He is like a slave. He is exploited by well organized and well informed sellers by charging higher prices, by supplying poor quality goods, even by supplying adulterated goods, shot weight, misleading advertisement, etc. Customers are still un-organized and have no idea about their basic rights of safety, right to choose, right to be heard, etc. 

In the word Consumerism, "Consumer" means the user or customer and "ism" means movement", and hence, consumer movement is popularly known as "Consumerism. It is an organized and collective movement of consumers. This movement started in the year 1920 to protect the interest of the consumers.

The main object of this movement is to educate and unite consumers and to fight for the protection of their rights. Consumer movement is similar to trade unions because it is a collective approach to solve the malpractices and injustice done by any organization.

Thus, it is a movement of the consumers, for the consumers and by the consumers because it is a social movement of consumers and it has came into existence to educate and unite consumers to fight for their rights. In short the process of uniting consumers is nothing but Consumer Movement.

ACHIEVEMENTS OF THE CONSUMER MOVEMENT .

Some interesting developments which are helping the consumer movement include, developments taking place in the field of consumer education and some noticeable changes that have Gen place among business organisations and their associations or federations. Consumer Protection is being incorporated in the courses at different levels in schools and colleges. Full-fledged courses have been introduced in management and law courses.

A number of large organisations have set up Consumer Grievance Cells as an in-house redressal mechanism. Life Insurance Corporation of India (LIC) has set up claims review committees at the zonal and central levels. Petroleum Companies, Railways, 20. Banks, Income Tax Departments, have also initiated setting up of public grievance cells. The Government of India has set up a separate Directorate called Directorate of Public Grievances at Sardar Patel Bhavan, Sansad Marg, New Delhi. They deal with omp plaints relating to hawks, railways, insurance, pensions and related matters. In the long run, they will cover all the ministries. The nationalised banks are observing 15th of every month as the 'Customer Grievance Day.' where an aggrieved consumer can walk into the top managers' offices in their respective town, district or zone. The Council of Fair Business Practices, of more than 20 years standing, is also trying to help in the redressal of complaints against business from individual consumers or groups. Federation of Indian Chambers of Commerce and Industry (I?ICCI) has set up a Consumer Business Forum which meets once a quarter in different cities of the country.

All stock exchanges in the country have also set up similar cells. The Advertisement Standard Council of India (ASCI), Confederation of Indian Industry (CII) and FICCI have evolved a code of ethics for their activities.

Another significant achievement of the consumer has been the representation given to consumer organisations on the policy making bodies (regulator machinery) of govern- ments and AdyisoryWelfare Committees of big business organisations and the service sector. Central and State (Government) Consumer Protection Councils, regulatory departments of Preventions of Food Adulteration, Supplies of Food and Drugs, Weights and Measures Department, Quality Control Institutions like Bureau of Indian Standards (BIS) and AGMARK, Petroleum Product Department, Railway Commuters Welfare Committees, Regional Advisory Committees for Indian Airlines Services all have representatives of the various consumer organisations. Thus, consumers get full oppor-tunity to participate in policy making aspects.

It appears that the time has come when consumers in India can hope to be 'The King' in the market place very soon. The labour of dedicated individuals and groups who have fought relentlessly for consumers rights through the decades has not been in vain after all.

Definition of Retail Marketing

Retailing is defined as a conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use. It is responsible for matching individual demands of the consumer with supplies of all the manufacturers. The word ‘retail’ is derived from the French work retailer, meaning ‘to cut a piece off’ or ‘to break bulk’.

Retail marketing is comprised of the activities related to selling products directly to consumers through channels such as stores, malls, kiosks, vending machines or other fixed locations, according to the Free Dictionary. In contrast, direct marketing to consumers attempts to complete a sale through phone, mail or website sales.

The successful implementation of the components of the traditional marketing mix (product, place, price and promotion) is essential for success in retail marketing. The savvy marketer must have a thorough understanding of his or her customers to answer the questions that are implied by each of the 4 P's.

Product

A retail business typically opens within a specific business category, such as men's clothes. The retailer must decide questions relating to price range, fashion and selection. All of these issues are answered by the assumptions that the retailer makes on the products most likely to attract his targeted customer base. The ability to match products and customers is as much art as science.

Place

      

     Factors such as whether the store location is near the targeted customers, offers easy access and exit, and is highly visible on a well-travelled street are vitally important in the selection of a store location (place).

The perceived quality of the physical structure is also important. Customers expect expensive items to be sold in an upscale environment. Low-cost items might fare better in a location where consumers are accustomed to purchasing those bargain items.

Retail stores can range from large national chains such as Sears or Wal-Mart to a small, locally-owned business, such as a bakery. These retailers have chosen retail locations they believe match their customer's expectations, are highly visible, and are close to the targeted customer group.

Price

Pricing is a complex process that combines finance with human psychology. If consumers believe that a product is priced too high, they may refuse to buy. If a product seems to be priced too low, they may suspect the product quality.

Additionally, a retailer typically sets price expectations as she develops her brand. If the brand is positioned as discount, the merchant must stay consistent with pricing decisions or risk customer confusion about the store's brand identity.

Promotion

Retail marketing is dependent on in-store traffic. Marketers must make effective use of promotions to ensure a steady stream of existing and new customers visit a retail stores. The retailer's selection of promotional channels is dictated by many factors including local competitive environment, profit margin on sales and total volume of sales. Each dollar spent in promotions must result in additional sales, or profit margins shrink to dangerous levels. Promotional media can include television, radio, print, direct mail and outdoor advertising (billboards).

Retail: The key growth drivers

Changes in demographics: India has the lowest median age of 24 as compared to developed countries like USA, UK, Japan etc. The composition of the Indian population is shifting towards the age group of 20-49 i.e. the working population with purchasing power. Approximately 60% of the Indian population is below 30 years of age. Thus, India has the largest ‘young’ population in terms of sheer size and this young segment is the major driver of consumption as they have the ability (disposable income) and willingness to spend.

Rising income levels: India is the second fastest growing economy in the world. A larger number of households are getting added to the consuming class with growth in income levels. Increasing instances of double incomes in most families coupled with the rise in spending power is further fuelling the growth of retail sector.

Changes in consumer needs, attitudes and behaviour: The growth of modern retail is linked to consumer needs, attitudes and behaviour. Rising income levels, education and global exposure have contributed to the evolution of the Indian middle class. As a result, purchasing and shopping habits have been inculcated and are increasing day by day. Historically, Indians have not been the ones to splurge on luxury items. Today, people are willing to try new things and look different, which has increased spending on health and beauty products apart from apparels, food and grocery items.

Increased credit friendliness: There has been a radical change in the Indian consumers’ mindset regarding credit. With the easy availability of credit and declining interest rates, personal credit has witnessed growth. The boom in financing has resulted in an increase in spends on housing and consumer durables such as two-wheelers and cars. The use of plastic money (credit and debit cards) has increased significantly in the last 3-4 years. In fact the ease of payments (ability to spend without cash) due to the use of credit and debit cards, has also led to an increase in total spending on shopping and eating out. With the acceptance of and the increase in the number of electronic data converter machines installed in retailing outlets, credit and debit cards will provide further fillip to organized retail.

Increasing awareness of Indian consumers: Over the years, as a result of the increasing literacy in the country, exposure to the west, satellite television, foreign magazines and newspapers, there is a significant increase in consumer awareness among the Indians. Today more and more consumers are selective with regards to the quality of the products/services.

Growth in Indian retail has been driven by the country's economic fundamentals over the past few years. Increasing number of nuclear families, easy financing options, increase in the population of working women and emerging opportunities in the service sector during the past few years have been the key growth drivers of the organised retail sector in India. Consumers are now showing a growing preference for organised retail, resulting in increased penetration. 

Retail management

Retail management is the sale by seller in small quantities to customer not for resale 


I prefer to understand "Retail Management" as:

The process of bringing the ultimate user to the main producer, through a series of stages, where retailing is the last one. It is not limited to quantities, but limited to the exact requirement of the ultimate user. Therefore, bringing about operational efficiency at this last stage, and creating an environment so compelling that he looks nowhere else, is "Retail Management". 
RM- is an art, and necessitates employing several tools of logistics management for a complete end user satisfaction. RM - is getting to know the final user on behalf of the producer. RM - is a process of facilitation.