Month: May 2020

The Consumer Protection Act, 1986 (CPA) is an Act that provides for effective protection of interests of consumers and as such makes provision for the establishment of consumer councils and other authorities that help in settlement of consumer disputes and matters connected therewith.

The CPA seeks to protect the interests of individual consumers by prescribing specific remedies to make good the loss or damage caused to consumers as a result of unfair trade practices.

Scope

Broadly speaking, the CPA seeks to protect the following basic rights of consumers:

• Right against the marketing of goods and services which are hazardous to life and property;
• Right to be informed about the quality, quantity, potency, purity, standard and price of goods or services;
• Right to choice, wherever possible through access, to a variety of goods and services at competitive prices;
• Right to be heard and to be assured that consumers’ interests will receive due consideration at appropriate forums;
• Right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers;
• Right to consumer education; and
• Right to clean and healthy environment.

Consumer:

Section 2(d) of the CPA defines “consumer” as a person who:

“(a) Buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for a consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose;

or

(b) Hires or avails of any services for consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for a consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose. It may, however, be noted that “commercial purpose” does not include use by a person of goods bought and services exclusively for the purposes of earning his livelihood by means of self-employment.”

From the above definition, it can be observed that:

• The goods or services must have been purchased or hired or availed of for a consideration which has been paid in full or in part or under a system of deferred payment, i.e., in respect of hire-purchase transactions;
• The goods purchased should not be meant for resale or for a commercial purpose. Goods purchased by a dealer in the ordinary course of his business and those which are in the course of his business to supply would be deemed to be for re-sale;
• In addition to the purchaser(s) of goods, or hirer(s) or user(s) of services, any beneficiary of such services, a user of goods/services with the approval of the purchaser or hirer or user would also be deemed to be a “consumer” under the Act.

Consumer Protection Council

The interests of consumers are sought to be protected and promoted under the Act inter alia by establishment of Consumer Protection Councils at the District, State and National levels.

Redressal Machinery under the Act

The Act provides for a three-tier quasi-judicial redressal mechanism at the District, State and National levels for redressal of consumer disputes and grievances, namely:

National Consumer Disputes Redressal Commission (commonly known as National Commission)

It has jurisdiction to entertain complaints where the value of goods/services complained against and the compensation, if any claimed, exceeds Rs10,000,000 (Indian Rupees 10 Million).

State Consumer Disputes Redressal Commission (commonly known as State Commission)

It has jurisdiction to entertain complaints where the value of goods/services complained against and the compensation, if any claimed, exceeds Rs 2,000,000 (Indian Rupees 2 Million) but less than Rs 10,000,000 (Indian Rupees 10 Million).

District Consumer Disputes Redressal Forum (commonly known as District Forum)

It has jurisdiction to entertain complaints where the value of goods/services complained against and the compensation, if any claimed, is less than Rs 2,000,000 (Indian Rupees Two Million).

Till the 1970s there was unchecked consumer mistreatment happening in India. Black marketing, monopolistic practices, adulteration of food were all commonplace. However, the consumer movement brought about a change in the scenario. The government too provided consumers legal protection through various laws and setting up of consumer court.

To protect consumer on legal terms, Court of Law i.e. Consumer Court has laid down certain acts to protect the consumers on legal grounds. This Legal Protection keeps intact the right of the consumer which when acted will provide them justice against any dissatisfaction created by the sellers/business/manufacturer.

This legal Indian framework by Consumer Court also consists of large number of regulations that are maintained strictly for the protection of consumers. Some of these regulations are followed as stated below:

Laws to Protect Consumers

The Consumer Protection Act, 1986 (COPRA)

• In this, it protects the right of the consumer and makes user aware of their rights.
• They have developed or formed three-tier system wherein there is District Forums, State Commission, and National Commission thus to protect the right of the consumer.

Indian Contract Act, 1972

• They lay down the conditions in which the parties promise each other of the services to be provided and agree on certain terms. The contract is made that is binding on each other.
• They protect the interest that the contract is not breached and in case if breached the remuneration to be provided.

The Sales of Good Act, 1930

• To ensure the consumer rights in case the goods offered to the consumer is not up to the standard which was promised and the false claim was made.

The Essential Commodities Act, 1955

• To keep track of the commodities which are essential and monitor their production and supply. Also keep a track of any hoarders, black marketers,

The Agricultural Produce (Grading and Marking ) Act, 1937

• To implement the grading standard and hence monitoring the same whether standard checks are been done to issue the grading. In this, AGMARK is the standard introduced for agricultural goods.

The Prevention of Food Adulteration Act, 1954

• This act makes sure the purity of the food items and the health of the consumers which could be affected by the adulterated items.

The Standards of Weights and Measures Act, 1976

• The Standards of Weights and Measures Act protects the right against the goods which is underweight or under measured.

The Trade Marks Act, 1999

• This act protects users from false marks which could mislead the consumer and hence cheat them in the ground of quality of the product.

The Competition Act, 2002

• The Competition Act replaced from the Monopolies and the Restrictive Trade Practices Act following to take action against the firms which use such practice which in turn affect the competition in the market.

The Bureau of Indian Standards Act, 1986

• The Bureau of Indian Standards Act ensures about the quality of the product to be used by the consumer and have introduced BIS Mark to certify the quality of the product and have set up grievance cell which can take complaints regarding the quality of the product.

Consumer Court

Consumer Courts are special courts set up by the Indian Judiciary to settle consumer grievances and entertain consumer problems. A special consumer court is set up to ensure that justice is done quickly and efficiently, without undue hardship to the complainant. Also to handle the sheer number of cases, the consumer courts help lessen the burden on the judiciary system.

Another major advantage that the consumer court offers is that the whole process is fairly simple. One does not even need to hire a lawyer or any legal professional for the hearing if he thinks it is not required. Self-representation is possible in a consumer court. Right from submitting a complaint to the process of hearing all procedures are kept simple and uncomplicated.

Applicability of the Law of Limitation

The District Forum, the State Commission and/or the National Commission shall not admit a complaint unless it is filed within two years from the date on which the cause of action has arisen. However, where the complainant satisfies the Forum/Commission, as the case may be, that he has sufficient cause for not filing the complaint within two years, such a complaint may be entertained by such Forum/ Commission after recording the reasons for condoning the delay.

Remedies under the CPA

Depending on the facts and circumstances, the redressal forums may issue orders for one or more of the following relief(s):

• Removal of defects from the goods;
• Replacement of the goods;
• Refund of the price paid;
• Award of compensation for the loss or injury suffered;
• Withdrawal of the hazardous goods from being offered for sale; or
• Award for adequate costs to parties.
• Removal of defects or deficiencies in the services

Retailing, the final step in the distribution of merchandise where the seller offers goods and services directly to consumers, plays a pivotal role in the global economy and in the daily lives of billions of people. This sector has evolved dramatically over the years, influenced by technological advancements, changing consumer behaviors, and broader economic trends. The relevance of retailing today can be attributed to its direct connection with consumers, its significant contribution to economic health, and its ability to adapt and innovate in response to market demands.

The retail sector’s ongoing evolution is driven by technological advancements, shifting consumer expectations, and broader societal changes. Retailers that succeed in this dynamic environment are those that adapt quickly, embrace innovation, and remain customer-focused. The future of retailing will likely see an increased blending of physical and digital experiences, a stronger emphasis on sustainability and ethics, and a continued focus on personalization and customer engagement. As retail continues to evolve, its economic and social relevance will only grow, underscoring its critical role in shaping the way we live, work, and interact with the world around us.

Relevance of Retailing

Retailing serves as a critical bridge between producers and consumers, ensuring the availability of a diverse range of goods and services. It significantly contributes to the Gross Domestic Product (GDP) and employment across the globe, acting as a barometer for economic activity. Consumer spending patterns, observed through retail sales, offer insights into the economic confidence and well-being of a society. Moreover, retailing has a profound impact on urban development, shaping the character of city centers and suburban landscapes through the establishment of shopping districts, malls, and retail parks.

The sector is also a key player in the innovation ecosystem, constantly adopting new technologies to enhance the shopping experience, streamline operations, and improve supply chain efficiency. From the integration of e-commerce and digital payment systems to the use of artificial intelligence (AI) for personalized shopping experiences, retailing is at the forefront of technological adoption.

Trends Shaping the Future of Retailing

• E-commerce and Omni-channel Retailing

The rise of e-commerce has transformed retail, allowing consumers to shop anytime, anywhere. Brick-and-mortar retailers have responded by integrating digital channels, leading to the emergence of omni-channel retailing, where the goal is to provide a seamless customer experience across online and offline channels. This trend emphasizes the importance of a cohesive brand experience, requiring retailers to synchronize their inventory, marketing, and customer service strategies across all platforms.

• Personalization and Customer Experience

Consumers increasingly expect personalized shopping experiences tailored to their preferences and behaviors. Retailers are leveraging data analytics and AI to offer personalized product recommendations, targeted promotions, and customized shopping experiences. Enhancing customer experience extends beyond personalization, encompassing the overall ease and enjoyment of the shopping journey, both online and in physical stores.

• Sustainable and Ethical Retailing

There is a growing consumer demand for sustainability and ethical practices in retail. Shoppers are more conscious of the environmental and social impact of their purchases, leading retailers to adopt sustainable practices, such as reducing waste, sourcing products ethically, and minimizing carbon footprints. This trend is reshaping procurement strategies, packaging, and overall business models to align with the values of social responsibility and environmental stewardship.

• Technology Integration

Technological innovations continue to redefine the retail landscape. Beyond e-commerce, technologies such as augmented reality (AR) for virtual try-ons, Internet of Things (IoT) devices for inventory management, and blockchain for supply chain transparency are becoming more prevalent. These technologies enhance operational efficiency, improve the shopping experience, and build consumer trust.

• Rise of Experiential Retail

Experiential retail, where shopping is combined with immersive experiences, is becoming a key differentiator. Retailers are creating destination spaces that offer unique in-store experiences, such as workshops, demonstrations, and interactive displays, to attract foot traffic and build brand loyalty. This trend highlights the importance of physical retail spaces as places for community and engagement, rather than mere transactional locations.

• Direct–to–Consumer (D2C) Models

The D2C model, where manufacturers sell directly to consumers bypassing traditional retailers, has gained momentum. This approach allows brands to control the customer experience, gather valuable consumer data, and increase margins. For traditional retailers, this trend necessitates a reevaluation of their value propositions and the exploration of collaborations with brands to offer exclusive products or experiences.

• Globalization vs. Localization

While globalization has expanded the reach of retailers, there is a concurrent trend towards localization. Consumers are showing a preference for local products, reflecting a desire for authenticity and support for local economies. Retailers are adapting by offering locally sourced products, customizing assortments to local tastes, and engaging in community-oriented marketing.

Retailers are referred to as middlemen or intermediaries. They occupy a middle position, receiving and gassing on products from producers and wholesalers to customers. Services carried out by retailers are different from those of wholesalers. The characteristics of retailers are listed below.

1. Marketing orientation

Retailing is a dynamic industry. It keeps growing by moving retail operations into new markets. Markets are ever changing and characterized by risk and threat. Retail marketing therefore, requires different types of decisions to be made in the complexity of the situations.

2. Multi-channel retailing

Retailers act as a connecting link between the producers/ wholesalers and customers. Their scale of operations is tilted more to serve sophisticated consumers. Recently, the impact of e-retailing has received considerable attention.

The success model for most retail sectors is multi-channel retailing.

• In the extended channel of retail distribution, manufacturer, wholesaler and retailer provide a chain of facilitating services in order to sell the right product to the final customers.
• In the limited channel, a retailer works directly with the producer.
• In the direct channel, the product is sold direct by using direct mailing, Internet services, telephone sales, etc. However, the traditional supply channel for retail products is raw materials, manufacturer, wholesaler, retailer.

3. Innovative methods of thinking and planning

Successful retailing requires innovative methods of thinking and planning. New ideas are generated to take advantage of opportunities or to improve existing methods of marketing. Retailers make clear propositions of their retail offer.

4. Right environment

A retailer has to create the right environment, offer additional advantages and value or loyalty schemes in order to ensure that the customer is offered a comprehensive package of benefits.

5. Unique characteristics of a retailer

• The retailer’s interface with the customer is service-based.
• Retailers sell small quantities of items on a frequent basis.
• Customers feel comfortable as the retailers provide convenience in terms of location of the shop, types of payment and different credit facilities for purchasing, range of merchandise and after-sales support, etc.
• Retailers offer selection an assortment of merchandise related to the target market in order to provide choice.
• Retailers trade with general public (whereas wholesalers may district the general public from purchasing from their warehouses).
• Retailers normally charge higher unit prices than a wholesaler.
• A retailer’s pricing policy is simpler than that of the wholesaler.

Other Characteristics of Retailers

(i) A retailer is the link between a wholesaler and the ultimate consumer and he is the last intermediary in distribution.

(ii) A retailer buys goods from wholesaler in bulk and resells them to consumers in small quantities.

(iii) A retailer maintains a personal contact with his customers.

(iv) A retailer makes sufficient shop display of his wares to attract customers.

(v) Retailers perform all the marketing functions which a wholesaler performs and in addition emphasises on advertisement.

(vi) Retailers deal in a variety of merchandise and are often known as general merchants.

(vii) Usually retailers are classified into two major groups, viz., small scale retailers and large scale retailers.

(vii) Retailers aim at providing maximum satisfaction to their customers in limited area.

India is fast becoming the retail destination of the world. According to the international management consultant AT Kearney, India has emerged as the leader in terms of retail opportunities. The retail market in India is anticipated to grow to 900 billion USD by the year 2020.

However, the face of the Indian retail industry is changing. India is passing through a retail boom today. A number of changes have taken place on the Indian retail front such as increasing availability of international brands, increasing number of malls and hypermarkets and easy availability of retail space. With the Indian government having opened up the doors for FDI, the entry of foreign retailers into the country has become easier. India has come a long way from the traditional Kirana stores and is on its way to becoming a ‘mall country’. The emphasis has shifted from reasonable pricing to convenience, efficiency and ambience.

The major factors fuelling this change are the increase in disposable income of the people, improving lifestyles, increasing international exposure and increasing awareness among the customers. India has a large middle class as well as youth population, which has contributed greatly to the retail phenomenon. The middle class is considered to be a major potential customer group. The youth are perceived as trend setters and decision makers. Tourist spending in India is increasing, which has also prompted the retail boom.

Food and grocery are the two categories in the Indian retail sector which offer the most promising opportunities. Apart from this, the other areas where there are vast possibilities for Indian retailers are jewellery, apparel and consumer durables. Indian retailers are also trying to create a niche for themselves in areas such as books, gifts and music.

Although organized retail is only a decade old to India but the pace at which the retail scenario and practices are getting tried and tested has been quite remarkable.

We have seen good adoptability to absorb some of the best practices with a touch of appropriateness of local preferences and style. It has come a long way and Indian Retail market has become the next frontier for most of the retail and brands practices.

Changes are good and need to be handled with care. Some of the prominent drivers in vogue are:

Retail Experience

Stores are no more just buying and selling but also to provide unique experience to customers. It’s a trend that has quickly become the pinnacle of retail success for both the big brands and the smaller start-ups.

From customer experience perspective, bricks and mortar stores are still extremely relevant; however, customer experience doesn’t rest entirely in the hands of physical retail.

In this digital era, it’s equally important to ensure that your brand resonates with the consumer online. Digital marketing is often the beginning of the brand journey and is built to assist with brand exposure; hopefully diving the in-store footfall.

Promotional features like use of technology, displays and in-store designs, personalization along with service and operational excellence have been adopted and implemented by brands to attract footfall at retail store. These help in building an important connect with the consumers.

How?

One of the large apparel brands Raymond recently launched its flagship store with that boasts of a double height ‘Live’ façade with LED curtains displaying digital content. This store has a unique fitting room trial experience with ‘Ipad’. The selection appears in the desired size inside the trial room.

Confluence of online and offline retail

Typically referred as Omni-channel phenomenon where physical and digital channels merging, is fast catching up, shopping centers in India are encountering the need to complement physical ambience with online stores. E-commerce and brick-and-mortar will co-exist and finally reach a level of maturity, translating into sound business sense for Omni-channel players.

Example: One of the leading footwear brands in India has introduced endless-aisle technology at one of their stores.

This endless-aisle technology allows consumers to browse, research and pick up their products with convenience. In addition to that, it also allows the retailer to sell products that are not available in stores.

Research based investments

Big Data, fast data and the data deluge are taking the world of digital businesses, especially the customer-focused ones, by storm. Retail is no exception as more and more customers leave digital footprints with every transaction, interaction and engagement at every retail touch-point online, mobile, social channels, in-store and even contact centers.

Technology is enabling businesses to collect shopper data from these touch-points, analyze it and derive insights to make informed decisions, whether it is to provide a better customer experience, run marketing promotions or decide product assortment or gain tighter stock control.

Monitoring and measuring the impact of data-driven initiatives against company-specific metrics such as gross profit, revenue and inventory carrying costs, can offer significant benefits.

Example

Shoppers Stop studied the buying patterns of members of its loyalty program called First Citizen. Based on the insights from it, they shortlisted 900,000 people for a trouser promotion. The insight gained led to significant increase in the sales.

Brand visibility and communication

Focus on brand visibility is the way to make a brand enter our subconscious mind by making it visible through out customer journey.

Brand visibilityis the single, most powerful message that encourages and motivates the customer to look at the product along with the brand attributes. Frequent advertising, and brand activation can help increasing the brand to enter the subconscious mind.

Example: Lots of brands in the mobile space have vastly captured the consumer mind as they are visible on the road as OOH, at the airports, at multi brand outlets as glow sign boards etc.

Digital transactions/Economy

Unlike the West, Indians tend to deal majorly in cash, using debit cards if required with even lesser reliance on credit cards. But post demonetization, consumers have been forced to use digital channels across various walks of life.

The transition from traditional commerce to e-commerce and now m-commerce has been driven by the retail segments. Mobile today is more than just a calling device as the internet-enabled smartphone is becoming a point of commerce — it has transformed into a host of retail outlets in customer hands. We see consumers now shopping across websites, apps and in-store as per their convenience. The growth is fueled by the availability of affordable smart phones and mobile data plans backed by improving telecom infrastructure. Consumers are split into two categories: those who shop online and those who don’t because they prefer experiencing the look and feel of a product.

The second type of consumer opts for cash transactions, being new to the concept of using technology as an enabler for financial transactions. Demonetization has thus formalized the process of going digital for financial transactions where concepts such as UPI (unified payments interface) have become easily available to consumers with the regulatory and policy push accelerating the process.

Example: Reliance Retail became the first organized retail chain in India to offer customers the option of mobile-based UPI app payments at its stores. The new UPI Payments facility is currently live across more than 200 Reliance retail stores across various formats, including Reliance Fresh, Reliance Trends, and Reliance Digital, among others, in Mumbai. The pan-India rollout of this offering at Reliance is also in the pipeline.

Retail sector is poised for substantial growth. Organized retailing will be growing at a rate of more than 18-20% CAGR. E-tailing will form a significant part of the revenue for various retailers. Apart from cashless transactions, changes in the regulatory environment with FDI, GST and ease of doing business, will obviously augur well for the retail industry.

Retail Marketing deals with identifying and meeting human and social needs. Retail marketing is typically seen as the task of creating promotion and delivering goods and services to retail consumers. The marketer has two options to satisfy the consumers’ needs first he should approach to all customers with identical marketing approach or adopt a differentiated approach for different sets of customers. The first approach in the world of retailing is known as mass marketing, the latter is turned as market segmentation. This chapter is an attempt to discuss the concept of market segmentation and highlights the criteria for market segmentation to gain competitive advantage.

Concept of Market Segmentation

Market segmentation is the process breaking down an entire heterogeneous market into small markets or segments of customers that are identical in terms of some characteristics like needs wants and buying behavior. Retail markets like any other sort of business, may enjoy the benefits of segmenting the markets. Due to increased competition, mass marketing approach is not feasible all the time.

Consumers have various retail formats to shop and distance is not an obstacle these days. A consumer can buy any consumer electronic item form a nearby shop or from a super bazaar; he may also visit to electronic Gallery to buy the same. Therefore, in order to attract customers and sustain them requires market segmentation where a retailer divides his customers into smaller groups and approaches them with different set of promotional programmes.

In evaluating different market segments, retailer considers two factors:

(i) The segment’s overall attractiveness

(ii) The firm’ objectives and overall resources.

It helps a retailer to customize the goods & services vis a vis its promotional campaigns according to the needs of narrowly defined customer group.

Significance of Market Segmentation

Retailers segment the market to identify particular groups of Customers in their trading areas so that selling and promotional efforts may be concentrated. The purpose of such exercise is to make the retailer the most attractive destination. Segmenting a market has following advantages:

1. Deciding Store Location

Market segmentation helps a retailer in deciding locations for its new outlets in case of expansion. The retail stores may be set up as per the concentration of target population. A location which is attractive and has good traffic flow but serves no target market is of new use to a retailer.

2. Understanding consumer behavior

Market segmentation helps a retailer to understand why consumers behave differently in a same set of marketing and promotional efforts. Once a heterogeneous market is divided into few homogeneous groups, it becomes easy for a retailer to develop an effective marketing & promotional strategy.

3. Deciding retail marketing mix

Marketing segmentation helps a retailers in deciding 7ps (Product, Price, Place, promotion, People, Procedure and presentation) depending upon the target market to serviced.

4. Deciding merchandise assortments

A retailer is always bothered about which item of inventory should be bought and displayed on the store’s shelves. Once the market is segmented, retailer can decide which item will go on the shelves. For a merchandise decision to be made successful, a perfect understanding of particular target market is essential.

5. Deciding promotional campaigns

Segmentation helps a retailer in deciding and developing accurate promotional campaigns that hit target at right time and at right place.

6. Positioning

Segmentation helps a retailer in positioning itself in a particular target market. For Instance, Ebony and Shopper’s stop have positioned themselves for higher income level while Vishal Mega Mart and Big Bazaar have targeted the Indian middle class.

Strategies for Effective Market Segmentation

For effective market segmentation, the following two strategies are used by the marketing force of the organization:

1. Concentration (Niche) Strategy

Under this strategy, an organization focuses going after large share of only one or very few segment(s). This strategy provides a differential advantage over competing organizations which are not solely concentrating on one segment.

For example, Toyota employs this strategy by offering various models under hybrid vehicles market.

2. Multi-segment Strategy

Under this strategy, an organization focuses its marketing efforts on two or more distinct market segments.

For example, Johnson and Johnson offers healthcare products in the range of baby care, skin care, nutritionals, and vision care products segmented for the customers of all ages.

Segmentation

Segmentation means to divide the marketplace into parts, or segments, which are definable, accessible, actionable, and profitable and have a growth potential. In other words, a company would find it impossible to target the entire market, because of time, cost and effort restrictions. It needs to have a ‘definable’ segment a mass of people who can be identified and targeted with reasonable effort, cost and time.

Once such a mass is identified, it has to be checked that this mass can actually be targeted with the resources at hand, or the segment should be accessible to the company. Beyond this, will the segment respond to marketing actions by the company (ads, prices, schemes, promos) or, is it actionable by the company? After this check, even though the product and the target are clear, is it profitable to sell to them? Is the number and value of the segment going to grow, such that the product also grows in sales and profits?

Segmentation takes on great significance in today’s cluttered marketplace, with thousands of products, media proliferation, ad-fatigue and general economic problems around the world markets. Rightly segmenting the market place can make the difference between successes and shut down for a company.

Segmentation allows a seller to closely tailor his product to the needs, desires, uses and paying ability of customers. It allows sellers to concentrate on their resources, money, time and effort on a profitable market, which will grow in numbers, usage and value.

Targeting

Targeting in marketing is a strategy that breaks a large market into smaller segments to concentrate on a specific group of customers within that audience. It defines a segment of customers based on their unique characteristics and focuses solely on serving them.

Instead of trying to reach an entire market, a brand uses target marketing to put their energy into connecting with a specific, defined group within that market.

The types of target markets are often segmented by characteristics such as:

• Demographics: age, gender, education, marital status, race, religion, etc.
• Psychographics: values, beliefs, interests, personality, lifestyle, etc.
• Business Industry: Business industry or vertical
• Geographic Areas: neighborhood, area code, city, region, country, etc.

Why Is Targeting in Marketing So Important?

Targeting in marketing is important because it’s a part of a holistic marketing strategy. It impacts advertising, as well as customer experience, branding, and business operations. When your company focuses on target market segmentation, you can do the following:

1. Speak directly to a defined audience

Marketing messages resonate more deeply with audiences when readers can relate directly to the information. Brands that have a large, varied market of customers often struggle with creating marketing campaigns that speak directly to their audience. Because their viewers are very different, few slogans or stories can resonate with each person on a personal level. Through target marketing, you can alleviate this problem and focus on crafting messages for one specific audience.

2. Attract and convert high-quality leads

When you speak directly to the people you want to target, you are more likely to attract the right people. Your marketing will more effectively reach the people most likely to want to do business with you. When you connect with the right people, you are then more likely to get high-quality, qualified leads that will turn into paying customers.

3. Differentiate your brand from competitors

When you stop trying to speak to every customer in your market and start focusing on a smaller segment of that audience, you also start to stand out from competitors in your industry. When customers can clearly identify with your brand and your unique selling propositions, they will choose you over a competitor that isn’t specifically speaking to or targeting them. You can use your positioning in marketing to make your brand more well-known and unique.

4. Build deeper customer loyalty

The ability to stand out from competitors by reaching your customers on a more personal, human level also creates longer-lasting relationships. When customers identify with your brand and feel like you are an advocate for their specific perspectives and needs, they will likely be more loyal to your brand and continue to do business with you over a longer period of time.

5. Improve products and services

Knowing your customers more intimately also helps you look at your products and services in a new way. When you have a deep understanding of your target audience, you can put yourself in their shoes and see how you can improve your offerings. You can see what features you can add to better serve your customers.

6. Stay focused

Finally, the benefit of using targeting in marketing is that it also serves to help your brand and team. Target marketing allows you to get more specific about your marketing strategies, initiatives, and direction of your brand. It helps you clarify your vision and get everyone in the organization on the same page. You have more direction when it comes to shaping upcoming plans for both marketing and the business as a whole. A focused approach helps you fully optimize your resources, time, and budget.

Positioning

A marketing strategy that aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer. Companies apply this strategy either by emphasizing the distinguishing features of their brand (what it is, what it does and how, etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or luxurious, entry-level or high-end, etc.) through advertising. Once a brand is positioned, it is very difficult to reposition it without destroying its credibility. Also called product positioning.

The types of market you are in determines the type of business strategy you need to have. Strategies for consumer markets are completely different from that of industrial markets. Industrial markets deal in bulk product selling whereas consumer products generally involve breaking the bulk. Costing and marketing is a critical function for both types of markets.

Furthermore, with the rise of globalization, companies have themselves gone global and thus their marketing strategies have adapted accordingly. There are several factors which are added to normal business strategies when you are considering going global. And last but not the least, the Government and Institutional business which are the real revenue generators because of their huge orders.

Types of Markets are:

1. Consumer Markets

As the name suggests, the consumer market involves marketing of consumer goods such as Television, Refrigerator, Air conditioners etc. As awareness and knowledge of consumers rises, marketing of consumer goods gets tougher. Today a lot of focus has shifted to consumer goods marketing because a consumer has a lot of choices. The brand loyalty is at its lowest and the worst fear a brand can face now is a high rate of brand defection.

Along with the branding part, the costing part too needs to be considered in the consumer market. The cost of operations is too high with various departments and specialities coming together to form a consumer goods companies. There is inventory management, logistics, manufacturing, promotions, strategies and whatnot. The presence of a tangible product increases the importance of proper planning without which a consumer goods company is sure to fail. Consumer durable market is characterized by the presence of high competition, penetration pricing, dynamics of channel management and finally a high expense on manufacturing and distribution.

2. Business Markets

Similar to consumer markets, nowadays even the organizational buyer has numerous options in his kitty. Just at the number of software and hardware services providers in the Market. For software there’s IBM, Accenture, Oracle and several other top brands. For hardware there’s Microsoft, Dell, and others. The competition is increasing. Furthermore, the organizational buyer will think 4–5 times before purchasing a product because of the cost involved. An order for computers for an multinational company’s office will probably go in crores.

Because of the cost involved, Organizational buyers make it a point to be much more knowledgeable than any average customer. Organizational buyers have a group of dedicated people who form the “Purchase department”. These people are responsible for buying at the lowest possible price they can. The other characteristics of business markets is the time taken to close the deal. Business markets involve selling of projects too. Projects take time to be analysed and to fix up a price as they consider the cost of inflation while the project is in progress. Thus they need proper planning else the cost of the project would take a hit on the profits for the company.

Finally, In case of business markets, the sales force, the price and the product have a much upper value than the promotions. This is absolutely opposite to consumer markets where promotions makes a huge difference to the consumer buying process. Some services such as Accenture and Intel hardly advertise their products nowadays. They just advertise their presence in the market. The rest is done by the quality of products they have. Same goes for Microsoft. Of the 4 P’s of the marketing mix, promotions is the most ignored in case of business markets.

3. Global Markets

The changes in the cost of transportation, government policies and the overall need for expansion have given an impetus to globalization. The strategies of global market companies may differ from each other but the core concept is the same. Most global marketing companies work on one fundamental. “Think local, act global”. The company which comes at the top of my mind is McDonalds and Coca Cola. Both known for their global presence as well as for the way they customize their message based on the country they are in.

Companies may be global on the basis of both – business to business as well as business to consumers. The challenges faced by global companies are much more than those faced by local companies. Firstly lets look at the options they have for modes of entry. How do they enter a country? Do they partner with some local company? Do they export their product? Or they shift a part of their operations in the country to directly establish their presence? Multiply these questions with the cost of operations involved as well as the amount of information which needs to be accessed.

Nonetheless, Global expansion is an excellent option for any company provided it has deep pockets to sustain the initial expenditure required to establish yourself in another country.

4. Government or Non profit Market

The government market mainly involves Government offices, ordnance factories, army, navy and other government departments. The non profits on the other hand may involve groups based on different beliefs some of which really have an excellent brand name and are recognised by several companies. Both of these entities have a limited purchasing budget and hence the price of products is important. Accordingly the purchase process is organized.

Most government and non profit organizations involve the issuance of tenders and bids. The one to bid the lowest is known as L1 and the one to bid the highest is known as H1. Naturally, L1 wins the bid. There are several companies which have modified their products specifically for the government markets to come L1 in these tenders and bids. The products may be a bit inferior, nonetheless they do meet the government’s requirement and that is what matters in the end.

Each of these markets can be tapped separately by companies. In fact, some consumer durable companies have different departments for corporate sales and government sales. Tapping each of these markets provides an avenue for the company to expand their market share and overall revenue generated by the company.

How would you describe your store’s ideal customer? Would you be able to map out where they came from, how they ended up on your site, and what products they first purchased?

Finding answers for these sorts of questions can help your team understand which new customers are the best to acquire, but surfacing the answers to those questions can be hard.

The number of data points that a marketing team can bring to bear continues to expand, and it takes time to know which variables to focus on. It’s easy to get bogged down in this process and let valuable customer information go to waste.

To help jump-start your explorations, I’ve listed the following “essential seven” variables that we’ve found are most predictive of a customer’s lifetime value, regardless of industry or vertical.

Try segmenting on these seven key variables in different combinations to figure out which are most meaningful for your business. Then you can use that information (for example, your best customers live in rural areas and come from paid search) to find more customers like your best ones.

The Seven Essential Segmentation Variables

1. Acquisition Path

How a customer ended up on your site to make the first purchase says a good deal about how he or she is likely to shop over time. Do some digging on your own as the implications fluctuate from retailer to retailer.

Example: A retailer could cut spending on Facebook after discovering that subscribers acquired through that channel converted to paying customers at a much lower rate than those acquired elsewhere.

2. First Purchase

A shopper’s first purchase says a lot about what type of customer he or she is likely to become. Brand, category and sub-category can give you strong conclusions on things like price sensitivity, shopping persona, and level of attachment to your store.

Example: A fashion retailer could change its retention marketing program after learning that customers whose first purchase was a sweater were over three times more likely to repeat in their first 90 days than customers who started by buying in other categories.

3. Device Type

For many retailers, shoppers who come in on certain device types are inherently different from those who arrive through the more conventional desktop route.

Example: A daily deal site might discover that its iPhone customers are worth twice as much as desktop customers – and change the way it targets and communicate with these customers accordingly.

4. Geography

Geography gives a surprising amount of valuable info on your customers. Beyond the low-hanging fruit (e.g., cities like New York and San Francisco tend to be both wealthier and more fashion-forward), geography can also give insight into the density of brick-and-mortar shopping options as well as regional shopping preferences.

Example: An apparel retailer might discover that its Midwestern customers are worth far more than average because they tend to buy pricey knits and outerwear during the cold winter months so its acquisition marketing team could begin targeting new customers from the region.

5. Income

Product preferences and even repeat rate can vary widely with disposable income. Tip on finding this info: Many data providers will provide you with their best guess on an individual’s income or assets by looking at median income or median home price in particular ZIP+4’s.

Example: A retailer could use a customer’s predicted income level to determine the right items to show him or her in emails.

6. Gender

Gender can say a lot about a shopper’s predicted spend. For example, a lifestyle retailer may be surprised to discover that although its target demographic is male, its female customers are actually more valuable.

Example: This luxury retailer’s marketing team could use this insight to transform the messaging and creative of their display advertisements.

7. Age

The relationship between age and lifetime value tends to vary from retailer to retailer, but is almost always a source of insight for lifetime value segmentation. Some retailers may find that their younger customers skew more valuable because of a greater level of comfort with e-commerce transactions. Other retailers may find that older customers tend to be more affluent, more brand-loyal, and less prone to price comparison.

Example: A fashion retailer could start targeting an older demographic after discovering that its older customers tend to be more affluent, more brand-loyal, and less prone to comparison shopping.

A detailed marketing plan related to the of the business, its targets and ways and methods to achieve it, in relation to retail is known as retail strategy.

It is important for a retail store to form a strategy to promote its goods and services and reach the right set of customers the primary objective of the retail strategies to increase sales as well as customer satisfaction equally.

Generally speaking, a retail plan is dependent on a lot of factors like products the store location of the store nature of customers and other multiple external factors like competition, physical and political restraints, seasonality, etc.

It is crucial that one considers all of these factors while planning and deciding the retail strategy.

Factors to consider while designing a retail strategy

While designing and retail strategy, it is important to consider many factors which influence the retail business. The retailer should consider these factors keep in mind the cell project and then design the retail strategy.

Although retail strategy would be different for different retailers near is a common guideline that is followed by almost all retailers while designing a successful retail sales strategy are as follows:-

1. Know thy customers

Almost every retailer would agree with the fact that knowing the customer is the foremost important factor for designing the retail strategy.

The customer is the one who is going to purchase the material which is why knowing the customer would mean knowing the likes and dislikes of the customer the preferences and tastes of different types of customers and the current trends in the market.

E-commerce websites are much ahead as compared to brick and mortar store in this category. The retail store opens at a particular time and closes at a particular time and also the best of the service can be provided during the working hours the brick and mortar store fails to provide service after hours.

This is when e-commerce websites come into the picture you not only send reminders to the customer to buy a particular product when in stock but also show the products related to the ones that are browsed by the customer again and again to ensure that the customer buys the product.

E-commerce apps show related products to the ones that are selected by the customer and try to increase the span of choice of the customer. No matter what strategy the retailer employs, knowing the customer will always be a significantly important part.

2. Get new and retain old

It is essential that the retailer retains the customers. With the use of advertising and marketing campaigns retailer can get new customers, but similarly, the focus should be equally on retaining the existing customers as well.

The existing customers important for repeat purchases, what is the new customers will be important from the point of view of the expansion of the business. Existing customers will form the base of the business, and the retailer has to look to grow beyond the base by capturing the new customers.

Different strategies can be used to track new customers by promoting on the website or associated with social media.

3. Know your business

Knowing the retail business is also an important factor in designing the retail strategy. It is crucial that the retailer considered the nature of the business and the nature of the goods that are sold.

For example, the retail business of having vegetables and other perishable items is very different from the retail business of having grocery, which is also very different from the retail business of furniture.

All of these businesses require a different strategy, and the important part of this is to know the product and the business. Knowing the business also means knowing the story of the location and how the to impact that is on the customers.

Location plays a very crucial role in the retail business. More than 50% of the business depends on the location and the convenience of the customers, which is why the retail strategy should be designed by keeping the location and mind.

These sentences are not a problem in case of e-commerce websites which are available 24/7 at the convenience of the customers.

For them knowing the business would mean using the right marketing strategy and targeting the right set of customers. Customer targeting is the most important part in case of e-commerce retailers. Social media is the platform used by e-commerce websites in order to promote their products to the target audience.

4. Know the competition

Retail store with multiple competitors in the neighborhood, and it is important that the retail store knows about its competition and the unique offerings of that competition.

The retailer should invest time in understanding the strategy of the competition and what is it that the competition is getting right so that the retailer can incorporate those changes in his own store.

The retailer himself also should try to get an edge over the competition by unique offerings over the competition. Focusing on services is another important strategy that the retailer should apply in order to have the edge over the competition since servicing the customers is the only differentiating factor which the retailer an employ.

In terms of service, the retailer can provide free home deliveries for assisting the customers with their purchases are specialized offers for the customers who regularly shop at the retailer for providing membership cards on membership points for privileged customers.

Retail strategies to boost sales

Multiple strategies adopted by multiple retailers in order to boost the volume of sales in the business. Although most of the retail businesses differ from each other more often than not, their employee the following common strategies in order to increase their sales.

1. Partnerships

The easiest way to promote yourself would be to partner with similar businesses. This store can achieve this by using different techniques like partnering with different retailers of different businesses in the same location who will provide a reference to that particular retailer when the customer walks to other retailers of different businesses.

The associate retailers with the direct customer to that particular retailer and he will get a new customer. Partnerships can also be done with different stores in a different area so that the customers are directed to the retailer.

This partnership can be mutually decided for paid depending on the terms of business. Every customer referral may be chargeable by the other retailers, or the retailer can return the favor by directing the customers to his reference when they ask for a product which the retailer does not have.

2. Social media

The easiest way to reach a particular set of the targeted audience is social media.

With the help of social media, unwanted advertising expenses can be avoided, and only specifically filtered customers can be targeted, and the store can be positioned. Using Facebook has become very common to promote a business.

Facebook offers large exposure to multiple people in the neighborhood and with a customer is set of targeting an audience selection preferences in Facebook advertising it is easier and effective for an advertiser to promote his product or service or in case of the retailer is business.

Starting a facebook group is also not uncommon where the retailer can promote different offers and schemes that are running in order to pull the customers. Paid Facebook ads are also another retail sales strategy wherein the business can be promoted with minimum cost and reach a tremendously high number of audience.

Instagram these days is in the neck to neck competition with Facebook, and most of the businesses from fashion industry prefer Instagram over facebook in order to target their audience. With high-quality photos on Instagram, it is easy to promote the business to a particular set of audience.

Different tools from Instagram like using proper hashtags making different stories in the Instagram profile, help to promote the business effectively. Many businesses also use other social media like Twitter, YouTube, LinkedIn, and even Google PayPerClick campaigns in order to promote their retail businesses.

3. Referral campaigns

The existing customers of a retail store can be asked to refer for new customer after which both the existing and referred customer will get a discount on a few products, or the retailer can also offer freebies. Referral campaigns proved to be successful because getting a new customer would be the job of the existing customer, whereas the retailer can focus only on strategies to retain the existing customer.

Referral campaigns are similar to word of mouth campaign which is promoting two different customers by the existing customers, but the difference is that in case of referral campaigns the customers get paid for every successful referral which is not the case in word of mouth campaign.

4. Instore advertising

Many retail stores have fantastic advertising inside the store, which instantly converts walk-in customers. These stores utilize their windows with large displays of the products highlighting offers and the best of their stuff so that it attracts the window shoppers.

Window advertising is seen commonly in tourist places where the tourists are unaware of the local products, and the store can help themselves promote with window advertising. Part of in-store advertising is also to have multiple variations of the same product which will cater and be to the liking of most of the customers.

Using merchandise which matches the products is also seen in many stores and can be used as a strategy. Use of bright lighting, bright interiors which compliment the store and the products can help in faster conversion of the customers.