Hiresh Lamani-0526-Maketing Strategies of Subhiksha

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Marketing Strategies of Subhiksha Retail Outlet in Bangalore M.P.Birla Institute of Management 1 MARKETING STRATEGIES OF SUBHIKSHA RETAIL OUTLETS IN BANGALORE A DISSERTATON SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MBA DEGREE OF BANGALORE UNIVERSITY BY Hiresh Lamani Reg.No-05XQCM6030 Under the guidance and supervision Of DR K.V PRABHAKAR Senior Professor M P Birla Institute of Management Bangalore M P BIRLA INSTITUTE OF MANAGEMENT (ASSOCIATE BHARATIYA VIDYA BHAVAN) #43, Race Course Road, BANGALORE. 560001 2007

Transcript of Hiresh Lamani-0526-Maketing Strategies of Subhiksha

Page 1: Hiresh Lamani-0526-Maketing Strategies of Subhiksha

Marketing Strategies of Subhiksha Retail Outlet in Bangalore

M.P.Birla Institute of Management

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MARKETING STRATEGIES OF SUBHIKSHA RETAIL OUTLETS IN

BANGALORE A DISSERTATON SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE AWARD OF MBA DEGREE OF

BANGALORE UNIVERSITY

BY

Hiresh Lamani Reg.No-05XQCM6030

Under the guidance and supervision

Of

DR K.V PRABHAKAR

Senior Professor

M P Birla Institute of Management

Bangalore

M P BIRLA INSTITUTE OF MANAGEMENT

(ASSOCIATE BHARATIYA VIDYA BHAVAN)

#43, Race Course Road, BANGALORE. 560001

2007

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DECLARATION

I hereby declare that this dissertation entitled a study on “MARKETING

STRATEGIES OF SUBHIKSHA RETAIL OUTLETS IN

BANGALORE” is the result of my own research work carried out under the

guidance and supervision of Dr. K V Prabhakar, Senior Professor, M P

Birla Institute of Management, Bangalore

I also declare that this dissertation has not been submitted earlier to any

Institute/organization for the award of any degree or diploma.

Place: Bangalore

Date: (Hiresh Lamani)

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CERTIFICATE

This is to certify that this dissertation entitled “MARKETING

STRATEGIES OF SUBHIKSHA RETAIL OUTLET IN

BANGALORE” is the result of research work carried out by Mr. Hiresh

Lamani under the guidance and supervision of Dr K V Prabhakar, Senior

Professor, M.P. Birla Institute of Management, Bangalore.

Place: Bangalore (Dr. Nagesh S Malavalli)

Date: Principal

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CERTIFICATE

I hereby state that the Dissertation entitled “MARKETING STRATEGIES

SUBHIKSHA RETAIL OUTLET IN BANGALORE” is the project work

carried out by Mr. Hiresh Lamani under my guidance and supervision

Place: Bangalore (Dr K V Prabhakar)

Date: Senior Professor

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ACKNOWLEDGEMENT

I am happy to express my gratitude to Dr. N. S. Malavalli, (Principal, M. P.

Birla Institute of Management and many valuable ideas imparted to me for

my project.

I extend my sincere thanks to Professor Dr. K. V. Prabhakar (Senior

Professor) M.P.Birla Institute of Management, Bangalore for providing

me all the Information required and the guidance throughout the project

without which this project would not have been possible.

Place: Bangalore

Date: (Hiresh Lamani)

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C O N T E N T S

SERIAL NO PARTICULARS PAGE NO

CHAPTER-1 EXECUTIVE SUMMERY 1

CHAPTER- 2 GROWTH OF RETAIL OUTLETS IN THE MODERN MARKETING SCENARIO 2-7

CHAPTER-3 INTRODUCTION TO SUBHIKSHA 8-11

CHAPTER-4 SUBHIKSHA AT BANGALORE 12-13

CHAPTER-5 OPERATIONAL STRATEGIES OF SUBHIKSHA 14-17

CHAPTER-6 KALIEDOSCOPE OF STRATEGIC MARKETING 18-21

CHAPTER-7 AN OVERVIEW OF MARKETING STRATEGIES IN RETAIL OUTLET 22-29

CHAPTER-8 LITERATURE SURVEY 30-34

CHAPTER-9 PROBLEM STATEMENT 35

CHAPETR-10 RESEARCH OBJECTIVES 36

CHAPTER-11 RESEARCH DESIGN 37-40

CHAPTER-12 RESEARCH LIMITATIONS 41

CHAPTER-13 PROFILE OF RESPONDENTS 42-43

CHAPTER-14 DATA ANALYSIS AND INTERFACES 44-55

CHAPTER-15 MAJOR FINDINGS 56-57

CHAPTER-16 RECOMMENDATIONS 58-61

CHAPTER-17 ANNEXURE 62-68

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LIST OF TABLES

SERIAL NO

TABLE PAGENO

1 Disposable income Vs No of respondents in % 44

2 Expense on daily needs per month (Rs) 45

3 Respondents who are buying from subhiksha 46

4 How often respondents visit Subhiksha 47

5 Outlet convenience 48

6 Responses towards brands 49

7 Media used for communication 50

8 Response about lowest price in Subhiksha 51

9 Pricing strategies of Subhiksha 52

10 Response about pricing strategy 53

11 Sales promotional activities at Subhiksha 54

12 Responders ratings towards service activities at Subhiksha 55

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LIST OF CHARTS

SERIAL

NO CHART PAGE

NO 1 Organized retailing in India 6

2 Age profile 42

3 Gender profile 43

4 Profession profile 43

5 Disposable income Vs No of respondents in % 44

6 Expense on daily needs per month (Rs) 45

7 Respondents who are buying from subhiksha 46

8 How often respondents visit Subhiksha 47

9 Outlet convenience 48

10 Responses towards brands 49

11 Media used for communication 50

12 Response about lowest price in Subhiksha 51

13 Pricing strategies of Subhiksha 52

14 Response about pricing strategy 53

15 Responders ratings towards service activities at Subhiksha

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EXECUTIVE SUMMARY The Indian retail sector is going through a transformation and this emerging

market is witnessing a significant change in its growth and investment pattern.

Both existing and new players are experimenting with new retail formats.

Currently two popular formats -hypermarkets and supermarkets are growing

very fast. Apart from the brick -mortar formats, brick -click and click-click

formats are also increasingly visible on the Indian retail landscape. Consumer

dynamics in India is changing and the retailers need to take note of this and

formulate their market strategies and tactics to deliver value to the consumer.

The research that forms the basis of this dissertation was carried out at Subhiksha

super market, an offline retailer based in Bangalore. The core business of

Subhiksha is retailing of food products, fresh vegetables and pharmacy products

on discount prices.

The main objective of this project is to formulate the marketing strategies of

Subhiksha super market outlet in Bangalore. The research also involves analyzing

the past promotional strategies and reach ability and also to determine the future

promotional efforts of the company.

The research finds that the Subhiksha retail outlet in Bangalore is formulating

good marketing strategies which are useful the company and these marketing

strategies are generating good result. But some improvements are required as per

the respondents.

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GROWTH OF RETAIL OUTLETS IN THE MODERN MARKETING SCENARIO

Organized food retailing is a relatively new phenomenon in India, with small

Western-style supermarkets only starting to appear since the 1990s. Most food is

still sold through local ‘wet’ market vendors, roadside pushcart sellers or tiny

kirana (grocery) stores. Although less than one per cent of food is estimated to be

sold through supermarkets, this share is growing rapidly. Most supermarkets

resemble the small independent operations that existed in Australian cities and

towns about 20 years ago, typically occupying from 275-750 square meters and

carrying about 6000 stock-keeping units. Most of the supermarket development

has occurred in the south of the country in the major cities of Bangalore, Chennai

and Hyderabad, as well as New Delhi and Mumbai in the north. According to the

estimated 500 shopping malls are expected to be built by 2010 from a near-zero

base in 2000, in a trend that can benefit Australian producers by providing greater

visibility and shelf space. Convenience stores are also taking off in major cities,

usually in the form of Shell shops or Food Stops attached to petrol station outlets.

The format and product range is surprisingly similar to those in Australia, and they

often include chilled and refrigerated sections. Market analysts estimate the

organised retail sector has been growing by nearly 30 per cent a year since 2000

with similar growth likely in the short-to-medium term. The sector is expected to

undergo further change with prospective new domestic and global foreign

entrants, and the takeover or exit of some existing participants. Global players

such as Wal-Mart (US) and Carrefour (France) have indicated their plans to enter

India once Indian foreign investment regulations permit.

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Food retailing in India

Traditional local markets and small-scale retailing continue to dominate India’s

food retail sector. There are an estimated 12 million retail outlets, of which almost

seven million sell food and grocery products. The vast majority of these are small

kiosks (17 per cent), general provision stores (14 per cent) and grocery stores

(called kirana; 56 per cent of all rural retail outlets) run by a single trader and his

family. With more than 71 per cent of the population living in small villages and

engaged in agriculture, most of India still does its food shopping at small-scale

vendors in the local village, or at larger-scale weekly markets often serving several

villages in one area, where small individual vendors trade. In the towns and cities,

most consumers do their food shopping at the local neighborhood independent

small retailers, kiosks and street hawkers. Servants in high income households

usually undertake this task. Most cities and towns also have one (or more) large

central fresh produce market where wholesalers and retailers (plus some

consumers) procure their supplies for the day from individual traders. The Food

Corporation of India (FCI) has an extensive nationwide network of about 478,000

fair price shops and sells subsidized food grains and certain other staples, but since

the retargeting of the Public Distribution System (PDS) in 1997 to focus on the

poor, these are only available for those below the poverty line set by the

government. There are also a few other chains of government-operated provisions

stores, such as the Kendriya Bhandar (about 120 stores nationwide) run by the

Ministry of Personnel, Grievances and Pensions, and the canteen stores (about 34

plus 3400 canteens) run by the Ministry of Defence, which are exclusively for

Defence personnel. Thus the majority of food and beverage retailing in India is

categorized as belonging to the unorganized sector. There is no firm data for the

total value of India’s annual food and beverage expenditure, however there are

various calculations and estimates, such as about US$90 billion by 2000 based on

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the Indian government’s estimates of average urban and rural household

expenditure on food and beverages, and about US$135 billion by 2004 and

growing at 4-5 per cent a year, based on industry estimates cited by the USDA.

However it is commonly believed that less than one per cent of food and beverage

retail sales take place through the organized retail sector, though this share is

estimated to be growing rapidly. An early form of ‘supermarket’ has been around

in India for some time: the single-unit, smarter family owned grocery and

provisions store, now calling itself a supermarket (while others may call it a

‘super-kirana’), of which there are at least five to 20 in each city. Another form is

a specific food and grocery section contained in some department stores, such as

the Sahkari Bhandar department store chain, which has about 16 stores in

Mumbai. But it is only in the past decade or so that a form of supermarket akin to

a Western-style supermarket, albeit on a smaller scale, has started to appear in

India, mainly in certain cities of southern India plus in New Delhi and Mumbai.

One of the pioneer supermarket chains was created in 1995 through a technical

agreement (and from 1999 by a 51/49 joint venture) between India’s Calcutta-

based RPG Group and the UK’s Jardine Matheson Group’s Hong Kong-based

subsidiary Dairy Farm International. The joint venture converted the loss-making

old Spencer department store chain owned by the RPG Group into the Food world

supermarket chain, with about 94 stores in several southern cities, including

Chennai, Bangalore, Hyderabad and Pune, by 2005. While Dairy Farm aims to

continue expanding the Food world chain, the RPG Group decided in 2005 to sell

its 51 per cent share in the Food world joint venture, though possibly retaining half

the supermarkets rebranded as Spencer’s. RPG Group plans to focus on

developing its other retail businesses including the Spencer hypermarket chain,

which had three stores opened by 2005 (in Hyderabad, Visakhapatnam and

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Mumbai), and a plan for 20 stores across India by 2007 in existing cities plus

others such as Chennai, Bangalore, Delhi, Calcutta, Ahmadabad, and Chandigarh.

Several other Indian-owned companies have developed chains of supermarkets,

hypermarkets or convenience stores, mostly in major cities in the southern states

plus in Mumbai and Hyderabad. Another pioneer, the Nilgiri supermarket chain,

opened its first supermarket in Bangalore in 1971 and by 2005 had built a network

of 30 stores, both company-owned and franchised, in the states of Tamil Nadu,

Andhra Pradesh, Maharashtra and Karnataka. The Hyderabad-based Trinethra

Group opened its first supermarket in 1986, expanded to 68 stores

by 2004, then acquired the 12-store Fabmall chain in Bangalore, in partnership

with a new 50 percent equity investor, Bangalore-based GW Capital, to enable

further expansion into more states. Fabmall now has a total of 28 stores in

Bangalore and Chennai. Other significant chains include the Subhiksha discount

supermarket chain, with 72 stores in Tamil Nadu, and Pantaloon Group’s 42 Food

Bazaar supermarkets and Big Bazaar hypermarkets in major metropolitan centres.

The Indian government has taken a cautious approach to allowing foreign direct

investment (FDI) in food retailing (and retailing generally), with majority foreign

ownership in food retail chains not allowed, and approvals generally given on a

case-by-case basis. (In February 2006 the government made a small concession on

FDI in retailing, by announcing that up to 51 per cent in retailing of “single brand”

products would be allowed.) Since the joint venture of the RPG Group and Dairy

Farm International was approved in 1999, only Germany’s Metro Group (with two

Metro Cash & Carry wholesale stores opened in Bangalore so far since 2002), and

the South African-owned Shop rite Group in partnership with a local investor

(with one Shop rite hypermarket opened in Mumbai in late 2004) have been

permitted to set up operations. Local foodservice group Radhakrishna has also

gained a license for food wholesaling in partnership with France’s Intermarché

Group, whereby independent food retailers can sign up for use of the Spar store

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brand. Several major multinational corporations, in particular Wal-Mart, have

been lobbying the Indian government to allow majority foreign ownership in

retailing. Wal-Mart has indicated that it would significantly increase its sourcing

from Indian suppliers from its current level of US$1.5 billion a year (so far mainly

non-food products, but likely to soon include some food products, such as basmati

rice, tea, spices, seafood), if it were allowed to set up retailing operations. Major

Indian retail groups, such as the RPG Group and the Pantaloon Group, have

expressed their strong opposition to allowing more foreign direct investment into

Indian retailing, especially majority foreign ownership. They argue that the sector

is still at a very early stage of development and multinationals such as Wal-Mart

would swamp local players, especially the kirana-wallahs.

However the Indian government appears to be considering some degree of

liberalisation, in the interests of improving efficiency in retailing and supply

chains and so strengthening the integration of the Indian agrifood market, plus

opening possible new avenues for Indian exports via multinational retailers.

Organized retailing in India

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Australian presence in India food retail outlet

Nearly all the major retail outlets, such as Food World, Metro and Nilgiri’s, sell

Australian food but none of them imports directly. There are a number of

importers and consolidators based in India that import food products from

Australia and distribute to various retail outlets.

The Australian Food to Southern India partners are making significant progress in

identifying potential retail partners for Australian exporters.

The supply of grocery items destined for Indian retailers usually initially requires

consolidation because of small volumes.

Market entry – best prospects

� Jams � Pasta � Sauces � Biscuits � Confectionary � Bar syrups � Honey � Juices � Wines � Breakfast cereals � Dietary foods � Health supplements � Canned seafood � Tomato paste � Ingredients for food service industry � Canned fruit and vegetables � Bakery ingredients – bread improvers, multi-grain flour, essence, marzipan etc � If market access is obtained, dairy – butter oil, skimmed milk powder and specialty cheese � Pulses – mung beans, chickpeas, lentils and field peas � Fresh fruits – mainly apples and also pears, grapes, citrus and stone fruit

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INTRODUCTION TO SUBHIKSHA

Founder

Subramanian who did his B.Tech from IIT and PGDBM (MBA) from IIM,

Ahmedabad has many first to his credit like starting asset securitization in early

90s, IPO financing in 94 and debentures trading. He has established Subhiksha

departmental store at Tiruvanmiyoor, Chennai in March 1997.

Entering the retail market ten years ago

There was no great logic behind entering the retail market in 1997. They made a

study of two areas: software and retail. Between software and retail, they thought

they were a bit late for software as Satyam, Infosys, Wipro, TCS, etc had already

established by then. They didn’t want to be a small and late entrant.

In retail, they would be one of the early entrants, so they would have the learning

curve much to their advantage. They allocated a Rs 5 crore (Rs 50 million) corpus

to it and entered the retail business. There was a lot of thought process behind it.

They wanted to attract not the top end customer but the aam aadmi.

From their research of three months, they found that consumers prefer buying

groceries from closer home. So, they decided to set up 1,000 sq ft shops all across

the city and not a 10,000 sq ft big store at one location in Chennai.

The next question was why would he come to our store abandoning the existing

store? It had to be the price, because ultimately there is no difference between the

branded products like say Boost or Surf or such things. So, they decided to sell

branded products at a lower price.

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On starting Subhiksha

They looked at all sorts of names; and finally they chose the Sanskrit word

Subhiksha (prosperity) because it reflects the Indian ethos and it is a word that can

be understood all over India. What they were trying to do was different from the

western model; their model is truly Indian. Their theme was, why pay more when

you can get it for less at Subhiksha?

In March, 1997, they opened their first store in Thiruvanmiyoor in Chennai with an

investment of around Rs 4-5 lakh (Rs 400,000-500,000). They opened it with the clear

idea that it is part of a larger system. They thought the day they opened, there would be a

stampede because the prices were low and they would sell goods of Rs 30-40 lakh (Rs 3-

4 million) by the month end. But there was nothing of that sort! They sold goods of only

Rs 5-6 lakh (Rs 500,000-600,000) in the first month.

Consumers were very surprised, and they gingerly looked at the products and

asked, are they seconds or old stock or defective products? In the first year, they

opened ten stores in Chennai.

They also started selling medicines at a discount. On the third day of their opening

the pharmacy, there were about 100 people outside their store in the morning.

They thought all of them were waiting to buy from their store. What they were

expecting on day one happened on day three, they thought happily. But they soon

found that people who standing outside were not there to buy anything; they were

chemists from the neighborhood who had come to do a dharna (protest) saying

Subhiksha could not sell medicines at a discount.

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Finally they had to go to court, and it was only in 1999 that the Supreme Court

gave a ruling that they could sell medicines at a discount. Subhiksha is doing quite

well on the pharma front and they enjoyed all the attention they got.

Another thing is the medicines that Subhiksha were selling at a discount were

bought mainly by the elderly who have no fixed income and they welcomed any

discount. Subhiksha people were quite happy to be able to help them in some way.

Medicine retailing is more of a service than business for them. Of course, it is

good business for Subhiksha too. But their main motto is service.

Expansion plans

By March 1999, Subhiksha started expanding rapidly. From 14 stores, they

expanded to 50 stores by June 2000. In the next two years, they had 120-130

stores across Tamil Nadu. Another big thing was, in 2000, ICICI Venture invested

in their company. Today, they have 145 stores all over Tamil Nadu.

Subhiksha saw to it that the moment they got into a city, they started as many

stores as possible there. Only that made business sense. Then, till 2004, they made

sure that they consolidated before they expanded, though there was a lot of

pressure on them to expand nationally.

They decided to look at every part of India which is significantly literate and is a

significant consumption market. Subhiksha wanted to be everywhere. They looked

at the telecom companies as their role model because these companies employed

capable regional managers and expanded.

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Subhiksha business is also extremely local. They can't sit in Chennai and run a

store in Chandigarh. They decided to have very good quality people to run the

region, area, town and the store.

In 2004-05, they decided to have 420 stores in places like Gujarat, Delhi, Mumbai,

Andhra and Karnataka by 2006-07. In 2005, they started recruiting people in

various regions. Subhiksha is already India's largest retail chain store with 500-

plus stores. They plan to have 1,000-plus stores by the end of this year.

India is a large country and there are still opportunities to avail of. Though now,

the thought of opening stores outside India is not tempting because there are

enough opportunities in India. They may look at overseas markets too. Probably

they open 2,000 or 2,500 or 3,000 stores in India.

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SUBHIKSHA AT BANGALORE

Subhiksha, a Chennai based supermarket and pharmacy discount chain, opened the

doors of its first store at Bangalore in the year 2005-2006. Subhiksha has now

become Bangalore’s major discounter outlet. Right now in Bangalore Subhiksha

operating 42 outlets and planning to open some more in couple months. They are

in Bangalore with four major verticals viz Supermarket / Grocery, Fruit&

Vegetables, Pharmacy & Telecommunication.

Some major events/milestones at Subhiksha in Bangalore

42 Subhiksha Fresh stores in operation at prime locations all across the

Bangalore

Software integration when fully operationalised and it’s a first initiative of

its kind in Indian Fresh produce industry.

Soft launch Catchments and target customer focused low cost but highly

effective promos.

Full fledged media launch is there by which all businesses at stores going

live.

60% of planned volumes and 80% Gross Margin targets in first fortnight of

launch itself.

Tremendous initial response, unexpected customer pull, good customer

feedback Good business.

Market information system designed and placed across all the retail,

wholesale markets and supply areas in and around the metro city during last

couple of months has started yielding dividends.

Strategic teams for Backend (Sourcing & Procurement), Warehouse,

Logistics, Front-end (Sales & Marketing), Market Information Systems,

MIS, Merchandising, Training and Manpower Development getting hands-

on experience. – Teams are working 24x7 with great enthusiasm.

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Warehouse, Suppliers, Hardware Vendors, Strategic Business partners,

Collaborators, legal formalities and other backend infrastructure etc in real

time test mode. – No major hiccups or show stoppers.

Stores fit outs and allied retail infrastructure is in various stages of

readiness at many locations in Bangalore.

Teams are raring to go for 2nd phase launch of another 30 outlets on second

term of 2007.

According to Bangalore Subhiksha executives, every outlets presence has

registered a 300 per cent increase in footfalls and a 145 per cent growth in

sales since the initial campaign was launched. Subhiksha allows a household to save around Rs 400 every month on its

basic necessities. On a yearly basis, Rs 48,000 is what the average

household spends on items such as groceries, vegetables and toiletries. This

amounts to Rs 3,000-4,000 per month, and as Subhiksha offers an 8-10 per

cent reduction in price on the same items/brands as other shops, the total

saving is about Rs 400 a month.

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OPERATIONAL STRATEGIES OF SUBHIKSHA

Subhiksha has not positioned itself against established players like Nilgiris or

Food World in retail marketing, who have set up air-conditioned outlets. Rather, it

aims to make its aggressive pricing strategy its brand equity against the

neighborhood grocery shops.

Mr K. Balasubramanian, Manager, Subhiksha Trading Services (P) Ltd, Chennai,

told Business Line , ``The company is emulating the worldwide trend of garnering

the benefit of organized retailing by efficiencies and economy of scale, which in

turn brings down the cost to the consumer.''

Apart from the entire range of branded grocery and cosmetic products, Subhiksha

retails medicines at lower prices. In fact, this aggressive pricing of medicines drew

strong protests from organized pharma traders. The company was forced to

approach the Supreme Court to ensure that its rights were protected and is able to

procure and sell medicines at discounted rates to ``Subhikshites''.

Explaining how his company was able to sell at a substantial discount to the MRP

in spite of its overheads and investment in technology, Mr Balasubramanian said

this was possible because of cost-cutting and elimination of waste wherever

possible. Besides, it was able to offer sizeable discounts due to its bulk-buying

strategy.

Subhiksha believed that low margins and high turnover was better than high

margins and low turnover. Even top retailers such as Wal-Mart, Metro, Tesco and

Carrefour believed that low unit margins (therefore, low unit prices to customers)

and high turnover are the ways to succeed in a very competitive environment and

Subhiksha was the relevant model in Indian context.

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Subhiksha efficiently operated on thin inventories and information technology.

However, Subhiksha does not offer its customers the freedom to browse and shop

like Nilgiris, Food World or Vitan retail chains. Because for buying cosmetics or

grocery, customers look for a quick purchase rather than the shopping pleasure.

Therefore, Subhiksha does not view this as a handicap.

Subhiksha positioned itself as a destination store for the ``value-conscious''

customer. ``It is a functional and transaction-oriented shop that has no room for

unnecessary frills and ambiences,''

On the limited choice for buyers in any particular product range, the company

stocked two-three most popular brands in each category as was common with

international discounters. This anyway constituted about 95 per cent of sales even

in stores stocking larger number of brands. The idea was to stock fast moving

brands and not those that had limited appeal. This also helped the company

manage an inventory logistics and supply chain as also in offering lower prices.

The chain was ``sensitive to customers' needs'', constantly adding or removing

products based on customer feedback.

Inventory

Subhiksha has a centralized purchasing system. This eliminates multiplicity of

billings, which would occur if the stores were to make independent purchases. It

buys directly from distributors who sell at only a small margin above the mill

prices and from 150 odd manufacturing companies.

Subhiksha has 3 separate god owns for stocking Pharmacy products, unbranded

groceries and branded FMCGs. It has a fleet of 10 tempos, which supplies its

stores once a day. As the discount format requires holding costs to be at a

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minimum all the stores are connected in an intranet to facilitate inventory

planning.

Subhiksha makes spot payments against delivery, which enables it to get cash

discounts. The supplier helps in inventory –control and in return gets an improved

cash flow.

Customer Education

Subhiksha helps the consumer make informed buying decisions. Smaller packs of

products in established brands are usually less economical. However, promotional

offers by leading brands usually price smaller packs at lower prices to induce

buying. For example the gingerly oil brand Idhayam was priced at Rs 14 for a 200

ml pack which works out at Rs 70 per litre while the 500ml was priced at Rs 36

which works out at Rs 72 per litre. Here, Subhiksha would inform buyers to

purchase multiple packs of smaller quantities to save money. On products like tea,

which have a nil tax on small packs and an 8 % tax on larger packs, the customers

are encouraged to buy multiple units of smaller packs, which help them save

money.

Thus, Subhiksha strategy of having low real estate costs, quick inventory turns and

informed customer buying has helped its meteoric growth.

Price Control

Subhiksha takes extreme care while pricing the products through all its stores. It

has employed software, which evaluates the price by minimizing profits. Every

store is computerized and utilizes the software to determine the pricing. This helps

in ensuring that the products are rationally priced.

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The success of Subhiksha indicates that the discount war will hot up in the coming

months but it will be the customer who will emerge as the final winner.

Subhiksha launches national campaign

Discount retail chain Subhiksha has launched its first-ever national TV campaign

following its recent expansion across the country. Launched in Hindi, the

campaign depicts various shoppers looking for lower prices and opting to shop at

Subhiksha, declaring that saving hard-earned money is "bachat mera adhikaar

hai" (savings are my right).

The company is spending Rs15 crore on this campaign in the first 12 months.

Other media it is using include print, outdoor and radio. The ad agency in charge

of the campaign is Orchard, Bangalore.

Subhiksha Food Card

ICICI Bank and Subhiksha have launched a pre-paid food card to be used as an

alternative to the cash and meal vouchers. "We are delighted to offer a solution

that helps cut down the hassle of carrying cash," said Ms Shanta Vallury, Dy

general manager, ICICI corporate payment solutions group.

The pre-paid card, which is re-loaded on a monthly basis, will be accepted at all

Subhiksha outlets throughout India and select restaurants. The card is first being

launched in Delhi and would soon be available in Mumbai, Hyderabad, Bangalore

and Ahmadabad.

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KALEIDOSCOPE OF STRATEGIC MARKETING

Marketing has been defined as the management function responsible for

identifying, anticipating and satisfying customer requirements profitably.

Marketing is, therefore, both a philosophy and a set of techniques which address

such matters as research, product design and development, pricing, packaging,

sales and sales promotion, advertising, public relations, distribution and after-sales

service. These activities define the broad scope of marketing and their balanced

integration within a marketing plan is known as the marketing mix. A

modification of a definition of marketing by Doyle (2000) suggests that marketing

is the management process that seeks to maximize returns to shareholders by

creating a competitive advantage in providing, communicating and delivering

value to customers thereby developing a long-term relationship with them. This

definition clearly defines the objectives of marketing and how its performance

should be evaluated. The specific contribution of marketing in the organization

lies in the formulation of strategies to choose the right customer, build

relationships of trust with them and create a competitive advantage (Doyle 2000,

p. 235). A marketing strategy consists of an internally integrated but externally

focused set of choices about how the organization addresses its customers in the

context of a competitive environment. A strategy has five elements: it deals with

where the organization plans to be active; how it will get there; how it will

succeed in the marketplace; what the speed and sequence of moves will be; and

how the organization will obtain profits (Hambrick and Fredrickson 2001, p. 50).

The organization must identify the problem that its customers use its products and

services to solve. It is also necessary to identify the benefits customers seek from

using a product or service available in the market. A market consists of all the

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potential customers who share a particular need or want who might be willing and

able to engage in exchange to satisfy that need or want.

A marketing orientation helps to define the organization’s business. Marketing is

concerned with problem solving and customer benefits. The organization must be

able to answer the following questions:

What is the problem customers are trying to solve?

What benefits do customers seek?

How well does the organization’s product solve this problem and provide these

benefits?

A statement that the organization is in the movie business is not very useful. An

organization is not in the movie business because that says nothing about customer

needs. Some movie organizations assumed they were in the movie business when

the entertainment business left them behind! Marketing is a philosophy that

encourages the organization to ensure that the needs and wants of customers in

selected target markets are reflected in all its actions and activities while

recognizing constraints imposed by society. This marketing concept first received

formal recognition in 1952 by one of its leading exponents, the General Electric

Organization – the marketing concept:

. . . Introduces the marketing man at the beginning rather than at the end of the

production cycle and integrates marketing into each phase of business. . . .

marketing establishes . . . for the engineer, the design and manufacturing man,

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what the customer wants in a given product, what price he is willing to pay and

where and when it will be wanted. Marketing will have authority in product

planning, production scheduling and inventory control, as well as in sales

distribution or servicing of the product (General Electric Organization, New York,

1952, Annual Report, p. 21).

Three aspects of this statement are interesting: the customer orientation; the profit

orientation; and the emphasis on integrated organization effort. These three

aspects are fundamental to the adoption of the marketing concept.

Marketing means, therefore, being oriented to the needs of customers rather than

emphasizing what is convenient to produce. Effective marketing requires that the

organization analyses the needs that its products are supposed to satisfy.

Customers do not buy ‘coffee’; they buy a warm stimulating drink or a unique

coffee experience if it is Starbucks. Likewise, customers do not buy sisal; they buy

a material to make baling rope to tie things together or fiber to serve as backing for

a floor covering.

The organization should realize that many alternative products may satisfy the

needs identified; there usually are many substitutes – for coffee include tea, cocoa,

alcohol or soft drinks and for sisal include polypropylene fiber or polythene

sheeting.

The real lesson of a marketing philosophy is that better performing organizations

recognize the basic and enduring nature of the customer needs they are attempting

to satisfy. It is the technology of want satisfaction which is transitory (Anderson

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1982, p. 23). The products and services used to satisfy customer needs and wants

change constantly.

The adoption of a marketing philosophy confers specific authority and

responsibility within the organization in regard to the provision, communication

and delivery of customer value. Marketing is concerned with all parts of the

organization; it is more than a set of tools, it is an orientation which pervades the

thinking of the organization as a whole.

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AN OVERVIEW OF MARKETING STRATEGIES IN RETAIL

OUTLETS

Marketing strategies outline exactly how marketing objectives will be achieved.

For example, if the marketing objective is to increase market share, the marketing

strategy states exactly how the market share increase will occur. A marketing

strategy is a way to give marketing orientation to a business by deciding to

position a product or service in terms of buyer needs and wants. Inexperienced

business people often make decisions based on what they like or want, leaving the

customer out of the picture.

A marketing orientation brings the customer into the center of the picture. The

marketing objectives for profits, cash flow and market share can be achieved by

increasing the number of users, increasing the rate of purchase, retaining existing

customers or acquiring new customers.

Location Competition, to most Indians, is good thing. It leads to better products and

services at lower cost. It can inspire a retail manager to do a better job. However,

numerous and/or aggressive competitors in a limited geographical area are costly

to the retailer. Too many similar stores serving too few customers cause the sales

volume of each store to suffer.

For some type stores, however, the best strategy can be to locate as close as

possible to the competition. Competing stores located in the same area may in

crease customer traffic. Some cities, for example, have an area with many antique

shops. Customers are drawn to the area because of this convenience, and each

store’s traffic helps the other stores. Retailers should not afraid of competition, but

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their mission statement should guide the finding of market where there is an

unfilled demand for the type of store create shopping areas where customers can

find everything they need in a single area.

The location strategy can be examined by mapping retailers according to the

amount of traffic at location (pedestrian and/ or vehicular) and the retailer’s

drawing power. The pedestrian or vehicular traffic is usually fixed at the location

unless the retailer has the ability to draw customer to the area just because that is

where the store is located. Drawing power represents the natural ability of the

store to encourage customers to travel farther to shop there.

Merchandise Planning the merchandising mix is one of the most important aspects of store

operations. The merchandise mix represents the full range of products the retailer

offers to potential customers. The merchandise a retailer carries defines the store

for the customer. Marketing the store as brand is another effective means of

competitive differentiation based on merchandise rather than price appeal. This

approach is heavily employed in United Kingdom and to a growing extent in the

United States and other countries. One manner in which retailers examine their

merchandising strategy is by using an assortment/variety graph.

Variety refers to the number of different types or classes of products that a retailer

carries. Retailer such as Target carries a large variety of merchandise, but a

relatively small assortment. The assortment refers to the depth of a product line, or

how many different styles and brands a retailer carries in each product line. Stores

often have to make the choice to carry either a large assortment or a large variety.

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Attempting to carry both would increase inventory costs to the point of being

competitive.

Price

One way to examine the relative strategic positioning of a store is to plot your own

retailer against competitors on a margin/turnover graph. To a large extent, these

two variables will define not only the success or failure of the retailer but also how

that retailer is perceived by the public. As per the graph, it is difficult, if not

impossible, to maintain both high margins and high turnover. As retailers increase

their process in an attempt to improve margins, customers start seeking

competitors from which to purchase goods. In this instance, competition will

quickly drive such a retailer out of business. Likewise, it is also impossible to

maintain low margins and low turnover. In this instance, the retailers will not

make enough money to survive.

This leaves the retailer a choice of either a low margin-high turnover or a

high margin-low turnover strategy. Discount stores depend partly on lower prices

(and thus lower margins) to achieve the high rates of turnover that they need to be

profitable. Where as specialty stores depend on higher prices to make up lower

turnover. While turnover and margins are good way to examine a relative pricing

strategy, this classification is insufficient by itself. Some Retailers found that high

margins were insufficient to make up for lower turnover.

Others have run into the opposite problem-that of having a high turnover

during sales at less than needed margins. During the mid-1980’s Sears found it

was having problems selling merchandise at full price. Most merchandise was

being sold at the reduced margins as customers learned to expect periodic sales.

Instead of paying full price, customers waited for the sale and bought merchandise

at discount. This led to a customer image that was consistent with Sear’s strategy.

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Service Each store owner-manager must determine the level of service that is appropriate

for the store. This includes both the quality of services provided by the sales

people and the quantity of associated services provided by the stores, such as gift

wrapping and mailing.

It should be recognized that high levels of service increase cost, and unless

increase in sales follow, it may be necessary to raise prices. Retailer must examine

the character of the business to identify the features that can be best exploited to

create a compelling point of differential from competition. In every type of retail

business there are features and variables that, while shared by competitors, can be

manipulated in a manner to establish a special character for a retailer over the

competition. For example, all retailers provide service of some sort, but service

can take many forms. If service is to be employed as a positive differentiator, the

key is to understand what particular aspect of service is most appropriate for the

type of merchandise being sold and is most important to the shoppers being

targeted. While basic services are necessary for a retailer, many firms, such as

Wal-mart and other discounters, have tried to minimize their cost. Other retailers

have built a strategic advantage around the idea of providing better quality service

than their competitors.

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Communications Each retailer should have an overall strategy to reach potential consumers. One

manner in which this strategy can be examined is in the context of the objectives

of the promotional mix. There are four strategic dimensions that can be examined

in the communication policy: Reach represents the number of people who will see

a promotion or advertisement at least once, where as frequency is the average

number of times that customer sees the advertisements. Most retailers use

newspapers to communicate with the potential consumers. However, with the

advent of inexpensive cable television, more retailers are depending on higher

levels of frequency with less reach, to target a specific consumer group.

The content of advertisement can be described as either image-or information-

oriented. Many larger retailers use national television ads to promote the image of

their stores. However most, retail ads tend to be oriented toward providing the

consumer with store, product, and price information. Each newspaper carries a

great deal of this type of ads. These ads tend to inform the consumer of the

products being carried by the store and the price of the products.

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Achieving strategic positioning Retailers depend up on the operations management, purchasing/logistics, market

research, financing, and technology to achieve their strategic positioning. These

variable acts as the tactics to achieve a given strategy. Their functions must be

performed on a daily basis, often without the customer’s direct involvement, to

ensure success.

Operations The manager must pay the attention to the day to day requirements of running

a retail outlet. Included in operations are staffing maintenance, and general

management of the store. While each store should have a grand plan or strategy to

compete, the daily operations will determine the success or ability to achieve a

given strategy. The managers must ensure that the staff provides services

consistent with the retail strategy and that the store appearance is maintained to

provide an appealing atmosphere.

Purchasing/Logistics Retailers are using purchasing and logistics as a competitive advantage.

Integrated into the distribution system is the retail buyer. This person is

responsible not only to maintain stock level in the store but also to ensure that the

goods are those that the consumer wants. Stores are defined by the products that

they choose to stock.

Logistics planning is also becoming more a competitive weapon. For example,

firms such as Wal-Mart use cross-docking, and The limited has reduced

turnaround times because of its efficient distribution system. These and other firms

have learned to substantially reduce costs or increase service to the customer by

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better controlling the distribution channels of their goods. While these options

have traditionally been reserved for only the largest retailers, new technologies in

distribution are allowing even the retailers who maintain more traditional

distribution channels may find themselves left behind.

Market Research In order to satisfy a customer and have store, as discussed later in the chapter, the

retailer must be touch with consumer expectations, desires, needs, wants, and

behavior. This is often accomplished through a formal market research program.

Store managers should always keep in mind that their tastes and preferences do

not represent those of the consumers. Too much inventory has been bought with

the attitude of “I like it” instead of “the consumer wants this.” market research is

also necessary to continually adjust to changing consumer trends.

Financing The financial performance of a retailer is often viewed as an end retail result,

instead of a planning function. However, store managers need to realize that

financial planning is an imperative for success. This is often a weak area for store

managers. For example, many small retailers are financed with short-term debt

that causes problems as it comes due. Often, little attention is paid to the return on

debt and equity. By planning for the future, retailers ensure that they have the

capital to be successful.

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Technology The use of technology has become so pervasive in retailing that it is often

considered a strategic decision. In smaller stores technology is used as a support

function for other functional areas of business. In retail chains and franchises,

technology is often the centerpiece of the system. It allows corporate and store

managers to interact on an efficient basis. Technology not only provides store

managers with information but also reduces inventory losses and reduces costs.

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LITERATURE SURVEY

Author- Neelkanth, from Bangalore, 27/March/2007 www.newretailindia.com

They are positioned as your neighbourhood kirana store with self service and

home delivery options - that offers low(er) prices. The interesting thing is that

everything in their store, and I mean everything is sold for below the MRP. This is

how the kiranas have always done their business - so this about taking their war to

them. Subhiksha also has discount pharma and a vegetable and fruits outlet.

When they launched in the area near us, assuming this is how they launch

elsewhere, they made a small but significant splash. Door to distribution of

membership cards, using the discount pharma (10% off MRP on everything,

unlike your friendly neighbourhood pharmacist who charges "Local taxes extra"

on the MRP) to attract customers to the other two (groceries and convenience

store). With their home delivery option, in time, they may well cause a significant

shift from the kirana.

Subhiksha still not have the reach (in terms of number of stores) or the width (they

cannot stock as many different items as the local kirana guys) and are also quite

constrained by the weights and measures (they sell their stuff packed, so you cant

buy 250 grams of something if their package is half a kilo) - but within these

constraints, they are a force to reckon with. Today, I would prefer to go to a

retailer who bills me (and therefore I hope pays taxes) and someone who gives me

more value for money. Therefore, if the impact is severe enough, kiranas may

move away from some of the brands and move into the “loose” “niche” space.

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By Ramesh, from Bangalore on 25/March/2007. www.newretailindia.com

We have covered the retail story quite closely, from the street. As the Retail

market enters a steady state phase (its still a long way away), different formats are

emerging. There are the Food Bazaar, Big Bazaars , Dmart and the Hypercity

(Shoppers Stop group). Where does Subhiksha fit in? Subhiksha is a contrarian

model - or an Indian model - call it what you like. It sort of merges the traditional

small front end with the economies of scale of the modern back end.

Subhiksha, the shop is a rudimentary shop with racks having most (no the smaller

stores do not have a huge variety to choose from) of what a basic shopper would

need. The stores are not air conditioned, the receipts are printed on dot matrix

printers (not in deskjet ones!!). They are very similar to what Margin Free in

Kerala is or what Apna Bazaar or Sahakari Bhandar is in Mumbai.

Will the Subhiksha model succeed when an Apna Bazaar didn't - but Margin Free

is a success for sure (more on that later). There is not a huge pricing

differentitation between say a Lux soap offered in Big Bazaar v/s that of

Subhiksha. Why should people shop in Subhiksha?

Can Subhiksha compete on merely pricing? May be it saves on store setup costs,

power costs, but employee and supply chain costs will not vary by much because

of its scale. My take here is that Subhiksha does not, unlike Big Bazaar, try and

change the consumer behaviour - which is a big big plus point. Big Bazaar except

for those who live near one, is a different behaviour. Drive down, stack grocery

and shop once a month. Subhiksha says, just do your regular shopping, we are

your regular shop, plus 10% every single time, every single item. Their vegetable

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and medicine counter are also pretty good. Where Subhiksha takes a hit, more than

the look of stores is stocks - here they have to improve.

Author- Umesh Hadagali from Bangalore on 1/may/2007

www.newretailindia.com

Will people shop in a rudimentary outlet and save a rupee or two on products or

shop in a Big Bazaar that offers more product categories, better ambience - almost

like a one stop shop? Perhaps yes, perhaps no, but as of now, unless there is a Big

bazaar near every Subhiksha one cant say, and then again we are comparing chalk

and cheese. Who will win? Will it be just one winner? My take on it is that it will

be Big Bazaar in the long run.

Even as Reliance retail opens its doors to its first launch in Hyderabad, Subhiksha

launches its newspaper in Bangalore. Yes, you heard that right.

As they say in an old saying, "Saam, Daam, Dand, Bhed" the retail wars will span

all three. The newsletter is just one of the many missiles that will be used.

The newsletter explains very well why Subhiksha stores are always away from

high streets (rentals), are not airconditioned (who pays for it), is sparsely staffed

(who pays for those people?). It also talks about how Subhiksha offers consistent

discounts and not bundled products and nor are their discounts promotional - it

promises to offer a 10% off on all MRPs.

All of these are intended at Big Bazaar (and perhaps Reliance) among others and

big stores that are airconditioned, have a lot of "smiling staff doing nothing" and

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are located on prime property. The Subhiksha model is a low operating cost model

which passes on the benefits to customers model and by locating themselves closer

to their clients, they are pretty much top of mind recall for any grocery. We have

seen that happen in our area where Subhiksha is doing pretty well and offers

consistent discounts and overall it is a decent experience.

Author-Ravikumar on August 10.2006

Well that's what Subhiksha, the retail chain store that started in 1997 from Chennai

means. Subhiksha, India`s largest discount retail chain, announced a Rs 550 mn.

Rollout plan in Karnataka, by opening 60 outlets in Bangalore and Mysore, to be

operational over the next 12 weeks. Here's the place in Bangalore - Indiranagar to

be precise, which we patronise:

I have no qualms stretching money to the max. Many of us do. For people like us,

there is a choice in such retail stores, the no frills, no fuss, no fancy stuff type. And

who doesn't want discounts? All those who are lying raise your hands.

Besides, who doesn't like a bit of honesty and homegrown, successful

entrepreneurs? R. Subramanian is one such type. Why not encourage an Indian

Sam-Walton in the making?

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We're brutally honest people and we believe that there are a lot of people who

love brutally honest businesses like ours.

"...we also consciously make less money per rupee of sale but make it up with

more sales. We are happy to earn 3 per cent on Rs 1,000 rather than 10 per

cent on Rs 100."

Its my belief that in a city like Bangalore where the ordinary, 'working class'

citizens are in the 95% category and struggle to make ends meet, for whom 10-

15% annual increments, stock options, ESOPS etc make little sense, to whom

malls & fancy cars are the stuff of dreams, retail/discount chains like Subhiksha

will give more than the good things in life.

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Problem Statement

Formulation of operational marketing strategies for Subhiksha retail outlets

in Bangalore.

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RESEARCH OBJECTIVES

• To examine STPD of Subhiksha.

• To examine the locational advantage of Subhiksha outlets

• To scan the pricing strategies of Subhiksha

• To examine the promotional activities at Subhiksha

• To identify the growth and expansion potential in Subhiksha

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RESEARCH DESIGN

This research investigation is company- specific and highly qualitative in nature.

We sought to generate data through a structured questionnaire blended with

personal interactions with all the key personnel of Subhiksha retail outlets and

also with the customers. We contacted 100 customers, selected on the basis of

stratified random sampling method. The data so generated is given qualitative

treatment by using the qualitative instruments like rating scales; and inferences

have been drawn accordingly.

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TYPES OF RESEARCH

The type of research method used for this project is Qualitative Research

Technique. In this methodology, people were chosen randomly and were asked to

respond to the questionnaire. They questionnaire has been designed in such a way

that respondent feels easy to answer the questions.

SAMPLING TECHNIQUE

In this project two types of sampling techniques are used.

1. Simple random sampling.

2. Stratified Sampling.

Simple random sampling technique has been used for general questionnaire as it

avoids any kind of bias in choosing the sample. Stratified sampling has been used

to interact with Subhiksha outlet people.

SAMPLE SIZE

The sample size chosen for the research is 100 out of which 95 are Subhiksha

customers and the rest 04 are general people.

RESEARCH INSTRUMENT USED:

The research instrument used for this survey is questionnaire. The reasons why

this instrument is chosen are:-

• It is free from all bias.

• It covers a wide area.

• It helps in getting original data.

• Not expensive.

• It is easy to tabulate and understand

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DATA COLLECTION PROCEDURE

PRIMARY RESEARCH:

The primary data is collected through interviews and questionnaire.

Interviews:

An interview can be qualitative, quantitative or a combination of both. In a

quantitative interview, the questions are predetermined and presented together

with multiple choice answers. Quantitative means that there must be measurable

results. A quantitative interview is conducted in an investigating situation, which

resembles an every day situation and an ordinary conversation. The answer to the

questions shall be spontaneous and be a result of the interviewee’s own opinion.

Both, quantitative and qualitative interviews are mutually inclusive. In a

quantitative interview the difficulty is in preparing the questionnaire whereas in

qualitative interview a lot of effort is required for analysis.

The approach used in this research is qualitative interview methodology. We

selected this methodology because it is considered easier to get the responses from

the sample within a limited time frame.

SECONDARY RESEARCH

The major source of secondary data has been internet from where collected all the

relevant information available about the Subhiksha and about its marketing

strategies.

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We also collected information regarding the Subhiksha's operational strategies in

Bangalore and the expansion strategies in Bangalore market. Various other

information of interest has also been collected.

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RESEARCH LIMITATIONS

• This research investigation is company-specific and is restricted to

Subhiksha retail chain. It is also restricted to a limited sample size. The

problem of generalization is, therefore, obvious

• Time and resource constraints

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PROFILE OF RESPONDENTS

Age profile

Age (in years)

<206%

20-3042%

30-4034%

40-5015%

>503%

<20 20-30 30-40 40-50 >50

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Gender profile

Gender Profile

Male, 89

Female, 11

Male Female

Profession profile

Occupation profile

Self Employed, 2

Service person, 64

Students, 18

Unemployed, 6

Others, 10

Self Employed Service person Students Unemployed Others

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DATA ANALYSIS AND INFERENCE

1) How much is your disposable income?

Table-1

Disposable income(Rs) No of people in % 30,000 40 20,000 30 10,000 25 others 5

Source: Field Investigation

Chart-1

0

10

20

30

40

No of respondents in %

30000 20000 10000 OthersDisposable Income( Rs)

Disposable Income Vs No of respondents in %

Inference: We can infer from the above data that the customers of Subhiksha belong to upper lower, middle and upper middle class.

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2) How much is your expense on daily needs per month?

Table-2 Expense on daily needs per month

(Rs) No of people in %

7000 25 5000 35 4000 20 3000 20

Source: Field Investigation

Chart-2

05

101520253035

No of people in %

7000 5000 4000 3000

Expense on daily needs per month(Rs)

Expenses on daily needs per month(Rs)

Inference: we can infer from the above data that major of the respondents spend their half of the monthly income on their daily needs per month.

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3) Are you purchasing all your daily needs from Subhiksha?

Table-3

People who are purchasing their daily needs from Subhiksha

No of people in %

Yes 60 No 40 Source: Field Investigation

Chart-3

Respondents who are buying from Subhiksha

60%40% Yes

No

Inference: 60% of respondents purchase from Subhiksha.

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4) How often do you visit Subhiksha?

Table-4

Almost daily 50 Weekly 30 Monthly 15 Once in a while 5 Source: Field Investigation

Chart-4

01020304050

No of people in %

Monthly Weekly Almost daily Once in awhile

How often people visit Subhiksha

Inference: 50% of people visit monthly, 30% people weekly, 15% almost daily and 5% people visit once in a while.

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5) Is this outlet convenience to your residential area?

Table-5

Outlet convenience No of people accepted in % Yes 60 No 40 Source: Field Investigation

Chart-5

40%

60%YesNo

Inference: 60% Subhiksha outlets are convenient to respondents' residence.

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6) Are you getting the entire Domestic and International brands in Subhiksha?

Table-6

Domestic and International brands No of people responded in % Yes 75 No 25 Source: Field Investigation

Chart-6

Responses towrds brands

01020304050607080

Yes No

Res

pons

es in

%

Inference: 75% people have stated that Subhiksha is offering domestic as well as international products but only a few international brands are offered

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7) From which media Subhiksha is communicating with you regarding their services?

Table-7 Media No of respondents in % News paper 20 TV 40 Hoardings 25 Magazines 15 Source: Field Investigation

Chart-7

0

10

20

30

40

Responses in %

News paper TV Hoardings Magazines

Media used for communication

Inference: Subhiksha is using many media for advertisement; TV ads are predominant and other media are also adequate enough to reach the customers.

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8) “Subhiksha has the lowest prices ever”. Is this statement true compared to other retail service outlets?

Table-8

Response Responses Yes 73 No 27 Source: Field Investigation

Chart-8

73%

27%

Yes No

Inference: 73% of people state that Subhiksha is offering lowest prices.

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9) What are the pricing strategies used by Subhiksha?

Table-9

Pricing strategies No of people responded in % List price 80 Discounts 5 Allowance 5 Payment period 5 Source: Field Investigation

Chart-9

80%

5% 5% 5%0

1020304050607080

No of response

List price Discounts Allowance Paymentperiod

strategies

Pricing strategies used by Subhiksha

Inference: Subhiksha is using all kinds of strategies but discount strategy is mainly doing well.

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10) Are you satisfied with the pricing strategy?

Table-10

Response No of response in % Satisfied 65 unsatisfied 35 Source: Field Investigation

Chart-10

Respondents reponse about pricing startegy

35%

65%

Satisfied Unsatisfied

Inference: 65% of respondents are satisfied with its pricing strategy.

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11) Sales Promotional schemes used by Subhiksha.

Table-11 Sampling Discounts Guarantees Door-to-door sampling Cash Discounts Refund of money Event sampling Trade Discounts replacements Source: Field Investigation Analysis & Inference: We have given typical sales promotion schemes to respondents and they are asked to select those sales promotion schemes which are popular in their opinion. They stated that Sampling (Door-to-sampling, Event sampling), Discounts (cash discounts and trade discounts), Guarantees, (refund of money and replacements) are very popular

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12) How much do you rate customer service activities at Subhiksha? Mark 1 to bet the least and 5 to be highly effective.

Table- 12 Ratings 1 2 3 4 5 Responses in %

10 20 40 20 10

Source: Field Investigation

Chart-12

05

10152025303540

Responses in %

1 2 3 4 5

Ratings

Responsers ratings towards service activiries at Subhiksha

Inference: Majority of the respondents stated that the customer service provided by Subhiksha is somewhat satisfied and some respondents stated that they are not satisfied.

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MAJOR RESEARCH FINDINGS

• Respondents who are making purchases under Subhiksha outlets are mainly

lower, middle and upper middle class and these outlets are not so well

modernized, not attractive for higher class people but more useful to the

middle class people

• From those who are purchasing things in Subhiksha, only a few people are

found purchasing their daily needs but some people visiting the store to buy

because of discount price.

• Subhiksha outlets are situated in major places at Bangalore but these are not

convenient to some customers and they have to travel from their residence

and due to this, these customers visit on monthly basis and on daily basis.

• In Subhiksha outlets, popular brands are available. Some local brands and

international brands are also available at discount prices. This is the main

reason why Subhiksha outlets are doing well.

• Subhiksha launched TV advertisement campaign in Kannada and also in

other regional languages; this helped the store to raise its market share in

Bangalore. TV Ads in regional languages are more useful not only for

customers and for the employees of Subhiksha also.

• Subhiksha advertises also through Hoardings, News paper and through

Magazines.

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• Subhiksha mainly hits not only in Bangalore but also elsewhere in India

because of its tagline “Subhiksha has the lowest price ever". This tagline

triggers customer traffic at the store. Even today Subhiksha is selling its

Food products, Pharma and Fresh vegetable at discount prices.

• Subhiksha mainly attracts the customers mainly because of its pricing

strategy not by its ambience. Subhiksha focuses more on pricing strategy

• Apart from price incentives, Subhiksha also uses other sales promotional

devices like Sampling and guarantees.

• The customer service provided by Subhiksha is good

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RECOMMENDATIONS We recommend that the following 'marketing nutrients' be

incorporated by Subhiksha in its marketing strategy:

• Improvement is needed in pharmaceutical section, because most of

the times prescribed medicines are not available in the store

• TV Ads in regional languages need to be continued, as TV is found to

be an effective medium

• Better utility products should be made available

• Aggressive promotional schemes should be used, particularly the use

of membership of the store

• More spacious outlets are required

• Customer care mechanism has to be activated more rigorously so that

the customers' shopping experience is enhanced

• Subhiksha should focus on the store ambience, sophisticated visual

merchandizing practices shall be hallmark of the store

• Convenient store layout is very much required

• Adequate parking faculties must be provided to ensure ease of

shopping

• Hygienic rest room facilities must be provided

• Subhiksha should develop its own website

• e-shopping facilities are needed

• Delay in home delivery system shall be avoided

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In the sum, we recommend the adoption of strategic marketing by Subhiksha

in order to reap good results from its retail operations. What is required is

strategizing its retailing operations. We give below the strategic marketing

inputs which can profitably be applied in this task of strategizing the retail

operations:

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ANNEXURE

1. Select Bibliography: (a)Books:

1. 'Retailing' by Roger Cox and Paul Brittain. Pearson Education Publications, Fifth

Edition, 2006

2. 'Retail Management--A Strategic Approach' by Barry Berman and Joel R Evans

Pearson Education Publications, Ninth Edition, 2006

3. 'Retailing in India' Edited, ICFAI Publications, 2006

4. 'Retailing: General' by Standard & Poor's Surveys 2002

5. ' Retailing Specialty' by Standard & Poor's Survey 2002

6. 'Selection of Retail Locations' by Richard L Nelson, F W Dodge Publications,

New York, 2000

7. 'Retailing on the Move: An Era of Change' by Thelma Snuggs, Black Collegian

Publications, 2000

8. 'Marketing: Real People, Real Choices' by Michael R Solomon and Elnora W

Staurt, Pearson Education Publications, Third Edition, 2006 (Chapter on

Retailing)

9.' 'Marketing' By Evans and Burman, Wiley Eastern Publications (Bizantra) 2006

(Chapter on Retailing)

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(b). Journals & Magazines:

• Journal of Retailing

• Journal of Marketing

• Retail Biz

• Journal of Marketing Research

• Harvard Business Review

• Marketing Mastermind

• Strategist (Business Standard)

• Brand Equity (Economic Times)

• Catalyst (Business Line)

• Business World

• Fortune

©. Websites used:

• www.thehindubusinessline.com

• www.sify.com

• www.startupavenues.com

• www.newretailindia.com

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2. QUESTIONNAIRE:

I am a student of M P Birla Institute of Management, Bangalore pursuing MBA Program. As a part of the MBA curriculum, I am carrying out a research investigation on 'Marketing Strategies of Subhiksha', Bangalore. In this connection, I need some information from you. Listed below are some questions. Kindly give your responses to them. I sincerely assure you that the information so provided will be kept confidential and shall only be used for academic purpose. Mr. Hiresh Lamani

Name: -------------------------------------------------

Age: -------------- Sex: -------------- Place: ----------------------------

Profession---------------------------

1. How much is your monthly disposable income? 2. How much is your expense on daily needs per month? 3. Are you purchasing all your daily needs from Subhiksha? Yes No 4. How often do you visit Subhiksha? (A) Almost daily (B) Weekly (C) Monthly (D) Once in a while 5. Is this outlet convenient to your residential area? Yes No

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6. Are you getting the entire Domestic and International brands in Subhiksha?

Yes No 7. From which media Subhiksha is communicating with you regarding their services?

News paper TV Hoardings Magazines

8. “Subhiksha has the lowest prices ever”. Is this statement true compared to other retail service outlets? Yes No Mention some products

9. What are the pricing strategies used by Subhiksha? List price Discounts Allowance Payment period 10. Are you satisfied with the pricing strategy?

Yes No 11. Please tick the appropriate items from the sales promotion schemes listed Below which are currently available at Subhiksha: (a) Sampling

• Door-to-door sampling • Sampling through mail • In-store sampling • On-package sampling • Event sampling • Inserts in magazines and newspapers requesting samples by phone and use

of specialized sample distribution services • Internet is yet another way companies are making it possible for consumers

to sample their products. There are several online sampling services such as Catalina marketing’s ValuPage.com and the Sunflower Group’s SitelinkPlus

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(b) Couponing © Premium offers

• Free premiums: usually inexpensive gifts or items that are included in the product package, distributed with a purchase or sent to consumers who make mail-in-requests along with a proof of purchase.

• Self-liquidating premiums: those that require the consumer to pay some or all of the cost of the premium plus handling and mailing costs. Self-liquidating premiums can be used to create interest in a brand as well as generate goodwill that enhances the image of a brand

(d) Contests & Sweepstakes

• Types of contests: • Photographic • Reason-why • Sentence completion • Lucky baby • Coloring • Special skills • Slogan writing • Story writing • Picture title • Beauty contest • Recipe contest • Word building

(e) Refunds & Rebates (f) Bonus packs (g) Discounts:

• Cash discount • Trade discount • Quantity discount • Promotional discount

(h) Price Deals (i) Frequency programs

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(j) Guarantees

• Refund of money • Replacement • Remedy • Augmented cash guarantee • Competitive guarantee

12. How much do you rate customer service activities at Subhiksha?

Mark 1 to be the least and 5 to be highly effective. 1( ) 2( ) 3( ) 4( ) 5( )

13. Please give your recommendations to enhance the utility of the services of Subhiksha------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- THANK YOU FOR SPARING YOUR VALUABLE

TIME FOR GIVING YOUR RESPONSES

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3. DIRECTIONS FOR FURTHER RESEARCH The following areas have been identified (carrying considerable research potential) for further research:

• Customer Perceptions/Expectations of Services Provided by the Store • Customer Satisfaction Survey by using the Multi-Attribute Analysis • Brand Image Study of the Store • Taxonomy of Visual Merchandizing at the Store • A Diagnostic Study of Supply Chain Management at the Store • Mapping Retail Stores Personality

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