Ucb Project

8/8/2019 Ucb Project

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SUBMITTED BY: SUBMITTED TO:

(09) Amit Gusain Ms. Shevta Mahajan

(19) Bharti Rathi Faculty: Sales Management

(20) C. Kriti Nagpal (Department of Retail)

(29) Lalit Mohan Pathak

(37) Nutan Rani

ACKNOWLEDGEMENT

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CONTENT

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TOPIC PAGE NO.

1. Scope ... 3

2. Limitation 4

3. Objectives 5

4. Research Methodology 5

5. Introduction 6

6. United colors of Benetton 9

7. Comparative study of brands 18

8. Inference 20

9. Analysis 21

10. Recommendation . 32

11. Conclusion 33

12. References . 34

13. Annexure. 35

SCOPE

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While working on this project we come to know about the effect of

discount as the promotional tool on the store visibility.

The results on sales during end of season sale

The consumer behavior on the good offers.

The tendency of consumers on interesting promotional offers.

The purchase decision of consumers while and after viewing sale\

clearance and store displays.

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OBJECTIVES

i) To compare usage across exclusive and multi brand outlets.

ii) To explore rationale behind such activities by examining consumer behavior.

iii) To pose challenges ahead.

RESEARCH METHODOLOGY

Type of Research Technique

Exploratory research :

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Experience surveys: We will be asking knowledgeable individuals about the effect of discounts

and other promotional activities on consumer buying behavior.

Secondary data analysis : We will also be using secondary data to gain some background

information and analyze it in our research.

Descriptive research: Through this research design, we can further go deep, detail into our

study, and find the effect of promotional activities on consumer purchasing behavior.

Cross sectional research: In this research we would be putting questionnaires to a particular

sample which will help us to infer our hypothesis relating to effect of discounts and other promotional activities on consumer buying behavior.

INTRODUCTION

In India, clothing retail accounts for 36% of organized retail business. It is the largest sector.

Ready-made apparel accounted for an estimated 20% of domestic clothing sales in 2005.

Indian organized retail industry is poised for growth. Apparel sector in particular has a great

opportunity with alignment of Indian economy to globalised markets. With the widespread use of

sales promotions- short term activities which provide material inducements to consumers and

trade it becomes imperative for managers to understand such practices and understand

challenges.

As apparel retail is led by fashion, a player needs to keep a close watch on fashion amongst

teenagers as they are the trend setters. Role of Bollywood in spreading fashion needs to be

understood. Seasonal variations on stocking pattern and need to clear inventory at the end of

season should be understood by apparel retailer. Typically once an item is sold from the outlet,

retailer ensures that there is no repetition of same. It gets replaced by different design, style,

color. Importance of store layout, dcor is very critical. A browser visiting the store frequently

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likes to see changes in the layout otherwise he may carry the impression that stocks are not

moving out of the store. Category management becomes very crucial function as transformation

of design into production and delivery has to be completed before fashion or fad changes in the

market. With the advent of modern format retailers and the growth of plastic cards, affluent

urban Indian are shopping like never before. They spend mornings browsing in stores looking for

deals or latest styles.

This highlights the importance of sales promotions- short term activities which induces trade or

consumer to buy now rather than in future as the value of apparel after the season, goes down

substantially and inventory carrying burden turns out to be very high. Apparel retailer needs to

understand critical role of sales promotions. Attractive promotions induces purchase

acceleration, stock piling and brand switching on the part of a consumer which substantiallyreduces retailers financial and inventory risk and consumers financial risk and psychological

risk.

Literature review

Liu, Yuping, (2007) found out t he Long-Term Impact of Loyalty Programs on

Consumer Purchase Behavior and Loyalty . Using longitudinal data from a

convenience store franchise, the study found out that consumers who wereheavy buyers at the beginning of a loyalty program were most likely to claim

their qualified rewards, but the program did not prompt them to change their

purchase behavior. In contrast, consumers whose initial patronage levels were

low or moderate gradually purchased more and became more loyal to the firm.

For light buyers, the loyalty program broadened their relationship with the firm

into other business areas. Thus there is a need to consider patronage to decide

rewards for loyalty programmes.

Rationale for sales promotion activities

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United Colors of Benetton.

OVERVIEW

A global brand, and one of the most well known in the world, United Colors of Benetton has aninternational style that combines color, quality and fashion. Each season the womenswear,menswear, childrenswear and underwear collections offer a total look for everyday, for work andfor leisure, in the city and outdoors. The Benetton Baby label is a new product line dedicated to

the prenatal and the under-fives world.

The brand is present in many other sectors, from the elegant accessories to the eyewear lines and perfumes, from the home collection to baby products. The above products are available inselected specialized shops worldwide.

Today, the Benetton Group is present in 120 countries around the world. Its core business is

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fashion apparel: a group with a strong Italian character whose style, quality and passion areclearly seen in its brands, the casual United Colors of Benetton , the glamour oriented Sisley ,

Playlife American college style and Killer Loop street wear. The Group produces about 160million garments every year. Its network of more than 5,500 contemporary stores around theworld, offers high quality customer services and generates a total turnover of over 2 billion euro.

FOUNDERS

Luciano, Giuliana, Gilberto and Carlo Benetton, launched the activities of the BenettonGroup in 1965. The company is today present in 120 countries around the world. Its core

business is fashion apparel with the casual United Colors of Benetton , the glamour orientedSisley, Playlife American college style and Killer Loop streetwear brands. Benetton Group islisted on the stock exchange of Milan.

LucianoBenettonBorn in 1935, Luciano Benetton is Chairman of the Benetton Group. He is also on the Board of Directors of Edizione Holding, the family-owned financial holding company and was a Senator of the Italian Republic from 1992 to 1994.

HEADQUATER

VillaMinelliBenetton Group's Corporate headquarters is located at Villa Minelli in Ponzano, about 30 kmfrom Venice. Villa Minelli is a complex of sixteenth century buildings of great historical andcultural interest.

The villa was acquired by Benetton in 1969 and the task of restoring and remodernising thecomplex, entrusted to architects Afra and Tobia Scarpa, took over fifteen years. From the mid1980s Villa Minelli became the headquarters of the Group and home to all its strategic functions.

STORES OF UNITED COLORS OF BENETTON

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HISTORY

1960s The idea of color.

1965 The Benetton Group is established.

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AUSTRIA - Vienna HONG KONG - Hong Kong FRANCE - Paris

PORTUGAL - Lisbon FRANCE - Paris UK - London


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1970s A business model making thedifference: unique, flexible andinnovative.

1980sBenetton communicationcampaigns: known all over theworld.

1990sA global company present in 120countries.

2000s

Benetton grows with the market:about 160 million garments soldannually in more than 5,500contemporary stores.

BRANDS OF BENETTON

Undercolors of Benetton is an extension of the Benetton brand,featuring underwear, beachwear and sleepwear collections, as wellas accessories for women, men and children. A wide selection of recurring basic colors is enriched every season with the latesttrends. Undercolors is available in its own chain of stores which

now has more than 500 locations in thirty countries and in selectedBenetton Shops.

Sisley

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This is the Group's most fashion forward brand. Sisley presentselegant and seductive collections, with special attention given to thechoice of design, fabrics and new shapes. Its creative artists andindependent sales teams concentrate their efforts on its image andon strong-impact advertising campaigns. The brand has created thevery fashionable Sisley Young line for children from 8 to 12 yearsold.

Playlife is the Benetton sportswear brand that redefines a style. Itsclean and elegant collections display a blend of the Americancollege, exclusive sports clubs and a strong sense of individuality.The brand's new store concept reflects the same values andhighlights their emotional content.

An expression of our time

"Communication should never be commissioned from outside the company, but conceived from within its heart".

Luciano Benetton

Benetton Group's advertising campaigns are not only a means of communication but an

expression of our time. Through their universal impact, they have succeeded in attracting the

attention of the public and in standing out amid the current clutter of images.

The campaigns have gathered awards and acclaim worldwide; by the same token, they have

aroused strong reactions - at times ferocious, at times simply curious, confirming once again that

they are always a focal point of discussion and of confrontation of ideas.

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Several of the communication projects created by Fabrica, Benettons research center have also

been developed in cooperation with prestigious associations (including FAO, UNV, WFP)

obtaining important acknowledgements at an international level.

Benetton was well known for its colorful and provocative advertisements (Benetton termed its

advertising and marketing activities as Communication Strategy). The company employed

unusual, controversial advertising techniques and themes that used shock value and the power

of photography to grab viewers attention. Unlike most advertisements which centered around a

companys product or image, Benettons advertising campaigns focused on social and political

issues like racial integration, AIDS awareness, war, poverty, child labor, death, pollution etc. The

advertisements initially succeeded in raising the brand's profile, but eventually began to cause

dissatisfaction among customers, retailers, government bodies and various international non-

profit organizations.

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Financial Highlights

Year 2007 (a) 2006 (a) 2005 (a) 2004 (a) 2003 (b)

Revenues (million euro) 2,085 1,911 1,765 1,704 1,859

Net Income (million euro) 145 125 112 109 108

(a) These figures are IAS/IFRS compliant and not comparable with the previous years(b) These figures are compliant with Italian accounting procedures

Sales by Region

Sales by Brands

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Benetton designs only two collections a year, expect one huge sale in the middle of each seasonrather than a rotating clearance rack.

DESIGN:

A staff of 300 designers from all over the world creates the collections for the casual United

Colors of Benetton , the glamour oriented Sisley , Playlife American college style and Killer Loop

streetwear brands.

The design team is also engaged in researching new materials and creating new lines for

different targets from children, men and women to expectant mothers, offering them not only practical and modern styles but also maximum comfort.

The result is the latest trends in design and a rich output of many models a year which are

realized with computer assisted design systems fully integrated with the rest of the company's

production phases.

PRODUCTION:

Consistently high quality is one of the fundamental characteristics of the Benetton production

process from the raw materials to the finished garment.

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A constant commitment to innovation, a crucial factor for development, has always characterized

the Groups business organization, from communication to IT, from research into new materials

to integrated logistics. Special attention is given to innovation in production, where all systems

and equipment are totally renewed every five years.

The Benetton production system, co-ordinated by a high-tech facility at Castrette (Treviso, Italy)

is capable of turning out about 160 million garments every year.

DyeingSince the beginning dyeing has always been a crucial phase in theBenetton production process. The dyeing vats are operational 24 hours a

day.

Computerized Knitting MachinesBenetton is the world's largest consumer of pure virgin wool andoperates with a structure of computerized machines that areprogrammed to operate all knitting phases.

Seamless Sweater

One of Benetton's innovations is the computerised knitting procedurecapable of producing a complete, seamless sweater in half an hourthanks to a software program conceived by Benetton specialists.

DISTRIBUTION

From the very beginning, Benetton decided to maintain direct control of the logistics phase and

has invested heavily in automating logistics processes in order to achieve total integration within

the production cycle, from customer orders to packing and delivery.

Automated Sorting SystemThese automated machines are capable of assembling individual ordersfor Benetton's more than 5,500 shops worldwide.

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About 160 million flat and hanging garments are automatically sortedevery year, packed into boxes and sent directly to the automateddistribution system through a tunnel of approximately one kilometer.

Automated ShippingThe Automated Distribution System covers an area of 20,000 squaremeters, with a total capacity of 400,000 boxes, and is able to handle40,000 incoming/outgoing boxes daily with a workforce of only 24,compared to the 400 people normally required in a traditionallyorganized operation.

The finished product is sent directly to the Group's more than 5,500

retail outlets in 120 countries worldwide.

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Comparative Study of Brands

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Store name Pantaloon Lifestyle Westside United colors of

benetton

Format Type Multibrand Multibrand Exclusive

Tata(Trent group

Exclusive

Positioning Family store Style &

affordability

Enjoying the

change

Style

Floor Size 28000 sq. ft 50,000 sq. ft 15000-30000sqft. 20000-

25000sqft

Categories Apparel&accessories for

men, women &

children

Menswear,women wear,

home furnishing

Apparel &accessories for

men, & children

women

Apparels andaccessories for

men,women and

children

Average

billing per customer

Rs.1800 NA Rs 800 Rs.1000

Average footfalls 1000on weekday& 1500 to 2000

on weekends,

holidays

100-120 onweekday & upto

250 on weekends

1200 in week days & 6000

during week end

100-150 onweekday and

upto 300 on

weekends


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SALES PROMOTION

INFERENCES FROM TABLE

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1.End of season Yes No Yes Yes2.Festive Promotions

(Diwali,Christmas etc)

Yes Yes Yes Yes

Loyalty card

Programme

Yes Yes Yes Yes

Special Promotion

(event)

Yes (Exchange

offer)

Yes No No

Joint promotion No Yes No YesMedia used Hoardings,print,el

ectronic (SMS, E-

mail),POP

Hoardings, In

store

Print, electronic,

hoardings, In store

Print, hoardings

and instore

Promotion

type

Price off, free

gifts, exchange

offer

Lucky draw,

discounts,

contests, free gifts

Cause related, gift

vouchers,

discount,

contest,combo,

coupons

Price off,

discounts,

ticketsize offer or

coupons

Evaluation

of promotion

Sales, Quarterly

profit

Sales Sales,Quarterly

profit

Sales, profit


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From the above table which gives comparative picture of various sales promotion activities and

manner of announcement, evaluation etc., it is clear that three out of four stores engage in end of

season sale. This reinforces the fact that seasonality affects apparel sector and hence it becomes

critical for a retailer to clear off the stocks at the end of season otherwise he may have to incur

substantial inventory carrying costs, allocate scarce shelf space and out of fashion apparels

maybe worthless- may remain unsold forever. Thus stock clearance seems to be very important

objective for apparel retailer in using end of season sale twice in a year wherein discount given is

upto 50% of the MRP(Maximum retail price).

Loyalty cards to reward loyal users and encourage them to visit the store often and buy more by

offering wide range for men, women and children. Some store also offer home furnishings,

accessories and footwear, thereby providing convenience for one stop shopping. Examining the

various terms and conditions of loyalty programme revealed that some rewards were quite

complex and confusing. e.g. lifestyles card- Inner circle. The conditions to be fulfilled is not

very clear to a card member. For example, if any other promotions are prevalent then purchase

made during those promotions would entitle for the card reward points or not was not very clear.

All the stores used in-store media to announce promotions. Use of only instore media would

restrict the announcement to those who walk into the store. It can be assumed that only loyal/

frequent visitor would know about the offers. Whereas variety of media used would enhance

footfalls to the store and trigger word of mouth.

Every retail outlet measures impact of sales promotion activities by looking at sales made during

the promotional period. Few others also look at the footfalls, conversion from footfall to buyers,

average bill size during promotions etc. Very few measure profits made during promotions by

relating revenues to costs of promotions.

PIE CHART ANALYSIS

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Q.1. I have difficulty controlling my urge to buy when I see a good offer.

35% of the sample are not affected by the offers followed by 23% those are neutral

Any such offer, followed by 21% which strongly agree that they are affected by the

Offers.

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8%

21%

23%

35%

13%

Fig. 1strongly disagree Disagree neutral Agree strongly agree


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Q.2. When I see a good deal, I tend to buy more than that I intended to buy.

0%

16%

28%43%

13%

Fig. 2Strongly Disagree Disagree Neutral Agree Strongly Agree

43% of the samples agree that they are intended to buy when there is

any good scheme.

28% on the other hand are neutral to any such offer. 16% people disagree

, and only 13%

strongly agree.

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Q.3. I tend to choose which store to shop in depending on eye-catching window displays.

45% of the sample agree that interesting window displays catch their attention, 33%

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are neutral, 17% disagree that they are attracted by interesting windows.

Q.4. I get an idea of what I want to buy after looking I through in-store form/mannequin

displays.

33% of the sample agree that displays on mannequins give them an idea what to buy.

27% disagree on this, 11% strongly disagree and only 3% strongly agree with it.

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Q.5. When I see clothing featuring a new style or design on display, I tend to buy it.

35% of the sample agree that new style in displays do interest them. 25% and 22%

disagree and neutral respectively to this. 11% strongly agree and 7% strongly disagree

To it.

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Q.6. I tend to rely on store displays when I make a decision to purchase clothing.

35% and 37% agree and strongly agree respectively that their buying decisions are

strongly influence by the store displays. 25% are neutral and 5% strongly disagree.

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Q.7. When I see clothing that catches my eye I tend to try it on without looking through the

whole section.

35% agree that good appeal of merchandise makes them to buy impulsively without going

through whole section. 25% disagree to this. 18% are neutral to it. 14% strongly agree to

it. 85 strongly disagree to this.

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Q.8. When I walk along the aisle, I tend to look through the clothing close to me.

45% of the sample size agree they not go much deep in selecting , what isnear to them. 39% are

Neutral to it. 10% of the sample size disagree and only 65 strongly

disagree to it.

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Q.9. If I see an interesting promotional offer (reduced price, sales promotion, and etc.) on

instore signs, I tend to buy.

stronglydisagree

3% disagree6%

neutral28%

agree41%

strongly agree

22%

fig 9

41% of the sample size agree that discounts and promotional offers tend to attract their

attention and influence them to buy the product. 22% strongly agree and 28% are neutral

to such offers respectively.

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Q.10. Sale/ clearance signs entice me to look through the clothing.

59% of the sample size agree that they are sales and clearance signs entice them to select a

product. 24% are neutral, 16% disagree.

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Q.11. When I see a special promotion sign, I go to look at that clothing.

53% of

the sample size agree that good offer on a product makes them to look at it. 19% and 18%

respectively strongly agree and are neutral to such offers.

Q.12. I am more likely to make an unintended purchase if the clothing has a sale orclearance sign.

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0%

10%

18%

53%

19%

fig 11strongly disagree disagree neutral agree strongly agree


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promotions (promotions linked to festivals like Diwali) may result in coinciding purchase with

such promotions leading to loss of margin an opportunity loss to sell at full price.

Loyalty card programmes require good administrative support and good database records and data

mining abilities to exploit to the fullest. Also IT investments are required to keep records andevaluate the impact. Big players like Pantaloon have a policy to invest in IT. They have implemented

SAP so database is available. Such investments in decision support systems may give competitive

edge to retailers.

The retailer must understand critical role of integrated marketing communications which will signal

unified message and image about the brand/ store. To what extent promotional calendars need to be

unified across markets for the chain and to what extent local managers need to be given freedom to

plan their promotions in local areas is a constant struggle between head quarter and regional chain

stores.

CONCLUSION

Accordingly people have agreed that controlling their urge, when they see good deal, they

depend upon eye catching window displays. They get an idea of what they are looking for in the

store.

People agree that when they see interesting offers on in store signs they tend to buy. They are

neutral when it comes to buy to look through the clothing.

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The people are neutral in approach when it comes to unintended purchase of the clothing has a

sale or clearance.

REFERENCES

1. Hyllegard, Karen; Eckman, Molly; Descals, Alejandro Molla; Borja, Miguel Angel Gomez.,

Spanish consumers' perceptions of US apparel speciality retailers' products and servicesJournal of Consumer Behaviour, Sep2005, Vol. 4 Issue 5, p345-362, 18p, 7 charts.

2. Kincade, Doris H.; Woodard, Ginger A.; Park, Haesun,, International Journal of Consumer

Studies, Dec2002, Vol. 26 Issue 4, p294-302, 9p.

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3. Liu, Yuping, The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior

and Loyalty, Journal of Marketing, Oct2007, Vol. 71 Issue 4, p19-35, 17p.

4. Meyer-Waarden, Lars; Benavent, Christophe, The Impact of Loyalty Programmes on Repeat

Purchase Behaviour, Journal of MarketingManagement, Feb2006, Vol. 22 Issue 1/2, p61-

88, 28p.

5. Lara, Pedro Reinares., Exploring the Benefits Obtained in a Loyalty Programme applied to

Retailing, European Retail Digest, Winter2005 Issue 48, p48-52, 5p.

6. Deeter-Schmelz, Dawn R.; Moore, Jesse N.; Goebel, Daniel J., prestige clothing shopping by

consumers: a confirmatory assessment and refinement of the precon scale with managerial

implications, Journal of Marketing Theory & Practice, Fall2000, Vol. 8 Issue 4, p43, 16p.

7. Consumer Lifestyles in India Euromonitor, International Consumer Lifestyles

Database(2005)

8. Sales Promotion Practices in Apparel Retail Sector and Challenges Ahead by Dr. Preeta H.

Vyas Indian Institute of Management, Ahmedabad.

9. Rita Clifton and John Simmons ,Brands and Branding, , edition1st.

SAMPLE QUESTIONNAIRE

Do you agree with the following statements?

1. I have difficulty controlling my urge to 1 2 3 4 5

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Stronglydisagree

disagree

neutral agree Stronglyagree


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buy when I see a good offer.

2. When I see a good deal, I tend to buy more 1 2 3 4 5

than that I intended to buy.

3. I tend to choose which store to shop in 1 2 3 4 5

depending on eye-catching window displays.

4. I get an idea of what I want to buy after looking 1 2 3 4 5

through in-store form/mannequin displays.

5. When I see clothing featuring a new style or 1 2 3 4 5design on display, I tend to buy it.

6. I tend to rely on store displays when I make a 1 2 3 4 5

decision to purchase clothing.

7. When I see clothing that catches my eye 1 2 3 4 5

I tend to try it on without looking through

the whole section.

8. When I walk along the aisle, I tend to look 1 2 3 4 5

Through the clothing close to me.

9. If I see an interesting promotional offer 1 2 3 4 5

(reduced price, sales promotion, and etc.) on in-

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store signs, I tend to buy.

10. Sale/clearance signs entice me to look

1 2 3 4 5

through the clothing.

11. When I see a special promotion sign, I go to 1 2 3 4 5

look at that clothing.

12. I am more likely to make an unintended 1 2 3 4 5

purchase if the clothing has a sale or

clearance sign.

Stronglydisagree

disagree

neutral Agree Stronglyagree

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