Retailers are broadly of two types. Store retailers include departmental stores, supermarkets, hypermarkets, speciality stores, convenience stores, discount stores, chain stores and cooperative stores. Non-store retailers include direct selling, mail order, tele-shopping, automatic vending machines and e-retailing. On the basis of ownership they may be independent, chain, franchise, cooperative or company-owned; on the basis of size, small unorganised (kirana, hawkers, weekly markets) and large organised retailers.

The service marketing triangle, given by Philip Kotler, shows the three parties in a service business — the company, the employees (providers) and the customers — and the three kinds of marketing that connect them. External marketing ("making the promise") runs from the company to the customer through advertising, pricing and branding. Internal marketing ("enabling the promise") runs from the company to the employees through training, motivation and empowerment. Interactive marketing ("keeping the promise") happens between the employee and the customer at the moment of service delivery. All three sides must be strong for service quality.

Merchandise philosophy is the guiding policy of a retailer about what to buy, how much, of what quality and price, and for which customer. It answers whether the store will stand for width or depth of assortment, national brands or private labels, fashion or basic goods, low price or premium quality. It is derived from the store's target market, image and positioning, and it directs merchandise planning, buying, pricing, display and stock control. A clear philosophy — for example "everyday low price on daily needs" — gives the store a consistent identity in the customer's mind.

An extranet is a controlled private network that extends a company's intranet to selected outsiders — suppliers, distributors, franchisees, large customers and business partners — over the internet, with access protected by user ID, password, firewall and VPN. In retailing it lets vendors see stock levels, sales data and purchase orders and lets the retailer track dispatch, so replenishment becomes faster and paperwork is reduced.

Meaning

A pricing strategy is the plan a retailer follows to fix the selling price of its merchandise so that it covers cost, attracts the target customer and earns profit. Price is the only element of the marketing mix that brings revenue; the rest create cost.

Main pricing strategies

• Cost-plus (mark-up) pricing: a fixed percentage of profit is added to cost. Simple and widely used in kirana and garment retail.
• Market-oriented / competitive pricing: price is set at, below or above the price of rival stores.
• Skimming pricing: a high price is charged when a product is new and demand is inelastic, and lowered later — used for mobiles and electronics.
• Penetration pricing: a low introductory price is set to capture market share quickly, then raised.
• Everyday Low Pricing (EDLP): consistently low prices instead of frequent sales — followed by DMart and Walmart.
• High–Low pricing: normal prices are higher but frequent discounts, festival sales and "end of season sale" are offered.
• Psychological pricing: ₹999 instead of ₹1,000 (odd pricing), prestige pricing for luxury goods.
• Promotional pricing: loss leaders, buy-one-get-one, coupons, combo packs and cash-back.
• Discount and quantity pricing: trade, cash, seasonal and bulk discounts.
• Bundle pricing: several items sold together at one lower price.
• Dynamic pricing: price changes with demand and time, common in e-commerce, airlines and cabs.

Factors affecting the choice

Cost, target customer's price sensitivity, competition, store image and positioning, product life-cycle stage, government rules and MRP, and the objective of the firm (profit, sales volume or survival).

Conclusion

A retailer should choose a strategy consistent with its image; frequent, unplanned price cutting damages both margin and brand value.

Meaning

Post-purchase behaviour is the fifth and last stage of the consumer buying decision process. It covers everything the buyer feels and does after the purchase — using the product, evaluating it, and reacting through repeat purchase, complaint, return or word of mouth.

Satisfaction and dissatisfaction

Satisfaction depends on the gap between expectation and actual performance:

• Performance below expectation → dissatisfaction.
• Performance equal to expectation → satisfaction.
• Performance above expectation → delight and loyalty.

Cognitive dissonance

After buying an expensive or high-involvement product the customer often feels doubt or anxiety — "did I choose the right one, was the price too high?" This mental discomfort is called cognitive dissonance (Festinger). It is greater when the price is high, alternatives were attractive and the decision cannot be reversed.

Consumer reactions

• Positive: repeat purchase, brand loyalty, favourable word of mouth, good online review, recommendation to friends.
• Negative: returning or exchanging the goods, complaint to the store or consumer forum, negative reviews on social media, switching to a competitor, and in some cases legal action under the Consumer Protection Act, 2019.

What the retailer should do

• Make honest, realistic promises in advertising so that expectations are not inflated.
• Provide a warranty, guarantee, easy return and exchange policy.
• Give after-sales service, installation and demonstration.
• Send thank-you messages, reassurance mails and user tips to reduce dissonance.
• Handle complaints quickly and courteously; maintain a feedback and grievance system.
• Run loyalty programmes and follow-up calls.

Conclusion

Post-purchase behaviour decides whether a first-time buyer becomes a lifetime customer. Since retaining a customer costs far less than acquiring a new one, managing this stage well is essential for a retailer's long-term success.

Meaning

Market segmentation is the division of a large, heterogeneous market into smaller homogeneous groups of buyers who have similar needs, characteristics or buying behaviour, so that each group can be served with a suitable retail offer.

Bases of segmentation in retail

• Geographic: region, city size, rural or urban, climate, distance from store.
• Demographic: age, gender, income, occupation, education, family size and life cycle.
• Psychographic: lifestyle, social class, personality, values.
• Behavioural: occasion, benefit sought, usage rate, brand loyalty, price sensitivity.

Importance for a retailer

1. Identifying the right customer: the retailer knows exactly whom the store is meant for and can avoid trying to please everybody.
2. Better merchandise planning: assortment, size range, quality and brands are selected according to the chosen segment's need.
3. Effective pricing: a value segment gets EDLP while a premium segment accepts higher prices for quality and service.
4. Focused promotion: advertising media, language, offers and festivals are selected to match the segment, so promotion cost falls and response improves.
5. Store location and layout: site, size, interior, ambience and staff behaviour are designed for the target group — a youth-focused apparel store differs from a family grocery.
6. Competitive advantage and positioning: serving a specific segment well creates a distinct image and reduces head-on competition.
7. Discovering new opportunities: unserved or under-served segments — senior citizens, working women, students — reveal gaps in the market.
8. Efficient use of resources and higher profitability: limited capital, space and staff are used where returns are highest, and customer loyalty increases.

Conclusion

Segmentation converts a mass market into a set of manageable target markets. It is the first step of the STP process — Segmentation, Targeting and Positioning — and without it a retailer's merchandise, price and promotion decisions become guesswork.

Meaning

Merchandise planning is deciding what goods to stock, in what quantity, of which brand and size, at what price and at what time, so that the right merchandise is available at the right place in the right quantity without over-stocking or stock-out.

Steps in merchandise planning

1. Study the target customer: analyse the segment's age, income, taste and buying occasions.
2. Forecast demand: use past sales records, seasonal and festival trends, fashion forecasts, competitor study and customer feedback.
3. Prepare the merchandise budget: fix the total amount to be invested in stock, planned sales, planned reductions (mark-downs, shrinkage) and planned gross margin, month by month.
4. Decide the assortment plan: fix width (number of product lines) and depth (number of items in each line), and prepare a model stock plan by size, colour, style and price point.
5. Fix the merchandise mix and price lines: decide the share of national brands and private labels, and good–better–best price points.
6. Select sources and buy: choose suppliers, negotiate price, credit and delivery, place purchase orders, and arrange for timely replenishment.
7. Receive, check and stock: inspect quality and quantity, mark prices, allot shelf space, and follow category management with a planogram.
8. Control and review: use the Open-To-Buy (OTB) system to control purchase within budget, monitor stock turnover ratio, fast and slow moving items, ABC analysis and the gross margin return on investment (GMROI).
9. Take corrective action: mark down slow movers, reorder fast movers, and revise the plan for the next season.

Conclusion

Good merchandise planning balances customer satisfaction with investment in stock. Too much stock blocks capital and forces discount selling; too little causes lost sales and loss of goodwill. Modern retailers use POS data, barcode scanning and inventory software to make this planning accurate.

Meaning

Online interactive retailing is the sale of goods and services through an electronic medium — website, mobile app or social platform — in which there is two-way communication between the retailer and the customer. Unlike a printed catalogue, the customer can search, filter, compare, zoom, customise, chat, review and pay online, and the site responds instantly with recommendations.

Features

• Available 24×7 from any place; no physical store needed.
• Interactive tools: search and filters, product videos, 360° view, virtual try-on, size guides, chatbots and live chat.
• Personalisation through browsing history, "customers also bought", wish-lists and price alerts.
• Customer reviews, ratings and Q&A create trust and community.
• Online payment through UPI, cards, net banking, wallets and cash on delivery.
• Order tracking, easy return and exchange.

Advantages

To the customer: convenience, wide choice, price comparison, home delivery, lower prices, and access to products not available locally.
To the retailer: low establishment cost, national and global reach, direct customer data, lower inventory through drop-shipping, and easy measurement of the effect of promotion.

Limitations

Goods cannot be touched or tried before buying; delivery takes time; high rate of returns; risk of online fraud, data misuse and fake reviews; internet and digital-literacy barriers; and heavy dependence on logistics.

Examples and outlook

Amazon, Flipkart, Myntra, Nykaa, BigBasket, Zomato and Meesho in India, along with social commerce on Instagram and WhatsApp and live-streaming sales. Many retailers now follow the omni-channel model, combining a physical store with an online store, "buy online pick up in store" and same-day delivery.

Conclusion

Online interactive retailing has become a major channel of Indian retail because of cheap internet, smartphones and UPI. Its success depends on trust, fast delivery and an easy return policy.

Meaning

Information based marketing (also called database or data-driven marketing) is a system in which marketing decisions are taken on the basis of collected, stored and analysed information about customers rather than on intuition or guesswork. The retailer builds a customer database and uses it to decide what to sell, to whom, at what price and through which message.

Sources of information

• Point of Sale (POS) and billing data, barcode scanning.
• Loyalty card and membership programmes.
• Website and app browsing history, cookies, clicks and cart data.
• Customer feedback forms, surveys and complaints.
• Social media activity and reviews.
• Secondary sources: census data, market research reports, government statistics.

Process

Data collection → cleaning and storage in a data warehouse → analysis using data mining, market basket analysis and RFM (recency, frequency, monetary value) → segmentation → targeted marketing action → measurement of response → feedback into the database.

Applications in retail

• Personalised offers, SMS, email and app notifications.
• Cross-selling and up-selling ("customers who bought this also bought…").
• Deciding store layout and shelf placement from market basket analysis.
• Inventory and demand forecasting, and automatic replenishment.
• Identifying and rewarding high-value customers, and winning back lapsed ones.
• Measuring which promotion actually produced sales.

Advantages

Reduces wasteful advertising, increases response rate and customer loyalty, helps accurate forecasting, and improves return on marketing investment.

Limitations and concerns

High cost of software and skilled staff, risk of poor-quality or outdated data, privacy issues and the need to comply with data-protection law, and the danger of over-messaging which annoys the customer.

Conclusion

In modern retail, information is a strategic asset. A retailer who knows its customer through data can serve better with less waste, but it must use the data ethically and keep it secure.

Introduction

For a modern retailer the website is a second store. Its development is a planned, step-by-step process, not merely the writing of code.

Steps

1. Requirement analysis and goal setting: decide the purpose (information, catalogue, e-commerce, booking), the target audience, expected features and budget.
2. Planning and site architecture: prepare a sitemap showing pages such as home, about, products, categories, cart, payment, contact; decide navigation and the technology stack; choose and register a domain name and select web hosting.
3. Content preparation: write text, collect product photographs, videos, price lists, policies (return, privacy, terms) and prepare them for search engines.
4. Design (wireframe and mock-up): prepare a wireframe of each page, then the visual design — colour scheme, logo, typography, layout, banners — keeping the brand image and user experience (UX/UI) in mind.
5. Development (coding):

• Front end: HTML, CSS, JavaScript and frameworks for what the user sees.
• Back end: server-side language (PHP, Python, Node.js), database (MySQL, MongoDB), user login, shopping cart, order management and payment gateway integration.
• Alternatively use a CMS or platform such as WordPress, Shopify or Magento.

1. Testing: check functionality, links, forms, cart and payment; test on different browsers and devices (responsive design); check page speed, security, and correct any bugs; take user feedback.
2. Deployment / launch: upload the site to the live server, install an SSL certificate, connect the domain, submit the sitemap to search engines and announce the launch.
3. Promotion: search engine optimisation (SEO), search and social media advertising, email marketing and content marketing.
4. Maintenance and updating: regular backup, security patches, updating prices, stock and offers, monitoring traffic through analytics, and improving the site on the basis of user behaviour.

Conclusion

A good website is developed through this cycle of plan → design → build → test → launch → maintain. Speed, mobile-friendliness, security and easy checkout decide whether the visitor becomes a customer.

Introduction

Service retailing means selling intangible offerings — banking, insurance, healthcare, education, hotels, restaurants, salons, tourism, telecom, transport and repair services. Consumer behaviour here differs from goods retailing because the customer cannot see, touch or test the service before buying.

Special characteristics of services that shape behaviour

• Intangibility: nothing can be examined in advance, so the buyer looks for physical evidence — building, uniform, equipment, certificates, brand name.
• Inseparability: production and consumption take place together and the customer is present, so the behaviour of the service provider directly affects satisfaction.
• Heterogeneity (variability): quality differs from person to person and day to day, which creates uncertainty.
• Perishability: a service cannot be stored, so waiting time, appointment and capacity matter to the customer.
• No ownership: the customer buys only the right of use for a period.

Stages of consumer behaviour in services

### 1. Pre-purchase stage

• Need recognition and information search. Because risk is high, the customer relies heavily on personal sources — word of mouth, family, friends and online reviews rather than advertising.
• Perceived risk is higher: functional, financial, physical, social, psychological and time risk.
• Evaluation of alternatives: the customer uses search, experience and credence qualities. Services are dominated by experience qualities (restaurant meal) and credence qualities (medical treatment, legal advice) which cannot be judged even after use, so trust and reputation become decisive.

### 2. Service encounter stage

• The "moment of truth" — every contact with staff, equipment and environment.
• The servicescape (interior, cleanliness, lighting, music, seating, signage) strongly influences mood and perception.
• The customer is a co-producer: he fills forms, describes symptoms, follows instructions; his own participation affects quality.
• Behaviour of other customers present also affects the experience.

### 3. Post-purchase stage

• Satisfaction is judged by the SERVQUAL dimensions — reliability, assurance, tangibles, empathy and responsiveness (RATER) — through the gap between expectation and perception.
• Outcomes: repeat purchase, loyalty, positive word of mouth, or complaint, switching and negative reviews.
• Service recovery — quick apology, correction and compensation after a failure — can restore loyalty, sometimes making the customer more loyal than before.

Factors influencing consumer behaviour in service retailing

Cultural, social, personal and psychological factors; income and lifestyle; convenience and location; price and payment terms; brand image and reputation; staff courtesy and skill; technology (online booking, apps, self-service kiosks); and past experience.

Implications for the service retailer

• Provide strong tangible cues and consistent physical evidence.
• Train and empower staff, since employees are the brand at the point of contact.
• Standardise processes through blueprinting and checklists to reduce variability.
• Manage capacity, appointments and queues to reduce waiting.
• Encourage reviews and referrals; build loyalty programmes.
• Set realistic expectations and have a strong complaint-handling and recovery system.

Conclusion

In service retailing the customer buys a promise, not a product. Behaviour is therefore driven by trust, perceived risk and the quality of interaction. A service retailer who understands this manages people, process and physical evidence as carefully as merchandise, and converts satisfied customers into long-term advocates.

Part A — Choosing the retail store site

Location is a long-term, high-investment and almost irreversible decision. It is rightly said that the three secrets of retail success are "location, location and location".

### Steps in site selection

1. Market/area analysis: study population, income, growth rate, occupation pattern, competition and purchasing power of the city or region.
2. Trade area analysis: identify the primary (60–70 per cent of customers), secondary and fringe trade area, and estimate the demand from each.
3. Choice of type of location:

• Isolated / free-standing store: no competition nearby, low rent, but must pull customers on its own.
• Unplanned business district: main market, neighbourhood or highway strip — high footfall but parking problems.
• Planned shopping centre / mall: professionally managed, anchor stores, parking, ambience, but high rent and rules.

1. Evaluation of specific sites on these factors:

• Footfall and traffic count, both pedestrian and vehicular.
• Visibility of the shop front and ease of entry.
• Parking space and public transport access.
• Neighbouring shops and compatibility (a sweet shop near a namkeen shop helps both).
• Rent, lease terms, deposit and future rent escalation.
• Size, shape and frontage of the plot, scope for expansion.
• Legal aspects: title, municipal rules, licence, zoning, GST registration.
• Safety, power, water, drainage and loading facility.

1. Techniques used: checklist method, analogue method, Reilly's law of retail gravitation, Huff's probability model, and index of retail saturation.

Part B — Store design

Store design converts the location into a selling machine.

• Exterior design: signboard, façade, marquee, display window, entrance, lighting and parking create the first impression.
• Interior design: flooring, ceiling, lighting, colour, air conditioning, music, aroma, cleanliness and fixtures.
• Store layout:
• Grid layout — parallel aisles, used in supermarkets and grocery; efficient use of space.
• Free-flow layout — informal grouping, used in apparel and boutiques; encourages browsing.
• Racetrack/loop layout — a main aisle circling departments, used in departmental stores.
• Spine and boutique layouts for speciality stores.
• Space allocation and planogram: shelf space is allotted by sales, margin and category role; eye-level shelves get the most profitable items.
• Customer movement and comfort: wide aisles, clear signage, trial rooms, seating, billing counters placed to avoid queues, and facilities for the elderly and disabled.
• Visual merchandising: window display, mannequins, point-of-purchase material, focal points and seasonal themes.

Part C — Importance of image mix

Store image is the total picture of the store in the customer's mind. The image mix is the combination of elements that create it: location, store name and logo, exterior and interior, layout, merchandise quality and assortment, price level, staff appearance and behaviour, advertising, services (delivery, credit, return), and the type of clientele.

### Importance

• Positioning and differentiation: a clear image separates the store from competitors selling the same goods.
• Attracting the right customer: image acts as a signal — a premium image attracts quality-seeking buyers; a value image attracts price-sensitive buyers.
• Justifying price: a strong image allows a higher margin, because customers pay for confidence and experience.
• Building trust and loyalty: a consistent image reduces perceived risk and brings repeat visits and word-of-mouth publicity.
• Supporting private labels and expansion: a respected store image makes it easier to launch own brands and open new branches or franchises.
• Employee pride and better recruitment.

### Requirement of consistency
Every element must send the same message. A store that advertises luxury but has untrained staff, poor lighting and cheap fixtures creates a confused image and loses customers.

Conclusion

Site selection decides how many customers can come, store design decides how comfortably they shop, and image mix decides whether they come back. Together they form the foundation of retail success.

Part A — Signage

### Meaning
Signage means all the boards, symbols, labels, posters and digital displays used inside and outside a store to inform, guide and persuade the customer. It is often called the "silent salesman" because it communicates without staff.

### Types of signage

• Exterior signage: main signboard/fascia with store name and logo, marquee, hoarding, road-side directional board, window graphics, opening-hours board.
• Directional and navigational signage: aisle and department markers, floor plans, arrows, "entry", "exit", "billing counter", "trial room", "washroom", "lift/stairs".
• Informational signage: price tags, product features, size, ingredients, warranty, "cash only", "CCTV in operation", GST and licence display.
• Promotional signage: "50% off", "buy 2 get 1", festival offers, new arrival banners, danglers and standees.
• Point-of-Purchase (POP) signage: shelf talkers, wobblers, end-cap and counter displays, that push impulse buying.
• Institutional signage: store policy, return policy, mission statement, awards.
• Digital signage: LED and LCD screens with moving content, useful for changing offers quickly.
• Statutory and safety signage: fire exit, no smoking, emergency contacts, and for restaurants the FSSAI licence.

### How to decide signage

1. Purpose first: decide what each sign must achieve — attract, direct, inform or sell.
2. Know the customer: language (Hindi, English or local), literacy level, and use of universal symbols for quick understanding.
3. Placement: exterior sign at eye level and visible from a distance and from moving traffic; departmental signs hung high; shelf signs at eye level; promotional signs at the entrance, end-caps and billing counter.
4. Design: short message (a customer reads a sign in 2–3 seconds), large readable font, high contrast between text and background, store colour scheme and logo for consistency.
5. Lighting and material: illuminated, weather-proof and durable material outside; neat, non-glare material inside.
6. Quantity: enough to guide but not so many that the store looks cluttered; remove outdated signs immediately.
7. Legal compliance: municipal permission for outdoor hoardings, mandatory declarations under packaging and consumer law, and correct display of prices.
8. Budget and review: cost against expected benefit; test and change signs on the basis of sales response.

Part B — Material planogram

### Meaning
A planogram is a diagram or drawing that shows exactly where and how much of each product should be placed on each shelf, rack or fixture of the store. It is the visual tool of category management and connects merchandise planning with actual display.

### Objectives
Maximise sales and profit per square foot of shelf, make products easy to find, keep the display attractive and uniform across branches, control stock and reduce out-of-stock situations.

### How to decide the planogram

1. Analyse sales data: use POS reports to identify fast-moving, high-margin and slow-moving items; apply ABC analysis and market basket analysis.
2. Define categories and their roles: destination, routine, convenience and seasonal categories, and allot space accordingly.
3. Allocate shelf space: space is generally given in proportion to sales volume and gross margin; calculate GMROS/GMROI (return per unit of space).
4. Decide vertical position:

• Eye level = "buy level" — most profitable and impulse items.
• Hand/waist level — popular and daily-need items.
• Lower shelves — bulky, heavy, cheap and children's products.
• Top shelves — slow-moving, premium or display stock.

1. Decide horizontal arrangement: block by brand, size, colour, flavour or price; keep related items together for cross-selling (bread with butter and jam).
2. Fix facings: number of units visible in front for each SKU, decided by rate of sale; fast movers get more facings.
3. Follow store layout and traffic flow: place high-demand goods deeper in the store so the customer walks past other goods; keep impulse items near the billing counter and end-caps.
4. Prepare and circulate the planogram: use software such as JDA/Blue Yonder, Nielsen Spaceman or even a simple diagram; issue it to all branches with photographs.
5. Implement, audit and revise: staff must place stock exactly as shown; regular shelf audit, compliance check and revision every season or when a new product is launched.

### Benefits
Higher sales per shelf, better stock control, uniform look across stores, easier restocking, reduced shrinkage, and a better customer experience.

Conclusion

Signage guides the customer and planogram guides the goods. A retail operator who decides both scientifically — on the basis of customer behaviour, sales data and clear design principles — increases footfall conversion, basket size and profit without increasing the size of the store.