THE MARVELS OF MERCHANDISING

Special Session by MR. P. K. Mohapatra- President & CEO, Technology Business Sector, RPG
& Chairman- Retail Varsity & Governing Council Member, CBS

Merchandising is a key aspect of modern day multi-product, multi-city, organised retailing. We could hear about it in detail from the horse's mouth when none other than Mr. Mohapatra, the pioneer of modern retailing in India, was giving the students the introductory session to the third module of the retail varsity called THE BRAIN OF RETAIL. The session showed the importance of merchandising in the retail scheme of things. Speaking on the same subject, he added that another main function of merchandising was to integrate the suppliers and customers; which could actually prove critical in the larger business canvas! Identifying the needs of the customer and ensuring that those needs are fulfilled within the defined boundaries has to be the main focus on the retailer's mind. Speaking on defined boundaries, Mr. Mohapatra said that general merchandise items and other products must be given special care and divided into broad categories based on the target customers and the pricing philosophy in the mind of the retailer.

After identifying the needs of the customer the next main step is to organize the sourcing and this involves the critical 'make or buy' decision. In this step, either the retailer decides whether to source the products from the manufacturer or to create private label brands. Again, private labeling is something that needs to be handled with a lot of care and analysis. Every aspect of private labeling- the pricing, branding, market share and most important positioning tends to lend a certain amount of credibility to the brand. Another important thing is that the pricing of the products must be done below than that of the manufacturer's brand. The product must also be placed in the near vicinity of the manufacturer's label. This is done so that the customer sees the products and is aware of their existence! Smart indeed…in this way the retailer is also saved of advertising costs of the products!!!

Branding – another critical aspect of any retail store, comprises of many choices that the retailer needs to make. One- to decide how many brands and subsequently SKUs will he keep in the store and how does he represent them to the consumers at large. Secondly- what would be the order size of the brands in terms of volumes and this would correspond to forecasting of the product and its effectiveness among the consumers. In the entire process of ordering, there would be a MOL- short for Minimum Order Level- which would identify how much the buyer must order with the given amount of quantity that he has. The various ordering cycles money blocked in this chain contribute significantly to the same.

However, Mr. Mohapatra said that this chain that seems so efficient and methodical on paper is not all that easy to execute; especially in the Indian scenario. This is primarily due to the suppliers' inability to constantly supply in India; which is why most of the stores in India face a constant stock out. The stores over order and with the money stuck in the pipeline, realize that the products are not selling well. On the other hand, products that move fast are under ordered and this leads to a lack of judgment and thought in the entire process!!! So, the next time you walk into a retail outlet, and do not find the product that you need… don't get puzzled!!! It may be one of these reasons after all!!!

Having given the students a comprehensive introduction to the world of merchandising and its process, Mr. Mohapatra proceeded to explain the importance of pricing and how it stood as an important driver in a purchase process. Once the retailer sets his mind on the price of the product, he places the order from the suppliers. Subsequently, the goods arrive at the warehouse and are dispatched to the various stores according to their MOLs. It is here that the tricky part of placing the products in the store begins. Deciding the planogram of the store and placing the products in various categories and gondolas, based upon what the retailer feels the customer would find simple and attractive, is an integral part of visual merchandising. Once this is done and the products are ready to be sold, the effect of the pricing on the products and their power over the customers has to be noted. This will give the retailer a significant view of how his products are selling, the effectiveness of the store layout, the inventory turnover and also his future order levels.

Finally to conclude, Mr. Mohapatra with his usual good humor and charisma, told the students that merchandising was not as easy as it seemed!!! A lot of thought and detail goes into the entire process. A single mistake in forecasting and it could result in the magnitude of a six car pile up on the highway!!! Thus analyzing what is to be done and doing it carefully is the most essential part of the entire process. It is correctly said that merchandising is the brain of retailing. It entirely controls the functioning of the store and supply chains and is interlinked to every process in the chain.

Mr. Mohapatra's sessions were always interesting & insightful and this one especially was an eye opener to the backstage of the world of retailing.

Contributed by: Neha Arora, Retail Varsity

In the land of Rio and the Amazania

Session on Business & marketing in Brazil by Mr.Ravichandran, Secretary-General, Indo-Latin American Chamber of Commerce and Honorary Consul for the Dominican Republic

(As a part of the BRIC & N11 Series Sessions in the International Marketing Course)

There are very few people who have the knack of zapping you with the way they converse. This can be in terms of the content they speak or the way they deliver the content or merely the rate at which they go about doing this. The session with Mr. Ravichandran, was a melting pot of all the three attributes of speech that I have mentioned above. As a part of the International marketing course, we have been fortunate enough to interact with people representing the MBRIC countries. This was a session in that direction, where Mr. Ravichandran (Secretary-General, Indo-Latin American Chamber of Commerce and Honorary Consul for the Dominican Republic ) gave us a brief insight into the world of business and trade practised in the Latin American region of the world.

Latin America has always been a dream destination for every travel enthusiast. The beaches of Brazil, beautiful islands of the Caribbean and the sight of mindboggling castles in Mexico can bring alive the thirst glands in every travel maniac. But there is much more to these places apart from their attractive scenic locales. The way countries like Brazil and Argentina have moved up the economic ladder, having started liberalization almost around the same time as India, had enough to write home about.

The economic development of any country depends on the policies of the government put in place in those countries. The government intervention or rather non intervention when it comes to deciding on a few policies pertaining to the direct improvement of the economy of these countries has been really fruitful. It was unimaginable to hear inflation scaling up to 5 digits when the liberalization bug had bitten these countries. After that period, the measures taken by them to control inflation and thereby bring it down to what it is today have been really commendable.

The impact of information technology as an industry and the services provided by this industry has been pretty late when we compare our country with them. But this has also had its positive impact in terms of concentration on other manufacturing industries has been on a high here. The export import business has seen an upward rise delivering all the necessary inputs for the efficient growth of the economy. The purchasing power and the per capita income of the residents of these countries have improved to a great scale. Their import and export revenue on comparison with our country is extremely high; the numbers are breathtakingly tremendous in terms of its contribution to their national economy. Today they have come a long way from being the deprived, exploited nations which were a easy prey to the super powers of the world to being a country which is helping the world’s central bank to survive the credit debacle.Now that’s called coming a full circleJ..

It was awe inspiring to hear when Mr.Ravichandran spoke about the knowledge of the people in Brazil about Mahatma Gandhi and his non violence principle. They in fact believed in his preaching so much that they propagate “Gandhigiri” in their own backyard. Salaam Baapu.!!

Currently they are trying to match in every step taken by any other developing nation when it comes to taking their country on the global platform and letting the world know about the power of Latin America.The welcoming of companies from across the world to set up their factories in their soil and thereby develop their economy are signs of a mature economy. It was very surprising to learn that a group of latin-americans are sweating out in Vellore, and Vaniyambadi to learn the trade of leather tanning. Also Equally interesting cases were the ones about the success of our own Coimbatore bred Elgi tyre re-treading company and CRI pumps in this part of the world. The generic market has paved way for success to our pharma companies too. It was really an amazing afternoon full of interesting information & insights.

At times we get so carried away by looking at the development and the kind of noise made by the economic super powers that the smaller players tend to be overlooked. But the fact remains that every super power today was once a small player. Mr.Ravichandran , the Latin American enthusiast that he is, ended giving a note of caution to every developing country in the world, to look out for the sleeping giants. They are on the rise!!! Its upto us to convert this in to business opportunity. Yes there is much more for us in Brazil than samba, soccer and the carnivals.

Posted by Pradeep,Marcom Varsity ,CBS

The real taste of India - A rural market visit to Santhai @ Acharapakkam, Tamilnadu

Travel forms an essential part of my life. For someone who loves going to different places, interacting with people and getting to discover something new and interesting every time , this was a memorable experience. As a part of our rural marketing course requirement , we got this opportunity to travel to a place called Acharapakkam, near Melmaruvathur, 80km south of Chennai. We were accompanied by Mr.Shivaji Padmanabhan, Audio Visual Executive from Anugrah Madison and Prof.Sathya, Head- Marketing & Marcom Varsity, CBS

This place is known for the ‘Santhai’ that it hosts every weekend. Santhai is a small gathering of people , comprising of buyers and sellers from in and around the place, to create a market environment for goods to be sold and bought by the customers.This place is a common meeting point for 5 villages around that locality. Villagers from these surroundings bring in all their products, which range from Cattle to cosmetics, Fruits and vegetables to Accessories, and Apparels to Edibles, to sell them to the customers around the region.

The first sight on landing at the place was that of cattle, especially bullocks being sold and bought by villagers out there. It was an interesting way of doing business when it came to cattle, as they strike a deal with buyers , holding their hand covered by a piece of cloth. What happens underneath that cloth is a million dollar question!!!!The deal is struck and both the buyer and seller look satisfied. But they weren’t satisfied looking at us initially.But that was bound to happen as they were wondering , what were a group of people wearing school bags and with notes in their hands , doing on their land.

It was interesting to know some insights about the cattle trade !!! Only bullocks and not the cows that come to the market place....well...no gender bias....it's because of a practical reason that the yield of the cow can be known only during the milking time in the mornings and the evenings !! Whereas for the bullocks very intuitive knowledge about the number of teeth, wear and tear in the teeth (!!) and the curve marks are taken into account in arriving at the right price. Here too the middlemen easily make 20% commission !!

We started venturing into the area slowly and had small conversations with the people out there to find out about the nitty gritties of doing business in such an environment. The santhai had myriads of small make-shift stalls selling chicks (Yes, the real ones!), fish, fruits, vegetables, garments, utensils, farming accessories, seeds, consumer goods, footwear, books, plastic toys, house-hold items, catapults, coconuts etc. There were also some interesting stalls with a parrot fortune teller, a herbal dentist (!), palmist etc. An interesting learning that we must have from the people out there is, their cognizance of consumer behaviour and people’s buying pattern. They are extremely well versed in this aspect ,as they are able to sustain their business , week after week, and retain their customer base strongly.

There were people who had been doing this since generations and they seemed to know exactly what the customer wants when he comes to a place like this. They were quite enthralled by the fact that they were being captured by our camera lens, they came ahead and clarified our doubts regarding every aspect of marketing in such a region.

Of course , there were a few people who did not appreciate our indulgence in their day to day business activities, so understandably their response to us was quite cold .But that’s fine, at least we felt the existence of cold this way, amidst such scorching sunlight .Gosh! it did take a toll on some of my colleagues. ..

But the amount of water lost to the quantity of knowledge gained , had a better ratio. So, effort taken never goes for a waste. Here I must quote one of the experiences undergone by a colleague of mine with a Palmist/Astrologer/Don’t know what else he does???

The effort taken by him in trying to interact with the palmist, led to him shelling out 300 bucks(Which I think he would never forget in this lifetime :)) and helped us gain knowledge on what not to do , while dealing with such people in a market..lol...Jokes apart, it was all taken in the right spirit...But every penny of the Rs.300 was worth in understanding the salesman in the palmist...unrufflled, the way he started the deal, confronted the 'small enemies' within his clan (who were sitting in the periphery and discouraging his potential customers!), building up a fear factor and increasing the margin (well....sounds like insurance sale right ??!!) and finally, like a typical management consultant, telling the client what he already knows, well....for a fat professional fee ;-)

This reiterated the idea that marketing “Marketing is a battle of perceptions, not products”. I truly believe in this ideology.

Another important thing was the availability of quite a lot of look-alikes of popular FMCG brands. The most interesting aspect was that several rural consumers buy them clearly knowing that they were fake and went home feeling happier with their own win-win equation of value for money. hmm....Welcome to the strange Indian marketplace !! Now I clearly understand why Ms. Rama Bijapurkar has named her book on consumer India as "We are like that only" !.

Class room sessions can teach us marketing only to an extent. Real learning comes in the form of trips like this, where we get the first hand experience of what is taught. This trip remains high on my travel catalogue as one of those most cherished and compelling journeys .

By Pradeep ,Marcom Varsity ,CBS

Deciphering the Aam Aadmi....

Rural marketing workshop Session by Mr. M.P. Nandakumar, Director, Anugrah Madison Advertising Private Limited

It is fascinating to see how powerful a medium cinema is ....It has a history of creating revolutions in the world and in our own backyard it has been responsible to make or break individuals. People associate themselves with the stars on the silver screen so very well that they end up making them Demi – Gods and literally worshipping them. This was one of the important medium used by Mr Nandakumar, Director, Anugrah Madison and his team from Anugrah Madison to communicate to the rural population in the countryside of Tamil Nadu..

Mr Nandakumar shared with us the challenges involved in communicating to the rural masses , as it is a completely different sets of lifestyle, priority and belief system that they are catering to.

The session with him helped us analyse and understand the complexities involved with developing a communication strategy for people in rural India and the efforts taken to reach out to such a mass.

Understanding a communication and reacting to it depends on the play of the semantics, semiotics & syntactics with the mind of the consumer. Here is where the critical point lies. The mind of an urban consumer is extremely different from that of a rural ‘dimag’. After all , what is responsible for a particular type of perception by a urbanite is not the reason for a person from small town to think that way. This is what makes the job of communicating to the rural mass even more challenging and exciting.

The easy route to the mind of the consumer in the rural areas is things that he relates to easily, one of them being cinema and the cine stars. Hence the communication strategy devised by Mr.Nandakumar and his team had excerpts and catchy one liners ( called 'punch dialogues' in filmy lingo) from various movies of Mr.Rajnikanth, for the rural promotion. This was lapped up by the masses out there and created a buzz among the people regarding the product. So, in this part of the country, Who is telling what is equally important like what is being told !!
The needs and desires of the consumer in rural areas are much different from their urban counterparts. How much would one think of before buying a product like watch in the urban areas? ...Not much, in fact today watches are a lifestyle product in the urban market. But the scenario in the rural market was completely different when Mr .Nandakumar and his team went about promoting Titan Sonata Watches in the interior parts of Tamil Nadu.

Sonata was Titan’s premium brand in the urban market and was also priced accordingly. But the need to bring it to rural TN and create a necessity for such a product was a part of the case study he discussed with us. The way they went about achieving this and successfully positioning Sonata as an affordable ‘must have’ proposition for the success of every family was something to write home about.

The problem they faced in these markets was the absence of a felt need for a product like watch. Hence their campaign included tasks involving make them realise the need for such a product and thereby making it an essential part of every villager’s life. The TVC that they used specific to rural markets also spoke about this idea.

The TV ad they used portrayed a commoner, who doesn’t find the need for a watch, follows his day to day activities, keeping track of time purely on the basis of some events happening everyday in the village, which included a bus reaching the village at a particular time signifying a part of the day. Then using an emotional appeal to strike a chord with the audience they are speaking to , the problems associated with not possessing a watch was conveyed through the villager. This way they brought in the impact of a watch in the life of a common villager.
The impact of such a campaign had placed Titan Sonata in an enviable position in those markets for years to come.

This was one of those sessions which started with a topic which was not so relatable for a person from the metros, but it ended up with these words lingering in my mind about a rural customer-“Jaana Pehchaana , Phir Bhi hai Anjaana”. That’s the ultimate fact of life, we think we know everything about him, yet he remains a stranger to us. Added to that is the complexity of communication in this country where there are atleast 1500 rationalized mother tongues which may include various dialects !! So communicating in a country which writes in many languages and speaks in many more voices is definitely a task in itself. Well, not for experts like Mr.Nandakumar, who speaks atleast 8 languages easily like his mother tongue !!! But more than that, the way he and his team have packaged the whole communication, like an expert master chef, made us to realise that there is much more in rural marketing in terms of engaging the audience and driving the brand elements than a simple understandable communication.

By Pradeep, Marcom Varsity, CBS

Long Long Ago....

PR (Public Relations) Session series @ CBS offered by Mr.Arup Kavan, CEO, WellSpring, An independent brand communication practice

Telling a story is not everybody' cup of tea. I believe it's an art in itself. After all not everyone can have that natural flow of thoughts and coherent sense of relevant meaning to what is being told. You must have it in you, to capture the sense of imagination of your audience and yet connect with their emotions, to strike the right chord. We were awe-struck to see one person who had this in abundance, Mr .Arup Kavan CEO, Wellspring PR.

Vibrant, Whacky, Smart, Witty, Energetic, Sophisticated are a few words that are my Top of the Mind recall currently to describe Arup in a few words. I was really impressed at the beginning of the session looking at the way he handled the idea of telling stories .Stories are an essential part of us. We all love to listen to them and at the same time a few love to narrate them.

This was the important insight that he asked us to work on. By asking us to think about the relevance of any incident that might have occurred with us at any point in our life to help us understand a point, was the essential tool he used to get us close to the concept of Public Relations.

He started off with sharing a story that was close to his heart, the story of the Snooker Table. It basically had the essence of possessing a particular thing which was always a prized possession in one's life, to having seen it getting ruined due to peripheral reasons attached to it. In a way it helped him understand, how important Customer Service is to any shop and how one can spoil all the hard work done in acquiring the good will of a customer within no time.

The lessons to be learnt from every story take us a long way in our life. This helps us look back at things , in a way which we would not have bothered to at some point of time. That's the power of a story.

Everyone has a story to tell, and every story has something to take away.

Arup wanted us to learn the relevance of this exercise and asked us to peep into our lives to resurrect any such incident that enlightened us to a new fact of life. This was the high point of the session, as he was able to get each one of us to reflect back and come up with instances which made us come in close quarters with customer service and its realities. A job neatly done.

Another important aspect that he discussed was the requirement of being specific in life. We always tend to think and act on things without getting into the skin of a matter. This ends up making us superficially, long drawn out, and beaters around the bush. The necessity to be specific and getting to understand the reason behind doing a particular task, always helps us understand it better and makes the person who gave us the task feel more confident about us. Hence , whenever we embark on a new task, the foremost thing to be done is , get to the roots, find out its value and then chart out strategy to accomplish it.

Some sessions leave you, with your jaws dropping in awe, while this one made my mind working, to take a big bow in front of one of those awe inspiring men who have visited our campus. Looking forward to some more exciting stuffs from Mr Arup....what a great start to this 15 session series !!!

By Pradeep,Marcom Varsity,CBS