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International Journal of Management (IJM)
Volume 9, Issue 3, May–June 2018, pp. 55–64, Article ID: IJM_09_03_006
Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=9&IType=3
Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication
CHANGING PATTERN OF PROMOTION IN
INDIAN ORGANISED RETAIL – A REVIEW
Sukanya Sharma
Research Scholar
,
Department of Management Studies,
IIT-ISM, Dhanbad, Jharkhand, India
Fedric Kujur
Research Scholar, Department of Management Studies,
IIT-ISM, Dhanbad, Jharkhand, India
Saumya Singh
Associate Professor
,
Department of Management Studies,
IIT-ISM, Dhanbad, Jharkhand, India
Gairik Das
Department of Management, IISWBM, Kolkata
ABSTRACT
Retail industry is incessantly going through dynamic changes due to liberalization,
globalization and consumer preferences. Retailing involves all actions that are
engrossed in selling goods, services and ideas to the final consumer to satisfy
customers’ needs. The existing retail houses are also gearing up to face the emerging
competition from the organized sector and the changing outlook of the consumers. This
has led to the transformation of promotion strategies of the retail organization. The
proposed paper is an attempt to review the changing nature of promotion especially in
organized retail sector.
Key words: Promotion, Retail Sector, Consumer, Communication Tools.
Cite this Article: Sukanya Sharma, Fedric Kujur, Saumya Singh and Gairik Das,
Changing Pattern of Promotion In Indian Organised Retail – A Review, International
Journal of Management, 9 (3), 2018, pp. 55–64.
http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=9&IType=3
1. INTRODUCTION
In India, retail industry is the second largest employer after agricultural sector. The Indian retail
market has been substantially growing for the last few years in the organized segment. Indian
Retail sector contributes 14% to the GDP and employing about 8% of the total inhabitants.
According to Indian Retail Report (2013) Indian Retail market attained Rs. 2,590, 000 Crore in
Changing Pattern Of Promotion In Indian Organised Retail – A Review
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2012 and share of the organized retail has mounted to 8%. It is anticipated that by 2020 the
share of organized retail in India will touch 20%. Various major domestic players like reliance,
Tata, Birla, Bharti group, Future group have paved their way to the retail arena in multiple
verticals.
Not very far from now retailers were considered to act as a connecting link between the
manufacturer and end users, and were dominated by major manufacturers. But the scenario has
changed totally and the present period can witness emergence of various retail formats like
supermarkets, hypermarkets, departmental store etc. Expecting a bright future of the retail
industry many big players of retail are broadening horizons into various segments throughout
the nation. During 1980s many leading apparel manufacturing company established brand
outlets to sell their goods. After the 90s the scenario changed and predicting a bright future,
business groups opened multiband outlets.
Prakash (2007) observes that the growing purchasing power of consumers have contributed
a lot in the retail sector. The average quality of life of people and the growing affluence of the
middle class have increased the purchasing power. With the increasing use of plastic cards and
growing population of female working population, the retail apparel sector is booming.
The spending and consumptions pattern of youngsters is also one of the factors that are
accelerating growth of retail sector. (Krishnan and Venkatesh, 2008). The propagation of mega
malls is adding extra spice to the booming Indian retail sector (Das, 2011). It has been observed
that the in the Retail Apparel sector, there is a great importance of promotional activities.
2. IMPORTANCE OF PROMOTION IN RETAIL SECTOR
Manufacturers allocate large amount of their marketing communication budgets for promotion
to regularly boost the sales of their brands, often at the expense of brand building advertising
(Jedidi, Mela, and Sunil Gupta 1999; Pauwels, Hanssens, and Siddarth 2002; Sethuraman and
Tellis 2002). On the other hand, retailers also spend heavily on sales promotion, either to match
manufacturers’ trade promotions or to reach their own local strategic goals (Chevalier and
Curhan 1976; Kim and Staelin 1999). Promotion plays vital role in increasing the sale of
products, while generating profit. Promotion is an effective tool to boost sale during the lean
period to augment sales (Das, 2011). There are various tools used in promotion as per season,
festival and events.
The changing nature of marketing strategy due to the impact of internet and social media
has posed challenging circumstances to design their effective promotional strategy to convert a
consumer into end user. The proposed paper aims to develop the understanding of various
promotional tools that can be proved to be effective in influencing people to buy more.
Managers can use these insights to improve their promotional estimates across various outlets.
3. VARIOUS FORMATS OF PROMOTION
Sales Promotion is defined as those marketing activities that provide extra value or incentive
to sales force, distributors, or the ultimate consumer that stimulates instantaneous sales (George,
1990). In the present market scenario manufacturer and retailer believe sales promotion to be a
significant constituent of their marketing strategies (Bell and Drèze 2002; Blattberg and Neslin
1990; Pauwels 2007).
There are various reasons to opt for sales promotion. If we keep the satisfaction parameter
of a product constant, then sales promotion is the main reason behind purchasing the product.
The location of a store is never a barrier if the promotional offers are beneficial for the
customers (Das, 2011). In an analytical study carried out in Indian apparel sector, it was
observed that retailer needs to clear the shelves at the end of the season to avoid inventory cost
(Vyas, 2007). So retail industries need to design strategic promotional tools to achieve
Sukanya Sharma, Fedric Kujur, Saumya Singh and Gairik Das
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maximum benefit (Malik, 2012), and to capture customers’ awareness by giving discounts,
voucher etc. Several factors have fueled the growth of sales promotion. There are various
components of sales promotion like: Buy one Get One, in store display, advertisement, social
media, gift voucher, cash back, free gifts etc.
People are enticed towards unplanned purchases through promotional variables like in-
store display and ‘‘two-for-one’’ (Inman et al., 1990). According to Sinha & Smith (2000),
Buy one Get One Free is a very popular promotional tool. BOGO is an alluring discount
technique which has gained popularity now days. Buy One Get One Free are often referred to
as self-liquidating promotions as they help in clearing the stock. Promotion plays vital role in
increasing the sale of products, while generating profit. Promotion is an effective tool to boost
sale during the lean period to augment sales (Das, 2011).
As mentioned by (Blattberg and Neslin, 1995), short-term sales are positively affected in
offering promotions. Literarure review shows that “Buy One and Get One free” (BOGO) is a
common form of volume discount promotion, used commonly in the marketing industry by
retailers, alluring customers to buy their product through the offer of a free gift. Promotions
such as “buy one get one free,”, “buy two get one for free” and so on are frequently used to
generate unplanned purchase (Inman et al., 2009).
While, a study done in India has concluded that sales promotions like offering “free
goodies” are not perceived favorable by consumers although this promotion is being widely
promoted in India (Manalel et al., 2007). Simonson et al. (1994) endorsed and stated that
consumers who are not interested in purchasing the additional product may not avail the BOGO
promotion scheme.
Price Reduction is a valuation approach where goods or products are offered in a good
discounted buying price Fill (2002). Price reduction has a relationship with different
promotion tools in a way that they are affecting each other and pushing the customers to buy
the product, such as coupons and samples (Huff and Alden, 1998; Krishna and Zhang, 1999;
Mela et al., 1997; Gilbert and Jackaria, 2002).
Designing a promotional strategy and pricing is of paramount importance for the managers.
(Bolton, Shankar, and Montoya, 2009). The vast amount of budgets spent on promotional
activities and requirement of profitability of current sales promotion efforts for retailers
(Ailawadi et al. 2009), effective promotion management continues to be a key point of attention.
POP displays have become integral part of retail industry today. They enhance retail sale
and provide information to the customer. It is a fact that 70 % of the purchase decision are made
inside the store. At supermarkets where there are multifarious brands, selections of brand are
made within the store from the display and offers. But the role of POP changes significantly
with the type of product being sold. If we consider women’s apparel in store it would lay
emphasis on style, fashion, quality and price, (Pradhan, 2012).
4. GROWING ROLE OF SOCIAL MEDIA
Today social media have exponential power. Social media can help companies in retaining
relations with customers as customers frequently visit or discuss such brands that they have a
loyalty to or are already interested in on a recommendation by friends and family (Baird and
Parasnis, 2011).The various social media sites like face book, tweeter, blogs etc. have become
an important platform for the apparel retailers as they can display the merchandise designed for
customers for viewing. Bashar, A., Ahmad, I., & Wasiq, M. (2012) found that consumers are
embracing social media like anything, and are obsessed to know more and more about product,
and offers.
Social media provides a new channel to acquire product information through peer
communication, (Kozinets, 1999). This media helps to share ideas about a given product,
Changing Pattern Of Promotion In Indian Organised Retail – A Review
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service, and contact other consumers, who are seen as more objective information sources.
(Kozinets, 2002). Social media has also prejudiced consumer behaviour from information
acquisition to post-purchase behaviour such as dissatisfaction statements or behaviours about a
product or a company. (Mangold and Faulds, 2009).
Shopping has always been a joyful experience and social networking allows consumers to
interact with individuals may be mostly they are strangers when we talk about online. Cultural
aspects have an influence on consumers’ usage of social networks and a great impact over the
online purchase intentions (Pookulangaran and Koesler, 2011).
Interactivity with target brand in social media is perceived differently by consumers
depending on the message they convey (Shin, 2008). The perceive d risk of purchasing and the
amount of money a consumer is willing to pay for a product also determines the user to think
more about the quality and the utility of the product (Ioanas, 2012). Apart from this, one of the
most commonly used effective communication tool is advertisement.
5. ADVERTISING
Advertising can be defined as any paid form of non personal presentation and communication
through mass media. The main media used for advertising are press radio, cinema, posters,
hoardings and direct mail. Advertising may also be done on bus shelters, buses, road dividers,
kiosks, balloons etc. The kind of media vehicle chosen by the retailers depends upon the reach
of that particular medium to the target audience. Advertising is the backbone of modern
national and international marketing. It’s a form of mass communication used by the sellers to
penetrate into the minds of target customer and induce the viewers or readers to buy the same.
Advertising is the most effective marketing tool (Katke, 2007). The main purpose of
advertisement is to find out the impact of advertising on customer buying behaviour (Abideen
and Saleem, 2011). The rate of influencing customer through billboard advertisement is quite
high compared to other media as it delivers information affordably, attract potential customer
which in turn enhances sales (Taylor and Franke 2003).
Many researchers have focused on the effect of advertising message on target audience.
One of such studies looked at the Information Processing Model (IPM) which is discussed
extensively by Belch and Belch (2001) and Shimp (2000), which shows how consumers process
and respond to advertising information. The ultimate objective of the advertiser is to encourage
the target audience to choose his, (the advertiser’s) brand or products rather than competing
ones, (Shimp, 2000). So, the advertiser’s main aim is to direct their audiences’ mind towards
their brand or products and subsequently encourage them support them.
In a complex buying situation consumers are considered as looking for information relevant
to their buying decision (Belch and Belch, 2001). Marketers and advertisers being aware of this
then flood the consumer with their information that are considered relevant to the consumer’s
buying needs (Shimp, 2000). So the consumer is bombarded with numerous information
competing for his/her attention and choice. Albernethy, (1992), in his research concluded that
magazine advertisements contain more informational content than television advertisement.
Albernethy and Butler, (1992) mentioned that newspaper advertisement were more
informational than magazine advertisements. Olson, Jerry C. and Reynolds, Thomas J. (1983),
in their study have shown how advertising works and the role of advertising content. If
advertising is combined with sponsorship, it gives wonderful result specially in augmenting
brand awareness.
6. SPONSORSHIP
Sponsorship is to maximize brand equity and ultimately achieve sustainable profitability of
Company (Azadi et al, 2015). Tong (2006) in his study, on the impact of brand equity in Chinese
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clothing the market, studied the effectiveness of marketing activities on different aspects of
brand equity and showed that Sponsorship for events had a positive effect on brand equity. The
findings of Pauwels (2007) showed that combining sponsorship and advertising is suitable to
increase brand awareness. The analysis of research Haider (2014) reveals that sponsorship has
positive impact on Brand Equity.
The research result of Hosseini and Mehrara (2013), showed that sponsorship programs
have a direct impact on brand equity. The research of Tufail et al (2014) showed that
Sponsorship has a positive relationship with Brand Equity. When Publicity and Sponsorship is
favorable, there is positive effect on Brand Equity. The analysis of research Haider (2014) also
revealed that sponsorship has positive impact on Brand Equity. As said by Dehbini et al (2015),
“both advertisement and sponsorship have positive effect on brand equity and customer
intention to buy, but the effect of advertisement is more than sponsorship. Apart from the
intrinsic value of a product, people now look for a good external look. So packaging has gained
importance. As such packaging speaks without words.
7. PACKAGING
Packaging is considered as an integral part of modern promotional aspect of marketing, which
covers all phases of activities that are involved in the transfer of goods from manufacturer to
customer. Packaging is a vital communication tool in marketing in the present day
organizations.
Harsh, (1986) considered Packaging as a magic tool for marketers. He added among the
major developments in the modern competitive market system, one is packaging. He endorsed
that the structural changes in the market environment including income, education, awareness,
technology, competition etc, have made packaging a prominent decision today. Packaging also
acts as a persuasive salesperson. An icon of South India, Nalli which is synonymous with silk
and kanchipuram sarees does an excellent packaging while delivering product to the customers.
While Mishra, (1985) by doing an analysis with a sample of retailers and consumers
believed that, although packaging is an important element in the marketing plan, it has not yet
achieved full status as a marketing tool.
Walter, (1970) in his study analyzed the use of status in selling goods, particularly from the
standpoint of packaging. Since prestigious products usually have a smaller market, there is a
less money available for advertising and sales promotion. Therefore the package must carry the
message. James & Akron (1977) mentioned that products used by children can create much
more satisfaction among children and parents by devoting more attention to the package.
Generally children seem to interact with packaging symbols that are colorful and otherwise
unique. Another format of promotion is exhibition where buyer and seller from various states /
countries meet together and tie business bond.
8. EXHIBITIONS
Exhibitions are unique in that they are the only medium that brings the whole market together,
buyers, sellers and competitors. Exhibitions offer an array of opportunities, problems and
challenges to the keen marketing manager. They can be leveraged to the maximum effect by
integrating them with other communication tools. Sponsorship of guides, maps, promotions,
free gifts and competitions can all be offered to the target visitor through advertising, editorial,
inserts, mailings, and eve telemarketing. Good exhibition plantings can integrate with other
communication activities at an early stage. In apparel exhibitions in India people from many
states come together and exhibit their materials. Many of them get good customers and continue
business for long. In apparel sector various ramp walk, fashion shows by renowned models