Human Resource Management PDF

**HUMAN RESOURCE MANAGEMENT** Human Resource Management can be defined as "employing people, developing their resource, utilizing, maintaining and compensating their services in tune with the job and organizational requirements." **OBJECTIVES OF HUMAN RESOURCES** - To help the organization reac...

**HUMAN RESOURCE MANAGEMENT** Human Resource Management can be defined as "employing people, developing their resource, utilizing, maintaining and compensating their services in tune with the job and organizational requirements." **OBJECTIVES OF HUMAN RESOURCES** - To help the organization reach its goal - To employ the skills and abilities of the workforce efficiently - To provide the organization with well trained & well motivated employees - To increase employees job satisfaction and self actualization (stimulate employees to realize their potential) - To develop & maintain a quality of work life - To communicate HR policies to employees - To be ethically & socially responsive to the needs of the society (ensuring compliance with legal & ethical standards) - To provide an opportunity for expression & voice in management - To provide fair, acceptable & efficient leadership - To establish sound organizational structure & desirable working relationships. **Table of Human Resources Management Objectives and Considerations** +-----------------------------------+-----------------------------------+ | **Objective** | **Considerations** | +===================================+===================================+ | Employee Engagement and | - Financial methods (wages, | | Invovement | salaries) | | | | | | - Non-financial methods | | | (health, safety, fringe | | | benefits) | | | | | | - Motivate employees to | | | increase productivity | +-----------------------------------+-----------------------------------+ | Appropriate Employee Mix | - Right number of employees | | | | | | - Correct location of employees | | | | | | - Employees with appropriate | | | skills and competencies | +-----------------------------------+-----------------------------------+ | Employee Training and Development | - Company-wide, departmental, | | | and individual training | | | | | | - Talent development to | | | identify, develop, and retain | | | future leaders | +-----------------------------------+-----------------------------------+ | Workforce Diversity | - Diversity in terms of sex, | | | religion, age, race, | | | ethnicity, sexual orientation | | | | | | | | | | | | - For multinational companies, | | | diversity in management and | | | board of directors | +-----------------------------------+-----------------------------------+ | Alignment with Corporate | - Ensure HR objectives support | | Objectives | overall corporate objectives | | | (e.g., cost-cutting, | | | expansion) | | | | | | - HR department needs to be | | | creative in finding ways to | | | support corporate objectives | +-----------------------------------+-----------------------------------+ **ISSUES IN HUMAN RETAIL RESOURCE** Here are some of the most pressing issues in retail human resources: 1. **High Turnover Rates** Turnover is an equal opportunity perpetrator in modern industry, but is especially insidious in the retail sector. 2. **Employee Engagement** Employee engagement is an important concept for retailers. A disengaged workforce directly impacts the impression left on a customer. 3. **Employee Theft** Employee theft is the largest source of inventory shrinkage. Dishonest employees steal more from their employers than the typical shoplifter 4. **Discrimination and Hiring Bias** This issue affects other demographics beyond race and includes gender, age, and ability, among other characteristics. 5. **Seasonal Demand** Retail stores are known to rely on additional, seasonal staff during the holidays and other cyclical peaks in business. 6. **Safety** Retail is a fast-moving environment that lends itself to assorted gaffes that can endanger employees and customers alike. This ever-present issue is another of the biggest challenges facing HR in the retail industry. 7. **Sexual Harassment** Sexual harassment is a common problem for retail employees. Whether it's customers, managers or co-workers, inappropriate behavior is a common problem for retail employees. 8. **Career Advancement** Retail jobs tend to be seen as temporary positions for younger people focused on longer-term career goals in other industries. 9. **Employee Misclassification** To avoid paying retail workers overtime, it's not uncommon for employers to "promote" them to assistant manager and move them into a salaried position. 10. **Union Vulnerability** HR departments need to have a pulse on employees across the workforce to uncover any discontent. Have conversations with employees or survey them on issues of fairness of pay, job security, benefits, and treatment by managers. **DESIGNING THE ORGANIZATION STRUCTURE FOR A RETAIL FIRM** - **Organization Structure** A formal structure where the various activities to be performed by the specific employees are identified and delegated, indicating their authority and responsibility. Organization structure is the formal system of task and reporting relationships that controls, coordinates, and motivates employees so that they cooperate to achieve an organization\'s goals. **Organization Structure should:** - Encourage employees to work hard and to develop supportive work attitudes - Allow people and groups to cooperate and work together effectively - A retailer cannot survive unless its organization structure satisfies the need of the target market, regardless of how well employee and management needs are met. - Most of the retailers do similar tasks such as buying, pricing, etc., but there are many ways of organizing a retail firm **The Process of Organizing a Retail Firm:** 1. **Outlining the specific task to be performed in retail distribution channel.** - The general tasks in a retail organization vary from organization to organization and size to size but these are some common retail activities that are usually applicable to all sorts of retail distribution channel. THESE ARE: (i) *[Arranging and buying merchandise for the retailer]*; (ii) *[Receiving merchandise and check for its quality]*; (iii) *[Determination of prices i.e., price setting/labeling]*; (iv) *[Marketing the merchandise]*; (v) *[Inventory management and control including stores]*; etc. 2. **Dividing the task among channel members.** - The tasks which are mentioned in the previous step does not needs to be done by a retailer only. It can be divided among the retailer, manufacturer or wholesaler, specialist etc. 3. **Grouping the Retailer's task into jobs.** - The tasks can be grouped into jobs 4. **Classifying the jobs.** - Here jobs are classified by categorizing them into functional, product, geographic or combination 5. **Integrating positions through an organization chart.** - The format of the retail organization should be designed in a coordinated and integrated way. - With these things in mind , a retailer devises an organization chart which graphically displays the hierarchal relationships - **Organizational Design** Organizational design is the process by which managers select and manage various dimensions and components of organizational structure and culture so that an organization can achieve its goals. 1. **Focus on Specialization** - The tasks should be assigned and allocated to the employees on the basis of the expertise that they possess. This will help in improving the quality of the work as well as increase the job satisfaction amongst the employees. 2. **Work out the reporting relationships** - The organization should ensure that there are correct number of employees under the superior 3. **Matching Authority and responsibility** - Providing relevant authority and responsibility to the employees helps the employees ineffectively undertaking the responsibilities which are assigned to them and get lead to maximization in sales and revenues. But many times providing the authority and responsibility may also lead to serious conflicts between the employees 4. **Matching organizational structure to the retail strategy** - The structure of the retail organization should match the retail strategy. The structure will change according to the type of retailer and the size of the store. **MANAGING DIVERSITY** Managing diversity means acknowledging people\'s differences and recognizing these differences as valuable; it enhances good management practices by preventing discrimination and promoting inclusiveness. Good management alone will not necessarily help you work effectively with a diverse workforce. **THE IMPORTANCE OF MANAGING DIVERSITY** - Well managed diverse teams out perform homogeneous teams & vice versa. - Reputation in the market & attract best employees - Employees who feel valued & rewarded are more engaged & motivated - Greater employee engagement lead to lower turnover rate 1. **Communicate Effectively** - According to Salesforce, employees who feel that their voice is heard in the workplace are over four times more likely to perform at their best than those who feel overlooked. 2. **Create an Open-minded Work Culture** -Creating an open-minded organizational culture in the workplace helps employees gain more knowledge, better connect with their colleagues, reduce conflicts, and encourage creative collaboration. 3. **Consider Leadership Training** - Managers must promote and embrace diversity from the start so that employees can enjoy a diverse atmosphere. 4. **Consider Sensitivity Training** - Sensitivity training helps employees and managers understand and respect a wide range of cultures and sensitivities and helps create a harmonious workplace. 5. **Report discrimination in the workplace** - To effectively manage workplace diversity, the organization must have zero tolerance for concerns related to a specific person or culture. **LEGAL ISSUES IN HUMAN RESOURCE MANAGEMENT** **Employment Discrimination** - **Discrimination based on protected characteristics**: This includes race, color, religion, sex (including pregnancy, gender, identity, and sexual orientation), national origin, age (40 years older), disability, and genetic information. - **Harassment**: This includes unwelcome conduct based on protected characteristics that creates a hostile work environment. - **Retaliation**: Employers cannot retaliate against employees who report discrimination or harassment, or who participate in investigations. **Compensation and Hours** - **Minimum Wage**: Federal and state laws set minimum wage requirements. - **Overtime Pay**: The Fair Labor Standards Act (FLSA) requires overtime pay for non-exempt employees who work more than 40 hours per week. - **Wage and Hour Record Keeping**: Employers must keep accurate records of employee hours and wages - **Child Labor**: There are restrictions on the types of jobs children can perform and the number of hours they can work. **Leave and Benefits** - **Family and Medical Leave Act (FMLA)**: Federal law that requires certain employers to provide unpaid leave to eligible employees for specific family and medical reasons. - **Worker's Compensation**: This system provides benefits to employees who are injured or become ill on the job. - **Unemployment Insurance**: This program provides temporary financial assistance to unemployed workers who meet eligibility requirements. - **Health Benefits**: The Affordable Care Act (ACA) requires most employers to provide health insurance to their employees **Other Legal Issues** - **Employee Privacy**: Employers have to respect employee privacy in areas like personal information, email, and internet usage. - **Workplace Safety**: Employers have a responsibility to provide a safe work environment. - **Non-Compete Agreements**: These agreements can restrict employees from working for competitors after leaving a company, but their legality varies by state. - **Independent Contractor vs. Employee**: Misclassifying workers as independent contractors can have legal and financial repercussions. **MERCHANDISE MANAGEMENT** A. **Merchandise Management Overview** **Merchandise** The commodities or goods that are bought and sold in business. When you go into a store, you\'re surrounded by merchandise, whether it\'s food, clothing, or books. Despite their close relationship, sales and merchandising are two distinct functions. The act of guiding a customer toward a sale is known as merchandising, whereas the act of a customer actually choosing a product and completing a purchase transaction is referred to as sales. **Merchandise Management** is the process through which each retailer decides what items to carry, how much to have on hand to meet the needs of customers, where they should be displayed in the store to maximize sales, and how they should be priced to sell the best and maximize profits. While maximizing profits is essential for retailers, merchandising management can also help you maintain an organized store and manage your inventory. For example, you can keep an accurate record of the available goods in the store to discover when restocking is due. **Here are some factors that contribute to effective merchandising management**: A. **Supply Chain** A retail store\'s supply chain is essential because it provides products to meet the demands of consumers. B. **Marketing Strategies** An effective marketing strategy is a practical way for retail stores to reach their target market quickly. One approach is to use conventional means of marketing like billboards, television, radio, and newspapers. C. **Competitive Analysis** You can manage a retail store\'s merchandise by looking at what other stores are doing and performing a competitive analysis. D. **Customer Service** When you satisfy consumers with excellent customer service during their visit to a retail store, it can improve customer loyalty. **Why is Merchandise Management Important?** Understanding the importance of merchandising management can help you evaluate consumers\' preferences so you can stock and display goods successfully, which in turn, create higher sales and maximizing profit. B. **Forecasting Sales** **What is forecasting?** Forecasting is a method of making informed predictions by using historical data as the main input for determining the course of future trends. Companies use forecasting for many different purposes, such as anticipating future expenses and determining how to allocate their budget. **Importance of sales forecasting** By predicting future sales performance, companies can optimize resource allocation, streamline operations, and improve supply chain management. - **5 Benefits of accurate forecasting** 1. **Improved Revenue Accuracy:** Accurate forecasts reduce revenue uncertainty, enabling better financial planning and decision-making. 2. **Enhanced Supply Chain Management:** Forecasts optimize inventory levels, reducing stockouts and overstocking, and ensuring timely deliveries. 3. **Better Resource Allocation:** Accurate forecasts ensure adequate staffing, production, and distribution resources, maximizing efficiency. 4. **Increased Efficiency:** Forecasts streamline operations, reducing waste, improving productivity, and minimizing unnecessary expenses. 5. **Competitive Advantage:** Accurate forecasts enable businesses to adapt quickly to market changes, stay ahead of competitors, and drive growth. - **Types of Forecasting** - **Qualitative Forecasting**: Based on expert opinions, intuition, or market research. Examples: Surveys, focus groups, and Delphi method. - **Quantitative Forecasting**: Based on numerical data and statistical methods. Examples: Time series analysis, regression analysis, and econometric models. **Most Commonly Used Forecasting Methods** 1. **Straight-line Method** Analyzes historical data to identify patterns and trends over time. 2. **Moving Averages** Smooths out short-term fluctuations to highlight longer-term trends. 3. **Simple Linear Regression** Explores the relationship between a dependent variable and an independent variable to predict outcomes. 4. **Multiple Linear Regression** Explores the relationship between dependent and multiple independent variables to predict outcomes. C. **Developing an Assortment Plan** **Assortment** Is a strategy in retailing that involves the quantity and type of products that stores offer to the consumers. A tool used by retailers to manage inventory and increase sales more effectively. **What is assortment planning?** Assortment planning is the process of selecting which "assortment" of products to sell during a specific period of time, and how to distribute those products across different locations and sales channels to maximize profits. In other words, assortment planning involves finding the right balance and deciding what products to sell and where to sell them based on seasonal trends and demand at particular locations. **To develop an effective assortment plan:** 1. **Understand your customer profile** --- Before choosing products, it\'s important to learn what your customers like and understand them. This knowledge guides product selection and tailors the shopping experience to resonate authentically with your target audience. - **Market segmentation** - **Consumer insights** 2. **Analyze your past performance and current inventory** --- Understanding the present and predicting the future in retail hinges on insights, you need to look at past information. An effective assortment plan is based in your past sales data and careful review of your current product assortment and inventory. - **Sales data analysis** - **Inventory Levels** 3. **Forecast future demand** --- You need to be able to predict what your customers will want in the future. This helps you ensure that you stay competitive, relevant and profitable. - **Trend analysis** - **Demand forecasting techniques** 4. **Curate a balanced product mix** --- Retail success is about choosing the right blend of products in your assortment. A well-curated product mix meets the different needs of customers, leading to increased footfall, higher conversion rates, and sustained brand loyalty. - **Product life cycle considerations** - **Merchandise hierarchy** 5. **Regularly review and adjust based on feedback** --- In retail, success depends on being flexible and open to change instead of using the same old methods. It's important to regularly check and adjust your product plan, using customer feedback to help with those changes. - **Feedback Mechanisms** D. **Setting Inventory and Product Availability Levels** **Importance of inventory management** Effective inventory management is crucial for businesses as it impacts revenue, profitability, customer satisfaction, and competitiveness. Optimal inventory levels ensure timely deliveries, minimize stockouts and overstocking, and reduce holding costs. **Impact of inventory levels on business performance** Maintaining optimal inventory levels reduces the cost of possible interruptions or of loss of business because of scarcity of products, reduces supply costs, and protects against price fluctuations. The inventory conversion period has a negative effect on a business\'s performance. **5 Key Factors Influencing Inventory Levels** 1. Demand variability 2. Lead time and supplier reliability 3. Product life cycle and obsolescence 4. Storage and handling costs 5. Service level and customer expectations **Inventory Classification Methods** - **ABC analysis (Annual Business Cycle)** ABC analysis is a method used in inventory management that classifies items into three categories (A, B, and C) based on their importance. This strategy helps to identify high-risk items, prioritize managerial time, and aim for near-perfect inventory accuracy. - **XYZ analysis (X-axis: demand variability, Y-axis: lead time)** XYZ analysis is a way to classify inventory items according to the variability of their demand or derived/forecasted consumption. - **VED analysis (Vital, Essential, Desirable)** VED analysis is a valuable technique for inventory management that can help businesses of all sizes to improve their performance. It is a simple but effective way to classify inventory items into three categories based on their importance to the business: vital, essential, and desirable **SETTING INVENTORY LEVELS** - **Economic Order Quantity (EOQ) Mode**l - **Reorder Point (ROP) Calculation** - **Safety Stock Calculation** - **Maximum Inventory Level (MIL) Determination** **PRODUCT AVAILABILITY METRICS** - **Fill Rate** - **Order Fulfillment Rate** - **Inventory Turnover** - **Days Inventory Outstanding (DIO)** **INVENTORY OPTIMIZATION STRATEGIES** - **Just-In-Time (JIT) Inventory System** - **Vendor-Managed Inventory (VMI)** - **Consignment Inventory** - **Drop Shipping** E. **Establishing a Control System for Managing Inventory** An inventory control system is a technology solution that manages and tracks a company\'s goods through the supply chain. This technology will integrate and manage purchasing, shipping, receiving, warehousing, and returns into a single system. **Types of Inventory Control Systems** There are two key types of inventory control systems. 1. **Perpetual inventory system.** 2. **Periodic inventory system.** **4 Inventory Control Techniques** **Inventory Control Systems Importance** 1. **Real-time inventory levels.** 2. **Optimize your logistic workflow.** 3. **Financial savings.** 4. **Reduce manual labor inaccuracies.** 5. **Improve customer satisfaction.** F. **Allocating Merchandise to Stores** **Allocation** process of assigning individual item quantities to specific stores. **Merchandise Allocation** involves determining how much, what type, and when to allocate to each store, as these decisions have a big impact on profitability. **Allocating merchandise to stores involves three decisions:** 1. How much to allocate to each store 2. What type of merchandise to allocate 3. When to allocate the merchandise to different stores **AMOUNT OF MERCHANDISE ALLOCATED** **Based on:** - **Sales Forecasts** - **Historical Data** - **Store Capacity** **TYPES OF MERCHANDISE ALLOCATED** **Based on:** - **Customer Demographics** - **Store Location** - **Regional Preferences** **TIMING OF MERCHANDISE ALLOCATION** **Based on:** - **Seasonal demand fluctuations** - **Promotional events** - **New product launches** **Profitability Impact** Profitability Impact refers to how the arrangement and stocking of products in a store affect profits. **Key aspects include:** - **Optimized Inventory Levels** - Keeping popular items available while reducing excess stock lowers costs and boosts sales. - **Increased Sales** - Matching stock with customer demand leads to more purchases. - **Inventory Turnover** - Selling items quickly improves cash flow and reduces storage costs, increasing profits. - **Adaptability to Market Trends** - Quickly adjusting inventory based on trends helps meet customer preferences and drives sales. - **Customer Experience** - Providing the right products enhances customer satisfaction and encourages repeat business. **Risk of Poor Merchandise Allocation** - Stockouts - Overstocking - Lost Sales - Low Inventory Turnover - Increased Cost G. **Analyzing Merchandise Management Performance** **Analyzing Merchandise Management Performance** analyze the performance of the process and make adjustments, such as ordering more or less merchandise, lowering prices to increase sales, allocating different assortments to specific stores or changing the assortment and model stock plans **3 Methods of Analyzing Merchandise Management Performance** 1. ABC Analysis 2. Sell Through Analysis 3. Multi Attribute Method 1. **ABC Analysis** The ABC analysis sometimes known as Always Better Control is an inventory classification process where total inventory is classified into three categories: **A** -- Outstandingly important; **B** -- Of average importance and **C** -- Relatively unimportant as a basis for a control scheme. 2. **Sell Through Analysis** This method describes the comparison between the actual and forecasted sales volume to determine whether early markdowns should be applied or fresh order for additional merchandise should be given to satisfy current demand. There is no universal rule to indicate when a markdown should be introduced or additional stock of merchandise be ordered. It simply depends on the experience with the merchandise, a buyer has in the past year. 3. **Multi Attribute Method** This method is used to analyze the- various alternatives available with regard to vendors and select one that best satisfies store needs. This method is based on the concept that customers look a retailer or a product as a collection of features and attributes. H. **Developing and Sourcing Private Label Merchandise** **What is a private label?** Private label refers to a product manufactured by one company and sold under another company's brand name. Private-label products can be similar to items that already exist on store shelves, but the exact manufacturing formula of the product must be original. **3 Benefits of Private Labelling** 1. **Exclusivity** Private labelling allows you to brand a product that will resonate directly with your target market based on your own research and experience. It is a great way to separate yourself from your competitors. 2. **Loyalty** Customer loyalty is one of the greatest benefits of private labelling. By offering your customers high-quality products and great customer service you will find that your customer will return to re-purchase your product. 3. **Increased Revenue** Last but not the least, private label products offer higher profit margins compared to reselling existing brands. **Product** **Development Process** 1. Concept development 2. Design and prototyping 3. Product testing and quality assurance 4. Final product selection **Sourcing Options** - **Domestic sourcing** -- Domestic sourcing involves partnering with suppliers or manufacturers within your home country. - **International sourcing** -- International sourcing involves partnering with suppliers or manufacturers in foreign countries. - **Contract manufacturing** -- Contract manufacturing involves hiring a third-party manufacturer to produce products according to your specifications. - **Private label manufacturers** - Private label manufacturers (PLMs) produce products exclusively for your brand, without their own branding or distribution channels. I. **Negotiating with Vendors** **Vendor Negotiation** is the process of reaching mutually beneficial agreements with suppliers in the retail industry. It involves discussions and bargaining to secure favorable terms and conditions, including pricing, delivery schedules, and contract terms. **Vendor negotiation** is an integral part of the retail ecosystem as it directly impacts product availability, pricing, and overall customer experience. **Implementation and best practices** To successfully integrate vendor negotiation into retail operations in 2024, retailers should adopt the following best practices: - **Establish clear negotiation objectives** - **Leverage data and analytics** - **Invest in negotiation skills** - **Build collaborative relationships** - **Embrace technology** - **Monitor and evaluate performance** **Roi and Performance Metrics** In 2024, retailers can expect various measurable impacts on their ROI and performance metrics through effective vendor negotiation. Some key projections include: - **Increased cost savings**: Successful negotiations can lead to significant cost savings by securing better pricing, volume discounts, and favorable contract terms. - **Improved sales performance**: By optimizing product assortment through negotiation, retailers can enhance sales performance and revenue generation. - **Enhanced operational efficiency**: Negotiating favorable delivery terms and inventory management agreements can improve operational efficiency, leading to reduced costs and improved customer satisfaction. - **Increased customer loyalty**: Effective vendor negotiation can result in improved product availability, competitive pricing, and enhanced customer experience. **Omnichannel and Customer Experience** In today\'s retail landscape, it is crucial to connect in-store, online, and mobile vendor negotiation processes to deliver a seamless and personalized customer experience. **By integrating vendor negotiation across channels, retailers can:** - Ensure consistent pricing and promotions across all touchpoints. - Optimize product availability and assortment based on customer preferences and demand. - Enable personalized offers and recommendations. - Enhance customer satisfaction and loyalty **Operational Efficiency** **Key considerations for operational efficiency in vendor negotiation include:** - Supply chain optimization - Inventory management - Workforce management and training - Data security and compliance **Action Plan for 2024** To optimize vendor negotiation in retail, retailers can follow this step-by-step guide: 1. **Define negotiation objectives**: Clearly define the objectives for each negotiation, considering factors such as pricing, delivery terms, and contract conditions. 2. **Gather data and insights**: Collect and analyze relevant data, including historical sales performance, market trends, and supplier information, to inform negotiation strategies. 3. **Prepare negotiation tactics**: Develop negotiation tactics and strategies based on the defined objectives and data insights. Consider different scenarios and potential concessions to achieve win-win outcomes. 4. **Engage in negotiation**: Conduct negotiations with vendors, employing effective communication and negotiation techniques. Maintain a collaborative approach and focus on building mutually beneficial agreements. 5. **Review and evaluate performance**: Continuously monitor and evaluate the performance of vendor negotiation efforts. Assess the impact on key performance metrics and make adjustments as necessary. 6. **Build long-term partnerships**: Foster collaborative relationships with vendors by maintaining open and transparent communication. Regularly review and renegotiate agreements to adapt to changing business needs. A. **PRICING STRASTEGIES** **Cost-Plus Pricing**: Setting prices based on the cost of goods plus a markup. This is straightforward but may not consider market demand. **Competitive Pricing**: Setting prices based on competitors' pricing. This requires constant market analysis but helps remain competitive. **Dynamic Pricing**: Adjusting prices based on demand, competition, and other factors in real time. Common in e-commerce and travel industries. **Penetration Pricing**: Introducing a new product at a low price to gain market share quickly. Once established, prices may be increased. **Skimming Pricing**: Setting high prices initially for a new or innovative product, then lowering them over time as competition increases. **Psychological Pricing**: Pricing products just below a round number (e.g., \$9.99 instead of \$10) to make them seem cheaper. **Bundle Pricing**: Offering multiple products for a single price lower than the total of their individual prices. This encourages higher sales volume. **Value-Based Pricing**: Setting prices based on perceived value to the customer rather than on the cost of the product. **Loss Leader Pricing**: Pricing a product very low (or at a loss) to attract customers, with the expectation that they will purchase additional items at normal prices. **Geographical Pricing**: Setting different prices based on geographical location, often due to shipping costs or local market conditions. B. **CONSIDERATION IN SETTING RETAIL PRICES** **Price Sensitivity of Consumers and Cost** - Generally, as the price of a product increases, the sales for the product will decrease because fewer and fewer customers feel the product is a good value. The price sensitivity of customers determines how many units will be sold at different price levels. If customers in the target market are very price-sensitive, sales will decrease significantly when prices increase and vise-versa. **Price Elasticity** - A commonly used measure of price sensitivity, or the percentage change in quantity sold divided by the percentage change in price. **THERE ARE VARIOUS FACTORS AFFECT THE PRICE SENSITIVITY FOR A PRODUCT:** - The more substitutes a product or service has, the more likely it is to be price-elastic (sensitive). - Products and services that are necessities are price inelastic. Thus, medical care is price-inelastic, whereas airline tickets for a vacation are price-elastic. - Products that are expensive relative to a consumer\'s income are price-elastic. Thus, cars are price elastic, and books and movie tickets tend to be price inelastic. **COMPETITION** - Consumers have lots of choices for goods and services, and they search for the best value. Retailers therefore need to consider competitor\'s prices when setting their own. Setting price based on consumer price sensitivity (elasticity) ignores the effects of competitor\'s prices. Retailers can price above, below, or at parity with the competition. The chosen pricing policy must be consistent with the retailer\'s overall strategy and its relative market position. **ECONOMIC CONSTRAINTS** - Some products are more sensitive to changes in unemployment and workers' wages than others. Makers of luxury products will need to drop prices especially when the economy is in a downturn. In other words, during economic slowdown, prices are lowered to generate demand. **OTHER ELEMENTS OF THE MARKETING MIX** - It is important to understand that prices cannot be set without reference to other parts of the marketing mix. The distribution channels used will affect price-different prices might be charged for the same product sold direct to consumers or via intermediaries. The price of a product in the decline stage of its product life cycle will need to be lower than when it was first launched. C. **C.PRICING TECHNIQUES FOR INCREASING SALES AND PROFITS** **Value-Based Pricing**: This technique involves setting prices based on how much value your product or service provides to customers. It helps businesses capture more profit by aligning price with perceived customer value rather than just costs. Value-based pricing can also foster brand loyalty, as customers perceive they are receiving quality relative to the price they pay. **Psychological Pricing**: Using psychological pricing techniques, like setting prices just below a round number (e.g., \$9.99 instead of \$10), can trigger emotional responses that make a product seem cheaper than it is. Customers are more likely to buy, feeling like they are getting a deal. **Dynamic Pricing**: Dynamic pricing adjusts prices based on demand, competition, and other factors in real time. Common in industries like airlines and hotels, it helps maximize sales during peak periods while filling inventory in low-demand times. This approach can significantly boost both sales and profits when implemented effectively. **Bundle Pricing**: Offering products or services in a bundle for a discounted rate encourages customers to buy more than they might have otherwise. It can increase average order value, leading to higher profits while making customers feel they are getting a better deal. **Penetration Pricing**: Setting a low initial price to attract customers and gain market share can be particularly effective in highly competitive markets. Once a customer base is established, prices can gradually be raised to improve profit margins. This technique can be especially useful for new market entries. **Premium Pricing**: For businesses with products positioned as high-quality or luxury, setting higher prices can reinforce the perception of exclusivity and superior value. This strategy works well when targeting customers willing to pay more for perceived better quality. D. **LEGAL AND ETHICAL PRICING ISSUES** **Legal Issues Price Fixing**: Agreements between competitors to set prices at a certain level can violate antitrust laws. This includes collusion to raise or stabilize prices. **Price Discrimination**: Charging different prices to different customers for the same product can lead to legal challenges, especially if it harms competition or is based on discriminatory practices. **Deceptive Pricing**: Misleading pricing strategies, such as bait-and-switch tactics or false discounts, can violate consumer protection laws. **Price Gouging**: During emergencies or disasters, raising prices significantly on essential goods can lead to legal repercussions. **Minimum Advertised Price (MAP) Policies**: Enforcing minimum prices can raise legal concerns if they restrict competition. **Ethical Issues Transparency**: Ethical pricing requires clarity in pricing practices. Hidden fees or unclear pricing can lead to mistrust. **Fairness**: Pricing strategies should be fair to all consumers, avoiding exploitation, especially in vulnerable populations. **Sustainability**: Ethical retailers consider the environmental and social implications of their pricing, ensuring that their practices do not harm communities or ecosystems. **Value Perception**: Retailers should align pricing with the perceived value of products without misleading consumers. **Corporate Responsibility**: Businesses are increasingly held to ethical standards that extend beyond legality, including fair labor practices in their supply chains. E. **COMMUNICATION PROGRAM TO DEVELOP BRAND IMAGES AND BUILD CUSTOMER LOYALTY** **Integrated Marketing Communications (IMC)**: Aligning messaging across channels (social media, email, in-store promotions) to create a consistent brand image. **Loyalty Programs**: Reward systems that incentivize repeat purchases, often communicated through personalized marketing. **Storytelling**: Using narratives to connect emotionally with customers and convey brand values. **Social Media Engagement**: Actively interacting with customers online to foster community and brand loyalty. **Customer Feedback Mechanisms**: Surveys and reviews that make customers feel valued and involved in the brand\'s evolution. **Promotional Campaigns**: Targeted advertisements and special offers that resonate with the brand's identity and customer interests. F. **METHODS OF COMMUNICATING WITH CUSTOMERS** **Direct Marketing**: It is marketing that communicates directly with target customers to generate to response or transaction. **Direct Mail**: Includes any brochure,catalog,advertisement or other printed marketing material delivered directly to the consumer through the mail or a private delivery company. **E-mail**: A direct marketing communication vehicle that involve sending messages over the internet. **Mobile Marketing**: A marketing through wireless handheld devices, such as cellular telephones, and m-commerce or mobile commerce involves completing a transaction via the cell phone. **Online Marketing**: The online media vehicles with which customers can interact include websites, blogs and social media. **Sales Promotion**: Sales promotion are special incentives or excitement-building programs that encourage consumers to purchase a particular product or service; They are typically used in conjunction with other advertising or personal selling programs. **Tools used in sales promotions**: - Coupons - Point of purchase displays - Rebates - Special events - Premiums - Pop-up stores - Samples **Personal Selling**: Personal selling is a communication process in which sales associates helps customers satisfy their needs through face-to-face exchanges of information. **Advertising**: Advertising entails the placement of announcements and persuasive messages purchased by retailers and other organizations that seek to inform and/or persuade members of a particular target market or audience about their products, services, organizations or ideas. Public Relations: Involves managing communications and relationships to achieve various objectives such as building and maintaining a positive image of the retailer and maintaining a positive relationship with the media. G. **PLANNING THE RETAIL COMMUNICATION PROGRAM** **Establish Objectives:** **Communication Objectives**: Specific goal related to the retail communication mix effect on the custmer's decision making process **Determine the Communication Budget**: - Marginal Analysis Method - Objective and Task Method - Rules of Thumbs Method - Affordable Budgeting Method - Percentage of Sales Method - Competitive Parity Method **Allocate the Promotional Budget**: The retailer decides how much of its budget to allocate to specific communication elements, merchandise categories, geographic regions, or long and short-term objectives. **Implement and Evaluate Program**: Many sales promotion opportunities undertaken by retailers are initiated by vendors. To evaluate trade promotion, the retailers consider: - Realized margin from the promotion - Cost of the additional inventory carried - Potential increase in sales - Potential loss - Additional sales **STORE MANAGEMENT** A. **STORE MANANGEMENT RESPONSIBILITIES** **STORE MANAGEMENT** - It involves operating and monitoring all aspects of a retail or wholesale store. - This means working with employees, suppliers and customers. - Effectively managing a store can boost sales and improve customer experience. **RESPONSIBILITIES** - Develop business strategies to raise our customers\' pool, expand the store traffic and optimize profitability. - Meet sales goals by training, motivating mentoring and providing feedback to sales management. - Ensure high levels of customers satisfaction through excellent service - Maintain outstanding store condition and visual merchandising standards. - Report on buying trends, customer needs, profits etc. - Propose innovative ideas to increase market share. - Conduct personnel performance appraisals to assess training needs and build career paths. - Deal with all issues that arise from staff or customers (complaints, grievances etc). - Be a shining example of well behavior and high performance. B. **RECRUITING AND SELECTING EMPLOYEES** **RECRUITMENT** Recruitment is the process of locating and encouraging potential applicants to apply for existing or anticipated job openings. **RECRUITMENT IS BROADLY CLASSIFIED INTO TWO TYPE:** 1. Internal Recruitment 2. External Recruitment **INTERNAL RECRUITMENT SOURCES** - Promotion - Transfer - Retired Manager - Recall Form Long Leave - Internal Advertisement **EXTERNAL RECRUITMENT SOURCES** - Management Consultant - Advertisement - Management Institute - Recommendations - Deputations Personnel **SELECTION** - Selection means selecting the fixed number of suitable candidates from those who applied for the posts. The selection process starts as soon as recruitment ends. - Recruitment considers all applications received on a due date while selection considers only the required number of most suitable candidates. **STEPS IN SELECTION PROCESS:** 1. **PRELIMINARY INTERVIE**W: The initial screening is usually undertaken by the receptionist in the office. This interview is essentially a sorting process in which applicants are given the necessary information about the nature of the jobs in the organization. 2. **REVIEWING FORMAL APPLICATION BLANK**: Application in blank is a written formal application submitted by the person while applying. The object of this application in blank is to get the candidate introduced to the interviewer so that he/she is in a position to prepare himself/herself as to what kind of questions he/she is to ask to size up the candidate. 3. **INTERVIEW**: This is the most important step in the process of selection. Only the screened applications are considered for selection and the firm sends out interview letters. By this interview, the manager can understand the positive and negative qualities of the applicant with reference to the job duties. 4. **PSYCHOLOGICAL TESTING**: A psychological test can be defined as \"Systematic approach for comparing the behavior of two or more persons\". The psychological tests operate on the common theory that human behavior can be well forecasted by sampling. 5. **REFERENCE CHECK**: Sometimes applicants are asked to name as references those people on whom they can rely on to speak about them. The main purpose of reference checks as a selection tool is to verify the facts such as dates of employment, earnings, sales volume, absenteeism and nature of the past selling job. 6. **MEDICAL EXAMINATION**: Confirmation of physical fitness demands that every candidate has to undergo a medical test. The employees' job needs both mental and physical fitness. Diseases and physical deficiencies of the employees affect the business. 7. **FINAL INTERVIEW AND APPOINTMENT**: The selected applicant is probably called for a final interview and his/her suitability is measured from the different tests, physical reports etc. The job must be explained to him/her along with all relevant details, which are required in performing the duties efficiently. **DIFFERENCE BETWEEN RECRUITMENT AND SELECTION** +-----------------------+-----------------------+-----------------------+ | **BASIS** | **RECRUITMENT** | **SELECTION** | +=======================+=======================+=======================+ | **Meaning** | It is the process of | It is the process of | | | finding and | short-listing | | | attracting qualified | candidates, | | | applicants for the | assembling and their | | | job. | final hiring | | | | decisions. | +-----------------------+-----------------------+-----------------------+ | **Priority** | Recruitment is the | Selection is the | | | initial process. | final process. | +-----------------------+-----------------------+-----------------------+ | **Time** | It begins when new | It begins after the | | | recruits are sought | applications are | | | and ends when their | | | | applications are | received and ends | | | received. | when hiring | | | | | | | | decision is made. | +-----------------------+-----------------------+-----------------------+ | **Level** | Generally lower-level | Mid- and top-level | | | managers deal with | managers deal with | | | the recruitment | the selection | | | process. | process. | +-----------------------+-----------------------+-----------------------+ | **Come &** | This process invites | This process tells | | | the applicants by | 'bye' to most of the | | **Bye** | saying "come". | applicants. | +-----------------------+-----------------------+-----------------------+ | **Approach** | The process of | The process of | | | recruitment is the | selection is a | | | positive approach. | negative approach. | +-----------------------+-----------------------+-----------------------+ C. **MOTIVATING AND MANAGING THE STORE EMPLOYEES** **WHAT IS MOTIVATION?** - it is the "Willingness to exert high level of efforts towards organizations goals, conditioned by ability to satisfy some individual needs", By Stephen R Robbins. - Leaders need to know or understand what motivates employees to perform at a high level and then create a workplace that contains these motivators. - Motivating employees to perform up to their potential may be store manager's most important but also frustrating task. **EMPLOYEE'S IMPROVES WHEN THEY FEEL** - That their efforts will enable them to achieve the goals set for them by their managers - That they'll receive rewards they value if they achieve their goals. **WHAT MOTIVATES PEOPLE?** **External Reward** - Salary - Working Condition - Benefits - Environment **Internal Rewards** - **Achievement** -- Recognize achievements through program that showcase performers. - **Responsibility** -- Have volunteer programs and other programs that enable employees to showcase their responsibility towards each other and the society at large. - **Recognition** -- Recognize winners through awards like Service Quality Awards, Best Operations Awards, Best Trainer Awards, etc. - **Feedback** -- Follow a system of feedback and performance appraisal - **Learning and Growth** -- Give a lot of importance to training and development and have various training academies to cater to various sections of employees. Analyze training needs to recognize competency gaps and impart knowledge through customized training programs. **TREORIES ON MOTIVATION** Maslow's hierarchy of needs state that ***"unsatisfied needs motivate people to satisfy their needs***". **Management** -- is a practice of consciously & continually shaping an organization. **Managing People** -- leaders try to influence and persuade employees to develop work behaviors and attitudes that lead to increased efficiency and effectiveness. **ORGANIZATION UTILIZES FOUR RESOURCES:** - Human - Monetary - Physical - Information **FOR EFFECTIVE AND EFFICIENT UTILIZATION OF RESOURCES FIVE MANAGERIAL FUNCTION ARE PERFORMED:** - Planning & Decision Making - Organizing - Staffing - Leading/Motivating - Controlling **A PERSON'S PERFORMANCE DEPEND ON THREE FACTORS** - Ability - Motivation - Environment D. **EVALUATING STORE EMPLOYEES AND PROVIDING FEEDBACK** **INTRODUCTION** Managing a retail store involves several key responsibilities, one of the most important being employee evaluation. As managers, it is crucial to monitor employee performance regularly, not only to ensure the success of the business but also to foster a positive and productive work environment. Proper evaluation allows managers to identify areas where employees excel and where improvements can be made. However, this task can often be postponed due to the daily pressures of store operations. Nevertheless, timely and constructive feedback is essential to maintaining an engaged and efficient workforce. **IMPORTANCE OF EMPLOYEE EVALUATIONS** Employee evaluations, when done effectively, can lead to substantial benefits for both the employee and the company. Delaying feedback can result in dissatisfaction, as employees may leave for employers who provide timely reviews and guidance. Moreover, if evaluations are treated as a routine process rather than a critical event, they become an opportunity for growth rather than a source of stress for both parties. Regular evaluations, scheduled every three to six months, allow for continuous improvement without the pressure of a one-time review. It's important to approach this process positively by starting the conversation with the employee\'s perspective on their job and how management can support them in reaching their goals. This promotes a collaborative atmosphere, which is more likely to yield productive results. **APPROACH TO EVALUATIONS** A successful evaluation process begins with a \"bottom-up\" approach. This means giving employees the chance to express their views about their job, challenges they may face, and how management can assist in overcoming those challenges. The evaluation should start with positive feedback, recognizing the employee's strengths before moving on to areas for improvement. **EXAMPLE OF AN EFFECTIVE EVALUATION CONVERSATION** ***Manager:*** \"John, thank you for coming in today so we can talk about how the job is going. First, are there any areas where we could be of help for you to complete your tasks?\" ***John:*** \"Thanks for asking. Yes, the mops I use on the retail floor are getting a little worn. I think I could be faster on the task with new ones.\" ***Manager:*** \"Awesome John. Thank you for the information. I will take a look and see how we can fix that for you. That was one of the issues I wanted to chat with you about today, was speed. We will look at the mop issue, and then let's put together a plan to increase how many floors you can get done in your shift. Do you see other ways you may be able to speed up the task so we can get all of the work done?\" ***John:*** \"Yes, I think if I can put together a schedule of which floors to do on which days, so they aren't so dirty when I get to them, it will help.\" ***Manager:*** \"Great. Let's work on that schedule together. I will look at the mop situation, and we can discuss again in a few weeks.\" This type of conversation encourages the employee to be part of the solution, making them feel heard and valued. By focusing on collaboration, the employee is more likely to feel motivated and less defensive. **POSITIVE AND CONSTRUCTIVE FEEDBACK** Evaluations should not be framed purely around negative criticism. Offering positive feedback is a key part of making employees feel appreciated. At the same time, constructive feedback, when framed as a suggestion for improvement rather than a critique, can be highly effective. For instance, a manager could guide an employee towards better performance by working together to address any issues. Feedback should be specific, actionable, and tied to measurable outcomes. For example, in John's case, the manager addressed the issue of speed, but also discussed specific tools and strategies, such as improving the equipment and creating a schedule, to help him perform better. **WHEN POSITIVE FEEDBACK ISN'T ENOUGH** Unfortunately, not all employees respond to coaching and constructive feedback. In situations where performance remains subpar despite multiple attempts to help, managers may need to resort to more formal evaluation methods. Graphic rating scales and checklists, which rate employees on factors like output, job knowledge, and attitude, can be used to give a more objective measure of performance. While these tools may sometimes put employees on the defensive, they are necessary when positive feedback alone does not result in the desired improvement. **CONCLUSION** Evaluating employees is an essential part of managing a retail store. When done regularly and with a positive, coaching mindset, it can lead to significant improvements in performance and morale. By starting the process with open communication and focusing on collaboration, managers can create a positive and productive work environment where employees feel supported in achieving their goals. However, when positive feedback is not effective, more structured methods of evaluation may be necessary. Ultimately, employee evaluations are an opportunity for growth, benefiting both the employee and the company as a whole. E. **COMPENSATING AND REWARDING STORE EMPLOYEES** **WHAT IS COMPENSATION? ** - Compensation is the total cash and non-cash payments that you give to an employee in exchange for the work they do for your business. - It is typically one of the biggest expenses for businesses with employees. Compensation is more than an employee\'s regular paid wages. - It also includes many other types of wages and benefits. **TYPES OF COMPENSATION INCLUDE** - Base pay (hourly or salary wages) - Sales commission - Overtime wages - Tip income - Bonus pay - Recognition or merit pay - Benefits (Insurances, standard vacation policy) - Stock options **COMPENSATION MANAGEMENT** - Compensation management refers to all forms of financial rewards received by employees. Employees of an organization use their overall efforts that need to be valued financially. - According to Michael Armstrong, \"Compensation management is essentially about designing, implementing and maintaining pay system which helps to improve organizational performance.\"  **DIRECT COMPENSATION** **Pay:** - Pay refers to the wages or salary received by the employee. It can be base pay or merit pay.  - Base pay is hourly, weekly or monthly pay and merit pay is performance-based pay. - It is an addition to the base pay. **Incentive pay:** - Higher performance-based reward is an incentive compensation. - They can give piece wages, commission, bonus, profit sharing, the stock option. - This is a variable kind of compensation and is found with salaried staff to incentivize them for a specific objective whether time or volume based. **INDIRECT COMPENSATION** **Benefits:** - Benefits is an addition to pay. - They are membership base financial rewards. - They can pay for time does not work, retirement benefits and executive benefits. **BENEFITS:** - Pay for time not work is like paid vacation, holidays, leaves, lunch breaks, bereavement. - Retirement benefits are like pension, gratuity, insurance payments, provident fund, medical care etc. and executively is like a free newspaper, telephone rental, rent, vehicle etc. **SERVICES:** - Services are not cash payment but considered as financial reward. It increases employee well-being. - It comprises reward like housing, fooding, furnishing, childcare and children education expenses, company car, airplane, discount on a purchase, credit card, loans, free legal advice and counselling for financial management and stock option scheme. **CONCLUSION** Most organization give compensation as a package. It consists of pay plus benefits and services. Compensation management must be flexible enough to get popularity in this human resource management function area. F. **STORE DESIGN OBJECTIVES** **WHAT ARE THE OBJECTIVES OF A GOOD STORE DESIGN?** 1. Stores Must be designed with the customer in mind. 2. The layout of a store should be easy to navigate. 3. Merchandise should be displayed In an appearing way. 4. Store design should reflect the company\'s branding. 5. Lighting and sound effects can be used to create a certain atmosphere. 6. Store design must be functional and practical. **PRINCIPLES OF RETAIL STORE DESIGN:** 1. **Totality -** entire store has to be conceived as a re unit between on retailer vision and mission. 2. **Focus -** the primary focus within the store has to be the merchandiser. Achieving sales is the primary step towards being sustainable in the long run. 3. **Ease of shopping -** store design should be such that it is easy for customers to navigate and shop. 4. **Change and Flexibility -** store design has to be adaptable to the environment and changing needs of the customer. **THREE ELEMENTS IN THE DESIGN OF STORE ARE THE:** 1. Layout 2. Signage 3. Feature Areas G. **STORE DESIGN ELEMENTS** **STORE DESIGN ELEMENTS:** **A store design can usually be considered as a combination of five key elements.** 1. The exterior 2. The interior 3. Fixture 4. Merchandise 5. People 1. **The exterior** - The store entrance, the architectural features of the building and windows. - The contribution of these parts of a store\'s exterior to an overall design can vary in importance according to the type of store format and the products on offer. 2. **The interior** - The interior of a store can be viewed in a similar way to living space. It comprises ceiling, walls, flooring and lighting, but instead of furniture a retail outlet houses fixtures for presentation of merchandise. - In choosing the material used for the interior, retailers have to consider the type of product being sold, cost, store traffic, health and safety. 3. **Atmospherics** - Creating an aura or an atmosphere can include the use of different aromas, sounds, colors, lighting, textures and temperatures. - **Aromas:** bread, coffee, chocolate, floral pine. - **Sounds:** popular music, classical music, voice (announcements, shop radio) - **Colors:** **Neutrals -- black, grey, white** **Warm colors -- red, orange, pink, yellow** **Cool colors -- blues, pale greens, Earthy colors - brown, greens, orange** **Earthy Colors -- brown, green, orange** - **Lighting** Cool lighting - blue, bright Warm lighting - orange, yellow, pink Spot lighting Sculptural lighting in alcoves, behind panels. Illuminated paneling and signage. - **Texture** - shiny and smooth. metallic. textile. wood. stone, bricks. **THE STRATEGIC ROLE OF STORE DESIGN** - It is being done to keep a high level of customer traffic moving through the store in order to maintain an adequate return on that investment. - When customers have a high level of choice, they will visit places where they feel comfortable, inspired and even entertained. - Competitive threat from home shopping means that the store environment has to have something special to offer and international competition also forces retailers to pay more attention to their selling environment. **RETAIL WEBSITE DESIGN** - Retail websites follow a set formula, this moves from opening page to company information, to categories of products available, then open up to pages of tiny product photos that can be clicked on for a closer look, finishing with an ordering facility. - But it does not provide much opportunity for differentiation. - A successful website needs to balance visual interest with ease of navigation and use. - The whole attraction and competitive advantage of website shopping is based on convenience, and so reminding the customer of the frustration incurred in store shopping such as not being able to locate items or waiting is bound to cause shopper dissatisfaction. H. **VISUAL MERCHANDISING** - Visual merchandising is concerned with presenting products to customers within the retail space. - Now it includes choice of store layout, the method of product presentation, the choice of fixture and fittings, the construction of display, and the use of point of sale material. - Fashion and home furnishing retailers have always devoted considerable resources to display products in a visually appealing way, whilst grocery retailers are much more concerned with space efficiency. - This function may be done by a team of regional visual merchandise professionals, but their centralized approach may prevent the retailer from adapting to local themes, preferences and competition in the visual merchandising activity. **WHAT IS VISUAL MERCHANDISING?** - Visual merchandising in the retail industry refers to all of the display techniques used to highlight the appearance and benefits of the products and services being sold. - It educates customers and creates desire to buy. - Visual merchandising can include elements of spacing, lighting and design. **KEY ELEMENTS OF VISUAL MERCHANDISING:** 1. **Store Front --** total exterior of a store. Encompasses a store's design or logo, marquee, banners, awnings, windows and landscaping.  2. **Store Lay-out --** the way floor space is allocated to facilitate and serve the customers. - Selling Space - Merchandising Space - Customers Space - Personal Space  3. **Store Interior --** interior fixtures, flooring, wall covering, furniture lighting, colors, interior signage and graphics.  4. **Interior Displays --** displays and demonstrates use of products. - Closed Displays - Open Displays - Architectural Displays - Point-of-purchase Displays - Store Decorations  **ADVANTAGES OF VISUAL MERCHANDISING** - **Increased customers --** visual merchandising can increase the number of customers who notice and enter your retail business. - **Increased sales --** Effective visual merchandising can have a clear and positive effect on retail sales. - **Maximizing the potential of your retail space --** a creative approach to merchandising can help you to get more out of your space without the need for expansion or renovations. - **Getting the most value out of products -- i**f you have products that are difficult to sell, clever visual merchandising could help you to market them without having to reduce their price. **DISADVANTAGES OF VISUAL MERCHANDISING** - **Changing layout and space -- y**ou may be required to spend time rearranging aisles, shelves, display fixtures and the general layout of the interior retail space. - **Increased demands on staff --** the success of your visual merchandising techniques may mean you have to handle more daily customers, more sales and more deliveries. There may also be more customer service issues, longer hours and the need for more staff. - **Expense --** If you install new fixtures, create new signage or improve the appearance of your retail space, costs can quickly add up. **RESPONSIBILITIES OF VISUAL MERCHANDISER** - The main responsibility of a visual merchandiser is to increase sales and buyer attention, capitalizing on the human tendency to \"window-shop\". - Visual merchandisers should be responsible for creating and maintaining a compelling presentation of merchandise that will engage customers and help stimulate sales activity. - Proper knowledge of how to use space for product display and lighting systems for product visibility. - Creating new design ideas for exhibitions and developing floor plans also he/she is making total company plan. - Making special displays for promoting a specific product which will be next to a satisfied offer. - Drawing product designs and tactics by help of hand or computer. **TIPS FOR EFFECTIVE VISUAL MERCHANDISING** - Point out different areas. - Use art. - Group products. - Use social media language. - Use mannequins effectively. - Keep seasonal items upfront. - Utilize the point of sale. - Use signage. **IMPORTANCE OF VISUAL MERCHANDISING** - Enhances the shopping experience by providing the right ambience. - Creates an image of the store in the minds of the customers. - Communicate to customers the right message about the merchandise. - Encourages the customers to enter the store. - Helps customers make buying decisions. **TYPES OF WINDOW DISPLAYS** - **Closed Windows --** large glass panel at the front and solid wall at the back. - **Semi-closed Windows** -- large glass panel at the front and half-covered at the back so that the inside of the store is partially visible. - **Open-back Windows** -- large glass panel at the front and no wall at the back. - **Corner Windows** -- windows that are located at the corner of the building and are seen from two directions. - **Elevated Windows** - it can either be a closed or open window that is located in a higher level. - **Shadowbox window displays** -- small box-like windows that are usually used for jewelry and cosmetics displays. I. **CREATING AN APPEALING STORE ATMOSPHERE** To provide a rewarding shopping experience, retailers go beyond presenting appealing merchandise. In addition, retailers use lighting, colors, music, and scent to stimulate customers' perpetual and emotional responses and ultimately affect their purchase behavior. **STORE ATMOSPHERE** It refers to the design of an environment by stimulation of the five senses. **THE ELEMENTS OF THE STORE ATMOSPHERE ARE:** - Lighting - Color - Music - Scent - **Lighting** Good lighting in a store involves more than simply illuminating space. Lightning can highlight merchandise, sculpt space and capture a mood or feeling that enhances the stores image. - **Color** The creative use of color can enhance a retailers image and help create a mood. Warm colors (red, gold, and yellow) produce emotional, vibrant, hot, and active responses, whereas cool colors (white, blue, and green) have a peaceful, gentle , calming effect. - **Music** Like color and lighting, music can either add to or detract from a retailers total atmospheric package. Music can control the pace of store traffic, create an image, and attract or direct consumer attention. - **Scent** Smell has a large impact in customers mood and emotions Scent, in conjunction with music , has a positive impact on the customers level of excitement and satisfaction with shopping experience. Scents that are neutral produce more positive feelings toward the store than no scent. J. **STRATEGIC ADVANTAGE THROUGH CUSTOMER SERVICE** **Customer Service** A Strategic Advantage ‌Customer service plays an important role in retaining clients and preserving the flow of repeat revenue. You also can take steps to use your customer service policies as a strategic advantage over the competition. Focusing on the customer is a good way to ensure repeat business and help increase referrals to new clients. **Empowering Agents** Implementing customer service policies that place the emphasis on the customer rather than the company create a positive experience for the client. Empower your customer service agents to make decisions that speed the process and improve efficiency. For example, allowing customer service associates to refund client purchases up to \$500 can accelerate service and improve customer satisfaction. **Solving the Problem** Customer service is about solving the client\'s problem in a manner that benefits the company and the customer. For example, if a client returns a product because it does not perform as the client had hoped, the customer needs a problem solved. Train your customer service representatives to ask the proper questions to resolve the issue. In some cases a refund may be appropriate, while in other cases the customer might prefer a replacement. **Helpful Representatives** Clients who have a positive experience with a company\'s customer service department tend to come back to that company. You can use customer service to your advantage by developing confident and positive service representatives. Train your representatives to be knowledgeable about every aspect of your company offerings so the representatives can offer helpful and confident. A staff of helpful and efficient customer service representatives will help your company stand out from the competition. **Follow Up** When you have your customer service representatives follow up on customer issues, you are creating a strategic advantage. You are emphasizing to the customer how important service is to your company, and you are making him feel appreciated by checking up on his satisfaction. You also can use the follow-up as a way to present the customer with product and pricing information that can lead to another sale. K. **CUSTOMER SERVICE QUALITY** Service quality measures how an organization delivers its services compared to the expectations of its customers. Customers purchase services as a response to specific needs. A company with high service quality offers services that match or exceed its customers' expectations. **THE FIVE DIMENSIONS OF SERVICE QUALITY:** 1. **Reliability --** to an organization's ability and consistency in performing a particular service that satisfies its customers' needs. 2. **Tangibility --** is an organization's ability to portray service quality to its customers. Many factors give companies a highly tangible quality, such as the appearance of its headquarters, its employees' attire and demeanor, its marketing materials and their customer service department. 3. **Empathy --** is how an organization delivers its services to make the company seem empathetic to its customers' desires and demands. 4. **Responsiveness --** is a company's dedication and ability to provide customers with prompt services. Responsiveness implies receiving, assessing and swiftly replying to customer requests, feedback, questions and issues. 5. **Assurance -- is** the confidence and trust that customers have in an organization. Having assurance is especially important with services that a customer might perceive as being above their ability to understand and properly evaluate, meaning there has to be a certain element of trust in the servicing organization's ability to deliver. **WHY IS HIGH SERVICE QUALITY IMPORTANT?** - **It Boosts Sales -** Customers who perceive a company's services as being high quality are more likely to do business with that company. Also, customers who buy from companies with high service quality are more likely to continue buying from those companies regularly. - **It Saves Marketing Money-** Retaining existing customers by offering them high-quality services is typically less expensive than attracting new ones. - **It can attract quality employees**- Highly performing professionals generally prefer to work for companies with high service quality. - **It can lead to repeat business**- Customers who see their issues and complaints swiftly and efficiently resolved by a company's customer service department may be more likely to buy from that company again. - **It strengthens the company's brand-** A company's reputation with above-average service quality can boost sales by attracting or retaining customers. - **It eliminates some barriers to buying- H**igh service quality can convince hesitant customers to make a purchase, as they know that if the service is not suitable for them, they can rely on strong customer service to remedy the situation L. **SERVICE RECOVERY** - The impact of Service Failure and Recovery - How Customers Respond to Service Failures - Service Recovery Strategies: Fixing the Customer - Service Recovery Strategies: Fixing the Problem - Service Guarantees - Advantages of Service Recovery - Switching versus Staying Following Service Recovery **Service recovery --** refers to the actions taken by a firm in response to service failure. **Service failure --** occurs when service performance falls below a customer\`s expectations in such a way that leads to customer dissatisfaction. **Complaining Customers:** **The Tip of the Iceberg** **The Unhappy Customer\`s** **Repurchase Intentions**  **THE SERVICE RECOVERY PARADOX** - Is a customer who has experienced a service failure and exemplary service recovery more likely to be *more* satisfied- impressed even- with the service provider? - "A good recovery can turn angry, frustrated customers into loyal ones...can, in fact, create more goodwill than if things had gone smoothly in the first place." (Hart et.al. 1990) - HOWEVER: - Only a small percentage of customers complain - Service recovery is expensive **CUSTOMER COMPLAINT ACTIONS FOLLOWING SERVICE FAILURE** **TYPES OF COMPLAINERS** - **Passives:** least likely to take any action, say anything to provider, spread negative WOM; doubtful of the effectiveness of complaining - **Voicers:** actively complain to providers, but not likely to spread negative WOM; believe in positive consequences of complaining- the service providers bestfriends! - **Irates:** more likely to engage in negative WOM to friends and relatives and to switch providers; average in complaints to provider; more angry, less likely to give provider a second chance - **Activist:** above average propensity to complain on all levels; in extreme cases can become "terrorists" **SERVICE RECOVERY STRATEGIES**  **FIXING THE CUSTOMER** - When customers take the time to complain, they generally have high expectations. - They expect the company to respond quickly and to be accountable. - They expect to be compensated for their grief and for the hassle of being inconvenient. - They expect to be treated nicely in the process. **Respond Quickly** **Customer Satisfaction with Timeliness of firm Responses to Service Failures** Source: TARP Worldwide Inc., Service Industry Data, 2007. The numbers across the bottom are the percentage of the total sample whose response (by the firm) was received in that time frame. So for example, 44% of the sample received an immediate response. Of that group 51% were completely satisfied with the response. **Provide Appropriate Communication** - Customers who have experienced a service failure often want an explanation by the firm as to what happened. **Treat Customers Fairly** - **Outcome Fairness:** Outcome(compensation) should match the customer\`s level of dissatisfaction; equality with what other customers receive; choices - **Procedural Fairness:** Fairness in terms of policies, rules, timeliness of the complaint process; clarity, speed, no hassle; also choices:" What can we do to compensate you...? - **Interactional Fairness:** Politeness, care, and honesty on the part of the company and itst employees; rude behavior on the part of employees may due to lack of training and empowerment. **FIXING THE PROBLEM** - After "fixing the customer" the company should address the actual problem that created the poor service delivery in the first place. - Strategies for fixing the Problem include encouraging and tracking complaints, learning from recovery experiences and from lost customers, and making the service fail-safe. **SERVICE GUARANTEES** - **Guarantee:** assurance of the fulfillment of a condition. - **In a business context**, it is a pledge that a product offered by a firm will perform as promised. - **For tangible products**, it is often done in the form of a warranty. - **Services** are often **not** guaranteed **CHARACTERISTICS OF AN EFFECTIVE SERVIVE GUARANTTE** - **Unconditional:** the guarantee should make its promise unconditionally- no strings attached - **Meaningful:** the firm should guarantee elements of service that are important to the customer and payout should cover fully the customer\`s dissatisfaction - **Easy to Understand:** customer\`s need to understand what to expect and employees need to understand what to do - **Easy to Invoke:** the firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee **ADVANTAGES OF SERVICE RECOVERY** - Increased customer loyalty - Increased satisfaction and positive word of mouth - Etc. **BENEFITS OF SERVICE GUARANTEES** - A good guarantee forces the company to focus on its customers - An effective guarantee sets clear standards for the organization - When the guarantee is invoked, there is an instant opportunity to recover **WHEN TO USE (OR NOT USE) A GUARANTEE?** **Reasons** companies might NOT want to offer a service guarantee: - A guarantee does not fit the company's image - Existing service quality is poor - Costs of the guarantee outweigh the benefits **CAUSES BEHIND SERVICE SWITCHING**  **\ ** **INFORMATION SYSTEMS IN RETAILING** **An** information system in retailing refers to the integrated set of technologies, processes, and data used by retail businesses to collect, store, manage, and analyze information to support decision making and improve overall operation. **KEY FUNCTIONS OF INFORMATION SYSTEM IN RETAIL** 1. **Inventory Management**: Tracks inventory levels, reorder in, and stockouts, helping retailers maintain optimal stock and avoid overstock or shortages. 2. **Point of Sale (POS) Systems**: Handles sales transactions, customer checkouts, and payment processing while recording sales data and updating inventory records in real time. 3. **Customer Relationship Management (CRM)**: Manage customer data, purchase history, and preferences to improve customer service and personalize marketing efforts. 4. **Supply Chain Management (SCM)**: Involves the coordination and optimization of all activities involved in the production, processing, and distribution of goods. This includes sourcing raw materials, manufacturing, inventory management, transportation, and the final delivery to customers. 5. **E-commerce Systems**: Is a digital platforms that facilitates the buying and selling of goods and services over the internet. 6. **Data Analytics & Business Intelligence**: Is an enable organizations to optimize performance, enhance operational efficiency, and gain a competitive edge by leveraging data-driven insights. A. **Creating Strategic Advantage Through Supply Chain and Information Systems:** 1. **Improved Inventory Management**: Involves overseeing and controlling a company's inventory levels to ensure optimal stock availability while minimizing costs. 2. **Enhanced Customer Experience**: Providing better customer service, personalization, and seamless interactions through digital tools or improved processes can lead to higher satisfaction and loyalty. 3. **Cost Reduction**: Implementing efficient systems or processes (automatic, cloud services, or outsourcing) can lower operational costs while maintaining or improving output quality. 4. **Increased Agility**: A flexible business model or technology infrastructure allows companies to quickly adapt to market changes, customer demands, or emerging opportunities, keeping them competitive. 5. **Data-driven decision making:** RIS collects, analyzes, and interprets large volumes of retail data to generate actionable insights, identify trends, forecast demand, measure performance, and make informed decisions that drive business growth and profitablity. B. **The Flow of Information and Products in Supply Chain:** 1. **Product Flow (Upstream to Downstream)** a. **Upstream Supply Chain** - include all activities related to the organization's suppliers: those parties that source raw materials inputs to send to the manufacturer. b. **Downstream Supply Chain** - can also be taught of as the "demand" while upstream supply chain managers seek to balance demand and supply to make sure that there are no lost sales, inventory shortages, or over-ordering. 2. **Information Flow (Bidirectional)** - it means that information flows in the both directions upstream (from customers to suppliers) and downstream (from suppliers to customers). This two-way flow is essential for optimizing supply chain operations and maintaining coordination. 3. **Key Information Systems in The Supply Chain** - is a software program or a suite of integrated programs designed to manage the flow of information within a supply chain. a. **Data Management** - collects and integrates data from various sources, including purchase orders, invoices, inventory levels, shipping logistics, production schedules, and customer orders. Planning and Forecasting- analyzes data to predict demand, optimize inventory levels, and plan production schedules to ensure efficiency and avoid stockouts. b. **Visibility and Tracking** - Provides real-time visibility of goods and materials throughout the supply chain, allowing for tracking of shipments, monitoring of production progress, and proactive management of disruptions. c. **Communication and Collaboration** - Facilitates communication and collaboration between different stakeholders in the supply chain, such as suppliers, manufacturers, distributors, and retailers. Decision Support: Generates reports and insights to help businesses make informed decisions about sourcing, pricing, product development, and logistics. 4. **Integration of Information Systems in Supply Chain** - Integration is the act of bringing together smaller components or information stored in different subsystems into a single functioning unit. a. **Vertical integration** - This strategy enables an organization to integrate unrelated subsystems into one functional unit by creating silos based on their functionalities. b. **Horizontal integration** - The horizontal integration method, also known as the enterprise service bus (ESB), assigns a specialized subsystem to communicate with other subsystems. c. **Point-to-point integration** - Also commonly known as star integration or spaghetti integration, this method interconnects the remaining subsystems. 5. **Emerging technologies enhancing information flows** - are those that are still under development or are just starting to be adopted on a large scale. They have a potential to significantly change the way we live, work and interact the world around us.