Term Paper: Sales Promotion Techniques Used in the Clothing Retail Industry in India and Challenges Ahead

Sales Promotion Techniques Used in the Clothing Retail Industry in India and Challenges Ahead

The Nature of Competition

Buyer-Seller Relationships for Promotional Support in the Clothing Sector

Long-Term Impact of Loyalty Programs on Consumer Purchase Behaviour and Brand Loyalty

Impact of Loyalty Programs on Repeat Purchase Behaviour

Consumers' Perception Regarding Quality, Fashionability, Product Assortment,

Extent and Quality of Customer Service, Convenience of Location,

Payment Options, Featured National Brands and Store Layout

Push and Pull Techniques in Sales Promotion

Personalized vs. Generic Buying

Effectiveness of Different Types of Sales Promotion

Competitive Strategy

Industry Context

Rationale in Support of Selecting Six Exclusive and Multibrand Clothing

Retailers

Chapter 3. Research Design and Methodology

Research Questions and Objectives

Research Approach and Strategy

Research Philosophy

Research Methodology

Exploratory Research

Descriptive Research

Explanatory Research

Inductive vs. Deductive Reasoning

Primary Data Collection

Questionnaire

Secondary Data Collection

Data Analysis

Data Collection Method

Research Setting

Research Participants

The Survey

The Interview

Chapter 4. Analysis of Indian Clothing Retail Sector

Overview

Six Exclusive and Multibrand Players

Current State of Play

Business Strategies

Chapter 5. Primary Research Results

Summary of Interviews

Chapter 6. Conclusion and Recommendations

Conclusion

Recommendations

General and Managerial Challenges

Areas for Future Research

Appendixes

Appendix a. Interview; Questions and Responses

Interview Summary

Statistics

Questionnaire

Abstract

Today, along with other countries such as China and Brazil, India is emerging as an economic powerhouse and is increasingly competing in the international marketplace. As part of this rise in fortunes, India is also experiencing a rapidly growing middle class that is seeking the benefits that this new level of affluence affords them. In this environment, many fashion retailers in India have also experienced new levels of business in terms of domestic sales as well through growing export levels. Not surprisingly, though, some retail clothing stores are performing better than others and the difference appears to relate both to the branding techniques they use as well as the promotional initiatives that have been employed. To identify a series of best practices for the growing retail fashion trade in India today, this study provides a review of the relevant literature and the findings of a series of semi-structured interviews with management staff at six leading retail clothing stores in New Delhi to (a) compare usage across exclusive and multi-brand outlets and (b) to explore the supporting rationale behind sales promotion techniques by examining consumer behaviour. A summary of the research is provided in the concluding chapter together with recommendations, an overview of the challenges ahead for this industry, and directions for future research.

Sales Promotion Techniques Used in the Clothing Retail Industry in India and Challenges Ahead

Chapter 1. Introduction

Today, India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. Slightly more than half of the workforce is in agriculture.

The government has reduced controls on foreign trade and investment. Higher limits on foreign direct investment were permitted in a few key sectors, such as telecommunications; however, tariff spikes in sensitive categories, including agriculture, and incremental progress on economic reforms still hinder foreign access to India's vast and growing market. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points (India, 2009)

India achieved 8.5% GDP growth in 2006, 9.0% in 2007, and 7.3% in 2008, significantly expanding manufactures through late 2008. India also is capitalizing on its large numbers of well-educated people skilled in the English language to become a major exporter of software services and software workers. Strong growth combined with easy consumer credit, a real estate boom, and fast-rising commodity prices fueled inflation concerns from mid-2006 to August 2008. Rising tax revenues from better tax administration and economic expansion helped New Delhi make progress in reducing its fiscal deficit for three straight years before skyrocketing global commodity prices more than doubled the cost of government energy and fertilizer subsidies. The ballooning subsidies, amidst slowing growth, brought the return of a large fiscal deficit in 2008. In the long run, the huge and growing population is the fundamental social, economic, and environmental problem. (India, 2009)

Dissertation Rationale

Retailing in India is receiving global recognition and attention and this emerging market is witnessing a significant change in its growth and investment pattern. In India, clothing retail accounts for 36% of organised retail business. Readymade clothes accounted for an estimated 20% of domestic clothing sales in 2006 (source: consumer lifestyles in India, Euromonitor International consumer Lifestyles databases, 2006). Indian organised retail industry is poised for growth. Clothing sector in particular has a great opportunity with respect to Indian economy to globalised markets.

Due to seasonal and fashion variations, apparel management has become very crucial function as transformation of design into production and delivery has to be completed before fashion changes in the market. This highlights the importance of sales promotions, which can encourage a customer to buy now rather than in future before the value of apparel goes down after the season ends and prevent the retailer from carrying unnecessary inventory burden.

This study will investigate various sales promotion activities which are followed by clothing retail stores in organised sector and will compare them on various dimensions with imperative need for managers to understand such sales promotions practices and the future challenges they might face. It will also present major findings and insights into consumer buying behaviour.

Six main exclusive and multibrand retail outlets will be selected for studying sales promotion practices. As the purpose of the study is 'exploratory', sample of six is deemed fit as they would represent the population of organized clothing retail outlets in New Delhi- a metropolitan city of India. Being the capital city and commercial hub, it is the perfect place to do such research. However it should also be noted that the nature of activities is not likely to vary across different markets as most of the outlets are a part of chain and their head office typically endorse the budget and plans sales promotional activities to be carried out in promotional calendar for these outlets.

Research Questions

What is the current general status of the retail clothing sector in India today?

What factors are needed to better understand sales promotion techniques currently employed by the retail clothing sector in India?

What are the primary general and managerial challenges currently being experienced and what are the future trends for the retail clothing sector in India?

Aims:

To present a picture of clothing retail sector in India

To explain why there is a need to understand sales promotion practices by the sector

To understand what general and managerial challenges these trends present and to provide recommendations and identify opportunities for improvement.

Objectives of Dissertation.

To compare usage across exclusive and multi-brand outlets.

To explore rationale behind sales promotion techniques by examining consumer behaviour.

Chapter 2. Literature Review

The Nature of Competition

Several studies on apparel retail industry and usage of promotions are reported in the context of developed markets. A brief overview is presented below:

Park, Haesun (2002) studied buyer- seller relationships for promotional support in the apparel sector which is critical for success. The purpose of the study was to define promotional support categories offered to apparel retailers by manufacturers to identify the retailer's perception of the offering frequency and importance of the promotional support, and to investigate the relationship between offering frequency and perception of importance. Results indicated that monetary support was regarded as the most important promotional support.

Liu, Yuping (2007) found out the long-term impact of loyalty programs on consumer purchase behaviour and their loyalty. Using data from a convenience store franchise, the study found out that consumers who were heavy buyers at the beginning of a loyalty program were most likely to claim their qualified rewards, but the program did not prompt them to change their purchase behaviour. In contrast, consumers whose initial patronage levels were low, gradually purchased more and became more loyal to the firm. Thus, there is a need to consider patronage to decide rewards for loyalty programs.

B, Christophe (2006) studied the impact of loyalty programs on Repeat Purchase Behaviour based on the behaviour scan single source panel which has been compared with the store data base. It was studied that loyalty programs did not substantially change market structures. When all companies had loyalty programs, the market was characterized by absence of competitive situation.

H, Karen & a, Gomez (2005) studied Spanish consumer's perception of U.S. apparel speciality retailers' product and services. The study examined consumers store patronage and apparel purchase behaviour, acceptance of U.S. apparel brands, perception of retailers' products and services and perceptions of the impact of foreign retailers on local communities. It found out that the consumer's perception differed regarding quality, fashionability, product assortment, extent and quality of consumer service, convenience of location, payment… [END OF PREVIEW]