The History Of Reliance Fresh Marketing Essay

The History Of Reliance Fresh Marketing Essay Giant corporations like Wal-Mart and Reliance have started to try and take over the Indian retail sector. The entry of the giant corporate retail in Indias food market will have direct impact on Indias 650 million farmers and 40 million people employed in tiny retail. More than 6600 mega stores are planned with Rs40,000 crore by 2011. Our case is intended to cover two primary objectives which are: First, when experts and giants like future group WalMart and Reliance they are ready to start operations in retail what kind of strategies and structure they would be having to get the competitive edge over each other and established small and unorganized retailers. Second, what kind of impact has been on other retailers including unorganized ones with the opening of Reliance Fresh stores. In the following case findings about Reliance Fresh were quite awakening and exemplary. Even after recent shutdown of Reliance fresh stores from UP and unwelcoming vibes from states like Kerala, West Bengal, Orissa and Jharkhand for its retail format (which was allegedly capturing the unorganized sector and leaving thousands of self employed people jobless) Reliance was not in any mood to hamper its 25000 crore plan. Reliance responded with superb strategy in which it shifted its focus from retailer to being a supplier i.e. targeting hawkers, vendors, Push cart wheelers instead of customers. Big retailers like Reliance have huge resources and network which directly impacted many of the retailers some of whom are planning to quit. In our sample size of 75 retailers more than 30 agreed to have lost as much as 50% of their sales. This case also discusses pros and cons of contract farming which on one part assures farmers of price for their crop and knowledge about fertilizers and seed b ut on other side has some obvious drawbacks like monopoly of big retailers. As a big market in which organized sector is poised to grow with 25% 30% annually our government must come with appropriate regulations to save small retailers and our agricultural sector. BACKGROUND OF RETAIL India is a land of retail democracy- hundreds of thousands of weekly haats and bazaars are located across the length and breadth of our country by peoples own self-organizational capacities. Our streets are bazaars lively, vibrant, safe and the source of livelihood for millions. India has the highest shop density in the world, with 11 outlets per 1000 people. This does not include the village haats. Our retail democracy is characterized by: 1. High levels of livelihoods in retail with nearly 40 million employed which accounts for 8% of the employment and 4% of the entire population. 2. High levels of self organization. 3. Low capital input 4. High levels of decentralization Retail in India has started with the concept of weekly markets, where all the traders gather at one big place to sell their products every week. The people come to these weekly markets to buy the household items for the next one week. Village fairs and melas were also common as it had more of an entertainment value. Once the people started getting busy with their lives and when they turned entrepreneurial, there emerged the mom and pop shops and the kiranas in the neighbourhood. After independence, came into existence the system of Public distribution of foods through the ration shops, where food grains, sugar and oil for the daily consumption were distributed at subsidized rates through the government ration shops. The modern corporate retail formats are of the exclusive brand outlets, hypermarkets and supermarkets, departmental stores and shopping malls. But still the Indian consumer depends on the self-organized retail shops for their daily needs. This is largely due to the excell ent food retailing system that was established by the kiranas (mom and-pop) stores that continue meet with all the requirements of retail requirements albeit without the convenience of the shopping as provided by the retail chains. The Hawkers/lari galla vendors and the local kiranas are the two main forms of unorganized retail in the country, which almost account for 97% of the total retail trade. Giant corporations like Wal-Mart and Reliance have started to try and take over the Indian retail sector. Currently the value of the retail market is estimated at around $ 270 billion with a growth rate of 5.7 per cent per annum according to the Indian retail report. The size of small retail is big, the size of big retail is small, a mere Rs. 250 billion in 2004 or 3% and Rs. 485 billion or 4.7% per cent of the retail market in 2006. However, the large scale corporate retail is projected to grow at the rate of 28% to 30% per annum, reaching Rs. 1000 billion or $ 70 billion by 2010 from th e current size of US $ 8.7 billion. The tenfold increase in corporate retail will be at the cost of small scale retail, which employs nearly 10% of Indias population. The strategy here is to define the small scale self-organized retail as unorganized and the large scale corporate retail as organized. The real difference is however not unorganized vs organized. But it is self-organized vs. corporate Reliance Fresh is the convenience store format which forms part of the retail business of Reliance Industries of India which is headed by Mukesh Ambani. Reliance plans to invest in excess of Rs 25000 crores in the next 4 years in their retail division. The company already has in excess of 560 reliance fresh outlets across the country. These stores sell fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products. A typical Reliance Fresh store is approximately 3000-4000 square. feet and caters to a catchment area of 2-3 km. History Post launch, in a dramatic shift in its positioning and mainly due to the circumstances prevaling in UP, West Bengal and Orissa, it was mentioned recently in news dailies that, Reliance Retail is moving out of stocking fruits and vegetables. Reliance Retail has decided to minimise its exposure in the fruit and vegetable business and position Reliance Fresh as a pure play super market focusing on categories like food, FMCG, home, consumer durables, IT and wellness , with food accounting for the bulk of the business. The company may not stock fruit and vegetables in some states. Though Reliance Fresh is not exiting the fruit and vegetable business altogether, it has decided not to compete with local vendors partly due to political reasons, and partly due to its inability to create a robust supply chain. This is quite different from what the firm had originally planned. When the first Reliance Fresh store opened in Hyderabad last October, not only did the company said the stores main focus would be fresh produce like fruits and vegetables at a much lower price, but also spoke at length about its farm-to-fork theory. The idea the company spoke about was to source from farmers and sell directly to the consumer removing middlemen out of the way. Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, Reliance Footprint, Reliance Wellness, Reliance Jewels, Reliance Timeout and Reliance Super are various formats that Reliance has rolled out. In addition, Reliance Retail has entered into an alliance with Apple for setting up a chain of Apple Specialty Stores branded as iStore, starting with Bangalore. CORPORATE SOCIAL RESPONSIBILITY Today when most of the companies are busy in making profits by any means, there are few Ones who are focused to return this society, a part of what they have earned through this society. Reliance retail is one of them. Following efforts of reliance retail are aimed at benefiting the society making reliance socially responsible: 1) Reliance Retail aims at recruiting people from the underprivileged community in society. Hence, we are planning to train students from corporation schools and schools run by NGOs. And, we consider this as a part of our corporate social responsibility, he said. Asked whether the company will take students on an employment basis and pay them a stipend during the course period, he said that actually, it is planning to charge a small fee from those who want to join the course as we want to bring in some discipline and regularity among the students, and will reimburse that once they are inducted into service. 2) Farming in India is highly fragmented and subject to harsh climatic conditions: once harvested, it is very difficult to keep fruits and vegetables fresh. To secure high quality, Reliance Retail is directly sourcing fresh agricultural produce from thousands of farmers from villages through Collection Centers. With this concept, Reliance has built a business model generating shared value that links the company supply chain more closely to poor farmers in Indian villages. Reliance is providing a guaranteed market for the farmers produce, reducing transaction costs and training the farmers in better and sustainable farming practices. This initiative results in higher income and upgrading of skills for the farmers, and reduced spoilage of produce (up to 35 percent) and better quality products for Reliance retail stores. 3) Reliance retail has adopted farm to fork theory which means it is procuring Directly from the farmers thus offering them quite reasonable prices for their produce as now no intermediaries are involved. In return Reliance is giving farmers information about how can farmers improve their productivity. They have centers in villages who apart from providing information make farmers aware of market rates of different crops so that farmers can choose crops they want to sow to become profitable. farmers are provided technical help as well like information about quality of seeds and fertilizers. Service marketing environment Service marketing environment of reliance fresh can be scanned by considering the six major environment forces like demographic, economic, socio-culture, natural, technological, and political legal. As the demographic environment consists of the age mix of population, literacy and education level. Economic level consists of income distribution of different people. The rich grew by 400% in urban areas and 200% in rural areas. Socio- cultural environment consists of influence of religion, languages and customer that shapes the values and attitudes of customer preferences, habits and behaviour. Services Marketing and Marketing Mix A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). A product is tangible (i.e. material) since you can touch it and own it. A service tends to be an experience that is consumed at the point where it is purchased, and cannot be owned since is quickly perishes. A person could go to a cafà © one day and have excellent service, and then return the next day and have a poor experience. So often marketers talk about the nature of a service as: Inseparable From the point where it is consumed, and from the provider of the service. For example, you cannot take a live theatre performance home to consume it (a DVD of the same performance would be a product, not a service). Intangible and cannot have a real, physical presence as does a product. For example, motor insurance may have a certificate, but the financial service itself cannot be touched i.e. it is intangible. Perishable in that once it has occurred it cannot be repeated in exactly the same way. For example, once a 100 metres Olympic final has been run, there will be not other for 4 more years, and even then it will be staged in a different place with many different finalists. Variability- since the human involvement of service provision means that no two services will be completely identical. For example, returning to the same garage time and time again for a service on your car might see different levels of customer satisfaction, or speediness of work. Right of ownership is not taken to the service, since you merely experience it. For example, an engineer may service your air-conditioning, but you do not own the service, the engineer or his equipment. You cannot sell it on once it has been consumed, and do not take ownership of it. Western economies have seen deterioration in their traditional manufacturing industries, and a growth in their service economies. Therefore the marketing mix has seen an extension and adaptation into the extended marketing mix for services, also known as the 7Ps physical evidence, process and people. Reliance Fresh Marketing Mix (7 Ps) After segmenting the market, finding the target segment and positioning itself, each company needs to come up with an offer. The 7 Ps used by Reliance Fresh are: 1. Product 2. Place 3. Price 4. Promotion 5. People 6. Physical Evidence 7. Process Target Segment what is Reliance fresh for me? A Family with children, a purchase place to be for the children. Urban customer on the move Great taste, quick service without affecting the work schedule. But keep it affordable. Product: How should the company design, manufacture the product so that it enhances the customer experience? Product is the physical product or service offered to the consumer. Product includes certain aspects such as packaging, guarantee, looks etc. This includes both the tangible and the non tangible aspects of the product and service. Reliance fresh has intentionally kept its product depth and product width limited. Reliance Fresh studied the behaviour of the Indian customer and provided a totally different menu as compared to its International offering. India is the only country where reliance Fresh serve vegetarian. Even the sauces and cheese used in India are 100% vegetarian. Place: Where should be the product be available and the role of distribution channels? The place mainly consists of the distribution channels. It is important so that the product is available to the customer at the right place, at the right time and in the right quantity. Nearly 50% of U.S.A is within a 3 minute drive from a Reliance Fresh outlet. There is a certain degree of fun and happiness that a customer feels each time he dines at. There are certain value propositions that reliance fresh offer to its customers based on their needs. Reliance fresh offers hygienic environment, good ambience and great service. Now Reliance Fresh have also started giving internet facility at their centres and they have been playing music through radio instead of the normal music. There are certain dedicated areas for children where they can play while their parents can have some quality time together. Price: What should be the pricing strategy? Pricing includes the list price, the discount functions available, the financing options available etc. It should also take into the consideration the probable reaction from the competitor to the pricing strategy. This is the most important part of the marketing mix as this is the only part which generates revenue. All the other three are expenses incurred. The price must take into consideration the appropriate demand-supply equation. Reliance fresh came up with a very catchy punch line Growth Through Value Creation. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base Reliance fresh has now. Promotion: What is the suitable strategy and channels for promotion of the product? The various promotion channels being used Reliance fresh to effectively communicate the product information are given above. A clear understanding of the customer value helps decide whether the cost of promotion is worth spending. There are three main objectives of advertising for Reliance fresh are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right audience through the right media. Reliance fresh does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion. Some of the most famous marketing campaigns of Reliance fresh are:  ·Ã¢â€š ¬Ã‚  Food and Fun People: How to converge the benefits of internal and external marketing? Reliance fresh understands the value of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy customer. Reliance fresh continuously does Internal Marketing. This is important as it must precede external marketing. This includes hiring, training and motivating able employees. This way they serve customers well and the final result is a happy customer. The level of importance has changed to be in the following order (the more important people are at the top): 1. Customers 2. Front line employees 3. Middle level managers 4. Front line managers Physical evidences -Actual Experiferal evidence -A good time entry. -Sign boards. -Essential eminence of service. -Good parking place Process Process Exist are complex on railways like some processes are: -refund process / claim process. -Communication process. -Entraining/Detraining Process. The service segmentation Reliance Fresh has segmented their service to all class of people like rich, poor by providing standards of facility in different ways, for example you can find different items/buget packs for them these are the service segmentation of Reliance Fresh by which they are serving different categories of people. In all these service segmentation Reliance Fresh is providing different facilities and charging same money. Items at a Glance timetable, I have always used these on booking and have never had a problem, write the abbreviation in which you want to purchase, next to the word on the purchase form. Organizations are taking an interest in the international marketing of services because of low cost factors and the ability to compete in nearby country markets (Bradley 1995); however, international services pose special challenges for marketing managers as a result of the intangibility of services, the extent of customization, and differences in preferences across cultures. Research on international service offerings has focused on entry-mode choices technology growth , geographic roles, service influences on national competitive advantage and strategic differences across services . Yet the marketing literature has not investigated several key components of service strategy, particularly in the international domain. Customers Requirements and Customer Expectations Customers Experience after visiting the store can be said to be not much satisfactory. After this entire buzz it seemed to be a damp squib to me. 1. Choice and Range. Reliance Retail is primarily a super market store. So, one expects a wide range of goods available across various categories, brands and price ranges. Hardly there is any range available. Not even, any categories of goods. Just one or two we can easily live without. 2.  Super Markets like Nilgiris, Trinethra (recently bought by Birlas), Subhikhsa, and Modern Market especially the last one has a superb range and Reliance Fresh is nowhere in comparison to them. 3.  The Ambiance in the shop is good, but as I said nothing much different from the other super market chains. 4.  The staff is cordial and friendly very much eagerly looking forward to help. After I made the payment, the staff greeting me by saying a Namaste. This I liked a lot. Especially after horrible experiences of visiting shops in Kolkata. I do not know why but shop keepers in Salt Lake have this tendency of looking at you as if why do these customers keep bothering us, when u visits them. 5.  They accept card payment even for payments less than a hundred rupees. 6.   They have this membership card option with a free insurance thrown in, just to ensure that you show loyalty to them. As they go through the reviews by the members, they observe that the same points they have quoted above are bothering them too. Some more reading, browsing and research made me understand some of the aspects related to it, which I want to share with you. 1.  Customer is the last person in the minds of these supermarket chains. Though it might be surprising, thats the fact straightly put. What matters the most is the number. The more the number of stores opened, the more is the number of people visiting them, the more the chances of success. 2. The commission they get for selling a product. They are least bothered about providing a range of goods and brands to the Customer. In contrary, the companies that pay them the highest commission get to sell their goods from them. When they have the numbers, companies cannot afford to ignore them courtesy, the large number of customers visiting them. But why are the Customers visiting them, when they are not getting what they want? 3.  The feel good factor. The goods we buy here can be easily bought at any other grocery store round the corner. Then why do we flock to them? Just because, we feel good. We feel happy becoming a part of another India, which looks great much unlike the India we have grown in. We love the ambience. We like being greeted. 4.  By making a right balance between the numbers and the feel good factor, they achieve their targets some times much beyond the expectations they have set. We are just part of the market grind that is happening right now! Service recovery strategies -Improving the after sales services. -Admit and apologies. -rectification of any error -Compensate -Minor performance lapse need monitoring Quality concern Quality means watching the services from customer prospective. The main quality concern of Reliance Fresh is: To provide hygienic condition inside the stores. Avoiding as much as possible the delay in the schedule. Freshness is also one of the concern for Reliance fresh. Improving the infrastructure to world class level of standards. Integrated gap model of service quality Revenue% The central focus of gap model is the customer gap, the difference between customer expectations and perceptions. GAP-1 Not knowing what customer expect i.e. what are the expectation of customer of Reliance Fresh which can be due to inadequate marketing research. GAP-2 Not selecting the right service design and standards. Reliance Fresh have a good service design but not reached to that level of standards to meet all customer expectations. GAP-3 Not delivering to service designs and standards. This can be due to deficiency of human resource policy of Reliance Fresh. And may be due to failure in meeting supply and demand. Because of the huge population of India. GAP-4 Not matching performance to promises. This can be due to lack of integrating services marketing communication and ineffective management of customer expectation by Reliance Fresh. In this way the gap between expected quality and perceived quality can be calculated by Reliance Fresh. Blueprint of Reliance Fresh (near Patel chowk) Entering path Tracks for purchase of googd Tracks for purchase of googd Billing counter Gate keeper Entrance to Reliance Fresh This is the blueprint of reliance fresh. Customer when comes to this store firstly the gate keeper will check it and keep the bag if he has with him. The billing counter is first right of entrance. When customer enters it the tracks whether for seeing of goods and if he liked something than he can put it in trolley and then he can go the billing counter. If he needs some help than he also can ask for it but telling the nearest salesman. After selecting the good he can go to billing and go back to gate keeper. Gate keeper now demand for the receipt for just the security purpose. Pricing Strategies by Reliance Fresh -Discount pricing strategy -Wide price range of each items -Credit card acceptance -Accept coupons Competitive prices. -Price marked in paisas -comparable cost.