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8/17/2019 Marketing Management Prabhat
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MARKETING MANAGEMENT
A STUDY OF THE DISTRIBUTION STRATEGIES OF RELIANCE FRESH
PROJECT
(Towards partial fulfilment of the evaluation in the subject of Marketing
Management)
Submitted to: Submitted
b:
Dr. Archi Mathur Prabhat Kumar
Faculty Roll: 1282
Marketing Management B.B.A., .B !"on#.$
%& 'o(h)ur &* +eme#ter
DATE: !"TH APRIL# $%!&
NATIONAL LA' UNI(ERSITY# JODHPUR
'INTER SEMESTER )JANUARY * APRIL# $%!&
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ACKNO'LEDGEMENT
-i#h to coney my (ee) gratitu(e to-ar(# my Marketing Management teacher Dr. Archi
mathur -ho ha# been a #ource o/ gui(ance an( motiation throughout my #econ( #eme#ter.
am grate/ul to the &nier#ity /or /acilitating me -ith the nece##ary aca(emic an(
)re)aratory re#ource#, online an( o//line, re0uire( to make thi# )roect.
am al#o grate/ul to all my /rien(# -ho kee) the #)irit o/ com)etition alie in me, an( my
#enior# -ho neer he#itate to hel) -hen an ine)erience( /ir#t year come# looking /or
genuine a(ice an( #u))ort.
Prabhat Kumar
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E+ECUTI(E SUMMARY
3he grocery in(u#try i# an i(eal eam)le /or eamining eten(e( #u))ly chain# that i# at once
unier#al4-e all #ho) an( eat4an( al#o the mo#t challenging #u))ly chain enironment.
3he in(u#try ha# uni0ue characteri#tic# like hy)er com)letion -ith ag. )ro/it margin# o/ 15
26 o/ #ale#, /ragile )ro(uct#, highly )eri#hable an( cu#tomer# are choo#y on ta#te# an( hae
a high (eman( /or lo- )rice. For all the#e rea#on#, eten(ing the #u))ly chain /or grocerie#
!#o that con#umer# hae an e)erience that i# more #erice5oriente($ )roi(e# a uni0ue
o))ortunity /or com)anie# to (i//erentiate them#ele#. For eam)le, cu#tomer# can )lace
or(er# online /rom the com/ort o/ their home#, an( hae their or(er# /ille( an( (eliere( to
their (oor#te). 3here are #ub#tantial co#t# inole( in eten(ing the #u))ly chain into
con#umer home#, -hich (oe# not #eem to /it -ith an etremely )rice5#en#itie in(u#try. An(
yet, it i# )reci#ely by turning thi# rea#oning on it# hea( that there i# a 0uiet in#urrection
occurring. 7ten(ing the #u))ly chain /or grocerie# -ork#, (e#)ite it# challenge#. t )roi(e#
a mean# o/ enhancing the cu#tomer# e)erience# an( breaking a-ay /rom the cru#hing
9)rice, )rice, )rice9 #trategy e)loite( by lea(ing retailer#, #uch a# al5Mart. t create# the
ty)e o/ cu#tomer e)erience that lea(# to greatly increa#e( cu#tomer loyalty. 3he i(ea i# to re5
/orge link# -ith cu#tomer# that hae been #eere( by (eca(e# o/ )rice )romotion# that hae
ero(e( cu#tomer loyalty to #)eci/ic bran(# an( to in(ii(ual #tore#. / eten(ing the #u))ly
chain can be u#e( to create a loyalty e//ect in the ultra challenging -orl( o/ retail grocer#,
there are im)ortant le##on# /or a broa(er range o/ retailer# an( manu/acturer#.
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TABLE OF CONTENT
Table of Contents
MARKETING MANAGEMENT.................................................................1
A STUDY OF THE DISTRIBUTION STRATEGIES OF RELIANCE FRESH.........1
ACKNOLEDGEMENT..........................................................................!
E"ECUTI#E SUMMARY.........................................................................$
TABLE OF CONTENT............................................................................%
RESEARCH OB&ECTI#ES.......................................................................'
RESEARCH METHODOLOGY.................................................................(
INTRODUCTION..................................................................................)
DISTRIBUTION STRATEGIES...............................................................11
A. INTRODUCTION TO THE DISTRIBUTION CHANNEL..................................................11
B. MULTIPLE CHANNELS OF DISTRIBUTION..............................................................12
C. BENEFITS OF INTERMEDIARIES..........................................................................13
RELIANCE FRESH..............................................................................1*
DISTRIBUTION STRATEGY..................................................................1)
SU++LY CHAIN AND DISTRIBUTION STRATEGIES AT RELIANCE FRESH.. .!$
A.......................................................................................................................23
PROCUREMENT.....................................................................................................23
RECOMMENDATION AND CONCLUSION...............................................*%
ANALYSIS.........................................................................................*(
ANNE"URE.......................................................................................*)
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RESEARCH OBJECTI(ES
• To comprehend he concep !nd re!"on #eh$nd he %!r$o&" d$"r$#&$on
"r!e'( &"ed #( Re)$!nce Fre"h.
• To cr$$c!))( e%!)&!e he "&cce"" !nd *!$)&re r!e !nd r!$o o* he p!r$c&)!r
m!r+e$n' "r!e'(.
• To $den$*( he re!"on" #eh$nd he "&cce"" *!$)&re o* !)) he "r!e'$e".
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RESEARCH METHODOLOGY
SUB,ECT - M!r+e$n' M!n!'emen TOPIC - S&d( o* he d$"r$#&$on "r!e'$e" o* Re)$!nce Fre"h.
The !&hor h!" re"e!rched *or h$" proec #( op$n' *or docr$n!) re"e!rch
*rom pr$m!r( !nd "econd!r( "o&rce". A&hor$!$%e #oo+" on m!r+e$n'
m!n!'emen !nd d$"r$#&$on "r!e'$e" h!%e #een &"ed o $n/&$re $no he
n$(0'r$( o* he op$c. Scho)!r)( !r$c)e" !nd repor" on Re)$!nce Fre"h h!%e
!)"o #een re*erred o.
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TENTATI#E CHA+TERISATION
• Eec&$%e S&mm!r(
• Re"e!rch O#ec$%e
• Re"e!rch Mehodo)o'(
Ch!per 1 Inrod&c$on o D$"r$#&$on Sr!e'$e"Ch!per 2 Inrod&c$on o Re)$!nce *re"hCh!per 3 D!! T!#&)!$onCh!per An!)("$"Ch!per 4 Recommend!$onCh!per 5 Conc)&"$on
Anne&re" 6/&e"$onn!$re7
L$m$!$on" 6$* !n(7
B$#)$o'r!ph(
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INTRODUCTION
M,-.eti/0 m,/,0eme/t i# the organi;ational (i#ci)line -hich /ocu#e# on the )ractical
a))lication o/ marketing orientation, techni0ue# an( metho(# in#i(e enter)ri#e# an(
organi;ation# an( on the management o/ a /irm# marketing re#ource# an( actiitie#.
*lobali;ation ha# le( #ome /irm# to market beyon( the bor(er# o/ their home countrie#,
making international marketing a )art o/ tho#e /irm# marketing #trategy. Marketing manager#
are o/ten re#)on#ible /or in/luencing the leel, timing, an( com)o#ition o/ cu#tomer (eman(.
n )art, thi# i# becau#e the role o/ a marketing manager can ary #igni/icantly ba#e( on a
bu#ine### #i;e, cor)orate culture, an( in(u#try contet. For eam)le, in a large con#umer
)ro(uct# com)any, the marketing manager may act a# the oerall general manager o/ hi# or
her a##igne( )ro(uct. 3o create an e//ectie, co#t5e//icient marketing management #trategy,
/irm# mu#t )o##e## a (etaile(, obectie un(er#tan(ing o/ their o-n bu#ine## an( the
market in -hich they o)erate. Marketing management /acilitate# the actiitie# an( /unction#
-hich are inole( in the (i#tribution o/ goo(# an( #erice#.
Accor(ing to Phili) Kotler, <Marketing management i# the analy#i#, )lanning,
im)lementation an( control o/ )rogramme# (e#igne( to bring about (e#ire( echange# -ith
target market# /or the )ur)o#e o/ achieing organi#ational obectie#.
t relie# heaily on (e#igning the organi#ation# o//ering in term# o/ the target market# nee(#
an( (e#ire# an( u#ing e//ectie )ricing, communication an( (i#tribution to in/orm, motiate
an( #erice the market.= Marketing management i# concerne( -ith the chalking out o/ a
(e/inite )rogramme, a/ter care/ul analy#i# an( /oreca#ting o/ the market #ituation# an( the
ultimate eecution o/ the#e )lan# to achiee the obectie# o/ the organi#ation.
Further, their #ale# )lan# to a greater etent re#t u)on the re0uirement# an( motie# o/ the
con#umer# in the market. 3o achiee thi# obectie, the organi#ation ha# to )ay hee( to the
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right )ricing, e//ectie a(erti#ing an( #ale# )romotion, (i#tribution an( #timulating the
con#umer# through the be#t #erice#.
3o #um u), marketing management may be (e/ine( a# the )roce## o/ management o/
marketing
)rogramme# /or accom)li#hing organi#ational goal# an( obectie#. t inole# )lanning,
im)lementation an( control o/ marketing )rogramme# or cam)aign#.
Marketing management ha# gaine( im)ortance to meet increa#ing com)etition an( the nee(
/or im)roe( metho(# o/ (i#tribution to re(uce co#t an( to increa#e )ro/it#. Marketing
management to(ay i# the mo#t im)ortant /unction in a commercial an( bu#ine## enter)ri#e.
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DISTRIBUTION STRATEGIES
A1 INTRODUCTION TO THE DISTRIBUTION CHANNEL
Di#tribution channel# moe )ro(uct# an( #erice# /rom bu#ine##e# to con#umer# an( to other
bu#ine##e#. Al#o kno-n a# marketing channel#, channel# o/ (i#tribution con#i#t o/ a #et o/
inter(e)en(ent organi;ation#4#uch a# -hole#aler#, retailer#, an( #ale# agent#4inole( in
making a )ro(uct or #erice aailable /or u#e or con#um)tion. Di#tribution channel# are u#t
one com)onent o/ the oerall conce)t o/ (i#tribution net-ork#, -hich are the real, tangible
#y#tem# o/ interconnecte( #ource# an( (e#tination# through -hich )ro(uct# )a## on their -ay
to /inal con#umer#. A# "o-ar( '. ei## an( Mark 7. *er#hon note( in Pro(uction an(
>)eration# Management, a ba#ic (i#tribution net-ork con#i#t# o/ t-o )art#: 1$ a #et o/
location# that #tore, #hi), or receie material# !#uch a# /actorie#, -arehou#e#, retail outlet#$?
an( 2$ a #et o/ route# !lan(, #ea, air, #atellite, cable, nternet$ that connect the#e location#.
Di#tribution net-ork# may be cla##i/ie( a# either #im)le or com)le. A #im)le (i#tribution
net-ork i# one that con#i#t# o/ only a #ingle #ource o/ #u))ly, a #ingle #ource o/ (eman(, or
both, along -ith /ie( tran#)ortation route# connecting that #ource -ith other )art# o/ the
net-ork. n a #im)le (i#tribution net-ork, the maor (eci#ion# /or manager# to make inclu(e
-hen an( ho- much to or(er an( #hi), ba#e( on internal )urcha#ing an( inentory
con#i(eration#. n #hort, (i#tribution (e#cribe# all the logi#tic# inole( in (eliering a
com)any# )ro(uct# or #erice# to the right )lace, at the right time, /or the lo-e#t co#t. n the
unen(ing e//ort# to reali;e the#e goal#, the channel# o/ (i#tribution #electe( by a bu#ine## )lay
a ital role in thi# )roce##. ell5cho#en channel# con#titute a #igni/icant com)etitie
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a(antage, -hile )oorly conceie( or cho#en channel# can (oom een a #u)erior )ro(uct or
#erice to /ailure in the market.1
B1 MULTIPLE CHANNELS OF DISTRIBUTION
For many )ro(uct# an( #erice#, their manu/acturer# or )roi(er# u#e multi)le channel# o/
(i#tribution. A )er#onal com)uter, /or eam)le, might be bought (irectly /rom the
manu/acturer, either oer the tele)hone, (irect mail, or the nternet, or through #eeral kin(#
o/ retailer#, inclu(ing in(e)en(ent com)uter #tore#, /ranchi#e( com)uter #tore#, an(
(e)artment #tore#. n a((ition, large an( #mall bu#ine##e# may make their )urcha#e# through
other outlet#. @hannel #tructure# range /rom t-o to /ie leel#. 3he #im)le#t i# a t-o5leel
#tructure in -hich goo(# an( #erice# moe (irectly /rom the manu/acturer or )roi(er to the
con#umer. 3-o5leel #tructure# occur in #ome in(u#trie# -here con#umer# are able to or(er
)ro(uct# (irectly /rom the manu/acturer an( the manu/acturer /ul/ill# tho#e or(er# through it#
o-n )hy#ical (i#tribution #y#tem. n a three5leel channel #tructure retailer# #ere a#
interme(iarie# bet-een con#umer# an( manu/acturer#. Retailer# or(er )ro(uct# (irectly /rom
the manu/acturer, an( then #ell tho#e )ro(uct# (irectly to the con#umer. A /ourth leel i#
a((e( -hen manu/acturer# #ell to -hole#aler# rather than to retailer#. n a /our5leel
#tructure, retailer# or(er goo(# /rom -hole#aler# rather than manu/acturer#. Finally, a
manu/acturer# agent can #ere a# an interme(iary bet-een the manu/acturer an( it#
-hole#aler#, creating a /ie5leel channel #tructure con#i#ting o/ the manu/acturer, agent,
-hole#ale, retail, an( con#umer leel#. A /ie5leel channel #tructure might al#o con#i#t o/ the
manu/acturer, -hole#ale, obber, retail, an( con#umer leel#, -hereby obber# #erice #maller
retailer# not coere( by the large -hole#aler# in the in(u#try.
1 Reliance Fre#h +tore# in Foo( Retailing, Dr. Deba#i# Pra(han Dr. B.K. Mangara,
on(on Bu#ine## +chool re/erence @+ 852C
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C1 BENEFITS OF INTERMEDIARIES
/ #elling (irectly /rom the manu/acturer to the con#umer -a# al-ay# the mo#t e//icient
metho(ology /or (oing bu#ine##, the nee( /or channel# o/ (i#tribution -oul( be obiate(.
nterme(iarie#, ho-eer, )roi(e #eeral bene/it# to both manu/acturer# an( con#umer#:
im)roe( e//iciency, a better a##ortment o/ )ro(uct#, reutili;ation# o/ tran#action#, an( ea#ier
#earching /or goo(# a# -ell a# cu#tomer#. 3he im)roe( e//iciency that re#ult# /rom a((ing
interme(iarie# in the channel# o/ (i#tribution can ea#ily be gra#)e( -ith the hel) o/ a /e-
eam)le#. 3ake /ie manu/acturer# an( 2 retailer#, /or in#tance. / each manu/acturer #ell#
(irectly to each retailer, there are 1 contact line#4one line /rom each manu/acturer to each
retailer. 3he com)leity o/ thi# (i#tribution arrangement can be re(uce( by a((ing
-hole#aler# a# interme(iarie# bet-een manu/acturer# an( retailer#. / a #ingle -hole#aler
#ere# a# the interme(iary, the number o/ contact# i# re(uce( /rom 1 to 2: /ie contact
line# bet-een the manu/acturer# an( the -hole#aler, an( 2 contact line# bet-een the
-hole#aler an( the retailer#. Re(ucing the number o/ nece##ary contact# bring# more
e//iciency into the (i#tribution #y#tem by eliminating (u)licate e//ort# in or(ering,
)roce##ing, #hi))ing, etc.Ebr Gn term# o/ e//iciency there i# an e//ect o/ (imini#hing return#
a# more interme(iarie# are a((e( to the channel# o/ (i#tribution. /, in the eam)le aboe,
there -ere three -hole#aler# in#tea( o/ only one, the number o/ e##ential contact# increa#e# to
H: 1 contact# bet-een /ie manu/acturer# an( three -hole#aler#, )lu# I contact# bet-een
three -hole#aler# an( 2 retailer#. >/ cour#e thi# eam)le a##ume# that each retailer -oul(
or(er /rom each -hole#aler an( that each manu/acturer -oul( #u))ly each -hole#aler. n /act
geogra)hic an( other con#traint# ty)ically eliminate #ome line# o/ contact, making the
channel# o/ (i#tribution more e//icient.Ebr Gnterme(iarie# )roi(e a #econ( bene/it by
bri(ging the ga) bet-een the a##ortment o/ goo(# an( #erice# generate( by )ro(ucer# an(
tho#e in (eman( /rom con#umer#. Manu/acturer# ty)ically )ro(uce large 0uantitie# o/ a /e-
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#imilar )ro(uct#, -hile con#umer# -ant #mall 0uantitie# o/ many (i//erent )ro(uct#. n or(er
to #mooth the /lo- o/ goo(# an( #erice#, interme(iarie# )er/orm #uch /unction# a# #orting,
accumulation, allocation, an( creating a##ortment#. n #orting, interme(iarie# take a #u))ly o/
(i//erent item# an( #ort them into #imilar grou)ing#, a# eem)li/ie( by gra(e( agricultural
)ro(uct#. Accumulation mean# that interme(iarie# bring together item# /rom a number o/
(i//erent #ource# to create a larger #u))ly /or their cu#tomer#. nterme(iarie# allocate
)ro(uct# by breaking (o-n a homogeneou# #u))ly into #maller unit# /or re#ale. Finally, they
buil( u) an a##ortment o/ )ro(uct# to gie their cu#tomer# a -i(er #election. A thir( bene/it
)roi(e( by interme(iarie# i# that they hel) re(uce the co#t o/ (i#tribution by making
tran#action# routine. 7change relation#hi)# can be #tan(ar(i;e( in term# o/ lot #i;e,
/re0uency o/ (eliery an( )ayment, an( communication#. +eller an( buyer no longer hae to
bargain oer eery tran#action. A# tran#action# become more routine, the co#t# a##ociate(
-ith tho#e tran#action# are re(uce(.Ebr G3he u#e o/ interme(iarie# al#o ai(# the #earch
)roce##e# o/ both buyer# an( #eller#. Pro(ucer# are #earching to (etermine their cu#tomer#
nee(#, -hile cu#tomer# are #earching /or certain )ro(uct# an( #erice#. A (egree o/
uncertainty in both #earch )roce##e# can be re(uce( by u#ing channel# o/ (i#tribution. For
eam)le, con#umer# are more likely to /in( -hat they are looking /or -hen they #ho) at
-hole#ale or retail in#titution# organi;e( by #e)arate line# o/ tra(e, #uch a# grocery,
har(-are, an( clothing #tore#. n a((ition, )ro(ucer# can make #ome o/ their commonly u#e(
)ro(uct# more -i(ely aailable by )lacing them in many (i//erent retail outlet#, #o that
con#umer# are more likely to /in( them at the right time.
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RELIANCE FRESH
Reliance Fre#h i# the conenience #tore /ormat -hich a )art o/ Reliance Retail limite(, a /ully
#ub#i(iary o/ Reliance n(u#trie# imite(. Reliance )lan# to ine#t R# 2 crore# in the
net J year# in their retail (ii#ion.
RR launche( it# /ir#t #tore in "y(eraba( in %oember 2I? maor /ocu# -a# on #elling
/re#h /ruit# an( egetable# at lo-er )rice# by eliminating the mi((le men an( interme(iarie#.
%o- it ha# more than I reliance /re#h outlet# acro## the country o/ -hich 11H are in Delhi
an( )lan# to increa#e thi# number to H8J to hae )an5in(ia )re#ence by 211. 3he#e #tore#
#ell /re#h /ruit# an( egetable#, #ta)le#, grocerie#, /re#h uice bar# (airy )ro(uct# an( non
egetarian )ro(uct#.
+tore#, #i;e arying /rom 25J #0 /t, are locate( in the ra(iu# o/ 152 km o/ each other
)roi(ing a goo( coerage o/ the area. Reliance retail ha# (eci(e( to re(uce it# e)o#ure to
/ruit an( egetable bu#ine## an( )o#ition it#el/ a# a )ure )lay #u)er market an( -ill /ocu# on
categorie# like /oo(, auto acce##orie#, FM@*, -ith /oo( accounting /or mo#t o/ it# bu#ine##.
"igh 0uality )ro(uct# are o//ere( to the cu#tomer# haing better #hel/ li/e an( more
con#i#tent 0uality. @om)any ha# e)an(e( it# #u))ly chain management an( it i# ca)able o/
han(ling it ra)i(ly gro-ing #tore# net-ork e//ectiely an( e//iciently.
hen #tore# -ere launche(, there -a# #ome initial )roblem# )o#t launch (ue to
circum#tance# )reailing in e#t Bengal, >ri##a an( &.P.
n 285C, Reliance /re#h limite( ha( a turnoer o/ R# 1HH8.I crore# an( re)orte( a lo## o/
R# 2JC. crore#.
Reliance Fre#h #tarte( the retail ourney in %oember 2I -ith the /ir#t Reliance Fre#h
#tore. 3o(ay they o)erate oer C citie# acro## n(ia -ith HL #tore# -ith a /amily o/ oer
1 million ha))y cu#tomer#. 3hey are not only the large#t grocery retailer in the country but
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al#o the only retailer -ho ha# #ucce##/ully /ul/ille( the entire #)ectrum o/ n(ian con#umer#
nee(# a# they )roi(e goo( 0uality Fre#h )ro(uce, Dairy an( bakery )ro(uct# oer an( aboe
the #ta)le# an( FM@* )ro(uct#. Reliance n(u#trie# imite( !R$ i# the bigge#t )riate
com)any o/ n(ia, a conglomerate that ha# it# bu#ine## #)rea( acro## retail, ga# e)loration
an( Pro(uction, re/ining an( marketing Petrochemical# an( telecommunication#. 3he
com)any #eek# to ca)ture the entire n(ian market -ith the launch o/ it# 'io n/ocomm J*
#erice# an( become the large#t (ata #erice )roi(er. 3he Bran( 3ru#t Re)ort 21 al#o
re)ort# R a# the Hth mo#t tru#te( bran( in n(ia. 2. Bu#ine## Practice# o/ Reliance Fre#hN
Reliance Fre#h i# a #u)ermarket chain -hich /orm# )art o/ the retail bu#ine## o/ Reliance
n(u#trie# o/ n(ia -hich i# hea(e( by the cor)orate giant Muke#h Ambani. ith a i#ion to
generate inclu#ie gro-th an( )ro#)erity /or /armer#, en(or )artner#, #mall #ho)kee)er# an(
con#umer#, Reliance Retail imite( !RR$, a #ub#i(iary o/ R, -a# #et u) to lea( Reliance
*rou) # /oray into organi;e( retail. +ince it# ince)tion in 2I, Reliance Retail imite(‟
!RR$ ha# gro-n into an organi;ation that cater# to million# o/ cu#tomer#, thou#an(# o/
/armer# an( en(or#. Ba#e( on it# core gro-th #trategy o/ back-ar( integration, RR ha#
ma(e ra)i( )rogre## to-ar(# buil(ing an entire alue chain #tarting /rom the /armer# to the
en( con#umer#. Reliance )lan# to ine#t in ece## o/ R# 2 crore# in the net J year# in
their retail (ii#ion. 3he com)any alrea(y ha# in ece## o/ I reliance /re#h outlet# acro##
the country. 3he#e #tore# #ell /re#h egetable# an( /ruit#, #ta)le#, grocerie#, /re#h uice bar#
an( (airy )ro(uct#. A ty)ical Reliance Fre#h #tore i# a))roimately 5J #0uare /eet
an( cater# to a catchment area o/ 25 km. RR no- o)erate# 22 (i//erent /ormat# acro##
n(ia. J Reliance Fre#h #tore# in oer J to-n# an( citie# are o)erational acro## n(ia.
nclu(ing the Reliance Fre#h #tore#, the com)any no- o)erate# oer C retail #tore# acro##
n(ia. . *ro-th an( Deelo)ment o/ >rgani;ation Po#t launch, in a (ramatic #hi/t in it#
)o#itioning an( mainly (ue to the circum#tance# )reailing in &P, e#t Bengal an( >(i#ha, it
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-a# mentione( that, Reliance Retail i# moing out o/ #tocking egetable# an( /ruit#. Reliance
Retail ha# (eci(e( to minimi;e it# e)o#ure in the /ruit an( egetable bu#ine## an( )o#ition
Reliance Fre#h a# a )ure )lay #u)er market /ocu#ing on categorie# like /oo(, FM@*, home,
con#umer (urable#, 3 an( -ellne##, -ith /oo( accounting /or the bulk o/ the bu#ine##. RR
increa#e( it# /oot)rint to more than C #tore# in 8 citie# acro## 1J #tate# in n(ia. Reliance
/re#h ha# oer 2 #tore# all nternational @on/erence on 3echnology an( Bu#ine##
Management March 252, 21 II oer Pune. 3he com)any may not #tock /ruit an(
egetable# in #ome #tate#. 3hough Reliance Fre#h i# not eiting the /ruit an( egetable
bu#ine## altogether, it ha# (eci(e( not to com)ete -ith local en(or# )artly (ue to )olitical
rea#on#, an( )artly (ue to it# inability to create a robu#t #u))ly chain. 3hi# i# 0uite (i//erent
/rom -hat the /irm ha( originally )lanne(. hen the /ir#t Reliance Fre#h #tore o)ene( in
"y(eraba(, not only (i( the com)any #ai( the #tore # main /ocu# -oul( be /re#h )ro(uce like‟
egetable# an( /ruit# at a much lo-er )rice, but al#o #)oke at length about it# </arm5to5/ork ‟‟
theory. 3he i(ea the com)any #)oke about -a# to #ource /rom /armer# an( #ell (irectly to the
con#umer remoing mi((lemen out o/ the -ay. Reliance Fre#h, Reliance Mart, Reliance
Digital, Reliance 3ren(;, Reliance Foot)rint, Reliance ellne##, Reliance 'e-el#, Reliance
3imeout an( Reliance +u)er are ariou# /ormat# that Reliance ha# rolle( out. n a((ition,
Reliance Retail ha# entere( into an alliance -ith A))le /or #etting u) a chain o/ A))le
+)ecialty +tore# bran(e( a# i+tore. RR ha# a (irect engagement -ith oer million
cu#tomer# /ollo-ing a loyalty )rogramme Reliance >ne -hich -a# o//ere( /rom the /ir#t
(ay o/ it# o)eration. Reliance Fre#h at a *lance Reliance Fre#h i# the conenience #tore
/ormat -hich /orm# )art o/ the retail bu#ine## o/ Reliance n(u#trie# o/ n(ia. 3aking another
lea) ahea(, Reliance Fre#h Direct make# the grocery #ho))ing een #im)ler by bringing it to
cu#tomer # (oor #te). A com/ortable #ho))ing can be (one /rom home? o//ice or on the moe‟
an( #election can be ma(e /rom a -i(e range o/ IL )ro(uct#. Reliance Fre#h o//er#
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conenience o/ #ho))ing /or eerything that the cu#tomer nee(# /or hi#her home 5 be it Fre#h
Oegetable# an( /ruit#, rice, (al#, oil, )ackage( /oo(, bakery an( (airy item, /ro;en an( )et
/oo(, hou#ehol( cleaning item#, #)eciali;e( beauty an( )er#onal care )ro(uct# /rom a #ingle
irtual #tore. 3he cu#tomer can get #tarte( by regi#tering -ith Reliance Fre#h, #elect the
)ro(uct# he#he nee(#, choo#e the (eliery time conenient to himher an( )ay the -ay
he#he -ant# to5through ca#hcre(it car(net banking an( /oo( cou)on#. Reliance Fre#h -ill
han()ick the cu#tomer # or(er the -ay he#he -oul( hae (one it him#el/her#el/ an( (elier ‟
it to hi#her home u#t -hen he#he -ant# it. Promi#e Reliance Fre#h gie# all that the
cu#tomer# -ant, -i(e range o/ bran(# an( )ro(uct# to choo#e /rom eclu#ie range# like
organic, regional (elicacie# an( many more. t o//er# on 5 time (eliery at cu#tomer#‟
conenience an( (e(icate( -ork/orce net-ork an( in/ra#tructure to en#ure it. t )roi(e#
conenient o)tion# o/ (eliery #lot#, cu#tomer /rien(ly inter/ace, u#er /rien(ly an( ea#y to
naigate -eb#ite, -ell5traine( cu#tomer #erice agent# to a##i#t cu#tomer# (uring or(er
booking an( en0uirie#. t al#o en#ure# /re#h, hygiene an( high 0uality )ro(uct# #tore( an(
tran#)orte( in high #tan(ar(# o/ hygiene an( tem)erature control.
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DISTRIBUTION STRATEGY
St-u2tu-e o3 C4,//e5
3he egetable# are collecte( in illage# /rom /armer# (irectly.
3hey are #ubmitte( to @ollection @entre# !@@$ like Bakta-ar Pur, Khe-ra(a, "a)ur,
Pato(i, Pani)at,etc.
Payment an( 0uality check# are (one in collection centre#.
From @@ they are tran#/erre( to Di#tribution @entre# !D@$ ia Reliance o-n logi#tical
unit#. Kun(li i# the D@ /or Delhi%@R.
/ the ca)acity i# not /ul/ille( by the collection centre then %ational #ourcing i# u#e(
%ational %ational
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3hi# lea(# u# to the net an( /inal #te) in the )roce##, i.e. the local Reliance Fre#h
#tore#.
3he or(er /or ne- egetable# ha# to be )lace( one (ay be/ore. 3ill eening the #tock i# in
(i#tribution centre#. At night it i# tran#hi))e( to the local #tore. +o there i# a (elay o/ one (ay
/rom /arm to the #tore# -hich are 11 in %e- Delhi.
T4e di6t-ibutio/ 2e/t-e ,/d t4e 5o2,5 6to-e6 ,-e -e/t b,6ed1
Daily rate# are monitore(. 3he /armer# are )ai( le## than the )reailing rate# in man(i. / the
re0uirement i# not met through /armer# then the a((itional goo(# are brought (irectly /rom
man(i at a 5J6 chea)er rate /rom the u#ual man(i rate.
3he total olume entering in %@R i# at aerage aroun( 1 ton#, but (ue to ri#ing )rice# o/
egetable#, the con#um)tion ha# /allen. 3hi# ha# ma(e the olume /all to H58 ton#. Almo#t
I6 o/ the olume bought i# /rom @ollection @entre# an( -arehou#e#, the re#t 6 i#
)rocure( /rom man(i#.
Mo7eme/t o3 Good6 )Lo0i6ti268
Reliance it#el/ )ay# /or all logi#tic# /rom the collection centre to the retail #tore#. Reliance
earlier ha# a logi#tic# com)any -hich u#e( to )roi(e man )o-er a# -ell a# tran#)ortation o/
goo(#. But no- the logi#tic# com)any i# no longer in )lace. +ome o/ the com)any o-ne(
truck# o/ logi#tic# com)any are u#e( /or tran#)ortation along -ith other truck# on rent ba#e(
#y#tem /rom a thir( )arty en(or.
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Membe-6 ,/d t4ei- Ro5e6
F,-me-6: 3he /armer# hare#t the cro) an( bring it to the collection centre. 3hey #ae on the
tran#)ortation co#t they -oul( incur in taking the egetable# to the man(i.
Co55e2tio/ Ce/t-e: >ne Reliance authori;e( )er#on i# in charge o/ collection centre. "e
in#)ect# the 0uality an( take# in the egetable#. "e i# al#o re#)on#ible /or )ayment o/ the
/armer#. "e en#ure# the loa(ing o/ all egetable# in the truck# -hich are #ent to the D@.
N,tio/,5 Sou-2i/0: n or(er to )roi(e a con#tant #u))ly o/ all )eri#hable egetable#
-arehou#e# hae been bought -here goo(# are ke)t in col( #torage. heneer there i# a
#hortage in #u))ly /rom any region then, the#e -arehou#e# takeoer an( #tart #u))lying
goo(#. 7g. 3omatoe# are #tore( in %a#ik, Ratlam, 'ai)ur? Potatoe# in Agra an( +hahba(. 3hi#
gie# Reliance a com)etitie e(ge. t al#o en#ure# that they buy at the chea)e#t rate an( #ell it
out -hen the rate# are con#i(erable higher.
M,/di: A team o/ t-o )eo)le i# #ituate( at the man(i. 3he#e team# are re#)on#ible /or
con#tantly monitoring the rate# an( communicating the #ame to the hea( o//ice. / there i# an
urgent nee( -hich cannot be /ul/ille( by the collection centre then reliance )urcha#e# the
#u))ly (irectly /rom man(i but at a rate -hich i# 65J6 le## than the actual man(i rate.
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Di6t-ibutio/ Ce/t-e: 3he (i#tribution centre receie# the egetable# an( (oe# a thorough
0uality check. 3hey )re)are the egetable# /or the retail #tore# an( al#o #hi) the egetable#
(e)en(ing on the re0uirement /or each #tore.
Ret,i5 Sto-e6: 3hey are u#t re#)on#ible /or receiing an( checking the 0uantity o/ egetable#
arriing each night. 3hen they )ut u) all goo( egetable# on (i#)lay /or cu#tomer#.
9u,/tum o3 (o5ume6
3he total olume# )rocure( )er (ay i# currently about H58 tonne#. 3hi# i# the /igure /or la#t
t-o month#. Due to ri#e in )rice# the olume ha# (ro))e( a# it -a# earlier about 1 tonne#
)er (ay.
M,/,0eme/t Po5i2ie6
/ the #tore o-ner# are able to reach their target then there i# a monetary a-ar( an(
recognition. t i# -orke( on monthly )ercentage increa#e in the #ale#. 3he cu#tomer# are
o//ere( #erice# like home (eliery on or(er# ecee(ing R#
Co/35i2t6
3he #tore# in &ttar Pra(e#h ha( clo#e( becau#e o/ )rote#t# /rom the local en(or#. 3hi#
re#ulte( in a Reliance (e5hiring all it# #tore#. 3hi# re#ulte( in a lo## o/ R# 2 crore in ta
)ayment# to the &P goernment. 3he late#t internal ne-# i# that Maya-ati ha# #ent her to)
A+ o//icer# to Mumbai to -oo Reliance Fre#h back in &ttar Pra(e#h2
2 htt):economictime#.in(iatime#.com%e-#%e-#5By5@om)anyR5@om)anie#5Reliance5
RetailReliance5retail5uggernaut5roll#5out5aim#5to5link5/arm5to5/orkarticle#ho-12IH.cm#
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SUPPLY CHAIN AND DISTRIBUTION STRATEGIES AT RELIANCE FRESH
A
PROCUREMENT
*rocery in(u#try i# uni0ue in term# o/ #u))lier#, in thi# in(u#try #u))lier# are /ragmente( an(
)ro(uce u#ually in #maller 0uantitie#.
Reliance Fre#h make# mo#t o/ it# )rocurement /or egetable#, /ruit#, (airy )ro(uct#, bakery
item# (irectly /rom the #u))lier# ba#e( on the )re5negotiate( contract#. By )rocuring (irectly
they -ee( out the mi((leman commi##ion#, co#t# o/ loa(ing an( unloa(ing, tran#)ortation
co#t# an( -a#tage (ue to echange o/ han(#. 3hey )roi(e the /armer# -ith high 0uality
#ee(# an( technical kno-ho- an( later buy their )ro(uce an( )rice# higher than the
-hole#ale market )rice#. 3hey make the /armer# a-are o/ the market )rice# o/ (i//erent cro)#
to enable them to choo#e the cro)# that )roi(e them be#t yiel( on their ine#tment an( har(
-ork. 3he )rice# /or the )ro(uce are (etermine( ba#e( on the 0uality o/ the )ro(uce an( the
)reailing -hole#ale market )rice#.
3hey #ource the )eri#hable )ro(uce /rom the area# -hich are near to their (i#tribution center#
-hich enable# them to maintain lo-er )rice an( maintain #hort cycle time#. %on5)eri#hable
)ro(uce a# FM@* )ro(uct# -hich hae longer #hel/ li/e are )rocure( centrally by their
merchan(i#ing (e)artment. 3hi# allo-# them to )rocure in bulk an( bargain a better )rice
/rom the #u))lier.
n certain area# -here (eman( ecee(# #u))ly, their mo(el inclu(e# the /ollo-ing
Procure the )ro(uce /rom the #u))lier# by gra(ing their )ro(uce an( o//ering them a
better than market )rice
Procure goo( 0uality )ro(uce (irectly /rom the -hole#ale market in bulk
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3heir (i#tribution center# not only )roi(e# to their retail #tore# but al#o to other bu#ine##
concern#. 3hi# en#ure# -hateer ha# been bought /rom the #u))lier i# #ol( en#uring the
a##ure( (eman( to the #u))lier an( reliance /re#h ha# the bene/it o/ locke( in #u))lier#.
3he )eri#hable )ro(uce like /ruit# an( egetable# i# not ke)t /or more than 2 (ay#, -hateer
i# le/t oer i# #ol( back in the -hole#ale market an( )rice# lo-er than the market )rice. 3hi#
#trategy allo-# them to con#i#tently maintain 0uality o/ )ro(uce in their #tore# an( al#o get
ri( o/ the un#ol( )ro(uce be/ore it become# -a#te. 3he non5)eri#hable )ro(uct# like FM@*
goo(# are ke)t till their e)iry an( a/ter that u#ually returne( to )ro(ucer#.
3he /armer# are ma(e )ayment on the #)ot -hen their )ro(uce i# bought at their /arm#. 3he
)eri#hable goo(# like /ruit# an( egetable# once bought are moe( through #o)hi#ticate( col(
chain o/ col( #torage# an( #)ecial truck#.
arge (i#tribution center# are e#tabli#he( to economi;e on the col( #torage in/ra#tructure
co#t# an( minimi;e inentory leel#.
D1 Su5ie- Co/t-,2t6
Reliance /re#h )rocure# mo#t o/ it# )eri#hable )ro(uce through contract /arming -ith /armer#
/rom nearby area# o/ their collection(i#tribution center#. 3he contract# inole a )re5agree(
)rice, )ayment term, mea#ure# o/ 0uality, 0uantity an( (uration o/ the contract
Dairy )ro(uct# are )rocure( /rom the (airy coo)eratie# or locally o)erating en(or# #uch a#
Amul in *uarat, %an(ini an( "eritage in Karnataka etc. 3he coo)eratie# act a# )artner# an(
are )roi(e( -ith the (aily (eman( /oreca#t# to #u))ly (irectly to their (i#tribution center#.
Bakery item# are #ource( /rom multi)le #u))lier# locate( in the icinity o/ the collection or
(i#tribution center#. 3he#e )ro(uct# are u#ually contracte( #uch that they are returne( to
#u))lier# a/ter the )ro(uct# e)iry (ate.
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3he merchan(i#ing (e)artment )rocure# the non5)eri#hable goo(# /rom the #u))lier# u#ing
ariety o/ contract#. 3hi# inclu(e# the contract# to return goo(# at lo-er )rice on e)iry, bulk
)urcha#e at le##er )rice#, minimum )urcha#e contract# etc.
E1 Lo0i6ti26 * Pe-i64,b5e
3he )ro(uce /rom the /armer# i# collecte( at the collection center#. hich are #maller an( (o
not hae col( #torage /acilitie#. A )reliminary 0uality check i# (one here.
3hen the )ro(uce i# moe( to the (i#tribution center# -here they are #orte(, gra(e( an(
)ackage(. "ere, the (ata !)ro(uct ty)e, 0uantity, gra(e, co#t )rice etc.$ i# entere( into the
+AP #y#tem /or ea#ier tracking o/ the inentory.
7ery (ay the retail #tore manager rai#e# a )urcha#e or(er /or the net (ay ba#e( on the
e#timate( (eman(, -hich i# receie( by the clu#ter manager at the (i#tribution center. Ba#e(
on the aailability o/ the )ro(uct# the or(ere( item# are (eliere( to the area manager (aily in
/ull or )ro)ortionately -hen oerall (eman( ecee(# aailability.
F1 Lo0i6ti26 * No/;Pe-i64,b5e
tem# are collecte( /rom the manu/acturer or national leel (i#tributor an( (eliere( (irectly
to the ariou# (i#tribution center#. 7ach #tore ha# the minimum or(er 0uantity leel /or each
ty)e o/ )ro(uct -hich i# tracke( by +AP #y#tem. Ba#e( on the #ale# (ata, a# #oon a# the
)ro(uct leel goe# belo- it# minimum or(er 0uantity the +AP #y#tem automatically )lace#
the or(er.
G1 I/7e/to-
Mo#t o/ the inentory i# ke)t at the (i#tribution center leel to minimi;e the oerall inentory
acro## the #u))ly chain. Peri#hable item# are #tore( u#ually in col( #torage, an( are #u))lie(
ba#e( on /ir#t in /ir#t out ba#i#. %on5)eri#hable item# are #tocke( an( reor(ere( ba#e( on the
minimum or(er 0uantity leel#.
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"o-eer, retail #tore# are u#ually )roi(e( -ith #mall #torage /acility ba#e( on the /oreca#te(
(eman( at that #tore. +tore inentory i# u#ually to #tore the non)eri#hable item#. Peri#hable
are u#ually ke)t /or more than 2 (ay#, an( a/ter that )erio( they are thro-n )roi(e( they
)eri#h.
H1 Di6t-ibutio/ Ce/te-
Reliance Fre#h ha# #trategically )lace( their (i#tribution center# taking in to account both
collection center# an( retail #tore#. Re)leni#hment o/ the #tock to the #tore# ha# a lea( time o/
2 (ay#, that mean# each #tore ha# to )roi(e a /oreca#t 2 (ay# in a(ance.
Peri#hable goo(#, once arrie( at (i#tribution center, are gra(e( into (i//erent lot# ba#e( on
the 0uality o/ the )ro(uce an( then (ata i# entere( into +AP #y#tem. Ba#e( on the (eman(
they are #hi))e( to reliance retail #tore# an( other )arty #tore#. e/t oer i# moe( to col(
#torage or #ol( back in the -hole#ale market.
@ertain )ro(uce like )ul#e#, )orri(ge, rice, #ugar are )rocure( in bulk, gra(e( an( )ackage(
an( then #ol( a# )riate label# un(er the name <Reliance +elect=. 3he )o-er/ul bran( o/
Reliance )roi(e# them goo( margin# on their )riate label# than other bran(#.
I1 Ret,i5e-6
A ty)ical reliance #tore i# range# /rom 2 to J #0./t. An( layout i# (one to maimi;e
#hel/ #)ace taking into account the ea#e o/ moement -ithin the #tore. Pro(uct arrangement i#
(one in a -ay that #imilar item# are #tocke( together on the #hele#. Due to better margin#
#tore# )roi(e better an( larger #hel/ #)ace to )riate label# an( re#tocking i# (one ba#e( on
the /oreca#te( (eman(.
3hey )roi(e cu#tomer# -ith a ariety o/ /re#h /ruit#, egetable#, (airy )ro(uct# an( bakery
item#. Pul#e# an( #ta)le# are aailable both un(er reliance an( other com)any label#. 3he
#tore# are -ell lit an( ke)t clean to )roi(e a -orl( call ambience to the cu#tomer#.
Reliance Fre#h +tore# in Foo( Retailing, Dr. Deba#i# Pra(han Dr. B.K. Mangara,
on(on Bu#ine## +chool re/erence @+ 852C
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+tore# (o not eten#iely u#e 3 #y#tem# an( almo#t all o/ the re#tocking re0uirement# are
in#)ecte( an( /oreca#te( manually. "o-eer, they hae im)lemente( +AP #y#tem# to enter
the #ale# (ata a# an( -hen the #ale# ha))en.
P-i2i/0
Reliance /re#h /ollo- the eery(ay lo- )rice )olicy /or mo#t o/ the )ro(uct#. &#ually the
)riate label# are )rice( a little le##er than the )o)ular bran(# /or the #ame )ro(uct.
P-ob5em6 e/2ou/te-ed ,t Re5i,/2e F-e64
R5/re#h ha# a )roblem o/ hol(ing inentory a# mo#t o/ the FM@* goo(# mainly /ruit# an(
egetable# that R5Fre#h hol(# (oe#nNt get con#ume( the #ame (ay, -hich lea(# to -a#tage
an( later the branch ha# to (um) the goo(# lea(ing to etra co#t to the branch -ith regar(# to
inentory. t -a# note( that there -a# an aerage o/ 8 cu#tomer# -ho u#e( to -alk in (aily
to the mart, an( more than 1 (uring -eeken(#.
+tock (oe# get con#ume( (uring the -eeken(# but there -a# a )roblem o/ hol(ing inentory
(uring -eek(ay#. Bringing in le## #tock (uring -eek(ay coul( not be (one a# R5/re#h (i( not
-ant a lack o/ inentory in ca#e o/ a larger #ale (uring the -eek(ay#.
Mo#t o/ten, the #tock hel( in by R5Fre#h !FM@*$ nee(e( to be (um)e( an( the co#t o/
(um)ing came out to be at )ar -ith the )ro/it# earne( by R5/re#h but thi# continue(. R5/re#h
increa#e( the )re#eration co#t #o that it coul( hol( the inentory /or a longer time but thi#
-a# not a /ea#ible #olution (ue to 0uality con#traint# an( #till the )roblem -ith regar(# to
inentory hol(ing continue#, R5/re#h ha# no- re(uce( it# inentory to #ome etent #o that
there i# inentory aailable /or all it# cu#tomer# ba#e( only on their (eman( an( it aoi(#
etra #tock.
P-ob5em i/ Det,i5
nentory i# nothing more than a co#t until it i# #ol(. 3he larger inentory, the le## money -e
hae aailable /or marketing, /or ne- e0ui)ment, or #im)ly (ra-ing intere#t in a bank
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account. Maor manu/acturer# an( retailer# -ork ery har( to kee) inentory leel# lo- an(
con#tantly moing. Retail outlet# like reliance /re#h lo#e money through )oor inentory
management.
n(u#try #ource# #ay Reliance Retail# ha# manage( it# /ront e)an#ion to I #tore# acro##
ariou# retail /ormat# etremely /a#t, it# #u))ly chain leae# a lot to be (e#ire(, -ith
cu#tomer# not being able to /in( a(e0uate #u))lie# at goo(# on Reliance# /oo( an( grocery
outlet#. Follo-ing are #ome o/ the com)laint# gien by #ome cu#tomer# o/ reliance /re#h.
1. Reliance Fre#h i# %> M>R7 FR7+" an( i# %> M>R7 @>> either.
2. +tale an( e)ire( item# are the )roblem -ith reliance #tore#. 3heir inentory management
i# really )oor an( you nee( to check eery item be/ore a((ing it to your cart.
I/7e/to- Le7e5
J1 E2o/omi2 O-de- 9u,/tit )EO98
Another #olution coul( be the 7>Q through -hich the o)timal 0uantity to be or(ere( can be
(etermine(.7>Q i# a mathematical /ormula (e#igne( to minimi;e the combination o/ annual
hol(ing co#t# an( or(ering co#t#. t i# the leel o/ inentory that minimi;e# the total inentory
hol(ing co#t# an( or(ering co#t#. 3he /ormula i#
here,
@ /ie( co#t o/ )lacing or(er
D annual (eman( )er year
" hol(ing co#t# )er year
7>Q can be a ery e//ectie tool /or hel)ing to o)timi;e inentory. "o-eer, in or(er /or it
to be e//ectie, it re0uire# goo( an( thought/ul (ata. Reliance coul( u#e thi# /ormula to
e#timate it# o)timal inentory.
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•
Im5eme/t,tio/ P5,/
P5,/ 6,5e6: n or(er to e//ectiely manage our inentory, -e nee( to kno- -hat -e e)ect to
#ell. For larger retailer# that are #tocking u) a large inentory, #o)hi#ticate( #ale# /oreca#ting
#o/t-are are al#o being u#e(. For many #mall retailer#, ho-eer, (eelo)ing a #im)le
#)rea(#heet /rom our P>+ #ale# hi#tory, by month by key category, i# mo#t co#t e//ectie.
+tart -ith la#t yearN# #ale# hi#torie#, an( make a(u#tment# /or unu#ual eent#, #uch a#
-eather, out o/ #tock#, one5time )romotion#, etc. 3hen /actor in the a))ro)riate #ale# increa#e
or (ecrea#e )ercentage, ba#e( on a rea(ing o/ the #ale# )otential /or the category /or the
u)coming #ea#on. Finally, /or larger categorie#, it may make #en#e to break the #ale# )lan
(o-n by #ub5categorie#, #tyle# or en(or#.
P5,/ i/7e/to-ie6: t make# little #en#e to bring in more inentory at any gien time than -e
nee( to #et our (i#)lay#, #u))ort our )lanne( #ale# until the net (eliery, an( )roi(e a
#a/ety #tock in the eent o/ an une)ecte( #ale# #)ike or a late en(or (eliery. Buying
inentory too /ar in a(ance i# one o/ the #ure#t -ay# to /in( our #el/ oer5#tocke( (o-n the
roa(. For many #mall retailer#, the be#t -ay to )lan inentorie# i# to )lan to hae enough on
han( at month en( to #u))ort the net t-o or three monthN# #ale#.
P5,/ i/7e/to- -e2eit6: / youNe )lanne( #ale# by month, an( en(ing inentorie# by
month, itN# ea#y to calculate ho- much inentory to bring in each month. e nee( to bring in
enough to coer that monthN# #ale# )lan an( en(ing inentory, le## the )rior month# en(ing
inentory. n thi# -ay, a buyer can kno- in March, -hen )re)aring /or the /all #ea#on, /or
eam)le, ho- much inentory to )lan on bringing in each month o/ the #ea#on.
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P5,/ m,-.do</6: Planning mark(o-n# goe# han( in han( -ith )lanning inentorie#. / -e
)lan the (ate o/ the /ir#t #ea#onal mark(o-n be/ore the #ea#on een begin#, -e can )lan the
inentory -e -ant to hae on han( at that )oint in time, an( thu# our mark(o-n )ercentage,
a# -ell a# our mark(o-n #ale# be/ore our #econ( mark(o-n, a# -ell a# all #ub#e0uent
mark(o-n#.
P5,/ d/,mi2,55: >nce -eNe com)lete( our )re#ea#on )lanning, (onNt )ut it in a (ra-er
neer to be #een again. &#e that )lan a# a (ynamic tool to track the )rogre## o/ the #ea#on. A#
each -eek goe# by, an( #ale# tren(# begin to (eelo), a(u#t /uture #ale# )lan# accor(ingly,
an( a(u#t inentory )lan# /or tho#e u)(ate( #ale# )lan#. / #ale# are ecee(ing )lan, -e -ant
to be #ure -e hae the inentory to kee) the momentum going. @oner#ely, i/ #ale# are
coming u) #hort o/ )lan, the #ooner -e a(u#t our inentory )lan#, an( thu# our #che(ule(
recei)t#, the le## likely -e are to en( u) -ith ece## inentory that nee(# to be marke( (o-n
at #ea#onN# en(.
3he root cau#e o/ many inentory )roblem# /ace( by #mall retailer# i# the lack o/ a(e0uate
)re#ea#on #ale# an( inentory )lanning. t may #eem that thereN# neer enough time /or #uch
)lanning, a# i/ itN# a luury that u#t canNt be a//or(e(, but in reality, itN# a critical nece##ity, a
ital ine#tment in the /uture health o/ any #mall retailer.
3he tra(itional mo(el o/ egetable retailing in n(ia inole( egetable# being #ol( in #mall
<#tore#= on the roa(#i(e, an( there -ere no /ormal rule# regar(ing -eighing, bargaining an(
0uality i##ue#, let alone col( #torage an( #o)hi#ticate( #u))ly chain#. Pro(uce traelle(
#lo-ly an( ine//iciently through a #erie# o/ interme(iarie# be/ore reaching the han(# o/
cu#tomer#, #u//ering mark5u)#, -a#tage# an( 0uality lo##e# along the -ay. <Reliance Fre#h=
marketing mo(el o)erate# on a//or(ability an( a hygienic ambience along -ith a goo(
#ho))ing e)erience=, #ai( Muke#h Ambani, the @hairman o/ R. Reliance Fre#h inten(e(
to bring high 0uality /re#h /oo( to the cu#tomer# at an a//or(able )rice. Reliance Fre#h al#o
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-ante( to e#tabli#h a benchmark o/ hygiene an( 0uality in their #ale#. t thu# #ought to
)roi(e the con#umer a//or(able an( 0uality )ro(uce in a congenial an( )lea#ing
enironment an( en/orce( #tringent 0uality an( hygiene gui(eline# -hich -oul( hel) it bring
high alue to the con#umer.
T4e R,tio/,5e be4i/d t4e Su5 C4,i/ St-,te0 ,doted b Re5i,/2e F-e64 ,6 0i7e/ b
Re5i,/2e o33i2i,56:
<e -ill al-ay# buy /rom the /armer, almo#t neer /rom the man(i !-hole#aler#$,= #ai( a
grou) o//icial. For eam)le, the lea/y egetable#, aubergine#, tomatoe# an( green chillie# in
the one o/ the outlet# in Mumbai -ere #ource( (irectly /rom /armer# in nearby (i#trict#. 3hi#
in e//ect got tran#late( into lo-er )rice# by at lea#t 16 to 26. <ell be ery a//or(able
an( com)etitie in the market, but -e arenNt )laying a )rice game here. 3he /ull e//ort i# to
(elier alue to the cu#tomer,= #ai( @hie/ 7ecutie, @u#tomer >)eration#, K+ Oenugo)al.
Pro(uce /rom the /armer# came to Reliance# city (i#tribution centre, -hich connecte( t-o
ery (i//erent #i(e# o/ n(ia, the )oerty5ri((en country#i(e, #tee)e( in tra(ition, an( the
-ealthy city center#. <Alrea(y, a /e- hun(re( /armer# hae been hooke( on to the Reliance
Retail #u))ly chain. n the net /ie year#, that number -ill gro- to million#. 7en contract
/arming 4 by a##i#ting /armer# in )rocuring high50uality #ee(#, /ertili;er# an( other e##ential
ra- material# i# on the car(#. By going to the /armer (irectly, Reliance Retail ho)e( to
(i#inter me(iate the #u))ly chain an( eliminate -a#te. 3hi# meant /re#her )ro(uct# at lo-er
co#t=, rea#one( the #ame grou) o//icial.
PROCUREMENT PROCESS
Reliance /re#h obtain# it# goo(# locally an( nationally #o a# to (erie the be#t )o##ible
mileage in term# o/ 0uality, )rice an( ea#e o/ logi#tic#. Fruit#, egetable#, grain# an( other
agricultural item# come /rom Palakka(, Kerala. All other FM@* come# /rom central hub o/
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Reliance, 3hri##ur. Fruit# etc are thro-n a-ay 2 (ay# a/ter they are brought, -hile other
FM@* are ke)t till the e)iry (ate.
For egetable# Reliance Fre#h enter# into contract /arming -ith /armer# -here it )roi(e# the
/armer# -ith high 0uality #ee(# technical kno-ho- an( guarantee# a##ure( market /or their
)ro(uce at )rice higher than )realent in the man(i.
3here are 2 warehouses. >ne o/ them in locate( in @alicut city an( the other in
Ko;hinam)ara 3he#e -arehou#e# #u))ly goo(# to I #tore#. A# true -ith reliance it ha# trie(
to back-ar( integration #o a# to #ecure it# #u))ly an( bring in e//iciency in the #u))ly chain
/or thi# it ha#. hole#ale centre# not only #u))ly to it# #tore but al#o to other bu#ine##
concern#. 3hi# -a# (one #o a# the /armer# get a##ure( market an( Reliance i# able to lock in
it# #u))lier# by o//ering them a##ure( market. >ther /eature#:
"igher )rice# an( on5#)ot )ayment /or the )ro(uce to /armer#
A #o)hi#ticate( col( chain /acility an( #eeral truck# -hich are u#e( to )re#ere an(
#u))ly the egetable# a# (eman(
A huge )roce##ing com)le in Kochi ha# been built -hich can #u))ly u) to 12 #tore#
Reliance i# alrea(y the large#t #ingle Big Retail buyer o/ /re#h egetable# an( /ruit# in Kerala.
+oon, i/ not alrea(y, there coul( be other #uch big )layer# too, -ith their leaner, meaner
tentacle# (igging (ee) into the rural lan(#ca)e o/ a /oo(5, egetable5 an( /ruit5(e/icit +tate.
THE BASIC PROCUREMENT PROCESS
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STORES
*grading and standardization takes place here
Reliance /re#h )rocure# (i//erent )ro(uct# /rom (i//erent en(or# (e)en(ing u)on t-o main
/actor#: Quality an( )rice. 3he )ro(uct# are not )rocure( by in(ii(ual #tore#, but are
)rocure( at (i#trict or #tate leel (e)en(ing on the ty)e o/ )ro(uct. Peri#hable item# #uch a#
egetable#, /ruit#, (airy )ro(uct#, bakery item# etc are )rocure( at a (i#trict leel. 3hi#
en#ure# that each (i#trict ha# the authority to )rocure the )ro(uct# 0uickly at the chea)e#t
rate# )o##ible. >ther )ro(uct# -hich are non5)eri#hable -ith long #hel/ li/e are )rocure( by
the Reliance Fre#h merchan(i#ing (e)artment -hich -ork at the #tate leel. 3he #tate leel
)lacement o/ the merchan(i#ing (e)artment# although are not a# 0uick a# the (i#trict leel
)rocurer#, it en#ure# that bulk )urcha#e# /or the entire #tate gie the merchan(i#ing
(e)artment )rice negotiation )o-er#. 3he merchan(i#ing (e)artment )lace( at the #tate leel
i# hel)/ul in )roi(ing lo-er )rice# /or the )ro(uct# to the con#umer#.
PROCUREMENT STRATEGY
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Conr!cF!rmer"
Co))ec$onCenre
D$"r$#&$on
Cenre89!reho&"
e
Sore
S!)e"
69!"!'e40:;7
P-o2u-i/0 3-uit6 ,/d 7e0et,b5e6 ),0-i2u5tu-,5 e-i64,b5e68
Reliance i# the large#t #ingle big retail buyer o/ /re#h egetable# an( /ruit# in Kerala. Reliance
/re#h ha# an aim to )rocure egetable# an( other /arm )ro(uct# (irectly /rom /armer#. By
cutting out mi((lemen, their S1 )er centT commi##ion, loa(ing, unloa(ing an( tran#)ortation
charge# are re(uce(. 3hu# they /ollo- a )hilo#o)hy to <)ay /armer# more= an( <#ell /re#h
egetable# at eer lo-er )rice#= to urban cu#tomer#. 3hey al#o im)lement contract /arming to
en#ure #table #u))lie# o/ /ruit#, egetable# an( (airy )ro(uct#.
Su5 C4,i/ 3o- F-uit6 ,/d (e0et,b5e6
3he )ro(uce /rom /armer# i# collecte( at the @ollection @entre# !@@$. 3he @@ /or the
Kunnamangalam +tore i# at a )lace calle( Ko;hina)ara. A )reliminary Quality @heck i#
(one here.
From the @@, the goo(# are #ent to Di#tribution @entre# !D@$, -here they are #orte(
an(
gra(e(. "ere, all (ata i# entere( into the +AP #y#tem /or ea#y tracking.
7ery (ay, the #tore manager o/ each #tore rai#e# a )urcha#e or(er /or the net (ayN#
re0uirement# ba#e( on e#timate( (eman(. 3he total or(er /or all the #tore# in an area i#
collecte( by the Area@lu#ter Manager.
Ba#e( on the aailability o/ goo(#, the or(ere( item# are (eliere( to each #tore
by the Area Manager (aily.
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M!n&*!c&rer"
D$"r$#&$onCenre8
9!reho&"e
Sore
S!)e"
69!"!'e
203;7
Procuring on !ruits and "egetables
Su5 C4,i/ 3o- No/ F-uit6 ,/d (e0et,b5e6
tem# (irectly collecte( /rom Manu/acturer or %ational leel Di#tributor an( (eliere(
to
the local D@.
7ach #tore ha# a Minimum Ba#e Quantity !reor(er leel$ /or all item#
heneer the #tock goe# le##er than the MBQ, the +AP #y#tem automatically
reor(er#
# $loser %ook at $ontract !arming
t inole# a )re5agree( )rice bet-een the com)any an( the /armer, along -ith mea#ure# o/
0uality, 0uantity, acreage to be /arme(, an(or (uration o/ the contract. t )roi(e# #ecure
#u))lie#. Reliance, through the#e contract# i# giing /armer# in/ormation about ho- can
/armer# im)roe their )ro(uctiity, making them a-are o/ market rate# o/ (i//erent cro)# #o
that /armer# can choo#e cro)# they -ant to #o- to become )ro/itably an( al#o )roi(ing
technical hel) like in/ormation about 0uality o/ #ee(# an( /ertili;er#. Reliance Fre#h currently
)rocure# (i//erent kin(# o/ egetable# like carrot#, onion#, cabbage, cauli/lo-er etc.
#dvantages and &isadvantages of $ontract !arming
AD(ANTAGES DISAD(ANTAGES
Redu2e 5o,d o/ 2e/t-,5 ,/d 6t,te 5e7e5
-o2u-eme/t 66tem
Fear# hae been e)re##e( ,that the reection
rate o/ agricultural )ro(uce by retail chain# -a#
high. 3he /armer# then hae to bear the etra
co#t
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B-i/0 ,bout , m,-.et 3o2u6 i/ te-m6 o3 2-o
6e5e2tio/ b I/di,/ 3,-me-6
&n#uitable technology an( cro) incom)atibility
Ge/e-,te , 6te,d 6ou-2e o3 i/2ome ,t t4e
i/di7idu,5 3,-me- 5e7e5
Mani)ulation o/ 0uota# an( 0uality
#)eci/ication#?P-omote -o2e66i/0 = 7,5ue ,dditio/#
t4e-eb 0e/e-,ti/0 0,i/3u5 -u-,5
em5ome/t1
an( aailability con#traint#, +ocial an(
cultural con#traint#, Farmer (i#content, 7tra5
contractual marketing n)ut (ier#ion )o#e#
a )roblem /or cor)orate#
A22e66 to -e5i,b5e m,-.et61
#dvantages and &isadvantages of !arm to !ork Model
AD(ANTAGES DISAD(ANTAGES
Le,d6 to -emo7,5 o3 /o/;7,5ue ,ddi/0
i/te-medi,-ie6 3-om 6u5 24,i/
o## o/ em)loyment !interme(iarie#
Co6t -edu2tio/ %ee( /or large ine#tment#
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Redu2tio/ i/ 5e,d time
Redu2tio/ i/ i/te-medi,-ie6 5e,d6 to 5e66e-
<,6t,0e
'tems stocked
3hey #tock goo(# o/ both )riate label# an( other label#. 3he margin# on )riate label# ,
kno-n a# Reliance +elect, i# obiou#ly higher to the tune o/ a))roimately 6. 3he
)ro(uct# o/ other bran(# hae a #ale# margin in the range o/ 25226. 3here/ore it i# more
)ro/itable /or Reliance Fre#h to )romote it# o-n )riate label#. ith a #trong RelianceN
bran( name, the #tore# hae ery e//ectiely taken a(antage o/ it. 3hey )romote the )riate
label# -ell in the #tore# by giing them #u//icient #hel/ #)ace. 3he re#tocking o/ the #hele#
take# )lace a# an( -hen the re0uirement# call /or it. 3he con#umer behaior i# #tu(ie(, the
macro5economic /actor# analy;e( an( the (eman( i# thu# /oreca#te(. De)en(ing on the
/oreca#te( (eman(, the #tock# are )lace( in the #hele#. For mo#t item#, the #hele# are
re)leni#he( a# an( -hen they #eem to get ehau#te( -ith their #tock#.
sage of 'T for procurement
3he u#age o/ 3 #y#tem# ha# not )enetrate( (ee) into Reliance /re#h, e#)ecially at the
in(ii(ual #tore leel#. Almo#t all o/ the )rocurement re0uirement# are in#)ecte( an(
calculate( manually. "o-eer they hae m)lemente( +AP #olution on their #y#tem#.
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Reliance Fresh: Wastage
A# a #u)ermarket #ering cu#tomer# -ith ariety o/ item, Reliance /re#h al#o hae -a#tage#
on
arying leel# among#t (i//erent item#. 3he )ercentage -a#tage /or #ome o/ the#e are a#
/ollo-#:
%on /ruit# egetable# hae a #hel/ li/e (e)en(ent on )ro(uctN# e)iry (ate: .5 16
Fruit# an( egetable# haing a #hel/ li/e o/ 15 (ay#: U H6
+hrinkage (ue to (ryne## in /ruit# an( egetable# haing a #hel/ li/e o/ 152 (ay#: 6
3here/ore the maor #ource# o/ -a#tage# are /ruit# an( egetable#. Being etremely
)eri#hable item#, they nee( to be ke)t in re/rigerate( enironment. 3he inentory leel# are
ke)t at minimum leel #o that the -a#tage# are re(uce(.
uppl +elations
Pe-i64,b5e Item6:
F-uit6 = (e0et,b5e6
Pe-i64,b5e Item6:
D,i- P-odu2t6
Pe-i64,b5e Item6:
B,.e- Item6
No/;Pe-i64,b5e:
FMCG Good6
Co/t-,2t F,-mi/0 Partner #u))lier
relation#hi)
Multi)le +u))lier# "& P*,
Durable arm# lengthA-m6 5e/0t4 6u5ie- Milk i# (irectly Arm# ength #u))lier
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-e5,tio/64i )rocure( /rom
MILMA
relation#hi)
Dairy )ro(uct# /rom
Amul Milma
3he #tore /loor #)ace i# 55555555555555#0. /t. t i# #)rea( on only 1 /loor !groun( /loor$ o/ the
com)le. 3he in#i(e ie- o/ the #tore )lan i# (e)icte( in the block (iagram. 3he layout i#
ba#e( on the #imilar category o/ )ro(uct# #tacke( together.
A/,56i6
3here are t-o mail gate# to the #tore. >ne i# meant /or entry an( the other /or eit. n
multi)ro(uct retail #tore#, one ha# to #urren(er all the article# -hile getting into the #tore
through the entrance an( get the )urcha#e( article# eri/ie( at the eit. But thi# )ractice i# not
religiou#ly /ollo-e( in thi# #tore. @on#e0uently there i# a high )robability o/ #ho) li/ting.
1. A managerN# counter an( a re/rigerator at the entry (oor #ere no much )ur)o#e an(
re(uce the ae#thetic alue o/ the #tore.
2. 3here are ca#h counter# u#t at the entrance. 3here i# little #)ace /or the cu#tomer# to
#tan( in the 0ueue (ue to the )re#ence o/ #hele# ery near to the ca#h counter.
. 3here i# a large o)en /ri(ge on the right bay o/ the #tore. 3hi# i# u#e( /or #toring
)eri#hable item# like butter, chee#e, milk, /ruit# etc. n the /ront o/ the /ri(ge, there are
large container# /ille( -ith /ruit# an( egetable#. 3here i# a lot o/ rotten /ruit# an(
egetable lying in the container#. 3hi# leae# a negatie im)re##ion on the cu#tomer,
a# the term FRESH in the #tore name a))ear# a# a mi#nomer.
J. *oing /urther /rom the /ruit#egetable bay, there i# a huge #)ace (eote( to
grocerie#. 3hi# i# -ell arrange( an( #ere# the cu#tomer nee(# -ell. Al#o a ne- rack
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ha# been a((e( -hich (i#)lay# )ackage( grocerie# by RELIANCE it#el/. 3hi# i# a
goo( moe to )romote #el/5o-ne( bran(#.
. 3he en( o/ the le/t bay ha# a huge rack containing e(ible oil )acket#. 3hi# i# (one to
#a/eguar( other )ro(uct# /rom oil #)illage.
I. A# -e moe /rom the grocery #)ace to the net bay on the right, -e can /in( FM@*#
like chi)#, noo(le#, chocolate#, namkeen, etc. 3he#e are highly #ol( item# an( are
#trategically )lace( at the center o/ the #tore. 3he #hel/ #)ace (eote( to )otato chi)#
an( #tu// like that #eem# too much though.
H. 3he net bay on the right i# (eote( to FM@* (aily care )ro(uct# like #haing
acce##orie#, talc, (eo(orant, #oa), gel#, #ham)oo etc. All the bran(# are ke)t together
(ue to limitation o/ #)ace. 3hi# area i# one o/ the mo#t cro-(e( (ue to the nature o/
the )ro(uct#. 3he back #i(e bay con#i#t# o/ hou#ehol( )ro(uct# like broom#, bucket#,
(oormat# etc.
8. 3he la#t bay i# highly unorgani;e( an( carrie# )ro(uct# arying /rom uten#il# to cloth
to /oot -are to ice5cream. 3hi# bay i# one o/ the lea#t i#ite( in the #tore. 3he #)ace
(eote( to )ro(uct# here i# too much.
C. %ear one o/ the billing counter#, there i# a rack containing ho#iery item#. 3hi# gie#
the #tore a ery )oor look. 3he garment# are not -ell arrange( an( are o/ten hanging
aroun( the #hel/.
1. 3here i# a maga;ine #tan( an( chocolate #hel/ near one o/ the billing counter#. 3hi# i#
goo( a# )eo)le u#ually en( u) buying #uch #tu// -hile going out.
11. A lot o/ loo#e container# containing material /or #ale are /oun( lying here an( there in
the #tore. 3hi# i# hugely (ue to limite( /loor #)ace.
12. 3he outer )arking #)ace i# ery inconenient (ue to uneenne## o/ the lan(.
Re2omme/d,tio/6
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1. e #ugge#t a )ro)er entry eit mechani#m -ith guar( al-ay# on (uty.
2. 3he managerN# counter #houl( be remoe( /rom near the entry gate an( )lace( at the
en( o/ the #tore.
. +ome #)ace ha# to be create( /or billing 0ueue /ormation.
J. t ha# to be en#ure( that the /ruit# an( egetable #houl( be o/ better 0uality an( rotten
material i# imme(iately remoe( /rom the #hel/.
. Beerage#, chee#e, butter, milk etc. #houl( be arrange( in a i#ually a))ealing
manner.
I. n#tea( o/ )roi(ing too much #hel/ #)ace to chi)# an( namkeen, a mechani#m can be
(eice( to han( the#e )acket#.
H. 3he toiletrie# #houl( be #egregate( ba#e( on bran(# an( arrange( accor(ingly.
8. 3he la#t bay nee(# com)lete re#tructuring. A #hoe (i#)laying rack #houl( be in#talle(.
C. ce5cream #ection #houl( be brought near the counter, in(ucing more #ale -hile eit.
1. 3he ho#iery rack /rom near the eit (oor #houl( be remoe( an( )lace( in the la#t
bay.
11. Fre0uent cleaning o/ the /loor #)ace i# #ugge#te( to aoi( (irty look o/ the #tore.
12. 3he )arking area #houl( be leele( to cau#e conenience.
1. A baggage counter -ith token #y#tem #houl( be in#talle(. 3he entry gate guar( can
take care o/ tran#action#.
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EMPLOYEE SCHEDULING
Reliance Fre#h in Kunnamangalam /ollo-# a ery rigi( em)loyee #che(uling #y#tem. 3he
rea#on i# that they cannot kee) em)loyee# on ariable rate# an( -age#.
3ime %o. o/ 7m)loyee# in the #toreH:51I: 1 Manager L H #ale# )eo)le
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1:521: 1 A+M L H +ale# )eo)le
1:51I: nentory unloa(ing time
PAYMENT OPTIONS
C6 tran#action# are on ca#h. Oery /e- tran#action# take )lace on car(. 3he -orker# hae
/ie( monthly #alary ba#e( )ayment #y#tem.
POINT OF SALE SYSTEM
Poi/t o3 6,5e !POS$ or 24e2.out i# the location -here a tran#action occur#. A 9checkout9
re/er# to a P>+ terminal or more generally to the har(-are an( #o/t-are u#e( /or checkout#,
the e0uialent o/ an electronic ca#h regi#ter. A P>+ terminal manage# the #elling )roce## by a
#ale#)er#on acce##ible inter/ace. 3he #ame #y#tem allo-# the creation an( )rinting o/
the recei)t.
3here i# 1 billing counter in the #tore. 3he #econ( one i# em)loye( (uring )rime time i.e.
: to H. 3he thir( one i# al#o o)ene( u) in ca#e the 0ueue get# bigger. 3hey u#e +AP /or
their billing actiitie#. 3he billing #y#tem gie# (etail# o/ )ro(uct #ol( to the central #erer
an( the central #erer /oreca#t# the )ro(uct# to be #u))lie(. 3hi# hel)# in kee)ing track o/
aailable inentory in the #tore. +uch com)ile( (ata hel)# in generating #tatu# re)ort#, log# in
the rate o/ #ale o/ the )ro(uct# -hich hel)# in analy;ing in/ormation /or other )ur)o#e#. 3he
)roce## inole( in billing i# a# /ollo-#:
• @u#tomer )ut# the ba#ket onto the counter
• 3he billing a##ociate u#e# the bar5co(e rea(er to u)loa( the in/ormation o/ the lot no.,
batch no. an( )rice o/ the item into the #toreN# +AP. 3hi# in/ormation i# al#o u#e( to
)re)are the cu#tomerN# inoice. +imultaneou#ly, he kee)# )utting the item# into a
)la#tic carry bag in or(er to re(uce -aiting time
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• For )ayment o/ bill the cu#tomer i# gien 2 o)tion#5 ca#h or cre(it(ebit car( )ayment
• 3he cu#tomer i# gien a co)y o/ the bill inoice an( the )acke( item#
•
3he cu#tomer get# the bill inoice an( item# eri/ie( by the guar( #tan(ing at the eit
-ho #tam)# the bill u)on eri/ication
BOTTLENECK AT BILLING COUNTER
Billing @ounter Queue: 3he cu#tomer -ait time i# aroun( 25 minute# (uring normal time#.
"o-eer at )eak time, it increa#e# to 5I minute#.
RECOMMENDATIONS
@u#tomer# can be )roi(e( -ith o-t,b5e b,- -e,de-6 an( hence the time taken to #ere
a cu#tomer -ill get re(uce(
P+,-
t i# a time #aing )roce##. @u#tomer# nee( not -ait in long 0ueue# getting their item#
checke(
t hel)# in maintaining accurate inentory control
$,-
3he cu#tomer# might not be a-are o/ ho- to u#e the #canner an( thu# can cau#e a lot
o/ )roblem# an( eentually a(( to the (elay.
>)erate t<o bi55i/0 2ou/te-6 at all time# an( em5o t4e t4i-d o/e (uring e,. time
P+,-
7a#ie#t -ay to re(uce -aiting time
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$,-
A((itional #ta// member i# re0uire( to be )re#ent at the a((itional billing counter
S,5e6 -omotio/ too56 #houl( be a(erti#e( at the billing counter#5 hile the cu#tomer i#
-aiting /or the bill to be )re)are(, he can be )roi(e( -ith #ale# )romotion tool# #uch a#
cou)on# -hich can be re(eeme( by him (uring the net i#it. n ca#e o/ any (oubt#, he
can get them cleare( at that )oint o/ time it#el/ by the billing a##ociate.
L1 IN(ENTORY MANAGEMENT
Sto-,0e A-e,
A #mall #torage area i# aailable )er #tore (e)en(ing u)on the /oreca#t )roi(e( by
the manager o/ the #tore. 3he /oreca#t nee(# to be accurate a#:
o arge inentory can a(( to the #torage co#t
o ay too much o/ inentory can al#o a(( to -a#tage i/ )eri#hable item# are
high in 0uantity
o e## inentory may a(( to (i#a(antage a# #ale# /igure# -oul( go (o-n
3he /oreca#t ha# to be gien t-o (ay# )rior by the #tore manager to the #u)eri#or,
an( then #u))lie# o/ goo(# take )lace.
Thus. time lag between demand and suppl of goods / 2 das
Di6t-ibutio/ A-e,
!ruit and vegetables 0 Perishable 'tems
o Di#tributor : Pallaka(
o 7ntry at #tore : C:AM
o &nloa(ing time : 152 minute#
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o nentory )re(iction /rom #ale# an( (eci(e( by "ea( >//ice
,ther products1 on Perishable
o Di#tributor : 3ri##ur
o 7ntry at #tore : bet-een 1 AM to JPM,
o &nloa(ing time : Minute#
C25e o3 -e5e/i64me/t
3he cycle o/ re)leni#hment o/ #tore# -ith the )ro(uct# /rom the -arehou#e# ha))en#
on a (aily ba#i#.
Fruit# etc are thro-n a-ay 2 (ay# a/ter they are brought !)roi(e( they )eri#h$, -hile
other FM@* are ke)t till the e)iry (ate ha# come.
3hi# i# calle( the !resh model an( lea(# to /a#ter turnoer o/ the inentory #ince the
e)ecte( cu#tomer i#it to #tore# /or re)leni#hment o/ item# i# t-ice a -eek an( t-ice
in a month in ca#e o/ #tu(ent# o/ M K.
3hu#, the #tore #houl( maintain inventor re3uirement of one da.
3he small storage area i# re)leni#he( in the morning.
3he #hele# are #tocke( (uring -orking hour# a# an( -hen re0uire(.
3he entire #ta// at Reliance Fre#h -ork# a# a cohe#ie team -orking /or cu#tomer
#ati#/action.
3he )eri#hable item# #uch a# egetable#, /ruit#, (airy )ro(uct# an( bakery item# are
#tocke( /re#h (aily into the #hele#.
>ther FM@* goo(# -ith longer #hel/ li/e are re)leni#he( a# an( -hen re0uire(. 3he
rate o/ re)leni#hment arie# /or each )ro(uct.
E>i-ed 0ood6 ,/d item6
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Many a time#, the )eri#hable an( non5)eri#hable item# e)ire -ithout being #ol(.
Reliance Fre#h al-ay# #trie# to maintain goo( 0uality /re#h )ro(uct# /or
cu#tomer #ati#/action, hence any e)ire( #tock i# (um)e(.
>n an aerage, 86 o/ the /oo( item# are (um)e( by the Reliance Fre#h #tore at
Kunnamangalam, @alicut.
@ertain item# -hich reach their e)iry (ate are taken back by the #u))lier#. 3he#e
inclu(e item# #uch a# bakery item#, an( certain (airy )ro(uct#.
n other ca#e#, the #tock i# (um)e(.
"ence, Reliance Fre#h en#ure# that the )ro(uct# in the #tore# are o/ goo( 0uality
an( hence Fre#hne##N #tan(# a# their &+P
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CLASSIFICATION OF CUSTOMERS
3he #ource o/ reenue /or reliance /re#h i# cu#tomer# an( a #tu(y ba#e( on cla##i/ication o/
ariou# cu#tomer# i# nece##ary to hae an un(er#tan(ing about the o)eration# a##ociate( -ith
it. +o @u#tomer# may be cla##i/ie( on the ba#i# o/
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Time o3 ,--i7,5
e hae ob#ere( a larger number o/ cu#tomer# coming bet-een to H: )m. +ome
cu#tomer# are more intere#te( in coming (uring holi(ay#. 3he#e cu#tomer# are -orking
)eo)le an( are earning member# o/ their /amily, -hich i# the rea#on -hy they (o not come in
o//ice hour#. 3hi# category (oe# maimum )urcha#e at the #ho).
Lo,5 Cu6tome-6
7en though the #ho) i# ne-, #ome cu#tomer# are loyal to the #ho) #ince the beginning. But
loyalty i# challenge( by the /act that the large#t chunk o/ cu#tomer# are #tu(ent# o/ M5K. +o
eery year aroun( o/ cu#tomer# are lo#t !a/ter they )a## out o/ the in#titute$ an( a
)ro#)ectie cu#tomer# !ne- #tu(ent# $are in aailable to be ma(e loyal cu#tomer#. n
other -or(# Reliance Fre#h kunnamangalam cannot #it back, con#i(ering that they hae a #et
o/ loyal cu#tomer#. +o regular large #cale marketing like (i#tribution o/ )am)hlet# an( other
-ork# nee(# to be (one. 3o ta) more loyal cu#tomer# Reliance /re#h hae o//ere( loyaly
car(#, -hen eer ne- )urcha#e# i# (one u#ing loyalty car(# #ome )oint# are re(eeme( to each
car( (e)en(ing u)on the )urcha#e he (i(.&)on reaching a )articular leel the cu#tomer i#
allo-ee( to make a /ree )urcha#e -orth 2 R#.
B,6.et 6e0me/t,tio/
@u#tomer# can al#o be #egregate( on the ba#i# o/ the amount o/ )ro(uct# they )urcha#e5 i(e
market cu#tomer# !(e)en( on the #tore or all )urcha#e#$, an( narro- market cu#tomer# !they
)urcha#e only a /e- item# /rom the #ho)$. Main agen(a o/ the /irm i# to retain all -i(e
market cu#tomer# an( conert all narro- ba#ket cu#tomer# to -i(e market cu#tomer#.
A0e 0-ou 6e0me/t,tio/
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@u#tomer# -ho are ol(er than are calle( ol( age cu#tomer#, -hile other# are calle( ne-5
age cu#tomer#. %e- age cu#tomer# -ant a ariety o/ bran(# an( their (eman( cannot be
)re(icte( ea#ily, -hile ol(5 age cu#tomer# are com/ortable -ith their bran(#. Pre(icting their
(eman( i# 0uite ea#y. %e- age cu#tomer# ho-eer are com/ortable in te#ting ne- )ro(uct#
an( o/ten they are the one# -ho (etermine the amount o/ #hel/ #)ace gien to ne- )ro(uct#..
ith a large chain o/ outlet#, reliance /re#h can een hel) the manu/acturer# )re(ict the
iability o/ )ro(uct#.
COST BENEFIT ANALYSIS
3he )ro(uct mi at reliance /re#h con#i#t# mainly o/ /ruit# an( egetable#, FM@*!Rea(y5to5
eat#, toiletrie#$ , #ta)le# an( other non5FM@* goo(#.
3he reliance5/re#h outlet# are being u#e( by reliance to )romote their in5hou#e )riate label
Reliance +electN. 3hi# i# a gro-ing tren( acro## all maor retail chain# like More !A(itya
Birla *rou)$, Big Ba;aar!PR$ etc.
a$ Reliance Fre#h )roi(e# le##er #)ace to -ell kno-n bran(# -hich are in(u#try lea(er#
in the #ta)le# category -hich inclu(e# rice, tea, co//ee, #ugar an( other agro )ro(uct#.
b$ 3hey )roi(e huge #hel/5#)ace to Reliance5+elect
c$ 3hey )roi(e the#e #ta)le# at a rate #lightly lo-er than the )o)ular bran(# an( gie
tough com)etition.
($ n thi# -ay, they are getting higher margin# on their )ro(uct#.
e$ 3he cu#tomer# -ho come to (o bulk #ho))ing are entice( to buy the#e )ro(uct# /rom
Reliance Fre#h.
3he en(5re#ult i# the gro-th o/ in5hou#e bran(, higher margin an( an entry into the market
#hare o/ eer5e)an(ing an( lucratie /oo( retail #ector.
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3he FM@* )ro(uct# #uch a# )roi(e better to #u)er5#tore# than to #mall retailer#. 3hi# make#
it )ro/itable to #tore in a much larger 0uantity. 3hu# o//er# like Buy >ne *et one, Di#count#
etc are )o##ible in thi# category. Maimum #hel/ #)ace i# (e(icate( to rea(y5to5eat category
to cater to the community at MK. 3he maimum reenue come# /rom thi# category.
3he /ruit# an( egetable# are )rocure( (irectly /rom /armer# eliminating the mi((le men to
the maimum etent )o##ible an( increa#e the margin. "o-eer, the /re#hne## i# heaily
com)romi#e( (uring the )rocurement an( mo#t o/ the /ruit# aailable at #tore are rotten.
<imately, the rotten /ruit# are (i#)o#e( -ithout any bene/it to the #tore. 3he co#t can be
)rogre##iely re(uce( a# the /ruit# become #tale. n#tea( o/ kee)ing 1Kg o/ rotten a))le# /or
1R# )er Kg, it can be #ol( /or 1 to R# le## eery(ay to kee) the inentory moing.
3he other non5FM@* item# inclu(e ho#iery, /oot-ear, clothe# etc -hich are totally unrelate(
to the /oo( retail in(u#try -hich i# )rimary /ocu# o/ Reliance Fre#h. 3he #ale# o/ thi# #ection
are unimaginably lo- -hile it continue# to occu)y unu#ti/iably #igni/icant amount o/ #hel/
#)ace. 3hi# #)ace can be utili#e( /or more FM@* )ro(uct# or #)rea(ing out the ei#ting
layout to occu)y thi# #)ace. 3hi# -oul( make it com/ortable to -alk aroun( the #tore an( al#o
hel) earn better )ro/it# )er unit #hel/ #)ace aailable.
S'OT ANALYSIS
St-e/0t4
>nly #u)ermarket -ithin kilometer# o/ Kunnamangalam. t ha# a #trong )re#ence among
young )eo)le -ho are bran( con#ciou#. Due to the technological a(ancement o/ Reliance,
they al#o hae mo#t mo(ern #o/t-are like +AP -hich can )re(ict the (eman( on the ba#i# o/
)urcha#e#. 3he #ho) al#o #ell# /ruit#, egetable#, @on/ectionarie#, #tationerie# an( other all
hou#ehol( item#. Quality i# maintaine( -ith utmo#t care, /ruit# an( egetable# are
re/rigerate(.
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'e,./e66
nability to )urcha#e item# ba#e( on local (eman( ha# been an i##ue, a# mo#t item# are
(eliere( on the ba#i# o/ +AP out)ut. Al#o the 0ueuing o/ )ayment counter i# not (one
#cienti/ically. @ertain item# like local #nack# are #ol( at a )rice (etermine( by the (i#trict
o//ice an( not the #ho), an( it i# al-ay# /oun( to be more than that com)are( to a ty)ical
neighborhoo( bakery.
Oo-tu/it
I #tu(ent# an( another 1 #ta// member# o/ MK are a grou) o/ bran( con#ciou# )eo)le,
an( their (eman( cannot be #ati#/ie( by other #ho)# in the area. +o they are com)elle( to
come to reliance /re#h /or all their )urcha#e#.
T4-e,t6
3he #ho) ha# no i#ibility a# it i# in a #ub roa(. Al#o there i# no boar( on the roa( /or ne-
)eo)le to /in( it. Another )roblem i# the )re#ence o/ #ociali#t an( communi#t )artie# in the
region. 3here i# lot o/ ma## organi;e( agitation an( rallie# again#t #ho)# run by cor)orate,
#ince )eo)le )erceie it a# a Bourgeoi# attem)t to unem)loyN #mall #ho) kee)er#. +o /or
)olitical rea#on#, the o)eration# o/ #ho) may be (i#ru)te( or een the #ho) coul( be in a
(anger.
RECOMMENDATION = CONCLUSION
3here i# a nee( to re-ork the /arm to /ork mo(el. Peri#hable goo(# nee( a #trategy that
combine# re#)on#iene## -ith e//iciency a# 16 lo##e# are ob#ere( globally in )eri#hable
item# -ithin the #u))ly chain. Deman( /oreca#t nee(# to be more accurate in thi# ca#e.
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Di#count #elling i# ie-e( negatiely by cu#tomer# -ho /in( thi# again#t the Fre#hN motto o/
Reliance Fre#h. 3hey hae been unable to achiee #u//icient olume# -hich hae le( them to
limit the number o/ o//ering#. &#e local #u))lier# to re(uce lo##e# /rom #)oilage. 3hi# -ill
allo- them to or(er more /re0uently an( allo- management o/ ariation# in (eman(. n
a((ition, gra(ation an( #tan(ar(i;ation o/ the )ro(uce i# al#o a challenge
Prime (rier o/ o)erational #trategy -a# Farm5to5Fork )lan o/ Reliance. t (e)en(# u)on
#elling the -hole FM@* )ro(uct# at lo-er )rice than the market, )roi(ing com)lete FB
!/oo(# an( beerage#$ range to the con#umer#, )roi(ing a mi o/ conenience an( goo(
ambience to #ho))er#, #ourcing the egetable# nationally an( #elling at lo-er )rice# than
market !thi# #trategy ha# change( #igni/icantly oer the year# to moe to local #ourcing$,
obtaining aggre##ie (i#count# by )romi#ing huge olume# to the FM@* goo(# )ro(ucer#
an( #ecuring the #u))ly chain /or /oo( !egetable# an( cereal#$ by entering into contract
(irectly -ith the /armer# eliminating mi((le man ntro(uction o/ 3 in #ourcing, or(ering,
billing an( re)ort generation.
3he organi;e( retail #ector in n(ia i# #et to gro- e)onentially in the coming month# an(
year#. +treamlining the #u))ly chain i# a maor key in #ucce##e# o/ retail )layer#.
Procurement #trategy mu#t be #treamline( accor(ing to market an( (eman(. nentory
management i# a key i##ue /or all retail chain#. 3 #ere# a# a great enabler /or #u))ly chain
o)timi;ation. +u))lier relation#hi)# are critical in the long term. Priate label# #houl( be
nurture( a# a gro-th (rier through #u))lier )artner#hi)#
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RECOMMENDATION AND CONCLUSION
So5utio/ = Re2omme/d,tio/6
• C-o66 Do2.i/0 * *ra(ing o/ the /arm )ro(uce #houl( be moe( to collection center#
/rom (i#tribution center#. 3hi# -ill allo- cro## (ocking o/ the /arm /re#h )ro(uct# an(
non5)eri#hable )ro(uct#.
• Sto-e I/7e/to- M,/,0eme/t ; currently reliance /re#h re0uire# #tore# to )roi(e the
(i#tribution center# -ith (aily /oreca#t#. %o-, thi# can in(uce bull-hi) e//ect at the
(i#tribution center leel cau#ing high (eiation# in inentory leel# at the -arehou#e.
Reliance Fre#h can u#e an a))roach o/ #tore inentory management /or all o/ the
#tore# )ro(uct# both )eri#hable an( non5)eri#hable. 3hey can al#o o)t /or con#en#u#
a))roach bet-een the clu#ter manager# at the (i#tribution center# an( #tore manager#
to arrie at /oreca#t#. 3hi# -oul( allo- them to manage their inentory e//iciently an(
re(uce bull-hi) e//ect acro## the chain.
• E7e-d, 5o< -i2i/0 * reliance /re#h at time# )roi(e# )ro(uct# at (i#count#. 3hi#
in(uce# it# cu#tomer# to buy more -hen the )rice i# lo- an( buy le## -hen the )rice
i# high. Rather reliance /re#h can try to #tabili;e the )rice leel# an( )roi(e an
eery(ay lo- )rice to the en( cu#tomer#. 3hi# -oul( al#o hel) to re(uce the bull-hi)
e//ect an( im)roe the #u))ly chain e//iciency.
P-o2u-eme/t 6t-,te0 * reliance /re#h #houl( a((itionally /ocu# on incentii;ing #u))lier#
to )ro(uce cro)# on rotation ba#i# through long term contract#. 3hi# -oul( allo- better
0uality )ro(uce -ith le##er tran#)ortation co#t#
RECOMMENDATION = CONCLUSION
3here i# a nee( to re-ork the /arm to /ork mo(el. Peri#hable goo(# nee( a #trategy that
combine# re#)on#iene## -ith e//iciency a# 16 lo##e# are ob#ere( globally in )eri#hable
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item# -ithin the #u))ly chain. Deman( /oreca#t nee(# to be more accurate in thi# ca#e.
Di#count #elling i# ie-e( negatiely by cu#tomer# -ho /in( thi# again#t the Fre#hN motto o/
Reliance Fre#h. 3hey hae been unable to achiee #u//icient olume# -hich hae le( them to
limit the number o/ o//ering#. &#e local #u))lier# to re(uce lo##e# /rom #)oilage. 3hi# -ill
allo- them to or(er more /re0uently an( allo- management o/ ariation# in (eman(. n
a((ition, gra(ation an( #tan(ar(i;ation o/ the )ro(uce i# al#o a challenge
Prime (rier o/ o)erational #trategy -a# Farm5to5Fork )lan o/ Reliance. t (e)en(# u)on
#elling the -hole FM@* )ro(uct# at lo-er )rice than the market, )roi(ing com)lete FB
!/oo(# an( beerage#$ range to the con#umer#, )roi(ing a mi o/ conenience an( goo(
ambience to #ho))er#, #ourcing the egetable# nationally an( #elling at lo-er )rice# than
market !thi# #trategy ha# change( #igni/icantly oer the year# to moe to local #ourcing$,
obtaining aggre##ie (i#count# by )romi#ing huge olume# to the FM@* goo(# )ro(ucer#
an( #ecuring the #u))ly chain /or /oo( !egetable# an( cereal#$ by entering into contract
(irectly -ith the /armer# eliminating mi((le man ntro(uction o/ 3 in #ourcing, or(ering,
billing an( re)ort generation.
3he organi;e( retail #ector in n(ia i# #et to gro- e)onentially in the coming month# an(
year#. +treamlining the #u))ly chain i# a maor key in #ucce##e# o/ retail )layer#.
Procurement #trategy mu#t be #treamline( accor(ing to market an( (eman(. nentory
management i# a key i##ue /or all retail chain#. 3 #ere# a# a great enabler /or #u))ly chain
o)timi;ation. +u))lier relation#hi)# are critical in the long term. Priate label# #houl( be
nurture( a# a gro-th (rier through #u))lier )artner#hi)#
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ANALYSIS
3here are t-o mail gate# to the #tore. >ne i# meant /or entry an( the other /or eit. n
multi)ro(uct retail #tore#, one ha# to #urren(er all the article# -hile getting into the #tore
through the entrance an( get the )urcha#e( article# eri/ie( at the eit. But thi# )ractice i# not
religiou#ly /ollo-e( in thi# #tore. @on#e0uently there i# a high )robability o/ #ho) li/ting.
13.A m!n!'er<" co&ner !nd ! re*r$'er!or ! he enr( door "er%e no m&ch
p&rpo"e !nd red&ce he !e"he$c %!)&e o* he "ore.1.There !re 3 c!"h co&ner" &" ! he enr!nce. There $" )$)e "p!ce *or he
c&"omer" o "!nd $n he /&e&e d&e o he pre"ence o* "he)%e" %er( ne!r
o he c!"h co&ner.
14.There $" ! )!r'e open *r$d'e on he r$'h #!( o* he "ore. Th$" $" &"ed *or
"or$n' per$"h!#)e $em" )$+e #&er= chee"e= m$)+= *r&$" ec. In he *ron o*
he *r$d'e= here !re )!r'e con!$ner" >))ed ?$h *r&$" !nd %e'e!#)e".
There $" ! )o o* roen *r&$" !nd %e'e!#)e )($n' $n he con!$ner". Th$"
)e!%e" ! ne'!$%e $mpre""$on on he c&"omer= !" he erm FRESH $n he
"ore n!me !ppe!r" !" ! m$"nomer.15.@o$n' *&rher *rom he *r&$"8%e'e!#)e #!(= here $" ! h&'e "p!ce de%oed
o 'rocer$e". Th$" $" ?e)) !rr!n'ed !nd "er%e" he c&"omer need" ?e)).
A)"o ! ne? r!c+ h!" #een !dded ?h$ch d$"p)!(" p!c+!'ed 'rocer$e" #(
RELIANCE $"e)*. Th$" $" ! 'ood mo%e o promoe "e)*0o?ned #r!nd".1:.The end o* he )e* #!( h!" ! h&'e r!c+ con!$n$n' ed$#)e o$) p!c+e". Th$"
$" done o "!*e'&!rd oher prod&c" *rom o$) "p$))!'e.1.A" ?e mo%e *rom he 'rocer( "p!ce o he ne #!( on he r$'h= ?e c!n
>nd FMC@" )$+e ch$p"= nood)e"= choco)!e"= n!m+een= ec. The"e !re h$'h)(
"o)d $em" !nd !re "r!e'$c!))( p)!ced ! he cener o* he "ore. The "he)*
"p!ce de%oed o po!o ch$p" !nd "& )$+e h! "eem" oo m&ch ho&'h.1.The ne #!( on he r$'h $" de%oed o FMC@ d!$)( c!re prod&c" )$+e
"h!%$n' !cce""or$e"= !)c= deodor!n= "o!p= 'e)"= "h!mpoo ec. A)) he
#r!nd" !re +ep o'eher d&e o )$m$!$on o* "p!ce. Th$" !re! $" one o* he
mo" cro?ded d&e o he n!&re o* he prod&c". The #!c+ "$de #!(
con"$"" o* ho&"eho)d prod&c" )$+e #room"= #&c+e"= doorm!" ec.2.The )!" #!( $" h$'h)( &nor'!n$ed !nd c!rr$e" prod&c" %!r($n' *rom
&en"$)" o c)oh o *oo ?!re o $ce0cre!m. Th$" #!( $" one o* he )e!"
%$"$ed $n he "ore. The "p!ce de%oed o prod&c" here $" oo m&ch.21.Ne!r one o* he #$))$n' co&ner"= here $" ! r!c+ con!$n$n' ho"$er( $em".
Th$" '$%e" he "ore ! %er( poor )oo+. The '!rmen" !re no ?e)) !rr!n'ed
!nd !re o*en h!n'$n' !ro&nd he "he)*.
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22.There $" ! m!'!$ne "!nd !nd choco)!e "he)* ne!r one o* he #$))$n'
co&ner". Th$" $" 'ood !" peop)e &"&!))( end &p #&($n' "&ch "& ?h$)e
'o$n' o&.23.A )o o* )oo"e con!$ner" con!$n$n' m!er$!) *or "!)e !re *o&nd )($n' here
!nd here $n he "ore. Th$" $" h&'e)( d&e o )$m$ed oor "p!ce.
3he outer )arking #)ace i# ery inconenient (ue to uneenne## o/ the lan(.
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ANNE+URE
Que#tionnaire )re)are( For @om)any >//icial:
17 9h! (pe o* "r!e'( do (o& &"e *or d$"r$#&$on *or (o&r ?$de r!n'e o*
prod&c"G27 Are (o& h!%$n' d$"r$#&$on $n ?ho)e o* Ind$!G 9h! $" re!ch o* (o&r
prod&c"G37 Doe" he comp!n( cond&c proper $nd&c$on pro'r!mme *or ne? ch!nne)"7 9h( do (o& h$n+ h$" "r!e'( $" per*ec *or d$"r$#&$on o* (o&r prod&cG47 Are here !n( pro#)em" !""oc$!ed ?$h h$" (pe o* d$"r$#&$on "r!e'(G57 Do (o& h$n+ #( &"$n' h$" Sr!e'( (o& !re !#)e o re!ch (o&r h$'he"
c&rren !" ?e)) !" poen$!) m!r+eG