Derivatives

Introduction :

Derivatives are financial instruments whose value changes in response to the changes in underlying variables. The main types of derivatives are futures, forwards, options, and swaps

A financial instrument whose characteristics and value depend upon the characteristics and value of an underlier, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline. These techniques can be quite complicated and quite risky.

The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility.

Types of derivatives:

Following re major types of financial derivatives;

Forwards:

A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at today's pre-agreed price.

A Forward Contract is a way for a buyer or a seller to lock in a purchasing or selling price for an asset, with the transaction set to occur in the future. In essence, it is a financial contract obligating the buyer to buy, and the seller to sell a given asset at a predetermined price and date in the future. No cash or assets are exchanged until expiry, or the delivery date of the contract. On the delivery date, forward contracts can be settled by physical delivery of the asset or cash settlement.

Forward contjracts are very similar to futures contracts, except they are not marked to market, exchange traded, or defined on standardized assets. Forward contracts trade over the counter (OTC), thus the terms of the deal can be customized to fit the needs of both the buyer and the seller. However, this also means it is more difficult to reverse a position, as the counterparty must agree to canceling the contract, or you must find a third party to take an offsetting position in. This also increases credit risk for both parties.

Futures:

 A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts.

Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures.

Options:

Option contracts give trade hedgers and investors a more flexible alternative to futures as a means of trading on the Exchange. When buying an options contract, the purchaser (taker) is not entering into a firm obligation. They are simply buying a choice of action. This choice allows the genuine trade hedger the opportunity of locking in a fixed price while maintaining the ability to abandon the option in order to take advantage of favourable price movements. This would be forfeited with a straight futures hedge.

A call option is a contract giving its owner the right but not the obligation to buy an  futures contract(s) at a fixed price (strike price) at any time on or before a given date.

A put option is a contract giving its owner the right but not the obligation to sell and  futures contract(s) at a fixed price (strike price) at any time on or before a given date.

The cost of purchasing the option is referred to as the premium and, unless the option is traded on, this is a write-off. It is not part of the value of the underlying futures contract. This means it is down to the user's perception of the market and the cost of the option as to whether they choose to use futures or options as their hedging medium.

Swaps:

Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. A kind of financial transaction which has many variations, usually highly complex. They generally involve a simultaneous exchange of assets (the swap) by counterparties for other different assets of comparable value. The assets may be commodities or they may be financial instruments involving interest rates, cash flows, foreign exchange, debts or equities. In addition to financial profits, the swaps have many purposes such as limiting risks, overcoming restrictions in certain markets, or balancing portfolios.

They can be regarded as portfolios of forward contracts. The two commonly used swaps are:

•           Interest rate swaps: 

An interest rate swap is a contractual agreement entered into between two counterparties under which each agrees to make periodic payment to the other for an agreed period of time based upon a notional amount of principal. The principal amount is notional because there is no need to exchange actual amounts of principal in a single currency transaction: there is no foreign exchange component to be taken account of. Equally, however, a notional amount of principal is required in order to compute the actual cash amounts that will be periodically exchanged.

Under the commonest form of interest rate swap, a series of payments calculated by applying a fixed rate of interest to a notional principal amount is exchanged for a stream of payments similarly calculated but using a floating rate of interest. This is a fixed-for-floating interest rate swap. Alternatively, both series of cash flows to be exchanged could be calculated using floating rates of interest but floating rates that are based upon different underlying indices. Examples might be Libor and commercial paper or Treasury bills and Libor and this form of interest rate swap is known as a basis or money market swap.

If we consider the generic fixed-to-floating interest rate swap, the most obvious difficulty to be overcome in pricing such a swap would seem to be the fact that the future stream of floating rate payments to be made by one counterparty is unknown at the time the swap is being priced. This must be literally true: no one can know with absolute certainty what the 6 month US dollar Libor rate will be in 12 months time or 18 months time. However, if the capital markets do not possess an infallible crystal ball in which the precise trend of future interest rates can be observed, the markets do possess a considerable body of information about the relationship between interest rates and future periods of time.

In many countries, for example, there is a deep and liquid market in interest bearing securities issued by the government. These securities pay interest on a periodic basis, they are issued with a wide range of maturities, principal is repaid only at maturity and at any given point in time the market values these securities to yield whatever rate of interest is necessary to make the securities trade at their par value.

At  any time the market is prepared to quote an investor forward interest rates. If, for example, an investor wishes to place a sum of money on deposit for six months and then reinvest that deposit once it has matured for a further six months, then the market will quote today a rate at which the investor can re-invest his deposit in six months time. This is not an exercise in "crystal ball gazing" by the market. On the contrary, the six month forward deposit rate is a mathematically derived rate which reflects an arbitrage relationship between current (or spot) interest rates and forward interest rates. In other words, the six month forward interest rate will always be the precise rate of interest which eliminates any arbitrage profit. The forward interest rate will leave the investor indifferent as to whether he invests for six months and then re-invests for a further six months at the six month forward interest rate or whether he invests for a twelve month period at today's twelve month deposit rate.

The graphical relationship of forward interest rates is known as the forward yield curve. One must conclude, therefore, that even if -- literally -- future interest rates cannot be known in advance, the market does possess a great deal of information concerning the yield generated by existing instruments over future periods of time and it does have the ability to calculate forward interest rates which will always be at such a level as to eliminate any arbitrage profit with spot interest rates. Future floating rates of interest can be calculated, therefore, using the forward yield curve but this in itself is not sufficient to let us calculate the fixed rate payments due under the swap. A further piece of the puzzle is missing and this relates to the fact that the net present value of the aggregate set of cash flows due under any swap is -- at inception -- zero. The truth of this statement will become clear if we reflect on the fact that the net present value of any fixed rate or floating rate loan must be zero when that loan is granted, provided, of course, that the loan has been priced according to prevailing market terms. This must be true, since otherwise it would be possible to make money simply by borrowing money, a nonsensical result However, we have already seen that a fixed to floating interest rate swap is no more than the combination of a fixed rate loan and a floating rate loan without the initial borrowing and subsequent repayment of a principal amount. The net present value of both the fixed rate stream of payments and the floating rate stream of payments in a fixed to floating interest rate swap is zero, therefore, and the net present value of the complete swap must be zero, since it involves the exchange of one zero net present value stream of payments for a second net present value stream of payments.

•           Currency swaps:

Currency swaps are agreements between two individuals or entities to exchange specified types and amounts of currencies. Along with the initial exchange of a specific amount of one currency for a specific amount of a different currency, the process of a currency swap normally also includes a series of recurring payments based on the cash flow performance of the two currencies. This makes a currency swap somewhat different from a currency, in that the exchange normally involves simply exchanging currency at the most recent rate of exchange.

The recurring payments that compose the second phase of a currency swap normally make use of both fixed and variable rates of interest. One party will agree to pay a fixed interest rate, while the second party will make interest payments based on a floating rate of exchange. However, it is possible to arrange a currency swap agreement where both parties pay recurring payments based on a fixed rate or a floating exchange rate. The final determination of how the interest rate will be calculated is defined in the terms and conditions that govern the swap.

One important aspect of the currency swap that also sets it apart from currency exchanges is the fact that the swapping of the currency is not a permanent component. At the time that the two currencies are swapped, the parties agree to make the recurring interest rate payments for a specific period of time. Once the duration outlined in the agreement is complete, the two currencies are returned to the original owner. However, each party retains all returns that were shared in the form of interest payments.

The transaction of a currency swap is usually utilized when there is some expectation that the two currencies in question have potential to realize a significant amount of return via the rates of interest accrued. As can be expected, both parties usually anticipate realizing a higher return with the currency type that is received in theswap. However, since rates of exchange tend to fluctuate over time, there is usually a reasonable chance that both parties ultimately benefit from the currency swap.

Warrants:

It is a security that entitles the holder to buy stock of the issuing company at a specified price, which can be higher or lower than the stock price at time of issue.

Warrants and options are similar in that the two contractual financial instruments allow the holder special rights to buy securities. Both are discretionary and have expiration dates. The word warrant simply means to "endow with the right", which is only slightly different to the meaning of an option.

Warrants are frequently attached to bonds or preferred stock as a sweetener, allowing the issuer to pay lower interest rates or dividends. They can be used to enhance the yield of the bond, and make them more attractive to potential buyers. Warrants can also be used in private equity deals. Frequently, these warrants are detachable, and can be sold independently of the bond or stock.

In the case of warrants issued with preferred stocks, stockholders may need to detach and sell the warrant before they can receive dividend payments. Thus, it is sometimes beneficial to detach and sell a warrant as soon as possible so the investor can earn dividends.

Options generally have lives of up to one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter.

LEAPS:

The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of up to three years.

In finance, LEAPS  are options of longer term until expiry than other, more common, options. LEAPS are available on approximately 2500 equities and 20 indexes. As with traditional short term options, LEAPS are available in two forms, calls and puts.

Options were originally created with expiry cycles of 3, 6, and 9 months, with no option term lasting more than a year. Options of this form, for such terms, still constitute the vast majority of options activity. LEAPS were created relatively recently and typically extend for terms of 2 years out. Equity LEAPS always expire in January. For example, if today were November 2005, one could buy a Microsoft January call option that would expire in 2006, 2007, or 2008. (The further out the expiration date, the more expensive the option.) The latter two are LEAPS.

When LEAPS were first introduced in 1990, they were derivative instruments solely for equities; however, more recently, equivalent instruments for indices have become available. These are also referred to as LEAPS.

LEAPS are an excellent way for a longer-term trader to gain exposure to a prolonged trend in a given security without having to roll several short-term contracts together. The ability to buy a call/put option that expires one or two years in the future is very alluring because it gives the holder exposure to the long-term price movement without the need to invest the larger amount of capital that would be required to own the underlying asset outright. These long-term options can be purchased not only for individual stocks, but also for equity indexes (such as the S&P 500).

Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average or a basket of assets. Equity index options are a form of basket options.

A basket option is an option whose payoff is linked to a portfolio or "basket" of underlier values. The basket can be any weighted sum of underlier values so long as the weights are all positive. Basket options are usually cash settled. A call option on France's CAC 40 stock index is an example of a basket option.

Basket options are popular for hedging foreign exchange risk. A corporation with multiple currency exposures can hedge the combined exposure less expensively by purchasing a basket option than by purchasing options on each currency individually.

Basket options are often priced by treating the basket's value as a single underlie and applying standard option pricing formulas. An error is introduced by the fact that a weighted sum of lognormal random variables in not lognormal, but this is generally modest.

Swaptions:

Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions market has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an option to pay fixed and receive floating.

Swaptions can be for American, European or Bermudan exercise. They can be physically settled, in which case an option is actually entered into upon exercise. They can also be cash settled, in which case the market value of the underlying swap changes hands upon exercise.

To specify a swaption, we must indicate three things:

•           the expiration date of the option

•           the fixed rate on the underlying swap

•           the tenor (time to maturity at exercise of the option) of the swap.

The purchaser of the swaption pays an upfront premium. If she exercises, there is no strike price to pay. The two parties simply put on the prescribe swap. Note, however, the fixed rate specified for the swaption plays a role very similar to that of a strike price. The holder of the swaption will decide whether or not to exercise based on whether swap rates rise above or fall below that fixed rate. For this reason, the fixed rate is often called the strike rate.

By symmetry, a call on a pay-fixed swap is the same thing as aput on a receive-fixed swap. Similarly, a call on a receive fixed swap is the same as a put on a pay fixed swap. For this reason, it is often more convenient to speak in terms of two basic forms of swaption:

•           A payer swaption is a call on a pay-fixed swap the swaption holder has the option to pay fixed on a swap.

•           A receiver swaption is a call on a receive fixed swap, the swaption holder has the option to receive fixed on a swap.

Approaches to Cost Estimation

Approaches to Cost Estimation

Cost estimating is one of the most important steps in project management. A cost estimate establishes the base line of the project cost at different stages of development of the project. A cost estimate at a given stage of project development represents a prediction provided by the cost engineer or estimator on the basis of available data. According to the American Association of Cost Engineers, cost engineering is defined as that area of engineering practice where engineering judgment and experience are utilized in the application of scientific principles and techniques to the problem of cost estimation, cost control and profitability.

Virtually all cost estimation is performed according to one or some combination of the following basic approaches:

Ø  Production function: - In microeconomics, the relationship between the output of a process and the necessary resources is referred to as the production function. In construction, the production function may be expressed by the relationship between the volume of construction and a factor of production such as labour or capital. A production function relates the amount or volume of output to the various inputs of labour, material and equipment.

Ø  Empirical cost inference: - Empirical estimation of cost functions requires statistical techniques which relate the cost of constructing or operating a facility to a few important characteristics or attributes of the system.

Ø  Unit costs for bill of quantities A unit cost is assigned to each of the facility components or tasks as represented by the bill of quantities. The total cost is the summation of the products of the quantities multiplied by the corresponding unit costs For design estimates, the unit cost method is commonly used when the project is decomposed into elements at various levels of a hierarchy as follows:

1.      Preliminary Estimates. The project is decomposed into major structural systems or production equipment items, e.g. the entire floor of a building or a cooling system for a processing plant.

2.      Detailed Estimates. The project is decomposed into components of various major systems, i.e., a single floor panel for a building or a heat exchanger for a cooling system.

3.      Engineer's Estimates. The project is decomposed into detailed items of various components as warranted by the available cost data. Examples of detailed items are slabs and beams in a floor panel, or the piping and connections for a heat exchanger.

A.    Subcontractor Quotations. The decomposition of a project into subcontractor items for quotation involves a minimum amount of work for the general contractor. However, the accuracy of the resulting estimate depends on the reliability of the subcontractors since the general contractor selects one among several contractor quotations submitted for each item of subcontracted work.

B.     Quantity Takeoffs. The decomposition of a project into items of quantities that are measured (or taken off) from the engineer's plan will result in a procedure similar to that adopted for a detailed estimate or an engineer's estimate by the design professional. The levels of detail may vary according to the desire of the general contractor and the availability of cost data.

C.     Construction Procedures. If the construction procedure of a proposed project is used as the basis of a cost estimate, the project may be decomposed into items such as labour, material and equipment needed to perform various tasks in the projects. 

Stay Interviews

Stay Interviews

In today’s scenario, for any organisation, their employees are their live assets. Employees are the primary and most important resource for the success of any organisation. Organisations are growing fast, and the only reason for their success is its valuable employees. Each and every organisation wants to retain their most productive and valuable employees. But the problem lies in retaining these employees for a longer period of time. Organisations are facing a huge attrition problem. Employees are switching jobs in a short period of time. This results in monetary as well as productive losses to the organisation. Many organisations are constantly dealing with this problem.

To retain the best employees, first the organisation and management has recognise the needs i.e. monetary and non-monetary needs of the employees which gives him a complete job satisfaction ultimately resulting to retain the employees. Organisations and their management are now coming up with different employee a retention strategy which not only aims at retaining the employees but also motivating them by satisfaction of their needs. One of the modern day’s retention strategies that is becoming one of the most popular retention strategy is the “Stay Interviews”. As the saying goes” prevention is better than cure”, Stay Interviews provides that prevention of employees rather curing the losses after the employees leave the organisation.

A stay interview should aim at sensitivity listening, collecting feedback from employees, identifying the strengths as well as areas of improvements, developing trust and confidence with the employees and ensuring freedom of expression and problem sharing. The concept of stay interviews is in-fact has an empowering approach. Stay interviews focus on what is going right, rather than what went wrong. Stay Interviews can help in attracting and retaining the right talent.

The need of Stay Interview is felt when the corrective action taken after exit interview is not able to contribute much on identifying the real cause of attrition. In some of the cases when the decision was deferred by addressing the significant few reasons of quitting the job, the insignificant many tends to pile up to backfire. There is a need for constant engagement with employees. Stay interviews help making employees feel appreciated. Contrary to exit interviews, stay interviews are conducted to understand the reasons why the employees wish to continue working for the organization. Stay interviews should be conducted once in six months. However, this depends on the size of the organization. Stay interviews are more proactive, focus on the positive emotions of people who are enjoying their stay in the company and are able to point to things that the company is doing and should do more of because they are very happy about those things. The huge challenge of retaining talent can be solved to a large extent by adopting the concept of stay interviews and the concept of stay interviews is a positive and empowering approach. "Stay interviews focus on what is going right, rather than what went wrong. This is highly relevant in the Indian context where every industry is making a hue and cry about the challenge they face in searching right employees.
Stay Interviews can be conducted periodically by the immediate supervisor The HRD professionals of the organization are involved as key partners and facilitators in the process. Organizations and teams can conduct stay interviews periodically and also while undergoing critical phases of a change process. The information is used to work on further developing strengths and building strategies based on the strengths.
There is appreciation from employees for the recognition of their successes, skills and competencies. They feel empowered as contributors to the organization's strengths and successes and feel a part of the process of actively involving themselves.
This approach is very positive and empowering for teams too. Team members learn and grow together based on understanding the positive influences they have on each other and how they support each other in their respective growths and the growth of the organization. Stay interviews should be conducted once in six months. However, this depends on the size of the organization. For a small organization, it could be within three months and for a huge set-up it could be six months.

Besides, firms can use stay interviews for those in key positions, for targeted "at risk" individuals or do a random sample. Thus, if keeping your good people for a longer time is your goal, then start to take stay interview in an organization

The guidelines to design the prefect Induction Programme

The guidelines to design the prefect Induction Programme

1.      Induction should be flexible and employee centric.

2.      Draw a plan for whom to be involved in the Induction Programme (like HR, HODs, etc) and inform them accordingly.

3.      Employ a range of communication techniques like group discussion and presentations (Power Point/overheads/slides) as part of the training process.

4.      The HR team usually handles the initial paper work like giving details about the company its history office locations, business operations,  products and services, departments and their functionality, hierarchy company policies and procedures and a write up explaining the job profile, responsibilities and accountabilities of the new employee.

5.      HOD or senior colleagues can provide an in-depth insight of the respective employee’s job and responsibilities, how their role fits into the team and the business as a whole, set performance standards and targets and identify training requirement, if needed.

6.      Give the new recruits sufficient time at least two-four weeks to settle down and know the job and how to be done.

7.      Maintain a performance tracking book and minutes of other regular meetings.

8.      Try not to overload the employees with too much information.

9.      Have a follow up appraisal to sort out any queries that they may have.

10.  Ensure that all new recruits are given a positive message and consistent information. The new recruits should be made to feel welcome and accepted.

11.  Before the candidate reports keep essentials like entry passes and a work station along with a working computer, phone, and other required stationary ready.

12.  Other methods clued furnishing employees with an Induction manual, giving pre-employment information packs including staff handbooks with an outline of the initial programmes, offers of pre-employment visits and guided of the company.

Impact of Customer Relationship Management over Consumer Buying Behavior with Special Reference To Organized Retailing In Pune City

Impact of Customer Relationship Management over Consumer Buying Behavior with Special Reference To Organized Retailing In Pune City

By: Mr. Pravin Laxman Thorat

         JSPM’s ,JICA

         Email: thorat82@gmail.com

         Mobile : 9922947478

Scope of the Study

India is one of the largest retail markets in the world with a total of about 12 million retail outlets in the year 2003 (Euro monitor 2004). However, in terms of the retail space, it ranks as one of the lowest with about 2sq.ft. per capita. The market is highly fragmented with average retail space per outlet being only about 50sq.ft. It is also highly unorganized with the share of organized retail being only about 3% (ASEAN India Business Portal, 2005). India is possibly the last major Asian economy to move towards organized retail.

The Indian retail sector has been experiencing significant excitement and growth over the last couple of years. What started off with a shoppers stop in 1990 or a Food World in 1996, seems to have finally caught up on the fancy of at least in bigger cities and towns in India. New retail formats are emerging, a number of business houses are getting into different forms of retail business and trying out different business models.

A number of socio-economic developments are supposed to be having significant impact on the retail sector development. The rate of urbanization have been witnessing significant rise over the last few decades. Urban population as a percentage of total population has increased from 23.3% in 1981 to 25.71% in 1991 to 33.4% in 2001. Percentage of urban population in CLASS I cities (cities with population of over 1 million) also have increased from 60.4% in 1981 to 65.2% in 1991 to 73.7% in 2001. India has a significantly young population with the percentage between 15 to 59 years increasing from 55.6%  in 1996 to 58.7% in 2001 and is being projected to increase to 63.2% by the year 2010 (Business world The Marketing White book, 2003-04).

The implication of these is that a higher percentage of the population will continue to remain economically active for a longer period of time thereby providing a growing market for many of the consumer products. The average Indian has been getting wealthier over the years-per capita income has been increasing steadily from Rs. 6481 in 1980-81 to 12,785 in 2000-01.  It is estimated to reach Rs. 40,000/- crores by 2010. As the economy continue to grow, this trend is also likely to continue. The total private consumption in India has also been witnessing steady increase- from a low of Rs. 5, 36,980 cr. in 1990; it has increased to Rs. 8, 66,911 cr. in 2000-01. It is estimated to crops 15,00,000 crores by 2010 Food, beverage, and tobacco are the major constituents accounting for 48.77% of the total expenditure. Although, as in case of any growing economy, this percentage has been declining steadily from a high of 55.73% in 1991-92 it still remains the biggest component of personal final expenditure (Business World The  Marketing White book, 2003-04).

OBJECTIVES

First, it tries to understand what is meant by “CRM” Customer Relationship Management.

Second: it tries to understand what is meant by “organized retail” interaction with different stakeholders in retail business and academicians indicates that each one interprets the term in his own way.

Third :the study tries to understand the importance of the different drivers of the organized retail in Pune city – from the perspective of the manufacturer, the retailer, as well as the consumer and explore as to how similar or dissimilar they are as compared to the drivers of the modern retail formats in the developed economies of the USA and UK.

Fourth: it tries to analyze the type of clientele visiting the organized retail outlets.

Fifth: the study tries to explore the expectations of the customers while visiting the organized retail outlets.  

Sixth: the study  tries to measure the customer satisfaction of the clientele visiting the organized retail outlets in terms of various parameters like price, preference, location, brand assortment, quick prompt service, etc.

Seventh: the study tries to understand the implications of the strategy used by the retail organizations under the headings of Customer Relationship Management.

This will include ……..

A)    Customer database management.

B)    Analyze the customer retention.

C)    The schemes offered by the retailers to “invite” the customers and offer of incentives.

D)    The strategy used on relationship management.

E)     The use of complaint handling systems.

Introduction

Retailing is a final set of activity involved in selling a product to its end user. “The word retail is in fact derived from the French word retailer, which means to cut off a piece or to break bulk”(pradhan,2004:3)

According to Barry Berman and Joel Evans, “it is the last stage in the distribution process” (Berman and Joel, 2001:3), it is seen as part of the distribution channel which is one of the key tools of the marketing mix of a manufacturer.

When we think of marketing we think of primarily the “manufacturer” and the “consumer” and refer to the intermediaries in between as “channel of distribution” who are their to ensure that the product flows from the manufacturer to the customer. how ever “this manufacturer centered view of channels has seriously under elated the power scope and importance of retail marketing”(Mcgoldrick,1990:2). Infact the danger of regarding distribution channel as passive and orderly adjuncts to the manufacturer marketing activities was pointed out as early as 1960 by McVeg “the middleman is not a hired link in a chain forged by a manufacturer but rather an independent market, the focus of a large group of customer for whom he buys. As he grows and builds a following. He may find that his prestige in his market is greater than that of the supplier whose goods he sells”  (McVeg,1960,quoted in Mc goldbrick,1990:2).

According to Philip Kotler, retailing included all the activities involved in selling goods or services directly to final consumer for personal, on business use”(Kotler,2003:535).

Michael Levy and Barton Weitz go a step further and refer to retail not just as a set of activity but as “the set of business activities that adds value to the products and services sold to consumers for their personal and family use”(Levy and Barton,2002:8)

Dunne Lusch and Griffith believe retailing “consist of the final activity and steps needed to place a product in the hands of the consumer or to provide services to the consumer”.(Dunne, Robert and David,2002:7).

John Fernie and Leigh Sparks provide another perspective from logistics and supply chain management perspective—“retailers were once effectively the passive recipients of products ,allocated to store by manufacturer in anticipation of demand .Today retailer are the active designers and  controllers of product supply in reaction to known consumer demand .They control, organize and manage the supply chain from production to consumption”(Fernie and Leigh,2004:6).

Exhibit 1: Retailers Ranking Amongst the Top 200 Global Corporation As Ranked By Fortune International

Fortune Rank(02)	Organization	Type of retailer	Fortune Rank(02)
1	Wal-Mart	General Merchandiser	1
35	Carrefour	Food and drug store	35
38	Royal Ahold	Food and drug store	38
46	Home Depot	Specialty Retailer	46
56	Kroger	Food and drug store	56
72	Metis	Food and drug store	72
83	Sears Reebuck	General Merchandiser	83
89	Target	General Merchandiser	89
100	Albertson’s	Food and drug store	100
104	Kmart	General Merchandiser	U.S.A.
111	Costco Wholesale	Specialty Retailer	U.S.A.
113	Safe way	Food and drug store	U.S.A.
114	Tesco	Food and drug store	U.K
124	J.C.Penny	General Merchandiser	U.S.A.
161	Ito Yokado	Food and drug store	JAPAN
181	Group Pinault	General Merchandiser	FRANCE
183	Walgreen	Food and drug store	U.S.A.

Generally organized retailing is referred to a professional service- oriented set up which provides the customers a pleasant shopping experience. Organized retail stores are characterized by professional management and a strong customer focus. (Marketing sense: retailing the sunrise sector-ICFAI 2002 Pg I and II)

What is CRM ?

CRM is mainly an enterprise-wide mindset, business strategy and the process that are designed to acquire, retain and serve customers. Advances in IT have played as a great catalyst in adaptation of CRM program by companies. Spending on CRM technology and activities is expected to exceed $ 17.7 bn by 2006, growing at an average annual rate of 6.7% (A beerdeen Group, 2003). CRM technology help companies to manage the customer lifecycle of acquiring new customers enhancing the profitability of exciting ones, and retaining profitable customer for long.

As a business strategy, CRM seeks to optimize the company’s profit and revenue generating ability by understanding its customers and delivering value to them.

1) According to Berry (1983), CRM is primarily a business strategy than an organization employs to identify, select, acquire, develop, retain and serve customer better.

2) According to Rigby et al (2002) CRM is a mechanism for aligning firm’s business processes with its strategies to built customers loyalty and the firm’s profits.

3) Similarly, Kim et. Al. (2003) defines CRM as “managerial efforts to manage business interactions with customers by combining business processes and technologies that seek to understand a company’s customers”.

Four dimensions of CRM that become apparent from these definitions are:

1)      company’s mindset,

2)      a ‘customer centric strategy,

3)      reengineering of the business processes and

4)      The role of technologies.

Components of CRM

The purpose of a business is to create customers (Drucker, 1954). The first step in customer life cycle is acquisition of customer. Therefore the first role of CRM is to provide a wide range of modes like telephones, fax, e-mail, SMS, instant chat and such others through which a customer can interact with the organization. The modes should be geographically distributed over branches, retailers, wholesalers, service providers and other categories of business partners. So any CRM system should have a sales module that integrates the multitudes of channels and present complete customer view to any channel partners or direct sales staffs.

The existing customers may need service and therefore a CRM system could have service module to track customer service record.

Finally, a CRM system needs to identify good customers that the company may like to retain. Various techniques including customer lifetime value (CLV) are used to analyse customer data in order to segment customer for identifying ‘good’ customers. This is done by the ‘marketing’ module of CRM system.

A component, which helps actual customer interaction (or operations), is commonly known as ‘operational CRM’ and which help analysis of customer data is known as ‘analytical CRM’.

TRADITIONAL MARKETING Vs CUSTOMER RELATIONSHIP MARKETING

The differences between transactional and customer relationship marketing are as follows:-

Traditional/ Transactional marketing	Customer relationship marketing
1. Emphasis on single sale transaction.	1. Emphasis on retaining the customers
2.Quality is the sole responsibility of production	2. Quality is a concern for every one.
3. Orientation on product or service features.	3. Orientation on product or service benefits.
4. Little emphasis on customer service.	4. Strong emphasis on customer service.
5. Short time scale.	5. Long time scale.

Why Customer Relationship Marketing ?

The cost of acquiring a new customer is almost 10 times the cost of retention of a customer, which means its much easier and more inexpensive to make an additional sale to an existing customer than to make a new sale to a new customer. As per Pareto’s Law, 80% of the total sales comes from 20% of customer. Hence, their is a need for customer relationship marketing, the core of which is customer retention. It is a highly beneficial for organized retailers to build long-lasting relations with the customers. It is the efforts of a organized retailers as a whole and not just that of one sales person or marketing department along that can ensure effective CRM benefits:- All departments in the firm must ‘think customer’.

Some of the benefits that accrue from customer relationship marketing are :-

1) Results in positive image projection and enhance brand equity due to high degree of customer retention and loyalty.

2) Builds good will in the market,

3) Keeps competitor’s away from customer’s sight,

4) Improved customer satisfaction.

5) Satisfied customer may refer other potential new customers.

6) Facilitates employee retention when the firm has a strong base of satisfied customer.

7) Positive word-of-mouth.

8) Turns customer into your friends.

THE CUSTIOMER RELATIONSHIP MARKETING MODELS

Customer relationship marketing can be described with the help of following models:

INPUT	PROCESS	OUTPUT
Value added product services.	CUSTOMER RELATIONSHIP	High customer satisfaction
One-to-one relationship.	MARKETING	Increased customer share
Individual care and attention		Lower marketing costs.
Special facilities and services		Positive word-of-mouth
Structural ties.		High brand equity
Information sharing		High customer loyalty

The core theme of all CRM and relationship marketing perspective is its focus on cooperative and collaborative between the firm and its customers, and/or other marketing actors. Another important fact of CRM is “customer’s selectivity”. Not all customers are equally profitable for an individual company.

“Customer relationship management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customers.” (Sheth jagdish N, Parvatiyar Atul, Shainesh G. CRM-emerging Concept, Tools and Applications 2003 4^th Edn)

The purpose of CRM is to improve marketing productivity. Marketing productivity is achieved by increasing marketing efficiency and by enhancing marketing effectiveness. In CRM, marketing efficiency is achieved because cooperative and collaborative processes help in reducing transaction costs and overall development cost for the company. The two important processes of CRM include productive customer business development and building partnering relationship with its most important customers. This leads to superior mutual value creation.

The emergence of CRM practice

Developing customer relationship has historical antecedents going back into the pre-industrial era. Much of it was due to direct interaction between producers of agricultural products and their consumers. It was only after industrial era’s mass production society and the advent of middleman that there were less frequent interaction between producer and consumer leading to transaction oriented marketing.

In recent years however several factors have contributed to the rapid development and evolution of CRM. These include the growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technology that allow producers to directly interact with end customers. Database and direct marketing tools give them the means to the individualized their marketing efforts. As a result, producers do not need those functions formally performed by the middle man.

The de-intermediation process and consequent prevalence of CRM is also due to the growth of the service economy. Since services are typically produced and delivered at the same institution, it minimizes the role of middleman. Another force driving the adoption of CRM has been the total quality movement. In the current era of hyper-competition, markets are forced to be more concerned with customer retention and loyalty.

CRM Formation Process

The formation process of CRM refers to decisions regarding initiation or relational activities for a firm with respect to a specific group of customers or with respect to an individual customer with whom the company wishes to engage in a cooperative or collaborative relationship. Hence, it is important that a company is able to identify and differentiate individual customers. In the formation process three important decision areas related to defining the purpose (or objectives) of engaging in CRM, selecting parties (or customer partners) for appropriate CRM program; and developing program (or relational activity schemes) for relationship engagement with the customers.

CRM purpose

The overall purpose of CRM is to improve marketing productivity and enhance mutual value for the parties involved in the relationship. CRM has the potential to improve marketing productivity and create mutual values by increasing marketing efficiencies and/or enhancing marketing effectiveness.

CRM - PROGRAMS

Customer Types Program Types.	Mass market	distributors	Business to Business
Continuity Marketing	*After Marketing *Loyal programs *Cross selling	*Continuous Replenishment *E C R programs	*Special Sourcing    arrangement
One-to-one marketing	Permission marketing *Personalization	*Customer business development	*Key account *Global account programs
Partnering/Co-marketing	*Affinity partnering *Co-brading	*Logistics partnering *Joint marketing	*Strategic Partnering *Co-design *Co-development

CRM Business cycle

As shown in diagram below, any organization starts with the acquisition of customer.

Acquisition is a vital stage in building customer relationship management ,For the purpose of customer acquisition, an organization is likely to focus its attention on the suspect, enquiries, lapsed customer, former customers, competitor’s customers and prospective customers and retain valuable customers.

Use of Technology in CRM

Technology includes all the equipment, software, and communication like that organizations use to enable or improve their processes. The mostly used tools are explained below.

Sales Force Automation

These systems help in automating and optimizing sales processes to shorten the sales cycle and increase sales productivity. In depth product information, specialized databases of solutions, sales force support queries, and a set of internet information on the internet can improve the productivity of the sales force.

Call Center

Call center helps in automating the operations of inbound and outbound calls generated between company and its customers. Companies are now focusing to offer solutions that leverage the internet in building comprehensive CRM systems allowing them to handle customer interactions in all forms.

Data Warehousing

A data warehouse is an implementation of an informational database used to store shareable data that originates in an operational database-of –record and in external market data sources. Data

Mining and OLAP

Data mining involves specialized software tools that allow users to sift through large amount of data to uncover data content relationship and build model to predict customer behavior. Data mining uses well-established statistical and machine learning technology to build models that predict customer behavior.

OLAP (Online Analytical Processing), also known as multi-dimensional data analysis, offers advanced capabilities in querying and analyzing the information in data warehouse. In some CRM initiatives, OLAP plays a major role in the secondary analysis that take place after initial customer segmentation has occurred. For example, in CRM- based campaign management systems, OLAP is an excellent tool for analyzing the success or failure of the promotional campaigns.

Decision Support and Reporting Tools

Web enabled reporting tools and executive information systems are used to deploy the business information that has been discovered. Applications equipped with some of the same sophisticated modeling routine developed in the data –mining phase era applied to individual contact in real time.

Electronic Point Of Sale (EPOS)

The main benefit of EPOS and retail scanner system is the amount of timely and accurate information they deliver. Advances in the technology have significantly aided the scope for data analysis. In additional to the original scanner-related data on the sales rate ,stock levels, stock levels, stock turn, price and margin, retailers now have information about the demographics ,socio-economic and lifestyle characteristics of consumers.

“Cherish customer who complain: they tell you what to change”

E’s of e-CRM

The ‘e’ in e-CRM does not stand for “electronic” but also can be perceived to have many other connotations, through the core of e-CRM remain to be cross channel integration and organization; the ‘e’ in e-CRM can be used to frame alternative decisions of e-CRM based upon the channels which e-CRM utilizes, the issues which it impacts and other factors; the e-CRM are briefly explained as follows;

1)  Electronic Channels:

New electronic channels such as the web and personalized e-massaging have become the medium for fast, interactive and economic communication, challenging companies to keep pace with this increased velocity. E-CRM thrives on these electronic channels.

2) Enterprise

Through e-CRM a company gains the means to touch and shape a customer’s experience. Through sales, services and corner offices-whose occupants need to understand and assess customer behavior.

3) Empowerment:

Through e-CRM a strategies must be structured to accommodate consumers who now have the power to decide when and how to communicate with the company through which channel, at what frequency. An e-CRM solution must be structured to deliver timely pertinent, valuable information that a consumer accepts in exchange for his or her attention.

4) Economics

An e-CRM strategy ideally should concentrate on customer economics, which deliver smart asset-allocation decisions, directing efforts at individuals likely to provide the greatest return on customer- communication initiatives.

5) Evaluation

Understanding customer economic relies on a company’s ability to attribute customer behavior to market programs, evaluate customer interactions along various customer touch point channels, and compare anticipated ROI against actual return through customer analytic reporting.

“You have no mercy on the people who make the items You buy in your personal life .why should you expect Your customers to treat you differently.”

                                                                              - Crosby

To implement CRM successfully, you’ll have to reorganize your customer and change your organization mindset .When CRM works, it helps to solve this problem by meshing everyone together and focusing the entire organization on the customer. Like all strategic initiatives, CRM requires commitment and understanding through out the company, not just in marketing. In all, it adds to sense of expectation and loyalty being instilled within the consumer and development of a relationship between the company and customer that competitors find hard to break. Business decisions based on complete and reliable information about your customers are very difficult for your competitors to replicate and represent a key and sustainable competitive advantage.

                 “A customer is the most important visitor on our premises.  He is not an interruption on our work; he is the purpose of it.  We are not doing him a favour by serving him.                        He is doing us a favour by giving us an Opportunity to do so.”

                                                                                                           Mahatma Gandhi

CRM is the commitment of the company to place the customer experience at the center of its priorities and to ensure that incentive system processes and information recourses to leverage the relationship by enhancing the experience. Like ERP, CRM solutions focus on automating and improving business process, albeit in the front end. Whereas ERP implementation can result in improved organizational efficiency, CRM aims to provide organizational effectiveness by reducing sales cycles and selling costs, identifying markets and channels for expansion, improving customer value satisfaction, profitability and retention.

Major Observations during the Study

1)      Experiences of retailers with the present generation of organized retailers.

Old retailers                                                           New Retailer

Particular	No	%	Particular	No	%
Ambience	60	12%	Ambience	480	96%
Courteous & trained staffs	160	32%	Courteous & trained staffs	430	86%
Choice of products	140	28%	Choice of products	480	96%
Personal attention	180	36%	Personal attention	330	66%
Home delivery	340	68%	Home delivery	280	56%
Credit facilities	270	54%	Credit facilities	300	60%
Use of technology	80	16%	Use of technology	460	92%
Discounts/ offers	170	34%	Discounts/ offers	380	76%
Personal service	190	38%	Personal service	310	62%
Payment terms/credit facilities	290	58%	Payment terms/credit facilities	240	48%
Taking back of goods	330	66%	Taking back of goods	280	56%
Telephonic order systems	190	38%	Telephonic order systems	300	60%
In case of stock-outs are branded products procured on order	220	44%	In case of stock-outs are branded products procured on order	350	70%

It is clear that new or organized retailers have a clear upper hand. People feel that they are far better then old retailers in ambience, Courteous & trained staff, choice of product, personal attention, Use of technology, Discounts & offers, telephonic order system. But old retailers are also giving them a good fight or are even better in some areas such as home delivery, Credit facility, payment terms, easy taking back of goods.

The two main areas where the old retailers are really far behind are Ambience and Use of technology.

2)                  Retailer treatment by compared to the old retailer?

      New                     Old     New                   Old

Keeps you on mailing list	120                    --	24%	0%
Informs you of the special offers	410                    --	82%	0%
Gives you a credit card?	130                    --	26%	0%
Greats you by personal name	140                    50	28%	10%
Gives home delivery	390                  250	78%	50%
Has intimate knowledge about you	140                    25	28%	5%
Recommends merchandise to you	430                    50	86%	10%

According to the data we easily recognized that new retailer is keeping customers on mailing list, informs them of special offers and  gives  a credit card, has intimate knowledge and recommends merchandise.  

. 

3)      Frequency of feedback by retailer

                                                    New                   Old              New                          Old

Once a month	170                      50	34%	10%
Once in 6 months	150                     100	30%	20%
Never	180                     350	36%	70%

Here the data generated is of serious cause for concern for the new retailers. Majority (36%) of people said that they never asked for feedback (by the new retailers). About 30% said that they have been asked once in 6 months. This is really bad because customers feedback is the main source of data for them to up to date themselves and change according to the market demand.

4)      Corrective actions against suggestions

                                                New                        Old            New                         Old

Always	80                          100	16%                         20%
Occasionally	320                        100	64%                         20%
Never	100                        300	20%                         60%

The data founded here is also not very good for the new retailers. People go to new retail shop because at the rush time their own gali kiranawala don’t even bother to listen to them. But from this data it seems that in the new retail outlets also there is nobody to listen to them. About two-third of customers (64%) think that occasionally they listen to their suggestions.

5)      Value for money

                                                  New                        Old           New                     Old

Always	190                          100	38%	20%
Occasionally	310                          200	62%	40%
Never	00                            200	0%	40%

Here also people go with the new retailers. 100% feel that these new retailers give them good value for money either occasionally or always. But nobody feels the other way. For the retailers 62% feel that they got value for money occasionally is good cause of thinking. They should try to change them into better part.

8. a) Access to retailer or retailers service

                                                New                        Old            New                            Old

Yes	470                         350	94%                             70%
No	30                           150	6%                               30%

94% customers feel that their retail outlet is relatively easy to access than others. This is also a good sign for the new retailers, because it shows a sign of loyalty in their customers toward their respective retail outlets. They feel that products of their respective stores are customized for them so they use to come to that store. Only 6% feel that other stores are easier to access than their retail store.

b) Service Response

                                                 New                        Old            New                        Old

Yes	430                         300	86%                         60%
No	70                           200	14%                         40%

Most of the customers (86%) think that new retailer’s approaches to meet and greet the customers are very good. They are well trained, well dressed, and have good product knowledge. At this front they are far ahead of old retailers.

c) Frequency of Visiting Retailer

  New                       Old             New                       Old

Every day	-                                -                 -                                 -
Once	280                           25	56%	5%
Twice	130                          100	26%	20%
Thrice	40                            175	8%	35%
Monthly	50                            200	10%	40%

More than half (56%) of the people used to go to new retail outlets once in a week. Another 26% visited even twice in a week. This seems to be a healthy frequency for the new retailers as only 10% of the customers visit monthly.

d) Staffs respond to the customer problems, request and question.

Quick response	300	60%
As problem occurred	90	18%
Take some time	50	10%
Slowly	40	8%
Don’t know	20	4%

According to the data 60% people feel that new retailer staffs are more conscious about customers problems, requests and questions. They take very quick action when the problem occurs while 10% think that they take time when customer complained.    

8% people feel they are very slow in taking action and some don’t want to comment. It means generally people are happy with the staff of new retailer.

f) Do service-staffs act in a friendly and polite manner

Yes	480	96%
No	20	4%

According to the data it is very clear that new retailer staffs are very polite and friendly. They listen to customer’s problems in a very polite manner and always try to make a friendly environment for customers. Only 4% people don’t feel like this.    

g) Do they (service staffs) serve you in the same manner every time?

Yes	390	78%
No	110	22%

About three-fourth (78%) customers feel that the staffs of new retail shops are well trained. So, every time they went to the outlet they are treated by same enthusiasm and well mannered approach. Only 22% feel the other way.

h)Do service staffs have requisite knowledge and skills?

Yes	420	84%
No	80	16%

84%people think that the staffs of new retailers are well trained in various skills and they also have requisite knowledge. They used these skills for handling customer problems. While only 16% people feel that they don’t have requisite knowledge and skills.

i) Is the service described clearly and accurately in terms of discounts and offers?

Yes	360	72%
No	130	26%
Don’t know	10	2%

72% people are agreeing with the new retailer’s service as described clearly and accurately in terms of discounts and offers. While 26% people are not satisfied, they feel that the discounts and offers are very complicated, in the case of new retailer always they mention condition apply.

j) How well managed are the tangible aspects of the service?

Billing	380	47.5%
Offers	280	35%
Credit card	100	12.5%
EDC	40	5%

According to the data we easily recognize that people are very happy with new retailer billing. in which every thing is mentioned very clearly in bills and accurately. They used new advanced technique in billing.35% people are very happy with offers, it attracts them to come again and again, 12.5% people are happy with credit card facility of new retailer and only 5% customers are happy with EDC.

                

9)      Rank this retail outlet on the following attributes given below on a 5 POINT SCALE     (according to their importance with respect to customer’s services expectations) …..

      1- Below average, 2-average, 3-above average, 4-good, 5-exceptional

	Below average	Average	Above  average	Good	Exceptional
Reliability	0%	14%	38%	46%	2%
Responsiveness	6%	16%	42%	24%	12%
Assurance	6%	8%	42%	40%	4%
Empathy	6%	10%	48%	34%	2%
Tangibles/physical evidence	2%	12%	44%	40%	2%
Accessibility	0%	10%	24%	62%	4%
Security	4%	8%	18%	60%	10%
Communication	0%	2%	54%	32%	12%
Competence	4%	4%	46%	36%	10%

In this question we are going to generate the data from different point of view about the weightage rating for the new retail outlets. These data is based on the rating given by the customers on the different aspects.

Reliability: People rather have a good feeling for the retailers on the reliability factor. Most of them (46%) rate as “good” and 38% rate as above average. Only 7% rate as average and not a single percent rate as below average. This is really good for the retailers.

Responsiveness: On this front most of people (42%) have given the rating as above average. Percentage of “good” (24%) is lower than this. Here 6% also rate them as below average or “bad”. But almost double of the people have gave them exceptional rating.

Assurance: Here there is good feeling in the people about the new retailers 40% give them “good” and 42% give them as average rating. Here also about 7% of customers rate the new retail outlet as below average.

Empathy: Here almost half (48%) of their customer give them above average rating and 34% of customers as good. But here also 6% of them rate as below average.

Physical evidence: Here also the scenario is almost similar to above aspects. 44% rate as above average and 40% as good. But only 2% rate as below average.

Accessibility: New retail outlets got the best rating at this front. About 62% rate as good and 24% rate as average. But the main thing is nobody rates them as below average.

Security: 62% customers rate the new retail outlets as good on the security point of view. 18% rate as above average and 10% also rate them as exceptional.

Communication: At this front only 32% give the retail outlets “good” rating. But 54% rate them as “above average”. The main point of concern is that not a single percent rate them “below average” while 12% rate them as exceptional.

Competence: at this front the data generated is much similar to the above one. 36% rate the new retailers as good and 10% as exceptional.

The overall scenario is that the customers rate in the favour of new retailers. Most of the customers rate them as above “average”, “good”, and “exceptional”. That is a good sign for the new retailers.

10)  Store image: - Indicate your perception of the service on a point interval scale where 1 indicates very unfriendly and 5 indicates very friendly.

Grading
1 very unfriendly	0	0%
2 unfriendly	10	2%
3 average	190	38%
4 friendly	230	46%
5 very friendly	70	14%

The customers, from whom the data was generated, feel that the service level of the new retailers is friendly and up-to mark. About 46% feel like this. While 38% thinks that they are just average in their service offering. About 14% think that new retailers are very friendly while offering the service. Only 2% think that they are unfriendly in their approach.

THE FINDINGS ON RETAILERS

The main focused customers of the new retail outlets are newly age office goers, which have income of Rs. 10,000 per month. They have lot of disposable income; both of the spouses are working, so they have lots of money to spend. These income groups generally come to the outlets every weekend. It is also clear from our data that most of the customers (56%) of the new retail format outlets come to the outlet once in a week. And another 26% visited even twice a week.Their main customers are in the age group of 25-35 years. They have the money, they are eager to spend the money because they are the one who want really world class lifestyle and ambience, and the main thing is that they are ready to pay for this.

Here they experience a totally different kind of shopping, they come here with the whole family for a picnic, shop, eat and enjoy the time with their family. The overall finding; from these data is every body wants more from these new retail outlets, whether its service or product.By the data founded, it is very clear that expectations of the customers are very high from the new retail outlets. They want best experience, the best products and the best services at the lowest possible price.

The most important thing they require is the clean and fresh environment, and the product lines neatly arranged. They have got fade up from the conventional kirana shops where products are just thrown every where with a dirty shop boy serving him. Now they are not satisfied with them because they have lots of other options up. With the fresh and clean environment, today’s customers also want well trained, well dressed and humble staffs who are ready to listen to them and willing to solve their problems. But even today in most of the retail outlets this thing is not happening. Most of our samples customers told us that at the rush time of every outlet especially in the weekends there is no body to listen them.

  The core thing that any customer wants from every retail outlet is the full range of product lines of the leading brands that are required for daily life. They want all the products required under one roof.

According to the research most of the customers want home delivery, and credit facility from the retailer .In these home delivery is very common, every customer want this facility from the retailer. Some groups of customer demand credit facility from retailers. More and more offers and discounts also attract all types of customer segments that mean expectations of customers have also increased from retailer. One more thing they expect from retailer is that they could be able to exchange the product easily if required. 

The data generate shows that most of the customers are quite satisfied from the new retail outlets. They like their way to approach the customers, the ambience provided by them, and above all the cheapest price in the town. 

94% customers feel that their retail outlet is relatively easy to access than others. This is also a good sign for the new retailers, because it shows a sign of loyalty in their customers toward their respective retail outlets. They feel that products of their respective stores are customized for them so they use to come to that store. Only 6% feel that other stores are easier to access than their retail store. Most of the customers also think that new retailer’s approach to meet and greet the customers is very good. They are well trained, well dressed, and have good product knowledge. At this front they are far ahead of old retailers. People think that retail staffs are overall good. Means they are friendly in nature, well trained, well mannered, clean and well dressed, and their approach toward the customers are good.But there are also some customers who have had experience from the retail staffs. They tell us that they don’t listen to them, and when they go to bring a product for them, they never come back. Again the customer has to ask to another staffs.Some of them don’t apologize even they have done the mistake. 

80% of the people think that services can be used without the risk, while 20% think that there is a risk involved in this. It means people want more services at the same cost form the new retailers because they feel that there is no risk factor involved in this.

According to the data generated 60% people feel that new retailer staff are more cautious about customers problems, requests and questions. They take very quick actions when the problem occurs while 10% think that they take time when customer complained. 8% people feel they are very slow taking action and some don’t want to comment. It means generally people are happy with the staff of new retailers.

According to data it is very clear that new retailer staffs are very polite and friendly. They listen to customer’s problems in a very polite manner and always try to make friendly environment for customer. Only 4% people don’t feel like this.    

About three-fourth (78%) customers feel that the staffs of new retail shops are well trained. So, every time they went to the outlet they are treated by same enthusiasm and well mannered approach. Only 22% feel the other way.

84%people think that the staffs of new retailers are well trained in various skills and they also have requisite knowledge. They use these skills for handing customer problems. While only 16% people feel that they don’t have requisite knowledge and skills.

72% people are agreeing with new retailer’s service as described clearly and accurately in terms of discounts and offers. While 26% people are not satisfied, they feel that the discount and offers are very complicated in the case of new retailer they always mention condition apply.

According to the data we easily recognize that people are very happy with the new retailer billing. In which every thing is mentioned very clearly in bills and accurately. They used new advanced technique in billing. 35% people are very happy with they offers, it attract them to come again and again.12.5% people are happy with credit card facility of new retailer and only5%customer are happy with EDC.

Promotional activity includes lucky draw, scratch cards, free shopping to certain number of customers like 100^th or 500^th. Collaboration with the neighborhood society is also used by some retailers. In this the members of those societies are given some extra discount by that retailer.

Factors like aggressive competition, demanding customers, and emergence of alternative channels of distribution and communication are redefining the rules of market. No doubt, the rules of the marketing in recent past have changed and the impact of it has been observed across all the industries. In the new market structure, new age customers have gained more clout with the power balance tilted in their favor. They feel it is their proprietary right to demand: high quality product and excellent service at competitive price. Moreover, customers are demanding companies to provide them facilities of delivering products or services anytime, anywhere. The new age customers are enjoying the kind of power for their betterment. No doubt, marketing model in the last decade has changed its focus from product-centric to customer-centric approach.

Markets are encountering the threats of their products or services being commoditized as they are facing not only competition from competitors but also operating under consistence pressure of loosing their Unique Selling Proposition (USP). The manufacturers, producers, or sellers are no longer in the position to govern the relationship between buyers and the sellers. In today’s competitive markets, new age customers are demanding an altogether different kind of relationship with retailers, suppliers, and producers than the customers of the traditional marketing era. Undoubtedly this is the golden era for the customers, but for the companies, survival has never been so difficult. Moreover the increased competition has led to proliferation of product and services offering, which has created a situation where companies are vying with product features, price and distribution network to attract customers. Most of the companies have lost control over the market and are in search of a USP. They find that establishing a long term relationship with the customers is the key to success in this customer driven economy. They will have to strive hard and win customer’s confidence in a long term relationship, which is possible only when the companies keep delivering value to customers.

It is observed that new age customers are becoming more value conscious and are not willing to pay even an extra penny to what they don’t perceive as value. If they do not find value for their money, they have no qualms in shifting their loyalties. Moreover, loyalty is not the only key difference factors in company’s performance, there are many unanswered questions. The worst part is, the management gets confused when it takes up the task of answering questions like –“What is the difference in the value of company’s loyal customers and other customers?” Does the company need to customize or personalize products and services? Does the company enjoy a premium brand?  Are there competitors in the market trying to change the “rules of the game”, which has made the situation more challenging?

The biggest challenge before a company is to identify the problems and address them intelligently so that they could convert this quest for value into opportunity. Offering more value to the customers not only strengthens a company’s position in the marketplace, but also enhances bottom line profitability and creates a strong customer franchise. We have learnt that profit since age is result of the relationship between revenue and cost and in new age business horizon increased revenue stem from increased customer satisfaction, feeling of satisfaction, and psychological state of achievement. This situation forced companies to attain high level of customer satisfaction. As customers consistently are in search of value, they are also interested in helping companies create value for which the companies need information. The new age customers also want to share problems they are facing, and inform companies the kind of product or service they are looking for. They also want companies to share every bit of information they have, which helps in developing a close bond between the customer and the company is known as customer relationship. Companies across the horizon, to enrich the bond of customer relationship, are using the new database technologies that enable the management to know all about customers and offer customers a platform to interact with the company. Today, customers and companies share information, which are helped the company to revive their relationship with customers and manage the customer relationship.

Companies across the board have discovered that profitable growth is difficult to achieve in light of the changing customer base. A company must overcome challenges like delivering consistent and personalized experience across channels, increasing profitability by aligning the right customer to the right channel, attracting new customer and identifying the most profitable existing customer, and most importantly reducing the cost to serve all customers to maximize customer interaction.

The companies endeavor to come closer to customers and win their hearts are making the path to CRM success face various problems, viz., inability to meet objective and benefits, risk to the business in general, events that could effect the implementation, loss of competitive advantages, legal consideration, lack of control, negative impact on business reputation, loss of market share and acceptance to CRM within an organization. These problems are tough to handle but companies are struggling hard to make CRM im