SUBMITTED BY: SUBMITTED TO:

(09) Amit Gusain Ms. Shevta Mahajan

(19) Bharti Rathi Faculty: Sales Management

(20) C. Kriti Nagpal (Department of Retail)

(29) Lalit Mohan Pathak

(37) Nutan Rani

ACKNOWLEDGEMENT

1
CONTENT

2
 TOPIC PAGE NO.

1. Scope …………………………………………………………... 3

2. Limitation ……………………………………………………… 4

3. Objectives ………………………………………………………5

4. Research Methodology …………………………………………5

5. Introduction …………………………………………………… 6

6. United colors of Benetton ………………………………………9

7. Comparative study of brands …………………………………18

8. Inference ……………………………………………………… 20

9. Analysis ……………………………………………………… 21

10. Recommendation ……………………………………………. 32

11. Conclusion …………………………………………………… 33

12. References ……………………………………………………. 34

13. Annexure………………………………………………………. 35

SCOPE

3
 While working on this project we come to know about the effect of
discount as the promotional tool on the store visibility.

 The results on sales during end of season sale

 The consumer behavior on the good offers.

 The tendency of consumers on interesting promotional offers.

 The purchase decision of consumers while and after viewing sale\

clearance and store displays.

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 LIMITATION

• The psychology & behavior of consumers is intriguing.

• The consumers are quite conversant about the various promotional

offers.

• There are different lifestyle patterns which effect the purchase

decisions, the impact of promotional tools such as discounts &
store/window displays on consumers behavior.

• The project on one particular store can make us infer and we can’t
draw conclusions regarding consumers.

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 OBJECTIVES

i) To compare usage across exclusive and multi brand outlets.

ii) To explore rationale behind such activities by examining consumer behavior.

iii) To pose challenges ahead.

RESEARCH METHODOLOGY

Type of Research Technique

Exploratory research:

6
Experience surveys: We will be asking knowledgeable individuals about the effect of discounts
and other promotional activities on consumer buying behavior.

Secondary data analysis: We will also be using secondary data to gain some background
information and analyze it in our research.

Descriptive research: Through this research design, we can further go deep, detail into our
study, and find the effect of promotional activities on consumer purchasing behavior.

Cross sectional research: In this research we would be putting questionnaires to a particular

sample which will help us to infer our hypothesis relating to effect of discounts and other
promotional activities on consumer buying behavior.

INTRODUCTION

In India, clothing retail accounts for 36% of organized retail business. It is the largest sector.
Ready-made apparel accounted for an estimated 20% of domestic clothing sales in 2005.

Indian organized retail industry is poised for growth. Apparel sector in particular has a great
opportunity with alignment of Indian economy to globalised markets. With the widespread use of
sales promotions- short term activities which provide material inducements to consumers and
trade it becomes imperative for managers to understand such practices and understand
challenges.
As apparel retail is led by fashion, a player needs to keep a close watch on fashion amongst
teenagers as they are the trend setters. Role of Bollywood in spreading fashion needs to be
understood. Seasonal variations on stocking pattern and need to clear inventory at the end of
season should be understood by apparel retailer. Typically once an item is sold from the outlet,
retailer ensures that there is no repetition of same. It gets replaced by different design, style,
color. Importance of store layout, décor is very critical. A browser visiting the store frequently
7
likes to see changes in the layout otherwise he may carry the impression that stocks are not
moving out of the store. Category management becomes very crucial function as transformation
of design into production and delivery has to be completed before fashion or fad changes in the
market. With the advent of modern format retailers and the growth of plastic cards, affluent
urban Indian are shopping like never before. They spend mornings browsing in stores looking for
deals or latest styles.

This highlights the importance of sales promotions- short term activities which induces trade or
consumer to buy now rather than in future as the value of apparel after the season, goes down
substantially and inventory carrying burden turns out to be very high. Apparel retailer needs to
understand critical role of sales promotions. Attractive promotions induces purchase
acceleration, stock piling and brand switching on the part of a consumer which substantially
reduces retailer’s financial and inventory risk and consumer’s financial risk and psychological
risk.

Literature review
Liu, Yuping, (2007) found out the Long-Term Impact of Loyalty Programs on
Consumer Purchase Behavior and Loyalty. Using longitudinal data from a
convenience store franchise, the study found out that consumers who were
heavy buyers at the beginning of a loyalty program were most likely to claim
their qualified rewards, but the program did not prompt them to change their
purchase behavior. In contrast, consumers whose initial patronage levels were
low or moderate gradually purchased more and became more loyal to the firm.
For light buyers, the loyalty program broadened their relationship with the firm
into other business areas. Thus there is a need to consider patronage to decide
rewards for loyalty programmes.

Rationale for sales promotion activities

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Usage of sales promotion activities has a direct impact on behavior as it motivates a consumer to
buy now rather than in future, enhances value of an offer temporarily till the promotion period,
encourages switching, reinforce or reward loyalty etc.

Broadly, objectives set for these activities are;

i) to generate store traffic,

ii) to move excess inventory,

iii) to enhance store image and

iv) to create a price image( high or low).

Traffic building is achieved by special event promotions like Diwali, Rakshabandhan

promotions; inventory reduction through end of season sale; creation and building store image
through feature advertising and displays and joint promotions and price image by highlighting
the discounts. It helps consumer reduce not only financial risk but also psychological and social
risk by making consumer confident of his/her purchase, conformation to group norms by
shopping at famous stores/brands and possibility of acquiring well known branded apparel
during promotions. Promotions may induce non buyers to walk in to the store and loyalty
programmes may encourage to buy more, more often or upgrade to better quality. Exciting
promotions also have tendency to generate positive word of mouth and help consumer feel a
smart shopper. Thus not only utilitarian benefits like, saving of money, time or quality
upgradation but hedonic benefits like feeling confident, feeling of excitement and entertainment
etc.

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 United Colors of Benetton.

OVERVIEW

A global brand, and one of the most well known in the world, United Colors of Benetton has an
international style that combines color, quality and fashion. Each season the womenswear,
menswear, childrenswear and underwear collections offer a total look for everyday, for work and
for leisure, in the city and outdoors. The Benetton Baby label is a new product line dedicated to
the prenatal and the under-fives world.

The brand is present in many other sectors, from the elegant accessories to the eyewear lines and
perfumes, from the home collection to baby products. The above products are available in
selected specialized shops worldwide.

Today, the Benetton Group is present in 120 countries around the world. Its core business is
10
fashion apparel: a group with a strong Italian character whose style, quality and passion are
clearly seen in its brands, the casual United Colors of Benetton, the glamour oriented Sisley,
Playlife American college style and Killer Loop street wear. The Group produces about 160
million garments every year. Its network of more than 5,500 contemporary stores around the
world, offers high quality customer services and generates a total turnover of over 2 billion euro.

FOUNDERS

Luciano, Giuliana, Gilberto and Carlo Benetton, launched the activities of the Benetton
Group in 1965. The company is today present in 120 countries around the world. Its core
business is fashion apparel with the casual United Colors of Benetton, the glamour oriented
Sisley, Playlife American college style and Killer Loop streetwear brands. Benetton Group is
listed on the stock exchange of Milan.

LucianoBenetton
Born in 1935, Luciano Benetton is Chairman of the Benetton Group. He is also on the Board of
Directors of Edizione Holding, the family-owned financial holding company and was a Senator
of the Italian Republic from 1992 to 1994.

HEADQUATER

VillaMinelli
Benetton Group's Corporate headquarters is located at Villa Minelli in Ponzano, about 30 km
from Venice. Villa Minelli is a complex of sixteenth century buildings of great historical and
cultural interest.

The villa was acquired by Benetton in 1969 and the task of restoring and remodernising the
complex, entrusted to architects Afra and Tobia Scarpa, took over fifteen years. From the mid
1980s Villa Minelli became the headquarters of the Group and home to all its strategic functions.

STORES OF UNITED COLORS OF BENETTON

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AUSTRIA - Vienna HONG KONG - Hong Kong FRANCE - Paris

PORTUGAL - Lisbon FRANCE - Paris UK - London

HISTORY

1960s The idea of color.

1965 The Benetton Group is established.

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1970s A business model making the
difference: unique, flexible and
innovative.

Benetton communication
1980s campaigns: known all over the
world.

A global company present in 120

1990s
countries.

Benetton grows with the market:

about 160 million garments sold
2000s
annually in more than 5,500
contemporary stores.

BRANDS OF BENETTON

Undercolors of Benetton is an extension of the Benetton brand,

featuring underwear, beachwear and sleepwear collections, as well
as accessories for women, men and children. A wide selection of
recurring basic colors is enriched every season with the latest
trends. Undercolors is available in its own chain of stores which
now has more than 500 locations in thirty countries and in selected
Benetton Shops.

Sisley

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 This is the Group's most fashion forward brand. Sisley presents
elegant and seductive collections, with special attention given to the
choice of design, fabrics and new shapes. Its creative artists and
independent sales teams concentrate their efforts on its image and
on strong-impact advertising campaigns. The brand has created the
very fashionable Sisley Young line for children from 8 to 12 years
old.

Playlife is the Benetton sportswear brand that redefines a style. Its

clean and elegant collections display a blend of the American
college, exclusive sports clubs and a strong sense of individuality.
The brand's new store concept reflects the same values and
highlights their emotional content.

An expression of our time

"Communication should never be commissioned from outside the company, but conceived
from within its heart".

Luciano Benetton

Benetton Group's advertising campaigns are not only a means of communication but an
expression of our time. Through their universal impact, they have succeeded in attracting the
attention of the public and in standing out amid the current clutter of images.

The campaigns have gathered awards and acclaim worldwide; by the same token, they have
aroused strong reactions - at times ferocious, at times simply curious, confirming once again that
they are always a focal point of discussion and of confrontation of ideas.

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Several of the communication projects created by Fabrica, Benetton’s research center have also
been developed in cooperation with prestigious associations (including FAO, UNV, WFP)
obtaining important acknowledgements at an international level.

Benetton was well known for its colorful and provocative advertisements (Benetton termed its
advertising and marketing activities as Communication Strategy). The company employed
unusual, controversial advertising techniques and themes that used “shock value” and the power
of photography to grab viewers’ attention. Unlike most advertisements which centered around a
company’s product or image, Benetton’s advertising campaigns focused on social and political
issues like racial integration, AIDS awareness, war, poverty, child labor, death, pollution etc. The
advertisements initially succeeded in raising the brand's profile, but eventually began to cause
dissatisfaction among customers, retailers, government bodies and various international non-
profit organizations.

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Financial Highlights

Year 2007 (a) 2006 (a) 2005 (a) 2004 (a) 2003 (b)

Revenues (million euro) 2,085 1,911 1,765 1,704 1,859

Net Income (million euro) 145 125 112 109 108

(a) These figures are IAS/IFRS compliant and not comparable with the previous years
(b) These figures are compliant with Italian accounting procedures

Sales by Region

Sales by Brands

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Benetton designs only two collections a year, expect one huge sale in the middle of each season
rather than a rotating clearance rack.

DESIGN:

A staff of 300 designers from all over the world creates the collections for the casual United
Colors of Benetton, the glamour oriented Sisley, Playlife American college style and Killer Loop
streetwear brands.

The design team is also engaged in researching new materials and creating new lines for
different targets from children, men and women to expectant mothers, offering them not only
practical and modern styles but also maximum comfort.

The result is the latest trends in design and a rich output of many models a year which are
realized with computer assisted design systems fully integrated with the rest of the company's
production phases.

PRODUCTION:

Consistently high quality is one of the fundamental characteristics of the Benetton production
process from the raw materials to the finished garment.

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A constant commitment to innovation, a crucial factor for development, has always characterized
the Group’s business organization, from communication to IT, from research into new materials
to integrated logistics. Special attention is given to innovation in production, where all systems
and equipment are totally renewed every five years.

The Benetton production system, co-ordinated by a high-tech facility at Castrette (Treviso, Italy)
is capable of turning out about 160 million garments every year.

Dyeing
Since the beginning dyeing has always been a crucial phase in the
Benetton production process. The dyeing vats are operational 24 hours a
day.

Computerized Knitting Machines

Benetton is the world's largest consumer of pure virgin wool and
operates with a structure of computerized machines that are
programmed to operate all knitting phases.

Seamless Sweater
One of Benetton's innovations is the computerised knitting procedure
capable of producing a complete, seamless sweater in half an hour
thanks to a software program conceived by Benetton specialists.

DISTRIBUTION

From the very beginning, Benetton decided to maintain direct control of the logistics phase and
has invested heavily in automating logistics processes in order to achieve total integration within
the production cycle, from customer orders to packing and delivery.

Automated Sorting System

These automated machines are capable of assembling individual orders
for Benetton's more than 5,500 shops worldwide.

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About 160 million flat and hanging garments are automatically sorted
every year, packed into boxes and sent directly to the automated
distribution system through a tunnel of approximately one kilometer.

Automated Shipping
The Automated Distribution System covers an area of 20,000 square
meters, with a total capacity of 400,000 boxes, and is able to handle
40,000 incoming/outgoing boxes daily with a workforce of only 24,
compared to the 400 people normally required in a traditionally
organized operation.

The finished product is sent directly to the Group's more than 5,500

retail outlets in 120 countries worldwide.

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Comparative Study of Brands

Store name Pantaloon Lifestyle Westside United colors of

benetton

Format Type Multibrand Multibrand Exclusive Exclusive

Tata(Trent group

Positioning Family store Style & Enjoying the Style

affordability change

Floor Size 28000 sq. ft 50,000 sq. ft 15000-30000sqft. 20000-

25000sqft

Categories Apparel Menswear, Apparel & Apparels and

&accessories for women wear, accessories for accessories for
men, women & home furnishing men, & children men,women and
children children
women

Average Rs.1800 NA Rs 800 Rs.1000

billing per customer

Average footfalls 1000on weekday 100-120 on 1200 in week 100-150 on

& 1500 to 2000 weekday & upto days & 6000 weekday and
on weekends, 250 on weekends during week end upto 300 on
holidays weekends

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SALES PROMOTION

1.End of season Yes No Yes Yes

2.Festive Promotions Yes Yes Yes Yes
(Diwali,
Christmas etc)
Loyalty card Yes Yes Yes Yes
Programme
Special Promotion Yes (Exchange Yes No No
(event) offer)
Joint promotion No Yes No Yes
Media used Hoardings,print,el Hoardings, In Print, electronic, Print, hoardings
ectronic (SMS, E- store hoardings, In store and instore
mail),POP
Promotion Price off, free Lucky draw, Cause related, gift Price off,
type gifts, exchange discounts, vouchers, discounts,
offer contests, free gifts discount, ticketsize offer or
contest,combo, coupons
coupons
Evaluation Sales, Quarterly Sales Sales,Quarterly Sales, profit
of promotion profit profit

INFERENCES FROM TABLE

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From the above table which gives comparative picture of various sales promotion activities and
manner of announcement, evaluation etc., it is clear that three out of four stores engage in end of
season sale. This reinforces the fact that seasonality affects apparel sector and hence it becomes
critical for a retailer to clear off the stocks at the end of season otherwise he may have to incur
substantial inventory carrying costs, allocate scarce shelf space and out of fashion apparels
maybe worthless- may remain unsold forever. Thus stock clearance seems to be very important
objective for apparel retailer in using end of season sale twice in a year wherein discount given is
upto 50% of the MRP(Maximum retail price).

Loyalty cards to reward loyal users and encourage them to visit the store often and buy more by
offering wide range for men, women and children. Some store also offer home furnishings,
accessories and footwear, thereby providing convenience for one stop shopping. Examining the
various terms and conditions of loyalty programme revealed that some rewards were quite
complex and confusing. e.g. lifestyle’s card- Inner circle. The conditions to be fulfilled is not
very clear to a card member. For example, if any other promotions are prevalent then purchase
made during those promotions would entitle for the card reward points or not was not very clear.

All the stores used in-store media to announce promotions. Use of only instore media would
restrict the announcement to those who walk into the store. It can be assumed that only loyal/
frequent visitor would know about the offers. Whereas variety of media used would enhance
footfalls to the store and trigger word of mouth.

Every retail outlet measures impact of sales promotion activities by looking at sales made during
the promotional period. Few others also look at the footfalls, conversion from footfall to buyers,
average bill size during promotions etc. Very few measure profits made during promotions by
relating revenues to costs of promotions.

PIE CHART ANALYSIS

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Q.1. I have difficulty controlling my urge to buy when I see a good offer.

Fig. 1
strongly disagree Disagree neutral Agree strongly agree

13% 8%

21%

35%

23%

35% of the sample are not affected by the offers followed by 23% those are neutral
Any such offer, followed by 21% which strongly agree that they are affected by the
Offers.

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Q.2. When I see a good deal, I tend to buy more than that I intended to buy.

Fig. 2
Strongly Disagree Disagree Neutral Agree Strongly Agree

0%

13% 16%

28%
43%

43% of the samples agree that they are intended to buy when there is
any good scheme.

28% on the other hand are neutral to any such offer. 16% people disagree
, and only 13%

strongly agree.

24
Q.3. I tend to choose which store to shop in depending on eye-catching window displays.

45% of the sample agree that interesting window displays catch their attention, 33%

25
 are neutral, 17% disagree that they are attracted by interesting windows.

Q.4. I get an idea of what I want to buy after looking I through in-store form/mannequin
displays.

33% of the sample agree that displays on mannequins give them an idea what to buy.

27% disagree on this, 11% strongly disagree and only 3% strongly agree with it.

26
Q.5. When I see clothing featuring a new style or design on display, I tend to buy it.

35% of the sample agree that new style in displays do interest them. 25% and 22%
disagree and neutral respectively to this. 11% strongly agree and 7% strongly disagree

To it.

27
Q.6. I tend to rely on store displays when I make a decision to purchase clothing.

35% and 37% agree and strongly agree respectively that their buying decisions are
strongly influence by the store displays. 25% are neutral and 5% strongly disagree.

28
Q.7. When I see clothing that catches my eye I tend to try it on without looking through the
whole section.

35% agree that good appeal of merchandise makes them to buy impulsively without going
through whole section. 25% disagree to this. 18% are neutral to it. 14% strongly agree to
it. 85 strongly disagree to this.

29
Q.8. When I walk along the aisle, I tend to look through the clothing close to me.

45% of the sample size agree they not go much deep in selecting , what is
near to them. 39% are

Neutral to it. 10% of the sample size disagree and only 65 strongly
disagree to it.

30
Q.9. If I see an interesting promotional offer (reduced price, sales promotion, and etc.) on
instore signs, I tend to buy.

strongly
fig9 disagree
3% disagree
6%

strongly agree
22%
neutral
28%

agree
41%

41% of the sample size agree that discounts and promotional offers tend to attract their
attention and influence them to buy the product. 22% strongly agree and 28% are neutral
to such offers respectively.

31
Q.10. Sale/ clearance signs entice me to look through the clothing.

59% of the sample size agree that they are sales and clearance signs entice them to select a
product. 24% are neutral, 16% disagree.

32
Q.11. When I see a special promotion sign, I go to look at that clothing.

fig11
strongly disagree disagree neutral agree strongly agree

0%

19% 10%

18%

53%

53% of
the sample size agree that good offer on a product makes them to look at it. 19% and 18%
respectively strongly agree and are neutral to such offers.

Q.12. I am more likely to make an unintended purchase if the clothing has a sale or
clearance sign.

33
 fig12
strongly disagree disagree neutral agree strongly agree

14% 10%

17%

27%

32%

32% are neutral and do not purchase unintended even if sale or clearance sign is there.

27% agree and 17% and 14% agree, disagree and strongly agree respectively to it.

RECOMMENDATION

From the study it is apparent that use of sales promotions is quite widespread and variety of activities
are used to address variety of objectives; clear off old stock, load the consumer, encourage brand
switching, to reward the loyal user, to create excitement at point of purchase etc.

The manager in charge of apparel retail operations need to understand impact of various types of
promotions on consumer behavior and objectives attained. Too frequent use of promotions may
evoke indifferent attitude among consumers or shape deal to deal buying. Predictability of
34
promotions (promotions linked to festivals like Diwali) may result in coinciding purchase with
such promotions leading to loss of margin an opportunity loss to sell at full price.

Loyalty card programmes require good administrative support and good database records and data
mining abilities to exploit to the fullest. Also IT investments are required to keep records and
evaluate the impact. Big players like Pantaloon have a policy to invest in IT. They have implemented
SAP so database is available. Such investments in decision support systems may give competitive
edge to retailers.

The retailer must understand critical role of integrated marketing communications which will signal
unified message and image about the brand/ store. To what extent promotional calendars need to be
unified across markets for the chain and to what extent local managers need to be given freedom to
plan their promotions in local areas is a constant struggle between head quarter and regional chain
stores.

CONCLUSION

Accordingly people have agreed that controlling their urge, when they see good deal, they
depend upon eye catching window displays. They get an idea of what they are looking for in the
store.

People agree that when they see interesting offers on in store signs they tend to buy. They are
neutral when it comes to buy to look through the clothing.

35
The people are neutral in approach when it comes to unintended purchase of the clothing has a
sale or clearance.

REFERENCES

1. Hyllegard, Karen; Eckman, Molly; Descals, Alejandro Molla; Borja, Miguel Angel Gomez.,
”Spanish consumers' perceptions of US apparel speciality retailers' products and services
“Journal of Consumer Behaviour, Sep2005, Vol. 4 Issue 5, p345-362, 18p, 7 charts.

2. Kincade, Doris H.; Woodard, Ginger A.; Park, Haesun,”, International Journal of Consumer
Studies, Dec2002, Vol. 26 Issue 4, p294-302, 9p.

36
3. Liu, Yuping,” The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior
and Loyalty,” Journal of Marketing, Oct2007, Vol. 71 Issue 4, p19-35, 17p.

4. Meyer-Waarden, Lars; Benavent, Christophe,” The Impact of Loyalty Programmes on Repeat

Purchase Behaviour,” Journal of Marketing Strongl disagr neutral agree Strongl
Management, Feb2006, Vol. 22 Issue 1/2, p61- y ee y
disagr agree
88, 28p. ee

5. Lara, Pedro Reinares.,” Exploring the Benefits Obtained in a Loyalty Programme applied to
Retailing,” European Retail Digest, Winter2005 Issue 48, p48-52, 5p.

6. Deeter-Schmelz, Dawn R.; Moore, Jesse N.; Goebel, Daniel J.,” prestige clothing shopping by
consumers: a confirmatory assessment and refinement of the precon scale with managerial
implications”, Journal of Marketing Theory & Practice, Fall2000, Vol. 8 Issue 4, p43, 16p.

7. “Consumer Lifestyles in India” Euromonitor, International Consumer Lifestyles

Database(2005)

8. Sales Promotion Practices in Apparel Retail Sector and Challenges Ahead by Dr. Preeta H.
Vyas Indian Institute of Management, Ahmedabad.

9. Rita Clifton and John Simmons ,Brands and Branding, , edition1st.

SAMPLE QUESTIONNAIRE

Do you agree with the following statements?

1. I have difficulty controlling my urge to 1 2 3 4 5

37
 buy when I see a good offer.

2. When I see a good deal, I tend to buy more 1 2 3 4 5

than that I intended to buy.

3. I tend to choose which store to shop in 1 2 3 4 5

depending on eye-catching window displays.

4. I get an idea of what I want to buy after looking 1 2 3 4 5

through in-store form/mannequin displays.

5. When I see clothing featuring a new style or 1 2 3 4 5

design on display, I tend to buy it.

6. I tend to rely on store displays when I make a 1 2 3 4 5

decision to purchase clothing.

7. When I see clothing that catches my eye 1 2 3 4 5

I tend to try it on without looking through
the whole section.

8. When I walk along the aisle, I tend to look 1 2 3 4 5

Through the clothing close to me.

9. If I see an interesting promotional offer 1 2 3 4 5

(reduced price, sales promotion, and etc.) on in-

38
 store signs, I tend to buy.
Strongl disagr neutral Agree Strongl
y ee y
10. Sale/clearance signs entice me to look disagr agree
ee
1 2 3 4 5
through the clothing.

11. When I see a special promotion sign, I go to 1 2 3 4 5

look at that clothing.

12. I am more likely to make an unintended 1 2 3 4 5

purchase if the clothing has a sale or
clearance sign.

39