Business Management 2018-20

Section C [Group 8]

Amar Punekar B18128

Burhanuddin Hakim B18140
Naman Sharma B18152
Sanya Dhandhania B18164
Uditi Gupta B18176
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Contents
CHOICE OF PRODUCT ........................................................................................................... 3
THE INDIAN MARKET PLACE: RETAIL .............................................................................. 3
MACRO ENVIRONMENTAL ANALYSIS.............................................................................. 6
Demography of consumers .................................................................................................... 6
Economic environment of the market..................................................................................... 7
Natural Factors ...................................................................................................................... 7
Technological Factors ............................................................................................................ 8
Political Factors ..................................................................................................................... 8
Social and cultural factors ...................................................................................................... 9
Legal ..................................................................................................................................... 9
MICRO ENVIRONMENTAL ANALYSIS ............................................................................. 10
The firm............................................................................................................................... 10
Suppliers.............................................................................................................................. 10
Marketing intermediaries ..................................................................................................... 11
Customers ............................................................................................................................ 11
Competitors ......................................................................................................................... 11
Publics ................................................................................................................................. 12
INDUSTRY AND COMPETITOR ANALYSIS...................................................................... 14
India’s retail industry: $600 billion ...................................................................................... 14
Reliance Retail:................................................................................................................ 14
D-Mart: ............................................................................................................................ 14
HyperCity: ....................................................................................................................... 15
Unorganised Retail Sector................................................................................................ 16
SEGMENTATIONAL ANALYSIS ......................................................................................... 17
Basis of Segmentation ......................................................................................................... 17
Targeting ............................................................................................................................. 18
Positioning........................................................................................................................... 19
CONSUMER ANALYSIS....................................................................................................... 20
CONSUMER INSIGHTS ........................................................................................................ 21
MARKET MIX ....................................................................................................................... 22
SWOT ANALYSIS ................................................................................................................. 24
BCG MATRIX ........................................................................................................................ 25
STRATEGY ............................................................................................................................ 26
Current Strategy................................................................................................................... 26
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Sales ................................................................................................................................ 26
Supply ............................................................................................................................. 26
Value Added Services (VAS)........................................................................................... 27
RECOMMENDATION ........................................................................................................... 27
Improve customer service .................................................................................................... 27
Set up online ........................................................................................................................ 27
Tap rural markets ................................................................................................................. 28
CONCLUSION ....................................................................................................................... 28
REFERENCES ........................................................................................................................ 29
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CHOICE OF PRODUCT
Industry: Retail
Brand: Big Bazaar
Parent Company: Future Group
Reason: The reason for choosing Big Bazaar for marketing study are following:
• Big Bazaar is one of the oldest and largest hypermarket chains of the country. Founded in
2001, it has achieved unprecedented growth
• The brand is at the helm of one of the fastest growing industry in the country – modern retail
• Big Bazaar has been able to penetrate into some of the most price sensitive segments while
maintaining high quality. It will be interesting to analyse what customers are looking for in
this segment
• Big Bazaar is a classic example of how companies can turn profitable with economies of scale
• We have over a decade and a half worth of data available about the growth of the company
• Big Bazaar offers an unique example of how a brand with deep consumer insight can achieve
unprecedented levels of success
• With competitors like Walmart entering the market, it will be interesting to see how Big
Bazaar responds
• With threat pouring in from online retail platforms like Amazon and Flipkart, it will be
interesting to analyse what could be the effect of new competition on the brand

THE INDIAN MARKET PLACE: RETAIL

India has the second largest population in the world. As a consequence, the market potential is
huge for various industries. With the advent of urbanization and increase in the consumerism of
middle class, retail industry is one of the domain that is seeing a steady growth. Currently, retail
industry accounts for 10% of the nation’s GDP [Gross Domestic Product] and employs 8% of the
total employed population1.

Retail sector deals with the selling of consumer goods and services to the end customers.
Currently, India is among the top five retail market destination in the world2. However, the
country’s retail market of $670 billion worth largely consists of unorganised players. Unorganised
retail sector includes local shops, small and standalone department stores. Not surprisingly, for a
developing nation like India, these small and standalone departmental stores make up for the 93%
share of the retail industry. As a result, retail industry is largely fragmented market in the country.
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Although the organised retail chains only form 7% of the total retail market, there has been a
steady growth since the last decade. Owing to rising per capita income and affluent middle class
segment, it can be expected that along with expansion of retail sector, organised retail chains will
grow rapidly. Furthermore, with efficient business models, larger capitals and rapid urbanisation,
the market share for the organised retail chains are bound to increase as against the unorganised
stores.

Retail industry in India has a widespread diversity in nature with respect to different parts. While
rural market is entirely dependent on local standalone stores, urban market has a wide range of
options available. The urban marketspace include Malls, hypermarkets and supermarkets,
conventional stores and e-commerce sector. The trajectory of e-commerce is expected to go higher
in the coming years. Therefore, there would be a steep rise in market competition expected in the
near future. Furthermore, unorganised sector would be the one taking major blows in market share
in the cities.

Since the turn of the decade, consumer behaviour towards shopping has drastically changed. From
viewing shopping as a mere buying of goods and services to attributing it as an experience and a
day out, customer perception has changed by a long mile. With the advent of Malls and
supermarkets, the consumer populace has started to spend more time in shopping owing to the
ambience these retail outlets provide.
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Consumer spend in India is expected to double to $3600 billion by the end of 2020. IBEF stated
that the consumer expenditure was $1595 billion in 2016. Rise in disposable income and higher
value for quality goods is the reason for boost in customer expenditure. Owing to growth in
economy, Indian Retail is one of the fastest growing markets in the world.
A third of the worlds FMCG stores are located in India. (10 out of 30 million). The market for
retail is expected to reach US$ 1.1 trillion by 2020. IBEF stated that the market in 2017 was US$
672 billion. Modern retail in India will grow to US$ 111.25 billion in 2019, currently it stands at
US$ 70.45 billion. With growing retail, the FMCG market is also expected to double.
Rural markets account for 60% of the consumer base for FMCG in India. Tier 2 and Tier 3 cities
are where Modern Retail is expected to grow.
There is a large scale entry of International brands such as Walmart and also a change in
government policies regarding FDI which will play a major role in the shaping of the modern
retail industry in India.
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The level of consumer confidence in India is high (Ranging from 128 to 136 compared to a global
average of 100). Consumer sentiments are a good indicator of the way a country grows. Eg: India,
Philippines, Indonesia and Vietnam have higher levels of confidence when compared to the rest
of the Asia Pacific countries. This has led to them growing faster and they show a higher potential
for growth in the future.

All the details above show us that India is a stable market and the potential for modern retail is
high and companies that initiate action will be able to gain large chunks of market share.

MACRO ENVIRONMENTAL ANALYSIS

Macro environment is essentially the external environmental factors that affect the marketing
strategy of a firm. These factors cannot be controlled, thus a firm has to come up with a strategy
which has to incorporate these factors. These external factors are extremely uncertain and more
often than not cannot be incorporated in to a future strategy of a firm. Thus a firm will have to
come up with multiple ways to tackle all sorts of issues that might affect the firm and its business
due to these external factors, Macro environment essentially consists of the demography of the
consumers, Economic environment of the market, Natural forces, Technology changes, Political
situations, Social and cultural factors of the economy.

Demography of consumers

These are factors which cater to studying the human population in terms of the density, location,
age , gender etc. These are the factors that are utilized for STP or more commonly known as
segmentation, targeting and positioning.

Marketers have also divided the world population into three parts currently which is as follows
a. Baby boomers: World war 2 – 1960s
b. GenX or Generation X : 1965- 1975
c. Generation Y : 1977-1992
d. Millennials – 1995 – 2003
This was an example of what the marketers have currently done to segment the population.

Coming to Big bazaar, Big bazaar is known to have the USP of having cheap products which can
compete with the local stores and even the local vegetable and fruit markets.
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Thus Big Bazaar typically caters to the Indian middle class consumers and specially the working
women and home makers who are the primary decision makers. Thus they come up with attractive
discounts and have ads in women magazines as well such that they can reach out to these women.

Economic environment of the market

These are the forces that affect the purchasing power parity of a consumer which essentially means
it affects the demand. Demand is the want that is backed by the purchasing power of an individual.
Thus in an economy there are trade cycles, economic resources, distribution of income and wealth
as can be seen. The economy typically goes through a real business cycle, it starts with a slow
growth, picks up pace and peaks and then slowly slides into recession and then slowly gets back
to its feet and the cycle starts again. The real business cycle has no timeline that has been specified,
however economists believe that it keeps happening and has been happening since centuries.

Taking Big bazaar into the picture we can say that if the market falls or the economy enters
recession, then the FMCG goods suffer a huge hit, as the consumers will now only consume the
essential goods and the sales of all other goods will get affected negatively. If the income level of
a family falls down, it would try to minimize its expense as much as possible, so even though it
might buy some groceries from Big Bazaar for other certain products where Big Bazaar is not
competitive enough it would choose to either not buy that product at all or not buy it from Big
bazaar.

Natural Factors

Natural factors are those which are affected by the natural resources. These factors are weather
changes, climate change, natural calamities such as Tsunami or floods etc. These factors can affect
manufacturing factories by forcing them to shut down as well or by hindering transportation
facilities due to which inventories will take a huge hit. Thus these factors would usually affect the
supply chain operations due to which the retail outlets such as Big Bazaar would not be able to
provide its customers with their requirements and thus reduce overall customer satisfaction.
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Technological Factors

Technology is the one thing that is constantly changing. It forms a paradox in itself, by being
consistent at change. These factors create new markets and many different benefits to the
marketers. The internet is continuously evolving and so are gadgets. It was not even 50 years ago
that TV was invented and now we have moved from a plain black and white television to a large
LED Flat screen TV.

In the retail sector, E Commerce is expected to grow 3X in 3 years as more and more customers
are shifting towards convenience over everything else. E commerce gives the customers the ability
to sit at home and get everything from clothes to groceries delivered at home as per their
convenience. This facility has started even in tier 2 cities and will slowly expand as well. With the
advent of digitization consumers have heavily started relying on technology and stopped relying
on modern trade as time is passing by.

Political Factors

This includes any action by the government such as the legislations in place, any policy or act
which directly pertains to the business of the consumer. These are the factors that determine the
basic set up of a business in an economy as the Govt is the body which sets the rules and
regulations according to which the business has to run. If the business fails to do so it will have to
pay a heavy fine or worst case scenario it will have to shut down which is not something any firm
would be comfortable with. The govt will affect the organization not only at the local level but
also at the national and international level. Thus the marketers and the business will have to look
at the Govt and the political forces to understand gauge how the government would affect their
company.

There are certain political factors that can cause disruption in the economy as well. If on a certain
day due to elections, roads are blocked, transportation will get affected which in turn will affect
the supply chain. Thus a firms supply chain might get negatively impacted due to political events
such as elections, rallies etc.
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Social and cultural factors

Cultural factors are those such as living styles, religion etc. In addition to culture a firm must
ideally even engage in welfare of others. Thus to incorporate this concept, companies have started
the concept of CSR which is known as Corporate social responsibility.
In addition to cultural factors, which mean that firms must respect all cultures and religions in
order to operate efficiently and effectively.

Big Bazaar is known to have a diverse set of people from all over India who come from different
ethnicity and background. In this aspect, big bazaar is one of the best firms. During each festive
season, it has something for all kinds of festivals, be it Eid or Holi or Christmas, it will decorate
its store accordingly with respect to the culture. This is another reason why consumers love going
to Big Bazaar. Consumers have increasingly started paying more attention to grooming and
lifestyle products which were initially thought to be not important enough have suddenly become
one of the most important products for a middle class consumer.

Legal

Legal factors are extremely important for this industry due to the multiple laws related to labour
and business practices. Labour laws especially are very stringent as they are imposed by the ILO.
There are other laws which are related to packaging and product content as well. If any retailer
violates any law, the repercussions will be severe.
In India there have been multiple law changes which have directly impacted the FMCG industry,
especially Big Bazaar. Law changes such as the plastic ban in Maharashtra had a huge impact on
the strategy of Big Bazaar as it would give its products in huge plastic bags and with the ban, it
couldn’t do that anymore leading to switching the bags. Over time there have been taxation
changes such as GST as well. GST had a huge impact on FMCG, so did demonetization.
Demonetisation rendered consumers helpless as they did not have enough cash to buy the
essentials, thus they would have turned to hyper markets like Big bazaar. However at the same
time they would be buying lesser goods as compared to before because of the cash crunch. Thus
overall the effect would have been negative leading to a drop in FMCG sales. As per Hindustan
times, there was a 20-40% drop in FMCG sales due to demonetization as well.
GST is supposed to vitalise the FMCG industry over a period of time
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MICRO ENVIRONMENTAL ANALYSIS

The Micro environment of a firm includes the way it functions. Thus it will include itself, the
suppliers, the intermediaries, customers, competitors and the public (which will affect the
company)

The firm

The firm has a certain hierarchy that has been set in place. The top management sets the goals that
have to be achieved by the firm as a whole. The strategy, policy, Vision etc is also decided by the
managerial team of the firm. Now according to skillset, there are various departments that are
made to maximize efficiency and incorporate specialization which increases efficiency of the firm.
There are three major parts of a firm which are Marketing, Finance and Operations. These three
together determine the workings of a firm. Different kinds of sectors will have one or two priority
parts for e.g. a bank will have Finance as priority, however a FMCG like Big Bazaar will have
marketing and operations as its priority. In addition to this there also has to be market surveys and
research that needs to be done, that is done by the R&D department to understand what a consumer
needs. Thus these surveys and feedbacks are something that Big Bazaar must frequently take in
order to be able to serve their consumers better.
In addition Big bazaar follows its vision in an attempt to serve all Indian customers by having
multiple stores pan India so every customer everywhere has a big Bazaar nearby. All the
employees attempt to fulfil its vision

Suppliers

This is the operations part of the firm. They are the delivery system and are extremely important
in the overall scheme of things. Suppliers provide the company with the raw materials that they
need for production. If a supplier doesn’t give quality products, it will lead to low rate products
which will not last long or may even break apart in transit. This will lead to a huge loss in the
firm, this is something that every firm must be very careful about. The suppliers have to be those
which believe in quality over quantity, as if quality gets compromised the firm will lose out on
consumers which will be much more harmful for them if the amount of product they have is less
at a particular point of time due to quantity issues. They also need to make sure that the products
are there in the stores on time as the delay of goods would lead to loss of sales leading to the loss
of goodwill in the long run. Thus they attempt to have long term relations with the suppliers. Other
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factors that can affect supply is labor. As times have evolved, there has been formation of trade
unions where the workers demand higher wage rate which might at times not be possible for the
firm to pay, at that point there might be a strike which would lead to shut down of production
leading to further losses in the amount of goods produced. Thus these are things that have to be
looked after and looked after very carefully.

Marketing intermediaries

The intermediaries are those who assist a firm to accomplish its marketing strategy. They
essentially help a firm in promotions, sales and distribution of the goods to other customers.
Big bazaar has advertisements and a tagline which says sabse accha aur sabse sasta, the ad agency
that looks after this is the marketing intermediary.

Customers

Customers are the individuals who buy the goods, they may or may not consume it but the
purchasing is done by them. The customer may buy a certain good for different reasons from one
as basic as he or she got attracted to a poster to one which has a long chain of events leading to
the customer buying the product.
Big Bazaar typically looks at the middle class segment of India as this is the fastest growing bit
and also the segment that Big Bazaar essentially caters to with its products in a range which are
competitive enough with the local stores. This is one of the shortcomings of Big Bazaar as they
don’t have an intimate relation with customers and they have not concentrated on building loyalty
in customers.

Competitors

A competitor is a firm that produces goods that can be substituted with those of the firm. Thus the
firm must have a marketing strategy such that it can showcase its product in a better light as
compared to that of its competitors product
Big Bazaar has multiple competitors in the current market from the local stores to other hyper
markets such as Reliance Fresh etc. Due to the extremely large consumer group, Big Bazaar along
with its competitors are thriving currently.
The retail sector is very fragmented and organized retail has the least market share of about 10%
overall thus the competition for this 10% is extremely fierce.
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Publics

Publics include those groups which have an interest and an impact on an organizational ability to
achieve its goals and objectives. The publics are of five kinds mainly – Financial Media,
Government, internal and General Public.

The impact of these publics have been discussed in the above analysis.
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INDUSTRY AND COMPETITOR ANALYSIS

India’s retail industry: $600 billion

Organized Retail: 10% market share (Scroll.in, 2017)

This tells us that the retail industry in India is more towards a perfect competition rather than a
monopolistic or oligopolistic market. Hence, the demand is very price sensitive and all suppliers
will have to be competitive with their pricing. ‘India is yet relatively new to organized and modern
retail.’ Major shopping takes place at local ‘kiraana’ and grocery stores.

Major Competitors:

Reliance Retail:

Owned by: Reliance Group

Turnover: Rs. 69,198 crore
Number of Stores: 8,533
Locations: 5200
(Reliance Retail, 2018)

Reliance retail has a strong backing from its parent company and builds its USP over trusted
quality. It positions itself as a quality and price alert firm. It owns various private labels to
boost sales inside the store. Reliance retail also boasts of a very strong distribution network.
Reliance retail also sources directly from farmers, hence increasing their margins and giving
them flexibility to reduce prices when needed. But reliance has low SKUs due to backend
infrastructure not being very good.

D-Mart:

Founded by: Mr. Radhakishan Damani

Owned by: Avenue Supermarts Ltd. (ASL)
Turnover: ~ 67000 crore
Locations: 158
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D-Mart has focused on gains for the longer duration, this has enabled the company to increase
its returns with a price strategy that is value driven. D-Mart also shows a price-based
differentiation. Their prices are clearly lower than their competitors in most segments. D-Mart
has a large discount policy, all essential goods are generally sold in bundles at flat discount
rates. Competitors are unable to match these prices generally. They also have working
relationships with their employees, suppliers and other stakeholders which can be termed as
good.

D-Mart started about 15 years before a retail boom was established in India. But, it has not
capitalized on the first movers advantage. It has focused on a slow growth which has allowed
new entrants to enter the market and give cut throat competition.

D-Mart has a focus on certain areas and doesn’t have a strong presence in southern India

HyperCity:

Owned by: K Raheja Corporation Group

Turnover: ~ 67000 crore
Locations: 158

Hypercity is known to have very large stores with a range of products, from food and grocery,
small furniture to health. They are known to provide a very modern experience at their stores,
where the shopping environment is exciting for customers.
They are experienced with running retail outlets due to existing outlets of Shoppers Stop and
Crossword.

They are currently present in metros where the purchasing power of customers is high. Their
stores are located in malls or other convenient locations with large footfall. Due to their
previous ventures, they have brilliant management teams.
The scale at which they operate is very large, but very limited number of stores.

Because of their huge stores, they have large infrastructure costs. Their business model does
not allow them to expand to tier 2 and tier 3 cities, which Big Bazaar has been successful in
doing.
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They have the capabilities to expand to other tier 1 cities where they do not have presence
currently.
They position themselves to give a very good customer experience.

Unorganised Retail Sector

This sector has a lot of small vendors and have 90% of the current market share, Larger
organizations such as Big Bazaar are trying to capture this market by opening stores in tier 2
and tier 3 cities. The Indian organised retail sector is not as big as other developed countries.
But, they have been successful in capturing small chunks of these markets, at least in major
cities.

The unorganized sector faces problems such as:

1. Lack of good inventory practises
2. Lack of know-how
3. No standardization
4. Customers are currently shifting towards larger retail outlets
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SEGMENTATIONAL ANALYSIS
Market segmentation is the first step to decide the consumers a firm plans to target. Primarily,
market segments aims to split the market into multiple groups of consumers so that it becomes
easy to decide on the target consumer. Once the segments are created, analyzing them gives help
to better target the customer group and increase the customers substantially. Segmentations also
leads to creating better user experience for each type of customers which eventually leads to
customer retention.

Basis of Segmentation

Segmentation can be done in multiple ways depending on the product or services and the
characteristics of the consumers. Broadly, segmentation can be done on the basis of
demographics, geography, income level, willingness to pay for particular features etc.
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For Big Bazaar, segmentation is done on the basis of income. Big Bazaar has segmented the
consumers into four categories- Low Income, Lower Middle Class, Upper Middle class and rich
class.

TARGETING AND POSITIONING

Targeting

Based on the survey results and secondary research, the target group identified for Big Bazaar is
Segment 2 and Segment 3. Segment 2 targets at the Lower middle class whereas segment 3
targets at upper middle class.
For Segment 2, cheap prices is the key driving factor while for Segment 3 one stop shopping
destination and wide variety is the key driving factor.
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Positioning

We will position Big Bazaar as a one stop shopping destination with wide variety of products at
cheap prices. Also, since it provides huge discounts and run promotion schemes every now and
then, it is best suitable for Burhan Cluster.
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CONSUMER ANALYSIS
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CONSUMER INSIGHTS
From our interaction with the consumers along with the help of consumer survey, we could gather
many meaningful insights about Big Bazaar. One glaring observation we could draw was almost
all customers opined that their experience with Big Bazaar as satisfactory or good. However, they
were not ready to label their outing with the retail outlet as excellent. This led us to further look
into the reasons associated with this feedback. One of the major factors is Big Bazaar never
proactively focused on customer satisfaction in their strategy. They are more than happy with their
business model centred on operations and value pricing. However, with the advent of e-commerce
platforms and entry of many players including global players into the organised retail space, Big
Bazaar needs to focus on customer satisfaction part of their business.

Before delving deeper into customer satisfaction part, let us look at the positives of Big Bazaar
according to our consumer analysis. The first and foremost reason people prefer to shop in Big
Bazaar is because of its all under one roof availability. Since there are variety of products stacked
in a single outlet coupled with diversified portfolios available, people can shop here without any
hassles of visiting many shops. This convenience is the driving factor for the consumers to visit
Big Bazaar. The hypermarket space also provides a wonderful ambience with airconditioned
environment and ergonomic lighting. Since the shopping is no more a chore but an experience,
people prefer these hypermarkets for their ambience too. Hence, the wonderful ambience of the
outlets was another factor for higher footfalls. In addition to all these, one significant thing that
was responsible for higher sales at the retail space was due to Big Bazaar’s low pricing strategy.
The low and affordable prices attracted numerous customers diverting them from local
departmental stores.

However, there are some major shortcomings as discussed above. The main complaint from the
customer front was the long queue in the billing counter. With footfalls expected to grow over the
future, this is going to be a huge problem in Tier-1 outlets. Specially on weekends and holidays,
the long queues for billing will be a huge headache for both the customers and Big Bazaar. Hence,
the firm should focus on improving their operations in billing. Furthermore, the consumers also
complained about the customer assistance quality. Whenever there are high footfalls in the outlet,
the level of customer assistance seems to decrease drastically. This is another pain area that Big
Bazaar needs to focus upon in the future.
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To sum up our consumer analysis, the customers largely shopped at Big Bazaar due to lower
pricing, availability of variety of products under one roof and the great ambience provided by the
retail outlets. However, the overall consumer satisfaction was although satisfactory, is not
exceeding expectations. This is majorly because of long customer queues in billing and low
quality of customer assistance provided.

MARKET MIX

Big Bazaar offers wide variety of products in different categories.

They started out with clothing apparels and then diversified to
PRODUCT
grocery, electronics, furniture, footwears, jewellery, toys, movies and
music, craft supplies etc..
Value pricing is perhaps the biggest strength of Big Bazaar. With
reduced margins and lower price, they are taking away the customers
from departmental stores. However, there is no scope for bargaining
PRICE
with the set price. Adding on, psychological pricing like not rounding
off to next number (e.g. INR 9999/-) is prevalent along with
differential pricing.
With robust distribution channels, Big Bazaar has retail outlets setup
in more than 250 locations. The hypermarket space ranging from
PLACE 15,000 to 1 Lakh square feet provides a strong presence in its
localities. Currently, the retail outlets are situated mainly in the Tier
– 1 and Tier – 2 cities of the country.
Big Bazaar’s promotion has been mainly through television
advertisements. Bringing on campaigns like lowest pricing, they have
strategically focused their promotion on their target consumers.
PROMOTION
Furthermore, value added services like loyalty points and payback
programs have helped in gaining large customer base and increased
footfalls.
Big Bazaar employs trained staff for inventory management, billing
and customer assistance. In addition, they also employ various
PEOPLE
distribution and transportation channels. Tie-ups with local vendors
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for the supply of certain products to the outlet is specific to the

concerned retail centre.

A lot of emphasis is given to the process right from the procurement

stage to its billing. Specially in the recent years the supply chain
PROCESS process is considered of higher significance and Big Bazaar is
continuously improving its process as can be evidenced in its
inventory management.
Well planned stores with properly stacked good in the racks is the
way Big Bazaar operates. Like many supermarkets, it follows ‘the
PHYSICAL long way’, where the customers have to walk an anticlockwise path

EVIDENCE from entry to exit. This ‘long way’ helps in increasing the browsing
time of the customer. Furthermore, air conditioned ambience coupled
with ergonomic lighting helps in attracting the customers.
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SWOT ANALYSIS
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BCG MATRIX

Since Big Bazaar is the first of its kind retailing in India, it is enjoying the benefits of entering the
market first. Although the market share is very low compared to the entire retail space with
unorganised sector making up for 93%, the relative market share with respect to its peers is pretty
high. Furthermore, The market growth rate of Big Bazaar is on a very high rate of 13.4% growth
(as per Future Group’s financial report of 2017-18). Considering these factors, we can say Big
Bazaar is a Star business. Hence, in order to capture the projected market growth, huge
investments are needed for its financial growth.
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STRATEGY
Marketing strategy of a company is the approach to planning to gain sustainable competitive
advantage in the long term. The strategy defines how the product will be differentiated in the
minds of the customers. It takes into account the current position of the company along with the
resources it has to implement the decided strategy. In defining the marketing strategy, three
questions need to be answered:
1. Where are we now?
2. Where are we going?
3. How are we going to get there?

In case of Big Bazaar, we will first look at the current approach it takes to differentiate itself in
the minds of the customer and then move on to the desired state and our recommendations on how
to get there.

Current Strategy

In this report we will divide the current strategy in three parts and analyse them:
1. Sales
2. Supply
3. Value added services (VAS)

Sales

Competitive pricing – For a long time, the USP of Big Bazaar has been its low prices. It offers
an average discount of 6-8% on MRP on almost all its products. Big Bazaar has been able to do
this because of its excellent supply chain. It procures the products directly from the manufacturers.
It is also achieved by keeping large stocks, efficient warehouse and inventory management.
Playing the volume game – Big Bazaar heavily relies on volume to generate profits. Since
consumer goods business is highly competitive, the margins are not very high. Consumers are
highly price elastic and will shift to other providers if the prices are increased to shoot up the
margins. Kishore Biyani realised this a long time ago and relied on Economies of Scale to achieve
profitability.
Supply

Sophisticated inventory management – Inventory management helps in ensuring that inventory

levels are maintained in resonance with the demand at an optimum cost. Big Bazaar has
championed inventory management and relies on its efficient distribution channels to achieve low
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costs. It has made good use of technology and implemented a Automated Replenishment System
(ARS) to maintain inventory levels. This ensures that the customer touch points are not out of
stock and no customer loss occurs.
Strong distribution – Since Big Bazaar purchases products directly from the manufacturers, it
shortens the length of the distribution channel and thus saves cost. The purchased products are
stocked in warehouses (central distribution centres) and inventory levels are maintained according
to different factors such as perishability and seasonality. These products are then directly sent to
the retail outlets of Big Bazaar and to the customers.
Value Added Services (VAS)

Discount Schemes – Big Bazaar offers heavy season end sale discounts. It also reduces its grocery
prices every Wednesday to attract more customers and give them more value for money. Mega
sale events such as “Mahabachat” are also conducted.
Customer oriented schemes – Loyalty programs are offered to regular customers which includes
payback points. Subscription programs like Big Bazaar Profit Club are also provided.

RECOMMENDATION
Based on the survey conducted with the customers, we identified certain pain points and are
recommending that Big Bazaar takes the following steps to grow its market share. These
recommendations also include implementation strategies.

Improve customer service

From the survey, it is evident that the most crucial pain point for customers is the mediocre service
that Big Bazaar offers at its retail outlets. It was a common opinion that personnel are not available
to help them pick up products when required. Training of staff would be very crucial here to
increase the customer service and satisfaction.
Long queues are still a huge problem at the billing counter that significantly increases the non-
value added time a customer spends in the outlet. Big Bazaar needs to focus on improving its
operations space in order to strengthen customer service. Cues can be divided on the basis of
products purchased by customers.

Set up online

Online retail is a huge segment and urban market is shifting online. With initiatives like Amazon
Groceries, the customer base may shift to these e-retailers which offer more convenience than
offline retail stores like Big Bazaar. With an online presence, Big Bazaar will also be able to reach
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markets where it is currently not present. It should develop its own direct to customer platform
and market it heavily to ensure better penetration into new markets.

Tap rural markets

Rural markets are still ruled by highly unorganized players. Local kirana stores still dominate
these markets. With 60% of FMCG consumer base coming from these markets, it is imperative
that Big Bazaar increases its presence there to acquire market leadership position. Setting up retail
stores in Tier-2 and Tier-3 cities is also relatively inexpensive as compared to Tier-1 cities.

CONCLUSION
It is clear that Big Bazaar already enjoys a healthy position in the offline retail segment. It has
been able to organize a highly unorganized market very efficiently. It has been able to capitalize
on very accurate consumer insight and was able to offer superior value to the customers by keeping
the prices low. Still, 90% of the retail market is still up for grabs and a good organizational and
marketing strategy would play a pivotal role in deciding who comes out at the top in the end.
Improving customer service, setting shop online, and tapping the rural markets should be the way
forward to ensure high growth.
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