strategic retail management-a case study on simple call

2 0 1 1Assignment on Strategic Retail Management

A Case Study on Simplecallwww.simplecall.com

Prepared by:

Bashir Jaman [email protected]

Assignment on Strategic Retail Management- A case study on Simplecall

Table of Contents1.0 Introduction: ......................................................................................................................... 4 1.1 Mission of Simplecall: ..................................................................................................... 5 1.2 Vision of Simplecall:........................................................................................................ 5 2.0 Retailing concept: ................................................................................................................ 6 2.1 Customer Orientation: ...................................................................................................... 7 2.2 Coordinated effort: ......................................................................................................... 10 2.3 Value driven: .................................................................................................................. 12 2.4 Goal orientation: ............................................................................................................. 13 3.0 Comprehensive awareness of strategic implication: .......................................................... 14 3.1 The effect of recession: .................................................................................................. 17 3.2 Strategic option for retailers at the time of recession: .................................................... 17 4.0 Conclusion: ........................................................................................................................ 18 5.0 Recommendations: ............................................................................................................. 19 References: ............................................................................................................................... 20

Bashir Jaman copyright:[email protected]

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List of Figures

Figure No:1 2 3 4 5 6

Figure Name Retailing Concept Customer store loyalty model for retail service Porters value chain for retail store Elements of retail Mix Competition with Simplecall Strategic Direction for Simplecall

Page No07 09 13 15 16 17


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1.0 Introduction:Retail comes from the French word Retaillier which means sale in small quantities. Retailing is therefore defined as buying in large quantities from manufacturer or importers and selling in small quantities directly to consumers (Mathur,U.C.,2010). A retailer cans sell tangible goods such as food or clothes or intangible goods such as hotel accommodation, Voice over internet protocol (VOIP).

Management is a systematic process which is consists of planning, organizing, implementing and controlling to achieve organizational objectives through efficient use of people and resources (Tripathi and Reddi, 2008). The word Strategy means techniques, process, skills which is somehow linked with leadership, vision and long term objectives. Therefore strategic management means not only managing day to day business activities but also taking the organization forward with right mission and vision for long term success. Olsen et al (2008) defines strategic management as the ability of the management of the firm to properly align it with the forces driving change in the environment in which the firm competes. Robert J. Harrington & Michael C. Ottenbacher (2011) has divided strategic management process into four main steps: (1) situation analysis; (2) strategic direction; (3) strategy formulation; and (4) strategy implementation

From the above definition it can be said that strategic retail management is managing retail business with a long term vision which influences firms business activities, its responses to market and completion and economic condition. Berman et al (2010) has proposed to follow six steps for strategic retail management which is given below: 1. Defining types of business in terms of goods and services. 2. Setting short and long term objectives to achieves sales, revenue or brand image. 3. Deciding the target market 4. Devising long term plan which will guide firm and its employees 5. Implement an integrated strategy which may consist of product location, packaging, pricing, advertisement or overall marketing activities. 6. Managing and controlling performance regular basis. Bashir Jaman copyright:[email protected]

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Assignment on Strategic Retail Management- A case study on Simplecall In this report, theory and practice of retailing concept along with effect and options of recession will be discussed and analyzed in light with the case study on Simplecall. Details recommendation will be given with appropriate solutions to the management of Simplecall.

Simple call is a subsidiary of Zamir Telecom based in London. It is a telecommunication company serving ethnic minority, especially Bangladeshi community for international calls. Simplecall is focused on providing cheap and quality international calling services. Simple calls mission and vision is presented here.

1.1 Mission of Simplecall:To create a world-class telecommunication organisation where our talented people team up with our business partners to continually drive down costs and deliver superior value propositions to our customers.

1.2 Vision of Simplecall: To be the global leader in providing Telecommunications service to the international ethnic community To delight our customers by providing low cost, high quality products and services. Making sure all our relation are built on trust Always be empathetic to the needs of ethnic minority To be the best place to work with multicultural background. Simplecalls main business is online. Customer register their mobile number, top up online and dial access number given by simplecall to make international calls. Simple call also has retail outlet to register new customer and help customer top up offline. Both online and offline activities are subject of this report. With this brief introduction of Simple lets look at retailing concept in light with Simplecall.


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2.0 Retailing concept:No matter where customers go for shopping in a mega super store or a neighbourhood small grocery store, the common thing of all these shoppers is the retail experience. How does a shopper fell before and after shopping? The retailing concepts make sure customer have a very good experience while shopping. Because of this experiences customer actually decide whether to visit that store second time or not. Retailing concepts has four ingredients: Customer Orientation Coordinated effort Value driven Goal orientation

The retailing concept works as a strategic guide to help broader planning framework.

Figure 1: Retailing Concept

Above points are explained and analysed in relation with case study of Simplecall.


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2.1 Customer Orientation:Customer orientation means focusing on customers needs and wants. A retail firm differentiate new customer, member and loyal customer in its activities; to be able to understand their demand differently and meeting their demands personally. Customer service orientation is affected by customer service and relationship retailing. Customer service activities include: Store hours Parking Shopper friendliness Sales people Rest room Delivery policy and Time at billing

Along with the above factors, Candice Ng-Chee (2004) has suggested to follow three critical steps in order to ensure customer satisfaction.

Step One: Understanding customers Almost every person loves to be remembered, respected and wants to have special treatment. Different customers have different choices, likings and dislikes. Therefore retailers should keep record of customers previous interaction with store to be able to offer personalized items and environment.

Step Two: Aligning Organizational Capabilities: Having understood customers needs and peculiarities, retailers should focus on its resources to optimize value of correct delivery. Challenge of any organization is to stay relevant to customers throughout his/her lifetime. Understanding different ways that customer experiences the retailers, retailer should be able to make customer happy At different relationship stage At different life stage and At different touch points


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Step Three: Empowering employees Knowing customers and aligning capabilities set off to a good start to providing a differentiated customer experience. But real customer-centricity happens real-time at the point of customer interaction with the people giving the services. Therefore organizations need to empower their people the very medium for building customer relationship. ShuChing Chen and Pascale G. Quester, (2006) and Mark E. Cross et al (2007) has shown on their research that there is a positive correlation between employee performance and customer satisfaction and between customer satisfaction and customer loyalty in retail stores. It shows attitudes, behaviour and prompt helping attitude of store staffs helps buy customer loyalty.

Figure 2: Customer store loyalty model for retail service Source: Shu-Ching Chen and Pascale G. Quester (2006)

Simplecall being an online web based retailer enjoys giving service 24/7. Its customer service is excellent both online and offline. Simplecall has ethnic based customer service work force who speaks in English, Bangla and Hindi to align with its customer based from Bangladeshi, Pakistani and Indian ethnic background. Though it is a UK based company but it sells products worldwide. Simplecall has its own call centre in Bangladesh and customer service


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Assignment on Strategic Retail Management- A case study on Simplecall team in UK make sure customer can call them anytime from anywhere without any charge. On top of that it has online chat support continuously 24 hour.

Simplecall has a user friendly website. Musfiq Mannan Choudhury and Abdul Mannan Choudhury (2010) have identified characteristics unique to e-commerce websites (i.e. online stores). There research shows that an user friendly website should have 13 characteristics, which include: security, appearance, adequate information about products and services, speed in downloading the pages, navigation friendly, search option/search engine, hyperlinks to other information, information on member facilities, history and profile of the company, ability to obtain information in limited number of pages instead of browsing several pages, option for providing feedback from customers, visitor statistics, and availability of interactive online activities. Comparing this research result with the interaction of Simplecall website it is seen that: Simplecall has highest security which is certified by GoDaddy.com Web Server Certificate. GoDaddy.com ensures transactions on the site are protected with up to 256-bit Secure Sockets Layer encryption. It has an online payment system with HSBC, Moneybooker and Paypal giving options to consumers to choose different gateways of buying top up. Simplecalls home page is simple to navigate. Appearance is simple with a mixture of white and navy blue colour layout. It has FAQ (frequently asked question) page giving answer to frequently asked question as well as giving information about companys background.

On the other hand offline stores of Simplecall in different locations at London have been designed with same colour branding of website as well as customer friendly sales force. Sales people are selected from ethnic minority background and trained to give best support.

Whether customer pays online or offline for top up, their account is recharged with click of mouse which brings 100% customer satisfaction. Simplecalls core business is retailing voice Bashir Jaman copyright:[email protected]

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Assignment on Strategic Retail Management- A case study on Simplecall (VOIP). Therefore, it ensures clear voice quality by using fibre optic line which gives noise free exchange of voice in both ends.

Simplecall has a free call service without needing to top up for first time user in order to test the call quality before the purchases. Therefore, it makes easy for customer to decide and welcome new customer with confidence, comfort and ensures peace of mind.

Simplecall rewards customer for their loyalty. Any customer referring to his friends will get 10% of his friends top up. Simplecall has recruited 14795 customers through referral service up to date and it has rewarded referee for this work. Simplecall also have a emergency top up service of 1 credit to customer who is unable to top up instantly which shows Simplecall trust its customer. All these activities bring customer satisfaction and loyalty.

2.2 Coordinated effort:In this stage retailer combined all its effort and resources to maximize efficiency. Integrated strategy includes Location Decor Selection Prices Promotion Simplecalls website is online at all the time. Its offline retail stores are located in East ham, Upton park and whitechapel in London where its most of the customer are based. 2011 census shows that Newham council is highly populated with Asians and Tower hamlet is the place of Bangladeshi origin ethnic minority. Therefore Simplecalls selection of places for its retail outdoor stores is appropriate. Though it has a very cheap and competitive rate for India, it has failed to recruit a good number of Indian customers. Therefore, it should concentrate on Indian market.

A customer can top up both online and offline. It has partnership with both epay and paypal to ensure customer can top up from 30,000 retail stores in UK with Simplecalls top up card. Simplecalls price for Bangladeshi, Pakistani and Indian are competitive. But it has presented its rate inclusive of VAT which may distract customer while comparing prices with its Bashir Jaman copyright:[email protected]

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Assignment on Strategic Retail Management- A case study on Simplecall competitor such as Rebtel or Localphone. Because competitors pricing strategy is excluding VAT. For instances Rebtel shows 2.2p/minute and Local phone shows 2.3p a minute (excluding VAT which is hidden) for Bangladesh. On the other hand, Simplecalls shows 2.4p/minute for same country but it is actually 2.1p/minute without VAT. Therefore, Simplecall should change its pricing strategy. Another advantage of VAT excluded pricing is that retailers do not have to change price tag in case government increases VAT. Gordon Mills (2002) has pointed out two strategies for retail pricing: Price dispersion: Price dispersion is difference of prices for same kind of item in different stores. Gordon Mills (2002) argues that it is costly for customer to compare prices therefore retailer can charge different prices at different stores. But he ignores the fact that internet technology and search engine has made is easy and costless for consumers for comparing prices. Therefore price dispersion is not a best choice. Price discrimination: Retailers can discriminate on pricing on low quality products and buying bundles together. Price discrimination for quality difference Price discrimination for Quantity discount

Simplecall with the core value of giving superior quality voice do not compromise with quality. However it has a bonus system for bundle buyers in most of time. For instances, customer who top up 20 at a time will get 2 free call credit.

A retailer should inform, persuade and remind customers about its products and offers through different promotional activities such as advertisement, direct sales, referral and sales promotion (Cant, MC,2005). Simplecall is active throughout the year with different

innovative promotional activities. It advertise in ethnic TV and newspaper to reach target market as well as online banner advertisement thorough different websites such as Google and Youtube. It has referral service which gives 10% call credit for referral. In different occasions like Eid festival and Baishak (Bangali and Islamic festival) simplecall do sales promotions with reduced price. Simplecall is active in community activities and pubic relation. This year it has donated 5% of its total sales to African people to help them face hunger and disease.


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2.3 Value driven:Value is the perception the customer has about set of activities that is meant to add value to the customer. Series of value added activities is known as value chain. Retailer can add value to the product in different ways. For instance, offering appropriate price for level of goods or services. Customer demands more for less. Therefore retailer should be able to create winwin situation for both him and customer. A retailer product should be a good value for money. Its branding and experiences of users should be able to have a positive implication on prospective customers on how they perceive the value of the product. Ruiz-Molina, M, & Gil-Saura (2008) has found in their research that perceived value of a retail customer has a positive influence on customer attitude and loyalty in long run. Therefore, retailer should invest behind creating positive perception about their products. Ken Mathie (Undated) has some suggestions on how to create perceived value Partial use of goods before purchase Testimonials from current customers Simple, informative and attractive packaging Service provided as promised. Simplecall gives 50p free credit customer to try the international call for free. It does not have any testimonials from its users.

Value Based Pricing

Total Customer Value Product Quality Service Quality

Figure3: Porters value chain for retail store


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However it shows 14795 people have referred simple call to their friends. Because simplecall is an intangible product, packaging is not relevant. But appearance of its website, video advertisement and FAQ is informative enough to help customer take decision. Porters value chain for retail store shows that value based pricing, product quality and service quality together form total customer value. Simplecalls pricing is competitive, good value for money, excellent product quality with fibre optic line and multilingual customer service brings good value for customers. Simplecalls per second billing and online call history to keep track of spending and call cost brings confidence in existing customers about Simplecalls honestly which buys customer loyalty. It does not do any false billing, no hidden charge or connection fee to ensure it billed as it advertise.

2.4 Goal orientation:Retailer sets short and long term goals and craft strategy to achieve it. Goal can be for increasing short term sales or long term brand images. Simplecall has following objectives for next five years: Reaching all the major communities in UK, Specially, Indian, Pakistani, Bangladeshi and Caribbean. Simplecall wants to recruit 20,000 Indian, 30,000 Bangladeshi 25,000 Pakistani and 15,000 Caribbean customers within next five years time. To grow geographically to USA, Australia and Canada starting with USA first. To increase profit margin by 20% within next five years. To decrease operational cost by 10% within next five years. Getting strong distribution and supplier channel within UK to reduce sales and production cost. Developing website from global perspectives, different language and timing for different countries and different geographic areas. Innovative product and hence differentiating Simplecall from other competitors. For instance, Creating mobile dialer for Iphone. Recruiting and developing strong sales and marketing team with ethnic background within UK and globally at the long run.


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3.0 Comprehensive awareness of strategic implication:Retail organization should follow step by step process to design strategy. Strategy development starts with situation analysis, setting objectives, Identification of consumers, specific strategy and control. Situation analysis can be done both internally and externally. Internal analysis can be done with SWOT model (Strength, Weakness, Opportunity and Threat) and external analysis can be done by PESTEL model (Political, Economical, Social, Technological, Environmental and Legal factors) analysis. Organization has no control over PESTEL factors but it has to accommodate and design strategies around these factors.

Situation Analysis Objectives

Identification of Consumers Overall Strategy

Specific Strategy Control

Figure 4: Elements of retail Mix, Source: Berman et al (2010), Along with this internal and external analysis, retailer should also be aware of competition within the industry. market. Following figure shows competition that Simplecall facing in the


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ISD Mobile operator Lycatel, Libara,Nowmobile & Vectone

Access number Dial a code, O2, Vodafone, BT etc

SIMPLE CALL

Web-Based VOIP provider Rebtel, Localphone, 1pinless etc

Calling Cards/Access numberLycatel, Nowtel, Pure minute,Talkhome.

Figure 5: Competition with Simplecall

After situation analysis retailer need to set its objectives. Simplecalls objectives have been mentioned earlier in this report for next five years. It has identified its target customers which are Ethnic Minority of Indian, Bangladeshi, Pakistani and Caribean people. In order to achieve above objectives, Simplecall has taken following strategy which is depicted in the diagram below. In this strategy, simplecall will be penetrating existing market as well as develop market both locally and globally.


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Assignment on Strategic Retail Management- A case study on Simplecall Opening outlet in Slough

Market Pene tration UK

Internet Caf Agent

New product development

New York office

Strategic Direction For Simple call Market Develop ment USA Calling Card agent Direct shop

Search engine optimization Global Market Develop ment

User friendly website

Social network marketing

Figure 6: Strategic Direction for Simplecall


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3.1 The effect of recession:While planning for the strategy retailer should also consider economic condition. Economic downturn can have significant affect on the performance of any firm specially retailing. But not all retailers are equally effected by recession. Some even sees it as an opportunity to grow (Sean S.,and Carla F., (2010), Peter J. W., and Ming Z.,(2009)). Recent recession has significant influence on consumers shopping pattern. Therefore, retailers strategy must go along with customers ability and demand in recessional period. Research shows that despite recession sales volume for non food item has not been affected, though sales volume of food item has been significantly affected. In the last recession, there was a sharp contraction in the volume of sales in non food stores and non-store retailers, while food store sales recorded positive growth. In the current recession, food stores have, on average, shown a much weaker level of sales than observed in the 1991 recession. In addition non food store retailers have shown positive growth in retail sales in the first months of the current recession, a contrast to what was observed in the previous recession. It shows that so far, for the most part of the current recession, the total volume of retail sales has continued to show positive growth, which has mostly been driven by the non-food retailing sector (Office for national statistics, 2009).

3.2 Strategic option for retailers at the time of recession:Smart companies perceive not just threats in a recession but also opportunities. Their goal is to grow so they can emerge stronger from the downturn. Peter J. W., and Ming Z. (2009) has advised three types of cost innovation during recession to bring value for money for consumers which are: Selling cutting-edge technology at mass market prices Offering a large choice or customizing products and Blowing up niches into mass markets There are mainly three types of retail strategies which are: Expected Retail Strategy- It gives minimum facility to the customers such as Cleanliness Speed Delivery Informed employee Product in stock and Parking facility etc Bashir Jaman copyright:[email protected]

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Assignment on Strategic Retail Management- A case study on Simplecall Augmented Retail strategy- Extra elements in the value chain which differentiated by Loyalty reward Trained and motivated superior sales people Valet Parking etc

Potential Retail Strategy- Any new service that add value to the customer such as Best customer service Modern Technology etc

According to the above research Simplecall being a non-food product should not be affected by recession. But still it should take pre cautionary actions against recession. It should innovate products to be able to offer its product with less price. Innovation of iphone dialler or PC dialler will enable customer to make international call from mobile and PC which wil save customers free minutes. On the other hand, Simple call can introduce different product with grey line for the customer who wants more minutes with less price and does not bother about quality. From the above three types of strategy options, Simplecall should choose augmented retail strategy to balance between quality and price.

4.0 Conclusion:Any retailer who understand its customer and market, and can design its strategy efficiently to offer all the four elements of retailing mix will be successful with periodic correction and control of its strategy. Simplecall being a web based service provider should implement following recommendation which will enhance its value proposition and will bring competitive advantage for it.


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5.0 Recommendations:From above analysis and findings, Simplecall has been given following recommendations: To recruit sales people from Indian ethnic minority Open new retail stores in Southhall and Haunslow in London to attract Indian consumers. To display call rate excluding VAT. To add testimonials from its users both in text and video format at home page of Simplecall. Innovate technological product to be able to offer more minutes with less price or by use of technology such as pc dialler to save free minutes of customers. To introduce step by step registration process like Local phone and Rebtel for new customer.


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References:Berman et al (2010), Retail Management: A strategic Approach, Canadian edition.

Candice Ng-Chee (2004) Three critical steps to customer centric business organization, Metacore asia, Available at: http://www.mcore-asia.com/PDF/Three-2520Critical-2520Steps2520to-2520Customer-centric-2520Business-2520Orientation.pdf, Sept2011. Cant, MC (2005) Introduction to retailing,1st ed: Juta & Company Ltd, South Africa. Gordon Mills (2002) Retail Pricing Strategy and Market Power,1st ed: Melbourne University Press, Australia. Accessed 23rd of

Ken

Mathie

(Undated)

Creating

Perceived

Value,

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online

at

http://www.thewritemarket.com/articles/index.php?art=creating-perceivedvalue&title=Creating%20Perceived%20Value, Accessed on 21nd Sept2011.

Mark E. Cross et al (2007) Customer orientation and salesperson performance, European Journal of Marketing, Vol. 41 Issue: 7/8, pp.821 835

Mathur,U.C.,(2010) Retail management-Text and cases, International publishing house, Delhi.

Musfiq Mannan Choudhury and Abdul Mannan Choudhury (2010) Identification of the characteristics of e-commerce websites, Journal of Webology, Vol.7 Yr.1

Office for national statistic (2009) The impact of the recession on retail sales volumes, Economic & Labour Market Review | Vol 3 | No 8 | August 2009


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Assignment on Strategic Retail Management- A case study on Simplecall Olsen, M.D., West, J.J. and Tse, E.C.Y. (2008), Strategic Management in the Hospitality Industry, 3rd ed., Pearson Prentice-Hall, Upper Saddle River, NJ.

Peter J. W., and Ming Z.,(2009) Value for money-Strategies for recessionary times, Harvard Business Review, March 2009 Issue

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Ruiz-Molina, M, & Gil-Saura (2008) Perceived value, customer attitude and loyalty in retailing, Journal of Retail & Leisure Property, 7, 4, pp. 305-314, Hospitality & Tourism Complete, EBSCOhost, viewed 22 September 2011.

Sean Sands and Carla Ferraro (2010) Retailers' strategic responses to economic downturn: insights from down under, International Journal of Retail & Distribution Management, Vol. 38 Iss: 8, pp.567 - 577

Shu-Ching Chen and Pascale G. Quester (2006) Modeling store loyalty: perceived value in market orientation practice, Journal of Services Marketing, Vol. 20 Iss: 3, pp.188 - 198 Tripathi and Reddi (2008) Principle of Management,4th ed: Tata-McGraw Hill companies, New Delhi.

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strategic retail management-a case study on simple call

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