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A Framework for Retail Communication Strategies

Faculty Contributor : Nagasimha Balakrishna Kanagal, Associate Professor
Student Contributors : Akhil Kumar Meshram and Abhishek Sood

The retail space in India is attracting both international retail giants and deep pocketed Indian business houses. Entry of many players is leading to increasing competition within the retail industry and the managers’ last resort, to attract and retain customers, is to improve the way they communicate with their customers. The methodologies adopted currently by retailers for designing communication strategies are neither structured nor robust; this paper aims to attend to this need for a framework which can assist managers, of different formats, in taking decisions regarding the communication strategies. The utility of the framework has been illustrated by developing communication strategies for a leading departmental store chain in India, and comparing them with the existing strategies.

As everyone discusses the furious pace of development in emerging markets such as India, one definite contributor to this growth has been the organised retail industry. Even as the organised retail industry in developed nations stagnates, we can see an increasing rate of growth in the emerging markets. In fact, the slowdown in the traditional hubs of organised retail is forcing the large players to look for opportunities for growth in other nations – and they have all set their sights on the emerging nations of Eastern Europe, India, etc. These markets represent fast developing economies where consumer spending power is on an upward trend. Also, the consumers in each country belong to distinct groups which have varied needs and demands.

To cater to each of these customer groups, retailers have come up with different formats within organised retail, the most popular of which are Hyper-marts, Super-Markets, Departmental Stores, and specialty stores. Each of these formats offers a different set of benefits to the consumer, though there is a fine line separating them from each other. To reach out to the customers, and to effectively communicate its message, each format needs a separate communication strategy. This need, in turn, has created a need for frameworks that the marketers can use to promote their own store and format.

To reach out to the customers, and effectively communicate its message, each format needs a separate communication strategy.

Primary Research of Retail Stores

For the purpose of this study, 4 national retail chains – Big Bazaar, Food Bazaar, Shopper’s Stop and Landmark – were studies, so as to identify the current strategies and communication tools prevalent in the market. The following conclusions were derived based upon some interactions with the management of these stores:

Importance of Customers

As with any business, all the decisions of the management take into account the customers. However, since the formats target different customer segments – which are differentiated on subtle factors, there are differences in decision making across the stores.

Positioning of the Store

Again, as with any business, the positioning of the store is interrelated to the customer segment which is being targeted. The positioning of the store and the target customer segment are interdependent and together form the basis for most other decisions taken by the management.

Customer Touch Points

The stores are looking at ways to increase interactions with customers and one way to do it is to enhance the interaction at specific ‘touch points’ – points where there is an opportunity to actively communicate with the customers such as wash rooms, trial rooms, billing counters, etc. Communications through these touch points have a higher probability of getting across as the clutter is removed and there is a higher chance of gaining customer attention.

Timing of Purchase

Every format observes a certain period in each month where the bulk of the sales are achieved, and during these periods all stores try to capture the attention of the customers to maximise these sales. Big Bazaar, for instance, observes the bulk of its sales between the 28th of the current month to the 8th of the next month, wherein the staples and other essentials form the most sought after products. During this period, the emphasis is on maximising sales and thus offers and discounts are offered on these products.

Similar Communication Tools Across Stores

We observed that almost all stores use similar communication tools, especially instore tools. These tools have a proven track record in terms of being able to garner customer attention, and the management is not willing to experiment. This has also lead to limited use of new media such as digital and interactive bill boards, which involve higher costs and unproven efficiency. The stores use other media generally only to promote specific schemes and offers.

Communication Strategies of Competitors

Stores give consideration to the communication strategy followed by similar format competitors, while they are designing one for themselves. The market is large enough to accommodate all players, yet no player wants to watch on the sidelines while one store makes use of a new tool or media and thus the competition analysis.

The Proposed Framework

The framework developed herein (Exhibit 1) would enable retailers to design a communication and promotion strategy that would help them meet their unique requirements. The communication need is derived from the marketing objectives of the firm, which can further be categorized as strategic objectives (long term) and tactical objectives (short term). The strategy would be different for each of the objectives, but the basic framework remains the same.

Exhibit 1 The Proposed Framework for Designing Communication Strategy

Customer Analysis

Once the marketing objective is clear the manager should identify the target group and develop a customer profile. The manager should address a few questions such as: Who is my customer? How do customers behave in the shopping centre? When do customer purchase from our store? These questions lead to identification of various customer-attributes such as - Demographics, Psychographics, Income levels, Price sensitivity, Fashion sensitivity, Loyalty and Media access.

Retail Analysis and Environment

It is important to understand the source of the communication (retailer) along with the receiver (customer). The manager should identify the following factors:

  1. The communication practices of a retail chain and the centralization of decision making which affect the capability of store managers to address tactical issues.
  2. The size, shelf arrangement, and location of individual stores that help in attracting the walk-in customers. For e.g. retail shop in a shopping mall would attract youth while a retail shop at a shopping market would attract householders.
  3. The positioning of the retail chain. The communication strategy should not dilute the positioning and confuse the shoppers. For e.g. Shopper’s Stop is known for luxury brands and price-off promotions would be contrary to such positioning.

Competition Analysis

Currently, the scope of the retail market in India is huge and the competition among organized retailers is low. This has lead to a situation where most retailers are not concerned with competitor activity. With the expansion of organized retail in India, the competition among retailers will increase and therefore, it is important for retailers to perform competitor analysis including identification of competitor, their communication strategies and the impact thereof on customers.

Communication Analysis

Based on the communication objectives, a manager should choose communication types (Promotions, Public Relations, Direct Selling, Personal Selling, and advertising) and corresponding tools (price promotions, coupons, Signage, Posters, advertisements, consumer contact activities, sponsorships, events etc.). He should also select suitable media and media vehicle based on communication objectives (high reach or high frequency), past performance of media, etc. Attention should also be paid to media accessibility of target customers, which also helps in identification of new media which can be used.

Market Environment

There are various market environment factors which affect the communication strategy and force retailers to adopt new or altered strategies. For example, Introduction of a new product by a manufacturer can lead to increase in attention and focus towards the new product, attention towards the existing product declines. Also, externalities like recession can decrease customer disposable incomes, causing higher demand for low price items. The discount retailers can tap this opportunity by giving price-off promotions. The premium retailers on the other hand should not change their positioning but use different means of retaining their customers such as longer credit period for loyal customers etc.

Application of the Proposed Framework

XYZ, the retail arm of leading Indian business house, is a chain of departmental stores. The company has already established 36 departmental stores (measuring 15,000 - 30,000 square feet each) in Tier 1 & 2 cities and hopes to expand rapidly with similar format stores that offer a fine balance between style and price retailing.

The management faces several decisions, strategic as well as tactical, and adopts communication strategies for each. The current communication strategy development process involves a study of the message to be conveyed, the target audience and the effectiveness of media available based on past performance. The company treats each communication need as an individual message and the same process is repeated every time. The proposed framework has been applied in the case of this company, and a comparison of the proposed and existing communication strategies is shown in Exhibit 2.

Exhibit 2 A Comparison of existing and proposed communication strategies for XYZ


The comparison between the existing and proposed strategies distinctly brings out the advantage of having a formal structure to follow. The current focus of retailers is on traditional media as they have been unable to track the media accessibility of the target customer to new media, which would be crucial for future communications given the emergence of mobile phones, internet, and digital billboards etc as media types. This information can be obtained in part by analyzing competitor’s communication strategy to detect early adopters of media technologies. The external market environment has also been ignored by retailers, even though it can alter the consumer behaviour - making existing strategy of using past communication effectiveness as a standard useless. The current shift in consumer preferences towards low price offerings due to economic crisis is an excellent opportunity for discounters. However, these lucrative opportunities should not be utilised if they lead to dilution of the positioning of the retailer.

The external market environment has also been ignored by retailers ... making existing strategy of using past communication effectiveness as a standard useless.

In the current economic scenario with low disposable income, XYZ stores, which is positioned as “affordable fashion” is now moving towards “affordable” to retain their customers. However, this can cause confusion among the loyal customers who may switch towards other retailers offering more fashionable products at reasonable prices. It was also observed that the communication needs are largely considered by the management to be tactical in nature (for a given period). The tactical decisions which repeat over time however become strategic and should be tackled uniformly across the retail stores. The Red Apple sales and Mahasale are considered as tactical but as they are repeatedly undertaken, the customers expect them to happen and thus the nature of these becomes strategic, requiring top management involvement.

The proposed framework would immensely help management to extensively analyse all the important aspects before designing a communication strategy for a given management objective. The robustness of the framework is the key for successful realisation of objectives.


Nagasimha Balakrishna Kanagal is an Associate Professor in the Marketing Area at IIM Bangalore. He holds a PhD from the University of Texas at Dallas. He can be reached at

Akhil Kumar Meshram (PGP 2008-10) holds a dual degree, Bachelors and Masters in Information Technology from Indian Institute of Information Technology and Management (IIITM) Gwalior and can be reached at

Abhishek Sood (PGP 2008-10) holds a Bachelors degree in Commerce (Honors) from Sri Venkateswara College, University of Delhi and can be reached at


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