Information Technology in Retailing: Types Used by Retailers

 Q. What is information technology? Describe in detail the types of information technology being used by retailers now-a-days. 

Ans. Meaning of Information technology: The Information technology means the use of tools such as computers and telecommunications for sending, receiving and retrieving information. 

In the words of Information Technology Association of America, “Information technology is the study, design, development, implementation, support or management of computer based information systems, particularly software application and computer hardware.”

Types of Information Technology used by retailers are as follows:

1. Computers: Today almost every retailer uses the computers. They use computers to make accounting entries, to store the data about the inventory, data about the customers, etc. Also all the records of the sales, the mode of payments by the customers, etc. are stored in the computers. 

2. Biometric System: Biometric system makes use of sophisticated technology which identifies special human characteristics such as finger prints, retina and iris, face recognition, size and shape of hand, etc. All these characteristics are specific to each individual and hence are very authentic proof of somebody’s identity. By using biometrics, the retailers have been able to reduce the credit card losses, etc. Hence it has increased customer’s confidence. Also, retailers are using biometric systems in order to record the entry and extra time of their employees. This has proved to be extremely useful as it has improved the attendance of the workforce and has also reduced so many frauds committed in the name of others.

3. Wireless Technology: By using wireless technology, the retailers are able to monitor the in-store operations very effectively. The retailers can have the knowledge about any area of the retail store. An effective medium by which the retailer can communicate with anybody around the store is walkie talkie. 

4. Integrated Electronic Security Management Solution: These types of systems are being increasingly used by the retailers these days. It includes the use of camera surveilliance popularly known as Close Circuit Television Cameras (CCTV cameras) in and around the retail store to notice the activities taking place. It also involves creating a video recording of both inside and outside of the store. There is an immediate accessibility to these recorded videos in order to use them at any time in future such as for evidences, investigations, etc. Also included in this is the remote viewing of the retailer’s shop. By using this feature, the retailer can view his shop live from any corner around the world by using internet. Also , there is a system of alarms set. The alarm will automatically ring and an e-mail will be sent to the retailer on the happening of a pre-defined event. For example, if the retailer has fed in the system that on someone trying to open the lock of the retail outlet illegitimately, then the alarm should ring. If someone tries to open the outlet illegitimately, the alarm will ring an e-mail will be automatically sent to the retailer. This system has proved to be extremely useful for the retailer against any possible thefts or shoplifting, etc. 

5. Database Management, Data Warehousing and Data Mining: These systems are used to organize retrieve stored and manage the data about the customers. All this data is stored in the database. Managing this data is known as database management. Data warehousing and data mining are the elements of database management.

Data warehouse is just like a simple warehouse. Just as a simple warehouse is used to store the goods, data warehouse is used to store the data regarding the customers. When the sales clerk swipes the customers loyalty card, all the information regarding the customer, his age, sizes, preferences, previous purchases, mode of payments, etc. appear and this information can be used to find customer’s loyalty to analyze the demand. 

Data mining means extracting the data about the customers for specific uses. This data is generally used for customer relationship management purposes. The data can be used to identify specific market segments, analyzing the customer’s behaviour and therefore is helpful in defining specific sales promotion campaigns for the target markets.

6. Bar Code Technology: This is a very common technology that is used by the retailers. Every product is assigned a unique bar code. Typically a bar code is a symbol consisting of many bars with some specific distance between them. A bar code contains information about the country code, the company code, the product code, the check digit, etc. When the bill is made, these bar codes are read by the bar code scanners and the details of the product are automatically loaded in the computer. This is very effective technology that helps in saving time while billing. Also if any article goes missing in the barcode series, it becomes easy to know the product details as all the information is already loaded in the computer. Also, bar codes are useful in stock taking and therefore any inventory shrinkages can be known.

7. Radio Frequency Identification (RFID): RFID is a technology that is increasingly being used by the retailers these days. It is replacing the barcode technology. RFID includes retrieving and storing information from the tag attached to the products through frequency modulated radio waves transmission. RFID technology helps in tracking the goods anywhere in the world as long as the RFID reader is within the range. This is an extremely useful technology and if used properly can help in tracking even the stolen products. But sometimes this technology is viewed as a disadvantage because it may sometimes be viewed as interference in individual’s privacy and can be used to track the movements of the customer inside and outside the store. 

8. Electronic Article Surveilliance: The electronic article surveilliance is another form of technology that is being used by the retailers. Under this technology, all the articles are attached with specific tags. When customer buys the articles, these tags are removed properly by the sales clerks. But if the articles are stolen by somebody and the price to move out of the store with the same, the alarms rings at the exist of the store and therefore the retailer is alarmed about the shoplifting. Also, various articles of the inventory can be tracked by using this electronic article surveilliance. All these have helped the retailer being prevented from the threat of goods being shoplifted. 

Methods of Collecting Primary Data: Merits and Demerits

 Q. Explain the different methods of collecting primary data along with merits and demerits of each. 

Ans. Primary data are those which are collected by a researcher for the purpose of a specific study. Such data are original in character and are generated by survey conducted by individuals or research institutions or any organisation For example, if any researcher conducts a survey on the manufacturing industries operating in a particular area, then he will be collecting data from the industry operating in a particular area. Such data are called primary data. 

METHODS OF COLLECTING PRIMARY DATA:– The primary data may be collected by using any of the following methods:

1. Survey Method: In survey method, the data are collected by asking questions from respondents directly to get desired information. This is done by personal interview, telephone interview, mail questionnaire, schedule through enumerators. Survey method include 

I. Interview Method: Interviewing is one of the major methods of data collection. It may be defined as two ways systematic conversation between an investigator and an informant, initiated for obtaining information relevant to as a specific study. It involves not only conversation, but also learning from the respondent’s gestures, facial expressions and pauses, and his environment. Interviewing requires face-to-face contact or contact over telephone and calls for interviewing skills. It is done by using a structured schedule or an unstructured guide. Interview is often superior to other data collecting methods. People are usually more willing to talk than to write. Once rapport is established, even confidential information may be obtained. 

Types of Interviewing Method: The interviewing method may be classified into two types: 

1. Personal Interview: In a personal interview, the flow of information as multi-dimimensional. This method is suitable for intensive investigation. Under this method, person is interviewed and close personsl contact between the interviewer and the interviewee is established. There are various types of personal interview such as:

(i) Structured or Directive Interview: Structured interviews are those conducted when it is known in the beginning what information is needed. The interviewer has a list of predetermined questions to be asked to the respondents. The same questions will be asked to everybody in the same manner.

(ii) Unstructured or Non-directive interview: An unstructured interview is an interview in which questions are not pre-arranged, allowing for spontenity and four questions to develop during the course of the interview. It is the sort of discussion with the respondents. It allows the interviewer to build better rapport with the respondents.

(iii) In-depth interview: It is conducted usually on one to one basis. In-depth interview is undertaken with an individual.  It is designed to reveal the underlying motives of the respondent’s attitude, behaviour and perceptions.

(iv) Focus group interviews: It is undertaken with the group of people. In a focus group interview we explore the perceptions, experiences and understanding of a group of people who have some experience in common with regard to our situation. 

(v) Panel Interview: A panel interview may be composed of either individuals or corporate units. It is convenient method of obtaining information about the continuing behaviour of a group or a panel of respondents. 

(vi) Clinical Interview: In clinical interview, the researcher will have some pre prepared questions but will ask spontaneous ones as well. It is concerned with broad underlying feeling or with the course of individual’s life experience. 

2. Telephone Interview: In telephone interview, the information is collected from the respondent by asking the questions on phone. Telephonic interviews are best suited when information from a large number of respondents spread over a wide geographical area is to be obtained quickly and the likely duration of each interview is, say ten minutes or less.

Advantages of Interview Method: 

(i) It is very good technique for getting the information about the complex subjects.

(ii) It can be easily adapted to the ability of the person being interviewed.

(iii) it yields a good percentage of returns.

(iv) It yields perfect sample of the general population.

(v) Data collected by this method is likely to be more correct compared to the other methods. 

Disadvantages of Interview Method:

(i) It is a time consuming process.

(ii) It involves high cost.

(iii) It requires highly skilled interviewer.

(iv) It requires more energy.

(v) It may sometimes involve systematic errors.

(vi) It is more confusing and a very complicated method.

II. Questionnaire Method: Under this method, data are collected through a set of questionnaire. A questionnaire is a document prepared by the investigator containing a set of questions. These questions relate to the problem of enquiry directly or indirectly. Here first, the questionnaires are mailed to the informants with the formal request to answer the questions and send them back. For better response the investigator should bear the postal charges. The questionnaire show decary , a polite note explaining the aims and objectives of the enquiry, definition of various terms and concepts used there. Beside this, the investigator should ensure the secrecy of the information as well as the name of the informants, if required. Success of this method greatly depends upon the way in which the questionnaire is drafted. Show the investigator must be very careful while framing the questions. The questions should be: (i) Short and clear (ii) Few in number (iii) Simple and intelligible (iv) there should be provision for close check (v) impersonal, non-aggressive type (vi) Simple alternative, multiple-choice or open-end type. Questionnaire method is more suited when the area of the study is very wide and when the informants are educated. 

Advantages of Questionnaire Method:

(i) This method is economical in terms of time, money and efforts involved.

(ii) This method is original and therefore very reliable. This is because the information is supplied by the concerned persons themselves.

(iii) This method can cover wider areas.

Disadvantages of Questionnaire Method:

(i) Generally, the informance do not take in filing the questionnaires and fail to return the questionnaires. Those who return, often send incomplete answers.

(ii) This method lacks flexibility in the sense that when questions are not properly replied, these cannot be changed to obtain the required information.

(iii) This method has limited use as questionnaire are answered only by the educated informants. Thus, this method cannot be used when the informants are uneducated.

(iv) If the informants are biased, the informations will also be biased.

(v) The conclusions based on such investigation have only limited accuracy. This is because some questions may be difficult and accurate answers may not be possible.

III. Schedule Method: In case the informants are largely uneducated, data cannot be collected by the mailed questionnaire method. In such cases, schedule method is used to collect data. Here, the questionnaires are sent through the enumerators to collect information. Enumerators are persons appointed by the investigator for the purpose. They directly meet the informants with the questionnaire. They explain the scope and objective of the inquiry to the informments and solicit (obtain) their cooperation. The enumerators ask the questions to the informants and record their answers in the questionnaire and compile them. The success of this method depends on the sincerity and efficiency of the enumerators. So, the enumerators should be sweet-tempered, good-natured, trained and well-behaved. This Method is mostly used when field of investigation is large and the investigators are well versed in the local language.

Advantages of Schedule Method: 

(i) This method is capable of wider coverage in terms of the area involved. Even illiterates will also provide information.

(ii) There is the fair degree of accuracy in the results. This is because investigations are done by specialised enumerators.

(iii) Unlike in the case of mailing questionnaire, there is personal contact with the informants in this method.  According, accurate and right answers are obtained.

(iv) This method is impartial. This is because the enumerators themselves do not need the required information, so they are impartial to the nature of information they obtain.

(v) Schedules have the merits of completeness,  because these are filled in by the enumerators themselves. 

Disadvantages of Schedule Method:

(i) This is very expensive method of investigation because the involvement of faint investigators.

(ii) Competent enumerators may not be available. Accuracy of the information accordingly suffers.

(iii) Enumerators may need specialized training for particular investigators. The process of investigation thus becomes time consuming.

(iv) Since this method is very expensive, it is generally not suitable for private investigations. This method is generally used by the Government institutions.

(v) If the enumerators are bised, the data will not be accurate. 

2. Observation Method: Observation means viewing or seeing, hearing and perceiving as well. Under observation method, the researchers do not interact with the respondents, but simply observations are made and recorded with accuracy. This method is considered more suitable in certain situations like consumer’s behaviour. For example, instead of ask asking which brand of the product is preferred, the research may observe which brand people are being used most. Observations can be made manually or mechanically. While using this method , the researcher should keep in mind things like: What should be observed? How the observation should be recorded or how the accuracy of observation can be ensured?

Types of Observation Method: There can be a number of methods to observe a particular event or action. The\nObservation method can be:

(i) Participant – Non-Participant Observation: If the observer observes by making himself as a member of the group he is observing, so that he can experience what the members of the group experience, the observation is called as the participant observation. But if the observer observes silently without any attempt on his part to experience through participation what other feels, the observation of this type is termed as non participant. 

(ii) Disguised – Undisguised Observation: This is also referred to as indirect – direct observation. When the people being observed are not aware of the fact that they are under observation, the method is disguised or indirect observation. The researcher does not mix up with the group under this mode of observation and record the activities of the group silently. In the undisguised observation, the observer tells the group about his purpose and question the members whatever feels necessary by mixing up with the group directly.

(iii) Controlled – Uncontrolled Observation: If the observation takes place in natural setting, it may be termed as uncontrolled observation but when observation take place according to definite pre-arranged planned involving experimental procedures, the same is then termed as controlled observation. In uncontrolled observation, no attempt is made to used precision instruments whereas in controlled observation, we use precision instruments. 

(iv) Human – Mechanical Observation: Some observation are made by technically trained persons while mechanical observation is the result of mechanical devices (or tools). Various mechanical devices (or tools) such as psycho-galvanometer, electronic digital camera, audio meter and eye camera may be used for observing the actions or response of the people. Videos other mechanical devices such as tape-recorders, VCR, CCTV camera can also be used while making the observation in research. 

(v) Structured – Unstructured Observation: If the researcher is clear in his mind as to what he is to observe, it may be termed as structured observation. But when the observer is free to observe whatever comes to him without any clarity of the subject, it is termed as unstructured observation. Such observation not free from biased. 

Advantages of Observation Method 

(i) It is less costlier than survey method.

(ii) This method is independent of respondent’s willingness to respond.

(iii) This method is particularly suitable in studies which deal with subjects (i.e., respondents) who are not capable giving verbal records to their feelings for one reason or the other.

Disadvantages of Observation Method 

(i) It gives information only on ‘What’ but not why?

(ii) Unforeseen factors may interfere with the observational task. 

(iii) Sometimes observation suffers from biased considerations.

Methods of Personal Selling in International Marketing

Q. Elaborate the different methods of personal selling in International Marketing.

Ans. Personal selling is more complex in international marketing in comparison to domestic marketing. The foreign customers may be of diverse background with regard to nationality, religion, culture, language, tastes, preferences, likings, dislikings etc. The various methods of personal selling adopted in international marketing are as follows:

● (1) Contacting Customers in Foreign Markets – In this method, sales representatives of business unit contact the customers in foreign nations. Sales representatives visit the target foreign markets and personally contact the potential foreign customers. Different ways of contacting customers in foreign markets are :

(i) Sending Domestic Salesmen to Foreign Markets (Expatriate Method): Domestic salesmen having good knowledge of foreign markets, their culture, language, buying motives, taste, preferences, buying pattern, etc. are sent to foreign markets to contact foreign customers personally and procure orders from them. This method is adopted by such business units as are in the initial stage of international marketing or their purpose is to sell surplus production in foreign market. 

(ii) Appointing Foreign Nationals as Salesmen in Foreign Markets: Large international business units set up their own distribution network in foreign markets. They set up their distribution outlets/branches/subsidiaries in foreign markets. In these branches, salesmen are hired from host nation (foreign nation). Search foreign salesmen have better knowledge of local culture, buying behaviour, geographical locations, language, etc. in comparison to salesmen sent abroad (Expatriates). When foreign national salesmen contact the potential foreign customers, the are not treated as strangers by the latter. They get more acceptance from foreign customers who may treat domestic salesmen of parent nation (expatriates) as strangers.

(iii) Hiring Foreign National Salesmen on Temporary Basis: The international marketers, who are not large enough to appoint full fledge salesmen in foreign markets, hire the services of foreign national salesmen on temporary basis. These salesmen may work for many business units which are generally complementary to each other and not competitive. Usually, when the international marketers undertake test marketing or conduct foreign market surveys then they adopted this method. Usually, such salesmen are appointed on commission basis.

● (2) Contacting Foreign Buyers Visting Home Nation – In this method, international marketers contact the foreign buyers visiting home nation. Some countries enjoy good image for certain products in the global markets. Buyers from various nations of the world visit such countries for buying some specific products. For example, Japan has good global image for electronic goods, India for gems and jewellery, Germany for engineering goods, etc. It creates good opportunity for international marketers to establish personal contacts with such foreign visiting buyers and procure good purchase orders. Different ways of contacting foreign visiting buyers are :

(i) Foreign Buyers Visting at their own: Some foreign buyers may visit other nation at their own for buying some specific products. These foreign buyers visit various markets at their own expense to explore good buying opportunity.  International marketer does not have to bear traveling expenses/boarding and lodging expenses of such visiting buyers. The international marketer may contact such visiting buyers at the place of their stay or at the prominent tourist destination. Further, such foreign visiting buyers may walk in the showrooms of business unit at their own. At this point also, effective personal contact can help procure order from such visiting buyers. This mode of personal selling is least expensive as the international marketer is neither sending expatriates nor bearing any travelling and lodging expense of foreign visiting buyers. 

(ii) Foreign Buyers Visting on the Invitation of International Marketer: The international marketer may invite its regular foreign buyers who purchase in large quantities to visit its outlet. The international marketer bears the travelling, boarding and lodging expenses of such visting buyers. Special salesmen may be hired who have knowledge of foreign language and culture to attend such visiting buyers. Such hired salesmen are given some initial training to acquaint them with the goods of international marketer. The international marketer may also already have regular/full time salesmen who have knowledge of foreign language and culture. Such salesmen attend visiting buyers through personal contact and procuure order from them. International marketer sends detailed product catalogue to such visiting foreign buyers along with the invitation letter.  It helps the visiting foreign buyers to have detailed knowledge of products, their features, price, etc. offered by international marketer. The international marketer keeps the goods in ready form so as to effectively demonstrate the goods to foreign buyers. 

(iii) Foreign Buyers Visting on the Invitation of Export Promotion Councils: Government of home nation may organise seminar, conference, meeting,  etc. of foreign buyers. Domestic producers of home nation are also invited by government to attend these seminars, conferences, meetings, etc. It creates opportunity for the domestic producer to establish personal contact with the potential foreign buyers. These conferences are arranged by Export Promotion Councils, Trade Associations, Ministry of Commerce, Commodity Boards, etc. These confidences help the international marketers to procure export orders. Increased exports also help the government in achieving its export targets and in earning foreign exchange for the country.  Cost of arranging such conferences are borne by the government/trade associations/commodity boards. 

● (3) Contacting Foreign Customers at International Trade Fairs and Exhibitions: Various international trade fairs and exhibitions are organised in different nations. These fairs and exhibitions may be organised in the home country of international marketer or in foreign countries.  These trade fairs and exhibitions provide good opportunity to international marketers to establish personal contact with visiting foreign buyers, to display and demonstrate their product effectively. These trade fairs and exhibitions may be of two types:

(i) Fairs and Exhibitions Organised in Home Nation of International Marketer: The international marketer does not have to spend much on attending these fairs as goods and sales staff are not to be sent abroad.  It saves travelling and transporting expenses. For example, in india, Indian government regularly organises international trade fair at Pragati Maidan in New Delhi every year. The Indian manufacturers/marketers, intending to establish contact with foreign buyers,  set up their stall here.

(ii) Fairs and Exhibitions Organised Abroad: With the increasing trend of globalisation, international trade fairs and exhibitions are organised across the world. The international marketers may set up their stall in such trade fairs to establish personal contact with visiting foreign buyers and procure orders from them. The international marketer attends such trade fair in such nation where it intends to take entry or strengthen its position. Participation in overseas trade fairs is costly as goods and sales staff have to be sent abroad. Further, it involves excessive formalities of custom clearance, foreign exchange, boarding and lodging, etc. 

Options: Meaning and Types of Options

 Q. What do you understand by the term Option ? Write in detail various types of options. 

Ans. MEANING OF OPTION: Options is the form of derivative in which a specified security can be bought or sold at a specified price at some future date at current price or exercise price. These are different to other financial investments such as shares, commodities and currencies. These instruments are based on other financial instruments, therefore, they derive their value from other asset. In the options contract, one party grants the right to buy a specific asset at a specific price to other party. The person who grants the right is known as ‘Option writer’ and the person who has received the right to buy is called as ‘Option buyer.’

The right to sell a security is called as ‘Put option’ and the right to buy is the ‘call option’.

These are like futures contract as they are made to minimise the risk. Options also help the investor in earning profits from changes in share prices without investing the full price of the contract. One obtains the full right over the specified asset without buying them outright. These are also helpful in protecting from fluctuations in the value of the investment.

TYPES OF OPTIONS: The call options and put options are the two types of options:

1. Call Option: The call option provides the right to buyer for buying an underlying asset at the strike price on or before the expiration date. The buy has to pay the premium in return of the right to seller.

2. Put Option: This provides the right to seller to sell an underlying asset at a strike price on or before the expiration date. The seller receives the amount of premium in return of that right granted.

The options can also be classified on the basis of expiration time. On this basis, they may be divided in American and European Options. American Options refers to that options, which can be executed at anytime on or before the expiry date whereas European Options refers to those which can be executed only on the expiry date.  

The other categorisation may be done on the basis of method of their trade. Under this categorisation, the options may be divided in two types: Exchange Traded Options and Over The Counter Option. Exchange Traded Options are those which are traded on recognised exchanges. Over the counter options are those which are not traded on exchanges, rather they are directly traded by buyer and seller. There are no standardised strike prices and expiration dates. 

In addition to these, there are some other complex types of options also. These may be divided into following two types.

I. Simple Options: Various types of simple options are as follows: 

(1) Stock Options: The options created on particular stocks are called as stock options. Every stock is not allowed for options trading by SEBI. SEBI has permitted only certain stocks that meet its stringent criteria. 

(2) Index Options: This option is written on the exchange indices such as CNX, Nifty 50, CNX IT and Bank Nifty, Sensex, etc. The trade is made on the general movement of stock market index movement. They are settled by payment of cash. The amount of settlement depends upon the difference between the closing price of index and strike price of option. 

(3) Commodity Options: Commodity options are derivatives contract which give the right to buy or sell a specific commodity at a pre-determined price at some point of time in future. A commodity option contract establishes a specific price at which the contract may be exercised. It has an expiration date.

(4) Bond Options: A bond option is an option to buy or sell a bond at a specific price on or before the expiry date. They provide the right to the investors, but not the obligation. It provide investors with a tool for hedging interest rate fluctuations. 

(5) Currency Options: These are exchange traded with pre-defined maturities. These provide safeguard against the adverse exchange rate fluctuations.  Like other options, they provide right to sell or buy foreign currency at a fixed price at some future date. 

(6) Options on Futures: As the name states, this type of options is the combination of futures and options. An option on a futures contract is the right, but not the obligation to buy or sell a particular future contract at a specific price on or before a certain expiration date.

II. Exotic Options: Exotic options are not traded on exchanges and are mainly traded over-the-counter. The terms of the options are negotiated by brokers or dealers. They are more complex in nature and are customised by combining the various types of options. These are as follows:

(1) Range Forward: It is a variation of regular forward contract which is used primarily to hedge the risk. This contract involves taking to opposite positions in options. It is set up in a way that they involve simultaneous sale and purchase of put options and call options on the same amount of principal and the same maturity but the exercise price is different. The range forward contract is used to reduce the cost of hedging to zero level. It is done by a hedger by receiving the premium on sales and paying the premium on purchase of options.

(2) Ratio Range Forward (RRF): It is the flexible variation of a range forward. They differ in amount. In these call and put positions are unequal. The investors choose the ratio of two amounts to bring down the upfront fees.

(3) Swaptions: It is a combination of swap and option. It provides its owner the right but not the obligation to enter into an interest rate swap on a specified date. In return, buyer pays a premium to the seller. Call swaptions and put swaptions are the two types of it. In the put option, the holder has a right to receive a fixed interest payment. But in the call option, the holder has to pay a fixed interest payment.