Unit 4: Customer service and IT in retail
Retail Management notes · PTU syllabus (MBA 924-18)
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Unit summary
Service and technology increasingly differentiate retailers, at home and abroad. This unit covers strategic advantage through customer service, the GAPS model for improving retail service quality, the growing role of IT in retailing, data mining, database marketing and business intelligence, and international retailing structures.
After this unit you can
- Explain strategic advantage through customer service
- Apply the GAPS model to retail service quality
- Explain the role of IT, data mining, database marketing and BI in retail
- Explain international retailing structures
PTU syllabus topics
- Strategic advantages through customer service
- GAPS model for improving retail service quality
- growing role of IT in retailing
- data mining
- database marketing
- business intelligence
- international retailing structures
POS systems
Billing and data capture
Database marketing
Loyalty and targeted offers
Data mining
Basket analysis
Business intelligence
Dashboards for decisions
Omnichannel
Store, web and app in one
Topic 1
Strategic advantage through customer service
- Customer service: activities and programmes that make the shopping experience more rewarding — information, assistance, convenience, returns, delivery, after-sales.
- Why it creates sustainable advantage: hard to copy because it depends on people, culture and systems.
Method
Staff tailor service to each customer
Set rules and procedures for consistent service
Strength
Personal, memorable service
Consistent, lower cost
Example
Personal shoppers, luxury stores
Fast food, DMart, self-service kiosks
Topic 2
The GAPS model for retail service quality
- 1Knowledge gap
Retailer's perception of customer expectations differs from actual expectations
- 2Standards gap
Service standards do not match perceived expectations
- 3Delivery gap
Actual service falls short of standards
- 4Communication gap
Promises differ from actual delivery
- 5Service gap
Customers' expectations exceed perceptions
- Closing the gaps: customer research and complaint analysis (knowledge), clear service goals and measurement (standards), training, empowerment and support systems (delivery), realistic promises and internal communication (communication).
- Service recovery: listen, provide a fair solution, resolve quickly.
Topic 3
Growing role of IT in retailing
Front end
POS and mobile billing, self-checkout, UPI, digital receipts
Back end
ERP, warehouse and transport management, inventory replenishment
Merchandise
Barcodes and RFID, demand forecasting, auto-replenishment
Customer
Loyalty apps, personalisation, chatbots
Omnichannel
Order management, click-and-collect, endless aisle
Analytics
Dashboards, pricing and markdown optimisation
Topic 4
Data mining, database marketing and business intelligence
- Database marketing: building a database of customers (from loyalty programmes, POS, online accounts) to target communication and offers.
- Data mining in retail: market basket analysis (products bought together), customer segmentation (RFM), churn prediction, store clustering, price elasticity.
- Business intelligence: dashboards and reports on sales, margins, stock and customer metrics for decision making.
Example
Market basket analysis at a supermarket shows that buyers of baby diapers often buy wet wipes and snacks — the store places them nearby and bundles offers.
Topic 5
International retailing structures
- Reasons to go international: saturated home markets, growth opportunities, unique formats or brands, economies of scale.
Direct investment
Wholly owned stores — IKEA in India
Joint venture
Partner with local firm — earlier Bharti Walmart
Strategic alliance
Partnership without equity
Franchising
Local franchisee runs stores — McDonald's, Domino's (Jubilant FoodWorks)
Licensing and shop-in-shop
Brand corners in department stores
E-commerce
Cross-border online sales
- Organisational structures: global (standardised, centrally controlled — category killers), multinational (adapted to each country), transnational (balance of global efficiency and local responsiveness).
- Success factors: adaptable format, local partners, supply chain, understanding of culture and regulation.
Key terms
- Customer service
- Activities making shopping more rewarding
- Service gap
- Difference between expected and perceived service
- Database marketing
- Using customer databases to target offers
- Market basket analysis
- Finding products bought together
- Transnational retailer
- Balances global standardisation with local adaptation
Quick revision
- Customer service as sustainable advantage; customisation vs standardisation.
- GAPS model: knowledge, standards, delivery, communication, service gap.
- IT: POS, ERP, RFID, omnichannel, analytics.
- Database marketing, data mining, BI.
- International entry modes; global, multinational, transnational structures.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.Why does customer service give sustainable advantage?
- Q2.Name the four provider gaps in the GAPS model.
- Q3.State two uses of RFID in retail.
- Q4.What is database marketing?
- Q5.What is market basket analysis?
- Q6.Name three entry strategies for international retailing.
Long-answer questions
- Q1.Explain how customer service creates strategic advantage in retailing.
- Q2.Explain the GAPS model for improving retail service quality.
- Q3.Discuss the growing role of IT, data mining and BI in retailing.
- Q4.Explain international retailing entry strategies and structures.
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