Retail Marketing Mix and Planning

International Retailing
All the activities involved in selling products and services to final international consumers for their personal consumption.

Internationalization of Retailing
Retailers are rapidly expanding internationally in order to:
Gain competitive advantage
Increase sales
Increase profits
Improve overall firm performance
As they expand internationally, retailers can take advantage of cost savings and learn from experiences in a way that could further enhance home-country operations.

Internationalization of Retailing
Trend:
Markets, retailing technologies and consumers are changing
Consolidation in the food and general merchandise sectors

Top 10 Global Retailers
Source: "2009 Global Powers of Retailing," January2009, www.stores.org.

Retail formats

The nature of retail marketing
The key aspects of retail marketing is an attitude of mind.
In making retail marketing decisions, retailers must consider the needs of the customers.
Retail marketing decisions are driven by what the shoppers need and want.

The nature of retail marketing …
Retail marketing is therefore a philosophy and is all about satisfying the customers
What the customers regard as value and what they buy is decisive.
What the customers buy determines the nature of the retailer’s business.

The nature of retail marketing
The essence of retail marketing is developing merchandise and services that satisfy specific needs of customers, and supplying them at prices that will yield profits.
Retailers must take the customers’ needs into consideration in retail operation.

The nature of retail marketing
Retail marketing is stimulating, quick-paced, and influential.
It encompasses a wide range of activities including:
Environmental analysis
Market research
Consumer analysis
Product planning etc.
5

The concept of retail marketing
The retail marketing concept is the acceptance by the retailer that it is the “customer” and not “demand” that lie at the core of the retail organisation.
The retail marketing concept is a philosophy, not a system of retailing or retail structure.
It is founded on the belief that profitable retailing and satisfactory returns on investment can only be achieved by identifying, anticipating and satisfying customer needs and desires.
It is an attitude of mind that places the customer at the very centre of retailing activities.

Importance of marketing in retailing
Marketing is a vital tool for every retailer, as it identifies current, unfulfilled needs and wants, which it defines and quantifies.
Marketing determines which target groups the retailer should serve.
Marketing could be seen as delivering an acceptable standard of living.
Marketing can ensure complete satisfaction and sustained customer loyalty.
Marketing depends on the efficient co-ordination of consumer prediction, product development, packaging design and influencing demand through appropriate communication medium.
From these, a suitable mix is achieved.

Retail marketing objectives
The retail marketing objective is a performance parameter which has been explicitly stated.
It can be stated in quantifiable terms and time terms so that results can be measured against it.
Three types of retail objectives include:
Basic objective – those which defines retailer’s long-term purposes.
Goals – those which the retailer must achieve to be successful
Targets – short-term goals that require immediate achievement.

Retail marketing mix
Retail marketing mix is the term used to describe the various elements and methods required to formulate and execute retail marketing strategy.
Retail managers must determine the optimum mix of retailing activities and co-ordinate the elements of the mix.
The aim of such coordination is for each store to have a distinct retail image in consumers’ mind.
The mix may vary greatly according to the type of market the retailer is in, and the type of product/services.

Retail Marketing Mix
While many elements may make up a firm’s retail marketing mix, the essential elements may include:
Store location,
merchandise assortments
Store ambience,
customer service,
price,
Communication with customers
10

Mix …
Personal selling
Store image
Store design
Sales incentives
People
Process
Physical evidence

The mix planning
The retail marketing mix is the vehicle through which a retailer’s marketing strategy is implemented and, in planning the mix, retailers should be guided by three basic principles:
The mix must be consistent with the expectation of target customers;
Elements must be consistent with each other to create synergy; and
The mix must be responsive to competitive strategy.

Composition of key elements
Place
Product
Price
Promotion
People
Process
Physical Environment

Key Element
Place (store location)
Target market
Channel structure
Channel management
Retailer image
Retail logistics
Retail distribution

Key element
Product (merchandise)
Product development
Product management
Product features and benefits
Branding
Packaging
After-sales services
15

Key element
Price
Costs
Profitability
Value for money
Competitiveness
Incentives
Quality
Status

Key element
Promotion
Developing promotional mixes
Advertising management
Sales promotion
Sales management
Public relations
Direct marketing

Key element
People element
Staff capability
Efficiency
Availability
Effectiveness
Customer interaction
Internal marketing

Key element
Process element
Order processing
Database management
Service delivery
Queuing system
Standardisation

Retail Marketing Planning
Retail marketing plan consists of:
Setting objectives
Systematic way of identifying a range of options.
Formulation of plans for achieving goals
Logical sequence of retailing activities.

Importance of retail marketing planning
Hostile and complex retail marketing environment
External and internal retail organisation factors interact
Maximising revenue
Maximising profit
Maximising return on investment
Minimising costs
Each element has conflicting needs
All these variables interact
All these variables result in optimum compromise.

Managerial use
To help identify sources of competitive advantage.
To force an organised retail approach
To develop specific areas of retail activities.
To ensure consistent relationships between retail organisation and its proximate environment.
To inform customers, suppliers and competitors.

Approaches to planning
Top down approach
Retail management sets goals and plans for all levels of management.
Bottom up approach
Various units prepare own goals and plans sent up for approval.

Types of planning
Annual plan – short term and tactical.
Long range – three to five years relating to strategic retail management.
Strategic plans – five to ten years long term plans relating to the adaptation of the retailing approach.

Short-term Retail Planning
Short-term
Tactical planning relating to:
Current retail marketing position
Strategy for the year
Objectives for the year
Action , budgets and controls.
Coordinating retail activities within departments.

Long-term plan
Long-term
Medium range planning relating to:
Major factors and forces affecting the retailer.
Long-term objectives.
Resources required.
Reviewed and updated regularly.
Deals with current business

Strategic retail planning
This is the process of developing and maintaining a strategic fit between the retail organisation’s capabilities and its changing marketing opportunities.
It relies on developing a clear corporate mission, supporting objectives, creating a sound business portfolio, and coordinating functional strategies.

Corporate level planning
Retail management should plan which business the retailer should stay in and which new areas to pursue.
Design the retail organisation to withstand shocks.
Adapt the organisation to take advantage of market opportunities.
Define the corporate mission.

Mission statement
A strategic plan should begin with a mission statement.
A mission statement is a statement of the retail organization’s purpose, what it wants to achieve in the large environment.
It guides people in the retail organization so that they can work independently and yet collectively towards overall organizational goals.

Retail formats

General Merchandise:
Specialty Stores
Specialty Stores offering a narrow product line and wide assortment:
Music stores
Clothing stores…

General Merchandise:
Specialized markets
Specialized markets that house stores specializing in a particular product category
Jade market, Hong Kong
Covered bazaar, Istanbul—the shops are selling primarily brass products and Turkish folk decorative object.

General Merchandise: Department Stores
Offer a broad variety of goods and wide assortments
Trend
U.S. and Canada: recent substantial losses
Europe: expansion of national chains throughout the European Union
Asia: on the decline
E.g. Germany: Hertie announced the close down of 19 (out of 73) stores in many German cities in Jan 2009

General Merchandise: Discount Stores
Sell High Volumes of Merchandise
Offer Limited Service, Charge Lower Prices
Types:
All-Purpose: offer wide variety of merchandise and limited depth. E.g.
Category specialists (category killers): Carry a narrow variety of merchandise and offer a wide assortment. E.g.

General Merchandise:
Off-Price Retailers
Sell brand name and designer merchandise at below regular retail prices.
Overruns, irregular products, previous seasons’ products
Examples:
Factory outlet stores
Close-out retailers (broad, inconsistent assortments)
Single-price retailers (all products for the same price)

General Merchandise:
Catalog Showrooms
Catalog Showrooms:
Showrooms displaying products of catalog retailers, offering high-turnover, brand name goods at discount prices.
Internationally goods sold through this venue tend not to be brand name, but, rather, goods that have not sold the last season through the catalog.

Food Retailers
Conventional Supermarkets:
Self-service retailers with annual sales higher than $2 million and less than 20,000 square feet of store space.
Superstores:
Combination stores (food and drug)
Hypermarkets—combine supermarket, discount, and warehouse retailing.

Food Retailers
Warehouse Clubs (Wholesale Clubs):
Require members to pay an annual fee. E.g. SAM's, Costco
Operate in low-overhead, warehouse-type facilities.
Offer limited lines of brand-name and dealer-brand merchandise at a substantial discount.

Food Retailers
Convenience Store
Small residential retailers or retail chains consisting of small neighborhood stores.
Open long hours.
Carry limited lines of higher-turnover necessities.
One-stop shopping.
Convenience store in Poland—note that Procter & Gamble products (especially their pan-European detergent Ariel) are predominant.

Nonstore Retailing
Internet Retailing:
Also known as interactive home shopping or electronic retailing.
Includes both new dot-com companies and traditional retailers attempting additional market penetration.
Increase company diversification.

Global Internet Retailing
Sector Segmentation
Category % Market
Share
Tickets & Travel 29.00%
Computers, Electronics & Software 28.70%
Household 12.80%
CDs, Music and Videos 11.80%
Books 8.50%
Apparel and Gifts 5.00%
Toys & Games 4.20%
Other 0.10%
Total 100.0%
Source: “Global Internet Retail,” Internet Retail Industry Profile: Global, May 2009, 1–17.

Nonstore Retailing
Vending machines:
Increasing in popularity
Accepting of Smart cards, credit cards
Technology is facilitating an interactive consumer experience.
Different formats worldwide
Used most in Japan
At Atlanta Airport – a vending machine
selling iPods (minis and shuffles).

Nonstore Retailing
Vending machines in the Netherlands
with hot snacks and Japan with
different vegetables

Nonstore Retailing (contd.)
Television Home Shopping:
A venue for selling merchandise to consumers in their homes using cable channels.
Examples: infomercials and direct response advertising.
Popular in North America and Europe, and becoming increasingly popular in Asian markets.
Canada
USA, UK, Germany, Japan
USA
Japan
China
Acorn, China

Nonstore Retailing (contd.)
Catalog Retailing and Direct Mail Retailing:
Venues for selling merchandise to consumers using catalogs and other types of direct mail. E.g. Quelle, Neckermann, Otto
It allows for the international expansion of retailers.
Must be adapted to local market needs and practices. (e.g. in Japan the consumers expect to receive the product before paying)
The potential fur Catalog retailing remains high international

Nonstore Retailing (contd.)
Direct Selling:
A retailing venue whereby a salesperson, typically an independent distributor, contacts a consumer, demonstrates product use and benefits, takes orders and delivers the merchandise. E.g. Avon
Direct selling firms are most active in the growth markets (in emerging markets).

Network Marketing
(Multilevel Marketing)
Variation on direct selling
Involves signing up sales representatives to go into business for themselves with minimal start-up capital and sell more “distributorships” and merchandise. E.g. Herbalife, Amway
Network marketing is growing rapidly, especially in emerging markets.

Issues in International Retailing
Legislation and Regulation
e.g. China banned direct selling till 1998,
Germany: Control of packaging disposal
Germany, France: Limit the period for sales
Taxation and Cross Border Shopping
Variations in Retailing Practice and Customs
Consumer: US: prefer to shop in bulk, Japan: prefer to shop in smaller quantities every day
Sales: Friendly in US, sometimes rude in Eastern Europe
Dana-Nicoleta Lascu Atomic Dog Publishing 2006