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Retail Brands - Store as a brand or brands in a store

Retail Brands - Store as a brand or brands in a store

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Published by Manoj Nakra
Retail, Branding, Strategy Execution
Retail, Branding, Strategy Execution

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Published by: Manoj Nakra on Jul 18, 2010
Copyright:Attribution Non-commercial

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02/20/2011

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Retail brands - Store as a Brand or Brands in a StoreIntroduction
Jumbo a short time ago received the ‘Superbrand’ award, and the Rivoli grouprecently released advertisements of its flagship Rivoli store, distinguishing ‘Rivoli’as having an identity beyond the brands it carries. Both managements, Iconjecture, believe that ‘Jumbo’ and ‘Rivoli’ are brands in their own right, andmean ‘more’ than the brands they carry. Retail branding has three key benefits.One, retail branding creates a distinctive customer perception about a store,influences customer’s decision where to shop, and induces store loyaltyincreasing revenue and profitability. Second, retail branding insulates a companyfrom competing retailers. Third, retail branding indirectly decreases purchasecosts by increasing the retailer leverage with the brand manufacturer. A strongretail brand image increases the market power of the retailer vis-à-vis thecustomer, and also increases their share of the total channel profit pie.
Unique Aspect and Potential of a Retail Brand
A retail brand is significantly different from a product brand like Tide, and theapplication of branding principles for creating and maintaining retail brands arevery different from those used for managing product brands. For Tide, beyondthe product, branding predominantly relies on advertising to conjure images forcreating a sense of identification in the mind of the customer for the brand. Thepurchase occurs in a relatively simple environment. In contrast for a retail brand,the customer purchases products in an ambience created by the retailer, andexperiences the product in a multitude of ways e.g. by the store design andlayout, the quality of the products, the product assortment, the merchandising,the pricing, the staff interaction, in-store and post-sales service, etc. Theexperience of a retail brand, therefore, is more multi-sensory in nature, andretailers have opportunities to create a retail brand experience through a wholeset of activities that contact the customer, and not rely just on advertising.It is well established in research that the way a store is defined in the mind of thecustomer is partly based upon functional tangible qualities (location, price andmerchandise, etc.), and partly psychological attributes. A shopper seeks a storewhose image is congruent with the shopper’s self-image. Some stores intimidatecustomers whereas others are too infra dig. A store is acceptable for some goodsand not for others e.g. a customer can shop for groceries in Carrefour, shop fordaily wear at Zara, but buy table ware from Tanagra. The utilitarian shopperseeks dependability, practicality and economy whereas the hedonistic or ego-expressive shopper bases shopping decisions on the symbolism of the store tothe status and life style. A store that lacks a sharp image or identity in the mindsof consumers i.e. doesn’t mean anything special, ends up being an alternativestore. The customer doesn’t head for such a store as a destination or primaryplace to shop. It is reasonably well established that customers make more
 
frequent visits, buy larger value, and often pay premiums when they identify witha retail brand.How does retail branding operate? What is it that draws a shopper to one storevs. another? Is it just the brands in a store or a store as a brand has meaningbeyond the brands?According to the American Marketing Association a retail brand identifies thegoods and services of a retailer and differentiates them from those ofcompetitors. A retailer’s brand equity is exhibited in consumers responding morefavorably to its marketing actions than they do to competing retailers. And thebasis of the brand equity is the image of the retailer in the minds of consumers.
The Constituents of Retail Image
Many retailer attributes contribute to overall image e.g. merchandise variety (e.g.fashion, styling, and brands) and quality, price, depth and frequency ofpromotions, services like refund and company procedures, professional,knowledgeable, and friendly staff, physical store appearance (internal layout anddesign) etc. There is a commonality of attributes that influence customers but theprecise mix and relative priority differ based upon the nature of shoppingexcursion. For grocery trips store ‘cleanliness,’ ‘ease of accessibility,’ and ‘speedof check out’ assume importance, whereas for department stores ‘value formoney’ and ‘product quality’ are valued, and in specialty stores customers placea priority on ‘product choice,’ ‘promotions,’ and ‘store atmosphere.’ The fivecritical dimensions are reviewed hereunder – brand assortment, price andpromotions, advertising, service, and store design.
Brand assortment 
 But what is the role of a brand in retail image? To what extent do manufacturerbrands influence a customer’s image of a retailer? Brands influence customerperceptions of a retailer in two ways – as signposts for quality, and price. A brandname represents to consumer aggregate information (e.g. the brand namesubsumes all aspects of the product like identity, quality, value, etc.) about theproduct, and is therefore an important extrinsic cue for the customer to inferquality perceptions about the product. If a customer sees the particular brand at aretailer, the brand often serves as a benchmark of the quality of merchandisecarried by the retailer. Brands also influence buyers internal reference pricesbased upon a perception of quality. Therefore merchandise and brandassortment carried by a store affects store image through quality and priceperception, both of which in turn influence store patronage decisions.The retailer’s brand assortment strategy therefore is a particularly potent tool forretailers to develop their own brand name. To the extent "you are what you sell,"and regional retailers have used exclusive distribution arrangements of
 
manufacturer brands to create an image and establish a positioning for theirstores, generating consumer interest, patronage, and loyalty. Rather the imageand equity of many a regional retailer brands has been overly dependent on thebrand equity of the manufacturer brands i.e. it is the manufacturer brands are the“ingredient brands” that influence consumer pull, often much more than theretailer brand does.Stores in the region can be categorized on two extremes. At one end are a lot ofdomestic retailers like Jumbo, Rivoli, Jashanmal, Paris Gallery, Salams, GrandStores, Rodeo Drive, etc, who are multi-brand retailers, and have developed theirown brand identity based upon strenuously developing brands they carry. On theother end are home grown domestic retail brands like The One, Home Center,and Nayomi that offer own sourced value-priced merchandise, and are notdependent upon manufacturer brands for their brand equity. Many otherdomestic retailers like Damas, Jumbo, Hour Choice, Al Futtaim Electronics, andSplash, and international retailers like Carrefour not only carry manufacturerbrands and but have also developed their own brands (e.g. Damas – Damas,Jumbo – Supra, Hour Choice – Cruiser, Continental, Al Futtaim – Aftron, Splash – Ms, Zync, Nexus). Retailers who have launched private label products havedone so either under their own unique brand names (like Splash) or under theretail brand name (Damas). This approach allows the retailer to differentiate itsofferings from competing retailers, although often without the support affordedmanufacturers brands. International retailers like Zara, Mexx, Massimo Dutti,Gap, Ikea, etc lie outside this categorization. They design, manufacture (orsource) and market their own merchandise, and use pricing, style, color, andassortment to create brand strength. In the case of fashion clothing, brands areessential to image. In other retail sectors, the influence is less so.
Price and promotions 
Price and promotions go hand-in-hand in influencing retailer brand pricepositioning image. Price of a product represents in tangible terms what must begiven up to acquire a product, and directly influences consumer perception ofretailer image and store choice behavior. A retailer’s price image is influenced byfactors like average level of prices, extent of price variation over time, frequencyand extent of promotions, and level of store service. Consumers develop generalprice perceptions of products in a store, and use that to evaluate whether or notthe store is expensive in relative terms compared to other stores. This perceptionis not static, and changes based upon how frequently a store offers a priceadvantage on a set of products through promotions, and the magnitude of theprice advantage.Retailers often use promotions involving price discounts (increasing customerperception of value) to increase store traffic and stimulate purchase. Retailersdesire to attract customers through discounting is at odds with the effort tomaintain store margins. Price promotions and discounting also has the potential

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