distinctive product assortments and location as a differentiator has weakened; products(and brands) can be rapidly copied (e.g. Zara), and are easily available on the net (e.g.eBay, Amazon). Newer choices of achieving retail differentiation have emerged basedupon a deeper understanding of consumer behavior; how consumers shop, understand andevaluate products on display, and make product / brand choices. Each step of consumerevaluation and choice-making offers an opportunity to retailers to ‘influence’ purchasebehavior. Research suggests that product (and often brand) choice is ‘constructed’ in thestore, rather than retrieved from memory based upon prior experience and / or a priorievaluation of alternatives. A critical first step in developing a differentiating plan is tounderstand what happens when a customer interacts with the product assortment. Threepotential levels of influence exist - assortment width / diversity / quality / price,assortment presentation (static - as visual merchandising, and dynamic - as staff-customerinteractions) impacting how consumers’ experience products in the store, and marketingmix variables like price and promotions (see inset). This emphasizes the need of assortment ‘management’ as different from assortment ‘planning.’ Assortmentmanagement is based upon planning assortments recognizing that consumers usuallymake product choice decisions on the shop floor, and the behavior and choice processthey manifest lends itself to influence.Presented hereunder are a series of steps that guide the creation of a differentiation plan.The steps are based upon a differentiation of products into two categories – functional(products that fulfill a functional need e.g. kitchen tools, appliances, luggage) andsymbolic (products that consumers use to express themselves in their social circle e.g.fashion clothing, Cartier watch, Tiffany jewelry, Prada handbag). To locate a position onthe quadrant reflect upon the consumer behavior of the targeted consumer - what docustomers want when they buy the product, how do they shop for it, and what do theyexpect from the product (and store) in terms of added features, benefits, and services. Aconsumer buying Giordano fashion is purchasing a basic functional product, and does notuse the brand to express a lifestyle statement, whereas a consumer purchasing a Guccihandbag is willing to pay a premium.
In table 1 identify which quadrant you are in (for an existing retailer) or desire to be (for anew retailer searching for market space). Examples of the different products that lie in thedifferent quadrants are identified. Key thoughts to be borne in mind – high marginbusinesses are an exception and not the rule, customers concern for value doesn’t implythat customers will not be willing to pay a higher price for quality, and opportunities existin creating value through services in both low-margin and high margin businesses.
If we have a idea about the quadrant we wish to be in, we can use table 2 to detail howretail differentiation will be implemented in practice using – differentiation at the productlevel, in-store (and post purchase) services, lifestyle and price strategies. The basis of this