Retail Marketing

Retailing & Retailer
Is defined as a set of activities or steps used to sell a pdt or service to consumers for their personal or family use Derived form French word” retaillier” meaning “to break bulk” or “cut a piece of” Retailer: Person, agent, Co., or organization instrumental in reaching the goods, merchandise or services to the ultimate customer

Retailer activities
 Anticipating customer’s wants  Developing assortment of pdts  Acquiring mkt info  Financing  Selecting target markets  Negotiating with suppliers  Training salespeople

Nature of retail marketing
 Profitable retailing and satisfactory returns on investment can only

be achieved by identifying, anticipating and satisfying customer needs and desires

 What the customers buy determines the nature of the retailer’s


 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.

Nature of retail marketing
 Cost & profit varies depending on type of operation & major pd line

 Manage profit of 9-10% on sales
 Sales volume influences business opportunities, merchandise

purchase policies, nature of promotion & expense control measures

 Retailers act as gatekeepers who decide which new pdts shd fimd

their way to the shelves of their stores….a strong say in the success of a pdt being launched

 Marketers have to sell a new pdt several times: first within the Co,

then to the retailer & finally to the user of the pdt

Key aspects of retailing  Direct customer interaction  Small unit size of sale  Point of sale promotions  Criticality of location  Emphasis of location .

Drivers of Change in Retailing  Changing demographics & industry structure  Expanding IT  Emphasis on lower costs & price  Emphasis on convenience & service  Focus on pdtivity  Added experimentation  Continuing growth of non store retailing .

If such space is occupied by non moving or slow moving merchandise……resort to substantial price red to get rid of unsold stock  Risk of no performance in terms of quality. supplies which in turn harms image of retail outlet ..Major concerns relating optimum selection of goods  A wide & increasing range of pdt categories accompanied by multiple brands in each category complicate decision making for both mfg & mkt intermediaries They have to make an optimum selection of goods to be sold given the foll major concerns:  Selling space.relatively fixed & must return max profits.

Retail industry  Largest private industry in the world ahead of finance. Wal-Mart  Brazil: top 2 global retailers…. engineering  Contributes 8% to the GDP in developing western countries  50 of the Fortune 500 & 25 of Asia’s top Cos are retailers  China. 7-Eleven..30% of the RM .3 of top 10 global retailers : Carrefour.

Global Retailing Market Size & Economics Infrastructure & Distribution Competition Operations Factors Used to Analyze Global Retail Markets Financial & Tax Reporting Merchandise Acceptability Partnering Capability .

Global Retailing Reasons for Global Expansion Spread of communication and mass media Lowering of trade barriers and tariffs Growth potential in underserved markets .

Indian retail industry  5th largest retail destination globally  Comprising of organized and unorganized sectors. though initially.        the retail industry was mostly unorganized Largest no of retailers abt 12 million… 5 million sell food & related pdts Retail sector is the 2nd largest employer after agriculture Amounts to US$ 330billion in 2007 to 427b in 2010 & 637 b by 2015 Retail has a share of 10-11% in the GDP 6 times bigger than that of Thailand & 4-5 times bigger than S. Available mall space 100 mill sq feet by 2011 .Korea & Taiwan Expected growth rate 25-30% annually.

.1%.22% by 2011 ...Growth in Indian retail markets 2006-7 Indian retail (Rs bn) Food & grocery Clothing & footwear Non institutional healthcare Furniture & furnishing Total Organized retail (Rs bn) Food & grocery 61 8680 1356 1159 986 14574 Clothing & footwear Non institutional healthcare Furniture & furnishing Total org retail Share of OR in TR% 251 24 101 598 4.

000 crores by 2011.Major Retailers in India Pantaloon  With more than 450 stores across the country  Launched country's first hypermarket ‘Big Bazaar’ Tata Group  A major player with its subsidiary Trent. 90. food & grocery retailing in 1996 with its retail Foodworld stores. which operates Westside and Star Bazaar. it also acquired the largest book and music retailer in India ‘Landmark’ in 2005.  Opened the pharmacy and beauty care outlets ‘Health & Glow’. . Reliance  More than 300 Reliance Fresh stores and Reliance Mart  It's expecting its sales to reach Rs. RPG Group  One of the earlier entrants in the Indian retail market.  Established in 1998.

Ludhiana. Lucknow. Allen Solly.. Chandigarh. Peter England 5 types of cities:  Maturing: Delhi & Mumbai  Transitional: Bangalore. Goa . Indore. Chennai. Pune. Van Heusen. have 1/3rd of India’s org retail sector  High growth: Jaipur. Coimb. Nasik. Ahmedabad. Kolkata. Baroda…next reatil destinations  Emerging: Nagpur. Hyd.A Birla Group  Strong presence in Indian apparel retailing. Cochin. Surat. The brands like Louis Phillipe.

Challenges facing Indian retail industry  The tax structure favors small retail business  Lack of adequate infrastructure facilities  High cost of real estate  Dissimilarity in consumer groups  Shortage of retail study options  Shortage of trained manpower  Low retail management skill .

Characteristics of Retailing Differs from manufacturing in foll ways:  There is a direct end user interaction  Only point in the value chain to provide a platform for promotion  Sale if small unit sizes  Location is a critical factor  Services are as imp as core pdts  Large no of retail units to meet the geographical coverage & population density .

Activities of retailers Sorting Providing additional services (Channel of commun. advert) functions) Arranging assortment s Breaking bulk Extending services Holding stock . transport.

Categorizing Retailers  No of outlets  Margin vs Turnover  Location .

Classification of Retail Operations Ownership Level of Service Product Assortment Classification of Retail Establishments Price .

Ownership Classification of Ownership Independent Retailers Chain Stores Franchises .

Big Bazar . Apollo Pharmacies Convenience Stores Discount Stores Eg: Wal-mart. Westside. Globus Specialty Stores Eg: Bata. Adidas Supermarkets Drugstores Eg:Medicine Shoppe.Major Types of Retail Operations Department Stores Eg: SS. Nokia world.

Classification Summary Type of Retailer Department Store Specialty Store Service Level Mod Hi-High High Low Low Low-Mod Assortment Broad Narrow Broad Price Mod-High Mod-High Moderate Gross Margin Mod High High Low Mod High Low Supermarket Convenience Store Drugstore Med-Narrow Mod High Medium Moderate .

Types of Retailers Retail franchising is a form of chain ownership in which a franchisee pays the franchisor fees or royalties and agrees to run the franchise by prescribed norms. in exchange for use of the franchisor’s name. .

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

Retail Objectives       To increase customer traffic To clear seasonal merchandise Match competitors price price Price leadership status Create entry barriers Encourage repeat buying .

directing efforts on basis of customer characteristics & needs Implementing integrated mkting plan Evaluation & revision of plan depending on internal & ext environ .Retail Marketing Strategy Define the business in terms of orientation towards to particular sector Key Tasks in Strategic Retailing Setting short & long term objectives Identifying TM.

Defining a Target Market Demographics Geographics Psychographics Value & Lifestyle Behavioral Segment the Market .

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. and the type of product/services. .  The mix may vary greatly according to the type of market the retailer is in.  The aim of such coordination is for each store to have a distinct retail image in consumers’ mind.

The marketing mix planning The retail marketing mix is the vehicle through which a retailer’s marketing strategy is implemented and. The mix must be consistent with the expectation of target customers. in planning the mix. retailers should be guided by three basic principles: 1. 3. Elements must be consistent with each other to create synergy The mix must be responsive to competitive strategy . 2.

The Retailing Mix Product Personnel Promotion Target Market Process Place Price .

the essential elements may include:  merchandise assortments  Store ambience  customer service  Communication with customers  Personal selling  Store image  Store design  Sales incentives .Retail Marketing Mix While many elements may make up a firm’s retail marketing mix.

. also called the product assortment or merchandise mix.Marketing Mix Place (store location)  Target market  Channel structure  Channel management  Retailer image  Retail logistics  Retail distribution Product (merchandise)  Product development  Product management  Product features and benefits  Branding  Packaging  After-sales services The mix of products offered to the consumer by the retailer.

The Proper Location  Large. long-term commitment of resources  Location will affect future growth  Local environment may change over time .

Shopping Center & Mall Locations Advantages  Design attracts Disadvantages  Expensive leases  Failure of common shoppers  Anchor stores draw customers  Ample parking  Unified image promotion efforts  Lease restrictions  Anchor store domination  Direct competitors .

Presentation of the Retail Store Employee Type & Density Merchandise Type & Density Fixture Type & Density Factors in Creation of a Store’s Atmosphere Sound Odors Visual Factors .

Price  Costs  Profitability  Value for money  Competitiveness  Incentives  Quality  Status Promotion  Developing promotional mixes  Advertising management  Sales promotion  Sales management  Public relations  Direct marketing .

External Influences on Pricing Strategy Competitor s Suppliers Pricing strategy Governme nt Customers .

Basic pricing strategies  EDLP  High low pricing .

traditional. reference.Pricing Practices: Combination of the foll  Skimming pricing  Penetration pricing  Loss Leader price  Psychological pricing (Prestige . odd-even pricing)  Bundling  Fixed & Variable pricing  Perceived value pricing  Bundled pricing  Price lining  Multiple – unit pricing  Extinction pricing - .

Pricing strategies Variable pricing – when differences in demand & cost necessitate a change. with a view to increase demand. Bundling Retailers combine several elements in one basic price. invariably closely related items. Flexible pricing – offering same products & quantities to different customers at different prices. Price lining – retailers establish specified number of price points • • • for each merchandise type & retailers purchase goods to fit the price points – makes price comparisons easier – can help store to upgrade / down grade customer s preference. Suitable for products with high consumption rates. . off season discount. Multiple unit pricing Price of each unit in a multiple pack is less than the price of each unit if it were sold individually.

. Loss leader pricing – Where an item is sold below cost to build traffic & encourage purchase of other items.Leader pricing When a high demand item is priced low & is heavily advertised to attract customers into the store. EDLP – When a retailer charges the same low price everyday for long periods and seldom offers the item on sale – stable but lower than prevailing prices but not the lowest.

proximity to competition Support from sales people Price above market price Monopoly. no sales Price at market price Central business district. inaccessible Self-service. untidy . customized offerings Extensive assortment Inviting. poor layout. Compatible store limited space to environment move around. wall shelves. compatible location to target segment Personalized attention to customers. home delivery. exchange facility. limited offerings. impressive store décor. visual merchandise attractive Service Attributes Assortment Store Environment Limited variety Medium Poor quality fixtures.Retail Pricing Approaches and other Elements of the Retail Marketing Retail marketing mix variable Location Price below market price No parking.

People element  Staff capability  Efficiency  Availability  Effectiveness  Customer interaction  Internal marketing Process element  Order processing  Database management  Service delivery  Queuing system  Standardisation .

. full-price items to buy. Customers will feel they have an investment in the store which is lost if they switch to a competitor. also encourages a customer to buy more and to return more often. newspapers.Retail Promotional Methods Coupons: distributed in magazines. Organizing Sales: A good way to try to sell off a inventory that has been difficult to move. direct mail.One can move out these clearance items while introducing the store to new potential customers who will decide to return again when the sale is over. or by introducing new customers to the store who then find other. coupons must either pay for themselves through increased sales of the discounted items. Loyalty programs: Encourage purchases by charging less than full price. or street handouts to drive sales to the store. To be successful.

Retail Sales Promotion Benefits      Excellent demand generator Build traffic Can play an important role in loyalty programs Generate in-store excitement Assist in introducing new products Type of sales promotion : Sponsors  Self sponsored  Joint with supplier Promotion formats for retail  Announce special sales – end of season / regular  Organize demos / samples – initiate trial & build traffic  Value-added gifts / premiums to build brand loyalty in specific categories  Coupons & contest – to retain interest / repeat .

.What sales promotion can’t do     Change buyers preference for un-desired product Compensate for poorly trained sales force Provide long-term support in sales Permanently stop a products’ declining trend/ push a nonseasonal item in off-season.

The more support a retailer is able to get from suppliers.New stores or those seeking to be re-build image need advertising.Those selling high-image / fashion goods need  discount / convenience store   advertising than a  Supplier support . Merchandise .Stores that are poorly located need more advertising. it can advertise.Factors Influencing Advertising  Age of store . the more . Store location .

Five pillars of Retailing 5 important actions for Retailers  Solve customer’s problems  Treat customers with respect  Connect with customer emotions  Set the fairest (not the lowest) price  Save customer’s time .

Performance of Selling Space  Sales per Square Foot Total Net Sales ÷ Square Feet of Selling Space = Sales per Square Foot of Selling Space  Sales by Department or Product Category Category's Total Net Sales ÷ Store's Total Net Sales = Category's % of Total Store Sales .Measuring Retail Performance & Productivity 1.

2. Net Sales ÷ Number of Employees = Sales per Employee . A store dependant on its sales clerks to make a sale will use this method Gross Sales ÷ Number of Transactions = Sales per Transaction  Sales per Employee  Retailers need to take into consideration whether the store has full time or part time workers. Convert the hours worked by part-time employees during the period to an equivalent number of full-time workers.  This form of measuring productivity is an excellent tool in determining the amount of sales a business needs to bring in when increasing staffing levels. Measuring Productivity of Staff  Sales per Transaction  Also known as sales per customer.

Driving force in change  Re-evaluating the mkting plan  Strong visual appeal  Workplace challenge .Drivers of Success in RS  Customers .

Ethical and Legal Issues Consumer Fraud Ecological Considerations Supplier Labor Practices Use of Customer Information Ethical and Legal Issues in Retailing Retail Theft Slotting Allowances .

cost and responsibility 6.   Objectives. or whatever activity one has planned for the annual calendar.  Identifying which weeks advertising will run. Distinct positioning Defined target audience Quantifiable goals Growing sales revenue (generating more customers and more dollars per customer) Enhancing profitability (Analyzing product margin and concentrating on those products that deliver the greatest profitability. 5. timetable and responsibilities   4. when and where will one seek media coverage for an important event. Specific as to date. which months for sending an email newsletter. on what dates for direct mail campaigns. 2. 3.) Generating leads and increasing customer count Adding new products or services Detailed tactical elements Budget. Measurability and accountability . it involves implementing an effective pricing strategy or overhauling your existing one.Retail Marketing plan Plan elements 1. SWOT. In most cases.




Damaged reputation. Mergers. joint ventures or strategic alliances. A developing market such as the Internet. 2. Weakness could be: 1. 5. Lack of marketing expertise. An opportunity could be: 1. 5. 4. 3. 3. Any other aspect of your business that adds value to your product or service. Your specialist marketing expertise. A market vacated by an ineffective competitor. 2. Taxation is introduced on your product or service. Moving into new market segments that offer improved profits. 4. A threat could be: 1. 5.e. Location of your business. A competitor has a new. Poor quality goods or services. innovative product or service. 2. Undifferentiated products or services (i. 4. 4. Price wars with competitors. A new competitor in your home market. . innovative product or service. 5. A new international market. in relation to your competitors). Competitors have superior access to channels of distribution. 2. Quality processes and procedures.How to do a SWOT analysis Strength could be: 1. 3. Location of your business. 3. A new.