Chapter 5

Retail Marketing Strategy

McGraw-Hill/Irwin
PPT 5-1
Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Elements in Retail Strategy

• Target Market
Customer Needs
• Retail Format
Method for Satisfying Needs
• Bases for Building Sustainable Competitive Advantage
Defending Position Against Competitors

PPT 5-2

Methods for Segmenting Markets

Buying Situations Geographic

Benefits Sought

Lifestyle, Psychographics

Demographics

PPT 5-3
 Can A Retailer Develop a Sustainable
Competitive Advantage by:

• Dropping the Price of Your

Merchandise?
• Building a Store at the Best Location?
• Deciding to Sell Some Hot
Merchandise?
• Increasing Your Level of Advertising?
• Attracting Better Sales Associates by
Paying Higher Wages?
• Providing Better Customer Service?

PPT 5-4

Internal and External Bases for

Competitive Advantage
Retail Firm
•Low Cost
•Large Size
•Efficient
Distribution,
Operations
Vendors,
• Unique Customers
Suppliers
Knowledge
• Loyal Employees

Sources of
PPT 5-5 Capital

Creating Store Loyalty

Mental and Emotional Attachments
• Elements in a Strong Brand
– Top of the Mind Awareness
– Associations with
Brand/Store Name
• Methods Used to Develop a
Strong Brand
– Massive Exposure
– Symbols to Reinforce
Image
– Consistent Positioning
Creating Strong
Associations
– Limited Brand Extensions

PPT 5-6
 Vendor Relationships

• Low Cost - Efficiency Through Coordination

– Electronic Data Interchange (EDI)
– Collaborative Planning and Forecasting to
Reduce Inventory and Distribution Costs

• Exclusive Sale of Desirable Brands

• Special Treatment
– Early Delivery of New Styles
– Shipment of Scare Merchandise

PPT 5-7

High Quality Customer Service

• Difficult to Achieve
– People Are Not Machines -- Inconsistent
– Retail Sales Associates At Bottom of Labor Pool

• Goes Beyond Hiring Good People at High

Wages and Training Them -- Organizational
Culture

PPT 5-8

Growth Opportunities

•Market Penetration

•Market Expansion

•Retail Format Development

•Diversification

- Related vs. Unrelated

PPT 5-9
 Steps in the Strategic
Retail Planning Process

1. Define the business mission

2. Conduct a situation audit:

Market attractiveness analysis
Competitor analysis
Self-analysis

3. Identify strategic opportunities

4. Evaluate strategic alternatives

5. Establish specific objectives and allocate resources

6. Develop a retail mix to implement strategy

7. Evaluate performance and make adjustments

PPT 5-10

Elements in a Market Analysis

100

50

0
1 st Q t r 2 n d Qt r 3r d Qtr 4 th Q t r

MARKET COMPETITIVE ENVIRONMENTAL ANALYSIS OF

FACTORS FACTORS FACTORS STRENGTHS &
WEAKNESSES
Size Barriers to entry Technology Management
Bargaining power of Economic capabilities
Growth
vendors Regulatory Financial resources
Seasonality Locations
Business cycles Competitive rivalry Social
Operations
Threat of superior Merchandise
new formats Store Management
Customer loyalty

PPT 5-11

Questions for
Analyzing the Environment

• New developments or changes --

technologies, regulations, social
factors, economic conditions
• Likelihood changes will occur
• Key factors determining change
• Impact of change on retail market
firm, competitors
PPT 5-12
 Porter’s Five Forces

Barriers to Entry

Bargaining
Power of Competitive Large
Vendors Rivalry Customers

Threat of
Substitution

PPT 5-13

Steps in Using Market Attractiveness -

Competitive Position Matrix

• Define strategic opportunities

• Identify market attractiveness and competitive
position factors
• Assign weight based on importance of factors
• Rate opportunities on market attractiveness
and competitive position
• Calculate scores and evaluate opportunities

PPT 5-14

Evaluation of Retail Market

Opportunities in European Community
High Low
SPAIN
ITALY UNITED KINGDOM
Open

FRANCE NETHERLANDS
MARKETS

GERMANY
Restricted

LUXEMBOURG
BELGIUM
IRELAND
PORTUGAL
GREECE
DENMARK

GROWTH

PPT 5-15