Strategic Retail Marketing CHETOCHINE

STRATEGIC RETAIL MARKETING
GEORGES CHETOCHINE

BY GEORGES CHETOCHINE
FORWARD BY ANTOINE GUICHARD
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FORWARD
It is always difficult to write a forward for one of the works of a friend. Especially when the topic... is your life. Your entire life. The strategic marketing of retailing, the communication and the type of management needed. This book shows that this job has become a complex profession, to say the least a real industry. But an industry of men for men. Manager of a great secular company, having built over time deeply anchored values and traditions, suddenly facing new young companies turned toward the future and innovative, it was necessary to update without "breaking up"... keep the values but shake the traditions. For years, Georges Chetochine has participated in this change. He is disturbing but it was necessary to disturb. He taught us a new vocabulary: traffic, flow, attached, detached, basic, and specific, etc... which will have no secrets for you, reader, when you close this book. But beyond the strategic choices defined the essential remains: to make up determined, proud and happy teams. In one word, intelligent teams. But this is another story...
Antoine Guichard President of the management council of Casino
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INTRODUCTION
Not so long ago in the fifties, Bernardo Trujillo, the indisputable pioneer of modern retailing used to explain to retailers who came from around the world to attend his seminars that three rules were to be followed to succeed in the retail business. They were: 1 - Location, location, location. 2 - No parking, no selling. 3 - Retailing is a losing ground in an ocean of profits Today things are no longer as simple as they were in the fifties. Retailing has become an industry. The growing number of formulas, the intensification of the lighterage zones has hardened competition. The customer changing behaviour pushed retailers into a permanent self adaptation. The technological advances in general, the computerisation process have brought forth the development of new buying, new logistics and new cost management strategies which better satisfy the customer. They also brought along better products and services. This process was to sort out yesterday's retailer from tomorrows. It is on the marketing strategy ground that the competition struggle will be fought. Having to face a more distributing, well informed, less faithful customer and more aggressive competitors, the successful firms will be the ones that will master the new formulas and all the elements of real retail marketing. This retail marketing is different from the one used by the manufacturers.
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The retailer does not work with a consumer but with a client. This client notion changes the whole idea. What goes for a product image that is for a consumer won't for the store image? The store attracts either living-by clients who come for its close location or people who will make the "trip" because the savings are worth the commute.
This book has three main objectives: First of all, it lays out the foundations and the principles of a retail marketing strategy. To do so, it introduces new concepts which redefine distribution centres, clients and products. It carries a practical vocabulary, understandable by the men and women who make up a retail company. It looks in a new way at the communication principles of brand stores, of brand store products. It emphasises on the fact that there are two marketing strategies in retailing: - The entrance marketing strategy which attracts customers. - The exit marketing strategy which makes them buy more. Then it has a will to help the brand innovation, commercialisation oriented manufacturer understand the retailer's rationale and learn the imperatives to respect in order to lean on the retail industry as to conquer the best market shares. Trade marketing is backed-up by facts and patterns which will be extensively developed in this work. At last, it aims at making retailing known as a key factor in the growth process of companies so that it becomes a dominant agent in the firm's development strategies taught in universities and business schools. It can be noted that many of these European or American schools still teach the 1960's kind of marketing that is the one which primarily targets consumers. Eight years from the third millennial, it must be noted that this new strategic marketing which developed in the US at the start of the
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consumption boom was bolstered by the development of the retail industries. These past years, most retailers have acted as to attract young and brilliant university graduates. This book yearns to do the same and trigger new marketing and communication vocations in the retail business. While Japanese goods dominate their European and American counterparts on many fronts, American and European retailers (especially French ones) are the most innovative. Let's wonder whether tomorrow's Japanese market conquest will come from the export of some of the retailing formulas explained in this book. In the east, a new adventure is starting as far as retailing goes. The industry described in this book will provoke much talk yet to come. Retailing is before all, the career of men and women who make up a company.
All what I know I learned it in the distribution centres with the aisles managers, the department managers, the store managers, the regional managers, the merchandisers, the buyers and their head offices. May they be blessed for their thoughts, their disapproval, and their constructive aggressiveness. It enabled me to progress, to question my thoughts and to find new ideas as well as new solutions. May the men and women who left a mark on my consultant and professor's career be thanked.
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CHAPTER 1
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The client-store relationship from the consumer to the client system
It is undoubtedly from the "client system" idea that the retailer's strategic marketing can be distinguished and differentiated from the manufacturer's strategic marketing. To promote his brand, to create the need, to conquer his market share, to communicate, to develop his image, the manufacturer looks at what can be called the "consumer" and his need to be motivated, his behaviour, his typology, his segmentation etc. But if the retailer is, of course, conscious that his client is a consumer everyday experience tells him that to understand this client he must take into account other explicative and operative concepts. In addition to his consumer feature, the client is defined by two concepts: - The shopper client. - The buyer client.
The shopper: It is the part of the client who wants to know "where he must shop as opposed to what he must buy". It is on the shopper level of the client that happens the brand choice process and that other ingredients such as price, service, and location come into play, as well as the store's brand image that he will study later.
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To attract new customers, the supermarket, wholesale furniture or stereo retailer must understand how shoppers react. He must know the reasons why they will cross town to go to this particular retailer and not cross the street to buy the same goods from a closer outlet. Accordingly, it is the understanding of the shopper which will enable the retailer to know why this advertisement, brochure or radio had attracted and drove this type of customer whereas that other one did not have any effect even though the customers were close to the distribution center, the restaurant, the fast food place. It is the shopper's behaviour that is the key to the understanding of why such product has more or fewer chances to attract such type of customer.
The purchaser: This concept addresses the customer who, once in the store, tries to solve the difficult problem of choosing products, on sale items and other promotions. In a buying atmosphere, the purchaser will react with more or less intensity depending upon whether he will like the store in which he is find a buying comfort that will drive him to spend countlessly or the contrary close himself to the sales offers whatever his financial capacities, his social standing or his consumer needs may be. Whether or not he likes the staff welcome, the cashiers, the buying atmosphere, all of this will be conditioned by the buyer part of the consumer, the loyalty to the outlet and its brand name.
1 - The client marketing One understands that to develop his business, the retailer must take into account a marketing which looks at the three aspects of the consumer whereas the manufacturer only develops the consumer marketing. The three customer aspects are his consumer aspect, his shopper aspect, his buyer aspect...
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The entrance marketing : One of the main worries of the retailer will be to look at the shopper and develop marketing campaigns as to attract new customers in his stores or manage to make his faithful clients numb to outside offers from his competitors. As we will see later, this entrance marketing will take on different forms that change with the nature of the activity such as food retailing, wholesale distributor or clothes, stereo retailing, pharmacies, opticians, designer stores. Others factors will intervene in this entrance marketing such as the store location, the price image, the service image of the store's brand, the sales driving range and credibility.
The exit marketing: If the retailer tries to attract consumers, he must develop actions, programs which will fulfil the purchaser's expectations so that he finds the goods he came for. The exit marketing carries the idea that the retailer has to maximize people's presence in the store, to develop merchandising programs which will provoke impulsive buying with outstanding profitability.
2 - The reality of client marketing It is clear that this idea of client marketing imposes the retailer a two way behaviour. Firsts of all, he has to be conscious of the realities outside his store to be able to work on the shoppers. Then he has to look in his tore at the ways to make the shopper the greatest source of probability.
The necessity of retail industry concepts: Retail marketing, because of the existing shopper and purchaser concepts can't be content with manufacturer marketing that is all the laws, schemes, concepts and tools with which one can study the consumer, launch products, make them live on the market and establish strategies to adapt the firm to the environment's changes.
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The retailer must lean on new concepts which will take into account the laws which regulate the consumer's behavior, as well as the purchaser's. His strategic projections must then look at these laws and the relations which can exist between the consumer client, the shopper client and the purchaser client.
Whereas product marketing is essentially based on a psychological material, retail marketing will on the other hand lean on a behavioral material to understand the choice process among a few distribution centers (shopper) and the choice and buying processes, the client's behavior before the shelves, the sales, special offers and more frequently the store's offer (purchaser). A specific marketing for the retailer has to be taken up as a result. A marketing which will determine the position of the distribution center, the brand name, its offer, its communication, even its structure and type of management.
The transformation of product marketing: If a client marketing strategy is to be chosen by the retailer, the manufacturer must choose it too. Because of retailings evolution, of its power and the fact that it has become an industry, it seems that product shapers, marketing directors, product managers, advertising agencies cannot keep on looking at the world as if retailing only had a passive function of distributing the goods, as if the shopper and the purchaser did not interfere in the consumption and destruction of the goods, as if production was the only thing influencing the consumer-product relationship. It is therefore a deep questioning of the marketing principles enacted in the sixties that general and modern food retailing are calling for.
The necessity to redefine the principles of communication: To admit that a same retailer use an entrance marketing and an exit marketing to understand that in his terms "shopper" and "buyer" the customer is more behavioral than in the term "consumer" is to set the problem of the role of communication, of the way it must reach its target and when to hit it. Are the elements of dream, brand image, the notion of brand itself sufficient to carry the purchaser away from his habits to take him to a new distribution center so that he changes his usual buying pattern and discovers new
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aides, new products and new offers? Certainly not.
The necessity to redefine the marketing research methods: To seize the shopper and the purchaser implies that one has the tools to understand, not only the motivations and behavior of the consuming clients but also their choice processes as far as stores, special offers and products go.
Today, many investigation means necessary to understand the motivations, needs, etc. of the consuming client are available. Yet to understand the choice mechanisms of distribution centers others tools are needed. These new tools point out the store and product choice processes. They turn out to be indispensable for the definition of product and brand strategic plannings as the concepts and methods are to seize the behavior and needs of the consumer.
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CHAPTER 2 ___________
The notion of Flow, Trafic and induced Trafic
If we consider the client system, experience tells us that an outlet is frequently visited by the kinds of customers: - The flow customers. - The trafic customers. - The induced trafic customers.
The flow clients are those who chose a store for a special kind of purchases or because it is the closest, or the easiest to get to. Anyway they chose it because it is the one which is the most convenient for them. It's the location of the outlet, in a given distribution zone and a defined competitive system which will determine the flow intensity that a store will be allotted. The fact that a flow shopper visits a supermarket on a more frequent basis than any other because it appears to be the more convenient one to get to doesn't mean that this customer will be a faithful and enthusiastic one. A flow customer can have a negative relationship with this nearest and most convenient store, having chosen it because he is used to going there. A same shopper can be flow of different outlets of the same brand in different distribution zones. This can be explained by the fact that people cans shop near their home, their workplace or any other place such as those with kids who will shop when they take their children to gymnastics or music lessons or any regular athletic or intellectual activity.
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It is the subtraction of flow, corresponding to the opening of a competitor in the distribution zone which is to be feared with this kind of shopper. As a real captive of the retailer, the flow shopper comes in between them, or if the usual store does not respect the simple rules or norms of retailing of which it is a member, as far as prices, service counselling and welcoming are concerned. The trafic clients are very different shoppers. They are customers who get committed to a store because it literary bought their commute. Reacting essentially to special offers, good bargains and promotions, they are picky clients, hard to seize who are more demanding because of the longer distance and inconvenience of the commute. Trafic clients react on the basis of the constraint-reward relationship. The longer is the trip, the more they want from their money. The less they're used to reacting to promotions, the more the retailer must hit them with special offers so that a commute be triggered. Most of the trafic clients are flow clients from another store. It is rare to find, in any business that is, pure trafic clients who only react to promotions and rewards. In France, only twelve per cent of the population has been assessed as fitting in the trafic client category. It is clear that the store location is going to play an important role in the constraint-reward relationship that drives the shopper. The easier it is to get to the outlet, the more the shopper will convince himself of the worthiness of the trip. Nevertheless, the location of the store won't be enough to speed u the trafic creation. The outlet, the brand name has to be legitimate, have a good image, a promotion credibility. Trafic shoppers also have to believe that every product will be satisfying in the aisles as far as choice, price and service are concerned. It is undoubtedly in large retail stores which sell food and non food products that this global perception of the outlet is the widest spread. Many large retail stores that try to use the trafic strategy with the help of promotions and very interesting offers do not get rewarded for their actions. In their case, the trafic shopper does not believe in the brand name, and the image of the choice he is being offered does not incite him to buy other goods than the product he came for and the latter is not worth the trip.
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The same phenomenon can be noticed in electric household equipment, furniture stores. The fact is:"trafic is hard to create". The induced trafic clients: Are those who come to a given store because they happen to be client of another nearby store. A fast food restaurant can have an induced trafic clientele because it is located on the parking of a supermarket. On the contrary, a wholesale food outlet can have induced trafic customers because these shoppers are, before all, clients of a garage or any other distribution center in the area. Just like the trafic clients, these induced trafic clients come to that store only because a nearby distribution center attracted them in the first place. 1 - The different types of flow clients Besides the classical elements of segmentation tied to the social stratas, flows can be analysed and seized from a typology organised around the flow and its outlet. Practice taught us that the flow clients can be: - Either attached clients, - Or unattached clients. The attached flow clients: attached to their store consider themselves as tied to the brand name or the distribution center. For different reasons, these attached flows feel guilty when, even when they are justified, they have to go shopping in other stores of the same or different kind. The attachment to a store is a psychological notion which usually stems from the store managers' efforts to welcome their clientele, to recognise it and give it a preferential status. The attachment notion is essential because it is in a way a simple means of fighting off the arrival of a competitor who might detour the flow from its habits by its mere presence. This tight relationship which sets in between the store, its staff, the offers, the buying atmosphere and the tied flow customer is beyond what satisfaction, fidelity and client attachment mean.
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To feel attached to a store is to express that you are a part of it. To maintain this relationship, not only do you have to forgive certain errors as far as service, prices or quality go but you also have to defend it against criticism like you would for somebody you care for. The attached flow client is not objective. His perception of other nearby stores is definitely influenced. In the marketing study field, the behavior, attitudes and motivations of the attached flow customer are to be carefully considered. As we will see, a specific data processing of this target's information must be done to avoid serious interpretation mistakes. The attachment of a flow customer is a real capital for a brand name store, a chain of outlets or even a mere downtown store. The breaking up between the attached flow client and his store carries serious consequences for the retailer. If unfortunately an attached flow customer feels that his regular store mislead him on quality, prices or service, if the charm is suddenly broken, not only will the retailer lose his customer forever but he will ruin the store's reputation in the neighbourhood, and cause a loss of a market share that used to be a given. It is undoubtedly in France that the supermarkets and wholesale stores in the eighties experienced the most this loss of attached flow customers. To cope with the opening of the Leclerc discount stores, many retailers chose to lower drastically their prices from one day to the other. Whereas attached flow clients would have accepted a certain difference in prices and would have stood by their more expensive distribution center, they witnessed a drop in prices without any protest on their part, which tended to prove that their store had been taking advantage of them for years. Other more subtle retail chains took to dimish their prices gradually before the opening of that discounter so that the price difference did not show too much. They proved right and met with success. Attached flow clients appreciate the fighting spirit of their store when it is challenged by a competitor. They can't stand the vision of their store motionless before the newly comers promotions and special offers. They think it should fight to mark its territory. The attached flow client, whatever
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his age, sex, cultural level, or financial capacity be is emotionally involved with his store. It's an asset and a flaw if badly managed.
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The unattached flow clients are totally different. They come to shop in a specific store because it is more convenient and simpler for them as said earlier. They have no particular relationship tying them to their store. Statistically, they can be considered faithful customers but if another outlet of the same kind opened on their way to the store, they would not hesitate to drop it although they regularly shopped here. It is of course, important for a retailer to know whether many unattached clients belong to his flow customer clientele. These clients can suddenly abandon the store even though they were considered good customers, nice with the staff and had been coming for years. This detachment notion is a fundamental one in retailing's strategic marketing. Studies have been carried out to determine whether these customers had a specific behavior, school level, certain knowledge of retailing. Unfortunately, these studies did not bring out the reasons of this detachment. It must be the retailer's strategy which causes this flow client typology to exist. It can be noticed that a change of director which induces a change in the store's management rapidly transforms unattached customers into attached ones. Everybody knows about the evolving of the small store's clientele in some cities. The mere process of changing the owner turns unattached customers into real friends of the store that is attached clients. In supermarkets where flow clients frequently come to shop, the cashier's role in the transformation of unattached flow clients into attached ones is predominant.
THE NOTION OF BASIC FLOW, SEMI-BASIC AND SPECIFIC CLIENTS
If flow clients can be characterised by the attached or unattached typology, they can also be characterised by their buying behavior inside the distribution center.
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The basic flow clients: They are the ones who buy most of their goods in a same store. In a travel agency, for instance, these people will buy business trip tickets as well as their vacation package on a catalogue if they are planning to go away. In a large store, such as Macy's, these clients wont be content with buying a few products. They will buy their clothes, other equipment, and even food if they can find some. They will do the maximum of shopping they will be able to. Now these basic clients can be attached flow or unattached flow clients. If they are attached flow as well as basic, they are very profitable clients for the retailer. In food retailing, in supermarkets, these basic attached flow clients are very important for the understanding of compared profitabilities between different outlets of a same or competing chains. It is obvious that when a store has forty per cent of basic attached flow clients in its clientele, its performance will be more profitable than the one of an outlet with only twenty per cent of this kind of customers. As a matter of fact, if this clientele is lost, profitability will surely drop severely. Supposedly, only impulsive buys would help a retailer have better results with this type of clients. As we will see later, it is at the exit marketing level that ways exist to make even better use of these perfect clients. Various studies carried out in England, Holland and Belgium show that certain retail chains such as Sainsbury, Albert Heijn, Delhaize have a great proportion of basic attached flow clients among their customers. This phenomenon partly explains the good results of these brand name chains which attracted many flow clients because of the location of their stores and succeeded in making them attached at first and basic clients after, which means that they buy most of what they need to live in the same store. The problems met by the Parisian supermarket chain Flix Potin mainly stem from the fact that these stores had a strong proportion of basic unattached flow clients in their clientele. Because of the trafic and parking constraints, flow customers would go to Flix Potin stores because they were forced to. They were not attached to their store but still were basic clients.
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The opening of more dynamic and close competitors instantaneously emptied Flix Potin stores that lost their profitable customers. Overnight, this chain had lost its profitability source.
Semi-basic flow clients: They are clients who only buy half of what they need when in a given supermarket. Coming back to the travel agency example, the client will only buy his business trip tickets without his vacation package, of vice versa. In a store such as Macy's, the client will only get pants and jackets and go to a designer store for shirts and ties. As for food, the semi-basic client will probably go to various stores and come to his regular supermarket for a few distinct products only. He is a particularly interesting client to improve sales. Since he is a flow of the store, since he can be "attached", and since he is semi-basic, this customer can buy more products if he gets to know the store, the range of products for sale, if a number of actions of which he will be the object are undertaken to improve the exit marketing. The ideas of attachment and detachment play a prime role in this desire to sell more to the semi-basic client. We will face the same problems discussed earlier but we will underline the fact that the loss of a semi-basic client is not important in the short run but will bear serious consequences in the long run.
The specific flow clients: They represent a considerable potential since they shop in different places to buy the rest of what they need. It is always painful to know that a retailer expects to see customers shop in his stores for a single kind of product whereas they are attached and faithful to the brand name of the chain and an obvious potential for profit. Let's also notice that a given outlet can divert part of the flows of a competitor and start a real catch process thanks to this category of specific flow clients. Working on a single product it can sell more competitively would do it.
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2 -The different types of trafic clients
If flow clients can be identified by gathering information on their social and working status, on their typology to know whether they are attached or unattached, basic, semi-basic or specific, on the nature of the products they buy, trafic clients cannot be identified by the same criterias because they live far from the store. Because a trafic client is a customer who is driven by the constraint-reward relationship, classical criterias cannot be used to identify customers. Different ones have to be used. Rather than defining the trafic client's nature, practice shows that it is better to look at the kind of flow which had him come to the store. There are six types of trafic.
The calendar events trafics: They correspond to promotional programs which are launched by retailers to attract customers at a given time of the year. The calendar is what influences the occurrences of these promotions. Easter, Christmas, Back to school time, seasonal sales, etc. are times of the year which instinctively drive customers to retail stores because they know it is a time for sales. It looks like a natural Brownian move which would push the majority of consumers to go to stores, to feel like buying goods and above all keep in mind promotional offers heard or read about. Christmas, for instance, is a time of year which enhances people's reading of promotional offers, as well as their desire to buy. The whole atmosphere will condition people and incite them to take their cars, no matter what the road or trafic constraint may be, to get the best possible reward. In the communication field, Christmas Easter or sales are magic words. Many retailers don't think it is necessary to write these words on their catalogues or promotions. They are wrong because they are necessary. Calendar trafics have a strong audience. They are waited on and are signals for goods bargains even if some stores' prices are not as appealing as they sound in the ads.
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The provoked events trafic: They are trafic created by the store but around classical themes. The distribution center's anniversary, the ten crazy days, a fashion show for the winter or summer collections. All of these are store made themes trafics clients are sensitive to. These provoked trafics should not be mistaken for calendar trafics. In this case, it is the store which launches the promotion out of the blue and the credibility of this event will be the guarantee of a public response. Some supermarkets have very profitable anniversaries whereas others don't bother with them because they simply are not legitimate enough to carry this kind of theme. Trafic clients remember very well the provoked trafics they were subject to. If a good sounding theme was not backed up by corresponding prices, the trafic client will remember the store did not live up to its campaign and will probably not trust it a second time even if he lives near it. Provoked trafics are theme oriented programs. In general, the same themes exist in the retail stores which offer a same product. Although themes don't get old, experience has proved that retailers on the other hand get rapidly weary of these well known popular themes described earlier. Effective promotion trafics: These trafics no longer correspond to themes, they correspond to products. A given supermarket will sell a VRC at a very low price, a furniture outlet will do the same for a leather living room, and a manufacturer will buy old fridges or used sewing machines. In any case, it's the strength of the product which will create the flow. It is a given that the retailer must sell other goods than the one on sale, that he must achieve complementary sales not to lose too much of a margin. In these effective promotion trafics, the flow shopper is drawn in so that he buys as much as possible (i.e.: client system previously studied). In general, food retailers complement these effective promotions with what can be called "every aisle" promotions. These promotions also exist in other retail stores such as photography stores or more generally in outlets where a few product ranges can be found to attract the trafic shopper. Some people consider these "every aisle" promotions as a derivative of the effective promotion trafic. What is to be pointed out is that we leave the
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world of theme trafics to enter the product trafic domain.
It is certain that effective promotion trafics require more creativity from retailers and especially from service managers. Unfortunately, retailers often copy one another and when a number of products are being promoted by one, others do the same which brings along a saturation of the market. New ideas need to be constantly dug out. Some retailers are more innovative than others in this field. They are real leaders. In the eighties, microwave ovens, VCR's, cameras, walkmen, fresh salmon, and caviar have been perfect examples of effective promotions launched by supermarkets or leading specialised retailers.
Curiosity trafics: The reopening of a store, after it has been remodelled, is one of the ways to draw trafic shoppers in. The public knows that after a reopening, "a grand opening", or a change in the distribution center, goods bargains generally come along. Half way from the provoked and the specific trafic lies the particularly interesting and well organised curiosity trafic. In certain kinds of jobs, the presentation of a new product, of an innovation or a curiosity creates large trafic quantities. At the beginning of the eighties, the French brand name store Carrefour proved it knew how to organise shows on its parking lot: they attracted large quantities of profitable flow this way. Sport car races, tennis games or other exhibitions took place on parking lots. Today some furniture outlets show they are able to organise these types of exhibitions which draw in an impressive amount of people who come for a car race, a wood cutting or an apple pie eating contest as it is done in the Wall Mart stores in the United States. These curiosity flows are still frequently resorted to fort the grand opening or reopening after enlargement or remodelling of an outlet. On the other hand, the Barnum side of this kind of trafic is less and less used, not because people don't come but because of the cities' prohibitions. Also, promotion representatives and salesmen are more sophisticated today and sound more like business school students than supermarket salesmen.
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Comparative trafics: In certain types of markets and products, the customer likes to compare prices, service and choice. As far as stereo, household appliances, television go, future purchasers often look in different stores before buying. Before investing in an expensive product, they want to compare prices and look for the best solution, make sure they are right to buy in a store that they previously chose. These comparative trafics are very important and must be fed with a specific communication. On the furniture, hardware, camera, second hand or new car markets, some products are subject to comparison. In France, a furniture retailer used to throw free country type banquets to attract trafic clients who were interested in comparing delivery terms, leather qualities or product features. Usually, the majority of retailers don't take comparative trafics into consideration. A natural flow moves from one store to the other. It does not have the vocation to be speed up, organised and picked up like it should be. We will study potential promotional actions in the right chapter. We will also look at the corresponding efficient techniques.
The Vietnamization trafics: They are trafics which occur on very specific targets. The retailer should work on both a product and a theme invented for a given target. One of the best examples to illustrate this is the program launched by the Belgium group Makro that targeted sports oriented people in Belgium. That is tennis players during the French open. Each tennis club will receive offer brochures asking young players to come get a present or the possibility to win a free ticket to attend the tournament. It is a French open theme. The products are tennis rackets, tennis balls, sneakers, equipment. The theme is focussed on a given target that is sensitised because it feels it is taken care of. Trafic vietnamization actions, when well carried out, are really interesting because they create a very friendly relationship between the target and the store. They are not visible and it is an asset because competitors cannot
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copy them, which prevents counter attacks from occurring like it usually does in specific trafic operations.
Couponing was not included in the six types of trafics that we just described. In spite of the fact that it is primarily used in food retailing, couponing is also a technique used by non-food retailers and other specialists. As a result, it must be considered as a mean of the several trafics and flows that we expressed, and not as a trafic in itself. Couponing can be done in a calendar clothes trafic, but essentially in an effective promotion trafic. Outstanding results can be achieved depending on the country. Consequently, in some cases retailers send out coupons brochure or insert them in local or national newspapers. These are uncommon cases. For us, they will fit in the calendar event, provoked event or effective promotion category. It is the most efficient technique in the Anglo-Saxon countries such as the US. It is the least efficient one in Latin countries. Several explanations were proposed to account for this difference. They bring some elements to the answer but no objective demonstration was ever accomplished. Couponing is successful when done on flow clients and not on trafic clients. In countries such as Belgium, England where distribution centers of more than 4500 square meters have a clientele mostly composed of flow clients, it is not a surprise if good results are achieved. Nevertheless, the coupon enigma is still alive.
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CHAPTER 3 ___________
For a new marketing definition of distribution center: The three main types of outlets :
The notion of client system and the flow and trafic concepts allow a new way of defining distribution centers and a new way of introducing the types of strategies related to them. Usually, outlets are defined either by their size or the kind of products they offer. In the non-food retailing business, they are called "grands magasins" such as "Les Galeries Lafayette" or department stores. For household appliances, stereo equipment they are called specialised stores. Outlets can also be defined by their geographic location to the customers, saying they are proximity outlets for instance or on the contrary outlets located in malls, shopping centers, etc. In each country, norms have been established. They determine (for national statistics for example) the limits in which the outlets must be located in order to assign a definition to them. In France, in particular, a supermarket's measures are comprised between 400 and 2000 square meters whereas a "hypermarch" is considered a distribution center where food and non-food products are sold in 2500 to 25000 square meters warehouses.
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Without questioning these definitions, one understands that the client system requires a more dynamic, practical way to define outlets so that a type of marketing is assigned to each outlet. Thanks to the notion of flow and trafic, three types of outlets can be defined: - Essential flow outlets, - Semi flow outlets, - Flow and trafic outlets.
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Essential flow outlets
They are outlets which depend solely on a flow clientele. This flow clientele can be found in a distribution zone whose radius is of about three to five minutes by foot. Whatever the nature of the clients attached or unattached to the store, they will come because of the short distance. To reach their break even point, these two outlets must not launch any expensive program. It is the flow clientele that is in the 3 to 5 distribution zone which allows the store to balance its spending with the purchases these people do. To reach this equilibrium, experience shows that the outlet penetration, as far as the number of household customers in the distribution zone is concerned, rarely exceeds ten per cent of the total number of households living in the distribution zone. In other words, this essential flow outlet balances its spending, reaches its break even point as soon as ten per cent of the clients of the 3 to 5 minutes by foot zone balances its spending. The notion of break-even point: By looking at this graph, it can be easily understood that several elements such as wages, social, energy and management costs can be substituted for costs on the vertical axis. This substitution will depend on whether the outlet is involved with a warehouse or not. It can also depend on the location and advertisement costs etc. Depending on the stores, the companies, it will be feasible to determine the relationship between fixed costs and variable costs and figure out the amount that will fit on the cost axis.
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Now we must come up with the revenues figure that will balance out the spending figure. The produced margin created by the revenues number will bring about the equilibrium. This figure is to be calculated by taking in the number of needed customers and their corresponding purchases. If the average purchases basket and the profitability per basket are usually known for an essential flow, a semi flow, or a flow and trafic store, it is harder to know how many clients come into the outlet. All stores know how many people go through their cashiers but mistakenly retailers think this number represents the number of customers who visit the outlet. A large supermarket or "hypermarch" will come up with 150 000 clients a month. A supermarket will say it deals with customers numbering between 50 and 60 000 a month. It is a notion that is not understood. In a pharmacy, a food market, a "hypermarch", a department store or a fast food restaurant, a same client can come back many times during a same month. It is therefore easy to understand the existing relationship between the number of cashiers trafic or cashiers receipts of a store and the actual number of clients. No surface product criterias intervene in this definition. Practice shows that the stores surface areas will differ with the kind of products purchased. In any case, the equilibrium between a store's spending and the necessary revenues to balance out these spending will always be reached thanks to attached flow clients or will not be reached. In food retailing, stores surface areas vary from 40 to 400 square meters. They usually are brand name store branches or small retail businesses. In household appliances retailing, they are small neighbourhood essential flow outlets. A pharmacy usually is an essential flow store. The stores of the brand name chain "Nicolas" in France, specialised in wine and alcohol rely heavily on their flow clientele and reach their break even point thanks to customers living in 3 to 5 minutes by foot distribution zone. Neighbourhood jewellery stores as well as certain travel agencies are essential flow stores just as neighbourhood bookshops are. This break even point idea achieved thanks to only 10% of household
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clients located in the3 to 5 minutes distribution zone, varies with the kinds of stores and housing.
Cities with lots of vertical housing will have norms different from the ones found in provincial towns made up of small houses, where people live in horizontal housing. Likewise, the purchasing power of the distribution zone's households is to be considered in relation to the kind of products found in the sore. In any case, when the equilibrium norms between spending and the necessary revenues are defined, the natural break even point rule must be respected. Generally, when this kind of store cannot balance its spending out, retailers immediately try to promote their goods, to create some trafic and to raise its household penetration index to 15 or 20%. It is an endless process which draws the managers or owners of a store in a hellish spiral of price raising, advertisement spending and risk taking which unfortunately do not pay off because these stores are not designed for permanent trafic actions. When an essential flow store cannot balance its spending on its own, it must be shut, even if it must be reopened a few hundred yards farther, in another street or avenue where it will be easier for flows to come to shop, be they attached or unattached. Let's note that these several hundred yards seem ridiculous compared to the problems caused by the shutting off of a store and its potential reopening. It is the definition of flow itself which must be considered. It is not the distance but the access to the store which defines the client. The opening of a competitor in the distribution zone will of course create a decrease in the flow. Likewise, a store located further but creating trafic might take a considerable quantity of clientele away from an essential flow outlet. There are the risks and weaknesses pertaining to essential flow stores. Undoubtedly, an essential flow store will have all the more chances to survive if it can have its clientele become attached to it.
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In food retailing, for instance, many small stores usually former branches which can be found in Western Europe had a hard time surviving not because they were not modern enough as it was brought forth but because they simply spent too much money on marketing, communication or promotion, to meet their break even point that is.
"Casino" is one of the only groups whose more than 2 000 branches testify of its good management of essential flow stores. Thanks to a rigorous choice of store managers, to a strong willed strategy of closing and opening stores, to a quality product policy and a practical logic, these stores keep on being profitable whereas all professionals agree that small food branches are doomed to disappear. The example of small successful stores run by immigrants such as North Africans in France or Asians in Los Angeles refutes that belief. COMMERCIAL OPERATION OUTLINE OF AN ESSENTIAL FLOW OUTLET
From the point the automatic break even point rule is accepted on, one must understand the strategic and tactical means available to a distribution center and/or to a chain of stores in order to fight off competitors, develop its sales and better penetrate the distribution zone. Relation strategy: The essential flow store enjoys the advantage of being small and having a staff that is close to customers. Attracting attached clients becomes easier especially if managers and cashiers understand that kindness, courtesy and relations need be sold just like products are. Many examples have proved that it is sometimes enough to change staff or manager to witness a sudden increase in sales or a come back of customers. An essential flow outlet without a relation strategy or an attached client strategy is a doomed one in the medium run. Purchase promotion strategy: Promotion in the distribution center, be it carried through ads or employees allows three types of purchase promotion: - Impulsion purchase promotion, - forgotten purchase promotion,
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- High unit value purchase promotion. In certain businesses such as food, pharmacy, household appliances retailing etc. or any essential flow store, a good buying atmosphere induces impulsions and causes the purchaser to buy one or several products more. The additional bag of candies or the newspaper which led to the purchase of a calculator. The purchase of a pen often leads to a book, a magazine or anything the consumer is attracted to.
This promotion of impulsion purchases will play a prime role in the profitability of the company. They are products that are a source of pleasure and whose prices are overlooked in a way. Retailers' margins are usually rewarding. Essential flow stores which generally have small surface areas, if well managed, have a natural potential to sell small goods that are easily forgotten by consumers because they just don't imagine they could be for sale in this store. Actually, they are purchases which are asleep in the client's mind. A good promotion, a good message in the outlet will make them surge to his consciousness. To focus on these small products is a way of enhancing the average basket. Bringing products out into the light becomes an art in these essential flow stores. An art that can become quite lucrative. A good merchandising, a good presentation can also have a flow client turn from one sort of products to another more expensive and more profitable one. Many cases observed in travel agencies have shown that ground work allows selling more expensive vacation, in places farther away and to customers who were only interested in information on a cheap product to spend a few days away. In jewellery, food household appliances retailing or many downtown stores, a good promotion, presentation and action from the salesmen or the managers can induce customers to buy better quality wine, a more expensive watch, or a multiple functions radio.
Sales promotion strategy: The essential flow outlet, as many other stores, can launch promotional campaigns outside the distribution center thanks to different forms of advertisement. Brochures, flyers, local radio
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ads, street placarding or in other neighbouring stores. Local advertisement when it is an important brand name chain is also used. These actions aim at solving three problems: - enhancing the shopping frequency of customers, - improving the store's penetration in the distribution zone, - to differentiate oneself from competitors.
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Enhancing the shopping or visit frequency of customers: The flow client by definition goes shopping in other stores. The more he will return to a store, the less competitors will sell (to this person anyway). These competitors might in others cities or neighbourhoods because the flow client of a store might be the flow client of another store. This being for geographic reasons on the one hand and job reasons on the other hand. The shopping frequency of customers who shop for food once a week could be enhanced to two or more shopping sessions because of a good promotion on fresh produce at a given time, like in the spring or when seasonal fruits are on the market. The shoe retailers, the stereo specialist can have consumers shop more at their store so that competitors don't get their business. It is understandable that this increase in the shopping frequency is not related to the break even idea. These campaigns are intended for profit making. It is therefore easy to calculate their profitability. An operating model is helpful to understand what will be displayed in the brochures, the flyers with regard to what the costs and expected profits will be.
To penetrate the distribution zone: A 90 square meters food branch reaches its break even point with about 400 household clients, that is 1 000 people. These 400 household people usually correspond to an average penetration of 10 to 12 per cent in the 3 to 5 minutes by foot distribution zone. A good running branch can reach 500 or even 600 clients thanks to communication if good promotions are achieved. The store will have to create trafic and choose among the types of campaigns described earlier, the one that will help develop new clients. Usually, calendar trafics are the ones which work the best for essential flow stores. Advertisement during open hours is a good example too. During these unsettled periods, the distribution zone client does not have to get out of his way to come check the store out because he knows it well since he happens to walk or drive by it and that he belongs to its everyday potential clientele.
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To differentiate oneself from competitors : Every store must look for strategic marketing ways to differentiate itself from other essential flow outlets (its direct competitors) in the same distribution zone from semi flow, flow and trafic stores selling comparable products but located in farther zones. The differentiation between brand names, between outlets is particularly important for retailers. One can take note of the fact that clients resort more to a comparison process between the assets and disadvantages of a store than through an impulsive process when they have to make consumer choices. The shopper, to choose between stores compares the assets and the flows of every factor he deals with. He trusts his experience and remembers by a trial/error process his past errors, his different purchases from such and such store. He compares the weaknesses and positive points of different stores. Therefore, as soon as we deal with the notions of strategic marketing of an outlet, we must look at the factors and elements which make the difference among distribution centers of the same kind; in this case essential flow stores belonging to the same type of markets. Generally, the comparison is done with the help of these criterias: - Prices of the outlet, - Price image of the outlet. All the services provided by a store form the service image of the store: - The depth of the supply, - The width of the supply, - The constraint/reward relationship related to the outlet's location, - the positioning of the store or of its brand name in relation to the price of the service, the supply and brand name promise as we will see later. Without going deep into the analysis of each of these elements which will be studied in a brand name strategy chapter, one must understand that the strategic marketing of an outlet cannot be achieved without harmony and cohesion between these criterias.
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INFLUENCE OF BRAND NAME COMMUNICATION ON ESSENTIAL FLOW OUTLETS:
Brand name communication for essential flow stores is absolutely necessary. It will be developed further in the brand name communication chapter. But we can already say that this communication of brand names has three influential outcomes. If it is well implemented, brand name communications of essential flow stores will reassure the customer and help the outlet's staff make him feel backed up by a superior power and believe he expressed himself for a great and important cause. Essential flow outlets, because of their small size, need to reach a certain dimension before its clients' eyes. Brand name communication must satisfy this need. It must also carry the notion of quality. This quality notion exists in the essential flow outlet definition, no matter what kind of business the store is in. A good brand name communication must grant the store a quality image that it should not enjoy if you consider its small size. The cleaner whose sign shows "dry in five secs" is surely closer to quality clients search for than a cleaner with no name, yet of good quality. At last, brand name communication is a good preparation device before sales promotions are launched through brochures, flyers which target the store's customers. A direct advertisement is known to work well especially when the store that runs it is well known. If this type of communication is necessary, it is not designed to help the outlet reach its break even point and substitute for the quality of the working staff. Brand name communication or corporate communication of essential flow outlets is a strategic means and not a technical means. One must be aware of the fact that mistakes were made on this very point by people who
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thought for instance that brand name communication could make up for quality deficiencies, inventories shortages and staff inability to serve customers. A very interesting example related to that problem is the one produced by two Parisian food chains "Flix Potin" and "La Laiterie Parisienne".
The Flix Potin chain had essential flow outlets in Paris. It also owned another chain: La Laiterie Parisienne, made up of essential flow outlets too. In the same street were located two stores. One of each chain. Flix Potin was producing and grocery oriented while La Laiterie Parisienne concentrated on industrial fresh produce such as milk, butter, eggs, yoghurts etc. In the same street, clients were flow customers of both stores. They liked to shop at both outlets. They would sometimes buy milk products on promotion at Flix Potin but would not hesitate to please the LP's manager through purchases they could have done at the Flix Potin store. This choice of two outlets suited everyone but some La Laiterie Parisienne technocrats who refuted these flow and attachment notions and the very principle of these outlets' mechanisms. The owners decided to merge the two brand names to save money and every store bore the Flix Potin name. The Laiterie Parisienne name disappeared. In the same street were two Flix Potin stores. Retail marketing laws soon proved their legitimacy. Quickly the Laiterie Parisienne stores which had been turned into Flix Potin ones lost so much of their clientele that they had to be shut off. While Flix Potin managers thought they could achieve 1 + 1 = 3; they understood alas too late that 1 + 1 < 1 in spite of all the advertising that had been done. MANAGEMENT OF ESSENTIAL FLOW OUTLETS Essential flow outlets in food retailing often correspond to small branches or grocery stores. Centralised management perfectly suits this kind of store. Allowing a bit of flexibility in displays, all stores can be part of the same model and be managed from the same headquarters. Most of the large French retail companies which grew out of small branches
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are examples of this efficient centralisation. Yet it must be noted that this centralisation which suits essential flow outlets very well is not always appropriate for semi-flow, flow and trafic distribution centers that will be describe later on. In essential flow outlets, the role of the president is crucial. A question is raised and calls for an answer to know whether there is a contradiction between a strong centralisation desire which suits this type of outlet and the amount of freedom and decision making power a store manager needs in whatever business he is involved in. Straight forward talk is a good way to deal with this problem as far as essential flow outlets go. With a solid centralised marketing on the one hand and motivation, responsibility and freedom of the outlet's operators on the other, good results are frequently achieved. Many examples attest of the good records achieved in many fields such as car rental, fashion, fast food or outlets specialised in cosmetics such as Yves Rocher or Rodier. MEASURING OF FLOWS AND TRAFICS
To measure the amount of flow and trafic in a distribution center, it is suitable to define the quantity of customers who shop in it. As the cashier turn over figure is not equivalent to the actual number of customers, a simple calculation will solve the problem. To do the job, a simple study of the times when shoppers come is sufficient. At the outlet exits, people have to be asked how often they come to the store, be it many times a day, once a day, three times a week, every two weeks or once a month etc. in order to determine their shopping frequency. On a scale of about five weeks, and with the necessary precautionary measures pertaining to statistical studies, a survey has to be carried out at different hours of the day, every day of the week to keep the results objective. Thanks to a first degree equation with one unknown, it is now possible to draw parallel between the cashiers recorded customers and the clients' shopping frequency in stores.
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Let's take two outlets A and B of a same size, same kind and belonging to the same chain. A has 110 790 cashiers recorded trafic clients. B has 110 790 cashiers recorded trafic clients.
A's clients shopping frequency is the following: Once a day Three times a week Twice a week Once a week Three times a week Twice a week Once a month Less often 8 24 56 245 26 81 76 37 4% 10% 44% 5% 15% 14% 7% 1%
B's client shopping frequency is: Once a day Three times a week Twice a week Once a week Three times a week Twice a week Once a month Less often 13 45 85 230 20 75 65 20 8% 15% 42% 4% 14% 12% 4% 2%
According to the calculations, outlets A and B had the same cashier recorded clients in the beginning but the number of people who actually visited the store is different. This is very important. It means that a store's marketing strategy starts with the knowledge of the exact number of customers who visit the outlet.
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In food retailing, "household customers" is a common term. It simply means that the person who shops in the store represents a family at home. When calculating the number of people who come regularly to the store, it is important to keep in mind this household customer idea and ask each person who leaves the outlet how many people he stands for. It is a way of narrowing down information that will be used to determine the average household's spending.
The break even point calculation as a result becomes a rather simple task since it is going to be possible to determine the exact number of customers who frequently visit the store as well as their potential purchases thanks to the number of cashiers recorded clients and the shopping frequency survey. If in addition, these surveys take into account the notions of attached, unattached, basic, semi-basic and specific clients, they will be even more accurate when giving an assessment of the number of customers who visit the store and the amount of products which allow the outlet to balance out its spending. Yet this type of survey should not make use of direct questionnaires. These attached, unattached, basic, semi basic notions have been part of my courses for more than 20 years and many outlet managers have been content with asking clients whether he belonged to such or such flow or trafic category. The shopper obviously does not know what these terms mean. If he is asked such a question, he will tend to respond in a way that is totally different from the way he actually feels only because to say that one is detached from a store sounds embarrassing and attached to a store degrading. To find out what a shopper really is, one must use logic breaking surveys. It is easy to understand that if someone is asked what kind of food they like, the person can answer naturally that he enjoys a definite dish such as Filet Mignon, but in a further question he won't be able to say he hates meat. It is consequently with the help of this logic breaking type of questions that one can determine whether a shopper is attached or not, basic or semi
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basic. A cleverly structured questionnaire with questions on ways an attached, detached or specific client can or cannot behave will give a trusting answer as long as a computer program provides the retailer with a means of finding where the logic breaking point occurred. Nobody is a hundred per cent attached, detached or basic. People belong to groups whose answers show that the shopper can fit in such or such category. Of course one could say that these opinions on how to determine the shopper's nature are part of a conflict of experts. It is not so and experience is here to make retailers understand it is misleading to use straight forward questionnaires which do not give the right information.
A large food retail store or "hypermarch" (such as "giant" is) in a mid size French city had tried to determine the number of customers who visited the store regularly as well as the amount of attached and detached clients in this clientele through a simple questionnaire. The survey had shown that the majority of these clients were attached ones (45%) and that only 20% were unattached. The president of the outlet had relied on these numbers and believed he could not be hurt by the opening of competitor since he possessed an attached flow clientele. Unfortunately, he was far from the truth. The use of a direct or straight forward questionnaire had produced wrong information. His customers were on the majority trafic clients and more important, they were detached clients because this store was the only one in its distribution zone and had become the only option for the neighbouring population. Therefore, all the store's strategies were mistaken from the start. Much energy was spent to regain its market share. Information on the nature of shoppers is so important that a rigorous strategy must be designed. Retailers should not believe shoppers are going to play their role and state where they stand in relation to the outlet. If shoppers need to be carefully analysed, samples must also be cautiously defined. Let's recall that for a retailer the number of customers to interview is only pat of the job. Time is also a factor to consider when interviewing them. Most distribution centers, no matter what business they are in, know that
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their clientele varies with time that is the days of the week and hours of the day. In a food retail store such as a supermarket or a wholesaler, people who come shopping around noon are very different from the ones who shop at the end of the day. The noon customer will tend to be a housekeeper who comes shopping before picking up the kids at school. In the evening, the customer will tend to be a working woman who will hurry to go shopping after work to get her dinner ready later on. Friday and Saturday evenings are times when couples come to shop for the week. Mondays and Tuesdays are days preferred by retired a jobless people or customers who had rather come when the outlet is not crowded. At the beginning and the end of the month, customers tend to be different. It is usually at the end of the month that stores promote the most to draw in as much trafic as possible. The beginning and the middle of the month are times when flow clients come to get products they ran out of since their last big shopping day.
Therefore it is absolutely necessary to undertake a client shopping frequency and definition survey of at least weeks, interviewing customers mornings and evenings and following specific quotas. Without going deep into statistical techniques, it is important to know that any one week survey is so full of errors that it becomes a danger for the outlet. At last, a sample, which is necessary to understand what goes on in the store has to be chosen. All the date on the outlet will help implement the simple formulas that are at our disposal for sample calculations. It will be important to look carefully at how cashier trafics evolve over time and over the months. Seasonal variations in some business are such that they naturally call for precautions.
2 - Semi flow outlets Semi flow outlets are distribution centers which, as previously seen, reach their break even point with flow shoppers exclusively. As a result, the distribution zone is bigger and brings about the notion that shoppers need a car to get to the store
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A semi flow outlet is actually composed of two types of flow shoppers: - Flow shoppers from a distribution zone called zone number one of 3 to 5 minutes by foot, - Flow shoppers from a distribution zone ranging from 3 to 8 minutes by car. To break even, this semi flow store will have to balance out its spending thanks to a clientele which will come by foot and another one which will use a means of transportation which implies that customers need parking facilities.
10 % HOUSEHOLD PENETRATION Zone 1
8 10 % HOUSEHOLD PENETRATION Zone 2
Z1 Z2 FLOW
BREAK EVEN POINT
Zone 1 = 3 to 5
COSTS
Zone 2 = 3 to 8 / 10
In the first distribution zone, to reach its equilibrium the store will need to have a penetration rate lower than 10 per cent. In the second distribution zone, to reach its equilibrium the store will need an 8 to 10 per cent penetration rate.
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Of course, the flow ration of the first zone and the one of the second zone will define semi flow outlets of different kinds. It is certainly in food retailing that these differences are most striking.
Semi flow outlets with a strong percentage of zone number one flow: these outlets, mostly found among food retail stores reach their break even point with at least 60 per cent of flow clients belonging to the distribution zone number one. These outlets are supermarkets that can be found in any town; they have a small parking lot and subsist mainly through their distribution zone number one penetration. They usually are very weakened by essential flow or semi flow outlets which settle in the distribution zone number one and divert their flow through the help of the proximity factor. As a result they have to go fetch customers in father zones and this effort is predestined to fail. These stores are not suited for dealing with trafic as we will see in the communication chapter. As for essential flow stores, semi flow outlets should never spend energy trying to balance their spending by creating trafic. Once more, they have to reach their break even point naturally.
Statistically, one can notice that food outlets measuring between 600 and 1 000 square meters are the ones which correspond best to this specific kind of essential flow store. Many retailers specialised in household appliances fit in this store category. This is also true for big pharmacies. 40 per cent of customers belong to the second distribution zone. Therefore they come from farther away, always for convenience reasons but the clientele which really sustains the store is the one that lives near it. Semi flow outlets with a majority of second distribution zone clients: In this case, it is the flow shopper coming by car who makes up the majority of the clientele that helps the store reach its break even point. There usually are 55 per cent of second flow clients for 45 per cent of zone number one flow clients. Less dependent on the neighbouring clientele than semi flow stores with a
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strong percentage of zone number one flow, these stores remain nonetheless like all semi flow outlets subject to the rule that asks for the break even point to be reached naturally without developing trafic actions. Often, second zone clients (who are numerous) are mistaken for trafic clients. In some cities where peripheral axes and highways allow people to travel far and quickly, strategies are misfit as in many supermarkets and retailers spend lots of money on communication vainly hoping to enhance the stores penetration in farther distribution zones. A semi flow outlet with a strong percentage of second zone flow remains a semi flow store. People come from more distant places but still are attached to the store through this notion of convenience. It is obvious that this convenience idea can take on a new meaning since customers can use a parking lot and that this new factor will undeniable play a part in the shoppers choice of the outlet as far as how easy it is to enter the lot and from what direction it is easier to enter it. It so happens that clients coming from the second distribution zone are also clients of other outlets, for instance of a same shopping center. It is the case in the US where, when one studies the customers provenance, one notices that it is for a next door supermarket, liquor shop or drug centers that people who live in more remote places actually took the road. If these stores are less worried by the opening of essential flow outlets in their distribution zone number one, on the contrary they are subject to the aggression of semi flow and essential flow outlets opening between them and the more distant distribution zone. It is essential, when looking at the strategic marketing of these stores to consider the evolution of cities and especially of new laws or changes enacted by city halls such as the introduction of new one way streets. The downtown trafic map realised in the French city of Dijon completely turned upside down the structure of the clientele of most semi flow stores with a majority of second distribution zone clients. For no reason, prospering and developing outlets, thriving brand name branches witnessed a sharp decrease in sales because of the new one way streets. The same phenomena were observed when pedestrian only streets were opened. The case of the Rue de Passy in Paris is interesting. Most outlets
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in this famous Parisian street were semi flow stores whose clientele was on the majority a second distribution zone clientele. Clothing stores such as Franck et Fils relied on customers living in neighbouring streets of the 16th or the 17th district. Happening, interesting, playing the role of a prime penetration axis, this Rue de Passy was a real Customer Boulevard. Because of the lack of parking sports, customers used to double park without any problem. In addition, the police particularly understood and parking tickets were almost no nuisance for retailers. Concerned with progress and wanting to copy Swedish models that were very popular in France at the time, the Rue de Passy was quickly closed to cars and turned into a pedestrian only street. Of course, many precautions had been taken and experiments undertaken. Nevertheless, the reality of semi flow stores with a majority of second zone clients was not considered. Rapidly, most stores of the Rue de Passy experienced a drop in sales volume. Customers refused to use the underground parking lot and those coming from far, that is the distribution zone number 2 would rather go to other shopping areas. The experiment was interrupted since customers would not show up ant the Rue de Passy was quickly turned back to a normal street and everything fell right back into place. The politicians who are in charge of this street dont seem to know that retailing marketing laws have to be respected.
COMMERCIAL CAMPAIGN OUTLINE OF SEMI FLOW OUTLETS A commercial campaign outline fluctuates with the proportion of flows from zone number one and flows from the second zone, as well as with the penetration rates in each of these zones. This being, general rules on these zones can be defined. Actions on the clients of the first distribution zone: It is about working with flow clients of this zone as one would do with flow clients of an essential flow store (previously described). It is necessary to: - create a contact,
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- develop the promotion of purchases through impulse purchases, forgotten purchases and the desire to sell the range of superior goods, - develop the promotion of sales by influencing the market through interesting offers as to create trafic not to reach equilibrium and break even but to achieve new profitability, - structure the supply in terms of assortment depth and width to maintain a favourable differential for the store. Therefore, great strategic campaigns will always be located at the exit marketing level. Nevertheless as far as these customers are concerned, retailers must watch the opening of other essential flow stores in the zone. They must also watch the evolution of the clientele in terms of purchasing power and age. As soon as competing semi flow or essential flow outlet is ready to open on, the retailer must launch campaigns to make sure its zone number one clientele is loyal. Everything must be done to remain competitive and especially not to let the natural obsoleteness of the outlet show. Because he regularly comes to his store, the first zone client ends up losing sight of it. Experience shows that an outlet becomes old rapidly. The colours, the equipment in use, the quality of the floors are things which look soiled when a competitor opens up. It is essential, to keep this first zone and second zone clientele, to change the outlook of the store, that is to update it or do a revamping which is a restructuring of some departments of the outlet. In any case it is dangerous to undertake a remodelling, that is a reorganisation of the store because the flow clients of the first zone would surely be destabilised by such a habit disturbing action.
Actions on the second zone clients: It is about dealing with flow clients who actually are much more often in relation with order outlets (competitors). It is therefore important to think about the role of parking, of its entrances and the ones of the distribution center itself. Experience has shown that a semi flow outlet often loses its customers of the second zone because of factors the manager cant influence. These factors have caused the access facilities of the store to change. For instance, new red lights have come hamper the way to get to the store, one way streets have made more difficult the entrances and exits of the parking lot.
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Therefore semi flow outlet managers must always be in contact with the City council running the town or the distribution zone to prevent objective actions from disturbing their clients trafic. Actions to increase the loyalty of the zone 2 clientele are necessary not to lose it. Nowadays, in some countries, supermarkets (or real semi flow outlets) develop fidelity card operations which are a good way to keep these fragile clients. Logically, the profitability of these fidelity operations will depend upon the number of second zone clients. The more of these clients a store attracts, the more profitable these operations will be. On the contrary, if a store has many first zone customers, it will spend money on a clientele which would have come to the outlet no matter what and would have remained loyal to it. In the eighties, the Delhaize supermarket chain in Belgium succeeded in keeping and making its zone 2 flow customers faithful through an old trick which amused competitors and strategic Marketing professionals. The trick consisted in allowing flow customers to buy four tea cups for the price of two if they could show the receipts of their previous purchases in the store. Each time a client would buy goods worth a certain amount of money, he would receive points for it. With a certain amount of points he could buy the cups half price. The results of this promotion were strongly felt by the Maxi GB chain whose stores are flow and trafic outlets. Some felt their trafic promotions did not fare too well before the fidelity of the first and second zone flows of the Delhaize supermarkets. In Canada, the famous price battle which opposed Provigo and Stenberg illustrates the necessity to understand what a semi flow store is before waging a price war against it. Most likely ill advised, Stenberg through its trafic action based on prices did not succeed in diverting Provigos clients who were first and second zone attached flows and preferred remaining loyal to their store. That store had been intelligent enough to drive a few reference prices down which customers keep in mind. Because Provigo had known how to make its clients loyal and because Stenberg did not have the means to create interesting trafics, the whole thing cost him a lot. We will see in the communication chapter the reasons why, in addition to what has been said, Stenberg could not win his price battle.
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It is crucial to insist on the necessity to develop a good product strategy in terms of the width and depth of assortment to make the difference and elude competitors. The prices, services and supply we just mentioned along with the positioning of the outlet must express themselves for this particular clientele in a dynamic, competitive and differential mix. INCIDENCE OF BRAND NAME COMMUNICATION ON SEMI FLOW OUTLETS If we expressed the fact that brand name Communication was important for essential flow outlets but that certain stores could live off their local success, the semi flow outlet case shows that communication is determinant. The brand name striking power will reassure the client about the outlet dynamism. Communication will also play a particularly essential role in the implementation of all the fidelity campaign stated earlier. To retain its clientele, the semi flow outlet will have to be present on radio waves, on TV when it is legal, on street ads to gain a real presence and a legitimacy people will accept, be they clients or not. But if an essential flow outlet must reach its break even point naturally, it must also launch trafic actions to improve its profitability, find new clients and above all reinforce the image zone 2 clients have of the store. Semi flow outlets cannot neglect calendar trafics, provoked trafics or even specific trafics. Of course they are not supposed to be constantly promoting products but they must have a commercial campaign plan strongly relying on intense communication. In the communication chapter, we will see what principles and what mechanisms communication strategies of semi flow outlets must obey.
Lets simply recall the outstanding quality of the communication strategy of brand name outlet chain such as Mr Bricolage outlets measuring about 2 000 square meters are real semi flow outlets. They are leaders in their field, which means that the majority of the clientele living in these small towns shops in their Hardware store.
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Naturally, these semi flow outlets are surrounded by traditional Hardware stores and by very big outlets like Castorama, Leroy Merlin which launch trafic programs that drive customers in from miles around. Instead of merging in the environment and remaining timid, the managers of the Mr Bricolage outlets played the strong communication card which allowed them to have their service, guarantee and client welcoming operation work successfully. By developing a very tonic merchandising, these outlets succeeded in making their flow clientele loyal and numb to strong trafic actions by competitors. Through very good calendar promotional actions to prevent customers from looking around in other stores in times of seasonal shopping, by knowing how to create two or three events a year, Mr Bricolage became one of the successful brand names in Hardware Retailing in France. Darty, the utmost specialist in Household appliances retailing is probably in many cases a semi flow outlet. Whereas its rivals such as Conforama, Boulanger or large wholesalers (hypermarchs) use trafic actions, the brand name Darty is content with saying it has the best service on the market and does not bother claiming it is the cheapest but proposes to reimburse the difference and offers champagne bottles to customers who find cheaper goods elsewhere. Very present on radio stations, on TV programs and newspapers, Darty never resorts to trafic operations. Only openings of new outlets can fit in this category of promotion. When a Darty outlet is near a hypermarch, it takes advantage of induced trafics. Anyway the success of this chain is an outstanding proof of the necessity to behave like flow outlet and to know how to use communication to make ones brand name and service image respected. MANAGEMENT OF SEMI FLOW OUTLET CHAINS In a same semi flow outlet chain, all stores dont behave the same way. Some reach easily their break even point through their first or second zone flow clientele, others on the contrary have a lot of trouble just making ends meet and have to resort to creating trafic actions to reach their break even point. Likewise in a same supermarket chain, there will be outlets with a majority of first zone flow clients and others with a majority of second zone flow clients.
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Let's take a few examples: when a client must buy batteries and is not settled on a brand, when he reaches the shelves, even if he did not plan to buy them that day, he will start looking at sizes because it is the first issue he has to deal with. His reading key will be the size and shape of batteries before their colour, brand and price. These elements might play a crucial role in the second step but are not taken into account in the first step. When a housekeeper planned on buying a frying pan is not settled on one of the 3 or 4 big brands on the market, she will not start looking at colours, shapes or prices but like in the batteries example, she will first look at the given sizes. This example is all the more interesting because pans can be purchased on supermarket shelves or in department store displays.
In both cases, the housekeeper will first read the product through the size and diameter of the frying pans. Only after will she look at the prices, weights, brands and colours of the different frying pans.
None settled purchases 1st STEP: RESEARCH OF THE PRODUCT

- The consumer searches from 15 seconds to 2 minutes - For each type of product, there is a main reading key - The reading key depends on the consumption habit nature regarding the product and its knowledge - There are 13 kinds of reading keys today - There are up to 2 reading key per product family which correspond to real purchase typologies
It can be said that in the batteries and frying pans cases the reading key is similar. It is define as "Objective normative reading key"
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Accordingly, the client has a norm in his mind and this norm is objective since we are talking about a diameter, a size that is to say something that can be measured. Let's point out that the organization of a department in a store will be all the more profitable to the purchaser if it takes into account his reading preoccupation or else, his need to discover the offer. If batteries are grouped according to their brand and not their size, frying pans to their brands and not their size, the retailer might solve a few internal organization problems but he must know that he bothers non settled clients which can lead to an absolute no purchase effect especially for clients who did not plan to buy. If we take the camembert (cheese) example, we will find out a new reading key. Certain clients of course go straight to the brand they are looking for and after having chosen the ripest one by gently pressing on it, leave the store with their cheese. The clients who somewhat haven't reached that maturity of decision making still search the department in 2 completely different ways. Some customers always start with the most expensive products, take the cover off, touch the wrapped cheese, and check whether it is ripe, close the box, go on to the next one and the like until they meet the smoothest one. They start from the most expensive cheese and gradually go down to the cheapest. Above a given price, they refuse to buy and prefer purchasing other goods. Others clients start systematically with the least expensive cheese. They take the cover of, push on it, close the cover and go on going up the price range until they find the adequate smooth cheese. Above a given price, they refuse to buy and prefer leaving with other products. Whether they start with the most expensive or the least expensive product, these clients none settled on a camembert brand use a reading key called "shelf frequency". The understanding of this kind of reading is necessary to organize a camembert shelf in a supermarket or any other store. We will see later that the price image of the cheese department itself depends on the respect of this reading key.
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Most perfumes sold in supermarkets or pharmacies are not planned products. If of course some clients are settled on certain brands, the majority of perfume purchasers (these perfumes are not the famous brands such as Chanel, Dior... that are protected by a strong selection of stores in which they are sold) are non settled purchases. In France, many factures have tried to give the perfume market a very good quality self serve department. When a shopper is not settled on a perfume, the reading key to be used is called "emerging" He looks at what's most striking on the shelf, what's visible or attractive. Consequently, "Darling" from Gibbs is very successful in Europe. Thanks to an excellent perfume and fine looking bottle with a big flower cap, this perfume got a very good response from a majority of clients. It is very important for a perfume to be chosen first, because when it is taken, it will be placed in the left hand, kept there and smelled by the shopper when possible that is if samples are available. With his right hand, the non settled purchaser will touch, take in hand other products and each time compare the product he holds in his right hand with the one he has kept in his left one. A real process will take place between the left and the right brain of this client. It is very likely that the right brain will choose because it is the feeling brain. Let's remember that the left hand communicates directly with the right brain. Anyhow, in this case, the reading key is an emerging one. To get the non settled client interested, it is absolutely necessary to have an eye catching packaging, an emerging one. In this perfume market, it is interesting to see that the Heinkel Company had also launched a very good quality perfume to be sold in supermarkets. Unfortunately, despite a very pretty and good quality bottle, this perfume was not selling as well as "Darling" was. Shelf studies unveiled that the main reason why this difference in sales exists was that the product of the Heinkel firm was less emerging than the Gibbs' one. A good packaging that is attractive to consumers is not enough. In the case of these products whose reading key is emerging to non settled purchasers, retailers must create a packaging which makes the difference, which is emerging and not only pretty. If dishwasher soaps are on the majority very settled products, it is true that about 20 % of the consumers are not settled ones. When they get
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to the aisle, decided or not on what to buy, their reading key is simple. It is said to be promotional because these non settled clients look for only one thing: Promotions on soaps. Their promotional reading key can be found in product families where there are many settled purchases and where by definition products are expensive and considered as a real tax by non settled clients. Let's look at French purchasers of dry sausage. It is a weakly settled product as we noted earlier. A majority of clients will trigger before the shelf thanks to promotions. Non settled purchasers will automatically examine all dry sausages. Some will even stay 3 or 4 minutes choosing, pressing on each sausage to check its quality. In fact, people who enjoy dry sausage, even if they are none settled, like it either very hard or very soft. Things take place as if people had a reference of the hardness of this sausage. Non settled purchases are then said to act out of a subjective normative reading key. French people and generally all those who like dry sausage and who are not settled on a brand have a subjective norm in mind of what makes a good sausage. To put sausages of a same hardness in a same basket is to prevent non settled client from choosing and by definition, lose sales. Experience showed there are 13 reading keys. The inexpensive reading key: The non settled purchaser reads prices and looks for the most expensive one and the least expensive one in the supply. A good example is the Porto wines one. In France, some non settled purchasers who don't really known what Porto is read shelves by ranking bottles according to their price. The shape of the bottle, the quality of the sticker will be heeded only later. Before, the client wants to know how the shelf is organized price wise. Obviously, non settled purchasers' reading keys won't be the same in Spain, England or Portugal. The difference stems from the product culture. It has been noticed that in the purchase of certain kinds of whiskies, or of other alcohols, the same reading key has been used by shoppers. The promotional reading key: As far as dishwasher soaps and VCR families go, we will come across this reading key which we will recall is not the first step of the non settled client approach. Often, one is
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surprised that VCR displays resort to a reading key for non settled shoppers that is the promotional reading key and not the technological one. The reading key is not related to the product's constitution. It is related to the product/client relationship. The emerging reading key: The perfume example that we gave formerly is actually one of the best one we can find. The technological reading key: The non settled client is interested in what makes up the product a good example is provided in the purchase of canned foods where the non settled client wants to know what is in the can before buying it. The example of the couscous cans sold in France is particularly striking. Shelf reading is done through product technology that is to say whether it is a lamb, vegetable or meat couscous. In the reading prior to the purchase of frozen pizzas by a non settled client, the same reading key is used: tomato pizza, cheese pizza, spinach pizza etc... It is necessary to clearly understand that the names given to these reading keys do not entail that the client will not be interested later on in what makes up the product. One must simply grasp the fact that we are dealing with a case prior to the product research in the aisle by non settled clients. Event related: It is a reading key that is found in products such as special shampoos, where goods are very influenced by fashion phenomena, public relations and by advertising. When a shopper is not settled and when he comes in the special shampoo aisle and not the family shampoo aisle, he first looks for those which correspond to the event, that is to say those people talk about, and that are in the ads on TV or on the radio. As far as living rooms and sofas go, made out of leather or not, this event related key is very often used. Objective normative: Previously described in the batteries example, this reading key is often noticed in the purchase of certain kinds of furniture, such as kitchen tables etc...What shoppers want at first when they are not settled on a model is to enter the purchasing process through a size, surface area, or volume. It is surprising to see for instance that in some household appliances devices' case, it is not as one might believe a technological or emotional reading key that comes to mind but an objective normative key simply because what consumers want to do first is approach the model with the size of a microwave oven which will fit in or a fridge which will find its place in a particular spot of
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the kitchen. Subjective normative: In the purchase of bathroom towels, it is frequent to notice that in certain countries non settled purchasers have in mind a norm that is defined by the smoothness, the softness of a good product which will dry off people well and be soft on the skin. Therefore, shoppers will start touching until they decide to enter the program. Bathroom towels and robes are read with the help of a subjective normative key which takes into account the softness and not the colours as people might think. The colour, the price will play a part later on in the second and third step of comparison and selection. Emotional: Let's observe how a handy man buys a driller or a wood machine when he is not settled on a brand or price. It is the relationship to the product that will play a crucial part. It is an emotional reading key. For him, the product has got an affective tone. He is not going to read the shelf starting with the most emerging product or the most expensive or least expensive one, but with the one he is attracted to. Bathrooms and bathtubs which are self serve products in hardware super stores have for reading key this famous emotional key. These products are read through their shape or colour and it's from that point on that it will all start. Programmed: Certain goods are purchased several times a month. Although not settled on a brand, the client will repeatedly go to the same place to look for this good. He will often get mad if at the given place the product family he is looking for has been changed, that is to say he will be asked to make up in his mind a new reading program.
Typical reading keys: CHEAP (The least expensive) RANGE OF PRICES (Interval of prices) TECHNOLOGICAL (Manufacture criterion) OBJECTIVE NORMATIVE
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(Reference to a measurable norm) SUBJECTIVE NORMATIVE (Reference to a subjective norm) EMOTIONAL (Product with an affective impact) EMERGING (Most striking product of the shelf) CURIOSITY PURCHASE (Related to a new product) CONJONCTURE (Several criteria motivate the choice of the first product) PROGRAMMED LECTURE (Accurate and usual product shelf space allocation) EVENT RELATED (Fashion phenomenon, public relation, inventory shortage) Sequential: The camembert example showed us that none settled purchasers before the shelf used 2 approaches which implied a reading sequence. Often, this reading key exists in certain textile families. Everything that deals with underwear, socks and certain household appliances families depends on these reading keys. Of course we can think that other ones exist. Those that have been presented are the product of more than 20000 surveys carried out in supermarkets for all kinds of goods in France as in other countries of Europe.
In certain particular families, a phenomenon called conjunctive reading key has been observed, that is to say that the non settled clients will not take into account one key but 2 simultaneous reading keys to read the shelf. Likewise, for a family or subfamily of products, one or 2 reading keys can be found depending on the kinds of clienteles in terms of social classes, of frequent purchaser of products or not, and of typologies, that
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is depending on the relationship consumers (and not purchasers) have regarding products. For more than 20 years these experiments have been carried out and disruptions have been noticed as far as settled purchases and non settled purchases are concerned and in the use of reading keys by clients as well.
None settled purchases 2nd step: THE COMPARISON - The consumer compares 4 products (at the most) - He uses a comparative process based on 6 possibilities - He compares with a product present on shelves or with a product not on shelves but which is his reference or norm. - The comparative process determines the effective competition of each product.
In the 70's, pasta had more settled purchasers than today. None settled ones had mostly technological reading keys. Today, these reading keys are more economical or are promotional ones. Therefore it is necessary to pay attention to the evolution of reading keys to understand how non settled clients approach the shelves. Knowing the percentage of non settled clients and the interpretation of their behaviour before the shelves is crucial for the setting up of merchandising. If one wants to "work" the shopper, he must be given shelves which will agree with the reading keys he uses. In particular when a client has not planned on buying, when he is attracted by a product display, he will automatically examine what he is proposed in accordance with his reading keys. If the presentation is carried out this way, he will buy the good if on the other side, this presentation is done in another way, the product research will probably become a constraint for him, and he might not buy.
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During the second step, the purchaser will try to compare the products he took in his hands. At that moment will come into play the manufacturer's marketing effort. The image expression of the product, the price/quality relationship will answer the securing needs of the consumer and no longer of the purchaser. After having entered the aisle and grabbed the 2 or 3 products he is interested in, the purchaser client will become consumer for a moment and all the notions carried by advertising, communication and the marketing effort of manufacturers will surge to his mind. It is important to understand that in the first step, we deal with behaviourist processes while in the second step, the one which consists in comparing products, we deal with more psychological problems rather than typical behaviourist ones. This sequence of comparison is illustrated by 6 kinds of schemes and no longer by behaviours.
The comparison process THE MAXIMIZATION PROCESS (The one that gives the most for a given parameter) THE MINIMIZATION PROCESS (The one which will give the least for a given parameter) THE OPTIMAL PROCESS (The best one) THE CORRESPONDING PROCESS (All the criteria are deemed coherent with what we are looking for) THE CONSECUTIVE PROCESS (Criteria by criteria comparison until one is no longer coherent) THE INVENTORY PROCESS (Listing of the advantages and drawbacks of one or several products granting several different points to each criteria) The first scheme is a maximization one: when comparing 2 products we look for the one that gives the most. The second scheme is a minimization one. When comparing 2 products we look for the one which shows the fewer drawbacks and takes the
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least space. The third scheme is an optimal one. We try to find the optimal one. We look for the one that optimizes all the constraints, all the problems that consumers think of. The fourth scheme is of corresponding nature. For a product to be chosen, criteria have to come together: the price, the size, the group of elements and factors carried by the image. The fifth scheme is a consecutive one. The purchaser will eliminate products by taking into account successive criteria and will cross out products which won't show satisfying scores on these criteria. The last scheme is an inventory one. The comparison is carried out by weighting the pros and cons of each product. It is important to insist here on the fact that this comparison sequence is not reached with the help of surveys, the same way the identification of reading keys is. The purchaser has to be interviewed thinking he is a consumer and consequently we cannot trust solely his behaviours, we have to know how he reacts. In the third step, the non settled purchaser will have to choose. Here again we must consider the consumer/purchaser pair. A list of elements related to the authenticity, to the preference one has for a product, to the coherence there is between the stickers, the shape and the price will be heeded. We will consider the institutional side of the product and we will try to reassure ourselves and dig out a proof to know whether what's announced by the product is true or not.
None settled purchased 3rd STEP: THE SELECTION - The consumer must choose between the products he has compared. He uses a process to choose among nine products
- The selection process defines the positioning of the products In any case, this third selection step will bear a particular interest for the
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retailer. In his merchandising and for non settled purchases, the retailer must respect the reading keys, know between what criteria a product can be compared and understand why a product is more likely to be selected than another. That is what will enable him to make a sensible assortment and implement a coherent product strategy concept. Here again we must go back to the central idea that the comprehension of this selection sequence of this last step of the purchasing process is of interest to the purchaser/consumer pair and not the shopper/consumer one.
The selection process AUTHENTICITY PROCESS (A feature of the product guarantees its quality with regard to the image the consumer has of the good) AFFINITY PROCESS (The consumer finds himself in the product) COHERENCE PROCESS (A group of equivalent criteria motivates the final selection) INSTITUTIONAL PROCESS (The best brand name image) REASSURING PROCESS (Research of a subjective guarantee) OPTIMAL PROCESS (The good with the best qualities for the consumer) VERIFICATION PROCESS (The good that has the qualities the client expects) PROOF PROCESS (Research of the product which shows objectively its qualities) TESTIMONIAL PROCESS (The client listens to people's advices)
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TYPES OF PURCHASES: DUTY, DESIRE, POWER The purchaser/consumer pair in the outlet achieves 3 kinds of purchases, which are duty, desire and power purchases. Duty purchases are purchases without which the client can't live or cannot live well. Socks are a duty product. Butter, batteries, videotapes, tights, wine in France, coke, mustard, nails, screws, wood glue, painting brushes etc...All these products are either regular, daily, weekly, monthly or less regular purchases. They have in common the fact that they are absolutely necessary to an everyday normal life. These duty goods can be planned or none planned, settled or not settled. They can also be committing or none committing.
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A duty product is called committing when the purchaser/consumer pair has a non neutral relationship to the product. On the contrary, a duty product is called none committing when the same pair has a perfectly neutral relationship to the product. Let's look at a few examples: kitchen paper towel is a duty product. If the housekeeper wants to avoid the daily housekeeping jobs, she needs today these products which replace yesterday's towels. When she is before the shelf, she might have planned her purchase or not and might be settled on a brand or not. In any case, studies in aisles show that the paper towel purchaser relationship is neutral. On the majority, paper towel purchasers do not feel concerned by this purchase. They can have brand name preferences related to the notoriety of the product, to its advertisement, but their purchase preoccupations do not let any doubt, any fear, any need to be secured show. On the contrary, in Spain for instance, olive oil is a duty product without which a great majority of Spaniards could not live. It is a major planned and settled product as well as a really committed product which means that in his purchasing act, the purchaser will need a lot of securing in terms of product quality, of brands being present and prices. When one observes oil purchasers in France, one notice that the majority of the purchases correspond to planned purchases major settled on a brand and that the purchase remains very committed. The purchaser/consumer needs a lot of securing that he will get partly from the brand name he purchases but also through the presentation of products. This client/product relationship will take a crucial importance as far as merchandising goes. The knowledge of the duty purchases list seems an important tool to determine the organization of an outlet. With the help of his written or memorized list, the client will first try to get rid of these duty products and particularly of his planned duty products. When strolling along the aisles of a supermarket or a specialized wholesaler, the client will also get settled and choose non planned duty products. When in front of the shelves, one notices that depending on whether the client is committed or not to the product, one will or will not
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notice what we previously described as a settled product or none settled product. The relationship that exists between the commitment to the product and whether the client is settled or not on a brand name seems obvious when one analyzes a meaningful series of purchasing acts of a same family or same subfamily. Experience shows that in a field where the commitment is strong, there will be more settled products than in a field where the commitment is weak and where there will be non settled products on the majority. This commitment notion does not oppose the classic brand name notion. It simply means that before the shelves, in outlets, one can measure concretely at the purchasing moment the degree of importance of brand names per type of product. Let's recall here that when the purchaser walks through the aisles, the presence of every brand name on a relatively small surface creates a real blurring of purchasing intentions previously set for instance during interviews done at home following the consumer concept idea. This over-competition of products, this real brand temptation brings about new behaviours which vary with the type of products, the proposition family and which counteract rather often the purchasing plan of certain shoppers. If among the planned or not planned duty purchases there is a hard core of settled products and this whatever the products and brand names on the shelves, a significant number of purchasers will feel puzzled and will not behave as non settled purchasers but as hesitating settled ones. The varying commitment to the product shows that these disruptions are stronger when the commitment is weak. Therefore, in every family of product, one explains and understands why the position of brand names on shelves varies and depends on whether products are at the eye level, at the beginning or the end of the shelf. If, as it can be understood, industrials and manufacturers want to protect their brand, the purchaser is not as Manichean and often, when he is not committed to a product, he can become interested in 2 or 3 other brands. Non settled duty products purchasers might not need to be secured by a brand name, on the other side the price of the product can be a strong committed element. Desire purchases are purchases which correspond to all the products that are not a duty, that consumers can do without but that one dreams
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about or which bring pleasure or something different to the everyday routine. Desire purchases are for instance these small appliances devices that consumers long for and that visual advertisement incites you to buy. They can also be a beautiful wood saw, a new more modern VCR or simply a small lamp seen many times in a store and pictured in a living room or on a desk by a client. These desire purchases are the basis for impulsion purchases. The client does not directly go towards these products but it is when going for his settled duty products that he literally gets acquainted with these products and that little by little he pictures himself buying them. Downtown outlet windows are an interesting example that illustrates the role of desire purchases. It is not rare to hear downtown retailers, opticians for instance or jewellers tell that after having withdrawn a product from their window, they often have people come in and ask where they can find this product they used to come look at twice or 3 times a week, before which they would dream when they would take their dog for a walk. The desire purchase deserves much attention from retailers because it is through products that can be qualified as such that the progression of the exit marketing sales volume will really be able to take place. Stores such as Ikea, Habitat and others are really specialized in desire purchases. The display of products, their lighting brings about a really interesting effect. A restaurant through the presentation of its menu and particularly of its wine list often uses without knowing it desire purchase marketing. As in previous cases, there are committing desire purchases and non committing ones. As far as committing ones go, the client will want to be secured. Either he wants to be sure he bought the right brand or he wants to make sure he is paying the right price. He might also want a confirmation on the after sales service. This is not exclusive to desire purchases though. A similar behaviour can be met among duty purchases whose price is important for the client. In any case, for desire purchases, as soon as the commitment notion is present, the outlet or the brand name will really have to play an important part. As we saw in the communication chapter, the brand name promise and its positioning will play a crucial role in these committing desire purchases. In non committing desire purchases, the
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purchaser does not ask to be secured. He simply wants to be able to dream about his product in the store. As soon as the salesman assisted sale takes place, one must pay particular attention not to disturb this dream and above all, not to try to convince the purchaser that the store is well located, that its got a good after sales service etc... The retailer must not choose the wrong target. When the distributor in the organization of his outlet knows how to harmoniously develop both committing or none committing, planned or not, duty purchases, he achieves really good results in terms of improvement of the circulation and development of impulsion purchases. Power purchases: When a outlet is in the middle of a promotional campaign, when it places ads in daily newspapers, in radio ads or in flyers, depending on the country, the types of traffic operations, certain clients say they get interested in these products, pretend they can buy them provided the effort made by the outlet is worth the trip to the store. Many clues allow us to think that consumer targets and shoppers have in mind a series of products they think of and that will trigger a trip to the store as well as a purchase. I can change cars says the consumer and go for another brand provided that such or such automaker makes and effort to buy my former car back. It is under these conditions that certain cars would become particular targets for power purchases. In household appliances for instance, certain purchasers wait for promotional periods saying they can change their vacuum cleaner or their fridge provided that, during the household appliances promotion or any other calendar event, retailers launch interesting special offers. In these so called power purchases, there is a sort of premeditation that is particularly interesting for the retailer. If one knows what the quality of this latency of product purchasing possibility per type of client and per type of market is, one can launch traffic or excessively relevant exit merchandising actions. Like duty and desire purchases, power purchases can be committing or not. By definition, they usually are planned and they can be settled or not on a brand. In a traffic action, the displaying of settled, committing, power purchases is one of the best possible guarantees for positive results. In the meantime though, one cannot neglect non committing power purchases. In this case, we must go back to the product nature and above all to the
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bargains offered by the retailer through his promotion.
MARKETING RESEARCH RELATED TO THE PRODUCT SYSTEM

The concepts of duty and power purchases tied to the notions of planned, non planned, settled, non settled, committing, non committing purchases are as we will see of crucial usefulness especially in the definition of shelf space allocation merchandising that is a product merchandising in the outlet and a global merchandising, that is to say in the way we will dispose of the different departments, sections and product families in the outlet. If as we studied, it is necessary to have very precise marketing research methods to understand the reason why a shopper chooses such or such outlet, we must also realize that to know the purchaser, one must use specific studies methods. Experience shows that when the purchaser is in the store, classic interview techniques don't always produce the expected results. The purchaser/consumer rationalizes his answers. He has trouble admitting that advertising influenced his purchase. He has trouble accepting that the positioning of a product on displays or on shelves guided him in his choice, and especially in Latin countries, it is rare that purchasers' interviews unveil that brands or packaging triggered the purchase. The purchaser buyer wants to be free, not abiding by advertising. He wants to be smart before the retailer whom he does not trust; all these behaviours make the research of the real mechanisms and the motivations which lead the purchaser in his purchases difficult. The methods of organization: The simplest and most direct way to understand what goes on in outlets' aisles to analyse purchasing behaviours resides in an observation strategy similar to the one ethno sociologists develop in their research. The simple observation of what goes on in the aisle is already a source of particularly rich information. One can observe and count the number of people who go straight to a product and who leave the store with it (it probably corresponds to settled planned purchases). Likewise, one can observe people who go straight to shelves but hesitate between different products, who grab
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one or two products, put them back and finally end up buying some goods (probably planned or non planned products, but definitely non settled ones). Counting of this kind, which require a lot of operating rigor, enable the retailer like the manufacturer to have a very interesting idea of what goes on in the aisles and especially of what goes on in different types of departments. If it has been possible to determine, thanks to such method, that the shelf or department was made up of duty or desire purchases, one will be able in a synthesis to come up with interesting connections and build his logic on concrete notions that can be useful immediately and which are not trivial (mathematically) like it has been seen unfortunately too often in the marketing research field. The technique of in vivo studies: As far as studies based on observations are concerned, the technique of in vivo studies and surveys seems the most interesting. To study a product shelf and to get a solid merchandising concept, one can thanks to hidden cameras, film the purchasing or no purchasing process of shoppers in the outlet. With a good team of smart cameramen, one must follow closely everything that happens, all the products which will be touched, looked at, taken or put back on shelves.
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It is the first phase of the observation. The camera is helpful because it keeps track of what happened and it enables, at the time of the analysis, to watch and watch again the images until we understand or we imagine what happened in the shopper's mind. Immediately after the purchase, or non purchase, the purchaser is asked to explain the end of his approach to the shelf. If one is supplied with a simple equipment, if the purchaser is showed the video immediately after, he will not have the time to rationalize his behaviour and finally, will explain sincerely what he was doing, what he was looking for. It is important in this second phase of in vivo study to take the precaution of asking the purchaser what he bought, the price of the product and of course the brand he chose. By hiding the product when asking these questions, we immediately get a lot of information which, after the analysis, will enable us to know if we were dealing with a settled, non settled, planned, non planned, committing, non committing product. When working on the purchase video, the purchaser will deliver a great part of what he spontaneously thinks of, information he might not even be conscious of. This done, we will have to go back to the aisle with the purchaser to interview him in a classical way to get a psychological material out of him that we will be able to compare, at the time of the analysis, with the spontaneous reactions of the purchaser taped when watching his purchase video. After having carried out more than 20000 in vivo over 20 years, we realize today with my team everything, all the information that we can get out with the help of this technique and of course all the precautions that we must take at the time of the analysis. If we side all this information gotten from the techniques of information with all the quantitative elements that can be drawn out of a survey carried out in aisles, we will then get a particularly solid knowledge of what really goes on in the aisles of the outlet.
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By getting out of the in vivo the "direct verbatim" (spontaneous words) of purchasers and by building a survey which allows us to know whether we deal with duty, power, planned, non planned, settled, non settled, committing or non committing purchases, we will statistically have an answer which will enable us by analyzing the real sales results of an outlet, to create an optimal merchandising as we will see in the chapter dealing with the implementation of the product system for the merchandising of shelves and global merchandising of the outlet. Observation techniques and the in vivo technique are not opposed to the classical techniques of consumer analysis. They bring out a different aspect of the complexity of the decision making mechanisms which operate in a person's mind that is going to buy a product. We can understand what goes on in the aisles by taking into consideration the consumption graph. The consumption graph: When a mother buys products for her child or her husband, she is only an element of a more complex graph where the husband and the child are the destructors of the product but where friends, the family doctor, parents, grand parents can play the very important role of guiding them. Therefore, it is not enough to just look at what goes on in the store; one must try to know if the observed person is or is not part of a more complex hidden system. Studies that were carried out in electric batteries aisles show that often, mothers have received the mission from their children to buy batteries for toys or calculators. These women who do not use these electronic devices are like paralyzed in the aisles because they did not imagine there were so many kinds and that they might make so many mistakes. If some had been wise enough to write on a piece of paper what they wanted, others get to the aisle completely lost. It is at this point that the analysis, the observation, the in vivo technique can be of so much help and where we understand which criteria or factors are considered by the housekeeper. As for the purchasing of clothes in a self serve store, it is particularly fascinating to observe the behaviour of small groups of friends who come help the girl buy a pair of jeans. The happening scene is easy to imagine and the role of these kids easy to understand.
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To organise an outlet which sells these goods requires great wisdom for those who will draw the map of the outlet. It is certain that in future years this intelligent conception of marketing research in outlets will enable many brand names to distinguish themselves from others and offer to their clients a greater satisfaction.
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CHAPTER 5
Exit marketing Merchandising of the outlet and its aisles
The purchasing notions of duty, desire, power as well as the expressions of planned, non planned purchases, settled, non settled brands allow retailers to develop a new style of merchandising conception.
1 - Global merchandising and product system
Several times we got acquainted with the global merchandising topic, that is to say the organization of the outlet and the way the distributor can organize circulations in the store. The shape of the outlet and the position of the entrances are elements which will play a crucial role. If we look at the matrix (next page) which shows the duty, desire, power, planned, non planned purchases axes, we notice that we can distinguish 4 merchandising totally different as far as the global merchandising of the outlet goes.
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Merchandising 1: In the first quarter, we find duty products and planned purchases. It is the product which is going to create the circulation. In other words, when they know the outlet that is when they are flows or when they are traffics which still visit the outlet regularly, purchasers will automatically head for the spots where their planned duty purchases are, spots that one can immediately locate by analyzing the written shopping list of purchases of the client.
The more duty purchases will be settled, the more they will be committing and the more the circulation will be oriented toward families or subfamilies of the given products. In food stores, this type 1 merchandising, that is to say the desire to organize the aisles and sectors according to this duty purchases and planned purchases notion bears a capital importance.
Merchandising 2: If we now look at sector 2 that is made up of duty products and non planned purchases, it is no longer (as in the previous case) the product which creates circulation but the display of duty products. In the first quadrant, the purchaser planned his purchase. In the second one, he did not. He must decide. The displaying of these duty product
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families will permit to create a kind of circulation that we will define as near circulation. Products that are situated in the quadrant 1 create what we call long circulations. A purchaser can go across an entire store to meet these products. For instance, it is advocated in food outlets to place soapy products at the opposite end of where groceries are located. Accordingly, the client who follows his list must cover as much as distance as possible in the outlet. Committing or non committing duty products actually are a way to have clients sweep across to the 4 cardinal points of the outlet. In quadrant 2, we are not in the same context. Since purchases are not planned, the client is going to be attracted only by the displaying or discounting of these non planned duty products. This display will have to be rather near the zone where the planned duty products are located. This way, the client will cover a few more meters to look at non planned duty products. Merchandising 1 will play the role of launching pad for merchandising 2. As we will see during the study of promotions in the exit marketing, the relationship between merchandising 1 and 2 can yield excellent results.
Merchandising 3: We are dealing with a quadrant corresponding to non planned desire purchases. The purchaser doesnt know that he might buy this kind of products. He must then fall right on the place we have chosen for these products so that this product might be purchased. It is the advertising of the promotion in the store which will create purchases. It is no longer a matter of creating circulation; it is a matter of triggering purchases. The more desire purchases will be common to a great number of clients, the more the retailer will have worked on displays, the more chances we will have to trigger purchases. In supermarkets, furniture stores, outlets such as Ikea or Habitat, this merchandising 3 implementation is crucial in the research of profitability maximization. Certain supermarkets for instance have trouble achieving good scores in the non food product sector. This often stems from a poor displaying of non planned duty purchases and also from an excessively low impulsion coefficient of the outlet.
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In these clothes outlets, this merchandising 3 is also fundamental. Logically, the conception itself of this merchandising 3 is in conflict with the organizational structures of outlets. Organizing stores by sectors, departments, and retailers have a hard time taking down their organizational structures to give as many chances as possible to their merchandising 3. Because sweaters belong to such department, because ties, shirts belong to another department and finally because tights, stockings and socks are the responsibility of another person, the outlet will be organized not as to create impulsion purchases but to make life easier for purchasers department managers who feel like they belong to a same purchase and sale system. The purchaser/client does not know this retailer's way of thinking. He moves from merchandising 1 to 2 and finally rejoices to meet with merchandising 3. Another striking example will surely clear up this idea. A food retailer interested in these merchandising 2 and 3 notions had understood the importance of setting up its wine department in such a way as to have clients go for planned duty purchases first (here ordinary wine) and then to make them interested in displays of non planned ordinary wines which would enhance the circulation in the department. Aware of the non planned desire purchase notion, this retailer had included in his wine department products called "cellar tools" such as thermometers, sophisticated bottle openers, glasses etc... Automatically, purchasers would fall in love with these products and complementary sales allowed the wine department margin to increase in a very substantial way. Satisfied with the results, the retailer had people come to conferences in his outlets in order to explain the good points of this experiment. A few weeks later, while visiting his outlets, the retailer was surprised by the fact that he no longer saw bottle openers, glasses and wine cases in the middle of the wine department. He thought maybe sales had been saturated and that the results were not interesting any more. The truth was nowhere near this conclusion. The wine cellar managers who were very different from the wine department ones had to cope with awful problems, especially when it came to draw up inventories. The selfishness of departments had overwhelmed merchandising 3. Despite his will, the owner of a large retail chain of hypermarkets had to back
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down, unable to impose on a structure something that seemed so simple. Merchandising 4: It is the planned desire purchase merchandising. When clients are regulars of a store, they usually have in mind a product they want to buy. It is not necessary to their everyday life but each time they shop in the outlet, they feel like buying it. This explains for instance why all quality supermarkets, good running ones, usually display washing machines and fridges on the right hand side of the outlets' entrances. This way, shopping housekeepers have to walk by these desire products (dishwashers, microwave ovens) that they plan on buying some day. Therefore, the circulation toward these products is natural. The purchase is not. It is then important to understand that the promotion is what will create purchases. Displaying these products is not necessary since we are dealing with planned desire products which are systematically visited by shoppers. The trigger action is what must be achieved. It is the additional element which will set off the purchase. In merchandising 4, a technique named "calling price" is often resorted to. As far as microwave ovens go for example, a range of products is presented in an ad which focuses on the first available price to create specific traffic.
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The purchaser who feels like buying this product and who planned on doing so in his mind will go straight to the first price product. He looks at it and automatically compares it to the ones next to it. It is at this level that the promotion and the display of products make the client decide to purchase first, and then have him interested in a more expensive product. Therefore, these 4 merchandisings are the basis of the global merchandising of an outlet. To fully understand this concept, one has to take into account the frequency of duty product purchases when one has very regular duty product purchase in his outlet, one can be sure that merchandising 1 will work in a very dynamic way. When one looks at the market where planned duty purchases are less regular, the notion of merchandising 1 will take on a rather different form. To the duty, desire, power, planned, none planned, and settled, none settled notions, it is important to add this notion of purchase or consumption frequency which will give the real dynamism to this matrix. When one visits a new outlet, it is interesting to try to find out what the structuralism will of the retailer was. A good example surely is the Kroger's experimental outlet that can be seen in Atlanta and whose name is "Kroger for the future". This outlet is a super store. It is 90 % food oriented. Right at the entrance of the store, on the right hand side is the meat department. The bakery is on the other side. A bit farther to the right is the gourmet department. All the way down the alley is the fruits and vegetables area. Fruits and vegetables are planned or non planned duty products which create the circulation dynamic. Caterer goods are on the majority planned or non planned or non planned desire products. The real problem is to know if these planned or non planned desire products are overlooked or not because they can't be seen from far that is, 40 or 50 meters away from the fruits and vegetables and other non planned duty products. Kroger's technicians have certainly meant to motivate their purchasers through merchandising 3 and 4 that rely on merchandising 1 and 2 displays of their planned or non planned duty products. This 7500 m2 outlet as a whole is a very good illustration of this alternation between these 4 types of merchandising.
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2 -Circulations
Now, let's follow the client during his "journey" in the outlet to verify what has been said about the 4 types of global merchandising and to control the importance of the outlet map the average purchase of the client, might they be duty, desire, and power, planned or non planned purchases. By marking out the outlet with infrared transmitters and by placing a memory transmitter in the cart of the shopper, one can follow the route of the client step by step and control the relationship there might be between the routes on the one hand and the value of the purchase basket out the outlet on the other. If one cares to know what the flow and traffic clients' list is at the entrance of the store, and if one checks at the cashier what has been purchased, one will, thanks to a simple and objective calculation, measure the effective implosion rate of the outlet. This simple, practical trotter system will allow us to grasp situations and phenomenons that customers interviews won't, simply because the client is unaware of his route in an outlet. Example of a real supermarket case: The director of a semi flow outlet which belongs to a great brand name chain was worried about his grocery sales which did not increase the same way the rest of the other departments making up his store did. 51 % of the clientele corresponded to attached clients, 40 % to unattached ones. Basis clients that is those who bought more than 80 % of what they needed in the outlet made up 52 % of the clientele, semi basic ones corresponded to 22 %. In terms of shopping frequency, 7 % of the clientele would come at least once a day, 19 % three times a week, 21% twice a week and 30 % once a week. 45 % of the clients lived less than 5 minutes away and 45 % lived between 10 and 15 minutes away. The age distribution of clients corresponded to the normal structure of the zone. The number of jobless people and the socio-professional categories of clients did not show any abnormality or deviation in terms of structure.
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Competitors were only represented on the majority by small essential flow outlets that are traditional retail stores, branch systems. The big supermarkets and discounters were too far to be considered as competitors which could play a real part in the observed phenomenon that is to say the no sale of grocery products. The analysis of circulations had to yield surprising information. The map of the outlet did not show any abnormality.
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The client would come in through the fruits and vegetables department which communicated a feeling of freshness and quality, then he would go straight to the sea food area at point 2, he would find a first group of products at point 3, 6, 7 corresponding to wines, alcohols, spring waters, beers, then he was attracted by the dairy products at point 12 and by the bakery at point 16. A delicatessen and a fresh cheese stand enabled him to achieve desire purchases. The way would logically proceed to point 23's frozen goods, industrial pastries and point 24's ice creams to arrive at the cashiers at point F. We were supposed to notice that 65 % of this outlet's client went straight to the fruits and vegetables and that a significant quantity of clients went directly to the diary products without stopping by the fruits and vegetables, which was rather surprising to say the least. Customers would go straight from the entrance to the sea food area without purchasing fruits and vegetables. Only 54 % of the clients who had come in the store would stop to look at sea food. But 98 % of the clients would go through point 12, where dairy products and ultra fresh products are located. The meat department was rather popular since 88 % of the clients stopped by it but only 24 % of the customers would check out dishwasher and other soaps, 6 % of the clients would purchase coffee at point 30 while 11 % would get chocolate and 2 % sweet and candies. It was possible to notice, for a reason yet unknown, that places such as washing machine soaps or detergents aisles (settled planned duty products) were not very visited as well as coffee aisles (settled planned duty product). The sweets (non planned desire products) and chocolate departments were so neglected that there was no chance to achieve impulsion purchases. The study of the impulsion purchase confirmed this circulation research. 65 % of the clients went naturally to the produce department and 61 % had planned on buying. At the cashiers, it could be noticed that 66 % of the clients had bought at least one product from the department. 54 % of the clients having planned on buying had actually bought a product. 7 % of those had not bought anything but 12 % of those who had not planned on buying had purchased a product anyway.
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Family: Fruits and vegetables In percentage
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88 % of the clients had been to the meat department but only 33 % had planned on buying beef and actually 34 % had bought some. Among those who had planned on buying beef that one day, 24 % actually bought some, 9 % had not found what they wanted but on the contrary 9 % of those who had not planned on buying had decided to do so after all.
Family: meat In percentage
98 % of the customers, that is to say all of them, had gone to the dairy products department. Only 51 % of the clients had planned on buying and the number of purchases was only of 48 %. The outlet had lost sales. Indeed, while 51 % of the clients had planned on purchasing dairy products, only 40 % did and 11 % had given up the idea of purchase. The impulsion was only of 8 % on the clients who had not planned on buying. For instance, it could be noticed about a planned settled duty product like fresh milk that only 9 % of the clients had planned on buying, which implied the idea that these clients, although loyal to the outlet, would go shopping in other outlets to find this type of products. Cheese had excellent results, since 45 % of the clients had planned on buying and that finally 52 % did buy with 15 % of impulsion. It could be noticed at the client purchase structure level some abnormalities that had to be taken into account to grasp how this outlet was operating.
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Family: diary products and ultra fresh products In percentage
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Generally, it was noticed for every non planned desire product that few clients were interested and that few impulsion purchases were taking place. Fine wines, champagne, sparkling wines and alcohols were such products.
Family: wines, alcohols, syrups In percentage
If one now concentrated on basic products like rice, pasta, oil, non planned, planned duty products, one would notice on the one hand that very few people were interested in these products and that on the other hand, impulsions were not operating at all.
The worst are cocktail products in which few people are interested. Purchasing forecasts are near zero and impulsions really weak.
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At last, jams and cereals, that is breakfast products which did not attract many clients, experienced few planned purchases and even fewer impulsion ones.
Family: cocktail In percentage
Family: jams/cereals In percentage
It was obvious that this outlet suffered from several problems. First, client circulations did not irrigate the back of the store and all the products which were located between point 24 and 32 had few chances to be purchased. Although many planned duty products were located in this zone, the circulation constraint was too great for clients to make the effort to get to this zone. It was necessary to draw a new map of the outlet in order to enable the clients to better irrigate the total surface area of the outlet. Then, it was possible to notice, in such aisles as the sodas and fruit juices ones which often correspond to very planned duty products, that there were few clients passing by but above all, very little purchase forecasting.
Family: Sodas/fruit juices In percentage

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It was the same with spring waters where only 18 % of the clients had planned on buying these products in the outlet. It was obvious that a bad organisation of shelf merchandising tied to a weak clientele attendance had caused the client to forget that this kind of product was for sale and could be purchased in the outlet. Effectively, one could notice that the price decrease on these products had no impact on the number of clients who were interested in these ails. Sales per client were multiplied but it seemed that the perception of the outlet's supply was not complete in the mind of most clients. Let's note here that, as far as milk goes, only 33 % of the clients had planned on buying which is a rather weak rate for a semi flow outlet where the clientele comes several times a weak.
Family: Milk In percentage
Finally, as far as products which might create impulsion go, one could notice that a bad merchandising could not enable the store to achieve good sales. In chart 1 (next page) we can see that chicken and delicatessen goods with a weak attendance rate still did not have an important impulsion rate while the number of people visiting the department was significant. Non wrapped cheeses with a high rate of interested clients could not reach 30 % of impulsion. As far as non food or cosmetic products are concerned, one could see that shampoos and deodorants with a weak figure of interested clients coming to the aisle had the lowest impulsion rate. This example is a proof of the importance of this crucial notion carried by the study of circulations in an outlet. It stresses the objective analysis of the organisation of the outlet and points out the decisions one should make in terms of implantation. But it also insists on the importance of the merchandising of shelves which must favour
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impulsion purchases and on the memorization that a client might have of what goes on in the outlet, of the products he can think of when making up his list. Although defined as a semi flow outlet and as part of a great brand name chain as we stressed it before, this supermarket only had one competitor; its circulations on one hand and its merchandising on the other. Essential flow stores located in the distribution zone were outlets which sold milk, canned foods simply because clients had heard that these products could be bought there.
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After having remodelled the outlet, moved cases to put them in the none visited zone of points 24 to 32, it has been noticed that a better circulation had a psychological influence of clients. They were beginning to learn that several products were actually in the outlet. A restructuring of the shelf merchandising from a brand or product organization to a seduction oriented organization helped the outlet to quickly improve its sales. EXAMPLE OF THE INCIDENCE OF CIRCULATIONS ON THE PROFITABILITY In the seventies, certain retailers in France, Belgium and other countries did not believe in the hypermarket "vogue". In the headquarters of certain retail companies, people were convinced that the experiment of Mr Defforey with his Carrefour stores which had started in 1963 could not prove right for different reasons. They thought that the management of these "selling plants" would cause many problems and those consumers, once accustomed to them, and would return to supermarkets which seemed to be the real modern formula at the time. Nevertheless, the experiment had to be carried out to see if effectively, the "everything under a same roof" had a chance to survive. In a few retailing groups, the decision was made to open hypermarkets with the same frame of mind that Carrefour had, but with a completely different circulation system. As a matter of fact, the thing was to organize the outlet in such a way as to be able to cut in half the hypermarket to have at once a supermarket on one side and a non food retail store on the other if the hypermarket fashion came to vanish. A great American consultant of that time Mr Halstead, specialized in semi flow outlets and cafeterias came up with a solution which was accepted immediately. It was about building outlets according to the sketch which is on the following page. Clients would come in the outlet through a large central alley and this way would get to the food zone which was the back of the store. By walking before alleys and displays, clients would become interested in
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promotions and if they wanted, could enter the alleys more deeply to shop. Usually, at the start of his journey the client was exposed to everything which had to do with textile. Then, little by little, he would move up the store and pass by the newspapers, household appliances, hardware departments to finally arrive at the food zone.
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It is clear that in theory, this route of the client presented a big advantage with regards to the map of the Carrefour hypermarket; there was very distinct non food and food areas. In certain companies, there were 2 outlets directors. A food director and a non food one. In Belgium, one can still see a yellow line separating the surface area of these outlets. This line showed the limit between the food and non food areas and this way the zones in which the non food director should not stroll. To build an outlet this way was to forget the way clients operate. Hypermarket type outlets have a motor: the food department. Clients come in with a written or memorized list and want to get rid of their daily purchases as fast as possible. When entering these outlets, purchasers would quickly go up the central alley and start choosing necessary daily products. Once their cart was filled up, it was rare to see any of them go down the central alley to go shopping in the textile, appliances aisles etc...other aisles parallel to the central alley were made to have food customers go down to buy non food products but it was no use. The cashiers line was too close to the area where food products were sold; the client would get rid of his purchases and would go back to his car to unfortunately purchase his non food products in other outlets. At the time when these outlets were thought out and built, the price war had not been declared yet. There were no great discounters in Europe and brand names did not have the influence they have today. The results, 20 % inferior in terms of impulsion purchase in these outlets were the consequence of a bad client circulation strategy. In the middle of the 1980s, the many retailers who owned such supermarkets had to straighten them out, that is to say reorganize the structure itself of the outlet by spending important sums of money to rebuild all the zones where products were unwrapped and gotten ready to be sold because they were not well located. In the classical scheme of hypermarkets, the client, before accessing to the food zone usually goes through the household appliance department, then through the small household appliances zone etc...After having completed his food zone tour, he comes back
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through the central alley and that is when he takes time to yield to purchases of impulsion. This way of "working" the client produces excessively beneficial effects in terms of profitability as well as in terms of client satisfaction.
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Studies carried out on consumers show that they blame supermarkets for all these tempting offers, these huge alleys they have to go through just to go fetch something to fix their lunch and also the wait at the cashiers. Many retailers have literally heeded these studies and have managed to make short cuts in their outlets, that is to say an entrance for clients who wish to deal with both non food and food products and an entrance for those who are more in a hurry and just wished to buy a few fruits and vegetables, a bit of meat and sodas. All these operations ended up in fiascos as far as management goes. One of the most famous ones is the Meyer chain one in the US which to satisfy its clients in large outlets after a marketing study, decided to create a short cut which caused a decrease in all impulsion sales, that is to say sales where the margin is particularly interesting. Besides the fact that one must be particularly cautious about the difference there might be between behaviour and opinion in terms of studies, one must remember that the circulation strategy in an outlet may be one of the most important ones with regards to the observation of the last profit line. It is something that was particularly well understood by the outstanding American retailer Stew Leonard's and his outlet that is located in Norwalk, Connecticut. This genius retailer created the most exceptional outlet that a retailer could observe. Of 3700 square meters of selling surface area, Stew Leonards' s built a flow and traffic store where there is only one big alley, that is to say one on which it is almost impossible to turn around and go the other way. From the outlet's entrance to the cashiers, there is indeed a great corridor where products can be seen on both sides. All the customers walk before all the goods. Besides the fact that the outlet positioned itself in a leisure function targeting parents and children, the fact that everyone is confronted to every product and every promotion brings about one of the highest profitability in the world. Stew Leonard's sells a million yogurt cases, 13 million cookies, 5,2 million croissants, 2 million muffins, 1040 tons of American hamburgers, 350 tons of bananas, which is represented by a $ 100 million sales figure which ranks him as one of the leaders in terms of
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sales per square meter. This circulation organization gears the outlet towards a strategy of selling only great rotation products. Stew Leonard's' claim is to sell at least 1000 product units a week. Everything under 1000 units is automatically eliminated. 20 % of the products generated 80 % of the sales. The product gripper consumer is one of the most astonishing ratios one can find. If the positioning and the formula cannot be excluded from Stew Leonard's ' success, we must admit that the circulation principle itself is the basis for the high profitability of this outlet. It is obvious that in the Exit marketing, this circulation notion play a crucial role. ANALYSIS OF THE REALITY OF THE EXIT MARKETING It is the analysis of the average basket that can best help us understand the incidence of circulation on the management of the firm. By definition, all food and non food retailers talk about the average basket on average purchase. Actually, it is a figure that is reached by dividing the sales figure of the outlet by the amount of cashiers recorded clients. If we forget for a moment the fact that the number of cashiers recorded clients does not correspond to the actual number of clients, we will be able to consider in a rather trivial way that the notion of average of basket itself is dangerous. If at the exit of the outlet we carry out a statistical survey on receipts or else on the composition of baskets, we will be able to determine a real structure of receipt distribution. In example A (see next page), we see that the outlet, whatever its type (essential flow, semi flow or flow and traffic) is composed of 2 clientele groups: a clientele disposing of 200 purchasing francs; another one of 135 purchasing francs. On the contrary, if we look at scheme B (see next page), we will notice that a large part of the clientele disposes of about 300 francs which yields an average ticket of 390 francs. The analysis of the efficiency of the Exit marketing must rely on these distributions of cashiers receipts. In the first case, it is interesting to analyse how 300 and 135 francs evolve. In the second case, if we are dealing with a hypermarket for
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instance, it is interesting to grasp the reasons why all the sales concentrate on 300 francs while around 1000 francs, we cannot see clear enough purchasing expressions. Any decision in terms of circulations of promotion must have an immediate influence on the evolution of the distribution of cashiers receipts. Likewise, when a competitor sets in the distribution zone, one must define the part of purchases which eludes the retailer and goes to the newly opened store. This analysis carried out during the evolution of cashiers receipts must be corrected with the help of the information on the nature of clients (basic, semi basic, specific, attached, none attached traffic flow). This is a way to establish a real action plan for the exit marketing of the outlet and for the control of the creation of impulsion purchases on the one hand and for the good functioning of the global merchandising of the outlet.
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The electronic means that are available today to retailers, especially the scanners, enable them to have daily information and organize real strategic meetings about the exit marketing. It is obvious that these means enable to make clear during busy days how the clientele distributions and average receipts are organizes, which allow retailers to make quick decisions, which is absolutely necessary for them if they want to respond to their competitors' actions or measure the effectiveness of their<promotions, particularly in the entrance marketing field. Let's take an example which shows how cashiers receipts are distributed to understand the reaction possibilities of an outlet. In a given distribution zone was a semi flow outlet. This 2500 square meter outlet was working on about 8000 household clients. Its profitability was good and its basket was about 125 francs. The opening of a rather distant flow and traffic competitor for the manager of this outlet looked like a threat but not like a major incident forcing him to change strategies. After 2 months of observing the sales results, one could notice that the forecasts of the directors of the outlet turned out to be totally wrong. The number of household clients did not decrease sensibly. The number of cashiers recorded clients was about the same as well as the number of monthly clients. The amount of clients was about the same. The problem was at the revenues figure level. Although keeping the same amount of clients, this outlet was losing more than 8 % of its revenues figure. All the sectors were hit except may be those dealing with daily purchases, that is to say basic products which people need to live. Despite the displays, the mark outs, the directions in the outlet, interesting promotions, nothing would help; everything seemed to happen as if the clients of the outlet only came for basic products and saved all their impulsion purchases for the new flow and traffic outlet. An analysis of the cashiers receipts distribution had to bring about a good response to the pending problem. This way, by using the information about the distribution of cashiers receipts before the opening of the competitor, one could notice that there were really 2 kinds of clients which were: The clients with a 55 francs basket essentially composed of butter, bread, pre-rapped pat and yogurts and a few alcohol free beverages. Then clients who had more completed baskets in which one could see wine, added value products, meat,
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perfumes and a few non food products to clean the house as well as small household appliances devices. When looking at the cashiers receipt distribution after the opening of the competitor, small clients were still present and their number had not varied while big ones had major deserted the outlet and in any case; if they had not done it, greatly reduced their spending. In fact, small baskets corresponded to a nearby campus' students. They were food clients who often came to buy what they needed to fix their meals. During week ends, they would leave town to go home. The second clientele corresponded either to professors who lived near campus or to people living by the store. They used the semi flow outlet as the basis for their alimentation and until the opening of the competing flow and traffic store, they were basic clients of the outlet. Rapidly, instead of purchasing all they needed in the outlet, they only came to buy a product they lacked and in any case quickly deprived the store from any heavy purchases. Through the set up of a conquest strategy of this clientele, in less than months, the semi flow outlet renewed with a good profitability without having to lower the prices of its basic products which would have only benefited the students and not induced the big clients to come back.
3. - Exit marketing promotion merchandising and product system
The sales promotion inside an outlet that is to say in the implementation of exit marketing bears a considerable importance as far as the profitability of an outlet goes. It is thanks to this sale promotion which will influence the clients circulation that impulsion purchases will take place and that non planned duty or desire purchases will become real. To develop a promotional action plan in an outlet is actually to decide to do everything so that the sales of different sectors and zones of the outlet are deeply worked on in the global merchandising context. This will of action applies itself to essential flow outlets such as book stores, small neighbourhood grocery stores, in semi flow outlets such
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as food supermarkets, some hardware stores, large bookstores, in flow and traffic stores as hypermarkets, clothes outlets, hardware wholesalers, stereo specialists etc... Each time it is necessary to draw this promotional action merchandising, one must take into account the advantages offered by the manufacturers, the discounts of such or such brand envious to have its place in the outlet, but above all one must do so using the rules and regulations of global merchandising. THE GONDOLA DISPLAY NOTION Usually, in outlets which rely on the display of products in a self serve department, retailers resort to gondola displays. These gondola displays simply are displays of products which are located at the end of a gondola, at their rear or at their front depending on the way of the circulation.
These gondola displays are particularly targeted by manufacturers who know very well that any product placed in these places is by definition
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purchased in a larger quantity than if it were simply placed on the shelves in an aisle. For the retailer, the problem is to know in which conditions it is necessary to accept these gondola displays. As it can be noticed in the scheme of the previous page, there are actually 8 reasons to create a gondola display. When one wants to launch product promotions in central alleys, one must first display non planned purchases, no matter what kind they are (duty, desire, and power). These well displayed non planned purchases will be noticed by the client and practice shows that finally displayed prices are not what triggers purchases. It is the display itself which does. It is necessary to make these gondola displays with all the desire products which are the object of advertisement on TV. When a large manufacturer launches shampoos, cookies or a new tool kit, it is interesting to display through gondola displays, the products that the client has probably noticed and inscribed in his brain. These gondola displays have the capacity to accelerate the sales of these desire products but also to give a very dynamic image to the outlet. More generally, all the new products, be they desire or duty ones deserve to be put in a gondola display. They will first have the capacity get the public interested, then to enable the outlet to have an excellent penetration rate in the clientele. This penetration rate will have an impact on the clientele and make it loyal in some way to the store especially if competitors seem unwilling to display those same new products. Non planned seasonal products also deserve a gondola display. During calendar events, at vacation time, none planned seasonal products sales can be enhanced through good displays. Too big or too voluminous products which fit in the desire product category can perfectly stand gondola displays or big alley pile stockings. In the spring, hardware outlets and wholesalers know that displaying bags of compost is a way of satisfying clients and creating liveliness always appreciated which aims at enhancing the purchasing comfort and atmosphere of the outlet. Generally, high rotation planned duty products should not be put in gondola displays. It is possible to do so if the outlet undersells in this
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product family and wants to catch up with other stores, that is reconquer some market share on its clientele. Certain particular products, important for the retailer as far as power purchases go, can be placed in gondola displays. In this case, it is essentially about an action strategy of the retailer who, through power purchases, wants to enhance its sales figure but also and especially wants to get across to his clients that the outlet is still perfectly competitive on all power. Products which turn slowly but leave a strong margin and are non planned desire, power or duty non committing purchases can be placed in gondola displays in a margin compensation policy context. It is a situation that one often meets in retailing and which can be dealt with thanks to gondola display which foster a more important than usual rotation. Indeed, it can be noticed that finally it is the planned committing duty purchases which are excluded from gondola displays. In other words, on absolute preference markets, the great brands of daily purchases must be placed in gondola displays only in very particular cases where the relationship with the manufacturer is such that there is no way out of it. Gondola displays must never deprive the aisles of any sales and above all for circulations. GONDOLA DISPLAY TECHNIQUE The gondola display actually is defined by 3 elements: - The product - The way it is presented - The location These 3 elements will indeed determine the promotional merchandising. Depending on whether it will be a duty, power or desire product, the gondola display will have a totally different tactical definition. A gondola display made up of duty purchases is useful only if they are non planned ones. The end itself of the promotional action aims at setting off purchases that the client could have not done since he had not planned on his list or in his mind to buy these products that day.
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To make a planned duty product gondola display makes sense only of the retailer realizes that the penetration of these products in his clientele is weak. Because too high prices had been assigned to this planned duty product family, clientele may have abandoned the outlet and it is time to reconquer the market share. One can obviously decide that a gondola display makes sense when it is made up for planned duty products in a traffic action context which will attract new clients in the outlet. These new clients, thanks to gondola displays, can understand that this flow and traffic outlet presents strong advantages, especially on products as crucial as planned duty ones. A settled and planned duty product gondola displays can be made only in extreme conditions. We understand that these goods will be purchased anyhow since they are duty products, since they are planned and since the client knows the brand he is going to buy. The ensuring display of these products makes sense only if the retailer wants to take the lead in the battle against his competitors and assert for instance to his trafic clients that he is the most competitive in terms of prices as far as these necessary products are concerned. Often, certain retailers think they will make money by accepting to display duty products said of "brand names" offered by the manufacturers. It is often a bad calculation. To make a gondola display out of a great brand name coffee (usually a strong purchase rotation, settled, committing, and planned duty product) is to give away presents to one's flow clientele if it is a semi flow or essential flow outlet and to the flow part of one's clientele if it is a flow and traffic outlet. It might get some traffic interested but in any case it is a way of anticipating purchases on a large part of the clientele and of losing substance in terms of profitability. The promotion manager can always say that he succeeded in showing that his price image was low. This point of view is undeniable. The problem though is to know the price he had to pay to develop such an idea. The different experiments show that overall, clients don't feel like they owe the retailer anything for this generosity that can be deemed transparent. Depending on the type of retailing and product, one must pay particular attention to these propositions made by manufacturers.
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Strong purchase rotation, planned, settled, committing duty products can be displayed either in gondola displays, in stands or in the middle of alleys only if the outlet is really late in the sale penetration of these products in its clientele. To display non planned desire products is to ensure a great client satisfaction on the one hand and a significant profitability on the other. The success is not the same when we deal with planned desire purchases. As in the planned duty purchases case, to actually do this display is to lose an intention of circulation in the outlet and deprive the outlet of a possibility to better implement all the mechanisms of impulsion purchases. To manage to display settled planned desire purchase is to either want to display its promotional capacity and its promotional price image or make a mistake we will never see he cost but which nonetheless exists. In house hold appliances outlets for instance, where many settled, committing, desire products can be found, retailers confuse the necessity to launch a promotion with the obligation of creating a show or a gondola display. We must remember that the client perfectly knows the location of settled committing desire products and that is the price comparison that matters to him rather than the display. In the global merchandising of the outlet, these mistakes have a considerable impact. The manager of an outlet must keep in mind this need, this necessity to have his clients circulate. They must go from sector to sector, from point to point and above all they must not realize too quickly that they already bought the maximum of what they wanted to purchase that day. The Japanese retailers define the outlet's circulation with the help of a particularly evocative term. They call this circulation: the golden flow. They insist on the fact that this flow should never be hampered. Some retailers' organizations in outlets do not facilitate this will of gondola display or assortment coordination. The selfishness of sections and departments exists. Each one wants to score as much as possible. This fighting spirit is often positive. It becomes even more positive when the outlet's managers take into account the requirements of global merchandising and the necessity not to hamper circulations in the outlet that on the contrary they need to foster.
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We must compare what goes on in an outlet to the blood circulation which makes us live. During the digestion, our blood goes to ward our stomach, during the intellectual effort it goes to our heads. Too much pressure at one point can cause damages or irretrievable injuries. Power products by definition are products that must be placed in gondola displays. If the outlet launched a traffic operation, the display of these products is particularly beneficial. The outlet will show traffics which came for calendar, provoked, specific or vietnamization operations these power products which will charm everyone. The only precaution that needs to be taken is the one which aims at not placing these power products anywhere, because there are strong chances that traffic clients go straight to displays, purchase what they like and leave. To choose what product will be displayed is part of a strategic will. Different elements must be taken into account; they are: -The nature of the product in terms of duty, desire and power. -The product specificity in terms of planned or non planned product. -The qualification of the product in terms of brand (settled or not, committing or non committing) -The consumer relationship (high or low purchasing regularity of the product) -The economic reality (product considered costly for the consumer, product considered as economically easy to get to.) -The price advantage (reward given by the outlet to its clientele and not in the context of a traffication) All these factors and elements will allow us to describe a chart which will describe the products that can be placed in a gondola display which will determine the pros and cons of each potential choice. This way, we will be able to assign a sales objective to the gondola display. This objective will be measurable either through surveys carried out at the cashiers or through a simple measuring of the sales volume with the help of classic information on the outlet.
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This will to measure the success of the gondola displays and assortments will give the retailer a database, an expertise, a "savoir faire" which will help him avoid many failures. The nature of the products must be as we just saw a premier element in the quest for promotion optimization and effectiveness and especially in the attempt to have promotions help solve the real problem of the outlet and its brand name. Now we must look at the way to present well chosen products. There are 4 ways to present a gondola display or achieve an assortment: -The presentation called mass display -The wall of value -The mixing -The seasonal
The mass display: It is about placing only one product on a very larger display. We are looking for a price impact, that is to say communicate to the client the idea that he just discovered a price promotion mountain. A mass display is really effective only for non planned, non committing duty purchases. A famous example is that can be seen in some American food outlets which cover an entire wall with paper towel or toilet paper rolls. In certain hardware outlets, the same technique can be found with walls of compost bags in the spring or mountains of fibre glass when it is time to fix roofs.
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Mass displays which are constituted with non committing desire products can function provided that the prices are really interesting. A mass display with non committing duty or power products doesn't make sense. A mass display works with only one type of products. The value wall: It must not be confused with the mass display. In this case, it is about taking different products of a same function. Products are said to belong to a same function when they correspond to a same type of utilization. For instance, the ingredients that are used to season steaks, salads, barbecues belong to the "give taste" function. Each product, each brand leaves its own trace. The objective is to give fish or meat another taste than their natural one. These products are not always complementary; they can be used separately... If in this "give taste" function, among all the products that constitute it, one first chooses planned duty products (non settled ones if possible) and then non planned duty products (non settled if possible) one will realize an inter-traction between these types of products. The value wall is impressive: It must be seen from far. The advertising in the outlet must be strong and aggressive. In this case we sell the price/product mass pair. It is obvious that a value wall made up of high purchasing frequency product will function better than a value wall made up of weak purchasing frequency products. Accordingly, once or twice a year the retailer can launch large operations on none planned, none committing, duty storable goods such as vegetables or fish cans.
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Many retailers refuse to make walls because they deem that somewhat disturb the ambiance of the store and often create uncontrollable client moves. Nevertheless, value walls remain highly considered by the public always in search of a good bargain and this no matter what the positioning of the outlet is. In fact, nothing is more interesting to a client than explaining to his friends that he got a good deal and that he knows where to get it. The value wall as a gondola display or presentation technique bears the feature of developing planned duty products which in turn foster non planned duty products that the outlet badly needs. It is a very interesting technique to make a semi basic flow clientele become a basic clientele. Planned duty and non planned duty products when in the wall must be seen from very far so that clients get near and look at them. It is a blunder to want to make discreet value walls which don't offer a large product presentation surface. Let's recall that the value wall is part of merchandising 1 and that it is a means of creating circulation. American retailers became masters in the use of value walls. In Europe, retailers often find this marketing technique too complex and especially too constraining as far as logistic go. Practice shows that this notion of product function is not always clear in retailers' minds. Trained in ancient merchandising schools which talked a lot of complementary products, a number of specialists have trouble seeing the positive side of this new definition called function definition. Deodorants and after shaves when they enter the duty products range are products which belong to the same "bien tre" function and can be used for a value wall. The mixing: A gondola display or presentation mixes planned duty products with non planned duty or desire products of different families. For value walls, we try to find products that are in perfect harmony and respond to the same generic need of the client. In the mixing, we don't have to worry about this. What matters is to set off the purchaser with planned duty products (none settled if possible not to lose margin) and to benefit from this trigger to sell none planned desire and duty products in very different product families.
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The mixing coefficient of product is therefore totally different from the one we underlined in the value wall case. We don't try to explore as in the previous cases a logic of the purchase mechanisms of the purchaser. We act spontaneously. A tooth paste gondola display fosters the sales of toothbrushes. Tooth paste is a planned duty product in many western countries and becomes less and less a settled duty product. Some clients like to change brands, which do not mean that some people are not loyal to Colgate, Pepsodent or Signal. Toothbrushes do not belong to the same function as toothpastes. They are duty products, often non planned ones and the mixing of these 2 products enables the retailer to develop important toothbrush sales. Toothbrushes can be called complementary products of toothpaste? This does not alter the nature of the mixing. Socks are planned duty products sales like ties which often are desire products. The seasonal: This technique is applied to non planned products. According to the season, back to school, spring or sales, one must take planned duty products and associate them with non planned desire products. Here, we are not trying to put together products of a same function as in the value wall case or much differentiated products as in the mixing. To have a successful seasonal technique, products simply have to be code products of the seasonal. In furniture outlets, it is frequent to see displays associating garden tables with umbrellas, barbecues or cocktail glasses.
4. Shelf merchandising and product system
If the global merchandising of the outlet is an idea which at the end of this century tends to preoccupy retailers, it is still something very theoretical. The word merchandising is reserved to the way products are arranged on shelves. To do merchandising is to give instructions to aisles managers so that they arrange products according to a map aiming at definite objectives?
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The word merchandising is a real frontier word. It is at this point that the interests of the retailer and the manufacturer often begin to diverge. Accordingly, 2 merchandising exist, one for the retailer and one for the manufacturer. The manufacturer focuses first at the sales managers of outlet chains. He then focuses on the retailer's structure, deals with store managers, department managers or aisles managers. But the manufacturer also looks at his representatives who will have to communicate to his different retail services the proposition of his commercial head office, his sales head office or else when it is possible of his merchandising head office. THE MANUFACTURER The manufacturer wants first to have a dialog with the retailing industry so that he favours his brand. A part from any conditions of financial negotiations, the manufacturer must absolutely gain room on the shelves for his brand if he wants to be part of the race for the market shares. Yet, a manufacturer with high purchase frequency planned and settled duty products does not have the same worries as another manufacturer with only non settled non planned desire products. The problem becomes even more complex when a same manufacturer has on the one hand strong purchase rotation settled planned committing duty products which the retailer won't make many profits or even lose money because he must align himself on his competitors' prices, and weak purchase rotation non settled, non planned desire products which will be sold only if they are efficiently promoted. The manufacturer must also drive his competitors out through an improvement of his relationship to the retailer, with the help of arguments, he must make his rivals doubt, prevent them from having their products on the shelves especially when they are non settled, non committing duty products. One knows that it is the room, the position on the shelf which actually creates the dynamic of this kind of products. In a more discreet way, the retailer must also fight to diminish the importance of the sales of brands that the retailer can sometimes place at the best place on shelves. These merchandising objectives are crucial for the manufacturer. As a matter of fact, they are part of his mix marketing. Many examples show
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us today that it is on this field of merchandising that begins the new trade marketing philosophy.
THE RETAILER If a manufacturer merchandising exists, a retailer merchandising emerges more and more. The retailer wants at first that his regular clients, his flow clients buy planned products; trigger purchases on none planned products and above all leave the store without having forgotten anything. Retailers also want trafic clients, those who were attracted by a promotion announced in flyers, newspapers, on TV or on the radio to purchase the products and find them easily on shelves. But the retailer also wants his logistic to be simple. He wants to find a solution so that the shelves are permanently stacked with products but without making the operators' life difficult. Depending on the retailer and especially on the markets we are interested in, very different objectives emerge. In self serve food outlets, in hardware stores, in clothing stores, the retailer will both want to facilitate planned product purchases and trigger a maximum of impulsion purchases. This way, out of a desire to ease the daily toil of the store's staff, the retailer wants both to favour his clients and improve his profitability. To reconciliate retailers and manufacturers, several surveys and study institutes set up famous computerized models such as Apollo, spaceman or simple techniques such as the Hope model. On top of being interesting, these models and techniques carry the advantage of being simple but the inconvenient of not considering the product client relationship or the different brand influences. They only consider the outlet's assortment and not the reality of the constitution of the market in terms of market share. The utilization of the product system that we previously described can take us further, closer to the reality of the purchaser and this way; help us to develop a series of models of different nature that can be adequately applied instead of a universal model applicable to all products.
RATIO ELEMENTS AND CONCEPTS FOR MERCHANDISING TACTICS AND A MERCHANDISING STRATEGY IN THE OUTLET
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Before studying merchandising cases dealing with duty, desire or power products, one must analyse the different elements and factors which come into play in the making of a merchandising strategy or merchandising tactics. 5 factors and elements must be taken into consideration in the study of the possibilities that offer a merchandising action to retailer or manufacturer.
The sales elasticity depending on the shelf or department location: Depending on the type of products (duty, desire, power) and the coefficient of purchase forecasting, that is to say the relationship between planned purchases and non planned ones, the location of the shelf will play a considerable role in the sales elasticity. It doesn't matter where the baby food shelf will be in a semi flow or essential flow outlet. They are duty products and the housekeeper cannot do without them because she must feed her baby. As planned products, they usually are on their shopping list and the housekeeper knows exactly what brand she will buy. If the clientele knows its store well and if the posted prices are relatively reasonable, there will be little difference in the quantities sold depending on the place where the department is. When on the contrary, one takes duty products in which a great majority of non planned purchases occur such as socks or shirts, one will observe that depending on where the shelf is located, the quantities that are sold will reach totally different levels. The more clients of an outlet pass before these shelves, the more likely purchasers who did not plan on purchasing get settled simply by getting acquainted with the products. By comparing the number of people who enter an outlet with the number of outlet of people who pass by the department, we will be able to establish in a simple way, that is through direct counting, the coefficient of product frequenting, of product family frequenting depending on the groups defined by retailers.. This frequenting coefficient must be taken into account when one compares the results of a product family in several outlets of a same chain or of competing chains. Often, when one wants to establish merchandising norms, it is necessary to resort to store checks balances. If one does not heed the shelf or department frequenting
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coefficient, they will take the chance of inserting in the comparison process errors which would be easy to detect. Some panels makers specialized in shelf comparison supply very interesting information. Unfortunately, very few of them tie the given sales information to the appropriate merchandising, taking into account the frequenting coefficient variable which is fundamental for certain products. It is easy to understand that as far as non settled, non planned desire products go, if the frequenting coefficient is low, impulsion purchases will be unlikely and retailers will tend to jump to the conclusion that this type of products does not correspond to the outlet. If it is difficult for some retailers to organize their outlet according to this frequenting coefficient, nevertheless they need to know it to assess the results of a department, and above all to understand the strategy of this competitor when he compares departments, their size, their developed length, the number of shelves and the depth of the products displayed on them. Today, real frequenting coefficient charts exist. They assess the elasticity of the sales of a product, of types of products in relation to the number of clients going through a department. The frequenting coefficient of a department belong both to the elements enabling to define the global merchandising of an outlet to those allowing analyzing the results of the shelf. Indeed one will be able to assign to each aisle and each department of the outlet a frequenting coefficient and determine this way the reality of the market which exists in each department of the outlet. By priority determining the nature of the products on each shelf in terms of duty, desire, power, planned, non planned settled, non settled products, we will be able to sketch a real circulation map and play with the frequenting coefficient by moving the gondola displays, by transforming the aisles map. Likewise, one wants to study a product family and set up an adequate merchandising, one will worry about the frequenting coefficient of the gondola, the counter etc... In food outlets, it can be noticed that many chains make the mistake when calculating the profitability for instance of their self serve pastry or fresh cheese department, of not taking into account the frequenting coefficient of these counters, of these stands, of these islands. Most of these products are non planned desire products. If the frequenting coefficient is very low, the outlet will achieve sales only on clients who planned on buying and profitability calculations will be done on only
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part of the potential market of the outlet. This is a calculation error which might push the retailer to make very risky decision. In sporting stores, where many non planned desire purchases occur, some aisles are penalized when one explains that they trigger too few purchases without unfortunately worry about the exact number of people who enter the outlet. A better organization would allow an increase of the sales and would make the product more profitable.
The sales elasticity in relation to the merchandising organization: If we take up the babyfoods example again, we understand that a shelf can be organized by brand or type of products (carrots, potatoes, spinach) without having the reorganization affect the number of products sold. If the case of planned settled duty products, the shelf observation shows that housekeepers go straight to the shelves, grab the product immediately and this no matter how the shelf is organized? In this babyfood world, the retailer can always hope to sell one more product to the mother. If she comes for spinach or babyfood, she can leave with a new formula, a promotion. This purchase will be triggered more by the product incentives than by a real strategy of merchandising organization. On the contrary, in the case of non planned duty purchases like socks, an adequate sorting out of the shelf will be susceptible of setting off 2, 3 or even 4 additional products. Depending on the way products will be sorted out (by price, colour or comparison), the purchaser will be more or less tempted to go back and forth, to spend more time and to convince himself to buy more products. If one is confronted to a non settled, non planned product shelf, this sales elasticity in relation to the shelf organization will be stronger. Not being settled on a brand, the client will not have any stopping element in his quest and will be able this way to sweep and sweep again with his eyes and with his touch all the products of the department. Let's note that this possibility of shelf organizing is considered only in the increase of a given brand. We will see later that it is another factor that must be taken into consideration.
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The sales elasticity in relation to the merchandising organization (SMO) depends on the nature of the power, desire, and duty product, of the purchasing forecast coefficient of purchase decision of a product, that is the none settled product / settled product ratio. The more we deal with settled, planned, duty purchases, the less the SMO becomes important. The more we deal with non settled, non planned desire purchases, the more the SMO is important. This SMO must be considered a freedom space which will allow us to know what behaviours are available to merchandising managers to make sales program.
The per category brand share: We now must take into account the market elements. Having a policy, a strategy, merchandising tactics also means determining the number of products, of brands, of items that must be selected in a product family. In other words, the retailer must know, depending on his sales policy until where he cannot go in terms of assortment reduction or on the contrary, until where he must go to give his client as much choice as possible while staying in a profitability configuration that is acceptable. Knowing the per category brand share elements will supply the information necessary to this decision of enlarging the ranges or on the contrary of reducing them. The per category brand share is organized around 2 ideas: -The sales percentage of the 3 top brands. -The sales percentage necessary to cover 50 % of the market, 67 % of the market, 75 % of the market. * 50 % to meet half of the demand * 67 % to meet 2/3 of the demand * 75 % to meet 3/4 of the demand Let's consider the babyfoods family we already talked about. Let's take into account the information given by Mediamark research in the US. For this counter as a whole, we notice that as far as babyfoods go (settled, planned duty products) the 3 first brands represent respectively 73, 3 %, 17, 3 % and 6, 4 % of the market.
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In other words, these 3 top brands cover 97 % of the market. 2 brands enable to cover 75 % of the market. On the contrary, still in the US and from the same sources, we can notice that wrapped up bread which is a non settled, planned duty product shows the following configuration: First brand 9,5 % of the market, second brand 4,5 %, third brand 3,9 % or 17,8 % of the market for the 3 top brands. If in the case of the babyfoods there is no choice for the retailer, on the other side, in the case of bread, the merchandising policy will take on very different aspects from one chain to the other. In the honey case for instance, the 3 top brands have 61 % of the market and 2 brands already represent 75 % of it. It is yet a planned duty product but a non settled one. The retailer can in his merchandising policy, have great latitude of brand choice. In the barbecue sauces and bottled sauces family, the 3 top brands represent 36 % of the market. 50 % of the market belongs to 5 brands and 75 % of it to 10 brands. When one knows the quantity of brands that exists on this high majority of non settled, non planned products market, one sees that the retailer can organize his shelves in a very particular way in order to reach a better profitability. It can be noticed that in certain product families, such as canned salt which are purchases with a high majority of non settled, non planned products, the 3 top brands in the US realize 80 % of the sales. The first brand achieving alone 62, 4 % of the sales. It is here that we must understand that this first brand which will be defined as leader in its market enjoys this status only because of it is largely represented on all the retailers' shelves. There are 2 ways to be a leader: The one which corresponds to the fact that one has a settled product and that everyone is forced to buy the good, and the one that correspond to the fact that one has managed to design a good policy vis a vis retailing and that the score that will be reached is more the result of a desire to be present on the shelf than the consequence of the brand's power. In detergents which are settled, planned duty products, the 3 top brands only make up 38,2 % of the American market with 22 % for the
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brand number 1, 8,1 % for the brand number 2 and 7,6 % for brand number 3. The first brand with 22 % is a brand leader wile in the case of salt; we say that the first brand is a sales leader. These are 2 notions which take on their full meaning in what we will see under the name of trade marketing strategy. The knowledge of per category brand share will give latitude of choice to retailers, latitude which will inscribe itself in the space of freedom of the SMO. We no longer aim at a sales increase. We are now interested in the sales increase of a brand or an opposite brand. In the chapter dealing with retailer brands, we will see the importance of this notion. Let's note further that the more settled products there are, the fewer brands there are on the market. The brand shift: We have seen in which conditions the frequenting coefficient could influence certain shelves. Likewise, we have seen that the S.M.O coefficient enabled us to understand how one could enhance sales in certain types of products by choosing to organize the freedom space, by organizing by brands, by colours, by size that is using an organization favouring impulsion purchases in the case of non planned purchases. With the use of information tied to per category brand shares, the retailer can choose his product ranges and enhance his profitability by choosing to limit the number of items or the contrary, to reinforce it depending on his client policy. The Shift coefficient refers to the skip/switch ratio. One can assign to each settled brand a skip or switch coefficient. If, to reconsider the detergents example, the first brand name makes up 22,5% of the market but is 90% skip, it does not have, in terms of merchandising, the same value as if having the same market share, it is only 60% skip. By multiplying the market share by the skip coefficient, we will reach the "market share limit" below which the outlet will loose clients. This is of course true only for settled products. Let's go back to the baby food example. The first brand represents 73, 3% of the market. If it is 65% skip, which means that 35% of the settled purchasers of this first brand agree to slide to another brand, its market share limit is only of 73,3*65 which is about 47%. With the same kind of calculation for the other 2 brands, one will be able to define how much the brand will allow us to influence brand merchandising. Let's note that in this planned settled product example, sales cannot be expanded through the enlargement of the shelf surface
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COEFFICIENT OF TRANSFORMATION OF AN AISLE When clients walk through a department, it can be noticed that certain people stop near their product and walk on, that others touch products, put them back on the shelf that others stop for a moment, look and walk on without having touched anything. We call Transformation coefficient of an aisle the number of products taken and therefore purchased in relation to the number of people who go through the department. This simple ratio which is reached through observation bears the advantage of supplying very precise information on the capacity of a shelf, arrayed a certain way to create sales in comparison with a same product shelf organized in a different way. This is an element of control of the job done and means of comparison especially between different outlets to determine the famous seduction merchandising.
Sales elasticity in the case of none planned products: For non planned duty or desire products, one must introduce 2 coefficients which play a part in the definition of the shelf's size. Depending on the outlet considered, there is whether we like it or not, moving speeds of the client in the outlet. This moving speed does not play any part in the discovery and search for planned products. On the contrary, in the case of non planned products, this moving speed will condition the observation capacity of the mobile client. In a large hardware outlet of about 7000 square meters for instance, the client usually moves at the speed of 80cm/second. It's the speed that is common to most large outlets where the clients goes from a planned duty product to another planned duty product or from a planned duty product to a planned desire product. As the retinal persistence is of 3 images/second, any product that is displayed on less than 27cm has few chances to be seen. One understands that apart from the logistics problems that aim at a displaying many desire or duty products on shelves, when these products are high purchasing frequency ones for stocking tools reasons, it is necessary to have a certain number of product facings to merely attract the eyes of clients when these products are non planned ones.
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A question arises. What is the number of facings that we need so that a maximum of clients who have not planned on buying choose to do so when walking by the department? If through a simple observation, one can define this number of facings, one can wonder whether these results are alike when one displays a single brand or on the contrary when displaying several brands. All the observations done in outlets show that the purchase triggering results are always more intense when, on a given optimal facing length, one proceeds to a brand multiplication up to a point where the phenomenon is no longer active. It is likely that the different kinds of packaging, the different price levels, and the colours chosen are what triggers best when brands are multiplied. To determine this number of brands and number of facings, one must simply observe in these non planned product families the evolution of the transformation coefficient of a department. It is a simple experimental method that any retailer can implement in outlets. Often we notice that an outlet undersells in a product family because he reduced so much the number of facings or the number of brands in non planned desire or duty purchases. He cut his transformation coefficient of aisles too drastically. In the purchases of clothes, of design products, this will which aims at measuring the sales elasticity in relation to the number of facings and brands on shelves is particularly important. Just like we measured these elasticities in a shelf serve outlet, one can do the same observations in department stores or in stores with presentation stands. As far as non planned products are concerned, we will get precious information which will allow us to know how many products we must actually put on stands, displays etc...so that they can be seen.
PERFORMANCE OF AN OUTLET IN THE MERCHANDISING FIELD Before introducing practical merchandising, which is the way of placing product to obtain profitability and impulsion purchases, we will have to determine if the outlet or the outlet chain are good enough sellers in the product range considered.
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It means that for a product family or subfamily, purchasers prefer to purchase in other outlets. It is a touchy situation for the outlet because it's letting its clients go to other outlets on the one hand and on the other hand it looses a margin substance which was almost in its pocket. On the contrary, we notice that those who over-dimensioned certain aisles oversell in certain product families. Practice shows that such a situation is not always favourable since an exaggeration in the development of certain aisles causes a reduction of some other aisles. We then must know what must be over-dimensioned or the contrary what must be reduced back to normal aisle dimensions. This notion of underselling or overselling product family or aisle is a necessary prerequisite for the setting off of any merchandising operation in the outlet. Indeed, if we agree that the 3 goals of merchandising are: - communicate the commercial policy of the outlet - favour the development of impulsion purchases - favour the profitability of aisles, one understands that all of this makes sense provided that the outlet meets the consumption capacity of clients.
Assessment of the performance: The performance of any outlet can be obtained in a rather simple way, using a model like the one implemented in the 2 following examples. First, we measure the number of clients of an outlet by taking the model expressed in chapter 3 for the definition of flows and traffics. In example A, we have a semi flow outlet a number of cashiers receipts of 39015 and a number of clients of 5173 that we got from the shopping frequency of the outlet showing in the chart of the following page. Let's recall that these frequencies have been obtained interviewing clients at the cashiers according to a rigorous plan, respecting all the statistical rules concerning samples on the one hand, survey sequences on the other hand and the time these sequences will last.
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Then, from the results of the study, we will determine the structure of the clientele of the outlet in terms of the number of people in the household, of purchasing power, of the type of purchases in the outlet, of purchases at competitors etc... This way we will make up a real theoretical consumption matrix relying on the statistical data of the household consumption. This matrix will help us know what could be the potential revenues figure of this outlet if the different types of clients purchased all their products. In France, we can use statistics from the INSEE ( National Institute of Statistics and Economic Studies ), in the other countries people report to different data sources specialized organisations can supply them with. At last, we will compare the potential revenues figure of the outlet with the actual figure. We will establish as shown in the charts a real map of the performances of the outlet. We notice here that groceries are purchased by about 90% of the outlet's clients but that only 25% of their consumption needs is represented on the chart. In the next sector for instance, we notice that near 65% of the clients buys this kind of products but that the penetration rate is only of 15% with regard to the consumption possibilities. By operating this way, that is by aisle and no longer as we first explained by group of products, we can really grasp if, in terms of sales the outlet undersells or oversells.
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CHART A
Let's note here the importance of information. Generally, in outlets, since one doesn't always measure the performance of the aisles or of product sectors, one is content with the percentage often called participation that represents such aisle or such sector in the total revenues figure of the outlet. If the information is interesting, particularly if percentage which doesn't give the reality of the performance of the outlet. We could have a very good participation of meat in comparison with an outlet which is very strong as far as fruits and vegetables or groceries go and in which more than 5% of the clients buy meat. Finally, we are going to lean on declarations of clients at the cashiers to understand how the sales per great product family or subfamily etc... are structured. We notice in chart B on the following page that in grocery, 92,6% of the clients purchase this type of products in the outlet but that only 40% of the clients purchase all they need, 20% half of what they need and near 30% come when they lack something. By comparing this information to the notion of basic, semi basic, specific, attached or unattached products, that we previously described, we will be able to understand the qualificative shape of the
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performance that is to say who are the clients who often make the aisle in the outlet a productive one.
CHART B
One understands then, when making up the merchandising which commercial policy will need to be chosen in a more acceptable configuration of the outlet. Let's consider now another outlet B. It is a larger flow and traffic outlet. For a 149500 cashiers receipt figure, there is a store grip of 30245 households. Chart C shows the performance of different aisles of the outlet. We notice here for example that in this flow and traffic outlet, groceries are purchased by everyone and that sales represent 80% of the total potential of the needs of the clientele.
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A study on competitors should help understand which commercial policy to develop, what type of merchandising to have to increase this grip. Chart D lays out a structure of consumption which enables to grasp the reasons of the under or over performance of this outlet. CHART C
Chart E (page 142) yields the same results in non food products. Measuring the performance of the aisles must be done essentially to give merchandising an additional goal to fulfil. It must also enable to reconsider the supply of the outlet in terms of price range of products.
THE NOTIONS OF DEPTH AND WIDTH OF ASSORTMENT Depth and width of assortment are the 2 components of the commercial policy of a retailer. The choice offered to the client, the differences with competitors will express themselves through these notions of assortment depth and width. To define these 2 notions, one must know the manufacturers' offer, the sales evolution of the different
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products and above all the function in which the product is placed by the client. The notion of function: Let's consider a product that we all use, bath soap. These bath soaps that can be found in pretty glass bottles or plastic bottles don't have the same function for the consumer. Let's note here that we are not talking about clients. Certain housekeepers appreciate bath soaps but ask the product an additional favour, decorate the bath room. CHART D
Taking pride in having their friends visit the bathroom, these housekeepers who correspond to a behaviour typology in the design of the house wish their bath soap to be seen and express this desire to have a pretty bathroom . At the outlet, these consumers who became purchasers admire the quantity of bottles that are displayed and say
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that they really have a lot of choice when they see multiple propositions on the shelves or in the aisles. For other housekeepers, bath soap must have a totally different function. It must be an exotic product and the colour of the water is the result of a lucky combination which makes one believe that he is in the Caribbean or in the Pacific Ocean. The client will like to find in the outlet his brand or brands and he will say that there is a great variety not because there are bath soaps in the decorating function on the shelves but because there are all the kinds of bath soaps for evasion displayed in a same place.
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CHART E
Other consumers, more practical ones, only see in bath soap the cleaning function. People take a bath and when they are finished, they empty the bathtub which is instantly clean thanks to this bath soap. Clients know the brand which makes this soap and it is the one that they want and no other. Other consumers will see in bath soaps the splashing about function. They want a cheap product to put in the kid's bath and that foams a lot. It's a way to calm them, to make them busy for a while. People will want a cheap product in a tall bottle with a nice packaging for a pretty bathroom. This perception of products by the consumer is crucial in the
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understanding of width and depth assortment. An outlet which has a great assortment width is an outlet that provides its clients with all the functions of a same product. Likewise, an outlet which has a great depth of assortment is an outlet which, in a given function, displays several items. We understand that this notion of function enables to clear up the reality of the depth and width of the supply. This study of the consumer/product relationship is all the more true because on a same type of products, we can find different functions which often correspond to particularly differentiated price offers. Let's take another example of a product that most of us consume, jam. It has 3 main functions: - The standing function, it is jam that people like to put on their Breakfast tray on vacation or on Sundays when brunching with friends. - The sweet tooth function with corresponds to jam that people like because there are fruit chunks in it. - The munchies function which corresponds to the jam that people give to kids and which, although good, is not as sophisticated as the first one, more economical because there often is as much jam on the bread as there is on the rug. To have an assortment width is to supply clients with these 3 jam families. To have an assortment depth is to have in each function a display of as many items as possible. In the standing function, it is easy to see all the kinds of jam express themselves in terms of nature of fruit, amount of sugar etc.... In the sweet tooth function, one can create a wonderful universe for all the sweet toothed clients. On the contrary, for the munchies function, it is clear that the outlet must have low prices. To provide variety and choice is not to offer a low price jam in 3 or 4 flavours (apricot, strawberry), it is, if one wants to develop an assortment depth, to voluntarily supply a series of low or first prices and economical sugar contents for people of this munchies function who have lots of kids or who want to save money. We understand in the jam market that one must define these 3 functions and know whether they want to be present in all these functions and up to what point in terms of number of products and
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offers. This function approach is all the more true when we look at non planned desire products. It is clear that in settled duty products the retailer must have every product. On the contrary, as far as desire products go, especially in furniture, textile or presents, one can take up his assortment only after having priority determined to have function belonged for instance a leather sofa, a garden set of table chairs or even certain TV Sets. One often notices that some outlets are not performing enough in certain product families merely because their assortment depth is not fully developed. When outlets of a same chain don't have the same surface area, there is always a problem when it comes to choosing the width and depth of assortment since clearly; one cannot display the same quantity of products in a 10.000 square meter outlet as in a 5.000 square meter one. The answer resides in the notion of functions. One must raise the question which asks what the functions that a smaller outlet can skip are or inversely, what is the limit assortment depth for a given function. It is the implementation of this supply geometry which enables to satisfy the client.
5 - Practical merchandising of aisles
To make up the practical merchandising of aisles, one must understand that the retailer does not dispose of a unique formula for every product he supplies his clientele with but that he must adapt to the power, desire, duty product types, to the nature of these settled or non settled products and to the fact that they are planned or not. Practical merchandising therefore is not an approach that can satisfy itself with a classical elasticity model but with a series of successive approaches which specify for each product system what must be the best possible merchandising.
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MERCHANDISING OF FAMILIES AND OF SETTLED PLANNED DUTY PRODUCTS SHELVES In these product families, one can decide to clean on 2 possible kinds of objectives of merchandising study. One can wish not to lose purchases that are having all the existing brands displayed on the shelves and this proportionally to the demand. One might also want to limit brands for space, manufactures relationship reasons and this way even want to suppress a few of them. Then it might be synonym of losing skip settled purchases on one several brands that are not on the shelves, it is about detouring switch settled purchases of the absent brand towards another brand. We will recall that on a same brand, we dispose of a switch or skip purchases percentage defined as product shift in a previous paragraph. Let's underline here that the problem is very simplified since we work on a planned product family, that is a family which does not imply that sales be triggered by a presence of the product on the shelf. Let's carry out a successive analysis corresponding to each of these 2 objectives that we just saw. 1st Step: The objective is to respond to the demand of all clients. The aisle will carry the demanded brands distributed proportionally to the demand. Over the same period of time, let's imagine a distribution according to the brands of duty settled planned purchases: Example: Over the same period of time, here is the distribution according to the brands of settled planned purchases. 35 of the settled and planned purchases concern Brand A 25 -----------------15 -----------------10 -----------------8 -----------------7 -----------------Brand B Brand C Brand D Brand E Brand F
The aisle carries the settled brands in the same proportions. Let's stress that the period of time considered is the period between 2
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restockings of the aisle. Based on the profit (or net unit margin) made by each unit sold, the following chart describes the calculation of the total margin.
With 100 sales, the net margin is of ..............................607.
2nd Step: It is about assessing the consequences of the elimination of a brand. The settled purchases are of 2 natures as we already said. They refuse to buy if they don't find their brand, they are skip purchasers. They replace their brand by another one. They are switch.
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Let's stress the fact that in this chart 80 % of the settled clients of brand A renounce their purchases if they don't find their brand in the outlet, but 20 % of them choose brand B rather than any other brand if A is absent. The chart indicates the results for brands B, C, D, E, and F. The consequences of the withdrawal of the product can express themselves the following way: a. Again in global productivity (one fewer line to manage) to be distributed per unit sold. b. An increase per unit sold of the fixed costs distributed per unit sold (the profitability gain and the increase of the fixed costs per unit sold are unknown for the outlet and are usually small; we don't regard them in this exercise). c. A loss in sales, therefore a suppression of the corresponding margin. d. A margin variation per change of unit sold. It will be positive if the beneficiary margin has a margin superior to the suppressed product, negative or not. The suppression of F with a forecast of the switch falling back on A leads to the following chart.
This chart explains itself the following way: Out of a hundred sales, the gain is of The missing profit is of 600, 00 FRCS 7, 00 FRCS
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A must come up with a global profit of Or a per unit profit of
196, 00 FRCS 5, 19 FRCS
Detail of the results: 1 - 60 % of the sales of F are lost with a per unit margin of 3 FRCS, therefore we lose 7 x 60 % x 3 FRCS = 12, 60 FRCS. - 40 % of the sales of F benefit A with a per unit margin of 5 FRCS. We gain 7 x 40 % x (5 FRCS - 3 FRCS) = 5, 60 FRCS. - Balance: - 7 FRCS. 2 The calculations done, global profit falls from 607 FRCS to 600 FRCS. 3 To get these 7 FRCS back, we must negotiate" a margin increase for A to gain 5, 19 FRCS and not 5 FRCS per unit sold. Practically, Product A goes from 35 sales to 38 or a 9 % increase of its sales in this outlet.
In the settled and planned purchases market:
out of 100 sales, the gain is of 563, 00 FRCS the missing profit is of 44, 00 FRCS D must come up with a global profit of 106, 00 FRCS or a per unit profit of 8, 55 FRCS
In the settled and planned purchases market:

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out of 100 sales, the gain is of 45, 00 FRCS
562, 00 FRCS the missing profit is of
A must come up with a global profit of 250, 00 FRCS or a per unit profit of 9, 62 FRCS
These 2 examples show that the decision of suppressing a product or a reference cannot be made blindly and that one must be able to measure the necessary compensations to assess their possibilities. MERCHANDISING OF DUTY AND PLANNED DESIRE PURCHASES WITH A MAJORITY OF NON SETTLED PRODUCTS: In this type of product family, one must obviously take into account the 3 notions previously expressed to list products: They are: -The settled skip products. -The settled switch products. -The reading keys of the aisle for non settled purchases. Since they are planned purchases, we know by definition that the purchases will go directly to the aisle or that the display of the products will not influence or very little on the reality of purchases. On the contrary, although we have here a majority of non settled purchases, we must remember that in all the product families we find a quantity of clients who are settled skip or settled switch ones. Before establishing the merchandising plan, one must assess this quantity of clients to determine what is the minimum of skip brands that must be placed on the shelf to avoid loosing this clientele. It is clear that at this point, schemes of decisions will have to be chosen.
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They will enable to specify the nature of the risks that one will take by eliminating a brand with regard to the propensity of clients who will purchase elsewhere the product that they cannot find. Once this skip percentage measured and the switch relations cleared up, that is the products on which the purchases can fall back, the aisle must be made up according to the reading keys used by the non settled client. Let's underline here that we have all the latitudes to place (for a retailer) any product provided that these products respect the criteria purchasers look for. These criteria are independent from brands. They are the colour, the volume, the price etc ...If the reading keys have to be respected as well as the comparison keys and selection keys which have been explained earlier, one must also take into account these criteria not to present the client with a product shelf that would not fit. Often, in non settled purchases, the elements of the reading key are confused with the purchase or choice criteria. Here is a simple example. The customer when buying shirts needs a specific length of sleeves. Some retailers, to simplify things present only 1 sleeve length in their display. The aisle and shelves might be as adequately presented as possible in relation to the product system and the reading keys: if the client does not find his sleeve length which is not a reading criterion of the aisle, he won't buy the product. As far as textile goes, this notion of criteria is related to the colours, to the elements of fashion which must be taken into account by purchasers. To manage the merchandising of the outlet, one will have to understand in which proportions these different criteria are considered by customers and from there, determine the assortment in order to insert in it the model of merchandising specific to purchases of desire or planned desire purchases with a majority of non settled products. Let's note here that the retailer has more latitudes than in the previous case. He will be able to put his retailer brand in a good place and structure his sales according to criteria tied to the optimization of his profitability. It is in this type of merchandising that the notion of the products at the
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eye level becomes meaningful. If the retailer brand is placed at the eye level in this type of merchandising, it will have more chances to be chosen by the client who is not settled and who consequently will take what is easier. The gathering phenomenon as defined by sociologists unveils itself unconsciously provided that naturally all the products placed at the eye level correspond to the criteria and reading keys of the family of products. Therefore, one must be very careful in this type of merchandising not to be systematic and must understand that this notion of eye level makes sense only if it is coherent with the behaviours of the purchaser in the aisle. At this point, we will have to include the elasticity problems that we described earlier, particularity to define the number of different brands that we wish to place in this aisle. Although the clients are not settled, although they planned their purchases, the multiplicity of the supply creates a favourable purchasing relationship, develops a better ambiance and above all builds a strong image necessary especially for other aisles. In this type of aisle, one must also take into account, for the choice of the location of the products, the notoriety utilisation relationship (N.U). At its epoch, Mediametrie proved there was an obvious relationship between the notoriety of a product and its purchase. Everything seems to happen as if a product, an average of transparent brand had more chances to be chosen from the moment its notoriety is superior to the one of its competitors. If, in these non settled planned desire or duty products one wants to give the client the feeling that the store has the best variety and that it fits the market, it is better to choose suppliers who have strong notoriety products. In any case, it is only a problem of powerful image and not of performance in the sales domain. Whether one puts a product with or without notoriety, the quantities sold will be the same, except that the client will be surprised not to find the brands that he sees everyday on TV, but as we said before that he does not require the store to have. Here we will use patterns based on principles of successive
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eliminations of brands.
MERCHANDISING OF NON SETTLED, NON PLANNED DESIRE AND DUTY PRODUCTS: If one carefully locates the few switch or skip settled purchases which can exist in these product families and if one makes a decision about putting these products on the shelves, we will notice that then, the most important point is to implement a seduction merchandising and no longer as in the planned and settle desire or duty purchases a management merchandising. At this point we wish to develop the maximum of impulsion purchases even before taking into account any notion of profitability optimization. We will have to consider the sales elasticity related to the arraying merchandising that we studied before. Likewise, we will take into account the sales elasticity in the case of planned products. At last we will try to adapt as best as possible the notion of reading key and the notion of selection key aisles. As far as non food products go, these 3 elements will allow creating merchandising strategies which will develop sales in a considerable way: of course, the results will be even more interesting if we consider the frequenting coefficient and if we decide to place the shelf or the aisle at the best possible location of the outlet. All the models which enable to implement this seduction merchandising must consider, at last, the clientele structures of the outlet, in terms of flow and trafic in order to develop tactics which will depend on whether the clients are regulars of the outlet or on the contrary people who come once in a while for a strong promotion. One cannot dissociate the merchandising of these non planned non settled products from the crucial role of the VLP and VLI. If the best locations and the best display structures to favour impulsion purchases have to be found, clients also have to be informed and interested by the implementation of all the classical ways defined by the name of aisle stop, of information and advertisement in the distribution centre. Whereas in the merchandising of settled planned advertising and information in the outlet don't make much sense and don't have many effects, they start having a role for certain products in the case of non settled planned products. For non settled non planned
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products, experience shows that really interesting scores can be obtained. In outlets selling non food products, the role of this information must be part of the strategic will of the merchandisers.
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CHAPTER 6
___________ Private labels roles, goals and strategies
In the nineties, the private label in many types of retailing is part of the mix marketing of the brand name. This new element in many cases influences the positioning of the brand name, its communication and the different tactics implemented to make the shoppers become loyal to the brand name and even in some cases to attempt to reconquer non clients.
A BIT OF HISTORY
The notion itself of private label is not new. Very often it can be noticed that in certain kinds of retailing in the making up of a new formula is accompanied by the creation of a retailer brand. When Woolworth invents its retailing formula where all the products bear the same price, it has to launch its own brand. In France, the formula was adopted and new brand flourish such as Monoprix, Uniprix, Prisunic which sell everything at the same price and under their own brand name. The arrival of the "Front Populaire" will prohibit this kind of retailing in France and after the war these brand names will turn into real department stores selling both products of any brand
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and products of their own brand. Marks and Spencer at the start of the century in order to launch its formula also had to fall back on a brand name it owns, Saint Michael, because it couldn't find manufacturers to supply it at the price it wanted to sell. Geoffroy Guichard, Felix Potin and most of the brand retailers have to create their own brand name to help their outlets subsist. These outlets at the time were considered as dangerous discounters by wholesalers and grocery stores who ask manufacturers not to deliver goods which were the leading retailers at the time. Migros in Switzerland relies on a private label and in England Sainsbury becomes the worldwide reference for this type of business. He sells luxurious goods such as Champagne under its own brand name and today this example is still quoted to those who question the private label. The new formulas which come out in the sixties, supermarkets, hypermarkets and more generally specialized outlets don't develop with the help of private labels but on the contrary by supplying its clientele with the widest variety of these so called national brands which advertise in stores and soon on TV. The strong coming of the manufacturer brand seems at this time to have definitely overcome the private label. One must wait for the seventies and the first oil shock to see this private label concept pop up under again under a new form: the generic products used by Carrefour in France called free products and by GB in Belgium called white products. This idea is simple. Part of the public and particularly intellectual people start to feel hyper marketing effect of the price paid in each product for advertising, merchandising and as some authors said at the time she wrapping imposed by manufacturers. "Soap merchants" are pointed at because of their so called excess Marketing. Generic or white products are defined as economical products whose quality is sufficient to satisfy the client and whose white packaging is a guarantee to save money. Gib in Belgium declares in its ads that people can save up to 40 %. Overall, these products sell rather well but are not enough to create traffic. For some brand names it is the way to make them known and to launch advertising campaigns that people still remember.
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The advertisement on the free products of Carrefour carried out by the excellent publicist Jacques Seguela is still quoted today as being the best of the seventies. Quickly emulated, these generic products are found in any brand name store, are purchased by all kinds of consumers and with in a few years, the great so called national brands seem to take over and reconquer market shares that they had lost in some cases.
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We will have to wait until the middle of the eighties to see a new generation of retailers' private labels appears, and above all to see some big national brand specialists such as Carrefour, Leclerc, Intermarche outlets, Auchan hypermarkets, put on shelves in different ways their brands, which compete directly with national brands and encounter a great success with their flow clients.
THE REASONS OF THE EVOLUTION OF PRIVATE LABEL

The coming out of the first generation of private labels, the one of Marks and Spencer, of Woolworth, of the branch retailers corresponds to a need imposed by the creation of a new formula. The second generation of private labels, of generic products can be considered as the consequence of the first oil shock as well as the Cultural Revolution which unfolded in 1968 in most of the western world. The third generation of private labels, the one of the eighties, is more complex and was brought along by 4 factors. The evolution of retailers: Until the 1960's, retailing in general and food retailing in particular did not depend on the manufacturer's strategies. Rapidly though, retailers are going to become an economic power. Soon people talk about the retailing industry. They witness the development of chain strategies and group strategies. The brand name is going to be the basis for the creation of the chain effect. Retailers look for concepts, positionings, and ways to fight efficiently against competitors. The race of the 60's and 70's for the best locations is over. In the 80's, it's time to create a brand name identity, to develop a strategic marketing to conquer traffic clients and keep flow clients. The market share is no longer captured by opening outlets, but by capturing clients.
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The private label then appears, right or wrong, as a way to set the chain, an element of group strategy, a link between the customer and the outlet, a way of showing that it is cheaper, whilst retaining an excellent quality level. It is also an element of negotiation with industrials. It is a new possibility to make other brands feel the limits, in terms of market share, that they should not overstep. As for the price battle that goes on in certain kinds of retailing, the private labels also is a way of retaining some margin. Depending on the brand names and retailing companies, but also on the relations with manufacturers, such or such characteristic of the private label will be put forth, pointed out or further developed. Depending on the personalities of the people who run these companies, the private label will be the vector of a brand name perception image, that is a strategic tool, or on the contrary, a mean put in the hands of the buyers of the big wholesalers to reach better commercial conditions. Depending on the sectors of activity, the density of competition, the emphasis on the price criteria, the use of price panels will enhance the retailers' desire of independence towards manufacturers, desire that can be felt in all sorts of markets. The evolution of manufacturers: Because of the intensification of advertising, the massive and constant arrival of new products, the manufacturers to keep or conquer their market share will have to win the shelf space battle no matter what. First of all, they must have more facing for each product. If possible, they must drive the competitor out of the shelf and convince the retailer that they have the best potential merchandising plan. The negotiations with the buyers of the large wholesalers are not only focused on the purchasing conditions. The merchandising will have to be negotiated. Unintentionally, the famous brands are going to make the best rise and give the buyers of the large wholesalers a new role, the arbitrary one. The arrival of new discount formulas such as the Leclerc
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centres and Intermarch in food retailing will create a new conflicting scene. The other retailers will blame the manufacturer for not ruling things and letting these new rivals dump or sell at such prices that it is easy to imagine that they have better conditions. Certain retailers who will buy distribution centres, former Leclerc centres or Intermarch ones will realise that, indeed, they did not enjoy the best purchasing conditions. They did not want to understand that these purchasing conditions were related for very clear reasons to the shelf space battle. The evolution of the consumer in his relationship to the private label: In the eighties, the consumer does not know what a private label really is. If he has been interested, amused, fascinated by the campaign on free products, he remains loyal to his brands; he gets receptive to the price discourse which starts to emerge in every kind of retailing. In food, household appliances, furniture retailing, advertising and promotions on prices come back again and again to show that one can buy cheaper. Before all those offers the ease of purchasing, the consumer will move from the consumption society to the enjoyment society. He no longer wants to restrain himself; he wants to take advantage of all the offers, he wants to enjoy the system. He no longer wants to wait to be able to afford a famous brand before buying it. Such a brand even discounted is still too expensive. Hed rather buy a small brand walkman than no walkman. He will buy a second TV set from a small brand rather than having only one set in his living room. The Geants Casino with their white GC products met with huge success thanks to their TV sets. When dealing with all those brands, the consumer starts to proceed from a new logic. He perceives the great brands, those which reassure him, which give him a status, that he does not want to do without, that he demands, he tries to purchase at the least possible price. He also perceives that many brands define and correspond to good quality products which are all alike that one can buy safely. Up to the sixties, the consumer believed that the Shell, Total, BP gasoline were different. Today he no longer looks at the brand but he would
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not buy gasoline from an anonymous brand. He also conceives that in some consumption sectors, one can and should try out the small brands which come out. Among them are the private labels. As far as great brands go, it is out of the question to take a risk. As far as the others go, it can be considered. The consumer is the one who destroys the products in the client system developed in chapter one, starts to structure the markets and the brands world. He sees three kinds of markets and three kinds of brands. They are: - The absolute preference markets with the strong brands, - The relative preference markets with the average brands, - The no preference markets with the transparent brands.
The absolute preference markets: Some well-defined products in markets or market segments where the majority of consumers has an absolute preference for all the brands which make them up. In the spread market segment, more than 85 % of the consumers of this kind of products demand a brand. If it is not in the outlet, the purchase won't occur and the consumer will prefer to go to another outlet to be sure to find his favourite brand. In the Cola market, more than 70 % of the consumers will demand a brand which will have to be in the outlet so that the purchases occur. In the razor market, there will be Gillette, Wilkinson and Bic consumers. They will all be loyal to their brand, to the razor system they use and won't accept the fact that their product is not present on the shelf. The housekeeper who usually carries out this kind of purchase for her husband will prefer to go to another outlet to find the Gillette blades rather than imposing to her husband a blade he does not know. This awakening of retailing is not going to occur overnight. It will be gradual. The buyers, the wholesale buyers, the department managers look at what goes on in their outlet and notice that, in some cases, their private brand brings excellent results. Whereas yesterday a retailer felt obliged to show all the Kleenex brands in his store, today's retailers understand that as far as Kleenexes go, the Lotus brand sells as well as this precursor of disposable handkerchief and that the private label
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has as many chances to be chosen despite the fact that it cannot advertise on TV like all the other brands of these product family do. In spite of the outstanding advertising of Panzani, Lustucru, the retailer notices that even if the consumer has preferences he ends up buying what is easiest to find on the shelf. The private label, shy at first, is going to take its place and in the nineties will stand next to the leaders of the market. In these relative preference markets, people are going to understand rapidly that there is no longer a need for reassurance backed up by the brand for the consumer, but simply a confirmation of notoriety, an ease of access to the product. Many manufacturers think that this is the consequence of too big a multiplication of the me too products, of the absence of objective differentiation of the products or of a bad job in the making of the brand images. In any case, the brand no longer defends the product as well as before. Whatever the position of the product in its life cycle may be, the phenomenon is confirmed. The no preference markets: Certain products which have prestige, an image, which are therefore well known by the consumer are prisoners of their position on the shelf. Not only do the consumers not demand a battery brand, not only do they have no preference for such or such brand, but they also buy any product without checking whether it is a famous brand or an anti brand made by the outlet. Provence spices or Ducros spices can be on the shelf only because the company really buys its space on the shelf. The American giant Mills, aware of this absolute no preference of the French consumers backs down and refuses to settle in France and prefers to manufacture private labels. The majority of the consumers dont care about the brand of their video tape, their paper towel, their toilet paper or even the butter they buy. The brand is totally transparent. People know Oasis, Banga fruit juices but they buy these transparent brands just as well.
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It is not a question of price; it is a question of ease of access to the aisle. The retailer is aware of this. In their often wild promotions to get a private label started, they notice that their client in his consumer part is by no means disturbed not to find these so called brands. Here again it is a market / consumer relationship. After having tried many products to realise they are the same, we can't imagine that a green bean can of a given brand is better than another. We don't really worry about what we buy. In the end, the brand is here again transparent. This evolution of the consumer about the new brand logic is more rapidly understood by retailers than by manufacturers. The latest are structured around their brand. Everyday it is said that the capital of the company is more its brand than its plants. The communication means used for the products are such that we can't imagine that Ducros, Wonder, Terraillon, Seb, Hitachi, Moulinex are not absolute preference products for all the products of their range. Yet, it is a fact that all the food, household appliances or any other retailers perceive. They know that refrigerator brands are transparent brands, that car oil brands are average brands which fit in relative preference markets. They forget though that rice fits in an absolute preference market and that in this case brands matter. The brand revolution is happening. Manufacturers and retailers will be able to understand their customers and clients better. Gradually, the private label will set a foot in the door and filter in the slow evolution of the consumer in regard to brands. The consumer does not feel attacked by these new brands and is glad to be offered so many products to solve his problems the way he wants. The consumer will take advantage of the private label. He will not consider it as a complement of the brands but as a means of the consumption society, of the marketing society to him and make him buy more. Three main consumer typologies emerge at this time when it comes to buying private labels: - the notorietists, - the mix-realists,
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- the promotionals. The notorietists are consumers who prefer to buy famous brands. For their duty committing or non committing purchases, they want brands. They are interested in discounts but for them, the private label remains an economical solution that's not very credible, that can be tried in several consumption sectors, more to secure oneself on the quality of one's brand and not to say that one is against a new solution that is a topic which is sometimes discussed among friends.
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The mix or realists are consumers who, at the beginning of the month, prefer to buy brands but who at the end of the month don't hesitate to buy private labels or even outlet brands. It is a good economical solution and for small brands, products with little importance (non committing duty products) the private label, the product of the outlet can help save money. The private label for these consumers must have a price lower than the one of the famous brands that is on promotion. They don't buy satisfaction; they look for a sufficient standard quality as cheap as possible.
The promotionals are consumers who go from one outlet to the other to take advantage of all the bargains. What they are interested in are bargains, what's on gondolas, the promotions that are heard on the radio, that are in flyers, catalogues or brochures. In the eighties, these consumers were not interested in private labels. Their price differential was not enough and buying private labels on promotion seemed less interesting than buying great brands. It is those promotionals who are going to become in the nineties the major consumers of first prices. For the moment, the private label is out of their sight. The private label therefore is going to find a favourable echo only among the mix and realists. The notorietists and promotionals will become consumers of those private labels only because they are there, on the shelf and that one day or the other they will be chosen to be tried. It is interesting to note that in 1991 a study conducted on 950 interviews and 10 distribution zones in France shows that the structure of the behaviour typologies in regard to brands is defined according to the following distribution : realists 56%,
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notorietists 19 %, mix 14 %, promotionals 12 %. If now we consider the 20 main consumption groups such as non alcoholic beverages, beer, pet food, frozen foods, cleaning products, we note that the notorietists start buying private labels despite the fact that they still consider themselves as favourable to national brands. The evolution of clients: The continuous opening of large supermarkets, of specialised outlets, the promotions, the supermarket war is not going to let the consumer cold. In the eighties, he is going to witness day after day, in France especially, new ways of buying, to find bargains, to buy cheaper. The shopper will be dazzled by these new outlets which push to consumption and which enable to take advantage of a good running economy. The slogans, the radios, ads, the flyers become a brand. People are going to trust these outlets, these private labels; they will be considered modern, logical, normal entities. People will often be astonished buy these aisles, this profusion of products, this infinite presence of brand. Many products which were up to then only bought by a few will be available to many. All the great brands are easy to buy. Laurent Perrier, Chivas Regal, great wines, Salmon, caviar even will be available to all. The sacred of the brand will both seem more striking and less mysterious.
The presence of private labels in this context will not seem strange. No more white products which look poor and remind of the economic hardships. Long life to those private labels packaging which are modern and pleasant to buy. The shelf, the self serve bases make the greatest brands look trivial. They enable small brands and private labels to have a good neighbourhood image. If we consider now the relation to the outlet with the help of attachment typologies, we notice that 54% of the consumers interviewed are attached, 8 % specific and 38% detached.
If now we analyse, keeping the main consumption groups, the behaviour to clients as far as brands and private labels go, we note that it is the attached client If now we analyse, keeping main
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consumption groups, the behaviour to clients as far as brands and private labels go, we note that it is the attached client who is the most favourable and the most likely to buy private labels purchase. The more the clients are attached to the store, the better is their attitude towards private labels. Once more, we realise that stores basics clients appear as being the biggest consumers of private labels.
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The typology of consumer behaviours in regard to national brands brings along very different opinions when it comes to purchasing behaviours of private labels. Yet even notorietists favourable to national brands (41% refuse to purchase private labels) say they buy private labels in a rather small number of product groups.
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The more attached consumers are to their outlet, the more favourable their purchasing behaviour to private labels and the higher the number of groups in which they say they buy private labels.
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Basic clients who primarily buy for their daily needs in their store say they buy the most private labels in a wide choice of product groups.
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THE PRIVATE LABEL IN THE NINETIES

Whereas the free product can be considered a revolution, the private label as we know it in the middle of the eighties is only a consequent evolution to the coming of a series of evolutions. At first, this private label of the eighties is going to be a reaction of the retailing industry. They are fighting products. Retailers must retain their margins, what they have won. In fact, at this time, the client is not the object of strategic developments. Retailers fight against manufacturers, against their merchandising expansionism and defend themselves from other retailers. To promote the private label, they rely on a margin compensation merchandising. The positioning of the products is tied to the price differential in regard to national brands. Products come out in every potential product family. The problem is more related to the supply sources than to the client satisfaction. Gradually though, things are going to change. From an economic state we are going to move on to a psychological state. Certain retailers will start to worry about the private label / client relationship. Others will try to launch new products under their name and this way innovates before manufacturers do, that is to say anticipate the great national brands' propositions. The positioning of the private label is no longer going to be done in comparison with national brands but according to the clients' expectations. We will move from tactical merchandising which aimed at margin compensation to strategic merchandising, that is to say the one which helps entrance the product grip on the client. The role of the product will confirm the positioning of the brand name. Soon consumers will consider certain private labels as great brands. But it is especially at the level of the role given to the client that the private label is going to benefit the most. At the start of the eighties, the mix realists buy private labels at the end of the month. It almost is something they're
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ashamed of. At the start of the nineties, the private label is going to give the client a role. The one who buys this type of product wants save money. He is a smart and chooses the clever solution to take advantage of life, feel his family, and make his friends happy. The private label is no longer to be hidden. In some cases it becomes a must. The Carrefour chain in France will give a new status to its private label. Making its free products disappear, this supermarket chain launched a large campaign of the so called united products for its clients. 300 clients are tried, criticised, controlled by consumers. The bad products are taken out of shelves. The good products are displayed. Within a few months, Carrefour sets its brand in, gives its products a status, gets the consumer committed, gives him a role and shows the way to the private label.
A new generation of brands, the private label, emerges from what used to be a fighting product. The traditional system of private label creation consists of creating the product focusing on the economical choice of the families, the choice of the references of the great product brands, then of making it, heeding the list of costs to yield a good margin and finally of displaying the product on the shelf after having found a good packaging, price and promotion to achieve a good brand
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merchandising.
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This system is replaced by the new private label system creation whose goal is to first choose the advantage for the client by understanding the given advantage, by choosing the brand, b y defining a real consumer benefit. Then this system is to make this advantage real by defining the product and the different items which come with it to finally communicate the advantage through a packaging message (a message that gives the consumer a role) a strategic merchandising, advertising and a promotion related to the brand name.
THE DIFFERENT TYPES OF PRIVATE LABELS
Depending on the products sold, the kinds of outlets, the ways the brand names are organised; there are four main types of private labels in this third generation.
The effective private labels: Many retailers around the world chose to name the products they make themselves or that
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they have made by a third party. If we look back, there are Felix Potin, Casino, Coop, Carrefour, Delhaize in France, GB in Belgium, Albert Heijn in Holland, Sainsbury in England, Migros in Switzerland, Safeway in the U.S., Kroger etc... To promote these products retailers use two kinds of strategies of packaging. Some proceed from a so called horizontal strategy which calls for a same packaging for all the products of the brand name, with the same colours, the same patterns, and the same uniform design. It is a desire to clearly assert the presence of the private label and this for all kinds of products (duty, desire, planned or settled products). Others, on the contrary, such as Carrefour, Safeway, or Albert Heijn chose a vertical packaging strategy. The goal is no longer to create a same packaging for all the products but to insert the product and the private label in the brands code for each product family. Each time, the brand name of the store is at the same place under the form of a real signature easily identifiable but not disturbing the packaging spirit developed by the market and the manufacturers as a whole. Using the effective private label brings synergy in terms of communication but also carries the disadvantage of the positioning of range prices with the leader brands of the market and the first prices. Finally, let's note that it is mainly in food retailing that can be seen this most often used effective private label strategy.
The range private label: Some food and non food retailers over the evolution of retailing have chosen not to put on the products manufactured by their plants or by others the name of their store but on the contrary to create real range names. The Marks & Spencer chain in England which seem to be the promoters of a new kind of retailing have called their products Saint Michael " and not Marks & Spencer. Prisunic in France developed for certain products the brand " Forza " and for others the brand "Kilt". Monoprix choose to call it preserves Beaumont and to keep an effective private label strategy for its nicer products with the help of the name Monoprix
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Gourmet. This private label strategy carries the advantage of being flexible if it is compared to the one previously described. At any time one can add or subtract a range private label whichever may be the problems of quality or mode that might occur in the life of a chain. Whereas in the case of the effective private labels it often is difficult to get the traffic clients interested because of the simple fact that they already are clients of another retailer who might have his own brands. In the case of range private labels, getting a traffic client interested becomes easier. He is not always aware of the relationship of this range brand of products and usually he is not surprised if the retailer chose a horizontal packaging strategy. When he shops for great brand, he is used to being confronted to umbrella sub-brand products. The range private labels can be found in both food retailing and household appliances or fashion retailing. Some department store, some large clothing stores proceed of such a strategy to promote their sportswear, underwear or baby clothes. Let's note that certain retailers don't mind (right or wrong) having part of their products under their brand name and the rest under a range private label. The Belgian retailer GB in its maxi GB uses the effective private label strategy for its food department and the range private label strategy for its textile.
The counter brand private labels: In this case the retailer acts as a manufacturer. He places brands which belong to him on the shelves and in the families and sub families of products. Naturally, these brands bear a different name every time. As far as packaging strategy goes, two main ideas prevail. Either the retailer resorts to packaging like manufacturers do and tries to give his products a packaging identity of their own, or on the contrary he tries to get as close as possible to the codes and brands of manufacturers not to stand out and to as
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much as possible to have the private label purchased by non planned, non settled purchasers or by switch settled purchasers. As far as flexibility is concerned, counter brand private labels enable in a same product family to insert private labels at different price levels and at different quality levels. Whereas the effective private label strategy only provides a price and quality positioning, whereas the range brand strategy pushes to completely review the range structure in the case of a price and quality evolution of the market, the counter brand private label strategy provides the retailer with any marketing solution. The flexibility counterpart is that often clients don't know that the brand they buy is a brand that belongs to the retailer. Recent studies conducted at the exit of outlets showed that for counter brands, only 10 % of the flow or traffic clients had understood the counter brand they had bought belonged to the retailer. In food retailing, it is the Auchan supermarkets in France and Alcampo in Spain which developed this strategy the most. The German discounters such as Aldi, Norma, Lidl developed this counter brand policy in most countries of the world. It is the strategy which created the most conflicts between manufacturers and retailers. In the mid eighties, everywhere in Europe and in the world, great brand names were suing retailers because the letters had totally japonized the great brands codes. Counter brand private label are often mixed up with what certain English retailers call in out . These in outs , whose interest in terms of promotion we will see later, correspond to private labels put on sale during a short time at the outlet that don't belong to the usual array of product that's on sale. Such manufacturers will launch a promotional action with a retailer by advertising for three weeks a small brand's cans of vegetable that is not famous and which will compete against a counter brand private label on the shelves. This small brand after a short time on the shelves will have little chance to be back. Whereas in the counter brand case the shopper will only take advantage of the promotion, he won't undergo the purchasing habits phenomenon that's so important for the flow clients.
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The in out products that is the small brands, fit more in the chapter of the promotion tools for the retailers exit marketing than as a real private label strategy.
The generic private labels: The Carrefour free products, the white products sold in the US in the seventies are part of the private label strategies which have been used. The retailer, by making products with a simplified packaging, tries to demonstrate to the shopper that he offers him an additional service by supplying him with products at the best price / quality ratio. Not only do they save money by eliminating the packaging which is expensive but the products are of fair and non sophisticated quality. The group GB in Belgium announced that its white products, that are its generic products, enabled to save 40 % in regard to national brands. These products were particularly popular and the results show that this white products campaign helped create lots of traffics. The problem with these private labels, these generic products or white products stems from the fact that the shoppers don't always understand the quality / price notion, even though studies conducted in the US show that clients are more sensitive to value than in Europe. Then, these generic brands which must be in a very interesting price range ( especially for food products ) must never be more expensive than counter brands which can be cheaper and even more interesting in terms of promise through their packaging. It was noticed in France that certain shoppers preferred to buy counter brand jam rather than free product jam only because the counter brand one was in a nice small container with a pleasant name whereas the generic jam was in a usual jar which symbolised restriction and poverty. Let's note this as far as pharmaceutical retailing goes, generic products represent in the US 20 % of the market whereas in Europe these products have trouble attracting buyers.
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THE QUALITY OF THE PRIVATE LABELS Besides its price, the private label product is defined by its quality whereas for brands the quality is carried only by the product and its marketing actions, for private labels the problem is totally different. All the studies on this matter show that the quality of a private label is determined by three components: - the generic quality - the essential quality - the reciprocal quality
Generic quality: When it is an effective brand, the private label's quality is more or less appreciated depending on the quality image of the store. For the shopper, how clean the store is, the favours done by the salesmen are all elements which contribute to and define a quality level which melts in the quality image of the product. In food retailing, it is not rare to see that the quality of certain private label products is thought to be poor just because the fish, fruit and meat departments of the store were not of high enough quality standards. It seems like the shoppers, when looking for information, decided that a retailer whose fresh products were below quality standards was unable to show rigor in the choice of his suppliers, in the management of his store, which ultimately prevents him from providing the shopper with decent products. What's true for food products is also true for other products. A
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badly lit store, again with outdated display stands does not look like it cat sell quality textile, fashionable underwear or efficient cleaning products. Reciprocal quality: In general, shoppers are not customers who only buy private labels or on the contrary totally opposed to this system. Over time, gradually, for various reasons, such as curiosity, lack of brands, promotions, good prices, customers have tried new products and assessed the overall quality of private label products. This trial / error process built a quality image which takes into account both positive trials and negative effects. For instance, at the start of the eighties, many food retailers were mistaken when trying to launch detergents whose quantity of active product was not sufficient to satisfy the clientele. Not only this product get stopped selling under private labels but many brands names lost the chance to sell other products of their private label through this phenomenon of reciprocal quality. Often, for price reasons, to be much differentiated from national brands, certain retailers jeopardized the success of their private label by heavily penalising the image of other perfectly interesting products whose quality was sufficient for the consumer. Even if we stick to a counter brand policy, even if in a range private label policy or in an effective private label policy we choose a vertical packaging and positioning policy, one has to be aware of the fact that the reciprocal quality of the products offered by a retailer takes on a very particular meaning for the client of the outlet. Essential quality: The essential quality is defined by the conscience granted to the follow up of the level of quality. For the shoppers, nothing is worse than getting used to a product and realise that its quality varies in time. It is for him a given opportunity to doubt, to question his purchasing program and to be completely destabilised up to the point where he will never buy another private label. The private label must be constant in its quality, either for high purchasing frequency products or on the contrary low purchasing frequency ones. As far as wine or food go, all these products where quality plays an important role, the
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absence of follow up is even more to be dread than a badly defined price, letting show a too big difference with competitors. As much as the shopper hates it when the organisation of the shelves and the place of the products is altered, he does not like to see the quality of the private label products change. Usually, it is the housekeeper who buys the products which will be consumed by the members of the family. Nothing is more frustrating for her than having to play the bad role and look careless as far as the quality of the products she buys goes. The amalgam principle: The clients of a same zone and for a same kind of retailing know the prevailing outlets which are in their town or their distribution zone. Since they have been going from outlet to outlet, they have built a definite idea of the quality of private labels and this independently from the stores which sell them. Therefore, there is for the client a global generic image of brand names, image from which he will position the quality of the private labels of his regular outlet. The notion of quality then is no longer tied only to the product, to the way the outlet is kept, the trial / error phenomenon. It is also defined by the quality image expressed by all the outlets. If a retailer with his effective private label lowers his quality level, it is the retailers as a whole who will see that their own brands are not as well considered as they used to. It is interesting to note that there is not in any country of the world a union of retailers aiming at defending a certain level of quality standard. It is something missing because obviously retailers who are in trouble and who want to become aggressive price wise are less regarding of the quality of their products. By doing so, they threaten the survival of their colleagues and the penetration itself of their private labels on the market. Consumer associations watch very thoroughly the prices that are tagged by retailers, the respect of a healthy price competition. Unfortunately these associations worry little about the quality distortions which can impede the quality and savings goals of the retailers. The notions of active quality and passive quality: The studies of purchasing acts that occur in the aisles of self-serve
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outlets or in outlets where salesmen help the client show that a same shopper can have totally different behaviours when it comes to the quality of the product he plans to buy. This way, the notion of quality does not look like a norm but more like the answer to a reassurance need.
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Active quality: In the case of the purchase of some products, things occur as if the buyer were worried and needed to reassure himself with a quality testimony, a brand, a guaranty or a label testimony. If a client wants to purchase a pull over in a food supermarket, it will be enough to make him anxious, to make him ask the salesman if it fits, if the product will not shrink or its colour won't fade away. If the same shopper wants to buy oil in France, he will again ask for reassurance, look for the product or the brand which will stand for quality and guarantee him that at high temperatures it will stay good and won't be another cancerous agent. As soon as a client deals with a committing product, he expresses a formal quality reassurance request. Passive quality: This same buyer behaves in a totally different way when it comes to other products which are not committing. He buys sugar without paying attention, underwear without looking at the brand, or batteries he needs for his radio the same way. All these products are they duty, desire or power products, if they are not committing do not fit in a quality system. The shopper is convinced that today these green peas or green beans cans, these tee shirts can only be products whose quality level is always acceptable. Whether we talk about manufactured goods or fresh products, quality is a passive element. It is clear that private labels have more chances to meet with success when they are passive quality products than when they are active quality ones. For a private label to impose itself in an active quality market, it is necessary for the brand name to intervene as quality guarantor. Under these conditions, the notions of generic quality, essential quality and reciprocal quality play a crucial role. In England, Sainsbury can easily sell under the effective private label all the products of active quality. Migros in Switzerland, Albert Heijn in Holland, Carrefour and Casino in France have the same capacity. Marks & Spencer can easily sell fresh produce, the most sophisticated and most delicate sandwiches under its private label Saint Michael, which is a phenomenon almost unique in the world.
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The exception of the standing products: Outside the quality problem, the standing products issue often stands. It can be noticed that some products such as alcohol, champagne, certain perfumes don't sell as well when they bear a retailer's name as when they are expressed as counter brands. All the studies conducted on that particular show, on the majority, the client when he goes back home does not wish to shock that the whisky or the wine he offers comes from a retailer, except if that particular retailer has legitimacy, a source of effect and an image such that he becomes more a specific retailer (like Fauchon in France) than a classic retailer.
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It is the same phenomenon that is found for certain clothing goods or appliances products where the consumer wants to show people something else than a quality level or a price. A part from the sales of Sainsbury on Champagne under its store brand name, practice shows that for the so called standing products, the private label only has few chances to succeed.
STRATEGY FOR PRIVATE LABELS The evolution of consumers with regard to brands pointed out in relative preference markets and in without preference markets the importance of merchandising, that is the ease with which the retailer could drive his client toward such or such brand name, C , M, G brand etc...In other words, it is clear that in relative preference markets and without preference markets the retailer masters the value retailing and numerical retailing of these private labels and this no matter what their form is. Nevertheless, this quality is not true for all the products, (especially in absolute preference markets) and does not always correspond to identical objectives. Now let's consider the matrix formed by the switch / skip vertical axis and the brand market / merchandising market horizontal axis (see scheme on following page).
Analysis of the first quadrant : It is the quadrant where the brands of manufacturers are in absolute preference markets. Here we find very few customers in relative preference markets and only a few consumers without preference. If they are high purchasing frequency products, one can be sure that they will be considered by clients as reference products and that their price will be well known and will be part of a comparison policy which will cause in some cases the setting off os real price wars. Retailers will be very tempted to sell these lesser margin products and overall, the profitability drawn from these products won't be excellent. These brands are going to considerably hamper the distribution. The retailer will launch brand names to compensate on consumers or clients with no reference, the losses or no gains noticed on clients or consumers who demand a brand.
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The retailer must be make real brand compensations. The study conducted on the evolution of the behaviours of the client and the
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consumer will enable, at a given time to speed up, if required, the move aiming at having the absolute preference markets evolve to ward relative preference ones. On the shelves, retailers will cautiously place these major products at places where the client will have to make an effort to take them. Buyers at wholesale prices will develop a strategy of negotiation vies a vis the companies processing these brands which will be designed to try to get discounts not on these brands but on the other brands of the manufacturer which won't necessarily be in this quadrant. We can see here the limit of the umbrella brands for manufacturers. If the retailer through his brand name communication policy succeeds in switching from these labels to private labels, we will notice that in these absolute preference markets, little by little, the private label will have also the strong brand status and enable the retailer to impose his brand name image. Sainsbrury and Marks and Spencer have met with success in this type of absolute preference market. Albert Heinj in Holland also seems to have succeded. It is certainly Aldi with its Ebrecht Coffee which shows best the level at which a retailer can get to when he was a particular relationship whis his clients.
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Brand of the second quadrant : Here we find products with a strong preference for the consumer but which can cause an important switch. They are relative preference markets in which we find a significant percentage of clients in absolute preference and a smaller percentage with no preference. For the consumer who can build a real brand image, they are great opportunity markets. With a neighbouring and insertion strategy of the private label at the shelf, one can little by little bring flow clients to take into account the private label as far as their switch possibility goes. If manufacturers don't have the wisdom of improving their top of mind, the notoriety of their brand and to try to turn the switch consumers into skip ones, there are many chances that strong retailers succeed in imposing their products in a systematic manner and with success. Nevertheless, the retailer should not neglect the level of notoriety of the brands he is trying to wipe out of his shelves. He must understand that his strategy is an insertion strategy. He should not be triumphalist in his merchandising. He must gradually get his clients used to finding the products. Let's note that in the countries where TV ads are available to retailers like in England, Holland or Belgium, it's in this second quadrant that private labels position themselves rather well and above all get across a lasting brand name image.
Products of the third quadrant : Here the brands are less dominant. The clients accept to change brands even if they have a preference. It is the ideal market for private labels, C Ms. By trying to make room on the shelves and by not making the mistake of eliminating the few products consumers with an absolute preference are interested in, the retailer can reach good levels in terms of sales volume. Here one must enhance his product grip, market share and try to have in any case as much facing as possible for private labels. The effective private label like the ones of Carrefour, Albert Heinj, Casino, Safeway or Sainsbury can be successful only if the power of the brand name is sufficiently accepted by the clients and especially the non clients. In flow and traffic outlets, it is Auchan like systems with CM which are the more likely to enable non clients of the brand name to purchase the analysis of the different retailers seems to show that today we tend to lean on this third quadrant especially on CMs or on small brands.
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Discounters such as Leclerc, Intermarche, Aldi have understood this possibility and have chosen to create a clientele loyalty for private labels, preferring to have a strategy of substitution of national brands or effective private labels for private labels called CMs. It is also in this sector of the matrix that we encounter the most in out products. The display of products, their promotion can help achieving good levels of sales rotation.
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Products of the fourth quadrant : Here we are confronted to markets in which we still find some consumers who are brand preference consumers, that is to say who consider brands as strong. There also is a non neglected part of consumers who no longer have any preference for products. It is the ideal place for the private label which bears the name of the brand name. With the help of mixed shelves on which there are strong brands and private labels, it is going possible to create a real neighbourhood and replacement strategy for the private label. Experience shows that the closer the private label is to strong brands, the more likely it is to see no preference consumers choose those products and neglect the strong brands for simple reasons such as lower prices or easy access to a product. A good example is the one of the instant chocolate mixes. On this market, the market merchandising corresponds to 45% of the sales whereas the branded market corresponds to 55% of the sales with only 35% of the sales related to the skip notion. The retailer can insert his product, his brand quite easily in the market merchandising although he has to respect Nesquick which still has 50% of the skip clients. If, on the contrary, one compares this market to the standard quality pasta one, he will notice that the market merchandising is the same : 55% of the sales and the branded market 45% with only 20% which can be ranked as skip.
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Although in the 4th quadrant, the 2 markets (omitting small strategic differences) can be worked the same way. While in the 3rd quadrant the volume is what mattered, in the 4th one we will try to get a margin compensation through a better harmonization of the shelf in terms of brand display.
POSITIONING OF THE PRIVATE LABEL Product manufacturers are particular in that they position their products in relation to well defined targets. It is one of the bases of the marketing action; particularly of the product managers. In the retailing context, this notion of positioning does not mean the same thing at all. When we look at brand name stores which propose effective brand names, the assortment variety is such that under a same brand name, we cover totally different products which address different targets. Therefore, the positioning can be considered only with regard to national brands and this, be they strong, average or transparent brands. In the case of product mix retailer's labels, one can approach the notion of positioning by taking into account the client targets but practice shows that it is a difficult operation especially in countries where TV communication is not a available to retailers. Let's stress that for effective private labels and product mix retailer's labels, on can only have a much globalised communication. It's not possible there to copy the action of the manufacturers. Only the case of the counter brand retailer's labels would allow approaching the issue of the positioning of the private labels as product manufacturers do. Yet, here again, is more difficult since one cannot dispose of an advertising budget strong enough to support each product. As a result, the positioning of the private label implies a different approach which will essentially rely on the one hand on the relationship to other manufacturers and on the hand on the relationship to the brand name image and the brand it represents. Positioning the private label looks more like what we call the operation of placement of the product in the width and depth of assortment with regard to manufacturers banks on the one hand and to the first prices of the market or in and outs that we previously described.
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Having by definition the best possible VD and ND, the real problem is to know what merchandising strategy, what price strategy must be chosen for each private label product, depending on the quadrant in which we are in the skip / switch, brand / market, merchandising / market relation.
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CHAPTER 7
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Brand Name Communication
The shopper or purchaser client does not perceive anoutlet like the consumer perceives a product. The flow shopper needs global reassurance from the outlet he goes to regularly. He must be sure that in terms of prices, quality, choice and service, his outlet guarantees him what other competitor outlets could without the same access facilities though. He cares to know if the difference proclaimed by other brand name stores is worth a trip and if really he is not being hypnotized by his habit reflexes, by his relationship to the outlet, by the moral confort he gets from shopping where he is used to, what he has been testing for many years. This flow shopper demanded by numerous communication actions wants to be both secured by his outlet and convinced that other outlets which attract him by promotions and special offers are indeed honest, credible and are worth disregarding one's principles of loyalty. Before changing, before applying the driving constraint relation, the discovering of another world with regard to an appealing reward, the flow shopper wants to be convinced that the transmitter, here the other outlet, is really credible and trustworthy. The traffic shopper, the one for instance who is a regular client of food outlets and who shops for back to school, does the Christmas shopping, looks for a committing present for the family, worries about reading all the promotions that are dropped in this mailbox. He manages to know where to go, who tells the truth, who lies about their promotions, who he must really believe. His trip to the store, his time consumption will they be rewarded by a choice, a price, a quality or a service ? Will he be able, since he bothered to drive, to buy the rest of what he needs as far as food products go ? Won't he face the classic trick of the loss island in an ocean of profits ?
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Do the purchases in a new outlet feel at ease ? Does he find purchasing comfort and pleasure he enjoys in his regular outlet ? If he just moved, if he comes from another part of the country, if he is on vacation, this purchaser who does not find his regular brand name store needs to build an opinion on what is his new brand name store, his new outlet to trust the declarations that are made on after sales service, to understand the choices he is offered and accept the truth fullness of the prices, the discounts and the promotions he is proposed. Finally, when the client buys equipment such as house hold appliances, stereos, clothes, when after months of deliberating he gets to the purchase itself, he needs to be even more secured that he made the right choice of outlet and product. When brands of the name of the retailer are going to be proposed to him, is the purchaser going to understand that he is offered at a lower price a quality equivalent to the one of the great national brands or other private labels bought in other brand name stores.
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Main perception of the brand name store
A retailer's store's brand name is perceived by clients and non clients through four components : - the legitimacy - the source effect - the top of mind - the image
Legitimacy corresponds to the notion of credibility of the being. When a traffic shopper is the object of a promotional after through a brochure, radio ad, press ad or TVad, he first needs to be convinced that the transmitter is really legitimate, that is to say that a majority of clients knows he is part of outlets which might sell the products which make up the promotion.
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In countries where hypermarkets had a lot of success (France, Spain, Argentina, Brazil) one sees for instance that the Carrefour brand name has the legitimacy of the hypermarket whereas other local brand names don't have this credibility. Not to say that in these countries, 5.000 to 10.000 m2 outlets resembling Carrefour outlets are not considered hypermarkets it is true that they don't have the same power, the same capacity to sell everything under a same roof (that's how the French supermarkets are defined). A furniture and house equipment brand name can offer interesting promotions in terms of video and household appliances. Yet these promotions will be meaning full only if the shopper is convinced that the brand name has a legitimacy as far as this kind of products or market goes. For instance in France there are many household appliances specialists but the most legitimate name, the one everybody agrees to say it is authentic remains Darty. In Spain, the brand name of the most legitimate department store remains the famous Corte Ingles. The real discounters in Germany, Belgium, and France, those that are legitimate are the German discounters, particularly Aldi. Therefore, legitimacy is a component which defines the credibility not of an outlet but of the territory on which it wants to place itself. All the outlets of a same economic sector of a same kind or same type are going to be compared in terms of legitimacy, of reference. In France, all the large hardware outlets will be compared to the Castorama brand name. They might be more interesting, more specialized in a field, better in the gardening or decoration department, it remains that the reference, the legitimacy of a large hardware outlet will always be dependent on Castorama. In Germany, as far as department stores go, the legitimacy of a store will always be relative to the Kaufauf brand name. For Hamburger retailing, Mc Donalds is the reference even if in the given country, it is another brand name which dominates like "Quick" in Belgium of the GB Group which is largely dominant. The existence of the component of legitimacy must not be confused with the one of the image components that we will see later. There are the real hamburger restaurants, the real hypermarkets, the real department stores, the real travel agencies, there are copies and finally there are the fake hypermarkets, the false stores, the false hamburger restaurants, the false discounters. In all the European countries, to fight the Aldi and Norma real hard discounters, many brand name stores have tried to launch formulas comparable to these ones, but few have gotten the credibility of the public that some expected from the promotions and prices they developed.
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The legitimacy of an outlet plays a crucial role in the perception of the brand name of the store. As soon as the client doubts the authenticity of the hardware store, the hypermarket, the discounter or the department store, he accepts with less ease the offers of the store. When he is told about such brand name or such outlet, he unscrambles the information he is given by going back to the level of legitimacy he grants the outlet or the brand name. In the analysis of the perception of outlets and brand names, it is necessary to set up research procedures enabling to compare the legitimacy of the brand names compared. Legitimacy cannot be reached by a mere advertising action. The problem is more complete and deeper. Some brand names have reached their legitimacy because they were precursors of the system. We already quoted Carrefour for hypermarkets, Mc Donalds for hamburgers, we would also quote Darty for household appliances, Carpet Land, Kentucky fried chicken, Migros etc... The innovation, invention bonus is a legitimacy guarantee provided that of course, overtime, the brand name correspondent to the innovation continues to be dominant, a precursor and far ahead of those who want to copy it. Some other brand names reach their legitimacy no longer because they innovated but because overtime they become the reference. Casino did not invent cafeterias. Yet in France, it is the brand name which is the most legitimate as far as this type of service goes. Sainsbury did not invent the supermarket but the brand name has the legitimacy for this kind of retailing. To gain legitimacy, one must in the eyes of the public, appear as the norms' guaranty, as the marker of the laws which define this retail. Auchan did not invent the hypermarket but its rigor in the definition itself of outlets helped it acquire a very high degree of legitimacy which is not the case for other hypermarket brand names in France. Therefore, 2 kinds of legitimacy emerge : - the legitimacy granted, which is the consequence of a successful innovation. - the legitimacy acquired which is obtained through the accumulation over time of the acknowledgement by clients that the actions of the outlet and the brand name are consistent with their declarations. It is surely in the political marketing field that this legitimacy notion is the most understandable. Everybody has in mind in his country political figures that run for different elections, different responsibilities at the city, state and country levels. Certain perfectly able ministers don't seem in the eyes of the voters capable of fulfilling certain missions. And everybody will be surprised when the latter, health and finance minister, becomes prime minister.
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To be prime minister, one needs all the voters of any kind, any opinion to accept that the appointed person have the legitimacy not to defend a party but to defend the government and the country. It is the same in the retailing field. The prices, products, the personnel and the surface areas are not enough to become an authentic hardware, furniture or clothing outlet or simply a cosmetics store. The pharmacist and the optician are always legitimate retailers since their status is established by a law, a degree and a clause number. To improve one's legitimacy and not lose the one that has been acquired are 2 attitudes which correspond before all to an entrepreneurship behaviour. It is the perception of the outlet which will matter. The staff, the products, the way the client will be welcomed will develop a rumour which will turn itself into a vocal communication. It is because the flow and traffic shopper guarantees his friends, those he knows that an outlet is legitimate that the credibility of a store is created. One can always in a communication, in an ad, get people informed to obtain a legitimacy but this information must necessarily be carried by the clients and non clients of the brand name store. Legitimacy strategies always go through opinion centres. Studies conducted on the implantation of the Ali stores in Belgium and in France clearly show that it is the neighbourhood opinion centers, that is to say the housekeepers who are important in their village, who gave this brand name store its real discounter legitimacy. It raises the communication problem of the launching of a brand name in a new distribution zone. The newly arrived store only has a few days to attract these opinion centres and prove it is a real supermarket, a real leisure store etc Because it does not impose itself, some will say that the new outlet in the region is only a copy of that already existed. It is all the more true when one wants to introduce a new system in a foreign country. Carrefour in Philadelphia might have been wrong not to assert its difference and hypermarket legitimacy through a striking action and its soft strategy can also explain the fact that the French type supermarkets have not yet found the success then deserve on the American market. The notion of legitimacy is very tied to the notion of fighting for survival of a brand name. When a system appears, creators fight to impose it to the market. The public knows this fight goes on and attends it as a spectator. It
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discusses chances of this new system. People make their own opinion. They try, touch, see. They like it, are disappointed or refuse it. Like wise, when a brand name can obtain legitimacy, it wages a war not on its competitors but on itself and its principles of action to show it respects dogmas, the basis of the system. A good example is given by the particularly positive evolution of the brand name of the Mercadona supermarkets in Spain; in a few years, this brand name became the supermarket reference in this country. Through a real service and quality effort, with the help of simple actions on clients, this chain is today what can be called a real supermarket. Everyday, clients are interviewed to know whether they are satisfied with the service, quality, welcome and the prices. These surveys are not a smoke curtain. They are studied by the store's staff and the flow shopper (since it is a semi flow outlet) can feel the positive evolution of the outlet, the successive corrections the improvement of quality and especially the attention paid to products such as the fruits, vegetable, the meat etc. The managers of Mercadona lead a real fight against themselves and don't want to kick back and wait. It has been the basis of the success of the branches and the Casino supermarkets in France where the daily fight against poor quality and poor service has wound up bestowing these essential flow and semi flow outlets a strong legitimacy. Mercadona in Spain, Casino in France, Sainsbury in England have worked up a legitimacy of supermarket not so much through their communication but through his fighting spirit to ward the service for the client. Apart from objective and comparable propositions like the price, the quality the variety, the client likes to know that the retailer, the store (its brand name) fight to keep their legitimacy through an altruistic, serious and legitimacy attitude.
The source effect : If the legitimacy of a brand name corresponds to the needs of reassurance in terms of authenticity of the retailer with regard to the system he represents, the source effect corresponds to the credibility of the words, the discourse, the expression in terms of the communication of an outlet. The shopper or purchaser receives signals he unscrambles and assesses according to the quality of the transmitter, that is to say the retailer. In other words, any message owes its credibility to the nature itself of the source which transmits it. This phenomenon of the source effect, which is not specific to the communication field in retailing, plays an essential role
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especially in all that corresponds to the actions launched to create traffic. To express him, the retailer must be different from his rivals as far as prices, the quality of the products sold, the variety, service and value of these promotions go. In this communication effort, he must first be credible so that his difference makes sense. If for instance, in the food retailing sector a retailer wants to conduct price operations, it is not enough to take a few reference products to display them in brochures, advertise them on the radio or in newspapers. He must be credible which means that he has a source effect in terms of prices. Such other retailer, still in food retailing, will want to sell the idea to his flow or traffic clients that he sells outstanding quality particularly in his fresh products. It won't be enough to display nice pictures of lettuce shot in the early morning light or symbolize the freshness of these carrots by using all the symbols related to the garden, the gardener and the rabbit running around in the country. If he does not have the source effect, credibility as far as freshness goes, he will have spent money to defend the idea that lettuce is green and that gardeners are nice people. Likewise, if a hardware store wants to demonstrate his width and depth of assortment, it can assert, proclaim it has more than 400 different wall papers and 53 different paint colours, his message will be heard only if he really has a source effect. The few examples in which we illustrated this source effect notion show that it is not enough to say, assert, repeat or pound in people's heads to be believed, it is necessary to develop a strategy to gain some source effect. The source effect actually corresponds to the communication territory bestowed by the client to the retailer. This semantic territory must not be conquered through assertion but through demonstration. One does not say he is a patriot, he proves it and shows it. One does not say he is cheaper, he proves it and shows it. Finally, one does not say he has a better service but proves it and shows it. To prove is to hold on no matter what. It is to take advantage of the obstacles, the incidents to show that one follows a strategy. To prove that one has a high level of after sales service is to accept as wall mart does in the US to rein in the spot any product bought in the store which does not satisfy the client.
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It is not only an information panel which claims "we want to serve you, we are united for you, we take care of you". It is not also guarantee slips with signatures which look like an hold peace treaty It is an every day commitment of all the managers, the hostesses and the president to accept that when the store engages in an after sales policy, it is the test the specific case and even the dishonesty of the client which enable to demonstrate to the rest of the flows and traffics the intentions of the company. To prove that the store has prices is not to display 200 or 300 prices in its assortment. It is to prove daily to the clients that the store is committed to this will and that it is shared by everyone. In Belgium, despite the presence of the hard discounters like Aldi, the Colruyt Company specialized in semi flow outlets such as the supermarkets has succeeded in gaining a predominant source effect in terms of prices. By installing a red phone for the client's use and by promising to lower its prices as soon as it would hear about a difference with its competitors, Colruyt proved it wanted to do everything possible to make credible its price message. Darty in France by promising to reimburse the difference and offer a bottle of Champagne if one could find cheaper elsewhere, managed to have the price legitimacy in the household appliances, stereo and radio fields. Let's stress that for Colruyt and Darty we are not talking about an advertising action. It is through the daily facts, the sharing spirit, the cohesion force of the companies' structure as a whole that the proof was given and that as a reward the source effect was granted by the clients. As far as quality goes, the example of the Casino branches and supermarkets is particularly proving. It is not by announcing a still that this brand name made its elf famous and known of the French customers as whole and most of the retailers worldwide. It is because everyday, observing the rules written by the founder Geoffroy Guichard, every one (cashiers hostesses, the outlet manager, the regional managers, the ware house managers) has been abscessed with quality. To make sure the products were fresh at a time when the cooling devices were not what they are today, one of those who gave its momentum to the brand name, Pierre Guichard had decided that the stocking or inventories rooms would not be as vast as the ones of their competitors as to be compelled to bring in daily the right quantity of products, fruits and vegetable which suited the clientele. By imposing to itself this non stocking constraint, from one day to the other, of the fruits and vegetable, by accepting not to take the easy way out, the company gave a proof of its will. Adopting the "retail is detail" motto, there was no manager, and this up to the highest
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level, who did not wear on his jacket the pin which enabled to sting apricots to know if they had come to maturity to be edible. The ensuing quality source effect was not the consequence of a model but of a doctrine. This doctrine had to be followed all the time even when, for obvious weather reasons, any kind of incident could hamper the delivery of the goods to the outlet. Never mind if the oranges froze in Spain or in Morocco, the fruits and vegetable purchasers had anticipated these natural hardship and found in Greece or elsewhere the quality which corresponded to their commitment. In Valence, Spain, for the pros, a good orange is called a "Casino"; the proof can be seen, touched and is communicated orally. Clients compare, discuss the promises made by brand name stores. Because it had forgotten this basic principle, the Felix Potin group in Paris lost in a few years every source effect as far as prices, choice and quality go. Despite advertising campaigns and promising slogans, the personnel and the clients knew what was really occurring in the company and various models set up to stop its demise never could make up for the lack of doctrine and commitment, the only motors of the proof of a will and strategy in terms of prices, quality and service. To prove is to make the transmitter exist in his territory of communication especially in times of crisis, during hardships. Steinberg in Canada dared wage a price war against Provigo. The fight was quickly settled. Steinberg did not possess the price source effect but above all Provigo in this difficult period has know now to reassure its clients and benefit from its brand name legitimacy and its price source effect which had been earned long ago through many hardships, aggressions and counter attacks by competitors. The proof carried orally yet is not sufficient to create a source effect. It is the necessary condition. Now it's time to demonstrate. The demonstration is totally different. It is no longer time to lean on a doctrine and combine it depending on what happens. Now the store must communicate to convince. The demonstration must provoke the client's conviction especially if he is shopper. To demonstrate, convince is to place oneself in a fight for the client. At first the clients will often attend his fight in a neutral manner. They will discover the stakes, the enemies of the brand name as opposed to the competitors. Little by little, over time, they will be convinced, will take sides and become partisans.
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In France, the Leclerc conglomerate has been giving for a few years the proof it was cheaper and has demonstrated its will to fight so that consumers have better prices. Not only did Leclerc take on the book, gas, pharmacy monopolies but the managers of this chain have each time waged war to defend the rights of its clients and of the non clients of the brand name as far as low prices are concerned. The enemies were clearly designated the monopolies were just quoted, the laws, the lobbies, the competitors, all those who according to Edward Leclerc have an interest in uniting to make like more expensive. By proposing scholarships to its employees, Wallmart gave a clear indication of its will to respect, of its will to serve. There is no wall mart outlet which does not show behind its cashiers the name, the photo of those who can go to college thanks to the company. Daily wall mart demonstrates its desire to take care of people. More than an inside management principle it is the demonstration of the credibility of the outlet's language. Wall Mart has the service source effect of the commitment for its clients. It proves it in its outlets and demonstrates it for example by fighting to give the priority to the products made by the American companies and by fighting so that jobs be saved every where the company is capable of doing so. In the press, in every store where it is possible to do it, Wall Mart announces its fight. The FNAC, which sells cameras, books and more generally all the products which favour individual freedom can easily talk about choice, price, service and quality. This brand name fought a war to enrich the companies' executive, which classic retailers or traditional retailers were not doing. It is this FNAC (National generation of the executives purchases in English) which batted as early as (965 to introduce the term culture in the daily use of products. One can remember conference, auditoriums, long term actions launched by the founders Andr Essel and Max Thret whose history is memorable, glorious and epic. One had been body guard of Trotsky, the other one of the managers of the socialist youths. It is because the FNAC was the first to have Marshall MC Luhan give a speech in Paris in a half empty room that today the communication territory of the brand name is a wide culture. It is because it fought so that everybody may have cheaper cameras at a time when these products really started to get a wide public interest that today the brand name can easily talk about prices. If the source effect is earned, it can also be lost. Les Nouvelles Galeries in France could talk about fashion and could announce that they were the most innovative, the Parisian reference in the provinces. Today this source effect does not have the same intensity and despite pleasant ads, the brand name's territory according to studies conducted seems to be shrinking.
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The Galeries Lafayette can put forward that they express novelty, the message is credible because the brand name succeeded in picking up a solid source effect over time. The La Samaritaine department stored a lot on their image but the question was :"What is their source effect" ?
The top of mind : This notion in retailing takes on a very particular meaning that must not be mixed up with the notions of spontaneous or suggested notoriety used by manufacturers when promoting their products. The top of mind in the retailing field simply means the relationship between the brand name and its preference parking in someone's mind for a given purchase. In other words, the top of mind of a brand name means for the client "whom do I first think of, which brand name am I going to choose first to find such or such product, service or brand ?" It is not really a preference between various brand name stores, between various outlets. The top of mind must rather be considered as the ranking of the coming up to ones mind for the purchase of a product. As far as household purchases go, such as furniture, household appliances equipment, this top of mind notion plays an important role in the frequenting of outlets. All the experiences show indeed that for certain kinds of purchases, the shoppers like to do a tour of several outlets in a same distribution zone. What is important is the order in which this tour is done. The shopper first thinks of an outlet, he goes there, looks at the products, gets information, then goes to a second outlet, compares the information he is given there, the prices tagged etc. In some cases, he can look for a confirmation in a 3rd outlet. When one knows for instance that some clients to buy a stereo mature their purchase for 6 month, one understands the importance of the top of mind and the ranking of the outlet's in the minds of clients. Besides the impact of this ranking, the top of mind also is the sign of what he could call the freshness of authority. In when purchasing certain clothes or standing products, people like to go where things happen. Certain restaurants have at a given moment in time a very high level of top of mind. People know that it is where things happen, that news are made. The top of mind is reached naturally through a presence and an advertising pressure tied to a notion of current events. In France, furniture retailers such as BUT and CONFORAMA bade up their
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communication strategies with a development will of a strategy of presence in the mind on all the potential clients. The sponsorship of certain test, sponsoring in general are part of the means of ten used to create the top of mind. Let's underline that the top of mind component is naturally indissociable from the one previously defined at the legitimacy and source effect levels. A brand name which would develop its top of mind would be very present in the consumers minds, yet this necessary condition would not be sufficient. On the contrary, a brand name which, in its field, would have legitimacy and a good source effect would be likely to be forgotten or caught up with by competitors because it did not work enough on its top of mind . One understands that at the strategy and communication levels, this element could play a crucial role.
The image : When a shopper, client or non client of a brand name defines the image of this outlet in an interview, he places his speech at 2 levels: the image perception and the determinant image. He expresses his point of view with the help of 2 notions : the mechanisms of purchase perception and the store functions. The image perception expresses the ranking of the brand name in terms of relative power. Here, the shopper forgets about his experience. He only refers to the information he receives and which helps him rank the brand name as a great or small brand name. Things happen as if the clients and non clients had a non effective global perception tied to the power of the company which is represented by the brand name. Even if in his town, his region the brand name is not implanted, and that as a result the shopper cannot frequent it and could never do so (on vacation for instance) he will have in mind this notion of ranking power of the brand name. It is always the information tied to corporate advertising, the sponsoring and the financial communication which will have create this ranking and this notion of power. We are not dealing here with brand name legitimacy as we previously saw it but with ranking all the brand names first in the gotha of the great brands then in the multitude of brand names which can be dynamic, pleasant, nice and which still remain second class brand names that can nevertheless be frequented.
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This very global image perception is particularly interesting when the brand name is going to want to implant itself in a town where it is not yet known. We notice that the public is always satisfied to see a great brand name arrive and often disappointed to known that it is a second rank brand name which is going to open near them. There certainly is a bonus to the image perception during an implantation. Yet, this image perception is not clear enough to be used at the brand name tactics and strategies level. We cannot be content with the sketch, the contour given by the shoppers during image studies. If one wants to position himself with respect to a competitor, define a policy of strong sides and weaknesses, he must rely on other more concrete and more solid information. The determinant page : If the shoppers have a global image of brand names, they also have a particularly clear of the outlets they frequently visit in their town or state. It no longer concerns global information but the expression of something felt, something lived. This determinant image is first expressed through purchase perception in food hypermarkets. For instance : The mechanisms of purchase perception in food hypermarkets The client shopper or non client perceives three kinds of purchases, they are : - the daily purchases - the choice purchases - the promotion purchases
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Daily purchases correspond to the products the housekeeper needs for the survival of her family : (grocery products, beverages, electric batteries, fruit and vegetable, meat etc... As a matter of fact, it concerns the active or passive quality duty or desire products. The client or non client shoppers are going to have a price image of the outlet, a quality image and a service image. It concerns a first level of perception essentially tied to daily purchases. This very particular image does not express itself in the absolute. It is a compared image. The price image of the given outlet will be compared for daily purchases with the image of other hypermarkets, other supermarkets etc... The same thing will be done with the service, the welcome, the choice. Through his daily purchases, the shopper actually expresses compared images which give birth to the constitution of a real profile image. The shopper, depending on whether he is flow or traffic, will have more or less clear compared images and this naturally with respect to his knowledge and frequenting of other outlets. When a flow shopper of an outlet is attracted by a traffic action in another supermarket he will discover prices, the choice, the quality, the service and will take in information which will enable him to have a compared image of this outlet with respect to others. It is clear that a study of determinant images of outlets with an image study of the daily purchases, that is with the making of a compared profile of the price images, the quality, the choice, the service first with the clients of the outlet, then with the non clients and in any case, after having located the samples of the various well known purchasing circuits to have a clear idea of the image profiles reached that way. It must be done by establishing the relationship with other outlets in which the constraint is more or less easy and the prices more or less high. When a shopper wishes to buy a fridge, a stereo, a land mower, he worries in his purchasing circuit about finding outlets which offer him first a satisfying choice possibility and choice width. This way the shopper in a same distribution zone will compare the choice the stereo department supply him the choice a stereo specialist provides him with. Likewise he will compare the assortment width a supermarket offers him with the gardening specialists, other supermarkets when he wants to buy a lawn mover or any other equipment for his house or garden.
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In his purchase perception mechanism, the shopper here no longer takes into account the daily purchases we previously saw. He first compares the outlets with regard to their degree of specialization and also their capacity to bring him what he needs. We are going to find here another type of profile image than the one previously described.
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Let's underline here a crucial point for the analysis of the image profiles. In his daily purchases, the shopper is going to express his opinion on the price, the quality, the choice, the service in relation with the constraint of going to the outlet and the reward that the store gives him through its prices, quality and service. As far as choice purchases go, this constraint reward notion won't take on the same meaning. Where as when buying his basic food the shopper "counts his foot steps", the distance no longer matters to him when he is out to purchase a stereo, furniture or a mere shirt. What matters is to find what is looked for. Nothing is more for a shopper than crossing town to buy a product and not finding it. In the image profile of the choice purchases, we will see appear as far as service goes, notions corresponding to the study of products, to the presence of certain brands etc. The hypermarket is a large as a big supplier of promotions and a real permanent transmitter of traffic. Here again, the client and non client shoppers are going to have an image of the quality of the promotions supplied by the given hypermarket in comparison to what other hypermarkets, other specialists do and especially in relation to the satisfactions and dissatisfactions met during various traffic actions. Here the shopper no longer thinks in terms of price, quality, choice or service. He considers the outlet as being certain kinds of products a real promotion specialist or on the contrary only an outlet which so called outstanding bargains cannot be trusted. We will get here another type of image profile which is going to take into account the different types of actions which can be done. Such hypermarket will be considered positive for his anniversaries, negative for his sales, interesting for every department operations, etc... The determinant image of a brand name therefore seems more complex, more concrete than the image perception. It is clear that depending on whether one will be an attached or a detached client, one will be more or less forgiving in his judgment on the criteria dealing with daily purchases, choice purchases or promotion purchases. Whereas legitimacy, the source effect and the top of mind are elements one can appreciate as such, the perception and determinant images must be regarded with much caution. All the researches show that the dishonesty of the client, dishonesty which calls for the favouring of his outlet at the expense of others, especially when it has reached the perception image level, the
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status of great brand name and that the comparison is done with second or third rank brand names. Experience shows also that many outlet managers are particularly interested in determinant images simply because they express their strengths or weaknesses, elements which will often enable to develop tactics aiming at improving the relationship of the outlet to its client. The study of the determinant implies the knowledge of the mechanisms of purchase perception in the given outlets. If one wants to know the determinant images in the hardware and stereo fields, he will have to get interested each time in the purchasing circuits that shoppers go through in the types of products purchased, and take into account these notions of daily purchases, choice purchases and promotion purchases. As far as hardware outlets go, we will meet the perception of daily purchases with the purchases of nails, screws, of wood, paint, joint, electric wire etc...and choice purchases particularly as far as all, electric tools are concerned. Finally, we will find promotion purchases depending on the seasons and this in different kinds of product families. In certain kinds of distributions where there are no daily purchases, we will find simplified forms of determinant images which will only consider choice purchases and promotional purchases.
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The functions of outlets
If the knowledge of compared image profiles is necessary to understand the determinant image of an outlet, one must also take into account the notion of function of the outlet. In addition to the prices, choice and quality of the products it supplies, an outlet responds to certain needs, certain wishes of the shoppers. Certain groups of clients, youngsters for instance wish to find in their outlet a diverting ambiance. Other groups such as women who work want their outlet to supply them with facilities they don't find anywhere else. This way are described the different psychological positioning of the outlets in relation to
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the expectations of identical nature from clients. There usually are 4 possibilities of function for outlets.
The function of distraction : A furniture outlet, a supermarket, a department store can have another reasons exist than presenting products, prices, some choice or quality. They can bring to a type of clients an answer to a subjective need for distraction. By the type of people who come to the outlet, by the ambiance, the multiplicity of the aisles, the decoration, these outlets can in addition to the rest bring a real distraction to their clients. This ability to divert can become in some cases one of the reasons why the outlet will be frequented before others. In the study of the image profile, one will have to understand the incidence of this qualification of the outlet in the analysis and the measuring of the different profiles. A given outlet in the distraction function will have a psychological bonus with respect to other outlets of a same organization but which are in another function.
The standing function : The outlet in this case brings added value. To go in such an outlet is to show that one belongs to a social group. To say that such or such good was bought in such or such outlet is to have pleasure, a bonus which is not always tied to the product. To buy one's glasses at such optician's is to show that one is part of such target group. To buy in such discount outlet in such agricultural co-operative is to show that one is different, not like others and has found an outstanding solution. This way, we will find very differently structured outlets which will answer this need for social belonging, this necessity not to act as everybody else. Some semi flow supermarkets will play this card especially in regions where population or sensibility mixes are not always of every one's taste.
The economic function : Certain outlets bring a new satisfaction to the client : save money. It is not enough for an outlet to be discount, it must have in his assortments and aisles outstanding offers in terms of savings. These outlets must also express the savings through their outlook. The Colruyt supermarkets in Belgium, by their very austere outlook are the expression itself of savings. It does not stop them from setting good French wines, high quality products, excellent meat but naturally in a typically economic context. The Metro chain in France, by proposing to craftsmen and entrepreneurs to come shopping thanks to a membership card, relies in a particular way on
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this economic function. The price clubs in the US play this function card for the greatest pleasure of their clientele.
The stocking function : For daily food and maintenance purchases, some outlets are considered by their clients as real cash and carry stores. Consumers are satisfied because they can buy everything quickly, in a wholesale way, not to worry about going shopping for a while. In this case, the public does not wish to find a particular ambiance. He is not picky about prices. What he wants is to find easily his products, buy as much as possible, as quickly as possible. Image perception, determinant image and function of outlet are 3 elements which will allow understanding how the client perceives the image of the outlet / brand name pair. The perception of the brand name of a store such as it has been defined does not only reside in the perception or determinant images. We must take into account the legitimacy, the source effect and the top of mind. It is clear that these elements are tied together and that one cannot be content, for a brand name, with only, talking about its image perception or its top of mind. One must, to clear up what a brand name is in terms of image concept, integrate the rotation there is between these 4 elements.
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The notion of claim and Pivot
The client does not only perceive a brand name through the pyramid we just described. If he is aware of the legitimacy, the source effect, the top of mind and the image profile of a brand name, he also has an acute sense of what brings him the store not only in terms of direct benefit (price, quality, choice, service) but also in terms of commitment. A retail brand name, which ever it may be, does its job and duty by supplying good prices, a good quality, a good choice and the services the client expects. When everything is perfect in outlet, the client thinks it is the way it should be. To use another image and help people understand this notion the client has deep inside himself, when a mover arrived on time, did not break anything, could take the piano down in a small staircase without scarring it, when finally everything has been put back on place in the new apartment and people have moved in the client thinks it is absolutely normal. But if the
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mover is late, leaves straw in the stairs or if unfortunately a glass is broken, the mover is badly estimated and will be told off by the client. The client expects from his retailer (of any kind) a commitment, a kind of profession of faith which will be the testimony of the will, the effort, the desire the retailer has to conquer his traffic client and to keep his flow client. The shopper wants to be sure that the brand name will do differently and more for them. They want him to engage in a war to free, help, shelter, defend them from these who attack them, the clients, centre of the preoccupation of the retailer.
The claim : The profession of faith of a brand name inscribes itself in what is called a claim. The claim is not an advertising slogan which expresses the quality of the brand name. It is not a good sounding
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Sentence either, an onomatopoeia or a play on words which attracts people's attention and builds top of mind. The claim is a serious thing. It is the expression of an action which will define the perimeter of the constraints the retailer imposes himself. Let's consider a few famous claims and let's try to analyze their structure. Sainsbury in a recent past was still announcing its profession of faith through this expression : "good food costs less at Sainsbury and the service is price". Publix still claims "where shopping is a pleasure". Delhaize inscribes in everyone's mind : "a thousand and one details which make the difference". Casino a few years ago declared : "We distribute quality, it's a choice". All these brand names by their claim state their will of action. We can't say : "at Sainsbury good food costs less and the service is free" if daily we don't try to give the clients what's best for less. No wonder that as soon as 1960 the managers of this claim made the decision to sell near 50 % of the manufactured products to the claim's brand with a particular attention paid to active quality products and tagging really interesting prices on the market. Not surprising either arte these product decisions which were made by the company and which went as far as offering surprisingly good and cheap champagne to the Sainsbury brand name. The meat, the fruits, the vegetable for everyday consumption are irreproachable and above all, in all outlets, the desire and pleasure products have a surprising price quality ratio which surprises the client and allow him to be able to buy a bit more at the price of a normal product. To affirm as Publix that it is the outlet where shopping is a pleasure means constantly fighting so that everything is perfect for the flow client. With its 400 supermarkets, Publix certainly is one of the most interesting cases that can be studied as far as the quality of the relation to the client goes. Daily, the managers of the company do checking in the stores and ask the staff and the cashier hostesses particularly if they are proud of the products sold in their store and of the way clients are served. Nothing is more surprising than seeing executives conduct surveys on the cashier hostesses to know if they are proud of the products they are grabbing to put them in the clients' carts.
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Also surprising are these meetings of the outlet where the degree of pride observed by the executives is discussed and where convenient decisions are take so that tomorrow the client be even happier to come shopping.
Fascinating the will the company's directors showed to set up everything as to be the first to equip their cashiers with scanners to entrance the speed at which people go through them and to ease the purchase in all their outlets. These two examples chosen from food retailing show that we are not talking about an advertising effect but about organizing so that the client can almost touch the action will of the brand name. It is certain that the Casino brand name owes its growth in the 1980's to its will to choose to fight for quality. It was not about having perfectly well maintained stores, good quality fruits and vegetable and a distribution franc carefully thought out on the basis of successively controlled and respected balance sheets. Never in the Casino outlets was an average quality meat sold. In the slaughter houses belonging to the group, people have voluntarily chosen to bring to the market only superior quality meat having for instance (what is almost impossible to get in France) the American attractiveness. During a period, the pastries sold in the Casino supermarkets were actually made in the outlet with the same methods used by the pastry shops. Few clients could suppose that behind this desire to sell quality Casino had had to create butcher and pastry schools to yield a service equal or superior to the one that could be found in traditional stores and at wholesalers' prices. If the claim is a profession of faith, a will of all in the company, it also is the pivot of communication. In France for instance, the UAP insurer uses these communication actions by systematically combining his claim certainly is one of the best that was found for this kind of retail. "No 1 oblige". This will to be number one, this constraint freely accepted by all drives the company to systematically come out ahead of its competitors and to let it know. The UAP reimburses damages faster, better than others, launches new products, participates in charity operations, deals with the problems of the city because "No 1 oblige".
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When Wall Mart declares "we take care", all the communication actions are going to be organized around this will. Wall Mart is going to take care of its clients, of the American products, of the country, the products, unemployment, the deprived, the teenagers and naturally its product ranges, its price policy will result from this will to take care of the clientele.
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The semantic pivot : A claim has, by definition, an expression understandable by all. It relies on an expressed will which is the fighting motor of the brand name. When Casino declares "we sell quality : it's a choice" its semantic pivot is "we won't choose the easy way out". The easy way is the enemy which leads to not give quality. The easy way is to put back in the cod chamber the salads that are not sold. It is not to change the ice of the finch displays. It is to use industrial products to fill up pastries. When the GB group declared in the eighties : " 2 million clients must be deserved every day" it was to rely on the semantic pivot "our clients have a choice and we know it". When Avis was setting up its claim "we try harder", its semantic pivot was "we are the number two and want to remain it". Therefore, the semantic pivot seems to be the claim's reason of being. It actually is the designation of the enemy ; of this evil force which opposes the consumer's joy. The retailer Darty in his claim tied to the trust contract relies on the semantic pivot induced by the following notions :"When one sells, he is ready to promise everything. After the client can be forgotten". One understands that the role of this semantic pivot is particularly important at the management of the brand name level on the one hand, and at the level of the communication strategy on the other. In terms of management, the company as a whole must first be proud of its claim and convinced of its semantic pivot. The claim will remain for years. Only a market change, a lightening evolution outside the firm or a repositioning of it authorizes to change this claim. All of those who work in this firm must understand and admit the semantic pivot. As far as recruiting goes (of the executives or employees) it is an essential key. A person who would not have the qualities to fight on the pivot cannot be admitted in the firm in the accounting, maintenance or sales department. When the Leclerc stores express their claim "le parti prix", all the partisans are proud to belong to this party. The ensuing pivot "fighting the monopolies"
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who make the prices can live only if each of the colleagues of the Leclerc outlets participates in this combat will against the unfair systems which male life expensive. From the claim / pivot pair emerges the organization of the Leclerc outlets, their structure that manufacturers often have a hard time accepting, their elimination method of all the members who would not respect the law defined by this claim/pivot pair. Often in retail companies, management specialists try to define what is called company projects or management plans. Experience shows that these projects, these restructuration plans have a chance to survive only if they come up with a claim relying on a pivot and not on a list of good intentions to do better. In the terms of management, the claim and the pivot are the commitment on the one hand, the raison d'tre and the reason why all those who serve the client work on the other. As far as communication goes, the claim will have to be put to life 3 types of actions must be combined this way, they are : - the spontaneous action, - the prepared actions, - the institutional actions.
The spontaneous actions correspond to the unscrambling of current went, depending on the pivot. Each day, each season, the problems the client knows are good reasons to combine his claim and to take advantage of the opportunities given by the current events to make the store's advertising heard and above all to show its clientele that it exists and that it is active. The Leclerc group never misses an opportunity to affirm that it takes sides and to fight monopolies. If comparative advertising is about to be voted by the deputies, then soon Leclerc wages a war to protect the consumer against false comparisons which could fool him.
The prepared actions are those which correspond to the combining of the claim in the implementation of a more strategic action plan. It is about putting the claim to life not spontaneously when the event occurs but in the context of a very prepared action. When the Carrefour chain in France launches operations concerning the credit of good standing cards, the insurance, they are prepared actions which fit in the claim : "with Carrefour, I am positiving". It
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is here a way to give to the claim its objective dimension indirect relation whit previously spotted consumer expectations.
Institutional actions : At the institutional level, to participate to specific demonstrations such as soccer, the tour de France, athletic meetings or help in the assistance of certain groups unveils a desire to give the claim a real social dimension. Deviated this way by spontaneous, prepared and institutional action, the claim and the pivot which are at the centre of the brand name communication strategy are going to find themselves at different levels anchored in the thoughts of the clients and non clients of a brand name. If this given information about the pivot and the claim is reported to what has been said earlier on the notions of legitimacy, source effect, top of mind and image profile, we understand that the brand name is defined very differently from the one considered for product brands.
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A brand name (of a store) is a commitment, a will that is seen to wane day after day. This way the brand name is alive and not still. It is a constant proof for the attached client that he did well to choose this brand name and a positive curiosity for the traffic one, who once in a while, will come to the outlet. The brand name this way can create a real enthusiasm for the clients and a kind of complicity with the non clients. Naturally it cannot be content an
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advertising slogan or one of these artificial makes of images which can be used when launching products. The brand name lives before all in its distribution zone and as we often stressed it exists in comparison with its competitors and more generally with the other types of retailing. The public, the potential clients observe the reactions of the retailer in his commitment on spontaneous actions, in the quality of his prepared actions and in the validity of his institutional actions combining what we could call his electoral promise that is the deviation of his claim and his pivot. To be elected by clients, the brand name must keep its promises and not be content with gratuitous declarations, unfounded ones. The brand name has a soul. It must show it. If a competitor opens an outlet in a zone, clients expect their outlet to respond. If something occurs in the zone, the brand name must be there. If it is true as we showed it that the one outlet, one market" notion exists in terms of commercialisation, it also exists in terms of the necessity to combine the claim and the pivot. Two examples show the big difference there can be between this claim and pivot notion and the advertising slogan. In Paris, in the eighties, the Felix Potin chain which was enduring losses accepted a slogan created by a famous agency: "Felix Potin, on y revient" (Felix Potin, people come back). This slogan printed in the press, on the bags at the cashiers, heard on the radio was nice and amusing. It was reminiscent of the Parisians' spirits who actually are clients who are very attached to their history and their roots. Unfortunately, this slogan did not commit the staff of the company. It did not express a brand name's will towards its clients and non clients. It did not rely on any pivot. Its impact on the sales was very limited and remained at the level of a slogan which, because heard too much, began to get old after a while. In the south eastern part of France, a very famous brand name of supermarkets and hypermarket, Montlaur, had for a slogan: "Find cheaper". Everywhere in the outlet, in the distribution zone were written the letters FC, standing for "Find cheaper". These outlets were good running ones and the clients were convinced of the fight the company was leading. Mr Montlaur, since the name of the stores brand corresponds to the name of the founder, was a man who defended the life of his colleagues who participated in the local life and who had even become mayor of the town of Mazamet where he had opened his first outlets. The Montlaur brand name was fighting against high prices, supplied its clients with a wide range of first prices and was a tough competitor for the other stores. For competition, management and
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purchasing power reasons, after a few years the managers of the company understood they could no longer engage themselves in this daily price battle and that it was difficult for them to continue to state their claim "Find cheaper". The decision was made to stop this claim and this way change what we previously called
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the constraint perimeter of the company. The store tried to sell at higher prices without saying it was very expensive though. This change was followed by an advertising campaign and for the first time a new slogan came out: "Montlaur, it's strong". It was no longer a claim and a pivot but a publicity slogan which obviously had for objective to hide the change from the clients. After a meeting of executives, the slogan was introduced in a show and large advertising means were set up to make this slogan known. The clients first noted the price increase. They did not understand the Montlaur it's strong" and, right after the campaign, many distribution zones and some outlets lost up to 10 % of consumer frequenting. All of a sudden, the public understood the brand name no longer fought, that it was advertising and that it did not have any commitment, a profession of faith which had its power and success. For many reasons, today, the Montlaur brand name no longer exists and all the people who know the story know that it is not the switch from a claim to a slogan which made it go bankrupt. In any case, figures show that this company perfectly anchored in its local environment got hardly hit because it tried to apply to its brand name product advertising methods.
4 - Life cycles of brand name communication
To understand the problems raised by brand name communication, we must now look at the life cycles of retailing communication. It can be noticed that four kinds of retailing usually go through five steps of communication.
First step - new formula: When Mr Defforey, in 1963, starts out his first hypermarket near Paris, he creates a formula which is going to revolutionise food retailing. In 1914, when Mr Clarence Sanders thinks of self serving, he is going to launch in his Piggly Wiggle supermarket an idea that no one had had before and which revolutionised food retailing
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When Woolworth in the US at the end of the 19th century opens its outlets where everything is tagged the same price, it is again the coming out of a revolutionary formula which will change the way products are distributed. The history of retailing is filled with these innovations which gave birth to the outlets we know today. When a new formula appears and when it gets the public interested, it usually is because it solves the contradictions of the existing systems. By mixing food and non food products in a same outlet, Carrefour answers the contradictions of French food retailing which is not yet very developed and of non food retailing which can only be found in large stores in the city. Because cars are available to all, because people need parking, because time is precious , the food and non food systems in France seems heavy, not adapted to clients. With its "everything under a same roof" formula, Carrefour fights the contradictions tied to the problems of parking, price, to the waste of time resulting from multistop shopping. Mr Duttweiller by starting out Migros, Messrs Marks and Spencer with their brand name builds formulas which are going to overthrow a kind of retailing. At the launching of a formula, the communication is obvious. The formula speaks for itself; it is the basis of the profession of faith, the real fight of the firm. In this first phase, the firm must give out an image and convince. It must upset people and be scandalous if we recall the etymological definition of "scandal: stone on which one trips". Mc Donald's, Kentucky fried chicken are revolutionary with respect to what was done before. Aldi by its economical concept, its will to sell only 600 products at very low prices launches, right after the war, a formula which will also revolutionise part of the food retailing industry. We find the same stories in the hardware furniture and stereo fields. The more the new formula is set against the contradictions of the existing formulas, the more clients perceive the difference, the more it travels orally and the faster the propagation of this formula in the country and in the world will be done.
Second step - the differential phase: If a formula is interesting, if it overthrows those in place and above all, if they conceive that they are losing some market share, quickly some of them are going to imitate and use the same formula. It is after having had the Carrefour franchise that the directors
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of Promodes launched their Continent hypermarkets. It is the former Leclerc managers who founded the Intermarche chain. The NASA chain is only a copy of the Darty chain and the different hard discounters such as Ed, Lidl, Norma, leader price, le Mutant only are formulas deviated from Aldi as well as Quick and Burger King are brand names which compete with the creator, Mc Donald's. In this second phase, in their own market, the retailers who adopted, copied and transformed the initial formula, if they happen to be in the same distribution zone, must bring to the public, to the market, an active difference. When it is about flow and traffic stores, retailers try to launch the best promotions, the strongest an most striking ones. The brand name of the retailers "cuir n 1" (leather n 1) born out of the Roche and Bobois formula, to beat its opponents, attempts to be more of a discounter, better equipped in sales promotions and ready to use all the new techniques. To fight Carrefour, Mammouth, hypermarkets of the Docks of France smashes prices and multiplies its promotions. In this phase which is a real market conquest, stores try to communicate their advantages and to install their outlets so fast as possible in the best distribution zones. This period is often very delicate for the one who launched his formula. If he is lucky enough to be the inventor, he also faces the disadvantage of fighting many direct competitors that is retailers inventing another more effective formula answering even better the contradictions of the existing formulas. In this Second phase of the life cycle of communication, the claim and its semantic pivot don't have yet the importance that we will have to grant them in later phases. The formula is new, it is copied, and it rolls out. If one is in the same distribution zone, he must have a difference that has to come out in the brand name communication through a real unique selling proposition (USP).
Third step - the anchoring phase: In this third phase, the brand name will have to anchor itself in the mind of the clients and non clients. At this stage of evolution, apparently all the evolution formulas are alike. The Continent hypermarkets resemble the Auchan and Carrefour ones. Naturally, for professionals, what has been said makes no sense. But for the public who sees things with less technicality than retailing specialists do, Continent, Auchan and Carrefour are three hypermarket brand names which each in their own way, present advantages and inconvenients depending on whether
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one is flow, traffic and especially if there is or there is no competition in the given distribution zone. Usually, in this third phase there is a stabilisation of the development of the formula. We can put forward that it reached a level of optimum density. In France, there are a few places left to build supermarkets on but the 1970's and 1980's hike won't happen again. Depending on the countries, these notions must be regarded with a lot of attention. The hardware outlets formula reached its maximum density in France. It only started in Spain, Portugal an Italy. The superstores formula peaked in England. In Belgium, the hypermarket formula reached its extreme development stage. Therefore, every where the formula came to maturity, the problem is to communicate in such a way so that the shoppers have the best reasons to choose their brand name. It is in this third phase that the notion of claim and semantic pivot is the most meaningful. Naturally, the brand name must be legitimate, it must have source effect correspondent to the market's demand, a sufficient top of mind and a satisfying compared image profile. But before all, the communication must express to the market the fight of the company, this will to do its best for the shoppers Of course, one cannot decide to start a claim only in the third phase. It is as early as the first phase for the inventor of the formula and as soon as the second phase for the followers that this claim and its pivot must be expressed to the expressed to the public. Even if the role of the claim is minimised by the expectations, in terms of advantage and differentiation of the clients, one must understand that retailing builds its brand names over time and not very fast like certain products on the basis of 2 or 3 advertising campaign. Carrefour which is the innovator hypermarket wise always kept this will, this innovation fight. By launching its free products in 1970, Carrefour makes the difference with all the other hypermarkets, all the distribution companies which got inspired by its formula. By deciding in the eighties to eliminate its free products and to replace them with brand name products through a campaign called "the campaign of concert products" where the clients could give their opinion on the quality of this brand name, Carrefour continues to combine its innovators fight. With the "With Carrefour I am positiving" the brand name enters its third phase and asserts its will to fight so that the public feels supported by
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modern ideas, by innovations. According to the market, to the type of distribution, in this third phase of the communication life cycle, not all the distribution companies have the need or the wisdom to lean on a claim. The notion of combat, inherent to the notion of claim makes sense only if the competitors are aggressive and if to gain market share or keep one's clientele, one must develop an intense communication. Although the necessity of a claim is absolutely necessary in the medium and long run, certain retailers think they can hold on by relying on an advertising slogan. We must note here that the claim with the meaning we gave it earlier imposes to the firm behaviour, a perimeter of constraints which are not always justified when the competition is not aggressive or active enough, as we just underlined. Therefore, the advertising slogan can enable in this third phase to gain some top of mind, to feed the image profile and to enable the promotions to move in a field of client intentions sufficiently intense. It is in this third phase that finally the projections in the future of the life of the brand name will be embodied. When a brand name fights for its claim (provided it respects it and that the claim corresponds to a client expectation) we can be assured that the brand name will keep its market shares or will enable appropriate strategies to develop effectively. On the contrary, when a brand name communication relies solely on an advertising slogan, that is a nice, pleasant idea which won't have any entanglement on the legitimacy and source effect of the retailer, we can expect non communicability phenomenas as soon as competition becomes stiff. The brand name which imposes itself on to clients and non clients with slogans usually ends up being confronted to the impossibility of getting across anything but a promotional message which becomes less and less penetrating because of the faculty that all retailers have of copying each other very quickly in their tactical and promotional development. In furniture retailing for instance, we notice that very quickly all the promotions mean have been used by the different brand names and that at a given moment; nothing seems to get the clients interested anymore. Only the brand names having relied on solid claims still get decent results This way, this third phase of the communication of the retailing companies is particularly dramatic. It is at the level that fundamental options will have to be chosen, options which will determine what the future communication strategies will be.
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Fourth step - the noisy phase, the incommunicability wall: When the densities of the formulas come to maturity, when for economic reasons the markets become difficult, that is to say when the flow and traffic clients don't get settled on impulsion purchases as fast or simply on their desires to move from one outlet to the other, communication is going to play a crucial role. The companies which chose in the third phase to back up their development with a slogan or the companies which only timidly gave momentum to their claim will face a difficult situation and will have to do advertising and proportional outbidding. In this phase, lots of noise is going to be made. According to the countries, the authorisations, with the radio, the press, the placarding, the TV, the client is really going to be hammered in order to make him come to the store. In food retailing, stores are going to send out many promotional brochures. It is the case of France with its hypermarkets; Real discount campaigns will be started and in some countries where it is possible, stores will go as far as dumping. The notion of brand name strategy might even disappear to be replaced only by a continuous development, perpetual with aggression and communication tactics. In this fourth stage, we'll often see retailers try to do some spot effect by using radio or TV people to support heir messages. In this fourth stage, we worry little about the notions of legitimacy and source effect; we only look at the top of mind notions In the first four stages, the communication objective has been an additional objective. In the first phase we have tried to give something else, something better and in the following phase, something more, much more. The structure itself of the communication strategy has, in these 4 phases rested on the essential idea that the traffic shopper would come to the store provided that he is offered more or like in the first phase, he is offered in a different way. At the end of the fourth phase, we noticed that the notion of "more" has no more impact. As we previously noted it, because stores keep on gibing, communicating, enchanting the shopper winds up being lost, he no longer understands and it becomes harder to have him come to the store. In the seventies for instance, calendar traffic in a hypermarket could move quantities of shoppers. Some brand names would count more than 40 % of additional clients who came for promotions. During anniversaries, that is to
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say provoked traffics, brand names such as Auchan, Mammouth or Carrefour could entrance their cashiers recorded clients by 40 or 50 %. In the nineties, this type of scores is no longer compatible with reality. The most striking anniversaries, the best organised ones can yield up to 7 or 8 % of additional clientele. Only the openings of outlets enable to achieve stunning scores but which will be unfortunately temporary and which cannot be achieved during operations carried out by the outlet in the months following the grand opening. It all happens at the end of the fourth phase as if the "more" had no interest any more for traffic shoppers. Indeed, the analysis of the evolution of the communication of many retailers in very different markets shows that by having communicated repeatedly, by having wanted to impress the client, he finally closed himself up to communication. To defend himself against all these promotions, not to become one of these humans wandering from outlet to outlet to find the maximum, the best, this shopper finally convinced himself that almost all the outlets were about the same.
THE CHRISTOPHER COLUMBUS SYNDROME

In this fourth phase, we notice that the clients all seem to be suffering from the same disease, the Christopher Columbus syndrome. If we ask the public who is according to them the man who crossed the Atlantic around 1935 from the USA to France, a great majority will say Lindbergh. If we go further and ask what the name of the plane was, a great majority will say "The Spirit of St Louis". If we go even further and ask the number of hours this trip took, many will give an acceptable time of between 25 an 35 hours. We will notice that overall the public chosen for the experiment basically has a good knowledge of the event. If on the contrary we ask this same public what the name of the man who crossed the Atlantic after Lindbergh is no one will be able to answer the question expect may be for an aviation specialist and in any case, no one will be interested in the second person. Even if he was a better pilot, even if he helped the evolution of aviation, the public will only remember the number one. If we repeat the experiment by asking the question: what is the name of the
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man who first set foot on the moon? the majority of the public will come up with the name of ARMSTRONG. It will be much harder to get the name of the second. Therefore, the print of the first is a biological term. If we ask in France the question "which is the cheapest food retailer? 80 % of the people interviewed will point at the Leclerc brand name. If we ask, Who is the first in household equipment? most people will say Conforama. If we ask What is the representative outlet of hardware in France? , most people will point at Castorama. Everything happens as if, since the coming out of a formula or since the differential phase, the one who communicated the most the best inscribed in people's minds. At the time of the fourth phase, that is at a time when shoppers are hard to attract, this Christopher Columbus Syndrome plays a crucial role. The public will no longer try to measure differences. It will be content with merely thinking of the name of the number one. This explains partly why the notion of "more", no longer works. If in France the Leclerc brand name is the first price wise, that is to say the cheapest, all the other brand names can say or show they tag good prices, no one cares about that issue since the public is satisfied with knowing there is a number one and since it considers that all the others can only be number 2. With regard to that Christopher Columbus syndrome, to this number one strength, 2 kinds of brand names emerge: - the brand name leaders in term of communication, - the brand name followers in terms of communication. The leader brand names are those which, in the client's mind, are considered number one, either in an activity or in a quality which defines a retailer in his market. Darty in France is considered as the leader in household appliances and house equipment. It has the number one after sales service. Castorama is considered by people in France as the brand name leader. It is number one, has the best service, the best quality and as it says in its communication, "it has every thing you need". These leaders owe their ranking to the development of their brand name communication and this since the phase 1 and 2. This biological position of number 1 in the minds of the clients persisted despite the actions of competition only because these leaders have always known how to develop
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product, price, quality and choice strategies which had a real meaning with regard to their competitors. They never betrayed their claim and their pivot. Then the challenger brand names are coming. They are brand names which have legitimacy, a source effect, a real top of mind but which are not inscribed in the mind of the consumer as number 1. The But brand name, a French furniture retailer is not a leader brand name as we just described it, it is a challenger in terms of communication which tries to catch up with Conforama. As far as Hardware retailing goes, Leroy Merlin of the Auchan group is not a leader brand name. It is a challenger which tries to catch up with the number one Castorama. Most challengers are distribution companies which came after phase 1 of the development of a formula. They often copied and improved this formula. Usually these challengers tried to get to the number one rank in the minds of clients. To get there, they developed communication actions which aimed at giving a plus, an edge to the client ant this in addition to what the leader of the market could give. Let's note here that in a given market or in a distribution zone, the intensity of the communication of the different agents will be all the more aggressive and strong because there is a number one which is tightly installed at the top and all around it, a series of challengers which will want to supersede it because they don't have this advantage in the minds of clients. In certain supermarkets where the distribution is less aggressive, this notion of leader and challenger will have fewer visible effects at a giver moment of history of the evolution of retailing. Challengers and leaders will realize that after the noise phase (fourth stage of communication cycle) it is going to become almost impossible to have people understand, to male them appreciate the plus that retailers wish to express to the public. Usually the leader retailers or challenger ones are going to conduct studies to know their strong sides and weaknesses. They will have to realise in this fifth phase that it is almost impossible for them to be really understood by clients. Challengers and leaders happen to be confronted to a dramatic problem, the one of the incommunicability of the pluses. All the communication and promotion actions seem to bounce on a wall. Each plus offered to clients is pointless. Communication is more and more expensive. It has fewer and fewer effects.
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Each tries to find a solution. Then it is immediately copied. And the few positive evolutions that can be observed here and there are finally very short lived.
Fifth step - dialectical phase: At the end of the fourth phase, we find ourselves in very specific conditions of communication. All the retailers of a same sector but also from other sectors of activity multiply their communication actions. When a client is interviewed, he expresses the fact that for him, there is a real information scramble. He no longer knows who actually carries the promotions, who doesn't and he notices that the slogans used are alike and produce the same effects. The boom of the Media also comes into play in the scrambling of information. Each retailer actually tries to find all the feasible communication means thinking it is a new tool which will help better get in touch with clients and non clients. At the end of this fourth phase, retailers of ten prefer to multiply the Media rather than trying to develop new strategies of communication to conquer market shares. The boom of the products and of advertising is factors which will cause the Christopher Columbus syndrome to filter in deeper in the minds clients. For the fifth phase, one must go over the wall of incommunicability and set off a new type of strategies of communication. To fully seize the reality of this new kind of communication strategies, one must isolate the potential strategies on the one hand for the challengers such that we defined them, and on the other hand the feasible strategies for the leaders.
Challengers' strategies: The challenger in this fifth phase of communication is defined as a retailer confronted to a leader who is considered as the number one (C. COLUMBUS SYNDROMA) by all the potential clients of the market. Let's stake a few examples. As far as hardware retailing goes in France the obi, Mr Bricolage, Leroy Merlin brand names are challengers which face the leader, Castorama. In the household appliances field, brand names such as NASA and BHV or Boulanger are confronted to a leader considered number one. Usually the leader has the reference legitimacy in its market and the most valuable source effect as far as communication goes and differentiation criteria acknowledged by shoppers. In the previous examples, Castrorama
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possesses the legitimacy granted to the inventor of the formula in France. It has the source effect in terms of choice and services which are criteria deemed crucial to establish a comparison between competitors. In the household appliances field, the Darty brand name also has the historic legitimacy on the market and the source effect concerning prices and the after sales service which are the deciding criteria for the public in its brand name choice. Confronted to the Christopher Columbus syndrome, to the legitimacy, the source effect of the leader, the challengers are going to have to develop a strategy exclusively aiming at destroying the C. Columbus syndrome. It is an act absolutely necessary. As we noted it, the challenger cannot hope to communicate in good economic conditions since because of the C. Columbus syndrome itself anything that will be said and expressed will benefit the leaders. Because it cannot make the difference, the challenger must solve the problem of indifference, consequence of the syndrome. If for the challenger the situation is touchy, difficult, often tense, for the clients as a whole, the situation is comfortable. The shoppers have the choice; they live in a situation of hyper offers. They are confident, they have certainties; they rely on norms and references. It is at the level of these certainties, references and confidence that the challenger will operate by trying first of all to destabilise the market to make these non clients doubt of their certainties, norms, and the criteria which lead to their choices and of the name of the retailer they considered up to now as the number one. The challenger, to destabilise tries to make the client who purchases at the leader's or another challenger's feel frustrated, unsatisfied, worried not to have gone to his store. Instead of offering better and more to those clients, the challenger spends energy to make them doubt about bargain they just realised at the leaders. Let's go back to 2 examples to better understand how a challenger can use in this fifth phase the strategy of doubt and develop actions directed at destabilising the market. In the seventies, the E. Leclerc centres, which are primarily represented by supermarkets, are challengers which, in their zone of distribution, are confronted to different leaders of a same kind, the hypermarkets.
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These Carrefour, Geant, Continent and Mammouth have given across to the public the idea that everything that is big has by definition better prices better promotions than what is small. The public has been able to notice that it is true and does not imagine that a 1.000 or 1.500 m2 supermarket could compete with these large hypermarkets of 5.000, 10.000 and 15.000 m2. The E. Leclerc centres do not try in their communication to define themselves, to position themselves as hypermarkets. They don't enter the over-promised spiral. Some will even say that E. Leclerc takes on the name: "le petit picier de Landernau" (the small Landernau grocery store) to mark its desire to be considered as a kind of David fighting the Goliaths which are the super stores. To exist, to develop, the Leclerc centres, challengers of hypermarkets must destroy the C. Columbus syndrome which says that what is small is more expensive than what is big. To advertise on low prices, on discount makes no sense. The different kinds of clientele would not believe it and it would be easy for any super store brand name to lower its prices and make the E. Leclerc centres look like specialists of false advertising. It is impossible to develop comparative advertising. It is forbidden in France. Let's note that Continent, Carrefour, Auchan, Mammouth spend about 1 % oh their revenues for communication which represents a per client spending that the E. Leclerc centres cannot hope to equal because of the number of outlets they have and their profitability per outlet. It is all the more distressing for Leclerc because in the seventies, all the hypermarkets expressed their desire to become discounters, which was facilitated because at the time, there were no private labels, no first price, no counter brands and because the market did not want big brands, that is to say products whose prices are alike. Because they could not display its prices elsewhere but in their stores, the Leclerc centres developed a series of actions which underlined the contradictions of the super stores. The thesis of E. Leclerc is simple. One must fight high prices, purchasing power drops especially in these inflation years. Those who don't enter this fight cannot say they are discounters. The fight against high prices will be expressed by Leclerc through his bottle against the long law which forbids the discount of books and more generally against the government's decisions which does not allow the discount of gasoline. Little by little, day after day, E. Leclerc and his distribution centres are going to point at these monopolies which hamper the liberalisation of
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prices. The big hypermarkets are going to be caught in a painful alternative: Either they engage in the same fight Leclerc is in and become followers or they keep quiet and will be pointed at by the public as allied of the great monopolies which favour high prices. The public will be spectator of this fighting spirit on the one hand and of this lack of response on the other. The attached clients of Continent, Carrefour, Euromarch are going little by little to doubt about the fight of the favourite brand name. They will naturally continue to frequent their hypermarket but they will show curiosity for these other distribution centres which seem to fight high prices, that are seen on TV shows ant that are heard about the radio. They are going to outlets and actually see that prices are really interesting. They won't always be convinced by the formula (which is a bit rough) of these outlets which contrast with the purchasing ambience of their supermarket. Little by little, these attached clients of the supermarket brand names are going to convince themselves that Leclerc is not a capitalist that he fights for the consumer whereas these big brand names although nice and pleasant belong to great financial groups which are obviously closer to their share holders than to their clients. It is actually underlined by E. Leclerc who attacks the president of Carrefour on the radio by saying to him "you fight for your share holders, I fight for the consumers". Gradually, a wide public is going to feel sympathy for the E. Leclerc centres. Some clients are going to become partisans. These partisans are going to be the main support of the Leclerc propaganda. At work, at home people are going to spread the idea that Leclerc fights against high prices and that it has this legitimacy before all the others. Its price source effect is going to assert itself. The notion of size of an outlet will no longer be thought of as justification of the prices. People will sincerely believe it is the desire to fight against high prices, the decrease of the purchasing power which is the guaranty of a will to sell cheaper. The C. Columbus syndrome syndrome is destroyed. Attached clients of a hypermarket brand name don't think that their hypermarket is more expensive than a Leclerc outlet. At least, they have the same prices. The less performing brand names in terms of prices will start enduring hardships. Their clients are going to understand that they are expensive and that they owe their discounter reputation only to the promotions through which they hide their policy of higher prices. With the opening of the Leclerc outlets on the French soil, the public is going to realise that some brand names had been selling at particularly high price levels. This is going to feed
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the rumour, favourable to Leclerc which is soon going to have the role of the only, the authentic real defender of the consumers against high prices. On one side we'll have hypermarkets with some performing brand names and on the other some brand names which are more expensive. The nature of the means put to use by Leclerc to implement its doubt strategy matters little. What matters here is to understand that in a few years, the price advantage granted to the very big outlets is going to be completely erased from the publics mind. Today in France, in food retailing the outlet's surface area and the power of the groups no longer are significant of the capacity to have permanent low prices. The destabilisation process started by Leclerc not only brings doubt to the public but also in the minds of those who run the great hypermarket brand names. Since the price preoccupation is total as far as the Leclerc centres' competitors go, a company of the Nielsen group decided to publish in France a price panel. The super stores, the hypermarkets buy this information to compare their prices with those of Leclerc. Prices are going to be the only discussion topic for retailers. The comparative price panels will be waited on impatiently. In every outlet, in every headquarter, people are going to realise that they are more expansive and it is going to divide the great brand managers and above all prevent other ideas dealing with prices from being discussed and assessed. These panels really bring chaos in the competing structures of E. Leclerc. The outlet managers face their employees. The regional managers question the wholesalers. The wholesalers question the manufacturers. Leclerc is in everybodys mind. It is the main preoccupation. Many hypermarket directors write their name on the waiting list to obtain the Leclerc franchise. But the Leclerc dialectics, its doubt strategy go further than the price problem. Everybody knows in France now that each Leclerc franchisee owns his outlet. He is a free independent and applies the "one outlet, one market" rule. He spends one third of his time taking care of the brand name that is the purchases, the communication, the training and the recruiting. This innovation upsets the classic schemes management. People begin to understand the necessity of decentralisation. Some competitors question themselves and start raising the centralisation non efficiency issue and its negative impact on the possibility to offer good prices.
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In fact, Leclerc wins on 3 fronts. First, it destroys the C. Columbus syndrome inscribed in people's mind and which stipulates that only the large outlets have good prices. Then, it keeps its rivals busy on the price and comparative panels issue. It mesmerises them, has them focus on a subject it is obviously a leader in. At last, it questions its competitors certainties who still believe in centralisation. By strengthening its legitimacy, by upsetting certain competing hypermarket directors, by questioning centralisation and dividing retailers and their suppliers, Leclerc, former challenger becomes leader. Now let's analyse the approach of doubt creation in this particular case; In fact, we are confronted to a classical case of dialectical analysis. In a first step, the challenger looks for the contradictions of the leader(s). Here, the contradiction is simple. The hypermarkets which want to be the cheapest do not enter the fight against high prices and purchasing power decreases. This contradiction is all the more clear because the oil shock just occurred, the public wants to consume. It is the boom of the brands and the hypermarkets launch the discount, good bargains and promotions fashions. In a second step, the challenger is going to give itself a role and as the same for its clients. Here Leclerc becomes a real Robin Hood. He is the defender of the public. Its clients are its partisans. They have a mission: "introduce their parents and friends to the truth of the Leclerc price". The attached house keeper clients of Leclerc are going to be recognised by their surrounding as good, money conscious, intelligent and smart housekeepers who don't want to buy the promotions of the other brand. In this role distribution, the great brand names are going to lose some of their prestige and become followers. In a third step, the challenger is going to back its doubt strategy with its clients so that they respond, make mistakes, feel destabilised and that way be less efficient. Simultaneously, the challenger is going to strengthen its own structures and develop in them a feeling of pride to belong to that brand name which will underline the strength of the brand name. These steps as a whole will converge to wards a one and unique idea: to close the leader in an alternative from which he will have trouble escaping.
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Because of Leclerc's success and the performance of its doubt strategy, many brand names in France have had to react. Carrefour, the innovator and Euromarch at one time have had to show to their clientele that they responded to Leclerc's dialectic and that they could counter it with prices. This way, in 1980 there was a big campaign of price comparison launched by these 2 brand names. It enable Leclerc to counter attack and above all to take advantage of this fight to engage in the pharmaceutical products bottle again by fighting the monopoly which prohibits laboratories to sell 90 alcohol and vitamins in supermarkets. All these actions contributed to reinforce the claim of Leclerc "The price side". The same steps and this same principle of doubt strategy can be found in the large operation realised by Avis in the US in the sixties. Avis was challenger who was confined by the legitimacy, the service source effect, the image profile and the top of mind of Hertz, the undisputed number one in car rental. All the advertising experiments proved that the Avis Company had trouble making people who rented cars admit that it had as good a service as Hertz's, that is to say that it would rent out new cars and that it would do any thing to help its clients. When launching the "we try harder" action, Avis respected the steps of the fifth communication phase of any retailer or Service Company. First, Avis stressed the contradictions of the leader, Hertz. The contradiction of a number one is that he is the absolute leader and that after all, there are many chances that he no longer does the maximum for his clients. He is by nature too big, too strong, and too fat. In a second step, Avis gave itself the role of the number 2, that is the role of the one who does its best and more to keep its place and which must fight daily not to be choked by the number one. By taking the role of the number 2, Avis chooses the sympathetic role which pleases the clientele and incites it to participate in the challenge. Through its communication, Avis gives the role of Goliath to Hertz and becomes David. By turning things around, with a non aggressive communication means Avis manages to conquer a market share from the leader and its other challenger rivals by relying on a doubt strategy which gives it service source effect and which makes its "we try harder" claim credible. The dynamic implemented and the problems faced by the structures of these
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rivals made the action carried out by Avis a great demonstration of doubt strategy in the fifth communication phase of the distribution system. The will to make one doubt does not imply that one must be aggressive and especially does not mean that one is going to disparage the leader systematically. It is not about comparative advertising either. To close in on the challenger's strategy, the example of the action of the GB group on the Delhaize group is particularly interesting. One the Belgium market, in the eighties, the supermarket chain Delhaize was undeniably the leader in the retail of good wines. If Belgium is not a great consumer of this kind of products, it still has a great amount of connoisseurs. By its service, the quality of its products, by its communication, the C. Columbus syndrome in the wine area was undisputedly in favour of Delhaize. Delhaize, as a matter or fact would insist upon its advantage by placing in each outlet wine consultants dressed up as real wine waiters. These wine consultants were trained by a team of specialists who would work only for the Delhaize supermarket chain. The efforts of the GB group to reconquer this market did not bring the results expected. Although it had excellent wines, remarkably displayed and a sales volume comparable to Delhaize's, all the promotions, all the actions could not help this brand name to becomes the leader and impose itself on the market. Despite a great promotion carried out with the famous Gault of the Gault et Millau guide, the Belgian public deemed that the number 1 in wines was and would remain Delaize. The managers of the purchases and merchandising of the liquids decided to implement a doubt strategy to change the course of things. First they looked for the leader's contradiction. They discovered it when they noticed that Delhaize which seemed to be wine specialist had part of them imported in barrels and clogged up in Belgium. This contradiction was unbearable for a wine amateur. He could admit that some wines coming from France were clogged up in Belgium but he could not stand the idea that he had not been told and this for so long. Smoothly, the GB brand name had the Belgian understand through a very delicate communication that there was at the back of the bottles the famous E 119 printed which meant that the wine had not been clogged up at the castle but in a warehouse somewhere in Belgium. G B did not say it was not selling this kind of wine. It did not say either that this wine was bad. It was just saying that a name evoking a wine variety or a castle should not hide the truth wine amateurs have a right to.
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The GB brand name was giving the bad role to Delhaize, the one of the presumed convict. Wine amateurs understood at once that through its fight, the brand name Maxi GB also had something to say and show for in wine retailing. The fact that GB was sued by some Belgian wine retailers gave importance to the issue comforted the managers at every level of the company and quickly, the sales volume of Maxi G B caught up with and overtook Delhaize's. The contradiction research and the role distribution were necessary steps to create an efficient doubt strategy. Another example of a challenger strategy is given to us by the action led by the hypermarket chain Mammouth in France in 1987. The Mammouth hypermarkets presented themselves as small hypermarkets (between 4.000 and 8.000 m2), well implanted in average towns. The Mammouth brand name depended on a purchase group called Paridoc which took care of the interests of different companies such as the Docks of France, the Cedis, the Cofradel, the Economas du centre, La Ruche Picarde etc.
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All these old chains decided to unite their efforts to develop a hypermarket brand name adapted to the kind of market targeted at the supply level. After having particularly well imposed itself thanks to a striking slogan: "Mammouth flattens prices", this chain was being hurt by the repeating waves of Leclerc outlets opening on the market. In eastern France, Mammouth was in real trouble because it lacked a promising and had a price level too different from the one proposed by Leclerc and Intermarch. The Mammouth hypermarkets were flow dominated flow and traffic outlets. The Leclerc and Intermarch outlets were cutting down this flow day after day and were making more difficult the strategies of local development of the brand name. After having carried out operations like "500 discount prices....Mammouth lowers 1.000 prices", Mammouth had to realize that they were in the fourth communication phase and that these operations although spectacular did not attract the flow clients who were choosing Leclerc and even less the trafic clients who came only for large promotion operations. The decision was made to abandon, the famous "Mammouth flattens prices" and to replace it by a new claim: "Mammouth: the new weapons against high prices". The idea of this claim was backed up by a simple semantic pivot. A price decrease is not enough to fight high prices as a whole and a purchasing power loss. Innovation is what's needed. The first attack by Mammouth on the market was to launch in France the sale of unwrapped products. It was a way to cheaper, really interesting and innovative in comparison to Leclerc, Intermarch and of course to other hypermarkets such as Euromarch or Carrefour which could be sometimes found in average size cities. The sale of unwrapped products was a great success and it enabled to make the flows and traffics understand that one could buy pasta, candies and cookies at incredibly low prices because it is not necessary to buy packaged goods, that is to say products for which one had to spend money just to condition them. With the help of local press communication, the sale of unwrapped products which was very developed in Canada and which had been successful in Belgium was becoming the way to express that Mammouth really was the one that had the weapons against high prices. In the mean time, an anti-Leclerc Campaign was also set off. 5 distribution zones of south eastern France were chosen. All the Mammouth outlets which were confronted to Leclerc outlets lowered a few prices overnight and this
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below their purchase price which was strictly forbidden at the time (and still is today) by the law. After having carefully chosen high rotation committing, settled, planned duty products, it was clear that the Leclerc outlets were going to respond. In St Gaudens and Brive, the managers of the Leclerc centres asked the law to go check Mammouth's prices as to bring this dumping to an end Mammouth's reaction was immediate. Locally, the Mammouth outlets told the press: "Mammouth lowers its prices; Leclerc fetches the police to bring them back up". At the national level, the chief executive officer of the Mammouth chain answered Leclerc directly with his famous: "Thank you Mr Leclerc you proved Mammouth is cheaper". The expression "Mr Mammouth" was born and the fight against the undisputed price leader was openly stated. This operation stirred things up on the retailing scene but also in the local and national press. All the sudden, everyone understood that Mr Mammouth became Leclerc's foe, the brave challenger which fought openly and head on the one everyone respected. In a fierce TV show, "Droit de Rponse" (the right to answer) Mammouth's CEO clearly fought the talented Michel Edouard Leclerc, son of the leader Edouard Leclerc; Jean-Jacques Fougerat, Mammouth's CEO became a mediatic individual. He was as present as the Leclerc family. People started to understand that this "Mammouth: the new reasons against high prices" was not an advertising slogan but a fight spirit. Mammouth strategy as previously stated now consisted in not getting closed in the price war where the brand name obviously going to lose. If it had wanted to gain price source effect and comfort its hypermarket legitimacy by adding some top of mind, it was the stores which had to improve their image profile on the one hand the strategic team of the chain which had to look for other ways to get over with the Leclerc problem on the other hand. The study of the opportunities showed that a new problem could be taken care of: the law forbidding certain products to be sold in hypermarkets; Following Leclerc's foot steps Leclerc which fought every monopoly and especially the pharmacy monopoly, Mammouth got a head start by launching its famous fight on baby milk. Until then, baby milk was only sold in pharmacies. To promote their products, the big brands would carry out milk tours in clinics and hospitals. It was about
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giving free milk to mothers. Each brand could do a tour of the clients handing out the products free of charge. Then the mother, loyal to the first brand she had used would go to pharmacies and the market would be organised. A Dutch competitor, Nutricia, had trouble entering the pharmacy market because the cost of milk tours and the entrance ticket for the pharmaceutical industry were too expensive for him. He was trying to sell in outlets like it was done in other countries. Mammouth's lawyers understood quickly that there was a real juridical vacuum and that it was possible to sell baby milk in large outlets. No law prevented it and it was a common practised in the other countries of the EEC, particularly in Belgium. One day, Mammouth bought advertising spaces in all the French daily newspapers and waged its war to sell baby milk. The pharmacists and the health department responded immediately. They did so even faster because other hypermarkets had already begun to try selling vitamin C, 90 alcohol, Aspartame in their outlets, surely not to let Leclerc be the only one involved in this fight. The operation stirred things up. The press, the media, everyone gave Mammouth much attention. The brand name was gaining top of mind, asserting its claim, demonstrating that its semantic pivot made sense; it was becoming Leclerc's direct competitor and the equal of the other big outlets fighting high prices purchasing power losses and monopolies. If the relations between Mr Mammouth and Leclerc were tense, they remained courteous and the men respected one another. Mammouth quickly became in that milk issue the leader of the fight against the pharmacies. A crisis team focusing on that problem helped the chairman of Mammouth participate in as many debates with pharmacists as possible in congresses, symposiums and other meeting that the press attended. Thanks to an obvious talent of orator, the chairman of Mammouth scored points regularly and above all managed to often make the pharmacists babble, contradict themselves and play the role of the villain before the press. As soon as 1988, right after this episode, Mammouth took on the problem of the sale of condoms in big outlets, understanding immediately the importance of this product in the development of AIDS. By using the same technique which aimed at using daily newspaper's ads, Mammouth stressed the contradiction of the system which forbade among others the sale of certain Zirconium condoms in large outlets. Fighting the monopolies, keeping the
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public informed, Mammouth became an emerging brand name which had a role to playas much as Leclerc or Carrefour did. These crisis cabinet tactics of Mammouth aimed at having the brand name identified with all the accidents, the events that occurred in this field. Practically, the outlets continued to fight on some prices, to supply clients with good promotions and to really develop new weapons against high prices. It certainly was Mammouth which was the first hypermarket in France to come up with the "first prices" which, at the time, could not yet be found, in the Leclerc centres, rarely in the Carrefour hypermarkets, a bit in the Auchan outlets and everywhere in the Intermarch stores. Besides the first prices, these counter brands, there were of course Mammouth products which had been completely redesigned, which were no longer just white products but products trying to reach a good quality price ratio. As far as textile is concerned, Mammouth produced its own brand, Alias, which was to compete with the brand of the Carrefour brand name Tex on the one hand and on the other hand to sell more textile products which started to sell well in some Leclerc centres which had grown from supermarkets to become hypermarkets, which was for many or promise of the new strategy of this brand name. The success of the first prices, of the Mammouth prices, of Tex, the sale of unwrapped products for pets were all actions which combined the claim of the firm. Mammouth had the good role. The flow clients were proud of their brand name. The staff had very high coefficient of pride to belong to the store. From an aging brand name relying on a strong but inappropriate slogan, Mammouth became an authentic hypermarket, considered as one of the strongest at the time. Without saying that Mammouth rushed its competitors, one could say that these different operations had given the brand name a new strength which permitted it to gain or reconquer some of its market share at the expense of all its rivals and particularly Leclerc. In 1989, she decision was made to continue the fight and lead the chain towards another direction not to remain enclosed in the context of the fight against high prices, that is to say in the context of prices where the Leclerc centres remained the leaders and above all the ones which communicated best. Very rapidly, it was decided that the claim "Mammouth: the weapons against high prices" should be abandoned and that the strategy of communication of
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the chain should be oriented to wards the idea of centre of life. For Mammouth's chairman, the hypermarket in future years had to be the new modern activity centre. All the studies showed that in these average size cities the hypermarket and its shopping centre were for many a meeting place a way to communicate. Teenagers liked this hypermarket ambience because they could find brands, music, new products... Elderly people liked these lively centres where it was pleasant to hang out, people were nice and there was a free and good quality show. This idea of centre of life correspond to a strategic and dialectical will to change the axis of the combat, as we pointed it out and to go on a territory that fitted Mammouth, that is to say to become a leader in term of the syndrome of C. Columbus on all these notions that history was carrying and that people started to understand (by looking at the votes of the ecologists, the public's will is to find more conviviality in these large outlets and fewer selling factories). The centre of live strategy aimed at making all the Mammouth outlets places where one could find everything needed to make people live better. The doctor, any kind of consultant, cultural means, and film are previews, a centre of ideas etc... The very large concept of centre of life appealed to the journalists, to the public but there was a need for an interesting opportunity to launch it so that everybody followed the idea. In a new Mammouth hypermarket in the region of Bordeaux, the decision was made to open a multireligion praying centre. A discreet and well furnished room was made available to the clients so that they could come pray no matter what was their god, language or race. The news did not make everyone happy. The Catholic Church leaders remained distant, thinking it was pure advertising and the other cults did not commit themselves. The press the contrary talked on and on about it but the clients came to the centre of life. It is certain that inside the chain, the topic was a common discussion subject but everyone understood that a centre of life could be beneficial and that every one had to have an opinion on it. Those who lived through this experience know deep inside their heart that Mammouth's chairman had a noble idea. Quickly, all the Mammouth outlets looked at the centre of live notion. They develop local operations which had no national impact but which heavily influenced the potential clients of the very specific markets the brand name was evolved in. At once, the hypermarket managers ceased being only good managers. They became communication men, had frequent contacts with the press and understood
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the good that could come out of some actions not directed only at promotions and prices. To confirm this notion of centre of life, the example of the Chernobyl incidents is interesting. When everybody heard about that disaster, only Mammouth took the precaution of placing Geiger detector devices in the Strasbourg region's outlets to assure its customers that the salads, some great cheeses were not radioactive and contaminated. It was a demonstration of Mammouth's interest in the life of its clients and of its new attitude to combine its claim In the region of Paris, a first optic centre was installed with professional opticians in the middle of an outlet to enable Mammouth's clients to buy glasses at unbeatable prices. It was another way to show how far a centre of life could go. All these communication actions aimed at moving Mammouth out of the axis of combat of the leader Leclerc and at becoming a kind of Co leader on another battle ground. Nevertheless, these actions did not forget the necessity to supply the market with the best products and the best conditions. Mammouth was the first hypermarket chain in France and undoubtedly in a world to use satellites to send from its Parisian centre video messages to each one of its outlets. A buyer of the purchasing centre travelling in Hong Kong could communicate directly with all the buyers of all the outlets, show the products he could get and ask to be sent by fax the quantities the aisle managers would order as well as the group managers of the 800 outlets of the chain. These operations that the public is not often aware of were designated to comfort the staff of the outlets and especially to show the suppliers that the brand name was ahead of its peers since it could display their new products in the Mammouth TV ads which were showed every month in all of its outlets. Let's stress here that these actions prepared by way for the advertising brochures of the usual promotions which were constantly taking place in the outlets. Let's note at last that although it chose other combat zones, the chain kept an eye on everyday problems and installed the first "phone which lowers prices" since one would ask the clients thanks to toll free numbers to point out the products which were cheaper elsewhere in order to have the outlet decrease the appropriate price. Mammouth like Darty did not want to say it was the cheapest; it wanted to
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say that it was among the cheapest. 4 years of fighting enabled Mammouth to show how one could fight a leader and become a real respected and renowned challenger.
Strategy of the leader: For the leader, things are totally different. It has legitimacy, source effect, top of mind and the good image profile. It just fears the constant aggressions of its rivals and must prepare itself against any action that the previously stated. If it waits for the challengers to set off doubt strategy operations, it will fall into the trap which consists in giving it the bad role and making it defend itself. Therefore the leader, when it gets to the end of the fourth phase and when it feels the challengers can catch up with it, must change for the game. It must keep its role of leader in the same time it makes its rivals look obsolete and lost. A good example is the moving company DEMECO. In the seventies, this moving leader was confronted to 2 kinds of competition. On the one hand the companies such as Calberson, on the other small companies advertising very low prices. The leader in this fifth communication phase is defined as a leader confronted to challengers. The C. Columbus syndrome plays in its favour. It usually has the legitimacy of the formula it defends, a good top of mind, a solid source effect on the criteria which matter to the shopper and an advantageously oriented image profile in comparison to these challengers. At the end of the fourth life cycle, the leader undergoes the repeated aggressions of its challengers. The more difficult the situation is, the more they will try to make offers which will lure some of these leader' flows to the other stores. If we cannot be sure that these moves and client circulation won't have any effect in the medium run, it is clear that in the daily management of its business, the leader will notice flow reductions. The great danger for the leader does not reside in these sales fluctuations which might disturb him in its management but which certainly don't endanger its future. Practice shows that 2 situations can be particularly difficult for it. The first situation is defined by the dialectical action of a challenger which looks to destabilise its clientele. In this particular case, the leader is always caught in an unpleasant alternative which is: either it responds and gives more importance to its rival's attack or it doesn't respond and proves that way it refuses to fight accepting the risk of letting its clients become spectators and judges and to lose their sympathy.
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The second situation is marked by the opening of a new rival proposing a new formula to the market. In Belgium, Holland, France and England, the opening of hard discounters such as Aldi, Norma, Lidl makes the great leaders like Leclerc, Auchan and Carrefour face this sort of problems. In this very case, the leader can no longer defend itself with its weapons, it can no longer use its legitimacy, its source effect since by definition the new rival will be located in phase I of the life cycle of communication, that is to say in the revolutionary phase. This rival by definition will exist simply because it will stress one of the contradictions of the leader. We must then analyse the strategies of the leader, making sure we dissociate the specific cases. In the first case, which is life cycle, it must not contradictions. To avoid underlined it will have to and effect. when the leader is in phase 4 of the communication wait for the challengers to try to show these falling for that alternative trick that we previously carry out initiatives which will confirm its legitimacy
In the eighties, the leader Darty had to face simultaneously the aggressions of 2 challengers, the NASA and the Boulanger brand names. These 2 challengers as well as the hypermarkets which sold this type of goods wanted to destabilise the clientele of Darty. The challenger Boulanger displayed in its outlets comparative price panels where it could be read that it was the best. NASA favoured promotions, price offers and above all made a lot of noise with the help of peripherals radios. The objective of these 2 challengers and especially of Boulanger was to stress the contradiction of Darty which refused to use prices as a battle ground and which was content with asserting that, as we already saw, it was ready to reimburse the difference and offer champagne if someone found cheaper elsewhere. To fight off its rivals, Darty had chosen to play the role of the leader and take advantage of the C. Columbus syndrome to keep in touch with its flows and traffics. Darty was considered number one in after sales service. It was out of the question for it to leave this strategic spot. By continuing to communicate intensely about this service and assert its position on prices, Darty let its rivals come. The brand name in this fight was well inspired to communicate on other points than those related to the products, prices and choice. In 1987, the press paid a lot of attention to Darty's desire to sell its company to its employees. The public and as result the clients and future clients could learn what Darty was about, what the company was worth and above all the pride
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and emotional involvement of the employees as a whole for their company. The Darty brothers, since that's how the company's owners are named, would make themselves know that way. People would learn their story, their success, and their will to believe in their staff. Whereas both challengers would keep on attacking on concrete matters, that is to say prices, promotions, the leader seemed stronger, taller, more interesting, and more human. The public felt close to Darty. It was proud to deal with this brand name too. It was the expression of a great human success and of a potential achievement for the men who would become one day partners of the firm. The communication mount that was spent for this goal was considerable. It was all the more important because it did not present itself as advertising but in the sense of a journalistic communication. Darty was leaving the advertising field to enter the information, the news one. In terms of dialectics, we can put for ward safety that Darty created this way a real transfer of emotions with the markets. Everybody felt committed to the brand name which no longer looked like the expression of the retailer but more like the reality of a myth. In this example, it is likely that the purchase of the company by the employees in agreement with the founders was not included in the strategy of response to the challengers. This being, it is interesting to note that unlike what we could think, this capital reorganisation of the company did not weaken the legitimacy or source effect of Darty in terms of service but on the contrary brought a new dimension, a human one to this crucial element of its strategy. The challengers who could not pick on the after sales service of Darty wanted to draw it into the price battle as we said earlier. The stand of the brand name, its new relationship to the market helped it triumph in this battle since NASA had to file for bank rupture and Boulanger looks for ways to finance its future. In all the cases where the leaders were confronted to challengers trying to destabilise them, a total success took place when certain rules were observed. Confronted to challengers, the leader must confirm and assert its C. Columbus syndrome by relying or its legitimacy and source effect. Then it must absolutely create a relationship with the public that its challengers cannot afford because of financial reasons or lack of incentive. At last the leader must demonstrate that its staff is really proud to belong to the brand name.
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To elude the alternative imposed by the challengers, the leader must really denunciate the scheme that is, express clearly that it has understood the game of its challengers but that this game is not beneficial to the public. It is only advantageous for those who want to take the place of the leader. When the leader is attacked by a new formula (not by challengers) the problem is completely different. Here the public, that is to say the different kinds of potential clients or the clients of the brand name are going to enter a system of comparison. They are going to try to see if the new formula is advantageous and especially if it makes the old one, the one of the leader obsolete. The French hypermarkets were recently attacked by the American toy specialist, TOY ARE US. Until now the great hypermarket brand names were the toy leaders during the Christmas season. By relying on prices but also on the choice, Carrefour, Mammouth, Auchan and all the others shared this toy market and 80 % of the purchases occur between November and December. The new formula Toys are us coming straight from the US is troubling (and will do so even more) the hypermarkets. Being aggressively discounted, the toy product almost became interesting profitability wise. To protect themselves against the formula of these toy specialists, the hypermarkets must develop particular strategies so that the public does not choose to go shopping at these toy specialists to purchase all or part of their Christmas presents. In the previous case, the leader Darty had the nice role towards the public. It kept its combat line, guaranteed the clients on the price and after sales service and managed to make people want to become partisans of the brand name. The nature itself of the debate was polarising. The public, the journalists, the economic leaders weren't indifferent to the development of Darty. Here the problem is completely different. The leader is attacked by a new formula and it catches people's attention. The hypermarkets toy department became ordinary and the public expects more or it threatens to change outlets. Each hypermarket brand name is condemned to fight this new formula. The public must be a spectator whose role is going to keep count of the score. It must see how its brand name fights, counter attacks and reduces the new comer to its mere expression. Whereas Darty was not to pay attention to its rivals, here, all the brand names which are confronted to Toys are US must absolutely attack competitors to show that the new formula does not bring anything new to the
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public. Because it did not respect this fundamental rule, the Delhaize and GB brand names in Belgium have had to do with the presence of 300 Aldi outlets which came to occupy the Belgian territory. Because it reacted very violently, the Albert Heinj group succeeded in containing the spread of Aldi which does not succeed as it does elsewhere. Here the leader must respect the rule of the first occupant. One must know now to make immediately the decisions which are going to play down the influence of the new comer. To hamper Aldi's growth in Holland, Albert Heinj has been able to launch immediately a range of good quality first prices comparable to the 600 products sold by Aldi. Thanks to a strong and clear communication, Albert Heinj has known how to confirm its attached flow clients. By using its claim, "the big one who thinks of the small one" the brand name gave no time to the newly come to settle down in the market. When facing a challenger, one should not play its game. One should transfer the problem. When facing a new formula, one should attack it directly while it is still in its testing period among the public.
STRATEGIC RELATIONSHIP BETWEEN LEADER AND CHALLENGER IN THE FIFTH PHASE:
If we consider the matrix of the following page, we notice that a series of favourable and not so favourable conditions exist for the leader and the challenger, depending on the quadrant in which we are.
The leaders with a slogan or slogan leaders: A leader in a given retail that is to say a retailer who benefits from a C. Columbus syndrome can communicate only with a slogan and not with a claim. This slogan carries either a client promise or simply its top of mind. The slogan leaders who are in quadrant are usually in a good position to fight off challengers with a slogan, that is the retailers in the same kind of distribution system relying not on a fight expressed by a claim but on a client promise or an effect favourite the top of mind. The claim leader Conforama tells the market that it is "the country where life
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is cheaper". In this case, it is a slogan, not a claim. We note that Conforama is perfectly well disposed to fight rivals such as Atlas, But, Mr Meuble and others even if they are not always direct competitors. Of course the slogan leader is not handicapped by the absence of a claim. It may be the history, even the nature of the market itself which makes that this leader never had to fight and clearly state its fight.
If the slogan leader does not fear its challenger, it can be very troubled by a challenger which would use a claim to back up its communications. From the moment a challenger has a communication strategy which would be to announce clearly to the market its will to fight for the client either in terms of price, service or quality, the slogan leader could find itself in a difficult communication situation. As a matter of fact, the slogan leader usually has the advantage of having advertising resources superior to those of the slogan challenger. In the case of a combat with a claim challenger, the problem is totally different since, of course, the combat will be fought with an advertising force on one side, the one of the leader, and while on the other side the challengers will be able to develop a communication action aiming at creating partisans and not always necessitating large advertising expenses.
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When a slogan leader wants to take on another market or looks for instance to enhance its sales capacity by targeting certain product families held by another competitor, we notice that it faces many problems when it is confronted to a claim leader. It is not rare to see that strategically slogan leaders try to avoid the attacks of claim challengers by increasing their influence zone and by targeting other products. It is an interesting adventure which at the communication and brand name image levels raises the issue of the slogan / claim relationship that we just exposed. To understand fully all the problems which can hamper a slogan leader's march when attacked by slogan challengers or claim challengers, one must take into account the communication capacity of the distribution system. It is clear that in certain forms of retailing, the advertising resources are too meagre to allow a real communication battle to take place. On the contrary, in other retails such as food and hardware retailing the ratios of advertising are very important and can reach 2 to 3 % of the revenues figure, which gives particularly interesting action capacities. When studying the slogan leader against slogan challenger relations, it will always be important to take into account these communication mass effects which account for the ampler of the given problem.
The claim leaders: When a leader exists through its C Columbus syndrome and that in addition it relies on a claim which clearly states its fight for the consumer, its position in terms of communication is rather solid. The claim leader does not fear the actions of slogan challengers. Experience evens shows that these slogan challengers spend great amounts of energy trying to take some market share away from these leaders. When such confrontations occur, we notice that claim leaders are usually very violently attacked not by the slogans of the challengers but by the promotions, the price drops which are the only possible solutions for this type of challenger. On the other hand, the claim leader can fear claim challengers or those which decide to attack by launching an action of presentation of their fight for the public. The question resides in this confrontation to know whether the challenger with its claim is going to succeed in destroying part of the C. Columbus syndrome of the leader, for example by changing the reference axis and by somehow making obsolete the criteria which have been taken into consideration by the public to establish C. Columbus syndrome.
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One can notice for instance that claim leaders particularly fear the coming out of any new retailing formula (which is located in phase 1 of the communication life cycle of the retailers). This new formula being by definition a way of changing the order of things, of redistributing the roles, and especially of inserting doubt in the mind of the leader's clients. Hard discounters like Aldi have attacked in very direct way retail leaders which were solidly anchored on their C. Columbus syndrome and on their claim. To evict a claim leader from its market position, one must make obsolete the elements of this syndrome or attack its claim to show that it is no longer up to date. We notice in the case of these claim leaders that the communication masses are important but that it is the perceived reality and value of the claim which question all the balances that had been reached up to then. Whereas in the previous case the slogan leader owes its position to its communication strength, to its impact and as a result to the volume of its spending, in the case of the claim leaders the problem is totally different. We are dealing with a conflict of ideas more than with a communication of the end of a fourth phase of communication life cycle in retailing.
Claim challengers: As we just saw, claim challengers have a great capacity to fight slogan leaders and can shake them up thanks to very clever strategies. It is when attacking slogan challengers that claim challengers are the most power full. It is relatively easy for them to have the slogan challengers play the bad role and especially to fight head on all the promotional offers of these challengers which make noise with their promises. Claim challengers are in an ideal position to make the slogan challengers' clients doubt. It is one of the advantages that their position on the market gives them. At a time when the Leclerc distribution centres were challengers of the hypermarkets, it was really easy for them to fight against other challenger supermarkets which relied only on slogans of the following type: "Felix Potin, people go back" or "go Prisunic", or "with Euromarch we euromarket". We note how important it is to define before any communication action the inter relations which might exist between the different challengers in order to isolate those with a claim from the slogan ones. In certain types of retailing where the advertising means are considerable, one can wonder whether the communication power of a challenger with a slogan can be by a claim challenger's. Experience shows it cannot. The claim is always stronger than
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the slogan in the mind of the public. It still is that depending on the power of the challenger with a slogan, depending on the situation and the contradictions that will be brought out, the position of the challenger will be more or less attractive.
The slogan challengers: The slogan challengers are retailing brand names which usually get to the market with an obvious desire to conquer market shares quickly. Large retailing groups are often ready at a given moment to launch harmonious modified formulas of those already existing and dominated either by slogan leaders or claim leaders. "La Halle aux chaussures and La Halle aux vtements" launched in France by the Andr group have rapidly seen challengers such as Vetland and others attempt to conquer market shares. Having quickly reached phase 5, these slogan challengers have had lots of trouble creating trafic and making clients come to their store. Here again, depending on the type of retailing, we notice that different attitudes dominate the strategy of communication investment allocation. Some managers of slogan challengers imagine they can get a foot in the market by attracting other challengers or other leaders through the development of a strong penetrating, nice and clever communication. Their goal is to have a share of voice large enough to rapidly obtain the same top of mind as their rivals. Such strategies can succeed provided there are only aging slogan leaders, that is to say leaders with no immediate response capacity. When there are claim leaders, the problem is very different and this communication spending (experience proves it) does not solve it. Often, it can be noticed that some slogan challenger' managers copying a formula wait for a sufficient number of outlets to carry out a so called national communication. It is no longer local. It seems to be a rather risky calculation because in every case they will be losers if, for instance they have in front of them a slogan leader, a claim leader or a claim challenger. It is certainly this kind of error that made the group Casino when launching its OBI hardware outlets by not granting them a strong enough communication force in terms of slogan since, it seems, the decision had not been made to give a claim to this challenger. On the contrary, the chain Mr Bricolage had clearly understood the need to invest strongly to face such leaders as Castorama. Rapidly reaching a very
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good level of top mind, building its legitimacy and a good source effect, the Mr Bricolage promotion demonstrated that one could take an interesting place on a market while having understood the necessity of the communication impact in this context. This matrix on the communication strategies becomes all the more meaning full in flow and trafic outlets, that is to say in any retailing field where one must, through particular actions, attract new clients. One can use this matrix only in relation to other strategic matrixes positioning outlets together. We must understand that it is only a simplified way of seeing the inter-relations between leaders and challengers, between the notion of claim and the notion of slogan. To conclude on this fifth phase, we can say that the tools of the usual dialectics that is to say the techniques and figures which are extensively treated in different books are going to enable the retailer to give a new meaning to their action. We must be aware in this fifth phase of the fact that to overcome the incommunicability wall, strategic choice must be made because they decide of the role that will be played, challenger or leader. The setting up of a claim is all the easier because overall, the operators basically relied on slogans and on promotions. The destruction of the C. Columbus syndromes is rather easy to achieve if one evacuates the idea that advertising exists in retailing only to promote the brand name's merits. At last, a combining of the launching of a claim and of a strong communication operation can help create rather rapidly a C. Columbus syndrome.
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The communication of outlets:
Now that the notions inherent to the definition of the brand name have been examined, we must analyse what must be the communications of outlets.
THE COMMUNICATION OF ESSENTIAL FLOW OUTLETS
These outlets which break even with the clientele of the first zone are confronted to 2 sorts of communication, the commercial communication and
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the corporate communication.
The commercial communication: This communication is done in the outlet. Its goal is to make people understand the offer, the price level, the quality level and the formula it belongs to. It is the decor of the outlet, the advertising in the outlet and above all the talking that is done at the cashiers between the clients and the retailer which enable the best to communicate all this information. Nonetheless, when competition becomes intense, these good dispositions are no longer sufficient. Clients which to have another perception of the brand name than the one they receive through the daily contact, the sympathy and the (often) friendly relations which might exist between the retailer, its employees and its clients. The corporate communication: The more aggressive communication gets, the higher the outlet denseness become and the more essential flow outlets need to bring a guarantee, a reassurance to its clientele. Although the shopper thinks he is loyal to an outlet that seems unique to him, he feels particularly secured in his choice when he is convinced that his outlet belongs to a brand name store. Fore the opticians, this notion of corporate communication takes on its real meaning. A neighbourhood optician is always well considered by his clientele. By nature, he his considered as part of a profession and one questions his retail legitimacy, his savoir faire, and his capacity to sell correcting lenses. Nevertheless, this optician or essential flow outlet needs to keep his clientele, to renew it and try to improve his profitability, to have more long-sighted, children etc... He also has to make himself known by ophthalmologists who are the main prescribtors in this kind or retail. For back to school season, at vacation time, this optician who usually displays his own name above his store wants to carry out clientele operations by proposing new services, new glasses. He notices that these ads, these direct marketing actions have little impact. He gets his attached clients interested but he is not sure the detached clients and the non clients are receptive to this promotions. His clientele renewing is done mainly orally and we can say that the outlet is tied to his own legitimacy, his source effect and his image profile. If on the contrary, we look at the results of the independent opticians associated in a chain system such as optic 2.000, or the Kris chain, we notice that the results of the direct marketing operations are more interesting and
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that overall the non client is more likely to read a brochure sent by a well known outlet supported by a strong brand name. We often notice that the offers of the independent optician liken those of the opticians who subscribe to a group such as KRIS or Optic 2.000. It is therefore corporate communication and the strength of the brand name which give another dimension to the tactics and marketing strategies of direct action on the clients and non clients. In food retailing it is certain that the small retailer, the bikini shop that can be found in big cities bring to their clientele an indisputable service. Opening early in the morning and staying open late at night, these outlets know how to create an optimum relationship with the clientele and everyone agrees to say that this new generation of outlets is crucial to the supplying of housekeepers. At any rate, the great chain of essential flow outlets in food retailing remain the best suited to sell certain products or develop certain discount policies. The strength of the Casino brand name enables the small neighbouring outlets to benefice from a particularly good profitability and especially to complete in the fruits and vegetable field which can be found in markets. The Franprix chain in Paris, the Dia chain in Madrid keep an indisputable credibility in their will to position themselves as discounters with the help of the strength of their brand name and the function expressed by communication. Often managers of chains of essential flow outlets do not which to spend important seems to communicate under their brand name. Let's analyse objectively that outlets live mainly off of their commercial communication, they don't deem important to develop great communication campaigns in order to defend their brand name. It usually is a fatal error. Any firm which runs essential flow outlets must invest in communication to assure the permanence of its outlets and especially to thank its clientele for being always so loyal. Some branch companies paid a high price for this savings incentive which consequently positioned their outlet and as result positioned their outlet and as result positioned their brand name as a secondary brand name. Rapidly, the outlets lost legitimacy, source effect image and had no ways to really exist in the minds of their clients. As we already said it, an outlet is a living system before anything. Corporate communication targets the clientele but also the employees as a whole. Vis a
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vis their small outlet, managers and sales men must secure themselves and be proud of belonging to a great brand name. To neglect corporate communication, to renounce to invest to have a strong brand name is also taking great risks in terms of management and in any case not making sure that the firm will keep its best employees and that the company will bring in new talents from outside.
COMMUNICATION OF SEMI-FLOW OUTLET
If in the case of essential flow outlets one can, for a short time period, close an eye on the research of a claim and on a communication aiming at developing the brand name's brand, one must understand that for semi flow outlets it is impossible. As soon as a semi-flow outlet notices there are many flow clients in a 5 to 8 minutes by car zone, it first has to remain present in the mind of its clients, then it will have to convince them they made the right choice. If these semiflow outlets are confronted to flow and traffic outlets, they will obviously have to make their clients become loyal with the use of their brand name so that they don't go shop somewhere else. In these semi-flow outlets, if the relationship to the staff is important, it is not like the one observed in essential flow outlets. Whether it is a clothing store, a food store or a specialised store, it must through communication make up for the lack of contact that there is in a small clothing store, a small retail store. In many cases, it can be noticed that semi-flow outlets (whatever they sell) today are attacked by formulas which look to create client traffic through the promise of discount. To fight these effects, the semi-flow outlets which don't want or cannot follow this price war often develop service strategies aiming at having clients understand that prices are not everything but that permanent help from the salesmen is necessary. This can be noticed for instance in photo stores, in certain sport shops, in optic stores and of course in food supermarkets. This desire to answer the discount with service is not a mistake in itself. Problems arise when outlets which wish to develop such a strategy have not invested enough in the value of their brand name. If these semi-flow outlets don't rely on a strong enough claim, if their service policy is not expressed by the mass media, there are few chances they can
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make their attached clients believe that they were right to prefer. In the mid eighties, to keep its clientele and especially to fight off certain discounters such as Aldi or Colruyt, the GB supermarkets had decided to launch a communication based on the neighbour-neighbour theme. In between the slogan and the claim, this communication theme wanted to position the outlets in the relation function and insist more on the service, the quality of the welcome than on the discount, which was what competitors were doing. The customers were informed by a letter of the president of what was going on in the outlet and its bargains. The staff of the outlet was glad to express its desire to help and serve customers. The later ones, attached or detached were perfectly aware of the fact that there were no discount prices in these outlets but they gladly accepted the friendly compensation they were offered. 6 - Research Methodology for the definition of a brand name image:
All the brand name and outlet managers are preoccupied with the force of comprehension, of perception of their brand name's brand. This legitimate preoccupation is explained by the fact that the force of a brand name brand permits to keep its flow clients and to better attract trafic clients since naturally, a promotion carried out by a strong brand name will have better chances to be perceived, read and remembered than a promotion done by a brand name whose brand importance will be less significant. Let's note that the successive communication wars that brand names impose on one another force all these managers to continually question the value of their brands. It is particularly difficult to use the classic techniques inherent to the research of product brands since we are not confronted here to a phenomenology of the need like it is the case for products but to a choice phenomenology, that is to say , of the behaviour. To know the force of a brand name and of its brand to grass the strengths and weaknesses of an outlet, one has to use an approach which illustrates the behaviours and not a research which underlines the motivations as it the case in classic studies used by psychologists. It is the method of client confrontations which has yet the best results up to now.
CLIENT CONFRONTATION - PRESENTATION
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In a first studio equipped with hidden cameras are placed fifteen clients of a given brand name. In a second studio are placed 15 non clients of the brand name having visited the outlet out of curiosity or to purchase products in the past six months. In a third studio are placed the managers of the outlet and those of the brand name. The experiment is not about asking the clients and non clients what they think of the legitimacy, the source effect and claim of the brand name but on the contrary to make them react to statements made by people running the outlet. All those who work in retailing like brand name, outlet managers or consultants know that the third type of clients of an outlet is its staff. Whereas the product is by definition finite, the outlet and the brand name are real living beings. The claim expresses a fight. The staff goes through this fight. The clients and non clients get a feel, through the behaviour of the personnel, of the truthfulness of the influence of the brand name's brand. Everyone in the outlet has an idea of its strengths and weaknesses, of the value of its claim, of its legitimacy, source effect, perception image and determinant image. If we previously talked about the dishonesty of the client, we cannot talk here of dishonesty but of a total conviction of the managers of an outlet and brand name to check that they are good, efficient and at any rate better than its rivals. It is this psychological material which will play the role of detonator to create the confrontation study.
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Successively, we will inject simultaneously and separately to the client and non client groups some "5 minutes to convince about the outlet". Thanks to the video, the clients and non clients will a series of 2 to 3 minute movies which will state what the managers of the outlet think, what their truth is. Their explanation of how they are chosen and why they are not chosen. The personnel of the outlet are going to give its opinion on the behaviours of the clients and non clients such as they imagine, hope and conceive it. Clients and non clients will react to the statements, the hypotheses launched by the managers of the outlet. They will express their positive or negative answer. The managers of the client and non client groups will not ask why, will not take the information up like in any normal four groups and will be content with having the participants express the reasons of their disagreement and those for which the come to the outlet. Thanks to the video, the managers of the outlet and of the brand name will be able to communicate at any time with the managers of the 2 groups and inject new ideas heeding the clients' reactions. Then, in a last phase, the non clients of the brand name will be asked to convince the clients of the brand name and vice versa. A real confrontation will take place between the clients and non clients which will make surge elements concerning the choice mechanisms taken into account by all. This kink of approach is advantageous because it makes the clients and non clients react as shoppers and non consumers. By working this way with the managers of an outlet, one can really face the problem that is the fact that the image of an outlet is first supported by those who make it daily, that is to say the personnel. Let's note finally that this confrontation technique points out systematically the contradictions there can be in the clients and non clients groups and in the group of the managers of the outlet. It is this perception of the contradictions which permits to understand what the qualitative reality of the brand name's force really is. Numerous experiments have shown that a brand name's brand could be understood only by working on an outlet and not in a global way. The clients or the non clients only know their distribution zone, their panorama of
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competitors. They can talk only about the choices they have to make which are tied to the location, the zone they usually shop in. The qualitative approach implies a quantitative validation. There again we have to consider the problem raised by the shopper, that is that we mainly try to understand behaviours and not motivations. Therefore we must resort to all the quantitative techniques which permit to have definite answers, scales of attitudes and scales of agreement as far as behaviours go. A new technique enables thanks to computers to work on large numbers of clients and non clients by infecting messages and statements like in the case of the previously described confrontation. Thus, the clients and non clients of a brand name get to vote with a key board which enables them to give their opinion immediately on diverse propositions. First, we will ask these clients and non clients to set up a hierarchy between them according to certain criteria that they will be proposed. With the help of a choice process, there will be a perfect hierarchy of the criteria not only at the ranking level (first, second, third...) but in compared value between the first, the second, the third, etc... This work accomplished, we will ask them to give a performance grade to each outlet of a given zone, to the aisles of different outlets, etc. We will have instantly a positioning mapping which will permit to grasp how are actually perceived the elements of legitimacy, of source effect, of perception image, of determinant image and of claim. We will be able to repeat this type of operations for several problems, for instance: - hierarchy of the choice criteria of a brand name, of the performance of each outlet in the region, of the sector, of the zone of distribution; - hierarchy of the supply, of the performances of the different competitors. Before any research, we will make sure to point out the purchasing circuit of the clients and non clients to have a sufficiently pragmatic, consistent and clear approach. By comparing the mappings of the clients and non clients, we will have a good perception of what can be quantitatively the value of the brand name brand.
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CHAPTER 8
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Life cycles of retailing companies
The retailing companies are the companies which run these outlets and brand names evolve in a very particular life cycle which can be broken down into 3 phases: - the technological step - the function step - the financial step.
1. First phase of the cycle: the technological step
Generally, retailing firms have started out from the creation of a new formula or out of the will of a powerful group to copy an interesting formula and make it develop faster and more surely than could do the promoter or the inventor of this new way of selling. As we already pointed out a few times, the history of retailing is filled with these extraordinary managers' epics, innovators who like Boucicaut have launched the department stores. Leclerc, Carrefour, Wall Mart; Migros, Piggly, Wiggly, Toy's Are Us, Handy Andy, Sainsbury, Marks and Spencer, Price Cup and many others are all brand names which were born out of the colliding of the ideas of a man or a team of men who created these new ways to satisfy the client and to distribute products.
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If the formula is indispensable to the distribution of a product, it remains true that for it to survive, there must be a savoir-faire, a real retailing technology which permits that each day the formula be supplied with products, be capable of communicating, be able to lead these men, spread and resist any rival, the lobbies which are going to try to eliminate it if it is too dangerous. This savoir-faire which is very different corresponds to the mastering of a crucial point to the formula in its relation to the market. In other words, the formula is the creative solution in the market-outlet-brand name relationship, the retailing technology; the savoir-faire is the tactical principle which yields the formula. Let's take a few examples. As far as its outlet franchise goes, Cacharel has the mastery of the communication of the expression and also of a certain kind of fashion. Thanks to the photographer, Sarah Moun, the Cacharel formula is going to exist. The distribution of products is going to be possible. Here the company technology is the capacity to communicate. Originally, the branch manager, Geoffroy Guichard, through his Casino brand name has had the mastery of management and organisational rigor in his warehouses. The formula develops thanks to this uncommon capacity at the time to know-how to run outlets, to be able to supply them and to retain for each manufactured or fresh product an indisputable quality for the price it was sold at. Here the main technology of the firm is its product circulation mastery, its warehousing at really performant price and quality conditions. The formula of the Leclerc distribution centres relies on another kind of savoir-faire. It is the organisation, the management of men which permits to have systematically performant outlets in terms of prices. It is the real Leclerc religion which is the basis of their success. If the brand name has particular capacities to communicate, its daily reality relies on this idea of the third time which makes that each partisan is both perfectly independent, free and completely caught in a real movement which has its laws, rituals, dynamic which have been unmatched up to now. The company technology is its savoir-faire, its management consequent of the charisma of the inventor of the formula. The example of the Yves Rocher stores. During the technological phase, the company will thrive by relying mainly on this savoir-faire, on this technology. This mastery of one of the elements of the formula, this distinct quality is
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going to allow the firm to make the difference with all its rivals, either those who attempt to operate a resembling formula or on the contrary those who operate more traditional and more ancient formulas. This company technology can be of 2 kinds: of human nature of technical nature.
Human: Certain formulas are built mainly on the charisma, the intelligence of their creator. The Wall Mart outlets in the US which show an n million dollar revenues figure are mainly dependent on the existence of their creator Sam Walton. Well-known all over the US, this company creator is a real god for his colleagues. It is his way of looking at things, his respect of men but also his way of behaving which make that everyday the Wall Mart stores are at the forefront of the service and satisfaction of the clients. Although very wealthy, Sam Walton likes to drive almost exclusively in his Ford pick-up truck because, says he, "I can buy samples at competitors". It has been said and the story is true that with his truck, he often goes and park in fast food parking lots and incognito sneaks in, goes to the bar and orders a hamburger, starts talking with a truck driver and gets a job as to unload the truck load of one of his Wall Mart outlets. There he can understand what goes on, how people live, what must be done for products to be delivered in the best conditions. Sam Walton knows his company the best. As head of 2500 outlets he is the fourth wealthiest man in the US and yet still lives in Betonville, Arkansas. He perfectly knows his job, his outlets. He can also explain it to his managing staff and keep his credibility despite his success, but also he's got an outstanding sense of how to manage people. In 1970, an outlet had made a wrong order and had been delivered a quantity of apple pies which represented one year of sales for that outlet. Sam Walton said one word to the director: "Manage it. Find an idea. You have to deal with the problem". The director and his team imagined the contest of the biggest apple pie eater in town. It was a real success and since that day, in every Wall Mart outlet takes place the world championships of apple pie eaters. This anecdote shows the will to give men the freedom to create or to solve themselves the problems, which is not always easy as far as retailing goes. The example of Sam Walton is only one among many others.
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The Hippopotamus restaurants are their success to the strength, the sympathy of their creator. This brilliant medical school student who would drop out of school one day and take over the family restaurant because his father was sick and could no longer work, did not know he was going to live an unexpected adventure by launching a new style of restaurants. The idea of the Hippopotamus restaurants rested on several simple principles. To have good meat, good fries and above all a price that is defined before, that is to say without surprises. But it is especially the ambience, the staff, its behaviour, its way to make clients wait which made the success of the formula. This dynamism, this motivation, this constant mobilisation rested and still rests on the extraordinary dynamism of the founder, Mr. Guignard. Everybody knows his passion for his company and his unexpected visits in his restaurants not to check on things but to dynamize, encourage and make everybody feel like doing better. This human technology will be able to express itself, to exist only if there is a rigor in the management to back it up, a method of purchase, a capacity to communicate, etc. Nevertheless, the distinct proficiency will rest on a man or men who will have this special something which will make the formula work and exist. Certain brand names such as the Leclerc centres have been and are dependent on the conviction force, the savoir-faire of their leader. Like Sam Walton, E. Leclerc and today his son Michel E. Leclerc have the real technology, the savoir-faire to lead men, to unite them and make the formula live. Naturally, the formulas which rest on the savoir-faire of a man or a team of men can last long provide that behind other savoir-faire help in the daily managing and the development of the firm. The central vibration of the company will be based on this human technology.
Technical: Other formulas owe their success not only to the men who invented the formula but to the mastering of a technique. The success of the Colruyt supermarket chain in Belgium is consequent of the mastering by the company of the data processing technology. Before its rivals, Colruyt has developed an organisation; a management which helped it gets ahead and supplies the market with really competitive prices. Born out of a computerised society, the Colruyt supermarkets has a
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considerable head start and could afford a communication carried out through direct marketing, file maintenance and special offers directed towards particular clientele segments. The Aldi hard discounters chain owes its success to the mastering of the purchase systems, to its capacity to buy directly from plants all over Europe and to the fact that it knows how to use the fluctuations of the moneys and their exchange rates to be even cheaper than its rivals. This mastering of the purchases is backed up by a fierce will to hunt down and find all the excesses in terms of running costs. No one wonders why there are no phones in outlets or why the lights of the corridors switch off on their own after a few minutes not to waste electricity. The purchase system and warehouse management are part of the savoirfaire which gave birth and prosperity to very different brand names. DEVELOPMENT OF THE TECHNOLOGICAL PHASE
During the technological phase (human or technical), the retailing formula or the distribution company are going to have the choice to develop according to 2 very different principles.
The on-line principle: In the on-line principle, the company looks to develop its formula as fast as possible. Since 1963 for instance, the Carrefour Company has opted for this on-line principle. Concentrated on its hypermaket formula, the company has chosen to open outlets everywhere the market looked favourable. France, Spain, Argentina, then Brazil and the US have been the markets considered to develop the formula in the most favourable and less risky conditions. Aldi since its creation develops according to this principle which was first present in Germany, then in Belgium, in Holland and in the US. The formula today takes on France. Carrefour and Aldi haven't changed formulas and have fought to make prevail their conception type of distribution for a certain type of clients. Darty for household appliances, Conforama, C & A have also chosen this type of development. As far as this on-line growth principle and the technological phase go, companies are going to face different problems.
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First of all, we wonder whether the formula will be durable enough, strong enough so that time, it will keep on being attractive. Then, will other companies be able to copy this formula, especially companies with many outlets and important financial capacities. Since 1963, the Carrefour Company has been heavily copied. The hypermarket system of Carrefour has had many emulators and some have even succeeded in matching the performances of the initiator of the formula. The Auchan hypermarkets in France have the same legitimacy level as the Carrefour hypermarkets. On the contrary, the Aldi formula has never been perfectly copied. All the hard discounters who try to establish themselves on the market are less authentically legitimate than this great German brand name. To be copied is to be confronted to a competition of the existing systems on the one hand, and to a competition of same nature on the other hand, that is to say lose some of one's originality, of one's differentiability and enter a brand name battle as opposed to a formula battle. The Leclerc distribution centres are hard to copy. It is because of the nature itself of the technological form which leads the company. It is a technology of human nature, as we already said it, which is hard to copy. All those who have tried to copy Leclerc have had to change strategies. The Intermarch outlets in France which were created by the Leclerc family are not based on the same principle. Darty and C & A have not been copied yet, here again because of technological reasons not of human nature but of technological nature. Those who have tried to make this kind of outlets have had big problems such as NASA and Boulanger did. Then, financing problems come. In its technological phase, the formula will often need to use the franchise principle to be able to develop quickly enough. As we will see in the chapter on the notion of franchise, the solution can be good only if the formula is indeed franchisable, that is to say interesting for the franchisee and franchiser. Mc Donald's which expanded according to the on-line principle and which was quickly emulated has had to face all the other kinds of restaurant formulas and its direct competitors, Burger King, Wendy's and Quick for instance in Europe. Through its franchise development, Mc Donald's has been able to quickly acquire a sufficient density on the one hand and especially strength in the
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expression of its brand name granted it.
that a centralised system might not have
At last, the formula might be confronted to the problem not of its obsolescence but of what we'll call the marginalisation of its technology. As we expressed it previously, for a formula to exist, it must be based on a technology. Sometimes, the knowledge of certain techniques, of certain processes enables retailers not to be copied and to keep a certain lead with regard to its competitors. If for technological advances reasons, everybody can use these techniques, the formula will be naturally less protected, easier to copy or less performant. The data processing progresses, the possibilities of storage supplied by specialised companies in transportation enable certain competitors to catch up with the most advanced ones. The current possibility to make specialised consultants work, especially in terms of warehousing, of products level out the technological differences between companies and give the opportunity to the weakest, the most backwards one to catch up with the entrepreneurs who in the mean time have taken risks to be really up to date in certain techniques crucial for the differentiation of their formula. The on-line principle of development has the advantage, when the formula is really original and different from the systems of distribution already in place, to rely on a simple and clear marketing strategy easily understandable for the client. The formula expresses the contradictions of the classic competitors, relies on a promise and as a result determines a unique positioning which typologizes the clienteles. Aldi is at the opposite end of all the classic forms of supermarkets, hypermarkets in the sale of grocery products. People like it or not. One is a client of Aldi or will never become it. The company and the brand name move in their zone without any ambiguity for the whole market. The authentic Ikea formula which relies on the contradictions of its rivals (people leave the store with the sofa and don't wait 3 months for delivery), the on-line principle of development based on the franchise, benefit from legitimacy, source effect, and a clear and understandable image profile, easy to get across. The traffic actions are immediately profitable; they are even less expensive because the formula has not yet been copied. Based on a simple marketing strategy and an easily understandable communication, the formulas which choose to develop according to the online principle also have the advantage of better occupying the scene. All the
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formulas which choose this type of development have a deep consciousness which aims at developing from distribution zones that bear many clients and are hard to take over. Being the first, these formulas usually have in their strategy; the choice as far as location goes. As a consequence, the flow shoppers will be easily captured and the traffic shoppers will be attracted in a less costly way if they buy the formula. Since their commute constraint won't call for too costly a reward, to use the constraint reward principle expressed earlier. The best hypermarket locations in France were taken by Carrefour at the time. The followers have often had to content themselves with less interesting locations that are requiring much heavier communication investments to achieve the same results in terms of traffic, number of clients, etc. This notion of location is all the more true since the formula is going to develop in countries where there are laws like in France or Belgium which don't allow developments which retailers would like.
The "on area" growth principle: All the retail companies don't develop through the on-line principle and some choose the so-called on area principle. Certain companies which started out with the help of a formula imagine at a certain stage of their development, of their technological phase that instead of trying to develop from Lille to Seville or Stockholm to Madrid with a same formula, they could grow by concentrating on a smaller geographic region, by developing all or part of the existing formulas in a same profession to act upon different clienteles. As far as food retailing goes, Le Docks chain in France for instance chose to develop in well-defined zones: the hypermarket formula under the Mammout brand name, the supermarket formula under the Atac brand name, and the small neighbourhood outlets under the Doc brand name. The group Casino chose to develop under a same brand name the hypermarket formula, the supermarket formula and the neighbourhood outlet formula by concentrating on cities, geographic zones and states. In Belgium, the group Gib chose to develop by concentrating on the market of Belgium with different brand names for different formulas. For instance, we find the Maxi GB, the super GB, the neighbourhood outlets Unic, the Serma hypermarkets, the No Prix and several standing outlets under the brand name Rome. The Promodes group in France, in food retailing develops Continent
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hypermarkets, neighbourhood franchisees under the Shoppi brand name, supermarkets under the Champion brand name, small Huit Huit neighbourhood outlets. Depending on the circumstances and the types of formulas developed, these groups can either own outlets or use the franchise system to present the market with all the existing formulas. The on area principle of development has the advantage for the company which initiates it of making it possible to approach the market with regard to the different expectations of the clients without fearing their being attracted by such or such new distribution formula. It is clear that the on area development demands that one be ready to copy or buy a brand new performant formula which could enter the zone. If at the principle level we understand the advantages of an on area development, we must nevertheless underline the major inconvenients or rather the constraints that such a strategic decision entails. First of all the issue comes of the marketing equilibrium of the markets. If in a same profession, food retailing for instance, a company chose the on area development such as Docks de France, Casino or GB did, it is necessary that a certain ratio of market share be respected in the chosen zone (distribution zone, city, state or the country itself for Belgium). In Franche-Comt, the Sedis Company which opened Mammouth hypermarkets, Suma supermarkets and Sedis neighbourhood outlets had come to cover in the Besanon zone 70% of the clients' needs in terms of food products. This particularly comfortable monopoly position enables the company in its marketing strategy to apply a particularly interesting price policy. Naturally, the hypermarkets were cheaper than the supermarkets and the supermarkets cheaper than the neighbourhood outlets. But the price level of the zone as a whole was clearly superior to what could e found in other regions. At the beginning of the eighties, this price strategy seemed to have only advantages. The company could coordinate its different formulas and in a way control the competition between outlets. Of course, the coming out of certain discount formulas such as Leclerc compelled the company to quickly look over this position. To resist, the hypermarkets had to freeze their prices. But because of a lack of source effect and legitimacy in the discount, things were not simple for Sedis. Quickly the Suma supermarkets met many woes and the company witnessed
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the decline of its market share. Many examples show that if one only takes into account the area principles and neglects the marketing equilibrium point, he will come to a point of extreme fragility, especially if new formulas come to stay. In certain markets where prices are not, like in food retailing, a great principle of competition, certain companies which had chosen to develop according to the on area principle were badly shaken simply by the opening of outlets which knew naturally how to achieve real flow subtractions. If one respects the marketing equilibrium, he must also respect the independence of the formulas in place. Often, groups which chose the on area development during their technological phase attempt to balance the actions of their different formulas by preventing some of them from being too striking, aggressive or dominant. We then notice that in communication emerge internal rules which don't consider the market shares conquered by each of the formulas. If we can save a lot in terms of communication by preventing certain managers from waging real wars against their colleagues to take away market shares from them, we will generally notice an impoverishment in the capacity to react to the opening of rival stores and in the most extreme cases to a sclerosis in the marketing action itself. The on area development also requires that one be very alert to spot logistics problems. Very often, different formulas need specific and adapted logistics. It is highly tempting when one operates by area to centralise logistics and to have the same for various types of outlets. In the term logistics, we include the purchasing service, the warehouses as well as the means of transportation of the goods to the outlets. We need here to grasp the limits that we don't want to step over in the standardisation, coordination and unification processes. Many food companies suffered from having hypermarkets, supermarkets and branches of neighbourhood outlets depend on the same warehouses. As it can be seen, the on area society structures are real on-line society structures. We no longer need to discuss the classic notions of centralisation and decentralisation but to approach the problems of coordination in terms of marketing, communication and logistics for different brand names of a same geographic sector.
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If we must be careful in the marketing planification of the coordination of the areas, we must also be perfectly clear in terms of brand name communication. Often, when a retail company starts out with a formula, it is proud of it and of the brand name that comes out of it. When new formulas come out, it is tempting to call them by the same name to benefit from the synergy of the economy and the prestige of the brand. Felix Potin in Paris started with branches, built supermarkets, then "maximarkets" and keeps its brand name to give each of its formula its legitimacy, its source effect, its top of mind. The Radar outlets in France, developing according to the on area principle, give the same name to their outlets. There are the Gant Radar and the Junior Radar. If the system in itself is not wrong, it becomes so when each outlet formula has a particular and differentiated promise with regard to the others. In Paris, Felix Potins branches have a positioning of service, of fresh produce such as any other neighbourhood outlet does. Its prices, while average, are not particularly performant or aggressive. On the contrary, the supermarkets which are bigger have a very different positioning. They are semi-flow outlets which must apply a certain price level to develop a large discount outlet positioning for end of the week shopping. For obvious reasons, these 2 formulas had the same price level and the interrogation was: "For how long would the client accept if an aggressive rival showedup?" We have the answer today, Felix Potin did not resist for reasons of positioning incompatibility. Let's now analyse the Casino outlets. Starting with branches of discount outlets at the time, Casino becomes famous and liked by clients. The Casino branches sell cheaper than the usual retail stores. The Casino brand name is for the client synonym of savings, and a quality guarantee. The brand name develops according to the on-line principle. When supermarkets open, the on area principle is chosen. They are even more discount. Casino in its communication shows the advantages of self serve outlets and demonstrates that thanks to this novation, it can sell cheaper than retail outlets and everything that one needs. The great discounters don't exist yet and the real discounter is Casino in its distribution zones. There is not really an incompatibility in this per area
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development between branches and supermarkets. When, in 1970, the company decides to open its first hypermarket in Marseille, it is called Gant Casino. This hypermarket formula is very promotional at first. More than prices, it is the promotions which are organised. We understand that at the time such a decision was made since the quality source effect of the brand name and its top of mind as well as the legitimacy were the guarantees for the clients and non clients of the different Casino formulas the quality of the products they could find. Only when the market was totally transformed did the 3 formulas under a same name became troublesome. The great discounters such as Leclerc and Intermarch could not play the promotion card but the everyday low price policy one. Two options were left open for Casino. Either to apply the same price level to all its 1200 m2 or 800 m2 outlets which is what does Systems U in its U Markets, supermarkets and hypermarkets or position each of these formulas under different brand names as Docks de France did by developing its Mammouth, Atac, Doc outlets and others. We understand here the importance of the coherence of the development and communication strategy of the brand name. Whoever chooses to work with different brand names for each of these formulas can afford a price system related to the positioning, the service and the formula. On the other side, whoever adopts the same brand name for different formulas must have the same prices for all its types of outlets not to see one of these formulas lose speed or torpedoed by one or the other of the other formulas developed by the company. The problem is all the more touchy since the formulas used are for some flow formulas and for others flow and traffic formulas. We can put forward that in the case of the developments according to the area principle and when one chooses a same brand name for his outlets, one ends up developing a general brand name concept rather than a brand name applied to different formulas. Leclerc and Systme U are real new concepts which, in a way, are different from the formula notions. It is clear though that these concept notions are not easy to put down to practice. If tomorrow hard discounting develops in France, certain retailers using a same brand name for different kinds of
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outlets will have to raise the question once again whether to use a head on fight or integrate this new formula in their concept. Whereas in the on-line principle the profit is calculated in each outlet, in the on area principle the profit is market share calculated. It is another very important element in the conception itself of the strategic choices which are available to the company. The length of time of the first life cycle phase of the retail companies varies with the type of market, the coming out or not of new formulas and at last depends on whether the choice was made in terms of development according to the on-line principle or according to the on area principle. We must look at each market, each profession to determine precisely which is or which will be the length of time of this first phase of life cycle of the retail companies. The end of the first cycle is always signalled the same way. It can be noticed that the market shares are harder and harder to conquer and that the return on marketing investment is less and less performant. It looks as if the on-line or on area retail companies were confronted to a kind of evolution wall which forced them to look for other solutions or made them think that there might be a second phase in the life cycle of the company.
2. Second phase of the life cycle of the company: the function phase
The retail companies having chosen either an on-line or an on area principle to develop their formula or conquer a market will have to continue their growth, change their behaviour and consider their future in a totally different way. This phase is no longer about developing a formula, about settling down in areas, that is to say exist through outlets, but about developing according to "the generic needs of the clients". The example of the Auchan hypermarkets is a model. Originally from Lille, the Auchan hypermarkets quickly developed in France, then in Spain and more generally everywhere the conditions enabled the outlets to express themselves in their particular positioning tied to the price and choice notions. Refusing to enter an on area system but understanding that the on-line development would meet its limits one day, Auchan decided to first look at the generic needs of the traffic or flow clients of the Auchan hypermarkets rather than studying the different outlet formulas.
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Rapidly, on the areas around the Auchan hypermarkets opened different kinds of outlets ranging from food to clothing retailing, from household appliances to hardware retailing and from car maintenance to sports equipment retailing. The goal here was to capture a maximum of the spendings of a consumer by supplying the clients with all kinds of products. The development of the group was no longer tied to a hypermarket formula or to specific formulas such as the Kiabi clothing outlets, the Pizza Paille restaurants, the St Maclou carpet outlets, the Boulanger household appliances outlets. It was tied to a will to sell a quality, a special offer, and a price and conviviality surface area to clients who has come either as flow or traffic for the hypermarket or as flow or traffic to buy a rug, sports equipment or simply to have a good time in one of the Pizza Paille type restaurants, etc. The marketing strategy consisted in making the client go to a maximum of outlets of the system; spend all or part of his budget in stores of the group. In this function phase, the Auchan group must not reason in terms of outlets but in terms of market share in the total spending of its clients. Whereas in the technological phase, these profits are the product of a totally different equation which must no longer consider the profit of the outlets but the profit per client entering the zone. The results of each outlet are used only to give information about their evolution and growth. The example of the GB group in Belgium is particularly interesting to understand the difference there might be between the technological phase and the function phase. As we previously described it, the GB group went through its technological phase by developing according to the on area principle in the food products market. Having reached a critical stage in terms of marketing equilibrium, the group felt the need to start its function phase by surrounding its Maxi GB outlets with a series of formulas such as the Quick fast food restaurants, the Brico hardware outlets, the Auto 5 automobile dealers, etc. The marketing strategy consists in coordinating the efforts of all the centres of interest for the clients so that traffic unrolls in the best conditions and that, as in the Auchan case, the client frequents a maximum of formulas which depend on the group so that he contributes by his spendings to the consideration of the market share of the group in the total spendings of the client. The strategic approach of the function phase is totally different from what has been described in the technological phase. Here naturally, each type of outlet
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must be left unhampered in its tactics. Nonetheless, it is crucial that there be a real strategic mix which permits to optimise the tactical communication spendings so that each formula, each outlet at a given time, brings to its zone as a whole its contribution in terms of efforts of traction of the traffic shoppers. It is necessary to take into account the direct or indirect competitions that the different outlets press on one another in order to organise the assortments, the supply of each of the outlets not to have in the end a dissynergy between the supplies rather than a synergy between the outlets. If on a same surface area we find a hypermarket, a hardware store, an auto dealer owned by the same group, it is clear that we must not hamper the sales of the hypermarket by suppressing certain products not to compete with the hardware outlet or auto dealer. Likewise, one should not deprive clothing or sports outlets located in the same area and owned by the same group, of certain possibilities not to be a nuisance to the hypermarket or not to limit the growth of such or such formula located in the neighbourhood. Each outlet of this zone must position itself clearly in a function tied to the type of products sold. It is this combining of functions which enables to obtain the optimal result in terms of client satisfaction and system profitability. Numerous hypermarkets having chosen the on-line or on area principle in their technological phase have allowed in their close surroundings different specialise outlets or have settled in zones where these kinds of stores were already in place. It is not the putting to practice of the principle of the function phase. The profits realised by each of these outlets do not benefit the same group. If one can hope that these outlets will ease traffic and enable stores to lure more clients to their outlets, one must consider that in terms of profitability there is no synergy and that on the contrary there might be a disruption in the case when certain outlets compete directly or indirectly on part of their products. If for instance, on a given surface, we find a hypermarket and next to it a household appliances Darty outlet, there is whether we like it or not, competition between this hypermarket and this Darty outlet. Naturally, clients will prefer coming to a zone where the variety and supply are maximised but in the case of function, the product of the sales will go to the same beneficiary; there will be a conflict between diverging interests. Without condemning this way of approaching the traffic problem of certain
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hypermarkets, it is essential to stress that the co-called function phase is of total different nature. When the Aldi outlets favour the creation of butcher shops or fruits and vegetable stores next to each outlet, it is not to enter a function phase but to create a zone fastening the loyalty of the clients. It is a marketing tactics and not a company tactics. Often, we notice that some retail companies develop only part of this function phase looking more to take advantage of the opportunities than to really establish a principle to strengthen the group. In its on area development, the Casino group in its catering department might have developed a function strategy. By looking at the generic food needs, one could say that the group through its outlets looked to conquer the food products consumed at home market and by developing its catering sector to take over the out of the home consumption market. The function phase strategy demands rigor in the choice. The company must keep in mind that these crucial goals consist in studying the clients' spending mechanisms and for once to study more the consumer part of the client system than the shopper part. It is a radical change. The organisation of a company in a function phase must reflect this will to capture the consumption capacities of the households. The drawbacks of this choice reside essentially in internal problems of structure and of organisation of the decision. It is difficult to make different formulas coexist in a same surface area and to ask this group to coordinate the promotional actions to reach a synergy of the system. Whereas in the function phase, one is perfectly equipped to resist the arrival of a new formula and to fight those who, in the technological phase, choose the on-line or on area principle, one is often confronted to structural problems as soon as one or several elements making up the function start being severely attacked by competitors who are not in the same technological phase or developing new formulas. In addition to a perfectly adapted organisation, one priorities not according to such or such but in relation with the spending of the client at a given time of the year, of the economic cycle of countries, of the spending incentives in general. Moving to the function phase is not exclusive of large groups. It is interesting to look at the evolution of the Intermarch brand names and to compare it to the one of the Leclerc distribution centres. Born out of a same idea, these 2 chains followed totally different paths. Whereas Leclerc remained in the technological phase, Intermarch has already moved to the function phase.
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By creating in a same zone, around these food outlets, the Vti March, Brico March, Logi March, CDM, Proco March outlets, the Musketeers of retailing (Intermarch) aim at bringing to their client the maximum of purchasing possibilities at a discount price level. By giving all these outlets the same function, by relying on the same claim, the group really moved from the technological phase on to the function phase.
3. The retailing diversification phase Certain retail companies go straight from the technological phase to the retailing diversification phase without going through the function phase. In this case, one must use the company technology to look at other markets. Companies specialised in food retailing are going to get interested in hardware retailing for instance like the GB group did. Retail companies specialised in household appliances are going to look into furniture retailing, catering, etc. It actually is a classic phase of the evolution of the companies that can be found in other sectors than retailing. Nevertheless, this phase takes on a particular meaning since it stresses the interest of the retailer for another type of retailing and not for an investment of an industrial service company. The retailer is going to apply his methods, his savoir-faire to companies which are either still in a technological phase according to the on-line or on area principle or still in a function phase. The problem is to understand what is the compatibility of the savoir-faire of the company with the new market, the new distribution considered and in what way the company cultures can or cannot help each other, combine to reach a harmonious development. Likewise, how is the company which diversifies its activity going to be able to react when on its new market new formulas show up, new companies try to become leaders or when on the markets where it is diversifying a market share was explodes. Then, the problems resulting from the choices made during the technological phase on the on-line or on area development principle will come up. Experience seems to show that going from the technological to the function phase, then from the function phase to the diversification phase. Indeed, we
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notice that the companies trying to diversify in their third phase by coming directly from the technological phase must both stand the development of their distribution base and the one of the companies which diversifies. At this point, very different fights have to be fought face to face. They threaten financial equilibrium or compel to consume considerable amounts of energy in terms of men to face all the problems coming up. Let's underline that the price of buying retail companies is such that often, the companies wishing to diversify have to heavily endebt themselves, which can be troublesome if one must, as it is the case in food retailing, face new formulas that are very discount and which by definition limit previous profits. To get to the diversification phase of retailing, one needs to have perfectly stabilised the 2 first phases of development. One must really control all the potential situations of competition to have a chance to succeed in this ultimate development of the firm. The notion of life cycle of the retail company stresses all the strategic choices which are available to a same company. When the brand name Carrefour in France bought out the brand name Euromarch, it was to finite its first development phase according to the on-line principle. When Casino buys out the Ruche Mridionale and the Sodim, it is to finite its technological phase according to the on area development principle. Therefore, we cannot compare these 2 purchases if we don't consider the strategic effects of each of them. When Carrefour buys part of Carpet Land in Belgium, and Bricorama in France, we can infer that the company finishing its development in the on-line technological phase looks to go straight to the retail diversification phase. The analysis of the threats looming over the company in terms of competitive aggression does not have the same meaning if one is in the first, second or third stage of the life cycle of the company. If the ranking of the retail companies can be expressed with the revenues figures, profits, surface areas, one must to be accurate, bring to the assessment the reality of the position in the life cycle. Likewise, we will evaluate for the retail companies their strength in terms of communication, the value of their claim or of their slogan by taking into account on the one hand the position of the economy in the life cycle, and on the other hand the position of this same life.
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CHAPTER 9
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The entrance marketing
The entrance marketing concerns particularly all the flow and traffic outlets. If the semi-flow or essential flow outlets can sometimes carry out operations aiming at creating traffic, especially in calendar periods, for the flow and traffic outlets it is a crucial point. From the moment, one must reach his break even point with a number of traffic clients, one needs to develop a series of commercial actions aiming at attracting for sure flow clients from other outlets and this at a cheaper price. The food hypermarkets, the furniture outlets, the household equipment specialists, the decoration outlets the hardware hypermarkets or supermarkets, all must absolutely develop traffic strategies.
THE PREMISES OF THE TRAFFIC ACTIONS
To attract a shopper, to divert him from his habits represents indeed one of the most complex strategic actions. To fully succeed at reasonable cost conditions, it is crucial to observe certain rules, certain premises and this whatever the type of retailing considered.
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Evaluation of the store grip: By using calculation methods allowing to know the number of flow clients, the number of traffic clients of an outlet whose name is present under the exit marketing column, we must before all determine the grip of the outlet in its distribution zone or more generally in the geographic region that matters to it. If the number of household clients of an outlet corresponds only to a 20% grip on the market, whatever the location of this outlet or the difficulty that there may be to attract clients, we can assume that it will not be difficult for it to reach a 30% to 40% grip. On the contrary, when a flow and traffic outlet already has more than a 50% grip on its market, it is clear that the cost of the traffic client will be very high and that to succeed it will have to develop particularly well prepared organised and striking operations. Therefore, one cannot carry out traffic operations without knowing exactly the grip of the outlet on the one hand and its opponents on the other. The grip calculation seems like the step which decides of the nature of the communication budget allocations which will permit, depending on the grip, to prepare coherent and profitable operations.
Knowing and scoping the competitors: To launch an entrance marketing action, one must understand that he has to address targets, shoppers that we can define either through a typological approach or by a segmentation principle. We must also consider the fact that all the shoppers we will try to attract to the outlet with traffic actions are clients of other outlets, direct competitors doing the same job. When a large hardware outlet wishes to carry out a traffic action, it addresses clients in general and more particularly clients of each of its rivals. It is the same for hypermarkets, stereo specialists, and furniture specialists. If one wants to target the clients of his rivals, he must have previously scoped the strategy of this or these competitors. Are the entrance marketing actions of these stores based on promotions of a certain kind? Do they function on the basis of methods that we know and master? Do they yield good results? Do they make such or such type of
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clients reacts and come to the store? Likewise, one must know the traffic strategies of the direct competitors that are of those who apparently do not have the same profession but who can sell similar, if not directly competing products. There was a time when the halogen lamps were products attracting a wide clientele. One could notice that the hypermarkets displayed these products in their brochures to attract flow clients from other competing hypermarkets. At the same time, the large hardware outlets also promoted this type of products to attract (they thought) the flow clients of other hardware stores. Furniture outlets did the same with the same halogen lamps not to attract the hypermarkets' or hardware stores' clientele but to lure the flow clients of their rivals. This way, at the same time, there were brochures coming from very different outlets, on the front page, the same kinds of halogen lamps at similar prices. Although the halogen lamp was at the time an excellent traffic product, certain hypermarkets have not met with this product the success they expected and which theoretically was to be important. Another example shows the importance of this knowledge of the strategies of direct competitors. In a French city, a photography specialist of the Camara chain observed that he was less disturbed by the promotions of certain outlets on cameras than those they could carry out on products such as winter sports equipment, skis, boots, etc. When an outlet launched promotions on cameras, the specialist could defend himself, act upon his clientele and answer by promoting other products. He was on a rampage, he knew that a promotion could make lose clients; he could fight on this ground. On the contrary, when a hypermarket promoted skis, many of his clients leaving for vacation hesitated between buying a new camera and keeping the old one but to take advantage of the promotion on skis and boots. This photography specialist insisted on the fact that this competition was tough on him because he could not really fight them. He could neither sell his service nor his brands or the quality of his products. He knew that the client had a
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certain amount of money to spend and that the temptation of buying the latest skis and boots would beat any photo special offer which would have few chances to get him interested. These 2 examples show the necessity to analyse the commercial actions plans of all the direct or indirect competitors and imagine, when one plans to carry out an action himself, those of all the forms of competition at the same time.
TOPOGRAPHIC KNOWLEDGE OF THE CONSTRAINT REWARD RELATION
As we already expressed it, the creation of traffic is the consequence of the constraint reward relationship. If there always is a psychological constraint to change outlets, would it be only because we all have habits and because we always feel lost in an outlet we rarely go to, there is the distance constraint tied to all the traffic problems. Crossing bridges, highways, hills are elements which must be studied when one launches a traffic action. It is advocated to measure this constraintreward relationship on the clientele which comes to the outlet simply by carrying out a survey at the cashiers on the clients who bought the products promoted either in the brochure, on the radio, the local press or in newspapers. By taking the address of the clients, by identifying the flow, traffic, attached, detached nature; one can quickly dispose of a data base which enables to assign to each product a real traction coefficient in relation to the different geographic zones which matter to the outlet. We will know that to attract a clientele of the south of the distribution zone, an average price desire product will be enough whereas to make clients of the north of the zone come, we will have to offer settled duty products with a strong price offer or very expensive desire products on which we will have to sacrifice a lot. We will be able to conduct the same type of studies at competitors' and understand better the quality of the commercial actions plan of direct and indirect competitors. When we have a flyers operation matching the sales capacities of a given
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retailer, we will be able to decide not to send flyers all over town but to narrow the operation down to 1 or 2 zones of the city, the state or the distribution zone, etc. Let's stress here the necessity to develop per zone objectives with regard to this constraint-reward ratio.
Measurement of the results: If one must know the commercial action plan of his rivals, one must also be able, after each operation, to draw conclusions, to measure the results and this way to build a data base, a savoir-faire, a certain knowledge which will permit over time to become more moderate, more confident in the actions to lead. All the retailers of the world work by comparing one year to the other. Whatever the kind of retailing, the type of outlet, people rest on the figure of the day or of the week compared to the one of the previous year at the same time. If in most cases, people make elaborate equations to know the exact figure of the month or of the week with regard to calendar disruptions, that is one more day this year or one fewer Saturdays, on the contrary they are often unable to remember the situation of the market a year ago. It is hard to remember the climatic conditions. Was it snowing last year? Was it raining? Were the roads icy or was there a heat wave boosting the sales of bathing suits, beers and tee shirts? Likewise, we have trouble evaluating and remembering socio-political events. Was there a bus or a metro strike last year? Was it an electoral period? Were there terrorist or war threats? Were we influenced by an incident that occurred at the other end of the world and brought to us by the media? If we know rather well the incidences of the calendar events on the revenues figure such as Easter and back to school, we must keep in mind that from one year to the other, Easter can be at the end of March or the last week of April and in certain countries the kids' return to school is not always scheduled in advance. If the use of moving means helps understand the way sales or the cashiers traffic evolve in terms of traffic actions and promotions for the entrance marketing, the information is not always sufficient and we remember that a back to school or spring action is prepared six months before so that buyers
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have time to supply their warehouses. We grasp the importance of disposing of a more accurate and fairer tool to judge the quality of a traffic action. Three methods seem to be of use: - the fugato model - the day after recall - the outlet exit survey after an operation on a sample of flow or traffic clients.
The fugato model: If we consider 5 weeks, for example the weeks 6, 7, 8, 9 and 10 and that we wish to evaluate week 8, we will naturally compare it to week 8 of last year. We will compare the revenues figure and the quantity of cashiers registered clients knowing that this number of cashiers receipts is not the number of clients. We must remember that certain operations yield more cashiers traffic just because the clients come back more often either to participate to a game, a lottery or to get coupons. Apart from this comparison, we will take the revenues figure of the weeks 6, 7, 8, 9 and 10 and we will compare the revenues figure of week 8 with the mean previously obtained. We will have 2 pieces of information, one concerning week 8 with regard to last year, the other concerning the value of week 8 with regard to the mean of the revenues figure of the cashiers registered clients of the total 6, 7, 8, 9, 10. With these 2 information pieces concerning the spread of the number of cashiers receipts on the one hand and the spread of the average ticket, that is the average basket, on the other hand, we will be able to determine a matrix scheme A (p. 270) where will be plotted all the weeks of the year. In the first quadrant, we notice that the operations gave more cashiers registered clients and more revenues figure. In quadrant 2,
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the operations did not yield more clients but thanks to the entrance marketing or the promotions advertised to create traffic, the revenues figure went up. In the third quadrant, it is the operations which yielded neither revenues figure nor clients. An analysis of each promotion might enable to understand the reasons of such a result. In quadrant 4 are the weeks during which the operations yielded a good cashiers receipt spread but a bad average basket spread. In this case, we must know whether these actions which created traffic were sufficiently well carried out in the store or if on the contrary, a lack of products, a bad assessment of the outlet managers or any other cause explains this bad score. If we consider scheme B (p.271) which represents an outlet of same nature and same size as the previous one and of the same brand name in another competitive situation, we notice that the same traffic operations did not yield the same effects at the same time. A deeper analysis of the proposed products, of the media used, of the spendings permits not only to understand how the actions functioned but also to know how much they really cost. The charts A2 and B2 (p. 272, 273) show, for these same outlets, the ratio between the promotion spreads, that is to say the costs and the revenues figure spreads. The calculation of the global impact and of the radiance rating of the promotions is a very useful notion which simply implies that clients be interviewed randomly in the distribution zone at promotion time. We have to control several points here. First of all, we will measure the internal penetration rates of the promotions. If it has been carried by a brochure, we will say that the internal penetration rate of the clientele is equal to the number of clients of the brand name x. The client of the brand name x is considered as having received the brochure of his outlet provided that he is able to say spontaneously: "I received the brochure of my brand name". Then, we will have the external penetration rate which corresponds to the total number of brochures of the brand name x received by the people interviewed minus the number of clients of the brand name x who received
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the brochure over the size of the sample minus the number of clients of the brand name x interviewed. Here again, we will say that a brochure is received by a client when during the interview, spontaneously, the client answers the question: "quote the promotions you received this week, the ones of the outlet of the brand name x", be they press, radio or newspapers brochures.
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The internal penetration rate and the external penetration rate will permit to get a radiance rating which is equal to the rate of external penetration over the internal penetration rate. If we now consider chart C (p. 275) with the brochures of the brand names A, B, C, D, E, F, G, we have the different internal penetration rates. Brand name A has 33, brand name C has 42, and G has 28. If we now look at chart C2 (p.275), there are the same brand names, and the external penetration rates of the brochures is of 19 for A, 27 for B and only 2 for C. Chart C3 (p. 275) gives the radiance rating of the brochures of each brand name and we notice that it is brand name B which shows the best score, followed by brand name E and brand name A. Let's note that for these clients; brand name A has excellent scores but a very average one for non clients whereas brand name B which shows about the same score for its clients has the best score for non clients. The analysis of these different ratios is going to enable to understand what we agree to call the promotional force of the brand names. This force will have to be taken into account in the analysis of the commercial action plan previously explained. During the phone interview, it is possible to differentiate between the declarations of reception of promotional offers, spontaneous, suggested as well as all the notions concerning the classic ones, seen read, memorised and assigned that are found in every classic day after recall. This second part of the phone interview will enable to get good information on what really goes on when the brochures are read. Still during the interview, it is interesting to work on questions about the allocation of food or non food promotions. The question is asked this way for
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example, "a 115 francs stool, where is it for sale"? By using a dozen of products, we will be able to measure the mind promotion, that is to say the brand names that we keep in mind for such type of promotion in such type of product family. A French hypermarket had the question asked on 115 francs pine-made stools that it promoted and much to its surprise, the majority of the sample had not quoted another hypermarket but a furniture outlet. The mind perception of the small furniture pieces was not tied to the food hypermarkets as far as this particular place was concerned. By carrying out systematically these interviews, one can measure easily the evolution of the competitors and the soundness of their traffic strategy, as well as the value of what is achieved in these promotions. This method enables to avoid slipping into a promotional policy called accordion policy. Often, when things go wrong, that is when the economy is in a slump and the competitors aggressive, people are very disappointed by the results of certain promotions and immediately want to compensate and react. Nevertheless, we forget that the disappointing promotion was prepared 6 months in advance and we want to correct something that a team planned long before. Knowing the history, the figures and the results of the competitors, in the case of the radiance rating, the brochures, the daily press or the radio enable to put things into perspective. The cashiers surveys during operations have the advantage of grasping the impact of the promotions on the flow clientele on the one hand and on the traffic clientele on the other. Therefore, we can measure the share of the sales consequent of the exit marketing, and the one that can be granted to the entrance marketing. Simple models enable to understand the impact of the promotions in terms of traffic on a certain type of clients and on the clienteles of competiting brand names. This is precious information which helps understand the value of the mind promotion of a brand name. This notion of mind promotion that we just introduced must be tied to the product but also to the type of traffic used. As we previously saw, certain brand names reach better scores during anniversaries, others during sales, others finally during calendar actions. The analysis of the mind perception permits to understand this value granted to the capacity of the brand name either to launch promotions on certain products, or to realise a certain type of operations.
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The principles of brand name communication: In the chapter on brand names, we explained which could be the relations between the notions of legitimacy, source effect, image and the notions of claim or slogan and top of mind. Practice shows that there cannot be a profitable entrance marketing action of all these problems of brand name positioning have not been previously solved. Indeed, the public first looks at the promotions of the brand names that he knows and by this approach at those of the so-called hot brand names, which are the brand names people talk about. We insisted several times on the importance of oral communication and on this bonus that shoppers grant to these brand names which strive and work to get. The cold brand names, the ones which simply are present and have no fighting spirit can get their flow clientele interested but hardly the traffic shopper clienteles. Thus, this entrance marketing goes with a communication plan aiming at developing umbrella actions, which is communications whose goal is not to present a promotion or a specific service but to state the positioning of the brand name, take the shopper's benefit from the market which matters to the outlet.
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In this case, we have to go back to the different notions we developed in chapter 7, "Brand name communication and private label".
Ease of access ambience of purchase: In a same town, the traffic operations occur all year around. To have a maximum of chances to attract shoppers, one must not only have a good entrance marketing strategy but also the will to make the access to the outlet as convenient as possible. The directional signs, the parking lots, the ease itself to find the entrance of the store are all apparently non-significant elements which are very important. The client satisfaction surveys stress the importance of these problems related to the access to the store. These surveys also stress the importance of the cashiers for the entrance marketing. In the exit outlet, in the end, the clients get used to their cashiers. In the entrance marketing, the client does not know his outlet very well and his image will be the one of the cashiers. If she is not as he wishes, he will keep a feeling of frustration and unsatisfaction which will have a particular importance when in the future he receives a new promotional offer to come to this outlet. The studies conducted on shoppers show that often they resent taking advantage of a promotion in such or such outlet because of the simple fact that the cashiers line, that the system of payment or that the wait at the cashiers is too long and too big a constraint. As strange as it may seem, the last image that one keeps of an outlet being the one of the cashiers, we can say that in food, hardware, furniture outlets, etc., they are the most important media of communication in the entrance marketing. There are particular training programs for cashiers who learn to behave positively, not really with the flow clients but especially with the traffic ones. Let's not forget that the best propaganda tool for the promotion pending in the traffic operation considered remains the cashiers. When to a traffic shopper who has just purchased a promotion, the cashier simply says: "You did the right thing by buying this product, it is an incredibly low price and I'll buy it myself", we don't suspect the positive effects produced and above all his
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desire to talk about it when he gets back home. The entrance marketing operations should be sale above all to the cashiers; this would have some effects that we can't often imagine. Everybody knows how important is the cashiers line and the necessity of a permanent formation in mass distribution. Let's simply insist on the fact that the cashier has got a crucial role to play on traffic clients in traffic operations.
THE PRELIMINARY OF THE PRICE IMAGE AND THE PRICE LEVEL OF THE BRAND NAMES Any brand name wishing to develop a traffic strategy must have priority solved its price image problem. The shopper compares. Even if in the retailer's field there are no price wars or great discounters, the comparison is a natural feature of the client. He compares the price of restaurants, the price of gasoline, the price advantage he enjoys in such or such outlet. It's a second nature one must reckon with. When the shopper is the object of a traffic strategy, when he discovers in the brochures, the newspapers or any other media an offer which is going to make him go somewhere, he naturally dissociates the value of the promotional offer of the price image of the outlet where he will go eventually to benefit from that promotion. If the price image of the outlet or of the brand name is bad, the promotion may be interesting and worth the trip, yet the shopper will be reticent because he knows he won't be able to purchase other goods and above all, he is afraid he will be tempted by displays of products which, in fact, will be a way for the retailer to make up for the loss he will have undergone by carrying out an interesting promotion. On the contrary, if the brand name and the outlet are renowned for a good price level in comparison with other retailers, an interesting traffic promotion will have many chances to attract clients because the shopper will know that his trip, the constraint he imposes on himself are really profitable. Because of a lack of good price image, an outlet may attract shoppers and see them leave with only the promotion of the entrance marketing strategy which will certainly entail a heavy loss in terms of profitability. It is clear that the entrance marketing must leave space for the exit marketing, therefore the impulsion purchases to take place in all the aisles of the outlet.
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This principle is all the more true since we look at distribution sectors where we find repetitive purchases and competitors who rest their positioning on discounting and the price differential like in food retailing, hardware retailing, mass textile, stereo equipment, household appliances, furniture and parts for automobiles, etc. To solve this price image problem, many retailers systematically conduct price surveys, subscribe to panels which enable them to level out their prices, not to seem too different from their rivals. This alignment and price policy feature pertaining to all the retailers yet is not an absolute guarantee of a good price image.
KNOWLEDGE OF THE PRICES BY THE SHOPPERS
To structure its price image, its price offer, the retailer must know exactly on what basis, from what, how and why the shoppers compare between them the price of certain products and leave on the side other apparently obvious comparisons. The different studies conducted on the knowledge of prices by the shoppers show that six cases of comparison must be considered.
First case: The settled duty products The shoppers compare the prices of all the settled, planned duty products deemed costly and whose purchasing frequency is at least of 4 times a year. These settled and planned duty products can be found in about all the departments. Let's stress that all the different retail managers are not to decide which are these settled, planned duty products but they are to interview the shopper in each sector to know, depending on his typology and his segment, the brands and costly products he keeps in mind. These settled, planned duty products in a same department, food for instance, are not the same in every country. These products are called first category reference products.
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Second case: The costly settle duty products The shoppers know exactly the price of the planned settled storable duty products. Everywhere, people know the price of 5 or 10 kilo barrels of soup or detergent. They are second category reference products. They are costly products which are often part of traffic promotions and which are high in the esteem of the clients. Usually, they are high purchasing frequency duty products.
Third case: The settled desire products The shoppers know very well the price of the settled desire products. For hardware products for instance, people know the price of the different devices that are found in hardware outlets and whose brand is Black & Decker, Bosch or Makita. What makes people know the price of the product is the relationship there is between the hope of purchase and the real price of the device. They are costly products that people buy once in a while but that they may have thought of for a long time. We face the same phenomenon with certain small household appliances products such as irons and mixers. Here, the purchasing frequency is not important, what matters is the desire/value ratio which is the incentive of the price comparison. Fourth case: The non-settled duty products The shopper can no longer compare prices. He does not know what the price of meat is even if the price per kilo is clearly marked on the wrapping in the supermarket. He also does not know the compared prices of the fruits and vegetable and if he knows a few scales of prices, he is unable to compare 2 salads, 2 pineapples, apples, etc. Yet he's got a clear idea of the positioning of the price of the outlets he often goes to or which will try to make him come for a traffic action. As far as these non-planned duty products go, the client knows rather precisely the amount of his consumption unit. A housekeeper of a particular consumption segment, for instance a family unit composed of 2 people who are employed with one child and living in a big city knows exactly what must be the total of its meat, fruits or fish spendings. In other words, the client knows how much a "food fill up" costs him.
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Each type of client knows exactly what he has got in quantity and quality for a given unit of spending value. It is the quantity price ratio which becomes the object of the comparison.
Fifth case: The costly non-settled desire products When the shoppers want to purchase a good corresponding to an average brand or a transparent brand, they no longer have a reference in terms of price on a brand or a consumption unit but more on what we can call the price slope, that is the different choice possibilities in a given price range. We compare the price possibilities tagged by the retailer. Between 2000 and 6000 francs, there are no possibilities of stereos. Between 3000 and 8000 francs, there are 6 fridge possibilities of. In this case appears, for the first time, the comparative of price ranges. The price slope is given by the price difference there may be between the most expensive product and the least expensive one in a same product family of non-settled desire products.
Sixth case: The seasonal products The shopper is particularly sensitive at the start of the season to the prices of the retailers. The price of the first asparaguses, of the first strawberries, of the first swim suits, of the spring or winter collection will quickly give a rhythm to the price comparison. It is all the more true since the shopper will observe over what period of time and how much the prices are going to drop between the first cherries and the prices a few weeks later. When the season to wear white clothes comes, even if they don't purchase any, the clients like to compare the prices of towels, bed sheets, comforters, etc. This way, the shopper looks at a real price system. It is not enough to align
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oneself on a few famous brands or on a few high rotation products, one must also have a real price policy if he wants to seem at least as interesting as the most aggressive or the most dangerous of his competitors, in these entrance marketing operations.
Measurement of the price image. The price image of an outlet must be measured both with flow and traffic clients. Experience shows indeed that the flow client is rather prone, especially when he is attached, to forgive his outlet if he notices price differences. On the contrary, the traffic client is more likely to develop certain dishonesty and to judge the least difference in the different cases we just studied. Amid the methods of measurement of price images which exist, the one which consists in looking for the price assignment/brand name seems the most valuable one. In a given distribution zone, we gather the prices of all the competitors in the duty, desire or power purchases. We then propose to a sample of clients of this zone these prices and ask them to match them with the brand names in which the prices are observed. The people interviewed are going to have to assign to the brand names A, B, C, D the four prices list for a certain product. To the list of price, we will add 2 fakes; one concerning a price much lower than all the others, the other concerning a much high price. By carrying out this operation on about 50 products, we will quickly notice how the price image of the brand names of the zone is organised in the mind of the clients. The presence of these 2 fakes will enhance the spreads between the least expensive brand name and the one considered as the most expensive one. By adding these results to the notions of flow, traffic, attached and detached clients, we will be able to establish a real image profile of the prices of each competing brand name and this for each nature of client and each nature of product. The use of such methods points out the fact that it is not enough to lower prices to have an image; one must know how to communicate this will and make sure the traffic shopper understood it. The communication, the construction, the correction, the establishment of a price image must absolutely come with any alignment action of a retailer.
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The information must first be inserted in the exit marketing in order to make the flow and traffic clients who frequented an outlet regularly communicate orally. Then, it must be the object of a specific communication campaign relying on large media, the radio, and the press if too big disruptions following the action of competitors are perceived. In this case, it is about controlling one's price source effect, even if one is not in a distribution based on discounting.
ACTION MEANS FOR THE ENTRANCE MARKETING
Once the commercial actions plan organized, the different traffic operations (calendar, provoked, specific, etc.) stated and the preliminaries previously stated and checked, we must now communicate with the different targets considered.
The product-media couple: To create traffic, one must, according to the kind of traffic chosen and the type of media used, decide to promote totally different products. The products which are going to make shoppers come for an anniversary are not the same as those which will attract people in the case of back to school calendar operations or specific traffic promotions targeting a family of products. Likewise, the radio, the press, the flyer won't be able to carry the same offers. What might interest people on the radio, will have no or little impact when it is read in a brochure and vice versa. This relationship product-media must help establish in a commercial action plan a real media strategy. This strategy must take into account the different communication means, the radio, TV, the street ads, the press, brochures on the one hand, the types of traffic actions chosen on the other hand, and finally the products proposed by the purchasing services, the merchandisers and accepted by the sales managers.
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For a same calendar operation, for instance, one can use several media, street ads, brochures, the press, the radio depending on the share of voice level desired. Each time, we'll carefully select the products which will be promoted in one or the other of these Medias in order to stay coherent with the notion of product-media couple. Despite the desire that certain retailers could have to use all the media available, we must remember that it is no use promoting a new product with a media that is not suitable.
The choice of the products: The choice of the products for an entrance marketing strategy is a difficult task. Not only must the product fit the type of traffic chosen, the media that one wants to use, but it must also be likely to create traffic. The product must not be chosen because of its relative good price, which is a normal reflex for purchasers, but because it corresponds to the expectations of the shoppers. Therefore, one must absolutely be in a situation of permanent analysis of the demand and not react as in a supply marketing strategy. Not only does one need to dispose of information on the expectations of the clients but one also must set up a real organisation enabling the purchase, the sales and the marketing departments to choose the best opportunity and not the best price for a product after having worked on the supplier. Experience shows that it is the work achieved on the so-called traffic commission encompassing the sales clerk, the sales, the marketing and the advertising agency integrated or not which best permit to reach significant results in terms of traffic client. We understand that in these meetings, information concerning the previous actions helps build real success teaching methods and the make of a savoirfaire which represents for retail companies the real strategic distinctive proficiency. If the choice of the products must be made with the marketing, communication, sales and purchase departments, it must also be made with
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regard to the objective targeted for each action. In its entrance marketing, the retailer must know if he wants to work only on traffics or if on the contrary, he wants to work on his flow clientele too.
Constitution of the supply: To get the traffic clients interested, one can use 3 types of products: - the settled (or not) planned desire products - the storable settled duty products - the power products. The desire products are those the client has in mind. He waits for a good price because he has been dreaming for a long time of this cordless driller, this mixer, this ladder, this outfit, these new jeans, this leather jacket, etc. Likewise, he may, at a given time of the year, for a special occasion, feel like eating smoked salmon or drinking champagne. These desire purchases that are found in every market, in all the kinds of retailing follow a life cycle that one must be particularly conscious of. In France, at a given time, caviar was a great traffic product. Because it was so often on promotion, it no longer attracted traffic. Irons have a longer life cycle and still get housekeepers interested. It certainly is because new models always come out and make obsolete the older ones. Leather-made furniture (furniture in general are products whose life cycles are even longer and which always have an impact on the public. To choose these products, one must be aware of this life cycle notion. The most permanent retailers in a given field are those who are always more advanced than the others on the market and who rely on promotional tendency books for these desire purchases. If we must be careful about the notion of life cycle, we must also consider the notion of rate of equipment in the households. Microwave ovens have been at a certain time excellent desire products for traffic operations because the
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households were not very equipped and the rate of growth of the market was excessively interesting. On the contrary, at the same time, the promotions on washing machines did not yield good results not because the products were not interesting but simply because the rate of equipment of the households was superior to 80% and that the rate of renewal was very weak. When a market is in full growth, it is always better to present what is called promotions of entry on the market, that is to say first prices so that the client comes out of curiosity to check whether or not he can buy the equipment. When, on the contrary, we're dealing with renewal markets, we must promote very sophisticated products which are going to make some consumers feel like buying something new, modern, which will render obsolete the older products and speed up the rate of renewal. Storable, settled duty products are products on which retailers must, in most cases, make strategies inventories to be able to offer interesting prices. Let's underline here the importance of the price comparison and let's point out that it is better to abandon a promotion on this kind of products if one is not sure of the price level at which the offer is going to be proposed to the client. For these storable settled duty products, we can take into account certain offers that can be found for instance in the hardware market on wall paper or wood. In this case, there is not really a brand, but the colour or the nature of the wood takes the place of the notion of purchasing decision that we expressed in the chapter on the product system. The power products correspond to all these products that certain targets can purchase provided that the price offer is particular. A great whisky such as the Chivas will be purchased if it is offered at an outstanding price. People will change their mattresses if there is a real good bargain at the furniture store. It is important to know this expectation structure of the clients to be able to make real interesting traffic offers.
The flow supply: Naturally, the flows are interested in all the traffic products but if one wants to make them respond, it is the non-planned duty products which must be promoted in the communication.
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Whereas these non-planned duty products have a weak incidence on the reaction of the traffics, they are particularly interesting for the flow clients who are going this way to manage to find these products in the outlet. To check the price image, the flow clients have of the outlet, one can also spread his communication with a few promotions on several settled, planned duty products. They are only actions aiming at correcting a price image or making it better understood. Let's point out that the private label which must never be used to create traffic can be used in an action on the flow clients of a flow and traffic outlet. Generally, the actions on flow clients are to enhance the number of clients shopping in the outlet, to have people discover a few underselling sectors and to confirm the price image. Whether it is to attract traffics and flows, whatever the products chosen, the trip must always be worthwhile and consequently, we will have to keep in mind the consumer benefit that is the discount that the operation will provide to a client which will be interested in at least 10% of the products promoted. It is this global amount which will have to be considered to get the constraint reward ratio.
THE NOTION OF ACTION THEMES
Apart from the products and the media chosen, the entrance marketing actions must rely on mobilising themes so much for the traffic clients as for the staff of the outlet. Experience shows that these evocative themes enhance the impact of the messages which might be conveyed by street ads, TV, the press or the brochures. It is all the more true for the commercial brochures used by most of the retailers. The theme creates the news and incites to reading. It gives character to the traffic action and gives dimension to the calendar actions, the specific traffics, etc. The retailers must make proof of great creativity. Here again, we must keep in mind all the propositions made by the competitor not to look like a follower but as a promoter of new ideas.
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We must be aware of the fact that the traffic shoppers does not wait for the brochure he receives in the mail, nor does he feel like choosing at the promotion that's in the newspaper. Besides the great calendar actions which have a natural impact, all the other traffic actions must create their own audience. The street ads, the brochures must first catch the eye to push to read and make understand that a good bargain must be prepared in an outlet where one is not used to shopping. If it is crucial to know the reading keys of a flyer, that is to say the way a traffic shopper will literally read and unscramble a flyer; one must understand that it will occur only if the theme made the client feel like reading. Let's stress here the importance of the brand name image, of its top of mind. All the experiments showed that the public first looks in the economic sector considered by the retail companies that have the best brand name and top of mind. All the advertising flyers are not, as one may believe, systematically thrown away. If the theme is pleasant and surprising, if the brand name corresponds to a real brand, there are chances that this media is good and conveys perfectly the promotions. There is for the public a vocabulary that always comes back. New words always catch people's attention. The words sales, back to school, anniversary represents an indisputable audience capital, provided that the perception image and the determinant image of the brand name are good. Each brand name must over time, know how to create a theme territory for itself in order to close certain action possibilities to competitors. Likewise, the street ads, the radio, the brochures and all personality that we will find in the way of expressing the themes, of structuring each support, of carrying out each promotion. This identity will be one of the elements which will permit to create a visual difference which will have to agree with the positioning of the brand name. Different studies show that by merely reading a brochure or a street ad, the potential traffics may recognise the brand names which have known how to
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build this identity which of ten represents a significant advantage.
THE ADVERTISING/TRAFFIC COMMUNICATION ACTIONS RELATIONSHIP
All the presentations of actions of traffic communication must follow the S.U.R. principle: - Seen - Understood - Reaction. If the ads, the brochure and the radio must be given an advertising spirit, we must yet admit that the beautiful, the decorative exist only to help the audience of the media. The traffic actions live on an increase of the revenues figure and the number of clients registered which can be obtained only if the proposition is clearly asserted on the market. Therefore, there is a consensus to be found between art on the one side and the reality of the understanding of a commercial offer on the other. As far as brochures are concerned, we must respect the theory of the reading keys which help understand how a 4 pages, a 12 pages, a 24 pages brochure or a big catalogue is read. These reading keys have been discovered by using the eye tracking techniques and they show that for each page, there are spots that are looked at before others, places which differ depending on the page considered. The way of expressing the figures, the size of the products, the type of photos used is subject to clearly defined laws. Like the great newspapers which resort to people who organise the page setting, the brochures and catalogues can be made only by specialists of this kind of work. The brochure is not a piece of art; it is a series of paths that the traffic shopper must grasp in a glance. On each of these paths, the eye must be
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attracted, interested. The organisation of the products, their choice must entail the memorisation and a simultaneous desire to purchase. As far as street ads and the radio are concerned, headlight products must be used, that is to say products which will get the shoppers directly interested and will have people talk about with their friends, their family or at work. These headlight products observe very precise criteria which must be absolutely respected. Whether we're talking about a brochure, the radio, the TV or the press, we must consider that every inch used for the ad, every second spent in a TV ad must be profitable. The buyers, the marketing managers must know the price of the first page of a brochure, the cost of a street ad and propose the products keeping in mind the media allocation these products will be granted, depending on the spot they will be assigned in the brochure or in the other media. A rigorous economic study is necessary in any operation of page setting or in the making of a radio or TV ad.
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CONCLUSION
The different chapters which were developed in this book bring forth 4 concepts which permit to better understand the strategic problems of retailing. The first concept expresses the client system, which are the relations which exist between the shopper, the purchaser and the consumer. It helps understand that there are 2 retailing marketings, the entrance marketing and the exit marketing, which is the main difference with the product marketing and the product brand marketing. The second concept is the one which deals with the differentiation of the clients of an outlet, defining them in terms of flow and traffic. It ensures a redefining of the types of opinions, of outlets, of the different potential strategies. Between the essential flow outlets, the semi-flow outlets, the flow and traffic outlets, there are different possibilities available to the strategy makers. The third concept defines the product system and drives to consider a new way of interpreting the components of the entrance marketing, the exit marketing, the merchandising and more generally the commercial communication of outlets. The forth concept deals with the definition of the brand name, resting on the notions of legitimacy, source effect, top of mind, image profile, stressing the necessity of a claim or a slogan and showing the relations which can exist between leader and challenger in a same distribution system.
Management: These last few years, under the pressure of certain

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manufacturers, the retail industry directed itself towards the concept of DPP (Direct Profit Product). If the interest of this approach is obvious, we can imagine today, with regard to the flow and traffic notion, another way of measuring with the help of the principle of direct profit of a client. To know how much money one makes on a flow client, to find out the cost of a traffic clients and understand what must be done in terms of exit marketing so that this client becomes profitable, there seems to be new notions necessary for the management of retail companies, whether they chose an on-line or an on area strategy, whether they're in a technological phase, in a function phase or in a financial phase. The calculation of the product grip per nature of client seems like a dynamic value which starts a new era for the classic management ratios studied up to now.
Management: The retail companies are very different according to whether they are organised to deal with flows or on the contrary with traffics. Experience shows that we are confronted to 2 types of organisations, 2 kinds of management and 2 kinds of colleagues. A flow outlet manager does not run the store like a flow and traffic outlets would. They don't have the same reactions, the same behaviour, they are not interchangeable. In the companies responsible for several brand names, CEOs have often been disappointed in the results of excellent semi-flow outlets' directors who were awarded or who were given the command of a flow and traffic outlet because it was in trouble. As far as purchases and the logistics go, this difference is even truer. If a retail company functions essentially on the basis of the pride to belong, one must be aware of the fact that this term does not have the same meaning in a company running essential flow, semi-flow or flow and traffic outlets. The study and research models on the pride to belong to an outlet clearly state that the sign values of these 3 types of companies are different. One cannot adopt the structure, the management of companies such as Sainsbury, Tesco, Safeway which on the majority run semi-flow outlets in a country (England) where there are few flow and traffic outlets, to open stores in Spain or in France. Vice versa, it is difficult to set up, in essential flow or semi-flow companies,
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the management independence necessary to flow and trafic outlets. Indeed, there is not one type of management for retailing; there are 3 depending on the nature itself of the type of outlet.
STRATEGIC MODELS
Let's look again at the chart of professor Buzzle showing the interrelation of the different elements of the mix marketing and let's adapt them to the problems of retailing. The families of elements make up this model. They are: - first family :the environment of the retail company - second family : goal and resources of the company - third family: the elements of the strategic mix.
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First family: The environment of the company Four main points define the environment of the company. First of all, we must consider the direct or indirect competitors, as natures of distribution and defined by the notions of flow and traffic. Each competitor, direct or indirect, must be studied in order to figure out how its break even point comes about. Likewise, it is important to analyse the elements of legitimacy, source effect, and top of mind, image profile as well as the nature of the claims or the slogans. The location of the direct or indirect competitors must also be considered on the basis of the notion of flow, traffic and market grip. A thorough analysis of the entrance marketing strategies and of the exit marketing ones must close this essential analysis, indicating the function in which are located the competitors. Then, we must understand and analyse the elements concerning the laws and more generally all the principles of retailing adopted in a country. The notions of numerus clausus, of cadenas law, of Royer law must be the object of a serious analysis. The study of the potential market of the outlet considered in terms of consumptions, of location, of distance, of family unity and of consumption graph must be analysed by searching all the elements which can get the clients interested on the one hand and the purchasers on the other. Finally, the study of the nature of the distributions must enable to grasp if, in a given field, we are dealing with a market, in a flow country such as England, Belgium in the food market, or on the contrary, a traffic country such as France or Spain. The knowledge of the densification of the competition tied to the notion of company life cycle, of communication life cycle must permit to point out the most promising distribution formulas or on the contrary the obsolete ones.
Second family: Objectives and resources of the company Here, we must take into account the objectives and resources of the retail company analysed. These objectives and resources can be objective or
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subjective. Retailing is made up of men and women who must meet market conquest imperatives according to 2 principles: the on-line and the on area principles. It is important in the analysis to observe the relations there might be between these objectives, these resources and the environment of the retail company such as we saw it. In the analysis of the resources, we will take into account the nature of the outlets, of the style of management used, depending on whether the company is made up of essential flow, semi-flow or flow and traffic outlets. In the understanding of the objectives, we will identify the limits related to the laws, to the natures of distribution of the country considered and to the position of the direct or indirect competitors.
Third family: The strategic mix
To make the objectives, the resources, the environment agree, the retailer can use 8 strategic levers in his entrance marketing, as in his exit marketing, they are: - his flow policy - his traffic policy - his price policy - his quality policy - his assortment policy - his implantation policy - his function chosen for the outlet - his communication policy. Every one of these 8 levers has been studied in this book. The strategic act consists in combining them, co-ordinating them, modulating them according to the environment of the company on the one hand, and to the objectives and the resources on the other. The implantation of the aisles must not correspond to a dogma or to examples noticed here and there during visits paid to other competing outlets. It's a strategic will to work on the clientele with the exit marketing.
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The quality policy and the price policy offered by the retailer must be coherent with, on the one hand the nature of the retailers of the country considered, and on the other hand the aggressiveness and the strength of the competitors. The assortment policy must take into account the nature itself of the implantation strategy, the reality of the price and quality strategies, but also the nature of the flow policies and the traffic policies in the entrance marketing and the exit marketing of the outlet. The choice of the function of the outlet must agree with the traffic policy, the price policy, the assortment policy and determine an atmosphere and a purchasing comfort. The communication policy must confirm the structure as a whole or impose its replacement, with regard to the competing communication policies, to the markets targeted and to the nature of the distributions taken into account in the environment of the company. Any intention of renovation of an outlet, of remodelling, of revamping must be inscribed in this strategic mix. The creation of private labels, the desire to introduce first market prices in certain arrays, families and subfamilies of products must take into account all the elements of the environment of the company and agree with the reality of the strategic levers as a whole available to the retail company. It is the strategic coherence of a retail company which is the best guarantee of its durability and its growth. The history of retailing is filled with examples that show that success is first tied to the simplicity of the formulas proposed to the clients and to the constant strategic coherence of all the elements of the mix marketing. To make one's opponent strategically incoherent before the eyes of the clients is certainly the surest way to put him in trouble.
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BIBLIOGRAPHY
Positioning: the battle for your mind by Al Ries and Jack Trout, Warner books - New York - March 1982
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STRATEGIC RETAIL MARKETING