Chapter 5

Retail Marketing Strategy

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Questions

 What is retail strategy?

 How can a retailer build a sustainable competitive
advantage?
 What steps do retailers go through to develop a
strategy?
 How a retailer becomes a global retailer?

5-2
Elements in Retail Strategy

 Target Market
 the market segments retailer plans to focus its resources and retail
mix
 Retail Format
 Method for Satisfying Needs
 Type of retail mix (nature of merchandise, services offered, pricing
policy, A&P program, store design and visual merchandising,
location…)
 Sustainable Competitive Advantage
 An advantage the retailer has over its competition that is not easily
copied by competitors and thus can be maintained over a long
period of time.

5-3
Retail Market Opportunities for
Women’s Apparel

5-4
 Analyzing McDonalds’ Retail Strategy

What Is McDonalds’:

The McGraw-Hill Companies, Inc./John Flournoy, photographer

-Target market?

- Retail offering (format) ?

- Bases for competitive

advantage?

5-5
Question

■ Why Does a Retailer Need to Focus on a

Specific Target Market ? Why Not Sell to
Everyone?

Rim Light/PhotoLink/Getty Images

5-6
Develop a Sustainable
Competitive Advantage by:

1. Dropping the price of your merchandise?

2. Building a store at the best location?
3. Deciding to sell some hot merchandise?
4. Increasing your level of advertising?
5. Attracting better sales associates by paying
higher wages?
6. Providing better customer service?

5-7
 Sources of Competitive Advantage
More Sustainable
■ Location
■ Customer Loyalty
■ Customer Service
■ Exclusive Merchandise
■ Low Cost Supply Chain
Management
■ Information Systems
■ Buying Power with Vendors
■ Committed Employees
Less Sustainable
■ Better Computers
■ More Employees
■ More Merchandise
■ Greater Assortments
■ Lower Prices
■ More Advertising
■ More Promotions
■ Cleaner Stores
5-8
Competitive Advantages may come
from..

Retail Firm

Vendors,
Suppliers Competitive
advantage Customers

Sources of
Capital
5-9
7 important opportunities to develop
sustainable competitive advantages ?

1. Customer Loyalty
2. Location
3. Human Resource
Management
4. Distribution and Information
Systems
5. Unique Merchandise
6. Vendor Relations
7. Customer Service

PhotoLink/Getty Images

5-10
How Retailers Build Loyalty
 Develop a strong brand for the
store or the store brands Retailing view 5.1

 Develop clear precise

positioning strategies
 The GAP: moderately price,
fashionable women’s clothing and
good services.
 Hermes: unique value, Luxury…

 Loyalty programs

5-11
Location

 What are the three most important things in

retailing?

 Highland Coffee in Vietnam?

 Starbuck in worldwide ?

5-12
Human Resources

 “Employees are key to build a sustainable

competitive advantage”

 Strategies for Recruiting and Retaining

Talented Employees
 Employee Branding
 Develop positive organizational culture

5-13
Distribution and Info Systems

Flow of Information

Vendor By decreasing costs here, the

is more money available to
Distribution Center
invest in:
Store  Better services
 Increase in breadth and depth
 Decrease in prices

5-14
Vendor Relationships

 Low Cost - Efficiency Through Coordination

 Electronic Data Interchange (EDI)
 Planning and Forecasting to reduce Inventory
and distribution costs
 Exclusive Sale of Desirable Brands
 Special Treatment
 Early Delivery of New Styles
 Shipment of Scare Merchandise

5-15
Unique Merchandise

 Develop Private Lebel

Brand
 1/5 brands in US are store
brands
 Exclusive merchandises

5-16
High Quality Customer Service

 Difficult to Achieve, take much time and effords.

 People Are Not Machines – Inconsistent
 Customer service becomes a part of retailer’
organization culture.
 Customer always require services better and
better.
 That are real sustanable competitive
advantage.

5-17
Growth strategies

5-18
 Why Do Category Killers and
Supercenters Succeed Globally?

 Developed operating expenses

 Scale economies for buying
merchandise globally
 Unique systems and
standardization formats that
facilitate control over multiple
stores
 Understand that consumers are Ryan McVay/Getty Images

willing to forego service for lower

prices
5-19
Key to Success in Global Retailing
■ Globally sustainable competitive advantage
 Low cost, efficient operations - Wal-Mart, Carrefour
 Strong private label brands: Starbucks, KFC
 Fashion Reputation - The Gap, Zara, H&M
 Category dominance – Best Buy, IKEA, Toys R Us
■ Adaptability
■ Global Culture
■ Financial Resources

5-20
 5-22
International Market
Entry Strategies

Direct Investment
Joint Ventures
Strategic Alliances
Franchising

5-22
Group exercise 3,4

1) What are differentiation characteristics between

target customers of Coopmart, Marximart and
BigC ?
2) Analyze advantages and disadvantages of
approaches that retailers can take when entering
nondomestic markets.
 Direct investment
 joint venture
 strategic alliance
 and franchising

1-23