Retail Marketing

Retailing & Retailer

Is defined as a set of activities or steps used to sell a pdt
or service to consumers for their personal or family
use
Derived form French word” retaillier” meaning “to
break bulk” or “cut a piece of”

Retailer: Person, agent, Co., or organization

instrumental in reaching the goods, merchandise or
services to the ultimate customer
 Retailer activities
 Anticipating customer’s wants
 Developing assortment of pdts
 Acquiring mkt info
 Financing
 Selecting target markets
 Negotiating with suppliers
 Training salespeople
 Nature of retail marketing
 Profitable retailing and satisfactory returns on investment can only
be achieved by identifying, anticipating and satisfying customer
needs and desires

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

business.

 The essence of retail marketing is developing merchandise and

services that satisfy specific needs of customers, and supplying
them at prices that will yield profits.
 Nature of retail marketing
 Cost & profit varies depending on type of operation & major pd line

 Manage profit of 9-10% on sales

 Sales volume influences business opportunities, merchandise

purchase policies, nature of promotion & expense control measures

 Retailers act as gatekeepers who decide which new pdts shd fimd
their way to the shelves of their stores….a strong say in the success of
a pdt being launched

 Marketers have to sell a new pdt several times: first within the Co,
then to the retailer & finally to the user of the pdt
 Key aspects of retailing
 Direct customer interaction
 Small unit size of sale
 Point of sale promotions
 Criticality of location
 Emphasis of location
 Drivers of Change in Retailing
Changing demographics & industry structure
Expanding IT
Emphasis on lower costs & price
Emphasis on convenience & service
Focus on pdtivity
Added experimentation
Continuing growth of non store retailing
 Major concerns relating optimum
selection of goods
 A wide & increasing range of pdt categories accompanied by
multiple brands in each category complicate decision making for
both mfg & mkt intermediaries
They have to make an optimum selection of goods to be sold
given the foll major concerns:
 Selling space..relatively fixed & must return max profits.If such
space is occupied by non moving or slow moving merchandise……
resort to substantial price red to get rid of unsold stock
 Risk of no performance in terms of quality, supplies which in turn
harms image of retail outlet
 Retail industry
 Largest private industry in the world ahead of finance, engineering
 Contributes 8% to the GDP in developing western countries
 50 of the Fortune 500 & 25 of Asia’s top Cos are retailers
 China..3 of top 10 global retailers : Carrefour, 7-Eleven, Wal-Mart
 Brazil: top 2 global retailers….30% of the RM
 Global Retailing
Market
Market Size
Size &
& Economics
Economics
Infrastructure
Infrastructure &
& Distribution
Distribution
Competition
Competition
Operations
Operations
Factors
Factors Used
Used Financial
Financial&& Tax
Tax Reporting
Reporting
to
to Analyze
Analyze
Merchandise
Merchandise Acceptability
Acceptability
Global
Global Retail
Retail
Markets
Markets Partnering
Partnering Capability
Capability
 Global Retailing

Reasons for
Global Expansion

Spread
Spreadof
of Growth
Growthpotential
potentialin
in
communication
communicationand
and underserved
underserved
mass
massmedia
media markets
markets
Lowering
Loweringofoftrade
trade
barriers
barriersand
andtariffs
tariffs
 Indian retail industry
 5th largest retail destination globally
 Comprising of organized and unorganized sectors, though initially,
the retail industry was mostly unorganized
 Largest no of retailers abt 12 million… 5 million sell food & related
pdts
 Retail sector is the 2nd largest employer after agriculture
 Amounts to US$ 330billion in 2007 to 427b in 2010 & 637 b by 2015
 Retail has a share of 10-11% in the GDP
 6 times bigger than that of Thailand & 4-5 times bigger than S.Korea
& Taiwan
 Expected growth rate 25-30% annually.
 Available mall space 100 mill sq feet by 2011
Growth in Indian retail markets
2006-7
Indian retail (Rs bn)
Food & grocery 8680
Clothing & footwear 1356
Non institutional healthcare 1159

Furniture & furnishing 986

Total 14574
Organized retail (Rs bn)
Food & grocery 61
Clothing & footwear 251
Non institutional healthcare 24
Furniture & furnishing 101
Total org retail 598
Share of OR in TR% 4.1%....22% by 2011
 Major Retailers in India
Pantaloon
 With more than 450 stores across the country
 Launched country's first hypermarket ‘Big Bazaar’

Tata Group
 A major player with its subsidiary Trent, which operates Westside and Star Bazaar.
 Established in 1998, it also acquired the largest book and music retailer in India
‘Landmark’ in 2005.
RPG Group
 One of the earlier entrants in the Indian retail market, food & grocery retailing in
1996 with its retail Foodworld stores.
 Opened the pharmacy and beauty care outlets ‘Health & Glow’.

Reliance
 More than 300 Reliance Fresh stores and Reliance Mart
 It's expecting its sales to reach Rs. 90,000 crores by 2011.
A Birla Group
 Strong presence in Indian apparel retailing. The brands
like Louis Phillipe, Allen Solly, Van Heusen, Peter England

5 types of cities:
 Maturing: Delhi & Mumbai
 Transitional: Bangalore, Kolkata, Hyd, Pune, Ahmedabad,
Chennai..to have 1/3rd of India’s org retail sector
 High growth: Jaipur, Ludhiana, Chandigarh, Cochin,
Lucknow, Surat, Baroda…next reatil destinations
 Emerging: Nagpur, Indore, Nasik, Coimb, Bhubaneshwar,
Goa
 Challenges facing Indian retail
industry
The tax structure favors small retail business
Lack of adequate infrastructure facilities
High cost of real estate
Dissimilarity in consumer groups
Shortage of retail study options
Shortage of trained manpower
Low retail management skill
 Characteristics of Retailing
Differs from manufacturing in foll ways:
 There is a direct end user interaction
 Only point in the value chain to provide a platform for
promotion
 Sale if small unit sizes
 Location is a critical factor
 Services are as imp as core pdts
 Large no of retail units to meet the geographical
coverage & population density
 Activities of retailers
Arranging
Sorting assortment
s

Providing
additional
services (Channel
of commun,
Breaking
transport, advert)
functions) bulk

Extending
services
Holding
stock
 Categorizing Retailers
No of outlets
Margin vs Turnover
Location
Classification of Retail Operations
Ownership
Ownership

Level
Level of
of Service
Service

Product
Product Assortment
Assortment
Classification
Classification
of
of
Retail
Retail Price
Price
Establishments
Establishments
 Ownership
Classification
Classification
of
of
Ownership
Ownership

Independent
Independent Franchises
Franchises
Retailers
Retailers

Chain
Chain Stores
Stores
Major Types of Retail Operations
Department
Department Stores
Stores
Eg:
Eg:SS,
SS,Westside,
Westside,Globus
Globus
Specialty
Specialty Stores
Stores
Eg:
Eg:Bata,
Bata,Nokia
Nokiaworld,
world,Adidas
Adidas
Supermarkets
Supermarkets
Drugstores
Drugstores
Eg:Medicine
Eg:MedicineShoppe,
Shoppe,Apollo
ApolloPharmacies
Pharmacies
Convenience
Convenience Stores
Stores
Discount
Discount Stores
Stores
Eg:
Eg:Wal-mart,Big
Wal-mart,BigBazar
Bazar
 Classification Summary
Service
Service Assort-
Assort- Gross
Gross
Type
Typeof
ofRetailer
Retailer Price
Price
Level
Level ment
ment Margin
Margin
Department
DepartmentStore
Store Mod
ModHi-High
Hi-High Broad
Broad Mod-High
Mod-High Mod
ModHigh
High
Specialty
SpecialtyStore
Store High
High Narrow
Narrow Mod-High
Mod-High High
High
Supermarket
Supermarket Low
Low Broad
Broad Moderate
Moderate Low
Low
Convenience
ConvenienceStore
Store Low
Low Med-Narrow
Med-Narrow Mod
ModHigh
High Mod
ModHigh
High
Drugstore
Drugstore Low-Mod
Low-Mod Medium
Medium Moderate
Moderate Low
Low
 Types of Retailers
Retail franchising is a form of chain ownership in which a
franchisee pays the franchisor fees or royalties and agrees
to run the franchise by prescribed norms, in exchange for
use of the franchisor’s name.
 Importance of marketing in retailing
 Marketing is a vital tool for every retailer, as it identifies current,
unfulfilled needs and wants, which it defines and quantifies.
 Marketing determines which target groups the retailer should
serve.
 Marketing could be seen as delivering an acceptable standard of
living.
 Marketing can ensure complete satisfaction and sustained
customer loyalty.
 Marketing depends on the efficient co-ordination of consumer
prediction, product development, packaging design and influencing
demand through appropriate communication medium.
 Retail Objectives
 To increase customer traffic
 To clear seasonal merchandise
 Match competitors price price
 Price leadership status
 Create entry barriers
 Encourage repeat buying
 Retail Marketing Strategy
Define
Definethe
thebusiness
businessin
interms
termsof
of
orientation
orientationtowards
towardsto
toparticular
particular
sector
sector
Key
Key Tasks
Tasks
in Setting
Settingshort
short&
&long
longterm
termobjectives
objectives
in
Strategic
Strategic
Identifying
IdentifyingTM,
TM,directing
Retailing
Retailing efforts
directing
effortson
onbasis
basisof
ofcustomer
customer
characteristics
characteristics&
&needs
needs

Implementing
Implementingintegrated
integratedmkting
mktingplan
plan

Evaluation
Evaluation&&revision
revisionof
ofplan
plan
depending
dependingononinternal
internal&
&ext
extenviron
environ
 Defining a Target Market
Demographics
Demographics

Geographics
Geographics
Segment
Segment the
the Market
Market

Psychographics
Psychographics

Value
Value &
& Lifestyle
Lifestyle

Behavioral
Behavioral
 Retail marketing mix
 Retail marketing mix is the term used to describe the
various elements and methods required to formulate
and execute retail marketing strategy.

 The aim of such coordination is for each store to have a

distinct retail image in consumers’ mind.
 The mix may vary greatly according to the type of
market the retailer is in, and the type of
product/services.
 The marketing mix planning
The retail marketing mix is the vehicle through which
a retailer’s marketing strategy is implemented and, in
planning the mix, retailers should be guided by three
basic principles:

1. The mix must be consistent with the expectation of

target customers;
2. Elements must be consistent with each other to
create synergy
3. The mix must be responsive to competitive strategy
 The Retailing Mix
Product
Product

Personnel
Personnel Promotion
Promotion

Target
Market

Process
Process Place
Place

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

Place (store location) Product (merchandise)

 Target market  Product development
 Channel structure  Product management
 Channel management  Product features and
 Retailer image benefits
 Retail logistics  Branding
 Retail distribution  Packaging
 After-sales services

The mix of products offered to the consumer by the retailer; also called
the product assortment or merchandise mix.
 The Proper Location
Large, long-term commitment of resources

Location will affect future growth

Local environment may change over time

Shopping Center & Mall Locations

Advantages Disadvantages

Design attracts Expensive leases

shoppers Failure of common
Anchor stores draw promotion efforts
customers Lease restrictions
Ample parking Anchor store
Unified image domination
Direct competitors
 Presentation of the Retail Store
Employee
EmployeeType
Type &
& Density
Density

Merchandise
Merchandise Type
Type &
& Density
Density

Fixture
Fixture Type
Type &
& Density
Density
Factors
Factors Sound
Sound
in
in
Creation
Creation Odors
Odors
of
of aa Store’s
Store’s
Atmosphere
Atmosphere Visual
VisualFactors
Factors
 Promotion
Price
 Developing promotional
 Costs
mixes
 Profitability
 Advertising
 Value for money
management
 Competitiveness
 Sales promotion
 Incentives
 Sales management
 Quality
 Public relations
 Status
 Direct marketing
External Influences on Pricing Strategy

Competitor
s

Pricing
Suppliers Governme
strategy
nt

Customers
 Basic pricing strategies
EDLP
High low pricing
Pricing Practices: Combination of the foll
 Skimming pricing
 Penetration pricing
 Loss Leader price
 Psychological pricing (Prestige , reference, traditional, odd-even pricing)
 Bundling
 Fixed & Variable pricing
 Perceived value pricing
 Bundled pricing
 Price lining
 Multiple – unit pricing
 Extinction pricing
-
 Pricing strategies
Variable pricing – when differences in demand & cost
necessitate a change, with a view to increase demand, off
season discount.

Flexible pricing – offering same products & quantities to different

customers at different prices.

Price lining – retailers establish specified number of price points

for each merchandise type & retailers purchase goods to fit the
price points
– makes price comparisons easier
– can help store to upgrade / down grade customer s preference.
Multiple unit pricing
• Price of each unit in a multiple pack is less than the price of each
unit if it were sold individually.
• Suitable for products with high consumption rates.
Bundling
• Retailers combine several elements in one basic price,
invariably closely related items.
 Leader pricing

When a high demand item is priced low & is heavily advertised to

attract customers into the store.

Loss leader pricing – Where an item is sold below cost to build

traffic & encourage purchase of other items.

EDLP – When a retailer charges the same low price everyday for
long periods and seldom offers the item on sale – stable but lower
than prevailing prices but not the lowest.
 Retail Pricing Approaches and other Elements of the
Retail Marketing
Retail marketing Price below market Price at market Price above market
mix variable price price price
Location No parking, poor Central business Monopoly,
layout, inaccessible district, proximity compatible location
to competition to target segment
Service Attributes Self-service, limited Support from Personalized
offerings, no sales sales people attention to
customers, home
delivery, exchange
facility, customized
offerings
Assortment Limited variety Medium Extensive
assortment
Store Poor quality fixtures, Compatible store Inviting, impressive
Environment limited space to environment store décor, visual
move around, wall merchandise
shelves, untidy attractive
People element Process element
 Staff capability  Order processing
 Efficiency  Database management
 Availability  Service delivery
 Effectiveness  Queuing system
 Customer interaction  Standardisation
 Internal marketing
 Retail Promotional Methods
Coupons: distributed in magazines, newspapers, direct mail, or street hand-
outs to drive sales to the store.
To be successful, coupons must either pay for themselves through increased
sales of the discounted items, or by introducing new customers to the store
who then find other, full-price items to buy.
Organizing Sales: A good way to try to sell off a inventory that has been
difficult to move.One can move out these clearance items while introducing
the store to new potential customers who will decide to return again when
the sale is over.
Loyalty programs: Encourage purchases by charging less than full price, also
encourages a customer to buy more and to return more often.
Customers will feel they have an investment in the store which is lost if they
switch to a competitor.
 Retail Sales Promotion
Benefits
 Excellent demand generator
 Build traffic
 Can play an important role in loyalty programs
 Generate in-store excitement
 Assist in introducing new products

Type of sales promotion : Sponsors

 Self sponsored
 Joint with supplier

Promotion formats for retail

 Announce special sales – end of season / regular
 Organize demos / samples – initiate trial & build traffic
 Value-added gifts / premiums to build brand loyalty in specific categories
 Coupons & contest – to retain interest / repeat
What sales promotion can’t do
 Change buyers preference for un-desired product
 Compensate for poorly trained sales force
 Provide long-term support in sales
 Permanently stop a products’ declining trend/ push a non-
seasonal item in off-season.
 Factors Influencing Advertising
 Age of store
- New stores or those seeking to be re-build image need
advertising.

 Store location
- Stores that are poorly located need more advertising.

 Merchandise
- Those selling high-image / fashion goods need  advertising than a
discount / convenience store

 Supplier support
- The more support a retailer is able to get from suppliers, the more
it can advertise.
Five pillars of Retailing
 5 important actions for Retailers
 Solve customer’s problems
 Treat customers with respect
 Connect with customer emotions
 Set the fairest (not the lowest) price
 Save customer’s time
 Measuring Retail Performance & Productivity
1. Performance of Selling Space

 Sales per Square Foot

Total Net Sales ÷ Square Feet of Selling Space = Sales per
Square Foot of Selling Space

 Sales by Department or Product Category

Category's Total Net Sales ÷ Store's Total Net Sales =
Category's % of Total Store Sales
2. Measuring Productivity of Staff
 Sales per Transaction
 Also known as sales per customer. A store dependant on its sales
clerks to make a sale will use this method
Gross Sales ÷ Number of Transactions = Sales per Transaction

 Sales per Employee

 Retailers need to take into consideration whether the store has full
time or part time workers. Convert the hours worked by part-time
employees during the period to an equivalent number of full-time
workers.
 This form of measuring productivity is an excellent tool in determining
the amount of sales a business needs to bring in when increasing
staffing levels.
Net Sales ÷ Number of Employees = Sales per Employee
 Drivers of Success in RS
 Customers - Driving force in change
 Re-evaluating the mkting plan
 Strong visual appeal
 Workplace challenge
 Ethical and Legal Issues
Consumer
Fraud
Supplier
Ecological
Labor
Considerations
Practices
Ethical and Legal
Issues in
Use of Retailing Retail
Customer
Theft
Information
Slotting
Allowances
 Retail Marketing plan
Plan elements
1. Objectives, SWOT, Distinct positioning
2. Defined target audience
3. Quantifiable goals
 Growing sales revenue (generating more customers and more dollars per customer)
 Enhancing profitability (Analyzing product margin and concentrating on those products
that deliver the greatest profitability. In most cases, it involves implementing an effective
pricing strategy or overhauling your existing one.)
 Generating leads and increasing customer count
 Adding new products or services

4. Detailed tactical elements

5. Budget, timetable and responsibilities
 Identifying which weeks advertising will run, when and where will one seek media
coverage for an important event, on what dates for direct mail campaigns, which months
for sending an email newsletter, or whatever activity one has planned for the annual
calendar. Specific as to date, cost and responsibility
6. Measurability and accountability
 Outline of a Marketing plan
1.0 EXECUTIVE SUMMARY
1.1 COMPANY
1.2 PRODUCTS & SERVICES
1.3 MARKET ANALYSIS
1.4 STRATEGY & IMPLEMENTATION
1.5 MANAGEMENT
1.6 FINANCIAL PLAN
1.7 SOURCES & USE OF FUNDS
 
2.0 COMPANY
2.1 COMPANY & INDUSTRY
2.2 LEGAL ENTITY & OWNERSHIP
2.3 COMPANY HISTORY TO DATE
2.4 FACILITIES
2.5 KEY ASSETS
 
3.0 PRODUCTS OR SERVICES
3.1 DESCRIPTION
3.2 FEATURES & BENEFITS
3.3 COMPETITION
3.4 COMPETITIVE ADVANTAGE/BARRIERS TO ENTRY
3.5 DEVELOPMENT

 4.0 MARKET ANALYSIS

4.1 TARGET CUSTOMER
4.2 MARKET SIZE
4.3 TRENDS
4.4 SWOT ANALYSIS

 5.0 STRATEGY & IMPLEMENTATION

5.1 PHILOSOPHY
5.2 PRODUCT DEVELOPMENT
5.3 INTERNET STRATEGY
5.4 MARKETING STRATEGY
5.5 SALES STRATEGY
5.6 STRATEGIC ALLIANCES
5.7 OPERATIONS 5.8 GOALS
6.0 MANAGEMENT
6.1 ORGANIZATIONAL STRUCTURE
6.2 LEADERSHIP
6.3 STAFF MEMBERS
 
7.0 FINANCIAL PLAN
7.1 REQUIREMENTS
7.2 USE OF FUNDS
7.3 INCOME STATEMENT PROJECTIONS
7.4 CASH FLOW PROJECTIONS
7.5 BALANCE SHEET
7.6 ASSUMPTIONS
 
How to do a SWOT analysis
Strength could be:
1.Your specialist marketing
expertise.
2.A new, innovative product or
service.
3.Location of your business.
4.Quality processes and
procedures.
5.Any other aspect of your
business that adds value to your
product or service.
An opportunity could be:
1.A developing market such as the
Internet.
2.Mergers, joint ventures or strategic
alliances.
3.Moving into new market segments
that offer improved profits.
4.A new international market.
5.A market vacated by an ineffective
competitor.
Weakness could be:
1.Lack of marketing expertise.
2.Undifferentiated products or
services (i.e. in relation to your
competitors).
3.Location of your business.
4.Poor quality goods or services.
5.Damaged reputation.
A threat could be:
1. A new competitor in your home
market.
2. Price wars with competitors.
3. A competitor has a new,
innovative product or service.
4. Competitors have superior access
to channels of distribution.
5. Taxation is introduced on your
product or service.