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Volume 5 (19) Issue 1 2014

Volume 5 (19) Issue 1 2014

Marketing Strategies: Small Retailers against Big Retailers

Andrei TOMA Valahia University of Târgovişte, Romania tomanndrei@yahoo.com

Abstract After 1990, in Romania there were radical changes in retail, in several steps. Initially, there were many small private retail companies in a very profitable sector for new entrepreneurs in the new conditions of post-socialist Romania. Gradually began to appear larger stores, big chaines stores as in Western Europe, which before 1990 were totally absent in Romania and competittion with small companies became more intense. This is a problem not only in Romania, but in almost all the world. Marketing strategies used by the two types of retailers: large retailers and small retailers. Their marketing strategies are largely different. Large retailers rely on promotions, offer diversity, merchandising. Although apparently in disadvantage, small business can use many marketing tools, such as: proximity to customer, close relationship with customers, impeccable customer service, customer attentive staff, decent prices. Large retailers are not perfect, so small retaliers have a chance to survive, although competition between them is a strong one.

Keywords: small retailers, large retailers, marketing strategies

JEL Classification: M3

Introduction

Buyers and the existence of loyal buyers conditioned business success; loyal buyers are the most profitable customers for an enterprise. In the retail business there are large retailers (such as hypermarkets, supermarkets, department stores) and small retailers. Competition between them is strong and the marketing strategies used are different. There are literature views of various authors that small retailers can form loyal customers also. I do not fully subscribe to these views, because shopping from large retailers are a reality and the kind of buyers who usually buy in small shops is the rush, comfortable and well informed ones.

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Valahian Journal of Economic Studies

Valahian Journal of Economic Studies

The battle between large and small retailers can be analyzed from the perspective of the marketing strategies used. Both type of business has their own strengths and weaknesses. I agree with Jay Conrad Levinson, JC "Guerilla Attack": "Being big does not necessarily mean to be good. So to be small". However, small businesses can successfully use several marketing strategies in competition with "giants". The purpose of this article is to show what can do small retaliers.

1. Romanian experience in retail since 1990

Before 1990, Romania was typical small retailers owned by the state. The large retaliers, in Western-style, were unknown. At the same time, private property in retail was insignificant. After 1990, in Romania there were radical changes in the retail, in a number of steps. Immediately after 1990, there were very many small private companies, retail as a lucrative sector for new entrepreneurs in the new conditions of post-socialist Romania. The small private shops emerged and multiplied since 1990, but it should be noted that there was at that time serious competition from large companies, which only then began to enter our market. Gradually began to appear larger retailers, as in Western Europe, which before 1990 were totally absent in Romania, and competition with small companies became more intense.

With increasing year by year in this area, Romania has come to have a hypermarket, a large supermarket and 15 small supermarkets to one million inhabitants, according to Shopper Trends 2008 survey conducted by Nielsen Romania. Their impact is greater in large Romanian cities. Thus, only 10% of the inhabitants of Bucharest still buy from traditional stores. A third of them prefer hypermarkets and over half alternates hypermarkets and traditional stores. Shopping in hypermarkets volume is much higher [***, 2008]. Romanian retail still has great potential for growth, even in comparison with neighboring countries (Ardelean, 2012). After 1990 in Romania were felt phenomena taking place on the international level in the field of retail. Two aspects of international experience in retail are obvious: expansion of supermarkets on an international scale and the survival of traditional retail in many countries (Burton, 2009). Supermarkets are specific to developed countries. In developing countries, are traditional small shops or other (bazaars etc.). For example, in India and Latin America, small retailers are important as a proportion of total sales. Large supermarkets were over 50% of sales in 2006 in Argentina and Chile, 45% in Mexico and Brazil. Traditional stores had 47% in Mexico, 46% in Colombia (Burton, 2009). There was a weak and slow success of supermarkets in India and Latin America, among those with low incomes (just among them!) Traditional methods of commerce in many countries have survived.

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Volume 5 (19) Issue 1 2014

Factors that favored traditional stores to supermarkets in India and Latin America

were:

proximity to houses of buyers - because low-income shoppers do not want to to travel a long distance, and some believe that supermarket prices are high.

also offers products at lower weights than in supermarkets, for example,

provide 150 grams detergents instead of 500 grams. And in fact the prices are somewhat higher!

advantage of being perceived as traditional locals and not foreigners.

pay the debt. Note: this is practiced in Romania, in many rural areas!

A tradition of small retail, there are in Eastern Europe, and had in Romania, but between the situation of mentioned countries and Romania there are many differences, which as expressing a difference of mentality. On the contrary, in Romania, the large retailers have quick success against small businesses.

2. Advantages and disadvantages of large retailers

Main advantages of the major retailers are:

lower prices

offer diversity

promotions

lower costs

large staff

reputation, company image

buyers can choose the product (cafeteria)

buyers

come

to

shop

and

walk

for

(Traistariu, 2005)

good supplier relations

strong financial background.

recreation,

for

common

atmosphere

Modern retail is facing a number of disadvantages. Surveys show that most often, the buyers are dissatisfied with:

rude or indifferent employees behavior

insufficient and poorly trained staff, unable to provide the information

requested

insufficient cash registers,

lack of products shown in catalogs

lack of "logic" product exposure (Vaschi, 2008).

3.

Advantages and disadvantages of small retailers

Main advantages of small business are:

proximity to customers

customer-familiar atmosphere

the opportunity to establish close relationships with buyers

Disadvantages of small retailers are:

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Valahian Journal of Economic Studies

higher prices

reduced areas of sales and exposure

low-diversity of supply

small staff

poor financial background.

Also,

traditional

stores

make

a

number

merchandise, crowded merchandise.

of

mistakes

sometimes:

too

much

4. Specific marketing strategies of large retailers

Specific marketing strategies of large retailers are:

Promotions

Creating a favorable image

Offer diversified

Quality products.

Merchandising

These strategies have effects, because reasons why buyers preferred supermarkets are [Felicia Traistariu, 2005]:

promotions

quality products

diversity of products, which are all in the same location

time saving

the ability to choose the product from the shelf

5.

Specific marketing strategies for small retailers

These marketing strategies should not mean big investments, but minimal and

include:

 

Proximity to the buyer, close relationship with customers (Popa, 2010)

Adaptation consumers continue to demand.

Good supply. Supermarkets sometimes have shortages in supply.

Quality Products

Good use of space

Exposure goods more attractive, that does not give the impression of busy and

tiring

Impeccable customer service, including several aspects: the rest given fair,

rapidity in serving customers, the way to address

Attentive staff with customers. Staff can be a major point of differentiation

from large retailers. It must to be respectful, kind, communicative, cheerful, flexible. Only in this way it will be attracted customers. Not grumpy staff, not bored, or do not give change correctly, not naughty, rude,or rushed.

Payment on credit (with risks!) Mostly practiced by some shops in rural areas. What you do not do it at all supermarkets! And involves risks.

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Volume 5 (19) Issue 1 2014

The best strategy is to maintain customer satisfaction, and the widespread of favorable impressions attracts new customers.

Focus, in written materials, on the satisfied customer testimonials

Reward loyal customers [Shari Waters].

Signaling offers for clients to be visible and attractive (Popa, 2011).

Home delivery - a tool used for many years in other countries and still untapped in Romania [***, 2008].

Decent prices, even higher than in large retailerss. But not high prices!

On can meet today, in Romania, situations where the sale price of the small

retailr is less than the supermarket price! (actually the incredible at first view). There are smaller additions sometimes practiced by corner retailers. There are recent studies that show that are price differences between different types of retailers, and small shops do not always have the highest prices; in fact some have even have the lowest prices (sausages and dishwashing detergents!) (Popa et all, 2013).

6. Customers loyalty

Customer loyalty is an indicator of their satisfaction in areas where there is competition and it means profits and sales on long term (Toma, 2012). Loyal customers are commonly those customers with the highest satisfaction. A loyal customer may attract more consumers through the positive impressions communicated to others (Toma, 2009). Strong competition nowadays makes it easier for a company to attract a customer than to keep him. There are literature views that on can reach customer loyalty and convenience stores. I do not fully subscribe to these views, shopping from large retailers are a reality and the kind of buyers who usually buy in small shops are often in time crisis or those comfortable. Corner shops serve especially for occasional purchases or for urgent necessity .

Conclusions

It is clear that business success is conditioned by the existence of loyal buyers who are the most profitable customers for an enterprise. Also a known fact in the business world is that it is more expensive and more difficult to attract a new customer than keeping the old one. And this is especially important under conditions of intense competition. I support the view that retailers can try to survive in a strong competition and they have marketing strategies in this regard. Large retailers have weaknesses that can be exploited by small retailers.

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Valahian Journal of Economic Studies

Valahian Journal of Economic Studies

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