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 customers 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 retailers

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 merchandiseresort 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 Asias 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 Size & Economics Infrastructure & Distribution Competition Operations

Factors Used to Analyze Global Retail Markets

Financial & Tax Reporting Merchandise Acceptability Partnering Capability

Global Retailing
Reasons for Global Expansion

Spread of communication and mass media Lowering of trade barriers and tariffs

Growth potential in underserved markets

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 Clothing & footwear Non institutional healthcare Furniture & furnishing Total Organized retail (Rs bn) Food & grocery 61 8680 1356 1159 986 14574

Clothing & footwear

Non institutional healthcare Furniture & furnishing Total org retail Share of OR in TR%

251
24 101 598 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 Indias org retail sector High growth: Jaipur, Ludhiana, Chandigarh, Cochin, Lucknow, Surat, Barodanext 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
Sorting
Providing additional services (Channel of commun, transport, advert) functions)

Arranging assortment s

Breaking bulk

Extending services Holding stock

Categorizing Retailers
No of outlets

Margin vs Turnover
Location

Classification of Retail Operations

Ownership

Level of Service

Product Assortment

Classification of Retail Establishments

Price

Ownership
Classification of Ownership Independent Retailers Chain Stores Franchises

Major Types of Retail Operations

Department Stores
Eg: SS, Westside, Globus

Specialty Stores
Eg: Bata, Nokia world, Adidas

Supermarkets

Drugstores
Eg:Medicine Shoppe, Apollo Pharmacies

Convenience Stores

Discount Stores
Eg: Wal-mart,Big Bazar

Classification Summary
Type of Retailer Department Store Specialty Store

Service Level
Mod Hi-High High Low Low Low-Mod

Assortment
Broad Narrow Broad

Price Mod-High Mod-High Moderate

Gross Margin
Mod High High Low Mod High Low

Supermarket Convenience Store

Drugstore

Med-Narrow Mod High Medium Moderate

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 franchisors 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 the business in terms of orientation towards to particular sector

Key Tasks in Strategic Retailing

Setting short & long term objectives Identifying TM, directing efforts on basis of customer characteristics & needs Implementing integrated mkting plan

Evaluation & revision of plan depending on internal & ext environ

Defining a Target Market

Demographics Geographics Psychographics Value & Lifestyle Behavioral

Segment the Market

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 retailers marketing strategy is implemented and, in planning the mix, retailers should be guided by three basic principles:
1. 2. 3.

The mix must be consistent with the expectation of target customers; Elements must be consistent with each other to create synergy The mix must be responsive to competitive strategy

The Retailing Mix

Product Personnel Promotion

Target Market

Process

Place

Price

Retail Marketing Mix

While many elements may make up a firms 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) Target market Channel structure Channel management Retailer image Retail logistics Retail distribution Product (merchandise) Product development Product management Product features and benefits Branding 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
Design attracts

Disadvantages
Expensive leases Failure of common

shoppers Anchor stores draw customers Ample parking Unified image

promotion efforts Lease restrictions Anchor store domination Direct competitors

Presentation of the Retail Store

Employee Type & Density Merchandise Type & Density Fixture Type & Density

Factors in Creation of a Stores Atmosphere

Sound Odors Visual Factors

Price Costs Profitability Value for money Competitiveness Incentives Quality Status

Promotion Developing promotional mixes Advertising management Sales promotion Sales management Public relations Direct marketing

External Influences on Pricing Strategy

Competitor s

Suppliers

Pricing strategy

Governme 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 mix variable Location Price below market price No parking, poor layout, inaccessible Self-service, limited offerings, no sales Price at market price Central business district, proximity to competition Support from sales people Price above market price Monopoly, compatible location to target segment Personalized attention to customers, home delivery, exchange facility, customized offerings Extensive assortment Inviting, impressive store dcor, visual merchandise attractive

Service Attributes

Assortment Store Environment

Limited variety

Medium

Poor quality fixtures, Compatible store limited space to environment move around, wall shelves, untidy

People element Staff capability Efficiency Availability Effectiveness Customer interaction Internal marketing

Process element Order processing Database management Service delivery Queuing system Standardisation

Retail Promotional Methods

Coupons: distributed in magazines, newspapers, direct mail, or street handouts 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 cant 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 nonseasonal 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 discount / convenience store

advertising than a

Supplier support - The more support a retailer is able to get from suppliers, it can advertise.

the more

Five pillars of Retailing

5 important actions for Retailers Solve customers problems Treat customers with respect Connect with customer emotions Set the fairest (not the lowest) price Save customers 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 Ecological Considerations Supplier Labor Practices

Use of Customer Information

Ethical and Legal Issues in Retailing

Retail Theft

Slotting Allowances

Retail Marketing plan

Plan elements
1. 2. 3.

Objectives, SWOT, Distinct positioning Defined target audience 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 Detailed tactical elements Budget, timetable and responsibilities

4. 5.

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.