Transcript RETAILING AND MARKETING

RETAILING AND MARKETING
Marketing in Retailing Organizations
Charles Blankson, Ph.D.
Learning Objectives
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Define retailing and marketing
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Explain the meaning and concept of marketing and its practices in
retail organisations
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Review the concept of marketing for retailers
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Review the elements of retail management mix.
2.
Definition of Retailing
The term ‘retailing’ is derived from the old French word ‘retailler’,
meaning ‘a piece of’ or ‘to cut up’.
Retail is:
“any business that directs its marketing efforts towards satisfying the
final consumer based upon the organisation of selling goods and
services as a means of distribution”.
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Growing Importance of Retail Sector
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Large and increasing contribution to GDP
Economic importance more visible
Major employer
Retailers as gatekeepers
Retailers diversifying their activities
Organizations growing on an international scale
Blurring of areas of retail to include wider areas of business
activity – store cards/credit cards, gas/petrol retailing, bank
services.
Size of operation allowing for supply chain control.
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Structural trends in American & European retailing
Increasing dominance of retailers over suppliers
 Increasing market share held by multiples and associated loss by
independents and co-operatives.
 Increasing rates of market concentration
 Marketing and Operational superiority of the big players providing
cost-effectiveness
Note:
 All of the trends occur to differing extents throughout America &
Europe.
5.
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Marketing in Retail Organization
Definition of Marketing
 The Chartered Institute of Marketing (CIM) defines marketing as:
“the management process responsible for identifying, anticipating
and satisfying customer requirements profitably”.
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Marketing philosophy is the acceptance of customer as
Queen/king.
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Definition continues….
Marketing is therefore:
 A management function
 It organizes and directs
 It has a function of assessing
 It has a function of conversion
 It deals with consumer purchasing power
 It deals with consumers or users
 It deals with moving the goods to the final consumer
 It achieves the profit target or other objectives/aim.
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Marketing Functions
Obtaining demand via:
 Price and pricing
 Advertising
 Personal selling
 Sales promotion
 Product planning
 Customer segmentation
 Merchandise display
 Store location
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Marketing functions
Servicing demand through:
 Transportation
 Logistics
 Warehousing
 Customer service
 Inventory control
 Order processing
 Merchandise handling
 Credit control
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Other functional activities
Other functional activities cover broad areas including:
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General administration and management
Public relations and inter-organization communications
Retail financing
Retail marketing research
Retail technology
Retail information technology system
International operations or cross-boarder retailing
Retail innovation.
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Marketing management mix
The marketing management mix covers the key dimensions of:
 Product (brand name)
 Personal selling
 Price and pricing
 Services including customer service
 Perceived image
 Location
 Sales incentives
 Integrated communications
 Store ambience and atmospherics.
11.
Marketing Practices in Retailing
Activities at strategy level:
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Environmental (PESTLE) search
Strategy development (STP marketing,
Brand management etc.)
Building strong organization
Implement retail strategy
Counter competitive threats
Forecast future market trends (SWOT
analysis, PESTLE analysis, Gap analysis
etc.)
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Marketing practices in Retailing
Activities at operational level:
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Collect information
Make operational decisions
Implement operational strategy
Manage store operations
Manage human resource
Manage store-level resources
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Retail marketing mix
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Store location
Merchandising
Store ambience
Customer service
Retail pricing
Retail integrated communications
Personal selling
Store image
Sales incentives
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Role of competition in retailing
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Retailing is more competitive than most other sectors
Retail competition is multidimensional i.e., 5 levels
1st level – product, services, communication, and physical
distribution.
2nd level – related to retail organization and its horizontal
competitors.
3rd level – other retail organization and the vertical competition.
4th level – deals with geographical dimensions including location
and shopping environment.
5th level – nature of the marketplace’s (local, national international)
economy, including economic boom, bust, recession, inflation
prone, hyper inflation etc..
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Dimensions of Change in retail competition
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Retail competition has been changing along spatial, institutional
and functional dimensions.
Spatial dimension – retailing follows population trends.
Institutional dimension – both large and small firms are engaged in
retail competition.
Functional dimension – takes two dimensions e.g. price
competition; and non-price competition.
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Retail concentration
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High concentration of retail competition could be attributed to ease
of entry.
High profit in retailing invites competition and resulting in high
concentration.
Large firms taking over smaller firms leads to polarization and
concentration.
Government policies and regulations favoring large firms and less
favorable to smaller firms lead to concentration.
Consumers willingness to accept process foods and innovative
products help build retail concentration.
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Competitive advantage (differentiation)
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Retailers need to differentiate themselves from their competitors
Competitive advantage is achieved through differential
congruence.
Differential congruence is the positive balance between store’s
image and the customer’s self-image.
Successful retailers must achieve differential congruence as a
means of coping with growing competition.
Retail management must create a congruence between the store’s
perceived image and the customer’s self-image to achieve
differential advantage.
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Monopolistic competition
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Monopolistic competition is where each retailer has certain unique
features, e.g. in terms of merchandise mix, its location etc.
The unique features give retailers competitive advantage over
their competitors.
The ability to use the opportunity to create competitive advantage
is indicative of good retail marketing management.
Retailers need to establish a degree of monopoly power in order
achieve competitive edge or to survive in a fast changing retail
market.
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Conditions for monopolistic competition
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The conditions that monopolistic competition imposes on retail
organization include:
Relative ease of entry
Relative ease of exit
A less than perfectly elastic demand function
Less than perfect information for individual firm
Consumer behavior is less than being entirely rational
The possibility of acquiring additional information.
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Seminar (Group Work)
“It is the effective blending of all the retail marketing mix activities
within the retail organization that determines the success of retail
marketing management”.
Task
In your group, prepare in summary form for class presentation how
these retail marketing mix activities could be blended for effective
retail marketing management.
You may use PowerPoint presentation style.
21.
Key Text Reading
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Hasty, Ron and Concha Neeley (2004), Retail Management Basics,
Fountainhead Press, Southlake, TX., Ch. 1 and 2.
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Omar, O. (1999), Retail Marketing, London: Financial Times / Pitman.
Ch.1.
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Kent, T. and Omar, O. (2003), Retailing, Basingstoke: Palgrave, Ch. 1 and
2.