Retail Marketing Mix and its Elements Lecture Notes

Retail MarketingRetail Marketing can be defined as “Any business that directs its marketing efforts towards satisfying the final consumer based upon the organization of selling goods and services as a means of distribution.” A retailing mix is the package of goods and services that store offers to the customers for sale. It is the combination of all efforts planned by the retailer and embodies the adjustment of the retail store to the market environment. Retailing mix, a communication mix and a distribution mix. The maximum satisfaction to the customers is achieved by a proper blend of all three. In the growing market, retail marketing has become one of the major emerging trends in the entire economic cycle. It is the retail market only which provides the consumer a basic platform to encounter with goods and a shop keeper for the first time. Retail market consists of a fixed location like boutique, store, departmental store etc., here in these location consumers meets the shop keeper and purchase goods in return of certain value. Maintaining a certain profit margin, these shop keepers sell goods to their consumers. The basic motive of these shopkeepers is to satisfy the consumers and fulfil their needs and demands. Elements of Retail Marketing MixA retailer must engage in planning, research and analysis before implementing a marketing strategy. At the core of any retail marketing plan is the mix consisting of the four Ps (Product, Price, Place and Promotion) of marketing. These are further explained below: 1. Product: The effectiveness of planning the marketing mix depends as much on the ability to select the right target market as on the skill in devising a retail offer which will generate high levels of satisfaction. A product is anything that can be offered to a market that may satisfy a need or a want. This means a combination of goods and services, which includes the store, the staff and the merchandise. In retailing the complete retail offer of location, price levels, merchandise, store layout or method of selling, brand name and service provided play a pivotal role in a firm’s existence and long-term success or survival. The conception of the store has to take into consideration the internal and external design fittings and features as well as all the myriad ways the brand, merchandise and promotional messages communicate with the customer. The shopper has to believe that the merchandise, or outlet, offers added value in order for it to be successful. Retailing comprises everything an individual or customer receives – both favourable and unfavourable– as part of the total retail transaction. From a retail marketing perspective, the product element of the mix is very important. Retailers provide stores full of products to suit every consumer’s needs. Some retailers fill their shelves with extensive product ranges (this can be seen here in the image of an extensive range of hair care products) whilst others offer more limited choices of products (as you can see in the image of an exclusive range of jewellery products). The range of products a retailer sells is called the assortment and this defines the nature of the business and its position in the marketplace. By looking at the following two pictures, you can begin to get a feel for the difference in the type of retail operations that might be selling these products. Product decisions also involve choices regarding brand names, guarantees, packaging and the services that should accompany the product offering. Guarantees can be an important component of the product offering. According to many retailers, the product is the most important element of the retail mix. Selecting what to sell, making the right purchasing decisions, organising stock management and arranging how to display product ranges is so fundamentally important to retail management. However, considered by many retailers to be of equal importance is price. 2. Price: Price is a key element of the marketing mix because it represents, on a unit basis, what the company receives for the product or service that is being marketed. It is the only element of the marketing mix that creates revenue, while all of the other elements represent costs. For example, expenditure on product design (product), advertising and salespeople (promotion) and transportation and distribution (place) all cost money. Marketers therefore need to be very clear about pricing objectives, methods and the factors that influence price setting. They must also take into account the necessity of discounting and giving allowances in some transactions. These requirements can influence the level of list price chosen, perhaps with an element of negotiation margin built in. Payment periods and credit terms also affect the real price received in any transaction. These kinds of decisions can affect the perceived value of a product. The pricing policy selected by a retailer will usually be directly related to the resultant level of demand over a period of time and, with the right margins, to the profitability of the enterprise. For the retailer, pricing decisions are critical because without adequate margins the business will not survive for long. As a business, the retailer has to seek cash flow, profitability and growth in order to improve their market position. The importance of selecting the right strategy is growing as battles among retailers to increase market share are fought on the basis of offering quality, selection and availability at competitive prices. To be successful, retailers are having to forge partnerships with manufacturers and introduce technology in order to gain cost advantage without compromising quality. Given this situation it is not surprising that cost, margin and price comprise the most important elements of the marketing mix for most retailers. This is especially the case given the existence of discount store formats, the entrance of Continental discounters and cheap sources of supply. For others, such as convenience stores, price is still important even if it is secondary to the benefits of location and the opening hours for trading. The current situation is that in the competitive retail marketplace, price is a major strategic weapon in the battle with the competition. 3. Promotion: “Promotion is a tool of marketing communication in order to move forwards a product, service or an idea in a channel of distribution.” Retailers communicate to their customers on a continuous basis through the store atmosphere, the products and services, promotional literature, advertising and other promotional means. Retail promotion is the descriptive term for the mix of communication activities which retail companies carry out in order to influence those publics on whom their sales depend. Retailing promotion will have the main objective of influencing consumer perceptions, attitudes and behaviour in order to increase store loyalty, store visits and product purchase. Retail promotions involve the management of elements of the promotional mix, which include advertising, sales promotions, digital and direct marketing, personal selling, sponsorship and public relations. The retail promotion mix varies from retailer to retailer and nation to nation depending upon technological advancement, nature of competition and availability of finance etc. Retailers design a promotional mix in compliance with store’s objectives such as positioning of the organization, attracting customers, increasing sales turnover, clear out seasonal merchandise, announcing special events and educating public about the organization and its offerings. Retailers generally spend their promotional budget on developing advertisement campaigns and on other sales promotion activities. A retailer has a variety of sales promotion methods to promote its goods and services. Therefore, promotion mix used by the retailer should be compatible with the desired store image, budget allocation and flexible enough to modify whenever need arises. 4. Place: Place considerations involve decisions concerning the distribution channels to be used and their management, the locations of outlets, methods of transportation and inventory levels to be held. The objective is to ensure that products and services are available in the proper quantities, at the right time and place. Distribution channels consist of organisations such as retailers or wholesalers through which goods pass on their way to customers. Producers need to manage their relationships with these organisations well because they may provide the only cost-effective access to the marketplace. They also need to be aware of new methods of distribution that can create a competitive advantage. The retailer should keep in mind the fact that his ‘product’ should be available near the place of consumption so that the consumers can easily buy it. If the brand preferred by the consumer is not easily available at a convenient location, he may buy some other brand in the same product category. Hence, the retailer has to ensure that the product is available to the target consumers whenever required. There are two major components of place: marketing channels and physical distribution (logistics management). Channel decisions affect considerably the elements of marketing mix and involve a longterm commitment of resources. Intermediaries involved in channel network are independent (at times contractual) organizations hence their needs must be taken into account while evaluating channel alternatives. The success of marketing efforts, to a large extent depends on the sound distribution network. Physical distribution involves transportation, warehousing, material handling, bulk packaging etc. Some of these activities are carried out by intermediaries. With the ever-growing size and dispersal of traditional retail operations, controlling merchandise as part of store operations has been of paramount importance. A considerable coordination is required among various channels to seek maximum results of marketing operations. Thus, above were the 4 elements of retail marketing mix that are essential for a retailer to work efficiently.