7/28/2019 Retailing and Marketing Lecture 1

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RETAILING AND MARKETING

Marketing in Retailing Organizations

Charles Blankson, Ph.D.

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Learning Objectives

Define retailing and marketing

Explain the meaning and concept of marketing and its practices inretail organisations

Review the concept of marketing for retailers

Review the elements of retail management mix.

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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 andservices as a means of distribution”.

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Growing Importance of Retail Sector

Large and increasing contribution to GDPEconomic importance more visible

Major employer Retailers as gatekeepersRetailers diversifying their activitiesOrganizations growing on an international scaleBlurring of areas of retail to include wider areas of businessactivity – store cards/credit cards, gas/petrol retailing, bankservices.Size of operation allowing for supply chain control.

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Structural trends in American & European retailing

Increasing dominance of retailers over suppliersIncreasing market share held by multiples and associated loss byindependents and co-operatives.Increasing rates of market concentrationMarketing and Operational superiority of the big players providingcost-effectiveness

Note: All of the trends occur to differing extents throughout America &Europe.

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Marketing in Retail Organization

Definition of MarketingThe Chartered Institute of Marketing (CIM) defines marketing as:“the management process responsible for identifying, anticipatingand satisfying customer requirements profitably”.

Marketing philosophy is the acceptance of customer asQueen/king.

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Definition continues ….

Marketing is therefore: A management function

It organizes and directsIt has a function of assessingIt has a function of conversionIt deals with consumer purchasing power

It deals with consumers or usersIt 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

AdvertisingPersonal sellingSales promotionProduct planning

Customer segmentationMerchandise displayStore location

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Marketing functions

Servicing demand through:Transportation

LogisticsWarehousingCustomer serviceInventory control

Order processingMerchandise handlingCredit control

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Other functional activities

Other functional activities cover broad areas including:

General administration and managementPublic relations and inter-organization communicationsRetail financingRetail marketing researchRetail technologyRetail information technology systemInternational operations or cross-boarder retailingRetail innovation.

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Marketing management mix

The marketing management mix covers the key dimensions of:Product (brand name)

Personal sellingPrice and pricingServices including customer servicePerceived imageLocationSales incentivesIntegrated communicationsStore ambience and atmospherics.

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Marketing Practices in Retailing

Activities at strategy level:

Environmental (PESTLE) searchStrategy development (STP marketing,Brand management etc.)Building strong organizationImplement retail strategy

Counter competitive threatsForecast future market trends (SWOTanalysis, PESTLE analysis, Gap analysisetc.)

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Marketing practices in Retailing

Activities at operational level:

Collect informationMake operational decisionsImplement operational strategyManage store operationsManage human resourceManage store-level resources

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Retail marketing mix

Store locationMerchandising

Store ambienceCustomer serviceRetail pricingRetail integrated communications

Personal sellingStore imageSales incentives

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Role of competition in retailing

Retailing is more competitive than most other sectorsRetail competition is multidimensional i.e., 5 levels

1st

level – product, services, communication, and physicaldistribution.2nd level – related to retail organization and its horizontalcompetitors.3 rd level – other retail organization and the vertical competition.4 th level – deals with geographical dimensions including location

and shopping environment.5 th level – nature of the marketplace‟s (local, national international)economy, including economic boom, bust, recession, inflationprone, hyper inflation etc..

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Retail concentration

High concentration of retail competition could be attributed to easeof entry.

High profit in retailing invites competition and resulting in highconcentration.Large firms taking over smaller firms leads to polarization andconcentration.Government policies and regulations favoring large firms and lessfavorable to smaller firms lead to concentration.Consumers willingness to accept process foods and innovativeproducts help build retail concentration.

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Competitive advantage (differentiation)

Retailers need to differentiate themselves from their competitorsCompetitive advantage is achieved through differential

congruence.Differential congruence is the positive balance between store‟simage and the customer‟s self -image.Successful retailers must achieve differential congruence as ameans of coping with growing competition.Retail management must create a congruence between the store‟sperceived image and the customer‟s self -image to achievedifferential advantage.

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Monopolistic competition

Monopolistic competition is where each retailer has certain uniquefeatures, 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 advantageis 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 retailmarket.

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Conditions for monopolistic competition

The conditions that monopolistic competition imposes on retailorganization include:

Relative ease of entryRelative ease of exit

A less than perfectly elastic demand functionLess than perfect information for individual firmConsumer behavior is less than being entirely rationalThe possibility of acquiring additional information.

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Seminar (Group Work)

“It is the effective blending of all the retail marketing mix activitieswithin the retail organization that determines the success of retailmarketing management”.

TaskIn your group, prepare in summary form for class presentation how

these retail marketing mix activities could be blended for effectiveretail marketing management.

You may use PowerPoint presentation style.

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Key Text Reading

Hasty, Ron and Concha Neeley (2004), Retail Management Basics,

Fountainhead Press, Southlake, TX., Ch. 1 and 2.

Omar, O. (1999), Retail Marketing, London: Financial Times / Pitman.Ch.1.

Kent, T. and Omar, O. (2003), Retailing, Basingstoke: Palgrave, Ch. 1and 2.