RETAILING AND MARKETING

Marketing in Retailing Organizations

Charles Blankson, Ph.D.

Learning Objectives

Define retailing and marketing

Explain the meaning and concept of marketing and its practices in retail organisations

Review the concept of marketing for retailers

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”.

3.

Growing Importance of Retail Sector

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.4.

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.

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”.

Marketing philosophy is the acceptance of customer as Queen/king.

6

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.

7

Marketing Functions

Obtaining demand via: Price and pricing Advertising Personal selling Sales promotion Product planning Customer segmentation Merchandise display Store location

8

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:

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.

10.

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:

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.)

12.

Marketing practices in Retailing

Activities at operational level:

Collect information Make operational decisions Implement operational strategy Manage store operations Manage human resource Manage store-level resources

13.

Retail marketing mix

Store location Merchandising Store ambience Customer service Retail pricing Retail integrated communications Personal selling Store image Sales incentives

14

Role of competition in retailing

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..

15.

Dimensions of Change in retail competition

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.

16.

Retail concentration

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.

17.

Competitive advantage (differentiation)

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.

18.

Monopolistic competition

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.

19.

Conditions for monopolistic competition

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”.

TaskIn 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

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. 1 and 2.