Retail Marketing

The Retail Marketing dimension is the face of Retail Management that is visible to the consumers.

All the efforts of the retailer to manage his retail business is to finally attract customers / consumers to his store and make them buy more and stay with him.

Broadly, Retailing can be classified into product retailing & services retailing

Retail Marketing

The add-on services that the retailer provides represents marketing of services other than the actual service or product that is retailed.

7Ps: The additional 3Ps are: People, Physical Evidence and Process(es).

Shopping Behaviour

Marketing Management for products & services starts with the understanding of Consumer Behaviour.

Retail marketing Needs to start with an understanding of Shopping Behaviour.

Shopping behaviour needs to be distinguished from consumer behaviour. The study of consumer behaviour is generally product or service centric. (Consumer behaviour for soaps / banking services)

Shopping Behaviour

However, one aspect of buying behaviour which is not stressed upon is the place where one buys it.

This represents the retail business. A product or brand or service could be available through multiple channels / outlets but a consumer or a group of consumers buy them in deference to their preference for a particular channel / outlet.

Shopping Behaviour

The study of shopping behaviour helps us to answer questions like how many shops does a customer go to before a decision to buy a product is made; why does he / she choose a retailer compared to others, etc.

The other aspect that would be of relevance to retailers is the reason for shoppers to shop. Shoppers could have different reasons to shop ranging from SOCIALISING to THERAPY to INFORMATION SEEKING.

Shopping Behaviour

CASE IN POINT

GROCERY / CONVENIENCE STORE

Shopping BehaviourCrucial challenges / issues faced by

Grocery / Convenience Stores Related categories and promotional

effectiveness Variety seeking Monitoring consumption rates for packaged

goods Long term effects of promotions on

shopping / shoppers' behaviour

Shopping Behaviour

Related Categories & Promotional Effectiveness

Most grocery stores display related categories together

The underlying assumption is that a household choice in one category is dependent of its choice in the other. In other words, when to purchase in one product category might depend on the decision for a related category.

Shopping Behaviour

Such an understanding is useful for the retailer because it helps by giving an idea about what kind of promotion will click with the customers.

A critical issue, while studying household purchases of multiple categories is being able to identify related product categories.

Consumers typically consume certain products together and therefore purchase them together.

Shopping Behaviour

This gives the retailer some extra space to promote unrelated categories “together” or otherwise.

Shopping BehaviourVariety Seeking Variety seeking behaviour of consumers can

be studied under True Variety Seeking and Derived Varied Behaviour.

The distinction between true variety seeking behaviour depends on whether observed switching is motivated intrinsically or extrinsically.

True variety seeking of consumers takes place only when variation is rewarding in itself.

Shopping Behaviour Retailers need to differentiate between

variety seeking behaviour, repeat purchasing and derived switching behaviour.

Variety seeking behaviour is more likely to occur for products that evoke lower rather than higher levels of involvement (Salt)

Higher rather than lower purchase frequency (Toothpaste)

Shopping Behaviour

Where perceived differences among the alternatives are smaller rather than larger (Brown breads)

Shopping BehaviourMonitoring consumption rate for packaged

goods

Rationale: Economic & behaviour theory

Households increase their usage when they have high inventory.

Faster usage rates also occur if products are perishable, need refrigeration or occupy a prominent place in the kitchen

Retailers can categorise these categories and thus promote them effectively

Shopping BehaviourLong term effect of promotions on

shopping / shoppers' behaviour In categories where promotions have

become frequent, consumers might learn to anticipate future deals.

This scenario suggests that a particular promotional event induces a household to stockpile on a given purchase occasion, followed by the promotion's long term negative effect, which is manifested as an increased probability that the household......

Shopping Behaviour

...... waits for another promotion before buying on subsequent purchase occasions.

Households develop price expectations based on their prior exposure to promotions over a long period such as moths / years

These expectations, coupled with cost of inventorying product, affect consumer purchase timing and purchase quantity decisions.

Shopping Behaviour Increasing expectations of future promotions

lead to a reduced likelihood of purchase incidence on a given shopping trip and an increase in the quantity bought during a purchase.

This strategy is consistent with the consumer learning to wait for good deals and stockpiling when these deals occur.

Promotions thus lead to higher price sensitivities, reduced promotional efficacy, greater inventories and higher demand volatility

Shopping BehaviourLoyalty Programmes Social identity research has shown that

consumers feel a sense of group identification.

Loyalty programmes generally use loyalty cards that members carry with them and have to show at each transaction with the company.

This explicit token of membership will strengthen their sense of belonging to the company and enhance the identification effect.

Shopping Behaviour

Loyalty programmes give rewards to members, varying from saving for items and targeted offers, to special shopping nights, preference in retailer's partner institutions and preferred service treatment.

The marketing activities within the loyalty programmes reward stimulates customer loyalty by providing either social or economic value.

Shopping Behaviour

Benefits of Loyalty Programmes Increased customer retention rates Increased purchase per customer Increased referrals Reduced cost of acquisition Reduced advertising cost for customer

retention

Shopping Behaviour

Aspects of Loyalty Programmes Loyalty segments Programme cycle Instant gratification MeasurementLevel of take up among customers Longevity of the programme

Redemption rates Contribution to knowledge base

Level of dialogue with customers Ability to segment customers

Cooperation