RETAILING AND MARKETING

1. RETAILING AND MARKETING Marketing in Retailing Organizations Charles Blankson, Ph.D.

2. 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.

3. 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.

4. Growing Importance of Retail Sector • Large and increasing contribution to GDP • Economic importance more visible • Major employer • Retailers as gatekeepers • Retailers diversifying their activities • Organisations growing on an international scale • Blurring of areas of retail to include wider areas of business activity • Size of operation allowing for supply chain control. 4.

5. Structural trends in European retailing • Increase dominance of retailers over suppliers • Increasing market share held by multiples and associated loss by independents and co-operatives. • Increasing rates market concentration • Technical superiority of the big players providing cost-effectiveness Note: • All of the trends occur to differing extents throughout Europe. 5.

6. 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 king. 6

7. Definition continues…. Marketing is therefore: • A management function • It organises 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. 7

8. Marketing Functions Obtaining demand via: • Price and pricing • Advertising • Personal selling • Sales promotion • Product planning • Customer segmentation • Merchandise display • Store location 8

9. Marketing functions Servicing demand through: • Transportation • Logistics • Warehousing • Customer service • Inventory control • Order processing • Merchandise handling • Credit control 9

10. Other functional activities Other functional activities cover broad areas including: • General administration and management • Public relations and inter-organisation communications • Retail financing • Retail marketing research • Retail technology • Retail information technology system • International operations or cross-boarder retailing • Retail innovation. 10.

11. 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.

12. Marketing Practices in Retailing Activities at strategy level: • Environmental search • Strategy development • Building strong organisation • Implement retail strategy • Counter competitive threats • Forecast future market trends 12.

13. 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.

14. Retail marketing mix • Store location • Merchandising • Store ambience • Customer service • Retail pricing • Retail integrated communications • Personal selling • Store image • Sales incentives 14

15. 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. 15.

16. 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.

17. 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 polarisation and concentration. • Government policies and regulations favoring large firms and less favourable to smaller firms lead to concentration. • Consumers willingness to accept process foods and innovative products helped build retail concentration. 17.

18. 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.

19. 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.

20. Conditions for monopolistic competition • The conditions that monopolistic competition imposes on retail organisation include: • Relative ease of entry • Relative ease of exit • A less than perfectly elastic demand function • Less than perfect information for individual firm • Consumer behaviour is less than being entirely rational • The possibility of acquiring additional information. 20

21. 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.

22. Key Text Reading • Omar, O. (1999), Retail Marketing, London: Financial Times / Pitman. Ch.1. • Kent, T. and Omar, O. (2003), Retailing, Basingstoke: Palgrave, Ch. 1 and 2.