Retail Marketing and Logistics Concept - Essay Example

Retail Marketing Contents Introduction 3 Rationale for article selection 3 Retail marketing and logistics concept 5 Application of concepts on chosen article 8 Conclusion 9 References 10 Introduction This study encompasses various aspects of retail marketing. Retail marketing can be defined as a range of activities implemented by retailer so as to promote sales and awareness of products or services offered by a company. There are some basic principles which are incorporated within concept of retail marketing. Marketing mix comprising of four elements – product, price, place and promotion are basic factors in retail marketing. Over the years, marketing message has been stated as transformation through Omni-channel and a way to enhance customer centricity. In retail enterprises, importance of marketing has been rapidly increasing. There are efforts made by organizations to combine digital and traditional marketing channels. Promotional activities are highly encouraged by retailers. It helps them to drive attention of customers that is essential for developing brand promise. In this particular study, an article has been chosen in order to highlight different approaches of retail marketing. This article is based on Sunday deliveries of Amazon. It was an initiative undertaken to build a broader base of loyal customers. Retail logistics shall be the prime focus of the entire study. Rationale for article selection The article chosen is based on innovative schemes implemented by Amazon. Amazon is an electronic commerce company of America which was founded in 1994. This company has its headquarters located in Washington. It was originally an online book store which has expanded its business operations into different product segments like selling software, DVDs, video, CDs, electronics, furniture, food, jewellery, apparel, toys, etc. Retail logistics concept is often difficult to understand or analyze. Amazon is regarded as the largest online retailer located in United States. There have been effective measures implemented by this organization in order to enhance level of customer expectations through on-time delivery. Procurement and delivery issues are closely knitted with the concept of retail logistics. The entire logistic mechanism needs to be highly efficient in case of retail companies. This is simply because they often do not have a brand or value proposition but it is structured only through satisfying customer’s interests. The article chosen for this study reflects upon widespread operations of Amazon. It has been observed that Amazon is actively involved in handling wide array of products. In this article it is highlighted that this company witnesses problems related to timely delivery. Many customers are not able to collect their parcel in working days. This in turn elongates the total logistic procedure of the company. Amazon is trying to avoid this issue by focusing on Sunday deliveries. The new approach in delivery process will be available in seven distinct areas. Shoppers in these regions are highly disappointed since they tend to miss their parcel on daily basis. However this form of approach will enable the company to increase level of customer satisfaction (The Telegraph, 2015). It is an interesting article since it reflects upon different approaches adopted by organization so as to survive in highly competitive market place. As per the article customers spent huge amount in online retail chains in comparison to retail stores. This factor is responsible for implementing innovative strategies in terms of diversifying into different product segments, collaborating with other firms, increasing efficiency in logistic operations, etc. The major reason behind choosing this article is that it encompasses one of the biggest online retail company known as Amazon. It is always beneficial to analyze operational procedure of such firms since it forms a benchmark while evaluating other companies’ operations. To be more precise, Sunday deliveries is usually not entertained by other firms. This loophole in retail supply chain had been mitigated by Amazon by introducing the new concept of Sunday deliveries. On the other hand, retail marketing concepts are only inclined towards promotions, products, pricing strategies, etc. There is little emphasis given on retail logistics which forms an integral part of the entire procedure. The article briefly outlines the concept of retail logistics (Dubelaar, Chow and Larson, 2001). It is evident that customer satisfaction or organizational productivity is greatly dependent on supply chain operations. Customers will be satisfied only when ordered products are delivered correctly and on specified time. In overall context, new techniques and focus on logistic system makes it an interesting topic to be analyzed or studied. Retail marketing and logistics concept Retailers in earlier years were considered as a medium used by merchants to position their products. In present context, retailers are designers of supply chain operations. These operations are structured being aligned with customer demand. There is a transformation of supply chain and retail logistics in real world scenario (Mason-Jones, Naylor and Towill, 2000). Retailers are now treated as channel captains. Effectiveness and efficiency of these channels are largely dependent on level of control exhibited by retailers. In retail logistics, there are set of management tasks involved that tends to enhance quality level of entire system. These tasks have been further elaborated in figure1. Figure 1: Management tasks in logistics (Source: Etzel, Walker and Stanton, 2004) The two ends of the approach comprises of service level and costs. In many cases logistic costs tends to rise and it then needs to be balanced by service level. Transformation in retail logistics can be summarised into six major trends. Firstly there is an increased control in context of secondary distribution. Stock replenishment is a common trend being observed on basis of information technology. Retailers now have tight control over flow of goods to retail stores from warehouse (Harrison and Hoek, 2002). Supply proportion is increased by retailers so as to address rising consumer market demand. Logistics systems are being restructured where inventory carrying costs is reduced and more focus is given on centralized distribution centres. Online retailers are now inclined towards maintaining stock as per demand level of consumer market (Whipple and Russell, 2007). Quick response is another strategy which has been implemented in retail logistics. This strategy enables retailers to avoid extended lead times. Lead time can be referred as the time lapse between order being placed and its delivery time. Increased lead time tends to lower down satisfaction level of customers (Tracey, Lim and Vonderembse, 2005). Quick response basically denotes much quicker delivery both externally as well as internally. The other important components associated with this model are efficient consumer response, active involvement in reverse logistics operations and integration of distribution networks into a single framework (Perreault and MaCarthy, 2003). Distribution or logistics play a critical role in retail industry. A part of distribution is the concept of retailing and it is even strongly associated with marketing channel. Distribution brings forth an alignment between production and demand by eradicating certain elements such as quality, space, quantity and time (Morash, 2001). The distribution flow model has been elaborated in figure2. Figure 2: Distribution Flow Model (Source: Frazelle, 2002) As per the model, flow of goods is dependent on four main discrepancies such as space, time, quantity and quality. Flow of goods is also accompanied with flow of information and nominal goods. Reverse logistics in retail sector is directly linked with flow of information from one point to another (Langevin and Riopel, 2005). Distribution can be further classified into two types like direct and indirect distribution. In direct logistics or distribution system, shipments are directly delivered to customers. On the contrary, indirect distribution relates to utilizing third parties, wholesalers or distributors in order to deliver products to end users. Application of concepts on chosen article The chosen article clearly demonstrates the trend of logistics in retail firms. Online retailers should be cautious about their distribution channels so as to deliver products on time to customers. Retailing at times is also regarded as distribution or flow of goods. The distribution model framework can be effectively applied on Amazon. Being one of the largest online retail companies forms competitive advantage of the firm. However there is a need for incorporating best possible measures so as to reduce discrepancies associated with its logistic system. Amazon’s new approach of Sunday deliveries is to enhance quality level of customer service. Customers missing their product deliveries are not a good sign for the company in long run (Lowson, 2001). Distribution channels should be effectively designed so as to ensure it encompasses market demand and internal operational procedure. The distribution model states that time is a vital element and it holds significance in case of Amazon. Their lead time in logistic system was extended due to inappropriate or rather incomplete deliveries. The main objective of Amazon is to effectively transfer goods from one point to another. Inventory holding leads to increased costs and this shall affect profit margins of the company. Its new method of Sunday deliveries to specific locations is a tool to address such time related constraints (Christopher and Towill, 2002). The company on basis of this new approach will take into consideration members who are working in order to ensure products are delivered to them on Sundays. Value addition or quality discrepancy is addressed through including no such additional charges for Sunday deliveries specifically for Amazon Prime members. A framework of logistics encompassing management tasks as shown in figure1 can be applied on the company. Amazon’s current logistics framework clearly states that management is aiming at striking a balance between service level and costs. The company is eliminating its extra costs through implementing strategies which can manage lead time. Lead time can be managed only when operational procedure between product ordering and delivering comprises of least possible time (Chopra and Meindl, 2007). Amazon has proved this theoretical framework to be relevant by stating that customer satisfaction level was deteriorating due to increase in lead time. The major reason behind expanding on delivery days was to ensure that customers are provided with their products at right time, on right place. This company has adopted the strategy of improving upon their retail logistic systems instead of investing into retail marketing activities. Distribution is not only about delivery of products but it includes wide array of factors as portrayed by Amazon. Conclusion According to this study, retailers are a medium between brand and customers. It is essential that customers receive products on time since it is correlated with customer satisfaction. The article chosen for this particular study is inclined towards concept of retail logistics. There are two factors common in any logistic framework – service level and costs. Service level of a firm denotes its base of loyal customers. Amazon operates in an intensely competitive market place. In such scenario a company can retain its market share only through implementing innovative strategies like deliveries on Sundays. This strategy was implemented only for office going individuals who were not able to collect their parcel. Certain theoretical frameworks have been applied on Amazon to prove its objective behind new strategy. The distribution model holds greater significance for the company. Time and quality are two main discrepancies that have been analyzed in relation to Amazon. It can be stated that customer satisfaction is not only dependent on product quality but also on value addition provided through supply chain operations. References Chopra, S. and Meindl, P., 2007. Supply chain management: strategy, planning, and operation. Upper Saddle River, N.J.: Prentice Hall. Christopher, M. and Towill, R.D., 2002. Developing market specific supply chain strategies. International Journal of Logistics Management, 13(1), pp. 1-14. Dubelaar, C., Chow, G. and Larson, P., 2001. Relationships between inventory, sales and service in a retail chain store operation. International Journal of Physical Distribution & Logistics Management, 31 (2), pp.96-108. Etzel, M.J., Walker, B.J. and Stanton, W.J., 2004. Channel of distribution. Boston, Mass.: McGraw-Hill/Irwin. Frazelle, E., 2002. Supply chain strategy the logistics of supply chain management. New York: McGraw-Hill. Harrison, A. and Hoek, R., 2002. Logistics management and strategy. Harlow: Financial Times/Prentice Hall. Langevin, A. and Riopel, D., 2005. Logistics system: Design and optimization. New York: Springer. Lowson, R., 2001. Retail operational strategies in complex supply chain. International Journal of Logistics Management, 12 (1), pp.97-111. Mason-Jones, R., Naylor, B. and Towill, D. R., 2000. Lean, agile or leagile? Matching your supply chain to the marketplace. International Journal of Production Research, 38 (17), pp 4061-70. Morash, E.A., 2001. Supply chain strategies, capabilities, and performance. Transportation Journal, 41(1), pp. 37-54. Perreault, W.D. and MaCarthy, E. J., 2003. Essential of marketing: A global-management approach. Boston, Mass.: McGraw-Hill/Irwin. The Telegraph., 2015. Amazon to launch Sunday deliveries. [Online] Available at: [Accessed on 18 March 2015] Tracey, M., Lim, J.S. and Vonderembse, M.A., 2005. The impact of supply-chain management capabilities on business performance. Supply Chain Management, 10(3/4), 179-191. Whipple, J.M. and Russell, D., 2007. Building supply chain collaboration: a typology of collaborative approaches. International Journal of Logistics Management, 18(2), 174- 196. Read More