Analysis of Retail Marketing Nuances - Term Paper Example

Retail Marketing Marketing as such is defined as a set of human activities directed at facilitating and accomplishing exchange of goods and materials. Market in general can be defined in two ways as Consumer market or industrial market. Consumer market is the market where goods or services are sought by individuals for their own or family use. Retail marketing serves this particular market. I, being a part of the retail store would like to define retail marketing as 'selling to the end user and not to a wholesaler, shop etc. As a salesperson I present a specific product or group of products to consumers in a retail environment, try to promote brand awareness and drive the consumers to purchase products. This is place which deals directly with the consumer. Some Background Of all the changes in distribution during the last century, those taking place in retailing have been the most dramatic. Totally new institutions have appeared in an industry that a hundred years ago consisted mostly of small general and specialty stores. The principle retailing innovation in the 1930's was the supermarket, which introduced a number of principles of mass merchandising that cut costs and increased volume at a time when family incomes were strained. The original supermarkets, in fact were not very attractive, but times have now changed. With innovative techniques of attracting the customers, supermarket chains have established themselves in a big way. Supermarkets introduced the principle of self-service, wherein the customer is supposed to do the leg work, which resulted in reduction of the personnel cost of the supermarket. Self service also resulted in encouraging impulse purchases, as the consumer could physically touch and feel all the attractively packaged stuff kept on display. In this study I'll study the nuances of retail marketing through my superstore 'Woolworth' a major superstore chain having branches in many countries and offering range of products from consumer durables, electronic items, toys, sports and leisure items to fresh food. We take pride in customer assistance, and a range of extra services and facilities. Woolworths Group plc is principally a UK retailer focused on the home, family and entertainment. Woolworths offers its customers value-for-money on an extended range of products. It is built around the well known Woolworths brand which is represented in towns and cities throughout the UK The Journey Frank Woolworth started his retail career as a sales assistant like me in the Augsbury and Moore Dry Goods Store in Watertown, New York in 1873. This young boy was desperately in need of a job and the co-owner William Moore took pity on the young farm boy and accepted his offer to work 'free of charge' on a three month trial in the store. If we see this episode in retrospective we'll find a trace of the retail marketing principles even in this offer of this young boy. The boy not only proved his worth but went on to create history in the retailing industry. Woolworths started displaying the 'fixed price' tags on goods as far back as in 1877, when it was considered quite unusual. Frank used to man the counter himself with a fantastic display at the counter, using red material and gold lettering. This attractive display of goods stimulated lots of interest amongst the customers and resulted in increased sales as well. In 1879 Frank persuaded William Moore to back him in opening a store of his own. He made his first attempt in Utica, New York, but failed after some initial success. The store became very popular for the first few weeks before sales started going down but not before Frank had made enough money to pay his debts and had learnt a valuable lesson - that the store must be located at the heart of town, and not in a side street. Experienced enough he tried again at Lancaster, Pennsylvania. The store opened on June 21st, 1879. It was a 'huge success' from the start, taking $127.65 on the very first day itself! Thereafter it was no looking back. With the help of his younger brother Charles Sumner Woolworth (known as Sum), Frank began the journey of creating a history in the retail market segment. On June 21st, 1979 the American arm of the company celebrated its100th birthday. In the late 1990s, the management extended the Woolworths brand into other retail formats and alternative channels to exploit full potential of the changing retail trends. This resulted in the opening of the first big 'W' store in 1999 and Woolworths General Store in 2000. Woolworths Group plc began trading on the London stock exchange, as a listed company on 28 August 2001 after its de-merger from Kingfisher plc. Today Woolworth is a successful retailer in the service of consumers with a number of practices and structures in place designed to ensure that the Company is run in a responsible fashion in the best interests of its shareholders and other stakeholders. These measures make a significant contribution towards its profile as a socially and environmentally responsible company. Traditional marketing mix concept, first proposed by McCarthy in 1960, consists of Product, Price, Place and Promotion (better known as the 4Ps). What I could perceive in the time that I've spent with Woolworth is, each particular marketing mix adds up to a certain amount of effort the company is making for the purpose of generating sales. Any plan to develop a competitive advantage must also be based on a sound analysis of just who a company's competitors are. Therefore, the basic marketing strategy applied by a company is the result of the mixing of different marketing components and these consist of the following: Services or products offered; Accessibility and availability of service or product offered; Promotion or communication to prospective client; and Price charged for service or product offered. With rapid changes in the business environment, I can say for sure that some more Ps are introduced in the marketing mix. These are; Public Relations, Political power, People, Physical evidence, Process and Packaging. I've come across many situations when as a salesperson I've to take recourse to couple of marketing techniques to sell one of the company's products to a consumer or a family group. For example, if I try to persuade my customer to purchase a TV set then, I need to make use of some important marketing success factors like; Packaging and Presentation: Attracting the customer towards the goods and services is an important aspect of retailing business. The presentation method selected as a part of marketing the product should adequately describe the product explaining its use and providing all relevant information like pricing, product options, price discounts etc. In case of a TV set, I explain the features and advancements available in the particular type of model. What I found that customer is more interested in the number of channels, tuning sensitivity, compatibility with DVD players, VCD players, the flatness of screen, automatic light adjustment of the screen etc. Moreover customer also desired to have price comparisons with other brands and superstores. Reach out to the customer: Selling a TV set is no big deal, but retaining the customer for future deals is more crucial. This will happen if we can offer the customer good after-sales service. I found that customers were curious to know as to how the TV will be delivered and installed at their homes and will there be additional charges for this service On my assurances that there'll be no additional financial burden on the customer they used to take a sigh of relief. The interest and accessibility of customers must always be at the back of our mind while trying to sell the product. Effective and efficient customer service holds the key to increasing sales. For this very reason it is of utmost importance that the store must provide good after sales services and the store must be available for visits/ purchases when the customer has the time. For this reason the concept of 24 X 7 has arrived. Gather and analyze feedback from customers: Understanding the needs of customers, analyzing them and then devising strategies accordingly helps in creating utility products for the customers. For a customer on the lookout for a new reliable TV set, it always helps in first requesting him to specify his preferences and thereafter I'll show him the appropriate company/ model. It is equally important once the TV has been purchased by the customer, I call him next day morning and after exchanging the pleasantries I'd gather the feedback on the TV set, that I sold him last night. In case he experienced some difficulties I'd offer him my help in making him understand the operations. This exercise may be repeated couple of times more depending upon the behaviour, attitude and availability of the customer. Broader assortment of merchandise: In order to attract a large number of customers, supermarkets must try to widen the range of products. This way they can sell profitably many things. While trying to sell a TV set, I always try to invite the attention of the customer towards DVDs of latest movies, DVD players, Music systems, Home theatre systems, MP3 players, Video games etc. These are the supportive items to our core business and we must therefore adopt mass merchandise display and promotion techniques. This sort of scrambled merchandising presents a major opportunity as it means more product exposure. On the other hand it also means lower retailer margins as the battle to sell these goods grows fierce. But both these factors result in stimulation of sales. No doubt, with this approach, as a retailer we'll have to deal with more channels of suppliers etc. and we need to learn the art of multi-channel management. Value Addition: It helps in offering value-added services and products. Customers appreciate the gesture when they find that proper care is being taken by the superstore towards fulfilling its needs. In fact this is an age old formula that if for the same price, the customer is getting more value, it would result in making him happier. For example, if a customer finds that all its requirements are available under one roof, and he is getting added incentive for doing the purchases for all its household requirements, then there are more chances of his becoming a loyal customer. Promotional Campaigns: Promotion includes all the tools in the marketing mix whose major role is persuasive communication. For promoting a TV set we need to promote it through appropriate channels like; Advertising: Any non-personal presentation and promotion of ideas, goods, or services by the supermarket. This could be in the form a print advertisement, Radio or TV commercial, Hoardings on the roads or Internet advertising. Personal Selling: This includes presentation in front of the prospective customer by informing him about the features of the goods or services. Publicity: This includes planting commercially significant news items about the products using radio, television, print media or stage. Keeping in touch with competition: Competition describes a state in which various agents are actively vying for resources, power, business, customer loyalty etc. Competition desires that the venture should become important and profitable in supplying the want-satisfiers in the market. From the strategic planning point of view, competitor analysis is very important for any company's long-term survival Michael Porter's Five Forces model has become a yardstick for assessing the profitability of any commercial venture. The five forces are; Buyers'/customers' power: Buyer power acts to force prices down. If apples are too expensive in Woolworth, buyers will exercise their power and move to Sainsbury or Tesco. Suppliers' power: This is the power wielded by suppliers demanding that retailers pay a certain price for their goods to sell. Large supermarkets have the advantage over a small shopkeeper. The supermarket can dictate the price they pay to the supplier, while the small shopkeeper has to make adjustments as demanded by suppliers. Rivalry among competitors: Rivalry between two supermarkets catering to the similar market segment is not new to the market driven economy. It always results in better bargain for the customer. Threat of new entrants: The supermarket chain in UK is getting more competitive. The likes of Woolworths, Tesco, Asda, Wal-Mart and Sainsbury were busy fighting it out when some new entrants like Morrisons and Waitrose have also appeared on the scene. Threat of substitute products: Classical economics deduces that rivalry between companies should drive profits to zero. This is part of the threat of substitutes. Anyone starting up a new supermarket chain has barriers imposed on them, implicitly or explicitly, by the existing supermarkets. Valuing the Environment and Nature: Continuously monitoring the environment and following the leads is key to a successful business venture. Studying different aspects of environment like social, political, legal, technological, etc and taking corrective and adaptive steps accordingly helps in growing of an organization. Rapid advancements in TV technology, DTH & Internet compatibility, hyper tuning channels, in-built video games, magic eye/ golden eye features etc. are some of the features which have the tendency to become fancied features. Price Discrimination: The dynamics of change is so uncertain that it sets up entirely new consumption patterns and hence new paradigms in the context of marketing. Marketing changes are always linked to the profile of the consumer and methods of consumption. Winners will invariably be those companies that are offering more value for the customer's money. I often come across customers who are on the lookout for bargain/ discount offers. And quite often these price bargains help in pursuing the customer to go for the items. A product can be priced in many ways depending upon the cost of manufacturing, the cost of reaching out to customers, the income levels of market segment etc. Product pricing also depends on the availability of competitors in the market and certain rules and regulations of the land. Price discrimination is generally resorted for deeper penetration into the marketplace, to attract more customers from competitors or to attract certain segments. Price discrimination also might be used as a predatory pricing tactic, for setting prices below cost to certain customers, to harm competition at the supplier's level. At times this leads to legal battles. Price discrimination, also known as differential pricing may be defined as the practice by a company of charging different prices to the same buyer or to different buyers for the same commodity or service without corresponding difference in cost. Broadly speaking, we should resorts to price discrimination; To increase revenue To offload excess capacity To invite newer customers To beat the competitors To take care of the elasticity of demand To segregate and cater to the market in segmented forms Conclusion Having undertaken this study I can conclude that; Retail business, like any service sector business, has become fiercely competitive today. Customer has indeed become the 'king' who is often dictating terms to the superstore to devise strategies and put up price tags appealing to him. Presentation of the product features in a manner appealing to the customer, is very important for attracting the customer towards the product. At times it is apparent that the superstore is ready to wait for breakeven, as it wants to play a long inning, but it cannot simply hike the prices and get the desired increase in revenues. The prices have to be customer friendly. Quality of the product and service (both aspects crucial for a superstore) cannot be taken lightly by the superstore, as today's customer has become more quality conscious and more aware about his rights as a consumer. Recommendations For creating a success story in the retail business; It must be always kept in mind that 'we have to take care of the customer' and then only will the customer will start reciprocating. If the level of competition is to be defined, then we can say that retail business is 'survival of the fittest', so the competition should never be taken lightly. The retail business must reach out to the place where the customer is, instead of always expecting the customer to turn up to the superstore. Presentation and packaging are no doubt very important for attracting and selling the products, but one must never try to pass on a low quality product under an attractive packaging. References: 1. Quick MBA: Strategic Management, "Porter's Five Forces: A Model for Industry Analysishttp://www.quickmba.com/strategy/porter.shtml (accessed on Nov. 24, 2006) 2. Phillip Kotler, 'Marketing Management' 2nd Edition, Prentice Hall Inc, 1972. 3. Marketing Virtual Library, available at http://www.knowthis.com/tutorials/principles-of-marketing.htm. (Accessed on Nov. 25, 2006). 4. '11 Ways to make a difference', ATKEARNEY, an EDS Company, available online at http://www.atkearney.com/shared_res/pdf/11_ways_difference_retailers.pdf 5. Retail Marketing defined, On-Point Marketing &Promotions, available online at http://www.onpoint-marketing.com/retail-marketing.htm (accessed on Nov. 26, 2006). 6. Woolworths UK, available online at www.woolworths.co.uk (Accessed on Nov 25, 2006). 7. Shari Waters, 'Tips to Increase Retail Sales', available online at http://retail.about.com/od/marketingsalespromotion/a/increase_sales.htm (accessed on Nov. 26, 2006) Read More