Retail Marketing - Merchandise Range, Retail Mix for Sustainable Competitive Advantage - Literature review Example

Retail Marketing Table of Contents Introduction 3 Part Merchandise Range and Assortment 5 Product Life Cycle 5 Depth and Breadth of the Product Range 7 Retail communications 7 Store Layout, Design and Visual Merchandising 8 Customer Service and Facilitating Services 9 Formats and Locations 9 Part 2: Retail Mix for Sustainable Competitive Advantage 10 Part 3: PEST Factors 12 Conclusion 14 References 16 Introduction The aim of retail marketing is to involve in certain activities with the intension of promoting the concerned products to increase sale and maximize profitability. Retail marketing is different from other forms of trading, as an individual is involved in selling the sample of products to the customers. The elements of marketing mix that include product, price, place and promotion are effectively used for the success of retail marketing. Retail marketing is effectively used in order to compete with large chain of stores (Perrey & Spillecke, 2013). The elements of retail mix for the non-domestic retailer i.e. Walmart in China is identified to be an important consideration for sustainability. With the increase in competition, importance of retail marketing is increasing for all the manufacturers. In order to compete with other manufactures of products, it is essential to raise awareness about the product manufactured. Retail marketing is preferred by the manufacturers with the growing demand of consumers, because the retail shops can directly promote the products to the target customers. Retail marketing offers the manufacturers to directly communicate with the customers. The communication process is essential to collect feedback from the customers, which in turn is effective to implement necessary changes in the products. In addition to this, maintaining long term relation with the customers improves loyalty and has potential to attract new customers (Perrey & Spillecke, 2013). In order to introduce Walmart in the target market, it is essential to analyze the retail market of China. The growth in China retail market provides increased opportunity to the foreign investors and therefore is likely to be beneficial for Walmart (Blythman, 2013; Hayden & et. al., 2002). Walmart Stores in United States servers the retail industry and has acquired the position of fortune 500 companies. The corporate strategy followed by Walmart focuses on gaining power in retail market and expansion of the business to achieve competitive position in the US market. In addition to this, other objectives state the importance of developing strong brand and to raise awareness among the customers to improve recognition of the business (Hayden & et. al., 2002). The business strategy has been developed in such a manner that enables expansion of the business in other foreign economies including China. The success of Walmart as a retail store is also dependent on the political committee that actively supports the business by providing million dollars to the brand annually. Walmart retail chain offers a number of products to the customers including family attire, household products, beauty, health products and many more. Additionally, Walmart possesses pharmacy, electronic and other departments according to the needs of the customers (Hayden & et. al., 2002). The target market for the expansion of the business is China. For successful expansion of the business, Walmart has to implement strategy in such a manner to gain competitive advantage in the market. The acquisition of Chinese market is followed by increased competition from the local competitors offering diverse products at a cheaper cost. Some of the rival competitors of Walmart in China are Sun Art retail group and Tesco plc. Walmart follows the competitive strategy of differentiation and cost leadership. The local competitors supply low price products to the customers in such case offering differentiated products has the potential to attract the potential customers to purchase the products. Moreover, providing better quality of products at a cheaper rate than the competitors is likely to be beneficial for the retail store (Wei & et. al., n.d.). Part 1: Merchandise Range and Assortment Product Life Cycle The product life cycle indicates different stages that are followed with respect to time and sale. The life cycle of a product begins with the use of raw materials that is essential for the manufacturing process. The extraction of raw material is followed by the manufacturing process and the cycle ends with the delivery and consumption of products by the customers. The product life cycle continues till the product is disposed of completely or has been recycled (Rosselot & Allen, 2000). Figure: Stages of Product Life Cycle Source: (Komninos, 2002) The above figure indicates the five stages that form the product life cycle. The stages of the cycle are applicable to all the products and services offered by Walmart to the customers of China. The development stage of the product life cycle indicates development of innovative idea. This stage also requires collection of relevant information for the development of new product. The retail market also follows the same pattern of product development. The development phase is followed by product introduction stage. The introduction stage involves the launch of the products in the target market of China (Varley, 2014). In this stage, retail owners are likely to introduce new concept of business for instance providing additional service with a particular product. The introductory stage of retail store generally involves lower profit as well as sales as compared to other stages of the product life cycle. The introduction stage is followed by growth phase of concerned retail store. The growth stage indicates improved sales and profitability, because of enhanced awareness with respect to the availability of different products at Walmart. The growth stage requires more innovation with respect to the products as well as services in order to retain the customers for a longer period of time. The growth stage is followed by the maturity phase that indicates an increase in competition that has the potential to affect sale and profitability (Varley, 2014). In order to face increased competition in retail market, the concerned store requires implementing either changes or offer additional services to the customers. Increase in competition may reduce the price of products that in turn has the potential to affect the quality of products. The maturity stage results to fall in profitability of retail store that is finally followed by the decline stage of the product life cycle. The decline stage indicates failure to implement innovative ideas in product to improve sale and profitability. The decline stage may require withdrawal of the business from the retail market (Komninos, 2002). Depth and Breadth of the Product Range Depth and breadth of the products defines availability of wide range of products along with variations of different brands. The availability of variety products at Walmart is likely to influence of the buying behavior of the customers in China. For the success of the retail store in the Chinese market, it is essential to effectively implement the assortment plan associated with both products and store management. The assortment plan defines the time period in which the concerned product is being displayed in the retail store (Bhatia, 2008). The assortment plan identifies depth and width of the products with respect to different ranges of products available in the retail store. The availability of wide range of product in the retail outlet is determined by the assortment plan of the business. In addition to this, the assortment plan also results to subdivision of merchandise within different product categories available in the retail store. The variables covered under assortment plan include price, design, packaging, size and various other factors linked with the products (Varley, 2014) Retail communications The communication process is essential to improve the overall experience of the customers in the retail store. The experience of the customers is a crucial factor for maintaining loyalty among the customers as well as has the potential to attract new customers in the Chinese market. The communication process is also linked with developing strong brand that is essential for maintaining competitive position in the retail market. The communication process is associated with promotional activities that provide a greater scope to interact directly with the customers. The promotional activity not only improves the communication process, but also allows the customers to share their experience essential to implement changes in the products. The promotional activities used by the retail store include effective use of marketing communication mix incusing advertisements, sales promotion, selling as well as public relations (Gilbert, 2003). Some of the store based promotional activities that can be implemented to achieve competitive advantage includes store tour, events, demonstration and various other observation programs. The store promotional activities are designed in such as manner to raise awareness about the availability of different brands under common store. Moreover, the observation and demonstration programs are likely to influence the buying behavior of the customers. The use of communication mix by Walmart China is also effective in developing customer relation that in turn influences customer loyalty in the long run (Ailawadi & et. al., 2009). Store Layout, Design and Visual Merchandising The store layout is associated with interior designing that is essential to attract potential customers. The layout of store is also linked with the placement of products and is one of the essential retail strategies for the success in the long run. The layout of the retail outlet is likely to affects sale of products and maximizes profitability. The types of retail layout can be classifies into grid pattern, free flow and boutique. In grid type layout, the retailer develops the product counter in long rows throughout the store. In free type layout, products are arranged in open flowing pattern on the floor of retail store. The store layout of Walmart follows open pattern that enables the concerned customers to identify and find the product easily. This pattern of layout has reduced the overall time involved in searching the products that in turn make the overall purchase process faster. Walmart China focuses on local sourcing. In this context, Walmart has established partnership mostly with the local suppliers for merchandising their stores in China (PSS Central Institute of Vocational Education, 2012). Customer Service and Facilitating Services Walmart has gained competitive advantage in delivering value to the customers in different ways. The introduction of digital technology has enabled Walmart to effectively use e-commerce sites in order to communicate with the customers. The combination of physical interaction along with the use of digital technology has increased the probability of growth (Walmart Annual Report, 2014). Formats and Locations The store formats are designed according to the pattern of shopping behavior of the customers. There are different types of store formats on the basis of price and merchandise categories of the products. The store formats can be classified as family, departmental, supermarkets, hypermarket, emporium, shopping centre/plaza or mall and other different stores. Walmart in China follows two different formats including supercenter and Sam’s club. The Walmart supercenter is mainly associated with supplying different types of food materials, clothes, as well as household items and many other products. The aim of the supercenter is to save the overall time involved in shopping from different retail stores. Moreover, Walmart offers products at different ranges that have the potential to improve customers’ experience. Sam’s club is one of the membership stores serving a number of business customers along with the other personal members. The store offers general merchandise along with grocery items. The store has reduced the problem associated with the selection of products, as it offers the best quality of product along with affordable prices rate (Walmart Global, 2015). Pricing Strategy and Tactics In the context of retail marketing, price of product is essential factor to maximize the overall revenue earned. Therefore, the pricing decision are more complex as well as sensitive, as it is linked with customer satisfaction that in turn has the potential to influence the profitability in the long run. Walmart follows the strategy of everyday low prices and supply superior quality of products to the customers. In addition to this, lower price of the products eliminates the additional costs involved in promotional activities. The lower price strategy followed by the retail store is effective in maintaining competitive advantage (Yang, 2009). Part 2: Retail Mix for Sustainable Competitive Advantage Retailers represent the combination of marketing process with the involvement of manufactured products and customers. There are a number of ways of delivering products and services to the customers and is known as format. Different formats are adopted by the retail stores in order to reach potential customers. The concept of marketing mix is associated with product, price, place and promotion. The elements of marketing mix are used in order to gain competitive advantage in a product and to maximize overall profitability as well as sales. Similarly, the elements of retail mix are used to gain advantage as compared to other retail stores. The elements of product mix include quality, length of assortment and in-store services (Azeem & Sharma, 2015). The quality of product is most crucial factors that influence the buying behavior of the customers. The departmental stores are more concerned with the quality of the products offered to the customers rather than the price of products. In addition to this, speciality as well as hypermarket store provides better quality of products as compared to other stores. The length of assortment is important in case of departmental stores, because the customers are more attracted to new variety of products. The availability of diverse products in the retail store is likely to influence the purchase behavior of the customers. In addition to availability of diverse products, the services provided within the store also positively affect the level of customers’ satisfaction. Another element of price mix includes price competition among different retail stores (Azeem & Sharma, 2015). The price of products and promotional activities are likely to influence the store image that the customers’ hold. The departmental store focuses less on price competition as compared to other forms of retail marketing. The discount stores are engaged in price competition with other retail stores. On the other hand, a hypermarket focuses on the price of products that is essential to maintain the sale and profitability in the long run. The speciality store offers exclusive and unique products to the customers and therefore is likely to charge higher prices as compared to other forms of retail stores. The convenience store focuses on the ease of products and therefore, the price factor is given less importance. The place mix is associated with the location of retail store that is associated with the sale of product and therefore, affects the profit margin of the retail store (Azeem & Sharma, 2015). The important of location depends on the type of retail stores. For instances, the convenience store focuses on the location factor that is essential to retain the visit of customers to retail stores. The location of retail store affects the buying behavior of the customers. Therefore, the convenient stores are located in residential areas, so that the products are easily available to the customers. In contrast to this, the hypermarkets are located outside the city, as the location of the store does not affect the sale of the products. Floor space is another element that has the potential to affect the sale of the retail store. In this context, the departmental store has greater space as compared to other retail store as the quality of the products available is greater. The hypermarket has the largest format of retail as compared to other (Azeem & Sharma, 2015). The size of store affects the speciality store that is turn is associated with the profit margin and influences the competitive position of the retail store. The promotion mix is elements that are essential to raise awareness about the store as well as availability of different brand products. For the promotion of the products, different activities are performed including offering loyalty cards to the customers to retain the existing customers. The people mix focuses on personnel management that is necessary to develop customer relationship. The employees of the retail store are intermediary between the business and the customers. Therefore, personnel management is essential to develop good relation with the customers that in turn affects the buying behavior. The location of Walmart has been based according to the convenience of the customers. The retail store stocks a variety of products with different brands based on the needs of the customers. The retail store follows low cost strategy in order to retain the existing as well as attract new customers. Walmart effectively uses the advertising technique in order to raise awareness about the retail brand and availability of the different products. The services provided at Walmart are customer friendly that is effective in developing good relation with the customers (Azeem & Sharma, 2015). Part 3: PEST Factors In order to evaluate the challenges faced by Walmart, PEST analysis has been implemented. The PEST analysis determines political, economic, social and technological factors that have the potential to affect the position of the retail firm in the long run. PEST analysis is essential to identify the factors affecting the performance of Walmart. Macro analysis of the environment identifies the factors that affect the success of the retail industry in long run. The political and legal factors affect the functioning of the business that in turn affects the sale of the products. Moreover, the business related policies adopted in the Chinese economy are likely to affect the sale of the products of Walmart (Wei & et. al., n.d). Additionally, the tax policies implemented by the Chinese government limits the position of the retail industry that affects the sale of the goods and services. The operational activities of Walmart are also influenced by the training law such as Supply Chain Capacity Building (SCCB) program that affects the performance of personnel working in the retail store. The economic growth of the Chinese economy also has the potential to affect the sale of Walmart. Moreover, Walmart follows the strategy of low price that is influenced by the economic position of China. On the other hand, in case of recession, Walmart is likely to face threat because of the low price strategy followed by the retail store. In addition, the change in the economy would also affect the volume of overall sales. The social factor is associated with the cultural factor with respect to the Chinese economy (Wei & et. al., n.d). With the improvement in technology, it has become essential to introduce new improved products in categories such as dry groceries, household appliances, furniture and fresh foods among others that are likely to meet the increasing need of the customers. The improvement in product quality is offered through providing online facility to purchase the products. Walmart has invested in the “docking inventory system” that has enabled the business to achieve economies of scale (Wei & et. al., n.d, p.3). The implementation of the system has proved to be successful for Walmart, as it has facilitated in maintaining low cost and to improve overall customers’ satisfaction (Wei & et. al., n.d). The emerging trends in retail market are different in the US and China and therefore, it is essential to analyze the trend before expanding in the new market. The local condition and buying behavior of the people is likely to affect the retail business in China. Some of the trends followed in retail market include trial and error method in which different formats and layout pattern are followed by the retail store with the aim of identifying the new target market. Another new trend followed in the retail market is the emergence of wholesale store that offers purchase of the products in bulk (Tripathi, 2005). Conclusion From the above discussion, it can be comprehended that the Chinese market for Walmart retail store has developed a strong position. The product life cycle of retail products and the store has been identified to be in accordance with the trends in the Chinese market. The stages of product life cycle have been examined that indicates the introduction, growth and maturity of the retail store. The breadth and width of the retail products defines the assortment phase of the product development. The elements of retail communication have indicated the importance of interaction with the customers for maintaining customers’ loyalty in the long run. The store layout and design has been examined with respect to the retail market. The retail mix elements relating to the pricing strategy followed by Walmart have been recognized to be effective for developing a competitive position. Therefore, in order to gain competitive advantage in the Chinese market, Walmart has analyzed the strengths and weaknesses of different elements of retail mix The PEST analysis has been used to examine the challenges likely to be faced by Walmart in the Chinese market. In this regard, it can be concluded that for the success of the retail market, it is essential to analyze the trends of the retail market. The attitude and cultural belief of an individual affects the buying decision of the customers that in turn affects the competitive position of the retail store as compared to other competitors. The expansion of Walmart business implies development of new retail outlets and more availability of improved products and services. The aim of the retail store has been to improve the efforts with respect to merchandising and effective use of price leadership skill to enhance customers’ services. In this respect, for effective expansion of the business in the Chinese market has been identified to be based on trends followed. Subsequently, new retail market trends are needed to be identified for enhancing the potentiality to maximize sales and profitability over the long run. References Ailawadi, K. L. & et. al., 2009. Communication and Promotion Decisions in Retailing: A Review and Directions for Future Research. Journal of Retailing, Vol. 85, No.1, pp. 42–55. Azeem, S. & Sharma, R., 2015. Elements of the Retail Marketing Mix: A Study Of Different Retail Formats In India. The Business & Management Review, Vol. 5 No. 4, pp. 51-60. Bhatia, S. C., 2008. Retail Management. 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