RETAIL MANAGEMENT
CHAPTER 4: RETAIL MARKET STRATEGY
That is a retail market strategy?
A retail market strategy format the retailer
plans to use to satisfy the target market's
needs, and the bases upon which the retailer
plans to build a sustainable competitive
advantage.
TARGET MARKET
This pertains to the market segment(s)
toward which the retailer plans to focus
its resources and retail mix.
RETAIL FORMAT
This is the retailer's mix (nature of goods or
merchandise offered, pricing, advertising and
promotion, store design and visual
merchandising, and location.
Sustainable competitive advantage
This pertains to an advantage over competition that
can be maintained over a long period of time. Michael
Porter described the company's competitive
advantage using some adjectives, such as valuable,
are, and non-substitutable.
Strategic retail planning process
The strategic planning process consists of a
sequence of steps, including a detailed analysis of the
environment where the retailer operates and the
retailer's unique capabilities. Based on this analysis,
the retailer can evaluate alternatives using a financial
theory and a market attractiveness/competitive
position matrix.
TARGETING AND RETAIL FORMAT
The retailing concept is a management orientation that
focuses a retailer on determining the needs of its target
market and satisfying those needs more effectively and
efficiently than its competitors. The selection of a target
market focuses the retailer on a group of consumers
whose needs it will attempt to satisfy. The selection of a
retail format outlines the retail mix to be used to satisfy
the needs of those customers. The retail strategy
determines the markets in which a retailer will compete.
TARGETING AND RETAIL FORMAT
A retail market is not as a specific place where buyers
and sellers meet, as in a very traditional context, but
as a group of consumers with similar needs (a market
segment) and a group of retailers using a similar retail
format to satisfy those consumer needs. Market
segments can be defined in terms of the customers‘
geographic location, demographics, lifestyle, buying
situation, or benefit sought.
Developing a sustainable competitive
edge.
An important element in a retail strategy is the retailer's
approach to building a sustainable competitive advantage. Any
business activity that a retailer engages in can be a basis for a
competitive advantage. Some advantages are sustainable over
a long period of time, while others can be duplicated by
competitors almost immediately. For example, today you could
hardly distinguish the differences in the retail mix of Jollibee and
McDonald's, Coke and Pepsi, or that of Colgate and Close-Up.
Some important opportunities for retailers to develop
sustainable competitive advantages are 1) customer loyalty, 2)
location, 3) human resource management, 4) distribution and
information systems, 5) unique merchandise, 6) vendor
GROWTH STRATEGIES
There are four types of growth strategies that retailers may
pursue-market penetration, market expansion, retail format
development, and diversification.
Market penetration and market expansion are both offensive
strategies, which, therefore, entail doing a lot of homework,
such as doing research about the market size, level of
competition, the economic status of the area, and the marketing
gaps that the new retail firm could fill up. Market penetration is
usually done by a challenger via the backdoor, like what "Beer
na Beer" of Asia Brewery has done when the company entered
the beer market in the Philippines dominated by San Miguel
Beer. A challenger needs to spend a lot on awareness
campaign, through advertisements and sales promotions, for
example, to make its presence felt, and a dent in the market
GROWTH STRATEGIES
Market expansion is usually done by the market
leader to reinvest its surplus resources and/or at the
same time to discourage entry of competition. Jollibee
and ShoeMart (circa 2008) are into market expansion
modes, judging by the way these two firms are
developing stores (in the case of Jollibee) and
shopping malls (in the case of SM) not only in the
Philippines, but also in the ASEAN region.
GROWTH STRATEGIES
Retail format development and diversification
are both innovation strategies which must be
continuing pursuits for sustainability and
relevance among retailers. Retail format
development is a marketing decision designed
to meet the needs and requirements of the
growing customers; that is, format
development within the retail core, like store
layout to make it more customer-friendly, or
improving the merchandise assortments.
MANAGING MARKETING CHANNELS
Channel management has six areas of consideration-
1)alignment of the channel management to the overall
marketing objectives and strategy of the company;
2)development of the channel strategy and objectives;
3)evaluation of channel alternatives;
4)Determining channel structure;
5)implementing channel strategy; and
6) evaluating channel performance.
ALIGNMENT OF CHANNELS
. Marketing channels represent significant investment
for the company. It is, therefore, important that a firm
develop its marketing channel objectives and strategy
only after formulating the company's overall
marketing objectives and strategy.
DEVELOPING CHANNEL OBJECTIVES
AND STRATEGY
This aspect must necessarily consider the target
buyer's preferences, the relationship orientation of the
firm as well as the culture of the industry, and the
degree of market coverage.
EVALUATING CHANNEL ALTERNATIVES
This analysis must cover three related channel
areas, namely, capabilities and costs of the
channel, channel compatibility or fit with other
marketing variables (such as products, pricing,
and promotions mix), and availability.
DETERMINING CHANNEL STRUCTURE
. The major decisions here concern whether to
use direct or indirect channels, channel or
multiple channels, or one of the many forms of
vertical marketing systems. Firms often mix
direct and indirect channels, and many firms
use multiple channels, especially to reach new
markets. a single
IMPLEMENTATION
Implementing implementation of a channel strategy is
often preceded by a trial period. Other
implementation tasks include setting performance
expectations and creating communications networks.
full-scale channel strategy.
EVALUATING CHANNEL
PERFORMANCE
This aspect requires addressing four key
areas: financial performance, working
relationships with other channel members,
ethical and legal issues, and future plans.
RETAILER AND WHOLESALER
Retailing includes all the activities involved in selling
products and services to the ultimate, or final
consumers, either for personal, somebody else's or
family use.
Wholesaling, on the other hand, includes all the
activities involved in selling products and services to
businesses or organizations that in turn resell the
products or services, or use them in running their own
businesses or organizations. This means that a certain
product can be classified as a retail product or a
WHOLESALING
An important part of marketing, wholesaling, to recapitulate,
pertains to the activities associated with selling products to
buyers that resell the products, use them to make another
product, or utilize them to conduct business activities.
Three basic categories of wholesalers. Wholesalers are
categorized as 1) merchant wholesalers; 2) agents, brokers,
and commissions merchants; and 3) manufacturers' sales
branches and offices. Some wholesalers offer a wide range of
services, while others offer a narrow or limited range of
services.
WHOLESALING
Types of full-service and limited-function wholesalers. There are
three main types of full-service wholesalers: 1) general
merchandise; 2) limited-line; and 3) specialty-line wholesalers.
Of these, general merchandise wholesalers carry the broadest
assortment of products and provide extensive services to their
customers. These services may involve promotional assistance,
inventory management and storage, physical distribution,
market feedback, assumption of financial risk, and offering of
credit. The two others carry progressively smaller and more
specialized assortments and provide different levels of service.
Limited-function wholesalers include truck jobbers, drop
shippers, cash-and-carry wholesalers, catalog wholesalers, and
wholesale clubs. Of these catalog wholesalers and wholesale
club Showed the most growth potential.
AGENTS, BROKERS, AND
COMMISSIONER MERCHANTS
All three Concentrate on making sales or purchases,
because it is from the Amount of sales/purchases that
they can make money. They do not take title to the
products they sell. These types of wholesalers must
be quite knowledgeable in order to develop strong
relationships with their customers and suppliers. They
are paid a commission, which is normally a certain
percentage of the value of each completed sales
transaction.
MANUFACTURERS
SALES BRANCH AND OFFICES
Manufacturers sales branches maintain inventory, handle
delivery, and act as an extension of the manufacturer for a
wide variety of services. In the Philippines, this group
would pertain to distributors like Zuellig, in the case of the
pharmaceutical industry. Zuellig handles inventory,
delivery, and sales for various pharmaceutical firms in the
drug industry. They have branches all over key business
and trade centers of the country, and Maintain a large
sales force and delivery vans. Manufacturers' sales offices
offer a narrower range of services, primarily because they
do not maintain inventory.
Written work
Define the following terms:
1. retail market
2. target market
3. retail format
4. sustainable competitive advantage
5. strategic planning process
6. retailing concept
7. market penetration
8. market expansion
9. retail format development
10. diversification