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L1: Introduction to Retail Marketing
Retailing - Business activities involved in selling
goods & services to final consumers for their
personal, family, or household use
...

Sell small quantity of items on frequent bases
...

Attempt to provide convenience in terms of
payment, location and after-sales services
...
com)
Web sites,
Mobile stores,






Physical stores,
Telephone sales

Cross selling across channels (in-store product
availability info on Web site)
...

Can buy & return product regardless on
channel
...

Role of each channel:
 Store– try on - ease of return, fast
availability (immediacy), compare
offerings
...


Retailing & Marketing – is all about delivering
and communicating VALUE to consumers
...

Perceived quality of the brand/product
...

Consumer characteristics and segmentation
...


Applying the Retailing Concept

Total Retail Experience - Includes all the
elements in a retail offering that encourage or
inhibit consumers during their contact with a
retailer
...

Number of salespeople, Display, Price,
Brands carried, Inventory or stock, Parking,
Cleanliness, Advertising, Lighting
...
Basically more doing & less thinking
...

Selective Distribution – Takes place when
suppliers sell through a moderate number of
retailers
...

Retail Strategy – Overall plan guiding a retail
firm
...

Retailing Concept – An approach to business
that is customer-oriented, coordinated, valuedriven, and goal-oriented
...

Relationship Retailing – Exists when
retailers seek to establish and maintain longterm bonds with customers, rather than act as
if each sales transaction is a completely new
encounter with them
...

Exclusive Distribution – Takes place when
suppliers enter agreements with one or a few
retailers to designate the latter as the only
firms in specified geographic areas to carry
certain brands or product lines
...
This often maximizes suppliers' sales

L3: Strategic Marketing Planning for Retailing

Retail Marketing Plan

Wheel of Retailing - A hypothesis that describes
how retailers approach to capture market share and
create brand value as they gradually work their
way up
...
There are many price-sensitive shoppers who
will trade customer services, wide selection
and convenient location for lower price
...
Price-sensitive shoppers are not loyal
...
New institutions are frequently able to have
lower operating costs than existing institutions
...
As, retailers move up the wheel, they typically
do so to increase sales, broaden the target
market, and improve their image
...

Profit - Retailers seek at least a minimum profit
level during a designated period
...

Image (Positioning) - How a given retailer is
perceived by consumers and others
...
(McD)
Franchisee pays an initial fee & monthly
percentage of gross sales in exchange for the
exclusive rights to sell goods & services in an area
...
The aspects of a strategy that
have gone well are maintained: those that have
gone poorly are revised
...

Based on sales
...

The proprietor is responsible for all aspects of its
business and pays a percentage of sales as rent
...
Ownership
2
...
Nonstored-based Retail Strategy Mix

The department store sets operating restrictions to
ensure consistency and coordination
...
The most
chosen medium of retailing
...

Vertical Marketing System –



Chain – retailer operates multiple outlets (store
units) under common ownership
...
(Wal-Mart)



Independent Systems: Independent
manufacturer, independent wholesaler,
independent retailer
...

Fully Integrated System: All production and
distribution functions are performed by one
channel member
...

A group of consumers invests, elects officers,
manages operations, and shares the profits or
savings that accrue
...
Demographics - consumer data that is
objective, quantifiable, measureable and
easily identifiable
...

2
...

Social
•Culture
•Social Class
•Reference Group
•Family life Cycle
•Time Utilization

Psychological
•Personality
•Class
Consciousness
•Attitudes
•Perceived Risks

Perceived Risk

3
...

Desires - discretionary shopping goals that have an
impact on attitudes and behaviours
...

Online Shoppers: Well educated, above average
incomes
...

Outshoppers: Out-of-Hometown shopping
...








4
...
Confident Shoppers explore more
...









Cannot find an appealing style
Nothing fits
No sales help is available
Cannot get in and out of the store easily
In-store experience is stressful
Cannot find a good value

Consumer Decision Process

Types of Consumer Decision Making

Types of Impulse Shopping
Completely unplanned - Before coming into
contact with a retailer, a consumer has no intention
of making a purchase in a goods / service category
...

Level of consumer involvement is high
...
Level of
uncertainty about the choice of product is high
...
Buying
car or house
...
He already had
an experience with the product and knows it
...
Level of consumer involvement is
moderate
...

Routinized- About everyday purchases with low
level of involvement from consumer
...
He knows what brand to
choose and which product suits him
...
The purchase decision
is simple and is quickly taken
...


Partially unplanned – Before coming into contact
with a retailer, a consumer has decided to make a
purchase in a goods / service category, but has not
chosen a brand / a model
...

How to stimulate it?





Promotion – Buy 1 Free 1, Discount
Keep customers know latest happenings via
online
...

Be strategic with positioning (checkout area)
...
Retailer Action

Mass Marketing – Appeal to an entire market with
1 basic strategy utilizing mass distribution
...
H&M, Nivea
Differentiated Mkt – Focus on 2 or more market
segments with a different marketing plan for each
...
Environmental Factors
State of the economy
Consumer confidence about the future
Country of residence- industrialized vs
developing
Cost of living
Rate of inflation
Infrastructure where people shop
Price wars among retailers
Emergence of new retail formats
Government and community regulations
regarding shopping hours, new construction,
consumer protection and so forth
Evolving societal values and norms

L5: Management of Service & Quality in Retailing

The Gap

Quality in Retailing

Gap 1: Ignorance of the Customer’s Expectations
– This is the Gap between consumer expectation
and management perception
...


For retailers to be better at managing quality, they
need to start with knowledge of specific
characteristics of retailing:
Tangible features- 5-sensor usage: touch, taste,
see, smell, hear
...

Intangible features- Pure service
...

Eg: banking, insurance, being served
...

Rationale: A point which represents the point at
which a gap may occur between expected service
and perceived service
...
Tangible goods
...

Functional Quality- How technical elements of
service are transferred / perceived
...

EG: Attitudes and Behaviours of Staff, Service
Mindedness of personnel, availability of parking
...

Management quality standards might not be there,
it is unclear, unrealistic, or unenforced
...
Even if the guidelines are
clear, poor employee performance results in poor
service delivery
...

Gap 4: Inconsistency Between Performance and
Promises – This is the gap between service
delivery and external communications
...

Gap 5: The Service Shortfalls – Gap between what
customers expect & what they actually receive
...

How To Characterise Service Quality?
TANGIBLES – Refers to what the customers can
see, touch, feel, use
...
The appearance of
physical facilities, equipment, personnel and
information material
...
The company honours
its promises, does not lie or cheat its customers
...
Eg:
Calling a customer back immediately and giving
prompt service
...

EMPATHY: Having an Understanding of what
customers as individual humans require in relation
to psychological as well as physical needs
...

Merchandising consists of the activities
involved in acquiring particular goods and/or
services and making them available at the
places, times, and prices and in the quantity
that enable a retailer to reach its goals
...
Forecast
The projections of expected retail sales for
given periods
...

It is essential to distinguish among different
types of merchandise when forecasting
...

Cross-merchandising: Retailers carry
complementary goods and services to
encourage shoppers to buy more
...

Assortment- variety of products in order
to give customers a proper selection
...

Seasonal- products which sell well due to
non-consecutive time periods
...


Attributes & Functions of Buying
Organisations
2
...
Assortment
Is the selection of merchandise a retailer
carries
...

Width- number of distinct goods/service
categories (product line)
...
Allocation
Placement & distribution of product in supply
chain
...


CATEGORY MANAGEMENT

Types of Product Assortment:

Is a merchandising technique used to improve
productivity
...

Wide and Shallow (many goods and a limited
assortment in each category)
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It is a way to manage a retail business that
focuses on performance of product category
results rather than individual brands
...


Narrow and Shallow (few goods categories
& a limited assortment in each categories)
...
Brands
Manufacturer Brands – A brand which is
controlled by the manufacturer
...

Private Brands – Also known as Store
Brands, contains names designated by
wholesalers/retailers
...

Generic Brands – Features Products’ generic
names as brands (such as canned peas)
...
Eg: Cola
...
Timing
For new products, retailer must decide when
they are first purchased, displayed and sold
...
When is the
peak season? Discounts and sale time? Stock
turnover?

IMPLEMENTING MERCHANDISE PLANS

LOGISTICS

ORDER PROCESSING & FULFILLMENT

Is the total process of planning, implementing,
and coordinating the physical movement of
merchandise from manufacturer (wholesaler)
to retailer to customer in the most timely,
effective, and cost-efficient manner possible
...


Performance Goals:
1
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2
...

3
...

4
...

5
...


Floor-ready merchandise- Items which are
received at store & to be put directly on
display without any preparation by retail
workers
...


TRANSPORTING & WAREHOUSING


Supply Chain Management:



Is the logistics aspect of a value delivery
chain
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
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Customer Transactions & Customer Service:



Plan for outbound logistics as well as inbound
logistics



Customer service is affected by logistical
effectiveness



Incorporates customer buying and customer
in-store experience



How often will merchandise be shipped to
retailer?
How will small order quantities be
handled?
What shipper will be used?
What transportation form will be used?
Are multiple forms required?
What are the special considerations for
perishables and expensive merchandise?
How often will special shipping
arrangements be necessary?
How are shipping terms negotiated with
suppliers?
What delivery options will be available for
the retailer’s customers?

L8: Retail Pricing

Gov & Retail Pricing

Pricing Options for Retailers

 Horizontal Price Fixing
 Vertical Pricing Fixing
 Price Discrimination (Robinson-Patman Act)
‒ Products are physically different
...

‒ Competition is not injured
...

‒ Market conditions change – costs rise / fall
/ competing suppliers shift prices
...

A pricing strategy must be consistent with a
retailers’ overall image
...
McD
...
It
offers solid service & nice atmosphere to
middle-class shoppers
...

Upscale: A prestigious image is the retailer’s
major competitive advantage
...


Key to successful retailing is offering a good value
in customer’s mind-for price orientation chosen
...


Consumer & Retail Pricing
Price elasticity  elastic / inelastic demand
...

Competition & Retail Pricing
Market pricing – Retailers often price similarly to
each other and have less control over price because
consumers can easily shop around
...

Status-oriented– More interested in upscale
retailers with prestige brands and strong customer
service than price
...

Personalizing– They shop where they are known
& feel a bond with employees & the firm itself
...


Administered pricing – Firms seek to attract
consumers on basis of distinctive retailing mixes
...


Demand-oriented Pricing

Market Penetration- Company sets a low price
for a new product during its initial offering to
attract customers away from competitors
...
It
determine range of price accepted to target market
...


Pricing objectives:

Prestige Pricing: Assumes that consumers will not
buy goods and services at prices deemed too low
...

To encourage shoppers not to be overly priceconscious
...

To be consistent in setting prices
...

To clear out seasonal merchandise
...

To match competitors’ prices without starting
a price war
...

To provide ample customer service
...


A retailer sets a price floor, the minimum price
acceptable to the firm so it can reach a specified
profit goal
...

Competition-oriented Pricing
Retailer sets its price in accordance with
competitors
...







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No competitors will have lower prices; no
competitors will have higher prices; or prices
will be consistent with competitors
...

Price leadership will be exerted; competitors
will be price leaders and set prices first; or
prices will be set independent of competitors
...


Implementation of Price Strategy

Implementation of Price Strategy – Customary &
Variable Pricing
Customary Pricing – A retailer sets price and
seeks to maintain them for an extended period
...

Yield Management Pricing - a computerized,
demand-based, variable pricing technique,
whereby a retailer determined the combination of
prices that yield the greatest total revenue for a
given period
...

Prices are set and cannot be negotiated by
customers
...
Those
who are good at bargaining obtain lower prices
...

Such as RM1
...

Leader Pricing – A retailer advertises and then
sells selected items in its good/service assortment
at less than the usual profit margin
...

Used to set a single price for 2 or more of the same
product
...
20 but you
can purchase 3 of it at RM5
...

Price Lining – Product Line Price
...
From the seller's
point of view, line pricing is simpler and more
efficient to use
...
Ex: A store sells jeans at RM20,
RM30, RM40 to show which price range they
belong to and may sway customers into buying the
more expensive one
...
Can happen due
to geographical locations: in areas where
customers are less price sensitive, the price will be
higher
...


L9: Retail Communication & Promotion

Elements of Promotional Mix

Brand

1
...


Paid, non-personal communication transmitted
through out-of-store mass media by an identified
sponsor
...

Key aspects:

Public brands have public label logos

‒
‒
‒
‒

How to Build Brand Equity?
Brand Awareness



It is the ability of consumers to recognize or
build
Can be in the form of Aided Recall or Top-ofmind awareness

Associations




The value of brand is largely based on
associations that customers make with the
brand name
...

EG: If retailer aims to build exceptional customer
service, but their sales promotion meanwhile
emphasis on low prices, then consumers might get
confused and not patronize the store
...

Gains pass along
readership (for print)
...

Many alternatives
available
...

Message study
possible
...

Self-service operations
possible
...

Some media require
large investments
...

Some media require
long lead time
...

Some media limit
the ability to
provide detailed
information
...
Public Relations
Communication that fosters a favourable
image for the retailer
...
The time or space provided by
the media is not paid for, and there is no
identified commercial sponsor
...

More credible
source
...

Mass audience
addressed
...

Ppl pay > attention
than to clearly
identified ads
...

Little control
over publicity
message
...

Costs for PR
staff, planning
activities &
events
...
Personal Selling
Oral communication with one / more
prospective customers for the purpose of
making a sale
...

Types of Sales Promoters:



Order Take
Order Getter

J
...
Sales Promotion
Encompasses the paid communication
activities other than advertising, public
relations, and personal selling that stimulate
consumer purchases and dealer effectiveness
...
g: Displays, Contests, Sweepstakes,
Coupons, Frequent shopper programs, Prizes,
Samples, Demonstrations, Referral gifts, Other
limited-time selling effort
...

2
...

4
...

Benefits:

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

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Discovery of consumer demographics and
socioeconomic characteristics
Opportunity to determine focus of promotional
activities
Opportunity to view media coverage patterns
Assessment of effects of trading area overlap
Ascertain whether chain’s competitors will
open nearby
Discovery of ideal number of outlets,
geographic weaknesses
Review of other issues (e
...
transportation)

How To Analyse Trading Area
By using a Trend Analysis – projecting the future
based on the past




Analogue Model
Regression Model
Gravity Model

Riley’s Law
Reilly’s law of retail
gravitation—a traditional
means of trading-area
delineation—establishes a
point of indifference between
2 cities or communities so that the trading-area of
each can be determined
...


Huff’s law of shopper attraction delineates tradingareas on the basis of product assortment at various
shopping locations, travel times from the shopper’s
home to alternative locations, and the sensitivity of
the kind of shopping to travel time
...


Digitized mapping with key location-specific data
used to graphically depict trading-area
characteristics such as:

Criteria for Choosing Location





population demographics
data on customer purchases
listings of current, proposed, and competitor
locations

Traffic, Easy parking, Total cost (labour, taxes,
utilities), Size/Space, Population of Location,
Governmental regulation, Political risk
...
Planned Shopping Centre

1
...

Large-store formats - Wal-Mart & Costco
Convenience store - 7-Eleven

Consists of a group of architecturally unified
commercial establishment on a site that is centrally
owned or managed, designed and operated as a
unit, based on balanced tenancy, and accompanied
by parking facilities
...
Unplanned Business District
There are 2 or more stores situate together in such
a way that the total arrangement / mix of stores is
not due to prior long-range planning
...

Secondary:
A city / town
that’s usually
bounded by
intersection
of two major
streets
...

String: A string is an unplanned shopping area
comprising a group of retail stores, often with
similar of compatible product line
...

Frail conditions of store
...

Merchandise
assortments available
within those stores
...

Attract many
shoppers
...

Generate significant
pedestrian traffic
...

No worries about
weather
...

Retailers may not like
mall management’s
control of their
operations
...

Competition within
shopping centres can
be intense
...


L11: Retail Distribution & Supply Chain
Management
Retail Distribution
The Management of Resources to supply the
product & services needs to the end consumer,
encompassing the supply chain of any physical
products & the exchange process involved
...
(Act)
Raw Materials
Manufacturer/Producer
Intermediary/Wholesaler
Retailer

Traditional Supply
Chain (Raw materialslabour & anything
involves in
production)
...

Other functions include warehousing, anticipating
demands and trends
...
g
 how to use it
...


Retail Logistics
The organized process of managing the flow of
merchandise from the source of supply to the
customer
...


Physical Flow, Ownership Flow, Service Flow,
Information Flow, Payment Flow, Promotion Flow

Like many aspects in marketing, the purpose is to
add value to your customers
...

Manufacturers should not experience
overproduction, allow defects, create waiting
through shortage or allow for transportation
inefficiencies
...

Manufacturers just produce, they don’t forecast
which leads to over-produce
...
g  how to use or
service the products (mostly electronic goods)
...
The physical movement of goods
...
The holding of these goods in stockholding
points
...
The holding of goods and quantities required
to meet demand from the end consumer
...
The management and administration of the
process which, in modern complex distribution
systems, is a function in its own right
...


Cost Structure in Retailing
Transport
Contains substantial fixed cost elements
...

Centralizing retail distribution also benefits by
decreasing the number of journeys, therefore
increasing efficiency
...

Lack of flexibility makes initial decision to create
warehouse capacity crucial
...

A regional distribution centre (RDC) is usually
located in a low cost area
...


Administration Cost
Communication Cost: Associated with order
processing and electronic data interchange (EDI)
...

Handling Cost: Risk cost of damage, pilferage or
deteriorating exists
...

Management Cost: Refer to the cost incurred as a
direct result of control systems and mechanisms

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