Download Retailing Trends and Pricing Strategies

International Journal of Research and Development - A Management Review (IJRDMR)
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Retailing Trends and Pricing Strategies
Sivamalar. S, A.W. Unas
Assistant professor, Department of Management Science, PSG College of Arts & Science,
Faculty of Business Management, Govt. Arts College,Coimbatore-641018,
Abstract:-The essence of retail marketing is developing
merchandise and services that satisfy specific needs of
customers, and supplying them at prices that will yield
profits. Thereby the concept is a philosophy, not a system
of retailing or retail structure. In today's CRM landscape
the old analogy comparing the rifle and shotgun
approaches to message and offer delivery is perhaps more
appropriate than ever, as more retail organizations
struggle to achieve one-to-one marketing-communications
with customers and prospects. Retail marketing mix is the
term used to describe the various elements and methods
required to formulate and execute retail marketing
strategy. The mix may vary greatly according to the type of
market the retailer is in, and the type of products /
services. Understand the connections between the lifestyle
and expenditure characteristics of customers, their
propensity to purchase one product or brand over another,
and leverage this understanding for competitive advantage.
Improve direct marketing response by ensuring they are
targeting the right households at the right time, using the
right media with the right message. Leverage current
consumer data to make better strategic decisions about
products, marketing and locations.
So retailers should try to maintain customer database in
order to understand customer behaviour & in that way
retailers can easily satisfy their customer needs. This
article mainly concentrated retailing strategies and
Retailing trends in 2014.
INTRODUCTION
A retail marketing strategy refers to how a store and its
products sell goods to its target customers. Each type of
retail business has to make decisions about all the details
of its marketing mix. A marketing mix consists of the
product, price, place, promotion and packaging. Internet
marketing strategies and those for stores that people
shop at in person must be developed to meet the needs
of potential customers.
A retail marketing strategy is first outlined in a business
plan.
A business plan contains information about the intention
and goals of the company. It's created before a business
opens. Business plans include research about who the
company's potential customers are as well as what their
needs and wants are. A retail marketing strategy should
be a part of the business plan. It should include decisions
about the marketing mix approach, such as how
customers will get the products.
For instance, a furniture company may choose a large
warehouse, while a jewelry manufacturer may decide to
sell only over the Internet. Other businesses may select a
combination of a brick and mortar store for in person
customer purchases plus a website for customer online
shopping. All retail marketing decisions should consider
the target customer as well as the company's profit. For
example, having an retail website rather than a retail
store may save on overhead costs, but it won't be a
profitable choice if the target customer isn't likely to
shop online.
Relationship marketing is a philosophy to change
eagerly the Customer’s behaviors and implementations
depending on what the customer is thinking about the
company and what the personnel of the company should
know about the customer. Relationship marketing has
received important attention since the 1990s as
consumers have become more demanding in their
exchanges with firms and competition has intensified.
Retailers have become interested in the potential of
relationship marketing activities to deliver enlarged
value to the customer over and above the firm’s product
or service offering. Building strong customer
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relationships offers a significant competitive advantage
due to the difficulty of direct imitation by competitors.
Customer relationship management is the general
company strategy which focuses to the creation and
retention of the long lasting and strong relations with
customers. In other words, retailers have to create
loyalty programs for the effective development of these
relations. Now CRM strategy may become a retailing
strategy, because CRM strategies mainly used to achieve
the objectives of retailers.
RETAIL PRICING STRATEGIES
Now that we understand what our products actually cost,
we should look at how our competition is pricing their
products. Retailers will also need to examine their
channels of distribution and research what the market is
willing to pay.
Many pricing strategies exist and each is used based on
particular a set of circumstances. Here are a few of the
more popular pricing strategies to consider:
Mark-up Pricing:
Markup on cost can be calculated by adding a pre-set
(often industry standard) profit margin, or percentage, to
the cost of the merchandise. Markup on retail is
determined by dividing the dollar markup by retail.
Be sure to keep the initial mark-up high enough to cover
price reductions, discounts, shrinkage and other
anticipated expenses, and still achieve a satisfactory
profit. Retailers with a varied product selection can use
different mark-ups on each product line.
Vendor Pricing:
Manufacturer suggested retail price (MSRP) is a
common strategy used by the smaller retail shops to
avoid price wars and still maintain a decent profit. Some
suppliers have minimum advertised prices but also
suggest the retail pricing. By pricing products with the
suggested retail prices supplied by the vendor, the
retailer is out of the decision-making process. Another
issue with using pre-set prices is that it doesn't allow a
retailer to have an advantage over the competition.
Competitive Pricing:
Consumers have many choices and are generally willing
to shop around to receive the best price. Retailers
considering a competitive pricing strategy will need to
provide outstanding customer service to stand above the
competition.
Pricing below competition simply means pricing
products lower than the competitor's price. This strategy
works well if the retailer negotiates the best prices,
reduces costs and develops a marketing strategy to focus
on price specials.
Prestige pricing, or pricing above competition, may be
considered when location, exclusivity or unique
customer service can justify higher prices. Retailers that
stock high-quality merchandise that isn't available at any
other location may be quite successful in pricing their
products above competitors.
Psychological Pricing:
Psychological pricing is used when prices are set to a
certain level where the consumer perceives the price to
be fair. The most common method is odd-pricing using
figures that end in 5, 7 or 9. It is believed that consumers
tend to round down a price of $9.95 to $9, rather than
$10.
Other Pricing Strategies:
Keystone pricing is not used as often as it once was.
Doubling the cost paid for merchandise was once the
rule of pricing products, but very few products these
days allow a retailer to keystone the product price.
Multiple pricing is a method which involves selling
more than one product for one price, such as three items
for $1.00. Not only is this strategy great for markdowns
or sales events, but retailers have noticed consumers
tend to purchase in larger amounts where the multiple
pricing strategy is used.
Discount pricing and price reductions are a natural part
of retailing. Discounting can include coupons, rebates,
seasonal prices and other promotional markdowns.
Merchandise priced below cost is referred to as loss
leaders. Although retailers make no profit on these
discounted items, the hope is consumers will purchase
other products at higher margins during their visit to the
store.
As we develop the best pricing model for the retail
business, understand the ideal pricing strategy will
depend on more than costs. It also depends on good
pricing practices.
It is difficult to say which component of pricing is more
important than another. Just keep in mind, the right
product price is the price the consumer is willing to pay,
while providing a profit to the retailer.
Omni channel retailing will be the norm
Retailers will continue to realize that they need to
connect with users on multiple channels and touch
points simultaneously or even interchangeably. In 2014,
more retailers will give customers the ability to interact
and complete transactions on their own terms. In other
words, if a customer wants to view an item online,
purchase it using their phone, and return it by dropping
by the store, they can do so in a smooth and seamless
way.
UK fashion retailer Oasis is doing a very good job in
omnichannel retailing. The merchant gives customers
the flexibility to browse inside the store, then purchase
online and vice versa. Shoppers can have their products
shipped, or they can choose to pick it up. Additionally,
the staff members at Oasis each have their own iPad
which they use not just to process payments, but to assist
shoppers when checking sizes, styles and availability. If
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a particular item isn’t available in the store, the staff can
use their iPads to help shoppers place orders online.
Technology will be even more integrated in brick and
mortar stores
The mobile wallet will continue to rise
2014 will be the year when stores say goodbye to
boring, antiquated layouts. It has started to dawn on
retailers that if they want to keep people in their stores,
they need to make their locations interactive and
engaging.
Cash and credit cards won’t be things of the past any
time soon, but mobile will definitely get a huge chunk of
the payments pie in the coming year. According to
Forrester Research, mobile payments will amount to $90
billion in the coming years. And we anticipate that in
2014, retailers will be taking big strides towards that
number by adopting solutions such as PayPal, Google
Wallet, Square Wallet, Dwolla, and more.
The restaurant developed a mobile application that
allows diners to view the menu, book a table, and more
importantly, pay bills via PayPal. That way, if the user
forgets their wallet, or is in a hurry to leave, they can
simply settle their bill with just a few taps.
Shoppers will
experiences
get
more
personalized
in-store
This can be done in a number of ways, the most basic of
which is by using in-store mobile devices. Tablets and
smartphones are versatile and can be used in several
ways, including taking payments, demonstrating
products, offering more information, and encouraging
social sharing. Here are a few examples that demonstrate
the successful use of in-store mobile devices. (Expect to
see a lot more of these in 2014):
Apple Store – Apple has armed all of its associates with
iPhones, so they can assist customers and process
payments anywhere in the store. The practice shortens
lines and opens up space. Additionally, it lets associates
interact with customers more freely.
Burberry – The luxury retailer once invited customers
into its stores to live-stream the London Fashion week.
Following the event, associates distributed iPads to
customers so they can browse and purchase the items
that they just saw.
Make Up For Ever – The cosmetics company put iPads
in some of its stores to let shoppers browse products and
virtually try various make-up combinations by
uploading their own photos.
One-size-fits all marketing just won’t cut it anymore,
which is why retailers will start implementing solutions
to personalize each customer’s experience.
While ecommerce sites have been doing it for years
through tailored landing pages, offers, and
recommendations, a lot of brick and mortar stores will
also get in on the fun next year. Thanks to Bluetooth
Low Energy (BLE), a technology that lets Bluetooth 4.0
devices such as PayPal Beacon, Estimote, and iBeacon
communicate with smartphones, retailers will be able to
send tailored notifications to each shopper’s device,
depending on where they are in the store. Major League
Baseball effectively demonstrated this technology when
it tested Apple’s iBeacon at the Citi Field stadium in
New York.
Users who have MLB’s app will be able to get
customized messages, depending on where they are in
the stadium. For example, when they arrive at the gates,
the app can give them directions towards their seats. If
they’re near a particular shop or booth (say a hotdog
stand) they can get store-specific deals. The app can also
send tailored offers, depending on whether someone is a
first-time visitor or a long-time fan.
In addition to tablets, we anticipate that major retailers
will implement immersive experiences with the use of
large, interactive displays that are meant to fully engross
customers to the point where they kind of forget that
they’re inside a store. To the customer, the experience is
interactive, engaging, and powerful.
Examples of retailers already doing this include the Nike
Fuel Station in London which has huge LCD displays
that mirror shoppers as they move through the store.
Similarly, Gucci has recently set up five columns of
super high resolution displays that enable shoppers to
browse various products using hand gestures.
The number of mobile businesses will increase
The mobile POS systems and other cloud applications,
people can now do business from anywhere. This has
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paved the way for on-the-go stores such as food trucks
and pop-up stores.
In 2014, as mobile technology continues to advance, we
expect mobile businesses to evolve with it. For instance,
aside from food trucks, expect to see more fashion
trucks, flower trucks, and even hair salon trucks.
Pop-up stores, usually reserved for apparel retailers, will
diversify as well. Amazon for instance, recently set-up
its own pop up store in a San Francisco mall, while
Google has its own Chromebook pop-up stores in
various airports.
Relationship marketing and thought leadership will rule
retailers' sales & marketing strategies
Customers' need for speed will grow in 2014
The "always connected" consumers expect fast answers
to questions or requests, and businesses will need to
work extra hard to get in touch with shoppers as quickly
as possible. And while businesses have already started
doing it via live chat, SMS alerts, 24-7 hotlines, and
social media, we’re anticipating brick-and-mortar
retailers to roll out solutions that would enable
associates to give instant, real-time information to
shoppers.
For example, shoppers who walk into Burberry stores
will see that associates are armed with iPads that they
can use to provide real-time product information and
availability. Not only that, but according to Retail Info
Systems News, associates also have a ton of customer
information at their fingertips, ―including if the
consumer opts in, their shopping behavior, what shops
around the world they purchase from, what they have in
their basket online,‖ and more, enabling them to provide
personalized offers and recommendations instantly.
Speed can also apply to order fulfillment. As Retail
Customer Experience put it, "By 2016, 50 percent of
national retailers, will invest in distributed order
management, enterprise inventory visibility, and
workforce management to enable same day fulfillment."
Say goodbye to pushy sales people who follow shoppers
around. Retailers will learn that going for the ―hard sell‖
isn’t effective anymore. Instead, they’ll invest in
cultivating relationships and establishing thought
leadership.
In 2014, we expect more brands to employ likeable
experts—store associates who aren’t there to sell, but
rather to dish out advice, solve problems, and build
relationships. As Internet Retailer puts it, ―the role of the
associate will change from an information provider to a
facilitator of engagement.‖ Instead of just giving product
and pricing information, they will leverage each
shopper’s data (i.e. previous purchases, shopping
behavior etc.) to provide tailored advice and shopperspecific offers. We predict that retailers will invest more
in training their staff for this role, and they’ll also invest
in arming them with the right tools.
In addition, businesses will spend more resources in
thought leadership and content marketing to educate and
engage with consumers. Kind of like what real estate
company Kinleigh Folkard & Hayward did when it
launched Completely London magazine in 2009—a time
when the real estate market was down in the dumps.
We believe that in 2014, retailers will find ways to
streamline and speed up order fulfillment so they can get
products into customers’ hands as quickly as possible.
Just take a look at what Amazon is doing. The company
recently generated a lot of buzz when it announced its
plans for Prime Air, a drone-based delivery service that
aims to complete deliveries in 30 minutes or less.
Retailers will continue to invest in Big Data to track
shoppers
Studies have found that ―Fifty-four percent of marketers
already have invested in Big Data solutions, and nine
out of 10 marketers plan to do so in 2014.‖
The magazine offered city guides as well as informative
and entertaining articles about the people, places, and
Why the focus on Big Data? It’s because businesses
properties in London. KFH’s efforts paid off. The
have realized that in order to predict shopper behavior
magazine successfully positioned the company as a
and provide truly personalized experiences, they would
thought leader in the real estate space, strengthened its
need to gather as much information about the behavior,
relationship with existing clients, and attracted new
history, and whereabouts of consumers. Big Data
ones.
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enables retailers to implement dynamic pricing,
personalized
recommendations,
shopper-specific
discounts, and more.
Nordstrom is among the top retailers leveraging Big
Data. The department store gathers and analyzes
massive amounts of information from in-store sales,
online behavior, social media, and more to determine
which products to promote and how to market them. It
even launched the Nordstrom Innovation Lab, ―a team
of techies, designers, entrepreneurs, statisticians,
researchers, and artists, all trying to discover the future
of retail.‖
Big Data will lead to bigger privacy concerns for
consumers
People will get uncomfortable when they realize just
how much they’re being tracked, which is why we’re
anticipating consumers to push back a bit, and try to find
ways to stop businesses from ―stalking‖ them. They may
start using ―Do Not Track‖ solutions such as the
recently-launched AVG app that blocks WiFi location
tracking. We expect more services such as this to
emerge next year.
Retailers may be able to address privacy concerns by
educating shoppers about the benefits of Big Data
analytics. They need to communicate that they’re
gathering data to improve shopper experience and not to
steal information or breach privacy. In addition,
businesses need to build trust by being transparent and
empowering users to take control of their information.
Social media will heavily influence product decisions
We predict that social media will play a much bigger
role in retail decision making. Currently, most retailers
are using social sites to monitor feedback and connect
with customers. In 2014 though, they’re going to take it
a step further and use social media when developing
products and marketing campaigns.
Nordstrom for example, has started using Pinterest to
decide which products to display in their stores.
According to Business Insider, ―popular items on
Pinterest will be displayed with a red tag identifying
them as popular in the women's shoe and handbag
departments of Nordstrom's 117 stores.‖
Similarly, Target launched Awesome Shop, a site that
showcases Target’s ―best-reviewed‖ and ―most-pinned‖
items.
Retail will grow in emerging markets
Brands are starting to see that they have huge
opportunities in emerging markets such as Brazil, China
and India, and we predict that they will strongly go after
those opportunities in the coming year.
In fact, we can already see signs of this happening.
Burberry for instance, has reportedly closed 14 stores
and opened eight to reflect a focus on ―’high potential
markets’ including China, the Middle East, India, Brazil
and Mexico‖. Recent reports also state that ―Tiffany &
Co. will spend more on marketing in China than any
other market next year as it strives to build the same
kind of reputation for its brand there that it enjoys in the
US.‖
CONCLUSION:
Companies started to develop different strategies to gain
loyal customers by customer focused marketing
strategies which give importance to customer
satisfaction and brand.
Every organization needs to design a loyalty programme
based on their individual requirements & in order to
retain their customer in long run basis. Retailers should
remove every potential barrier that stands between
converting a customer’s interest to purchase, into the
intent to purchase. It goes on to suggest ways of making
retailers business and products more accessible, such as
having an easy-to-navigate website that can handle high
traffic during peak times; ensuring there’s adequate
parking and clear signage at retailers store; and making
the return process easier, as well as consistent with
online policies.
Ref: www.google.co.in, Book-Retail Marketing Swapna
prdhan
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