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An Introduction to
Retail Management
&
Marketing
Book 3
Retail
Marketing
Book 3 Sessions
 Session 2: Retail marketing planning
 Session 3: Consumer behavior
 Session 4: Retail brands
Session 2: Retail marketing planning
1. What is retail marketing planning?
2. Business mission
3. Marketing audit
4. SWOT analysis
5. Marketing objectives
6. Core strategy
7. Competitive advantage
8. Marketing mix decisions
9. Valuating the marketing strategy
10.Organization, implementation and control
11.Conclusions
1. What is retail marketing planning?
• Marketing is more than
advertising, promotions &
sales people
• Marketing is understanding
how to create customer value
& then planning to achieve
market-focused goals
• Retailers need customers to
return & make repeat
purchases: goal of marketing
is long-term satisfaction not
short-term deception'
• To succeed, retailer must understand that
marketing orientation influence all aspect of
organization
Operations support creation of customer
satisfaction
Staff must recognize importance of customer
satisfaction & take responsibility to create it
Goals are achieved thru customer satisfaction.
Marketing includes whole of retail operation
from P for sale to complaints, buying function,
logistics department & etc.
Marketing orientation vs. Production
orientation
Marketing-orientated
Production-orientated
- Companies close to
customers
- Understand needs &
problems: market driven.
- Organization focus on
strategies to maximize
customer benefits
- Identifying potential
market opportunities, &
developing P&S to satisfy
customer needs.
- Companies focus on
production methods before
customer
- Is cost focused
- Aim for economies of scale
with limited range of
products to minimize
production costs.
- Aggressive sales effort to
sell regardless buyer
benefits
Marketing mix is considered to encompass
four key business areas which influence
marketing planning: product, price, place &
promotion
a. The development of retail marketing
• Recently, major retailers are dominating marketing
channels , manufacturers & wholesalers.
Cause retailers have taken control of marketing mix
• In the past, retailing had taking a passive role in
distribution : G passed from manufacturer to
consumer through retailer
• Now retailer is involved throughout supply chain
– Adopts a market-centred view
– Develop market share through better understanding of
customer & tailoring business to satisfy needs
The development of retail marketing
• 1970s: Shift in the balance of power from
manufacturer to supplier & then retailer, when there
was a major shift in channel power.
• 1950s: the 'manufacturer was king'.
• 1960s: Consumer spending was on increase, as was
competition. Thus, shift towards consumer, so in this
era customer was king.
• 1970s: trade became more concentrated & powerful
retailers took over the marketing functions so in this
era 'trade was king'
• Retailers developed power in supply chain through:
– Abolition of resale price maintenance (RPM) &
development of strong retailer brands
– Concentration of retail trading - leading brands
dominating various sectors
– Terms of trade, i.e. large retailers force power by
greater purchasing power over smaller retailers
– Access to information
• Shift in balance of power between retailers &
manufacturers thus dependence on multiple retailers
• Even with power over marketing mix many fail
• Lacking organization & coordination
• Thus, importance of Strategic marketing
Retailers had a marketing department
Sophisticated marketing solutions dealing with
complex & demanding marketing environment
D for managerial skills & competencies has created
retailing professionals adept at market analysis,
strategic thinking & planning
• Shift towards marketing orientation
• Customers is important & needs at heart of planning
b. The retail marketing planning process
Six questions for planning process:
1. Where are we now?
2. How did we get here?
3. Where are we heading?
4. Where would we like to be?
5. How do we get there?
6. Are we on course?
• By answering each of these questions, a business
can develop a marketing plan.
Figure 2.1 The stages in the marketing planning process
• This model is useful as it provides a clearly
defined path from the vision of what a business
might be to the actual implementation.
• But, retailers rarely follow such well-ordered stages.
This approach to marketing planning shows:
1. A systematic way of getting to know about each of
the elements of the planning process
2. How individual elements of the planning process
are integrated.
2. Business mission
• Business should have mission statement guiding its
activities.
• Mission statement is enduring & served to distinguish
business from its competitors.
• It sets out business retailers are in & reason for its
existence
• Business mission focus for developing other stages
• Guiding mission has to be operationalized for business
success & that by understanding trading environment.
• Thus, conducting a marketing audit let you capture how
those forces might be affecting a retail business.
3. Marketing audit
• It provides a framework for a systematic
examination of a business's marketing environment
• Therefore, development of marketing plan
• Audit helps to identify key problem areas & answer
the 1st three of key planning questions:
Where are we now? How did we get here? Where
are we heading?
• Identifying elements of micro- & macro-environement
helps to provide us with a checklist retailer might
consider when conducting a marketing audit.
• External audit focuses on forces in environment
affecting business performance,
• whilst internal audit focuses on business's activities.
• Internal marketing audit checklist focusing on company
performance: market mix effectiveness; strategic
performance; marketing structures, marketing systems
• It is an ongoing activity used to support
business planning & decision making.
• Audit should enable a company to evaluate
its current position.
• The next stage: where company is heading &
where it would like to be heading.
• This can be achieved by identifying + & affecting future successes
• Audit should enable a company to evaluate
its current position.
• The next stage in the planning process is to
consider where the company is heading &
where it would like to be heading.
• This can be achieved by identifying + & affect future successes.
4. SWOT analysis
• Marketing audit is a process of constant information
gathering & analysis.
• These information need to be summarized to inform
development of a marketing plan.
• To achieve this : SWOT analysis.
• SWOT: Strengths, Weaknesses, Opportunities &
Threats
• Used to analyze output of marketing audit
• SWOT analysis provides a straightforward
4. SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Example of SWOT analysis
Strengths
• Excellent customer service
• Loyal customer
• Clear focus on specialist niche
market
weaknesses
• P are of good quality but
designs are a bit dated
• Lack of marketing expertise
• lack of knowledge of web
marketing
Opportunities
• Growing market D
• Economic conditions - movement
in the housing market is slow so
many homeowners are renovating
Threats
• Economic conditions - consumers
are becoming price sensitive
• Competitors entering the soft
furnishing market.
Information as part of the wider marketing
planning process.
Fig 2.3 SWOT analysis and strategy development
5. Marketing objectives: Strategic thrust
& Strategic objectives
A- Strategic thrust: Defines future direction
1. Existing P in existing markets (market
penetration )
2. New P for existing markets (P development)
3. Existing P in new markets (market dvlp)
4. New P for new markets (new markets)
Fig 2.4 Strategic thrust options
•
•
•
•
1) Market penetration
Take existing P in existing market
Existing customers become more brand loyal & new
customers in same market begin to buy brand.
Getting existing customers to use brand more often
(wash hair more frequently) & to use a greater
quantity (2 spoonfuls of tea instead of one)
2) Product development
Increasing sales by improving P or developing new
P for current markets. It may be brand extensions
(Anadin Extra, Maximum &Strength) providing
slightly modified features for target customers
•
•
•
•
•
•
•
Market development
Targeting new customers with existing P
When successful product range, there may be
opportunities in new target markets.
Selling to different types of consumers (e.g., older)
Often means moving into ≠ geographic locations.
Entry into new markets
Selling new P into new markets
Most risky
Sometimes only option, especially if company's
current market is in decline & future upturn is
unlikely.
Strategic objectives
B- Strategic objectives: specific objectives at P level
1. Build - if a retailer is selling a P, it will need to
build sales in order to grow its share of the market
2. Hold - Promotional price wars to protect market
share in a particular category, e.g., seasonal P
3. Harvest - market share of a particular P is allowed
to fall but profit margins are maximized.
4. Divest – P is dropped when it no longer profitable
By setting objectives, a retail marketing planner
answers 'where would the business like to be?'
6. Core strategy
• Marketing objectives set out the focus
• Then core strategy identifies how these objectives
are going to be achieved.
There are three key elements:
1. Target markets
2. Competitor targets
3. Competitive advantage
Target markets
• Marketing is not about chasing any customer at any price.
• A decision has to be made regarding segments attractive to the
business & match its supply capabilities.
• Retailers need to understand target market they wish to serve.
• Marketing planning process helps marketers to focus on
identifying right target market.
• Choice of target market will emerge as a result of SWOT
analysis & setting of marketing objectives (strategic thrust).
☼ Retailer needs to link analysis from audit & SWOT
analysis with company's resources & capabilities to develop
a strategy
7. Competitive advantage
• Retail marketing planners must consider which
competitors to target.
• Link between target markets & competitor targets is
the competitive advantage
A competitive advantage is the
achievement of superior performance
through differentiation to provide superior
customer value, or by managing to
achieve lowest delivered cost
Most successful methods are built upon
some combination of three advantages.
1. Being better - superior quality or service
2. Being faster - anticipate or respond to
customer needs faster than the competition
3. Being closer - establishing close long-term
relationships with customers
• Another route to competitive advantage
Lowest relative cost position of all competitors.
Low prices, or by producing standard items thus
higher profit margins than those of competitors.
Advertising as a tool for competitive advantage is
often employed when P benefits are subjective
Distribution putting customer in mind, not only in
terms of availability but also with respect to S
levels, image & customer convenience.
8. Marketing mix decisions
• Understanding target customer is key to making
good marketing mix decisions.
• During marketing planning process, a retailer will
identify market segment it aims to target, so that it
knows who its customers are.
• Once target market is identified, marketing mgt
needs to understand how customers react to
competitors' offerings & to consider the company's P
& S from customer's perspective.
Matching marketing mix to customer needs
Retailers create competitive advantage based on how they
'blend' marketing mix.
• Customers evaluate P on economic &
psychological criteria.
• Economic criteria include factors:
performance, availability, reliability, durability
• Psychological criteria are: self-image,
pleasure, convenience and risk reduction.
• ‼ Analysis of customer choice reveal a set of
requirements that must be met to succeed
• Meeting or exceeding requirements better than
competition leads to competitive advantage.
9. Evaluating the marketing strategy
10. Organization, implementation &control
• The final stages involve implementation & control
• Implementing new marketing plans require
organizational changes & close attention to actual
implementation process.
• Successful implementation requires planning &
involves getting support from decision makers, with
appropriate resources & getting commitment from staff
in terms of both individual & departments
• A final consideration: how marketing function fits
into the structure of the organization.
• Smaller retail can rarely afford to have managers
with functional specialisms, ex; directors of
marketing, finance & operations.
• Even in larger organizations not all choose to have a
marketing director
• It is important not to forget the final element of the
planning process: control.