With the changes in the marketing environment, consumer preferences, and technology advancement, retailers are looking for new marketing strategies to operate profitably. Retailers face major marketing decisions about their target markets and positioning, product assortment and services, price, promotion, and place.
Retailer marketing decisions are;
- Target Market and Positioning Decision
- Product Assortment and Services Decision
- Price Decision
- Promotion Decision
- Place Decision
Target Market and Positioning Decision
Retailers must begin with defining their target markets. Well defined target markets enable the retailers to decide how they will position themselves in these markets. A retailer should seek answers to some important questions.
- Should the retail store concentrate on up strata, mid strata, or down strata shoppers?
- Do target shoppers desire variety, depth of assortment, convenience, or low prices?
To make appropriate and consistent decisions about product assortment, services, pricing, advertising, store decor, and any other decisions to support their positions, retailers must first precisely define and accurately profile their markets.
Product Assortment and Services Decision
Retailers must make decisions on three important product variables- product assortment, services mix, and store atmosphere.
The retailers’ product assortment decisions must aim at matching target shoppers’ expectations. Decisions regarding product assortment include its width and depth.
Thus, a restaurant can offer a narrow and shallow assortment (small lunch counter), a narrow and deep assortment (delicatessens), a wide and shallow assortment (cafeteria), or a wide and deep assortment (large restaurant).
Another element of the product assortment is the quality of the goods. The customer considers not only the range of choice but also the quality of the products.
To compete with the competitors having similar product assortment and quality level, the retailer must find other ways to differentiate itself from them. It can pursue any of several product-differentiation strategies.
It can offer products that no other competitor carries. It may use its own private brands or may sell national brands on which it holds exclusive distribution right.
The retailer can feature blockbuster merchandising events- Bloomingdale’s is known for running spectacular shows featuring goods from a certain country, such as India or China.
Or the retailer can offer surprise merchandise, as when Loehmann offers surprise assortments of seconds, overstocks, and closeouts.
Finally, the retailer can differentiate itself by offering a highly targeted product assortment – Lane Bryant carries goods for larger women13.
Retailers must also decide on a service mix to ensure maximum customer satisfaction.
Besides typical customer services, modern retailers may offer such services as home delivery, credit, and conversation. A retailer can use service mix as a key tool of nonprice competition for differentiating him from others.
The store’s atmosphere is another important consideration for a retailer. The store’s physical layout and atmosphere should be properly planned to suit the target market and induce customers to buy.
For example, a restaurant should be quiet, cozy, and clean. Modern retailers are increasingly working to create a shopping environment that matches their target markets.
A retailer’s price policy plays an important role in positioning. In formulating price policies, retailers must consider their target market, product, service assortment, and competition.
Although all retailers would like to charge high markups and achieve high volume, they are rarely achievable simultaneously.
Most retailers, such as specialty stores, seek high markups on lower volume. Retailers like mass merchandisers and discount stores seek low markups on higher volume.
Retailers also must pay attention to pricing tactics. Most retailers will put a low price on items to serve as “traffic builders” or “loss leaders.” On some occasions, they run storewide sales.
On others, they plan markdowns on slower-moving merchandise.
For example, shoe retailers may expect to sell 50 percent of their shoes at the normal markup, 25 percent at a 40 percent markup, and the remaining 25 percent at cost.
Retailers use advertising, personal selling, sales promotion, and public relations as promotion tools. They advertise in print media (newspapers, magazines) and electronic media (radio, television). Advertising can be supplemented by circulars and direct-mail pieces.
Salespeople are trained properly to carry out personal selling jobs. Sales promotions may include in-store demonstrations, displays, and visiting celebrities.
Retailers also perform public relations activities. These include press conferences and speeches, store opening, newsletters, and public service activities.
A retailer’s location is the key to its ability to attract customers and succeed in business. The costs of building or leasing store premises have a significant bearing on the retailer’s profits.
So, for a retailer, site-location decisions are crucial. Small retailers may not be able to pay much attention to selecting locations.
However, large retailers generally utilize the services of specialists who select locations using advanced methods.