RETAIL MARKETING ENVIRONMENT

Chapter 3 – Retail Marketing and

Communication

1
 Introduction
• The role of marketing in a retail organization is
two – fold.
– The first role is to inform the customer that it
exists.
– The second one is to bring the end consumer
closer to the retail stores.
• Retail marketing can reach the masses and still
be much focussed and convey the same
message in different languages, to varying
audiences in the same or different cities /
regions.
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 Retail Marketing Mix
• The marketing tools that are used by a retail
organization to meet its marketing objectives
is called the retail marketing mix.
• Retail marketing mix has four parts, each
directed toward the target audience.
• The way a retailer designs his marketing mix
affects the value proposition and the way
customers perceive his store.
• It will vary based on the type of consumers
served and the market in which he operates.
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 Components of Retail Marketing Mix
Product: Product or merchandise is one of the
main elements of the retail marketing mix.
– Range: Range of merchandise refers to the variety
or number of different merchandise items the
retailer stocks in the store.
– Depth: Depth of merchandise is the number of
Stock Keeping Units ( SKUs) within each brand of
the merchandise line.
– Breadth: This refers to the number of
merchandise brands in that merchandise line. This
is also called as assortment.

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Price: Pricing of the merchandise inside the store
depends on two things:
– The uniqueness of the merchandise itself
– The price customers would be willing to pay in that
location.

• Price is an important part of the retail marketing mix; if

customers cannot afford the products, they are unlikely
to frequent the store.
• Most of the products in the store should be in a
comfortable range for the target audience base; to get
this information, the retailer will need to perform an
audience analysis to get an idea of median income and
spending power.
• To create a sense of desire and to give an option to
splurge, he can also sell some items that are priced just
out of the target customer's normal price range.
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Place:
• For a brick and mortar store, location of the store
has always been an extremely critical factor in the
success of the store.
• In retail, the design of the store and the way the
products are presented is an important part of
the marketing mix.
• The display should fit the brand’s image so that
customers encounter a cohesive experience
• Placement can help bring certain products to
attention and promote items the retailer wants to
sell more of.
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Promotion:
• Sales Promotions, PR, advertising play and
important part role in the communication
strategy of the store.
• Promotion is the most recognizable part of the
marketing mix.
• It involves all of the marketing activities one does
to let his customers know about the products
being offered.
• For a retail outlet, one might advertise in
newspapers and on the radio, start a social
marketing campaign, use marketing emails, hand
out flyers or plan grand-opening events.

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Customer Service:
• Multiple initiatives are taken by retailers to enhance customer
service at the store.
• The store speaks to the end consumer not only quantitatively
through product, pricing and promotion but also qualitatively
through service received at the stores.
People:
• Employees manning a retail store are the face of the organization.
• Their attitude, behaviour and product knowledge are very
important in building a long term relationship with the customers.
• People refers to the staff and salespeople who work for the
retailer’s business, including the retailer himself.
• When people provide excellent customer service, they create a
positive experience for their customers, and in doing so market the
brand to them
Presentation:
• The way in which the products are displayed in the store is called as
visual merchandising.
• Just the display of products in an orderly, appealing way can drive
customers to buy them.
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 Elements of a retail marketing mix

Price
People

Product
Place
Retail
Marketing
Mix

Customer
Service Promotion

Presentation

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 STP Approach
STP stands for Segmenting, Targeting, Positioning

Segmentation:
• Segmentation means to break down a large market into
groups of smaller segments of consumers who may be
similar in their needs or purchase habits.
• Segmenting may be done on the basis of any of the
following:
– demographics – age, gender, marital status, education,
family life cycle, etc.
– location or usage patterns – example: non users, heavy
users, occasional users, etc.
– psychographics and lifestyles.

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Targeting
• Once the retailer has segmented its market
into different consumer segments, he needs
to pick up those whom he will ‘target’ first.
• The target market is chosen on the basis of :
– Size and future of the target segment
– Whether the retailer can meet the needs of this
segment
– Kind of investments required and profits that can
be generated from this target segment.

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Positioning
• Positioning is what the product stands for in the
eyes of the customer.
• Retailers need to study the consumer’s buying
behaviour and the various factors influencing it.
• The four main areas that affect the retail
positioning strategy:
– Merchandising strategy
– The trading style / format strategy
– Customer service strategy
– Customer communications strategy

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• The key to successful retail positioning is that
– the store must have an identity that has some
advantages over competitors and
– at the same time those advantages must be
recognized and valued by the consumers.
• Market positioning based on price, product
differentiation and service provision, is central
to the competitive strategy of multiple
retailers.

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The STP Approach

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 Repositioning
• Repositioning involves an attempt to change
consumer perceptions of a brand, usually because
the existing position that the brand holds has
become less attractive.
• Repositioning in practice is very difficult to
accomplish.
• A great deal of money is often needed for advertising
and other promotional efforts, and in many cases,
the repositioning fails.

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Consumer Touch Points – The Retail Image
• Every element of the store which comes in contact with
the customer is a key element for the store.
• A touch point is every occasion when a customer sees or
hears the brand’s name, visits the store on-line or in
person, or any point during the transaction from
beginning to end.
• Factors that affect the retail image of a store are:
– The product being sold
– The location where the store is present
– The pricing of the product
– The store ambience and the way the product is displayed: Visual
Merchandising
– The advertising / promotion of the store.

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 Factors affecting store image

People

Presentation

Customer Service

Brand Associations
Promotion
Retail
Pricing Store Image

Product Place

Shopping Experience

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• The goals in every customer touch point are
to:
– Exceed expectations
– Delight
– Minimize disappointment
• What used to delight becomes the norm very
quickly.
• So one must be on the lookout to “Create New
Value Add or Wow Moments” and keep the
brand’s promise.

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 Retail Communication Mix
• Communication is used to inform customers
about the retailer, his merchandise and
services.
• Communication is now two-way :
– the retailer communicates with the consumers
using a set of tools,
– the consumers can also communicate with the
retailers using toll free numbers , contact us
available on the websites, social media, etc.

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Marketing Communications Mix

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Advertising
• Any paid form of non-personal presentation
and communication through mass media.
• Advertising may be used to –
– Create awareness about a product or a store
– Create a desire to want a particular product.
– Create a specific image of the store in the
consumer’s mind.
– Reposition the store’s image.
– To increase sale of some categories for a shorter
term
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Sale Promotion
• Incentivising customers to visit the store and / or purchase
merchandise for a specific period of time is called sales
promotion.
• It helps in attracting traffic to the store and in quick
conversion by inducing impulse buying, generating
excitement, etc.
• Some of the common retail promotions are:
– Contests: A contest where customers can participate and win
prizes. Many retailers allow consumers to enter into the
contests based on the amount of purchases they have made.
This lures customers to buy a little more than they were or to
buy if they were earlier not.
– Coupons: A coupon allows the consumer a reduction in price or
some merchandise free when the coupon is redeemed.
Coupons can be sent through newspapers ( eg: Faaso’s ,
Dominoes Pizzas), magazines or in products.

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– Samples: Getting consumers to simply try a product
can change the decision making. Sampling gives the
consumer an option to try the product at no cost.
Sampling can be done in-store, door-to-door, through
post or in newspapers / magazines.
– Brand Promotions and schemes: This is a simple
straight forward promotion where the shopper gets
either a monetary discount or a product free with
purchase ( buy 1 get 1 free).
– Frequent shopper programs: A frequent shopper
program is one in which a shopper accumulates points
on every purchase. They get invitations for special
events and discounts equivalent to points
accumulated.

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Public Relations
• Public Relations aims at fostering goodwill.
• By way of public relations, the retail organization
strives to create and sustain a good image with all
stakeholders.
• This can be done through
– press releases,
– feature stories,
– newsletters or
– through interviews with the press / press conferences.
• Publicity is non paid form of media coverage.
• Some examples in retail which can get publicity are
– Store openings,
– Store renovations,
– Celebrity visits,
– New product launches, etc
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Personal Selling
• Personal selling happens when salespeople assist
customers one to one to help satisfy their needs.
• It is the process of learning the needs and wants of the
buyer and striving to satisfy them with the required
product or service.
• This can happen both within the store as well as the
outside – where orders are taken by telephone, mail,
internet or even at the customer’s residence and then
serviced.
• Personal selling is expensive as it requires a strong sales
force where the sales person should be trained on
various aspects like the product knowledge, features of
the products and services, body language of the
customer, etc.

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Point of Purchase (POP) Displays
• POP displays help in reinforcing the in-store
branding, product and provides information to
the customer.
• The basic function of a POP material is to
induce sales – it helps in reinforcing the
message being communicated by advertising
and sales promotions.
• Communication material used for this purpose
are posters, danglers, flyers, glow signs,
translates, banners, etc.

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Some POP Display units

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 Direct Marketing
• Direct marketing is a form of marketing that allows
the retailer to directly reach the customer.
• This can be done through phone call, SMS / text
messaging, Emails, mailers and brochures, database
marketing, etc.
• This is one of the lowest cost way to reach the
consumer and if done right, can make a huge impact.
• Direct Marketing must almost always have a call to
action - for example, a number mentioned to call ; a
free gift on coming to the store with the brochure ; a
lucky draw, etc

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 Types of Direct Marketing
Three main types of direct marketing include:
• Telemarketing: Direct marketing that involves
calling people at home or work to ask for
donations, an opinion, or for sales purposes.
• Email Direct Marketing: This form of direct
marketing targets consumers through their Email
accounts. Email addresses can be harvested from
websites, forums, or purchased. Some companies
require you to receive announcements to use
their websites.
• Direct Mail Marketing: Advertising material sent
directly to home and business addresses.

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 Digital Marketing
• Digital Marketing also aims to reach the
customer directly – Online.
• It is very much similar to Direct marketing in
its basic principles, except for the fact that
– its done online ( through emails or social media,
etc) and
– that the incremental cost of contacting each new
customer is zero online.

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Components of Digital Marketing

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Integrated Marketing Communications
• IMC is an approach to achieving the objectives of a
marketing campaign, through a well coordinated use
of different promotional methods that are intended
to reinforce each other.
• IMC blends various promotional tools and
communications/marketing/advertising services and
techniques to maximize profit.
• IMC is ultimately achieved through concise and
consistent messaging that fosters familiarity and
consumer affinity.

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Integrated Marketing Communications

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A few examples help illustrate the growing importance of
integration:
– Search marketing: When someone is considering buying a
product or service they will often conduct an online search.
What they find online will affect their buying behaviour offline
– Accessibility and convenience: Consumers expect information
and services that relate to a brand to be conveniently accessible
via its website.
– Aggregation of information and services: The traditional
demarcation between a company, its suppliers and customers
has become confused. For instance the Apple iTunes app store
aggregates software and information from app makers, along
with reviews provided by consumers. Product promotion,
delivery, service and information from many sources are
seamlessly presented together.

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– Social media: Traditionally businesses were in control
of their brand communications. Now brand
communications are multidirectional as consumers
can easily share, comment and create content. Brands
can use this to their advantage by creating good,
appealing content. For instance Unilever’s campaign
for Dove, The Dove Real Beauty Sketches went viral
with over 54 million views on YouTube.
– Growth of mobile: The growing penetration of smart
phones with fast internet connectivity means that
marketers need to take into consideration the
integration between the online experience and place-
based experiences.

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Thank you

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