Retail Management

Retail Market Strategy Topics for discussion

What do we mean by retail market strategy? Why should retail companies adopt planning? Problems likely to occur due to lack of Planning Purpose of a Market Plan Structure of Market Plan

Retail Market Strategy

Retail strategy identifies: Target Market Format of stores Unique Differentiator for sustaining competitive advantage Target Market is a group of consumers with similar needs and buying behavior. These could be serviced by a retail outlets of similar formats Map your customers needs and create a niche based on demand

Have a Target Group which you think will respond to your USP Every communication every time should talk about the same positioning

Retail Market Strategy

Avoid multiple channels of communication. Choose the ones with which your customers engage the most. It will also help in measuring the success of your marketing mix. Monitor constantly through interaction with customers the success of your sales pitch. You could go terribly wrong thinking all the while that you have been able to grab more heart and mind share than your competition. You may not be able to measure success instantly but you can keep looking for signals which will tell you if you are headed in the right direction.

Retail Market Strategy

Building a sustainable Competitive Advantage
Collective strength of these Forces determine the ultimate profit potential of any industry

Retail Market Strategy The five basic forces

Rivalry amongst existing competitors
Degree of concentration in the industry Number and relative size of competitors Fight for market share if growth is slow Extent and nature of product differentiation Are costs high Are products of perishable nature Characteristics of demand Capacity in relation to demand Are exit barriers very high to prevent players from exiting despite low or negative returns?

Retail Market Strategy The five basic forces

Bargaining Power of Buyers
Degree of concentration relating to the relative importance of demand from the customer in comparison with those of the competing suppliers Relative significance of the product to the customers in terms of quality, cost and service Switching costs Amount of info with the buyers Ability of buyers to backward integrate Profit levels of the buyers The extent to which differentiation is sought by the buyers

Retail Market Strategy The five basic forces

Bargaining Power of suppliers
Structure of the supplier side relative to the producer Degree of product differentiation and substitutability Potential for forward integration Relative importance of the industry demand to suppliers Feasibility and cost of producers switching suppliers

Retail Market Strategy The five basic forces

Bargaining Power of suppliers
Structure of the supplier side relative to the producer Degree of product differentiation and substitutability Potential for forward integration Relative importance of the industry demand to suppliers Feasibility and cost of producers switching suppliers

Retail Market Strategy The five basic forces

Threat of new entrants
Extent of economies of scale Capital infusion to
Capture Customer Loyalty Create Brand identity Towards inventories Start up costs

The learning curve benefits which lower costs experienced by existing companies Switching costs Government and legal limitations and barriers

Retail Market Strategy The five basic forces

Threat of substitutes
Availability of substitutes Willing of buyers to purchase substitute products Impact on profit of close substitutes Impact of comparative price and quality of substitutes

Retail Market Strategy

Opportunities to develop Sustainable Competitive Advantage

Customer Loyalty

A strong brand for the store or for the store brands Clear and Precise positioning Strategies Offer Loyalty programs and create an emotional Bond

Location HRM Distribution and Information systems Unique Merchandise Vendor relations Customer service

Retail Market Strategy

Use of multiple sources to build a Sustainable Competitive Advantage Different operational areas based on the strength and strategy of the retailer are exploited to work in unison to gain a competitive advantage

Coffee Day and Tanishq in the Indian scenario

Retail Market Strategy Planning why?

Pace of change in the retail industry is highly unrestrained Need to create successful changes in the market place Remain competitive Approach problem solving in a systematic way

Retail Market Strategy Planning for what?

For merchandise Inventory and logistics control Information systems Pricing and promotional campaigns Store location and layout Expansion plans In short on every functional activity to stay competitive Market planning is a key Function.

Retail Market Strategy

Failure to take advantage of potential growth markets and new marketing opportunities Erosion of market and mind share Customers expectations not being met Demand and supply issues Level of awareness Low brand image Will result in lack of support and motivation among the suppliers and employees

Problems that may arise if Retail Planning is ignored

Retail Market Strategy Purpose of a Marketing Plan to the overall To provide a clear direction
retailing operation To coordinate the resources of the company To benchmark targets for effective evaluation To minimise risk through analysis of the external and internal environment To assess progress relating to target segments To focus on long term retail plan

Retail Market Strategy Why do Plans fail?

Weak support from the senior management Lack of coherence between plans No clear timelines Undefined responsibility Matrix Plans are highly rigid and lack course correction in case of crisis More of an annual ritual Data integrity issues

The corporate mission and goals External and internal Audit Business situation analysis Creating Objectives Providing an effective marketing mix Monitor the Plan

Retail Market Strategy Structure of Marketing Plan

Marketing Plan
Marketing is more than just selling and advertising. It's about what you need to do to capture and retain your customers over time. Your marketing plan needs to answer the question: Why am I in business ? What do customers want ? and Why will customers buy from me and not my competitors? Developing your marketing plan covers four main aspects: Market research. Marketing goals. Marketing strategies. Monitor and control.

Market Research
Before you develop your marketing goals and strategies you need to identify what are the most promising Retail opportunities you should pursue. You need to consider: Your Products and Service It may seem obvious, but you will benefit from analyzing your product/service offering from the customer point of view. Ask yourself what: benefits are you offering your customers? which ones will be most valued by customers? Do customers look for a wider choice or a sharper price in your context ? What constitutes Quality as in Consumers perception ? How much more they are willing to pay for Exceptional Service? Can I differentiate with Better Service ?

Market Research
Your Market Understand your market and identify factors that will impact on your business. Aspects to consider: What is its size and is it growing or shrinking? Where are your target customers located? What are its characteristics, eg. gender, aspirations, ability to pay? What changing social trends and attitudes could affect your business?

Market Research
Your Customers Once you have researched your market you can define the specific segments you intend to target. Market segments are groups of customers who share similar attributes and attitudes - Purchasing power location (distance, Neighborhood type) gender ethnic identity ( South Indians, Bengalis, Expatriates) attitudes ( frequent shoppers ,treasure hunters, discount seekers) and attributes (Washing Machine owners, car owners) Shopping trip You need to understand the factors that will drive your customers to buy products at your store

Market Research
Your Competitors Identify both direct competitors (those selling the same products in similar retail format) and indirect competitors (those offering same products but in different format). Information you need to know about competitors includes: What exactly they offer their customers ? How well established they are and their reputation? Their strengths and weaknesses and what makes them successful? Their pricing? Their Promotion strategies Whats the level of service customers get at your competitors store

Retail Market Strategy

Corporate Mission and Goals
A clear mission statement enables a retailer to focus on his core business objectives and what is to be accomplished It is a confirmation of the business the retailer is in from a consumers viewpoint Acts as a guide to employees to know the purpose of the business and provides a direction It represents the overriding goal and the means to achieve it

The most effective form is to create a balance between setting corporate direction and ensuring employee commitment and involvement

Retail Market Strategy External and Internal Audit

This is normally done using the following analysis
Political : Taxes and duties, statutory regulations, rules, government policies Economical: Market environment, infrastructure Social: Geodemographic,Cultural lifestyle Technological: Innovations, current trends and advancements to assist business

Retail Market Strategy

Business situational analysis
Your SWOT Analysis Using the information you have collected you can undertake a SWOT analysis to help you determine your marketing goals. Your SWOT involves assessing: Strengths you should build on Opportunities you should exploit Weaknesses you need to overcome Threats you need to manage You need to develop strategies to deal with each identified issue.

Retail Market Strategy

Management of life cycle position based on market strength/weakness
Stages/competitive position Birth Growth Maturity Decline Dominant Fast business growth expected due to competitive strength and focus Defend position and Aggressively defend Continue to defend build in strategy of position and renew position cost leadership an efforts of leadership technological strategies and Find way to superiority taking share relaunch retail concept Need to improve total business to ensure growth within the industry sector Ensure focus and Plan turnaround marketing is maximizing returns Retrench by attacking leaders weaknesses Divest Control costs Weak Improve to ensure growth will occur Find niche Require a major turnaround or new focus of the business Start to harvest returns or plan improvements Take quiet route Harvest Withdraw

Favorable

Need to develop strengths of differentiation, cost control, and focus.

Retail Market Strategy

Creating the Objectives

Define a clear roadmap for the organisation in terms of

Sales and revenue targets Product or service differentiation Technology Adoption Customer service

Objectives need to be a balance between aspirational and realistic

Retail Market Strategy

Growth Objectives A retailer may pursue one of the four types of strategies
Market Penetration Market Development Product Development Diversification

Retail Market Strategy

Integrative Growth

An objective to increase sales by incorporating one or more levels of the supply chain into the business would be based on integrated growth The three areas of integrated growth are
Forward Integration Backward Integration and Horizontal Integration

Retailers have the greatest competitive advantage when they engage in opportunities with synergy in their existing business.

Retail Market Strategy

Last but not the least

Monitor.. Monitor.. Monitor!!