Chapter 5

Retail Marketing Strategy

McGraw-Hill/Irwin PPT 5-1 Levy/Weitz: Retailing Management, 5/e

Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Elements in Retail Strategy

Target Market Customer Needs Retail Format Method for Satisfying Needs Bases for Building Sustainable Competitive Advantage Defending Position Against Competitors

PPT 5-2

Methods for Segmenting Markets

Buying Situations Benefits Sought Geographic

Lifestyle, Psychographics Demographics

PPT 5-3

Can A Retailer Develop a Sustainable Competitive Advantage by:

Dropping the Price of Your Merchandise? Building a Store at the Best Location? Deciding to Sell Some Hot Merchandise? Increasing Your Level of Advertising? Attracting Better Sales Associates by Paying Higher Wages? Providing Better Customer Service?
PPT 5-4

Internal and External Bases for Competitive Advantage

Retail Firm Low Cost Large Size Efficient Distribution, Operations Unique Knowledge Loyal Employees

Vendors, Suppliers

Customers

PPT 5-5

Sources of Capital

Creating Store Loyalty Mental and Emotional Attachments

Elements in a Strong Brand
Top of the Mind Awareness Associations with Brand/Store Name

Methods Used to Develop a Strong Brand

Massive Exposure Symbols to Reinforce Image Consistent Positioning Creating Strong Associations Limited Brand Extensions

PPT 5-6

Vendor Relationships
Low Cost - Efficiency Through Coordination
Electronic Data Interchange (EDI) Collaborative Planning and Forecasting to Reduce Inventory and Distribution Costs

Exclusive Sale of Desirable Brands Special Treatment

Early Delivery of New Styles Shipment of Scare Merchandise
PPT 5-7

High Quality Customer Service

Difficult to Achieve
People Are Not Machines -- Inconsistent Retail Sales Associates At Bottom of Labor Pool

Goes Beyond Hiring Good People at High Wages and Training Them -- Organizational Culture

PPT 5-8

Growth Opportunities

Market Penetration
Market Expansion Retail Format Development Diversification

- Related vs. Unrelated

PPT 5-9

Steps in the Strategic Retail Planning Process

1. Define the business mission 2. Conduct a situation audit: Market attractiveness analysis Competitor analysis Self-analysis 3. Identify strategic opportunities 4. Evaluate strategic alternatives 5. Establish specific objectives and allocate resources 6. Develop a retail mix to implement strategy 7. Evaluate performance and make adjustments
PPT 5-10

Elements in a Market Analysis

100

50

0 1 st Q t r 2 n d Qt r 3r d Qtr 4 th Q t r

MARKET FACTORS Size Growth Seasonality Business cycles

COMPETITIVE FACTORS Barriers to entry Bargaining power of vendors Competitive rivalry Threat of superior new formats

ENVIRONMENTAL FACTORS

ANALYSIS OF STRENGTHS & WEAKNESSES

Management capabilities Financial resources Locations Operations Merchandise Store Management Customer loyalty

Technology Economic Regulatory Social

PPT 5-11

Questions for Analyzing the Environment

New developments or changes -technologies, regulations, social factors, economic conditions Likelihood changes will occur Key factors determining change Impact of change on retail market firm, competitors
PPT 5-12

Porters Five Forces

Barriers to Entry

Bargaining Power of Vendors

Competitive Rivalry

Large Customers

Threat of Substitution
PPT 5-13

Steps in Using Market Attractiveness Competitive Position Matrix

Define strategic opportunities

Identify market attractiveness and competitive position factors Assign weight based on importance of factors Rate opportunities on market attractiveness and competitive position Calculate scores and evaluate opportunities

PPT 5-14

Evaluation of Retail Market Opportunities in European Community

High
SPAIN

Low

MARKETS Restricted Open

ITALY FRANCE GERMANY

UNITED KINGDOM NETHERLANDS

LUXEMBOURG BELGIUM PORTUGAL IRELAND GREECE DENMARK

GROWTH
PPT 5-15