Professional Documents
Culture Documents
Module 2
Product: Totality of the offer which includes services, store lay out, merchandise, brand and features/benefits. Price: What the customer has to be willing to pay in exchange for the benefits of the product and channel service. Promotion: Means by which the retail offer is communicated to the target groups Place: Based on the retailers activities in supplying a channel service. Includes the logistics of inventory management systems.
Product
Retailing as a product is a combination of: Service Quality Merchandise Brand name Features and benefits Store Layout
Atmospherics and store lay out affect: Speed at which consumers move from one point to another in the store Degree of well being felt by the staff working in the store environment Total sales revenue, sales pattern and type of product sold Image the consumer has of the store and its merchandise.
Retail Pricing
Price is the monetary value assigned by the seller to something purchased, sold or offered for sale and on transaction by a buyer, as their willingness to pay for the benefits the product and channel service delivers. Price Sensitivity Elastic and inelastic demand Retail mark ups should vary inversely with price elasticity of demand if profits are to be maximised.
Factors affecting price sensitivity Perceived substitutes effect Unique value effect Importance of purchase effect Difficult comparison effect Price quality effect Expenditure effect Fairness effect
Further factors influencing pricing Perishable nature of products Competitive nature of the industry Cost control Seasonal demand Psychological aspects of both quality and status Intermediaries Volatility in the market
Approaches to pricing
Cost-oriented pricing
Cost plus pricing Rate of return pricing
Problems of seasonality and poor timing of offer Merchandise became shop soiled or damaged on the shop floor Need to release the display space for other merchandise Selling space/display of the merchandise had been inadequate or in the wrong location Policy decision taken to develop improved customer goodwill through markdowns Initial markdown being too small to achieve desired sales results Sales staff not being briefed properly or encouraged to sell old as well as new lines.
Retail Promotion
Mix of communication activities carried out to influence consumer perceptions, attitudes and behaviour in order to increase store loyalty, store visits and product purchase. Forms of promotion: Advertising Sales promotion Public Relations Personal Selling.
Advertising
Any paid form of non-personal communication through the media about a product, that has an identified sponsor. Follows the principle of AIDA A - Capture Attention I - Arouse Interest D - Create Desire A - Inspire to take Action
Types of Advertising
Product Advertising Markdown Event Advertising Institutional advertising Co-operative advertising
Sales Promotion
Any paid non-personal marketing communication activity, other than advertising, which offers an incentive to induce a desired result from potential customers, trade intermediaries or the sales force. Types of promotions:
Point of purchase/point of sale Contests Sweepstakes Coupons Frequent shopper Prizes Demonstrations Referral gifts 2 for price of 1 Branded giveaways Samples Premiums Special events
Personal Selling
Gain benefit through face to face or telephone contact between the sellers representative and those people with whom the seller wants to communicate Selling is a process of steps whereby the salesperson build up a personal obligation for the customer to make a purchase.
Public relations
Non personal communication which changes opinion or achieves coverage in a mass medium, which is not paid for by the source. Includes press releases, organising press conferences, organising events etc