Chapter – 03 Retail Marketing Mix and strategies

Retail product

A retail product is any goods that is sold to individual consumers for their own personal
use. This contrasts with wholesale products, which are sold in bulk to businesses for resale
or use in their operations.

Here's a breakdown of the term:

• Retail: This refers to the activity of selling goods directly to the public, typically in stores
or online.
• Product: This is an item that is produced and sold, often in large quantities.

So, a retail product is essentially something you'd find for purchase at a store or online
retailer, intended for your own personal use. This could be anything from clothes and
electronics to food and furniture.

Product Assortment and Display

Product assortment and display are two sides of the same coin in the world of retail. They
both play a crucial role in influencing customer decisions and driving sales.

Product Assortment

• What it is: This refers to the variety and depth of products a business offers to its
customers. It's essentially your product mix, and can also be called the merchandise mix.
• Components: There are two main parts to consider:
o Width (Breadth): How many different product categories do you have? This reflects the
diversity of your offerings.
o Depth (Length): How many variations of a particular product do you carry? This could be
different sizes, colors, flavors, or brands within a category.
• Why it's important: Having the right assortment strategy helps you:
o Cater to different customer needs and preferences.
o Maximize sales and profitability by stocking what customers want.
o Avoid overstocking or understocking products.

Product Display

• What it is: This is how you physically present your products to customers in a store or
online.
• Importance: A well-planned display can:
o Grab attention and entice customers to explore your products.
o Make it easier for customers to find what they're looking for.
o Communicate the value and benefits of your products.
• Display Strategies: There are many tactics to consider, such as:
o Grouping by category or brand.
o Highlighter products in prime locations.
o Using clear signage and labels.
o Creating a visually appealing and cohesive layout.

New Product launch

Launching a new product is an exciting time! It's the culmination of all the hard work that
goes into developing and designing something new. To maximize your chances of success,
here are a few key things to consider:

Before Launch

• Planning and Strategy: This is the foundation of your launch. Define your target
audience, identify your product's unique selling proposition, and set clear goals for the
launch.
• Generating Interest: Create a buzz around your product with teasers, trailers, or early
access programs for influencers.
• Marketing and Sales Materials: Develop compelling marketing materials, sales
enablement tools, and train your team on the product's features and benefits.

Launch Day and Beyond

• Product Availability: Ensure your product is available for purchase through your chosen
channels on launch day.
• Promotional Activities: Implement your marketing campaigns to generate awareness and
excitement.
• Customer Support: Be prepared to answer customer questions and address any issues
that may arise.
• Data Analysis and Feedback: Track your launch metrics and gather customer feedback
to iterate and improve your product.

Product Life Cycle in Retailing

The product life cycle (PLC) is a fundamental concept in retail that describes the stages a
product goes through, from its introduction all the way to when it's no longer sold.
Understanding the PLC is crucial for retailers because it informs decisions on things like
pricing, marketing, and inventory management.

There are four main stages in the PLC:

1. Introduction: This is when a new product first hits the shelves. There's typically low sales
volume at this stage, and retailers may not make much profit (or even lose money) due to
high marketing and production costs.
2. Growth: If the product is successful, it will start to gain traction with consumers. Sales
volume increases rapidly, and profits become more substantial. Competition may also start
to emerge during this stage.
3. Maturity: This is the longest stage of the PLC. The product is well-established, and sales
volume reaches a peak before plateauing. There's often fierce competition at this stage,
 and retailers may need to employ strategies like price promotions or product innovation to
maintain market share.
4. Decline: Eventually, sales will start to decline as consumer preferences shift or new
technologies emerge. Retailers may choose to discontinue the product altogether or sell it
at a discount to clear out remaining inventory.

Retailing Pricing Strategies

Retailing pricing strategies are all the different tactics stores use to set the price of their
products. These strategies consider a variety of factors to reach the right balance between
attracting customers, making sales, and achieving a profit. Here's a breakdown of some
common pricing strategies:

Cost-Based Pricing: This is a straightforward approach where you add a markup to the
cost of the product (including manufacturing, materials, and other expenses) to arrive at a
selling price. This ensures you cover your expenses and make a profit.

Competitive Pricing: Here, retailers set prices based on what their competitors are
charging for similar products. This strategy can help you stay in the game, especially if
you're selling common items.

Value-Based Pricing: This focuses on the perceived value of the product to the customer,
rather than just its cost. If a product is seen as high-quality, unique, or solves a specific
problem, you can command a premium price.

Price Skimming: This involves setting a high initial price for a new product, then
gradually lowering it over time. This capitalizes on early adopters who are willing to pay
more for exclusivity, and later targets budget-conscious customers.

Discount Pricing: This strategy uses temporary or permanent price reductions to attract
customers, move inventory, or boost sales during slow periods. Examples include sales,
coupons, and buy-one-get-one-free (BOGO) offers.

Penetration Pricing: This involves setting a low introductory price for a new product to
gain market share quickly. Once the product is established, the price can be raised.

Loss Leader Pricing: This is where a product is sold below cost to attract customers into
the store, with the hope that they will buy other items at higher margins.

Retailing distribution in store and online store

In-store retailing distribution is the final leg of a product's journey from a manufacturer or
producer to the end customer. It's where retailers like supermarkets, clothing stores, or
appliance stores receive the merchandise and prepare it for purchase by consumers.

Here's a breakdown of the typical in-store retailing distribution process:

1. Delivery: Products are delivered to the retailer's loading dock by the manufacturer or
distributor in bulk quantities.

Delivery truck at loading dock of retail store

2. Receiving: Store employees check the shipment against a packing slip to ensure they
receive the correct order.
3. Stocking: Products are then moved to the store's backroom or warehouse for storage until
they are needed on the selling floor.
4. Inventory management: Retailers use inventory management systems to track stock
levels and reorder products when necessary.
5. Product placement: Store employees stock shelves and displays with merchandise
according to planograms, which are detailed layouts that specify the placement of each
product.
6. Pricing and promotion: Products are priced according to the retailer's pricing strategy
and any promotional offers. Price tags and signage are added to provide information to
customers.
7. Customer service: Store associates assist customers with finding products, answering
questions, and completing purchases.

Online store
Retail distribution for an online store refers to the process of getting your products from
the manufacturer or supplier to your customers. There are two main distribution models
for online stores:

• Direct-to-consumer (DTC) distribution: In this model, you sell your products directly to
customers through your own online store, cutting out the middleman (wholesalers or
distributors). This gives you more control over your brand image, pricing, and customer
experience.
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• Dropshipping: In this model, you partner with a dropshipping supplier who stores,
packages, and ships your products to customers. You don't hold any inventory yourself, so
it's a low-risk way to start an online store. However, you may have less control over
product quality, shipping times, and profit margins.

The best distribution model for your online store will depend on a number of factors, such
as your product type, budget, and target market. Here are some things to consider when
choosing a distribution model:

• Product type: If you sell bulky or fragile products, dropshipping may not be a good
option, as it can be expensive to ship these types of products.
• Budget: If you have a limited budget, dropshipping can be a good option, as you don't
need to invest in inventory upfront.
• Target market: If you sell to a niche market, you may need to use a DTC model to reach
your target audience.
 Factors Influencing Location of Stores

Choosing the right location for a store is crucial for its success. Here are some key factors
that influence where stores are located:

Target Market:

• Demographics: Understanding your ideal customer's age, income, lifestyle, and

household characteristics helps pinpoint areas with a high concentration of those people
[3].
• Shopping Habits: Consider how your target market prefers to shop. Do they frequent
malls, high-street stores, or online retailers?

Location Attributes:

• Accessibility and Traffic: This includes ease of getting to the store by car, public
transport, or foot. Ample parking and good visibility from the road are important for
attracting customers [5].
• Foot Traffic: High foot traffic areas with a good mix of pedestrians are ideal for stores
that rely on impulse purchases [5].
• Zoning and Regulations: Ensure the location complies with zoning regulations and
allows for the type of business you want to run, including signage [4].

Business and Competition:

• Cost: Rent, property taxes, and utilities can vary significantly depending on the location.
Balancing these costs with the potential for sales is key [3].
• Competition: Some businesses may thrive near similar stores, while others need to be the
only destination in town. Analyze the potential benefits and drawbacks of co-locating with
competitors [4].
• Complementary Businesses: Being near stores that complement yours can increase foot
traffic. For example, a coffee shop might benefit from being near a bakery.

Additional Considerations:

• Long-Term Growth Potential: Consider the area's development plans and future growth
trajectory.
• Availability of Qualified Workforce: If your business requires specific skills or
experience, ensure there's a talent pool nearby to recruit from [3].

Retail Promotion Programme

A retail promotion program is a strategic use of incentives to drive customer traffic and
sales. It's a marketing technique that entices customers with deals and motivates them to
buy.
 Goals of a Retail Promotion Program

• Increase Sales: This is the most common goal. Promotions can generate a surge in sales,
especially during slower periods.
• Attract New Customers: Promotions can introduce new customers to your store and
products.
• Move Inventory: Discounts can help clear out slow-moving stock or make way for new
arrivals.
• Build Brand Awareness: Promotions can get people talking about your store and
products.
• Boost Customer Loyalty: Reward programs and exclusive offers can keep customers
coming back for more.

Types of Retail Promotions

• Discounts: Percentage or dollar-amount reductions on products.

• Buy-One-Get-One (BOGO) Offers: Customers get a second item free or at a discount
when they buy another item.
• Free Gifts with Purchase: Customers receive a free item when they spend a certain
amount.
• Loyalty Programs: Customers earn points or rewards for their purchases, which can be
redeemed for discounts or other benefits.
• Contests and Giveaways: Generate excitement and attract new followers.
• Seasonal Promotions: Special offers tied to holidays or specific times of year.

Promotion Budget

A promotion budget is the amount of money a company allocates to marketing and

advertising activities. This budget is used to fund campaigns that raise awareness of the
company's products or services, generate leads, and ultimately drive sales.

Here are some key things to know about promotion budgets:

• Uses: Promotion budgets can be used for a variety of activities, including online
advertising, social media marketing, content creation, public relations, trade shows, and
events.
• Setting the Budget: There are several methods for setting a promotion budget. Some
common methods include:
o Percentage of Sales or Revenue: A common approach is to allocate a fixed percentage of
sales or revenue to promotions. This approach can be easy to implement, but it doesn't
necessarily account for specific marketing goals.
o Objective-Based Budgeting: This method involves setting a budget based on the specific
marketing objectives you want to achieve. For example, if your goal is to increase brand
awareness by 10%, you would need to research and determine how much budget would be
required to reach that target.
o Competitive Parity: Some businesses choose to set their promotion budget based on what
their competitors are spending. This approach can help ensure you stay visible in the
market, but it may not be the most efficient use of your resources.
• Tracking and Analysis: It's important to track your promotion budget spend and analyze
the results of your marketing campaigns. This will help you determine which activities are
delivering the best return on investment (ROI) and allow you to optimize your budget for
future campaigns.

Understanding Customer

Understanding your customers is fundamental to any business's success. It's like having a
roadmap that guides your decisions about products, marketing, and overall customer
experience. Here's why it's important and how you can achieve it:

Benefits of Understanding Customers

• Increased Sales and Customer Retention: When you understand your customer's needs
and preferences, you can tailor your offerings to exactly what they want. This leads to
happier customers who are more likely to buy from you again.
• Improved Customer Experience: By understanding your customers' pain points and
frustrations, you can identify areas where you can improve your service and make their
experience with your business smoother.
• Better Decision-Making: Customer insights can inform all your business decisions, from
product development to marketing campaigns. Data-driven decisions are more likely to be
successful than those based on guesswork.

How to Understand Your Customers

• Collect Customer Data: There are many ways to gather customer data, such as surveys,
website analytics, and customer relationship management (CRM) software. This data can
provide valuable insights into demographics, buying behavior, and preferences.
• Talk to Your Customers: Conduct interviews or focus groups to get direct feedback from
your customers. This will help you understand their needs, wants, and motivations on a
deeper level.
• Listen to Social Media: Pay attention to what your customers are saying about you on
social media. This can be a great way to identify trends and areas for improvement.
• Analyze Your Competition: See who your competitors are targeting and what they are
offering. This can help you identify potential gaps in the market and tailor your offerings
accordingly.

Consumer shopping behaviour

Consumer shopping behavior is a fascinating field that examines how individuals and
groups make decisions about what to purchase. It dives into everything from the
psychological influences on why we buy certain things to the social factors that affect our
choices.
 Factors Affecting Consumer Behavior:

• Psychological factors: Motivations, needs, attitudes, and perceptions all influence what
we find appealing.
• Social factors: Reference groups, social media, and cultural influences shape our
preferences.
• Personal factors: Age, income, lifestyle, and personality all play a role in our buying
decisions.
• Situational factors: The time of day, mood, and shopping environment can all affect what
we purchase.

Types of Consumer Buying Behavior:

• Routine Response: Low-involvement purchases like grabbing a bottle of water at the

checkout.
• Limited Decision Making: Occasional purchases where you might compare brands, like
choosing a new shampoo.
• Extensive Decision Making: High-involvement purchases for expensive or unfamiliar
products, like a new laptop.
• Impulse Buying: Unplanned purchases driven by emotions or sudden desires.

Customer Service and Satisfaction

Customer service and satisfaction are two sides of the same coin. Here's a breakdown of
both:

Customer Service

• The assistance and support provided by a business to its customers before, during, and
after a purchase.
• This can include answering questions, resolving problems, and providing product
information.
• Effective customer service is friendly, helpful, and efficient.

Customer Satisfaction

• A measure of how happy a customer is with a company's products, services, and customer
service.
• Satisfied customers are more likely to repeat business and recommend the company to
others.
• Businesses can track customer satisfaction through surveys, reviews, and social media
sentiment.

Why are they important?

• Satisfied customers are loyal customers. They're more likely to make repeat purchases and
recommend the company to others. This leads to increased revenue and growth for the
business.
• Good customer service builds trust and positive relationships with customers. This can
help a business weather tough times and recover from mistakes.
 Customer Relationship Management

Customer relationship management (CRM) is a process for managing all aspects of a

company's interaction with its customers and potential customers. It involves using
technology to gather information about customers and the ways in which they interact with
the company. This information can then be used to improve customer service relationships
and sales growth.

CRM systems are used to track customer contact information, sales leads and
opportunities, customer service interactions, analytical data, and marketing campaigns.
CRMs can also provide features such as workflow automation, task management, and
reporting.

Benefits of using a CRM system:

• Improved customer service: CRM systems can help businesses track customer interactions
and resolve issues more quickly.
• Increased sales: CRM systems can help businesses identify and qualify sales leads, and
track the progress of sales opportunities.
• Improved marketing: CRM systems can help businesses target their marketing campaigns
more effectively and track the results of those campaigns.
• Improved customer satisfaction: CRM systems can help businesses improve customer
satisfaction by providing a more personalized experience.