Strategic Retail marketing

Introduction

Retail is the sale of services and goods to a customer who is the end consumer in the production chain (Sullivan, 2002). The production chain starts its process from the producer to the distributor, to retailer and finally the customer. In the retail business, a lot of communication and marketing is done towards the promotion of the products. As described by Sullivan (2002), retail marketing is the process by which retailers create awareness of the existences of their goods and services to increase their volume of sales from their customers. The most vital aspect of the retail business is the customer. A lot of money is invested trying to woo customers into buying their products. They know for sure that it is the customer who will make the business progress (Chen, 2005). In fact, in the production chain, retailers are the ones who use the highest amount of money trying to market their businesses. The producer companies also do advertise their products, either on air or using magazines. However, the retailer has to ensure that his customers get to know what types of products he is dealing. It is because of the zeal and determination of the retailers to create awareness of their products that retail marketing was born. With the evolution and growth of technology, there are many different method and approaches that non-domestic retailers use today.

In this paper, we are going to put our focus on Zara stores. The company deals in fashion clothing. It first store was in Spain as a small clothing store in 1975 and since then it has grown to 2100 stores located across 88 countries.  Zara is a Spanish brand and it is the only brand that keeps up with the latest fashion while still maintaining its affordability. The brand’s 2100 stores are strategically placed in across the 88 countries making it the world’s largest retailer in fashion clothes. The Brand has a store in the United Kingdom and it intends to open more stores across the United Kingdom. As a non-domestic retailer the company has faced many challenges. Its ambitions to have more outlets across the United Kingdom will be faced by various forex issues. In this paper we shall address the issues and offer strategies for competitive advantage.

Retail Marketing Mix

Businesses in the United Kingdom, use different methods of advertising and creating awareness of their products. It is essential for every business to be able to establish its marketing mix which will work well with the firm. Settling on the right market mix will lead to profitability in the business and also a higher return on investments (Barlow, 2004). Most profitable retail shops in the country, uses the four Ps of retail marketing. A perfect combination of the four Ps is what will make Zara retail stores stand out in the world of retail business.

The degree and nature of the combination will determine how successful the business will be (Bhattacharya, 2008). Also, the choice of the four Ps will be influenced by the objectives of the company. The choice will have to be in line with the objectives as well as their mission and vision statements. The right and most convenient promotional mix should be compatible with the type of business and the image of the store. The promotional mix should also be flexible enough in case any modifications are needed. The best promotional mix chosen by companies should be credible, have a degree of control and flexibility in the costs associated with the promotional mix. The four Ps include:

 Product mix

According to Bhattacharya (2008), every business has a product mix that is constituted of product lines. There is a similarity in characteristics and usage of the products mix in a business or organization.

Product range and assortment

Products that a company manufactures and the services it offers are called product line. The goods or products that a retailer will stock in his business are called a product range or assortment constituted of different product lines. Product lines are vast but could be intended for a similar purpose. A product mix, therefore, is a set of all product lines that a business or organization is offering. In a product assortment, there are several terms that retailers use to describe the nature of product lines. For instance, length refers to the number of goods that are available in a product line, and depth relates to the different goods and services in a product line while consistency is the relationship between the goods and services in their final destination.

Product mix components

A product mix is made of various components which when blended they become strategic selling point for the goods and services. In-depth analysis and also research is required in figuring out the right steps to make in modifying or making the components work in harmony which creates a competitive edge over their competitors (Bruce and Birtwistle, 2004).

Services

Visual merchandising, design and store layout

It’s one of the components in a product mix that challenges most organizations as well as businesses. How they design their package for the product or service will determine how it will perform in the market. Visual merchandising attracts customers and with the same measure, it can repeal away customers. A lot is taken into consideration when deciding the type of packaging design to use. For a product, a package design that is attractive, convenient to carry, less bulky will be an optimal choice for a company. However, in marketing inferior products, retailers have gone an extra mile to putting then in bulky packaging to stand out on the shelves (Bruce and Birtwistle, 2004). Store layout and display is important because it helps customers in the viewing of the products. An attractive store layout will sell better than a normal one with just a counter at the front. A layout where customers get to interact with the product and services is the best for retail outlets trying to curve out a competitive advantage over competitors. A good store layout is the one that considers the customers interests first.

Brand

Every business has to brand itself. A brand is a name or sign that people can relate. Most retail shops are successful because of the branding strategies used. When branding, a lot is put into consideration. The business has to come up with a brand that will sell the retail store and standout from others. Branding creates an emotional connection with a customer such that he cannot buy any other brand. To maintain a brand name a retail store has to ensure it is competent, reliable and trustworthy to the customers.  Building a brand takes a lot of efforts but the moment customers’ trust the brand, sales and revenue increase.

Merchandise

In retail stores, what matters is the product item on display. The store has to ensure that every product is of good quality and attractive. The product item should relate to the nature of business and services offered. A product item that does not meet customer needs will not sell. Similarly, products which do not match the services being offered will be rendered useless. It is up to the retailer to ensure that the product items are reliable and of good quality.

Product Line

Product line involves the products that are on display in a retail store. A retail store has to choose the correct product line. Successful retail stores have opened chain stores which deal with different products at a go. Each retail outlet has a different product line (Porter, 2011). Specialized product lines give a customer the confidence that the business is experienced in the product or service and trust builds towards the retail store. For instance, Zara specializes in designer fashion wear which will build customer trust over time such that any product from the Japanese retailer will be a trusted product in the market.

Strategies in product mix

1.      Launching new products into the market from time to time will keep customers coming for more.

2.      Changing and altering the existing products to make look new or attractive.

3.      An entire line can be eliminated and a new product line replaces it, or some products but not the whole product line can be removed. It is done to remove non-performing products in a retail store.

4.      Managing the product life cycle by having more attractive and durable products on the shelves.

Price Mix

It is the most significant factor in an organization’s strategies. It can mar or make a retail store. Prices are very sensitive because a retail outlet can overprice or even underprice their products. Both ways will have a negative impact on the retail store. Prices are easiest and quickest element of the four Ps that can be changed. According to Lubow (2004), pricing of products helps a retail store or an organization accomplish their objectives particularly for a new entrant in the market who wants to use favorable prices to attract customers and grow its brand and get market acceptability. Pricing of products will determine the business overall performances in terms of sales, revenues and Profits. Also, it creates a competitive edge over other business rivals. Pricing of products will also determine the return on investments.

When pricing, it is necessary to know that a low price is not always the best price because it can cause closure of business. In such a case, the lowest price that still has considerable gains is always the best. In the price mix, the price is not always the overall factor, but companies have to seek cash flow which leads to profitability and finally growth of the business (Lubow, 2004). When trying to establish the price, operating expenses and other costs are put into consideration because price is not an independent factor but various elements will affect it.

Price strategies

Organization objectives: The goals set by the business will determine the pricing of their products. Objectives that are too ambitious will see an increase in price. Pricing will also affect how fast an organization will meet its set goals. Reduced pricing methods will derail the accomplishment of the objectives. Similarly, high prices will even lag the objectives further if customers do not accept the price (Mukhopadhyay, 2009). Depending on the objectives and goals of the business, product pricing will be determined.

Competition: Competition is among the key factors that affect the pricing of products. A company that has established itself in a competition-free zone will take advantage of its monopoly and hike its prices. Since there is no competitor, they can regulate the prices as they wish. However, in a market zone characterized by high competition, prices will take a downward trend as they try to outdo each other (Porter, 2011). Competition is healthy but hazardous if pricing is not well regulated. Business will cut down their prices to attract more customers, after all, customers are attracted to prices more than the products.

Cost and profit: If the cost of doing business in a region is very high, the cost will be translated to the final consumer. Companies are trying their best to cut down on the cost of doing businesses so that they can be able to manage the price of goods. In most cases, it is the costs that are involved in making a product or delivering a service that makes prices hike or decline. Also, profits will play a critical role in pricing (Mukhopadhyay, 2009). The primary aim of business is to make profits for the owner. If profits are not made because of low pricing, the price will, however, be raised to increase the profit margin. No business will operate while making losses. Thus, prices will tend to increase to better the profits.

Credit terms: Credit terms Credit terms are the conditions and regulations under which businesses will buy goods on credit. In most cases, credit terms are favorable thus the attractive pricing of their goods and services. If the credit terms are harsh, it will translate to an increase in prices.

TargetGroup and Willingness to Pay: Retail stores that are located in wealthy suburbs of the super-rich in the United Kingdom will tend to sell their products and services at a higher price compared to areas characterized by mutual man. If the target market can pay the price, then a price hike would come in handy. However, the increase in price should be considerable to avoid overcharging the clients (Mukhopadhyay, 2009

Place Mix

Place or location determines how consumers receive a product. Business should try to ensure that their location is strategic. Strategic locations will affect the performance of a business positively. Also, it is good for the products to be near the consumers for easier access and convenience. If the retail shop is not well situated, the customer will end up buying another product form the same product line that is accessible. It is the duty of the retailer to ensure the product is readily available to consumers whenever required (Jones, 2007). Some factors affect place mix which is logistics management and physical distribution. When evaluating channel alternatives, the needs of the intermediaries must be considered because they have been contracted. A distribution network that is sound will make marketing efforts successful.

On the other hand, physical distribution involves warehousing, transportation and bulk packaging. Intermediaries and coordination handle These activities are required for effectiveness. Jones (2007), states that place becomes a sensitive factor because a retailer cannot put his business in areas where the clients as well as the intermediaries cannot access it. In making the decision to position the business, strategic factors such as transportation, distance, intermediaries and storage should be put into consideration. A business that is not imperative to the above factors will incur costs while trying to maneuver these factors.

Promotional Mix

A promotional mix will determine the extent to which customers will be attracted to the retail business. While making a budget, the promotional mix should be considered and allotted a good share of the budget. Retail stores can opt to combine public relations, advertising, sales promotion and personal selling. Small retailers whose resources are limited can use fliers, banners and word of mouth to promote their business. There are also retailers whose financial capabilities are not limited, and they can opt for TV and newspaper adverts (Reardon, 2005). The promotional mix will be different between retailers depending on the level of technological advancement, objectives of the business, nature of the firm, competition and finances.

Retail communication

These are schemes and programs conducted by the retailers to make their customers aware of their services, products, location and most of all to increase their customer base. Most retail communications are structured in a way that they correlate with the objects of a company as well as its goals creating a competitive edge over other business (Porter, 2011). In well-established businesses, they spend a lot of finances and time trying to develop promotional activities and designing strategies. The following promotional factors in retail communication should be considered in choosing an efficient mix, the cost of methods, the credibility of the mix, the degree of flexibility, how many people it can reach and how the combination will control the media.

Competitive Advantage

According to Barney, (2007) it is defined as the power which a business has over another rival business in a competitive market. As explained in the four Ps, a wise choice of combination of either of the four Ps will come up with a marketing mix that the retail store will use as an advantage over other similar businesses. A retail store will gain a competitive edge over its competitor if it has access to resources and information that the competitor doesn’t. Also, a skilled human resource will be an advantage over the opponent. It should be an advantage that is not easily copied by others making it possible to maintain it over an extended period. Such a strategy will ensure the existence of the business and superior performance. The effectiveness of the market mix of the four Ps will result in a higher degree of competitive advantage over all its competitors. In developing a competitive advantage, the capabilities and performance of the business is put into consideration. Barney (2007), further states that the nature of the competitors will also affect the depth and weight of the competitive advantage.

Customerservices

Services vary depending on the type of business. In most retail stores, they offer after sale services which relate to the product or service provided. For instance, Zara retail stores should offer free packaging services and also deliveries to customers within England. Such services will make a retail store sell itself better hence increasing the number of sales. To create a competitive edge over their competitors, they should also consider four Ps of customer service.

Professionalism: It is how you look, you talk, self-presentation and how you handle customers

Positivity: No matter how cruel, unfriendly or good or bad, you should always be positive by controlling yourself.

Personal: This is making the customer feel as if he is the most important person in the shop or world while serving her.

Present: Always let your mind be where the customer is. Don’t be absent minded because the customer will realize and walk away.

Challenges

PEST factors: These factors are political, environmental, social and technological factors. In general, as the business grows to become a leading international mobile making company. It shall experience the PEST handles along its way. Opening up more stores in the United States will depend on social and political factors (Ziliani, 2004). The environment may not affect them as much as compared to changes in fashion which may lender some outfits to be outdated.

Competition: Other new and upcoming manufacturing companies are making better and more durable designer fashion wears that are cheaper. It will pose as a challenge to the Zara fashion retailer as he tries to make a mark in the United Kingdom. Staying above the competitors will require the stores to be open minded and very creative.

Growth objectives: Due to the dynamic needs of the customer and the changing fashion trends in the fashion industry, the company may be forced to change its objectives because if they continue using existing objectives, in a matter of years to come, the objectives will become redundant and spur minimal or no growth.

Growth strategy: Challenges such as growth strategy will be eminent when the company reaches its peak in production and revenues, and there will be no further growth of the enterprise. After all, the market will be saturated with similar fashion companies making it even harder to expand.

Emerging retailing trends. Retailing trends are changing dynamically with a change in time. It means that in the next five years as the company grows, it will have to change its retailing strategies. According to Aggarwal (2009), some options will be to sell their products online. Such challenges will be easy to maneuver if the company keeps its four Ps in check.

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