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.
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.
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.
Reference
Aggarwal, P., Vaidyanathan, R. and Venkatesh,
A., 2009. Using lexical semantic analysis to
derive online brand positions: An application to
retail marketing research. Journal
of Retailing, 85(2),
pp.145-158.
Barlow, A.K., Siddiqui, N.Q. and Mannion, M., 2004. Developments in
information and
communication technologies for retail marketing
channels. International Journal of Retail & Distribution Management, 32(3), pp.157-163.
Barney, J.B. and Clark, D.N., 2007. Resource-based theory: Creating and
sustaining competitive
advantage. Oxford: Oxford University Press.
Bhattacharya, C.B. and Korschun, D., 2008.
Stakeholder Marketing: Beyond the four Ps
and the
customer. Journal of Public Policy &
Marketing, 27(1),
pp.113-116.
Bruce, M., Moore, C. and Birtwistle, G., 2004. International retail marketing: a
case study
approach. Routledge.
Chen, M.C., Chiu, A.L. and Chang, H.H., 2005.
Mining changes in customer behavior in retail
marketing. Expert Systems with Applications, 28(4), pp.773-781.
Cusumano, M.A., 2010. Platforms and services:
Understanding the resurgence of
Apple. Communications of the ACM, 53(10), pp.22-24.
Jones, P., Comfort, D. and Hillier, D., 2007.
What's in store? Retail marketing and corporate
social
responsibility. Marketing
Intelligence & Planning, 25(1),
pp.17-30.
Lubow, A. and Bunin, C., 2004. Retail marketing method. U.S.
Patent Application 11/008,786.
Mukhopadhyay, S.K., Su, X. and Ghose, S., 2009.
Motivating retail marketing effort: optimal
contract
design. Production and
operations Management, 18(2),
pp.197-211.
Porter, M.E., 2011. Competitive advantage of nations:
creating and sustaining superior
performance. Simon and Schuster.
Reardon, T., 2005. Retail companies as
integrators of value chains in developing countries:
Diffusion,
procurement system change, and trade and development effects.
Sullivan, M. and Adcock, D., 2002. Retail marketing. Cengage
Learning EMEA.
Ziliani, C. and Bellini, S., 2004. From loyalty
cards to micro-marketing strategies: Where is
Europe's retail industry heading? Journal of Targeting, Measurement
and Analysis for Marketing, 12(3),
pp.281-289.
