There are many factors for retailers to consider while developing and implementing their marketing plans. Among the major retailing decisions are these related to (a) Target markets (b) Merchandise management (c) Store location (d) Store image (e) Store personnel (f) Store design (g) Promotion, and (h) Credit and collections.
- Target Markets: Although retailers normally aim at the mass market, a growing number are engaging in marketing research and market segmentation, because they are finding it increasingly difficult to satisfy everyone. Through a careful definition of target markets, retailers can use their resources and capabilities to position themselves more effectively and achieve differential advantage. The tremendous growth in number of speciality stores in recent years is largely due to their ability to define precisely the type of customers, they want to serve.
- Merchandise Management: The objective here is to identify the merchandise that customers want, and make it available at the right price, in the right place at the right time. Merchandise Management includes (i) merchandise planning (ii) merchandise purchase, and (iii) merchandise control. Merchandise planning deals with decisions relating to the breadth and depth of the mix, needed to satisfy target customers to achieve the retailers return on investment. This involves sales forecasting, inventory requirements, decisions regarding gross margins and mark ups etc. Merchandise buying involves decisions relating to centralized or decentralized buying, merchandise resources and negotiation with suppliers. Merchandise Control: deals with maintaining the proper level of inventory and protecting it against shrinkage (theft, pilferage etc.).
- Store Location: Location is critical to the success of a retail store. A store’s trading-area is the area surrounding the store from which the outlet draws a majority of its customers. The extent of this area depends upon the merchandise sold. For example some people might be willing to travel a longer distance to shop at a speciality store because of the unique and prestigious merchandise offered. Having decided on the trading area a specific site must then be selected. Factors affecting the site include, traffic patterns, accessability, competitors’ location, availability and cost and population shifts within the area.
- Store Image: A store image is the mental picture, or personality of the store, a retailer likes to project to customers. Image is affected by advertising, services; store layout, personnel, as well as the quality, depth and breadth of merchandise. Customers tend to shop in stores that fit their images of themselves.
- Store Personnel: Sales personnel at a retail store can help build customer loyalty and store image. A major complaint in many lanes of retailing, is the poor attitude of a salesperson. There is a growing trend now, to provide training to, these sales clerks to convert them from order takers to effective sales associates.
- Store Design: A store’s exterior and interior design affect its image and profit potential. The exterior should be attractive and inviting and should blend with the store’s general surroundings. The term “Atmospherics” is used to refer to the retailer’s effort at creating the right ambience. Merchandise display is equally important. An effective layout guides the customer though the various sections in the store and facilitates purchase.
- Promotion: Retail promotion includes all communication from retailers to consumers and between sales people and customers. The objective is to build the stores image, promote customer traffic, and sell specific products. It includes, both, personal and non personal promotion. Personal communication is personal selling – the face to face interaction between the buyer and the seller. Department stores and speciality stores, emphasize this form of promotion. Non personal promotion is advertising. The media used are TV, Radio, Newspapers, Outdoor displays and direct mail, other forms of promotion include, displays, special sales, give always and contests etc.
- Credits & Collections: Retailers are generally wary of providing credit, because of additional costs-financing accounts receivables, processing forms and bad debts etc. But many customers prefer some form of credit while purchasing. This explains the popularity of different types of credit cards and debit cards.