Micro Enviornment Factors in Retailing

What do you mean by retail environment? A retail marketing environment consists of the external actors and forces that affect the retailers ability to develop and maintain successful transactions and relationships with its target customers.

We can distinguish between the retailers’ micro environment and macro environment. The micro environment consists of the actors in the retailer’s immediate achievement that affect its ability to serve its markets: Suppliers, intermediaries, customers, competitors and publics.

Micro Enviornment Factors

Every retailers’ primary goal is to profitably serve and satisfy specific needs of chosen target markets. To carry out this task, the retailer links himself with a set of suppliers and a set of intermediaries to reach its target customers. The suppliers / intermediaries / customers chain comprise the core marketing system of the retailer. We will now look at the forces which after the retailers micro environment.

  1. Suppliers: Suppliers are business firms and individuals who provide resources needed by the retailer. For example a retail store must obtain various products from different suppliers so that as and when customers come and ask the products, he will be in a position to sell them on time. Developments in the ‘suppliers’ environment can have a substantial impact on the retailer’s marketing operations. Retail managers need to watch price trends of their key inputs. They are equally concerned with supply availability. Supply shortages and other events can prevent fulfilling delivery promises and lose sales in the short run and damage customer goodwill in the long run. Many shops prefer to buy from multiple sources to avoid depending on any one supplier who might raise prices arbitrarily or limit supply. Retail purchasing agents try to build long-term trusting relationships with key suppliers. In times of shortage, these agents find that they have to ‘market’ their shop to suppliers in order to get preferential supplies.
  2. Intermediaries: Intermediaries are firms that aid the retail shop in promoting selling and distributing its goods to final buyers. Large business organizations might hire agents to find retailers in various South Indian cities and pay commission to these agents based on their success. The agents do not buy the merchandise – they direct retailers to buy and sell ultimately to the consumers. Physical distribution firms assist the retailer in stocking and moving goods from their original locations to their destinations. Warehousing firms store and protect goods before they more to the next destination. Every retailer has to decide how much storage space to build for itself and how much storage space allotted for different merchandise. Marketing service agencies-marketingresearch firms, advertising agencies, media firms and marketing consulting firms – assist the retailer in targeting and promoting its products to the right markets. The retailer has to review the products sold periodically and must consider replacing those that no longer have demand in the market as expected. Financial intermediaries include banks, credit companies, insurance companies and other companies that help finance firm and / or insure risk associated with the buying and selling goods. Most retailers and customers depend on financial intermediaries to finance their transactions.
  3. Customers: A retailer links himself with suppliers and middlemen, so that he can efficiently supply appropriate products and services to its target market. Its target market may be individuals and households that buy goods and services for personal consumption.
  4. Competitors: A retailer rarely stands alone in its effort to serve a given customer market. His efforts to build an efficient marketing system to serve the market are matched by similar efforts on the part of others. The retailer’s marketing system is surrounded and affected by a host of competitors. These competitors have to be identified, monitored and outmaneuvered to capture and maintain customer loyalty.

A basic observation about the task of competing effectively can now be summarised. A retailer must keep four basic dimensions in mind, which can be called Four C’s of market positioning. He must consider the nature of the customers, channels, competition and his own characteristics as an organisation. Successful retailing is a matter of achieving an effective alignment of the organisation with customers, channels, and competitors.

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