Principles of Marketing

Principles of Marketing 2

1. Retailing

• Core of marketing: exchanging, positioning, segmentation & targeting (4P’s Retailing, market channels)

• Retailing dominates our world, the biggest companies are retailers or use retailing (Apple, Ali Babba, Home depot, Walmart…)

In US 2 first Walmart, Casco.

Europe: Tesco, Metro, Casino, Auchan

• Retailing: all the activities in selling goods or services directly to final consumers for their personal, nonbusiness use.

• Inditex example

• Key Retailer Marketing Decisions

Driven by target marketing & positioning

-type of channel (Internet, Brick & Mortar, Direct Marketing or Multi-Channel)

-location and number of retail outlets

-type of retailer (department store, convenience stores)

-size of store

-product assortment, variety, overall number

-pricing

-service levels

-store layout, shelving, merchandising

-store atmospherics (lighting, scents, colors)

• Retailer marketing decisions

Location (Place) decision:

Central business districts are located in cities and include department and specialty stores, banks, and movie theaters

A shopping center is a group of retail businesses planned, developed, owned, and managed as a unit.

• Type of Retailers

Product line classifications

-specialty stores: boutiques

-department stores: galleries Lafayette

-convenience stores: open almost all the time like Carrefour City

-superstores: big Walmart

-category killers: Castorama

Organizational Approach

Franchises (MacDo …) are contractual associations btw a manufacturer, wholesaler, or service organization (a franchisor) and independent business ppl (franchisees) who buy the right to own and operate one or more units in the franchise system

• Retailer Marketing In-Store Decisions

Major product variable decisions include:

-product assortment

-services mix

-store atmosphere

• Retailer Marketing Decisions

Price decision

-Price policy must fit the target market and positioning, product and service assortment, competition, and economic factors

        High markup on lower volume

        Low markup on higher volume

-Everyday low pricing (EDLP) involves charging constant, everyday low prices and offering few sales or discounts

-High-low pricing involves charging higher prices on an everyday basis, coupled with frequent sales and other price promotions

• Retail layout and design

4 main considerations

-store layout (how the aisles are)

-space planning (where you put stuff inside the store layout)

-presentation (how the merchandise is presented within its space/department)

-atmospherics (sound, music, smell, colors)

Types of design

There are three general types of store layout design:

-grid Auchan

-racetrack (AKA loop) IKEA

-free-form 

Space planning

Decisions about allocation of space to departments, categories, and items is complicated

Four questions that need to be answered are as follows:

1. What items,vendors,categories,and departments should be carried?
2. How much of each item should be carried?
3. Where should the merchandise be located?
4. How much space should the merchandise take?

Location of departments

Relative location advantages:

-best locations are on the main floor near entrances and escalators (highest traffic areas)

-within level, best locations are near main aisles

-floor space to the right of an entrance is most attractive

-racetrack designs facilitate the flow

Impulse products:

-in department and specialty stores: fragrances, cosmetics, complementary prod

-in supermarkets: magazines, tabloids, candy bars

-generally located near the front of the store draw or near POS terminals

Demand/destination Areas:

-generally away from main aisles: children’s apparel, expensive specialty goods, furniture, customer-service areas

-demand for item exits before the customer gets to the store, thus the department is a specific destination for the customer

Physical characteristics of the merchandise:

-furniture requires a lot of room

-curtains require a lot of wall space

-shoes require close storage

Adjacent departments:

-complementary products (within and across department) are often clustered

• Space planning

-based on various forms of research

-to determine where merchandise should be located within departments, planograms are developed

-planogram=diagram created from photographs, computer output or artists’ renderings that illustrates exactly every SKU (stock keeping unit) should be placed

• Merchandise presentation

4 basic principles:

-merchandise should be displayed in a manner consistent with the store’s image

-consider the nature of the product (Levi’s can be stacked, dresses should be hung)

-packaging often dictates how the product is displayed (bulk, self-service vs packaged)

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