Retail marketing is unique due to the fact that its primary focus is to target individual consumers. Retail marketing, therefore, requires much more variety than a business to business (B2B) model, for example, in order to satisfy customers. This poses interesting challenges when management decides the types of items to stock, how to price those items, where to get those items from, and how to promote the those items to consumers. The purpose of this paper will be to analyze how distribution, price, product, and promotion strategies relate to each other and the retail mix.
Distribution Strategy Distribution strategy from the perspective of a retailer is relatively simple. This is due to the fact that the retail operation is considered the
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With retailers taking more responsibility for the product on the shelf, they are required to be more involved in the selection of manufacturers. Greater amounts of attention must be paid to where the inventory comes from. The net effect of retailers being more involved is that they are more frequently working backward through the distribution chain.
Product Strategy With large retailers working backward from a predetermined product, the product strategy has taken on a different face. In the past, retailers would have to decide on what they wanted to carry, and then find manufacturers that would be able to provide that product. Now, Walmart (for example) has the ability to tell manufacturers what it wants. This is because manufacturers rely on Walmart to sell their products, so they accommodate those requests because they can 't afford not to. The ultimate reason retailers have the ability to be more picky about products is because they are tailoring them to the needs of consumers. Today 's consumer is looking to “acquire and define products according to their needs and desires” (Ribiero et.al., 2014, p. 44). A retailer is closer to customers than manufacturers, and will understand whether the size, color, or utility of a product are up to consumer
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Walmart is well known for its every-day low pricing (EDLP) model. Although EDLP seems as though it is a pricing model, it is mostly used to differentiate the retailer from others. Proof that EDLP isn 't always a pricing strategy lies in the fact that EDLP “does not have a lower price on all goods” (Lal & Rao, 1997, p. 97). This means that EDLP is a strategy for differentiating itself, not on always providing the lowest possible prices. “Walmart 's mission statement is “We save people money so they can live better” (Walmart, 2014) which indicates that Walmart 's pricing structure is the way it serves its customers. After deciding on a message too deliver to its customers, a retailer must then decide on the best way to actually get the message out. These can include television, radio, newspapers, direct mailers, and many other methods. It is important for retailers to keep the cost associated with promotion in mind so it does not unintentionally over-inflate the cost of goods. However, if that retailer does not promote enough, then it will fail to bring in the customers it
Wal-Mart follows the everyday low prices “EDLP” strategy, which proved to be one of the most successful pricing strategies. Wal-Mart achieves that through an efficient supply chain management that tracks all goods from manufacturers to suppliers to end customers. LU, C. (2014)
Per Kalogeropoulos (2016), the company is better able to ensure product availability while managing their costs because of their latest logistics initiative. They have recently created a network of deployment centers that reduces the time between when the product leaves a supplier to when it hits the shelf at the Home Depot store which drives profits higher. Parnell (2014), relays that companies who use low-cost strategy seek distribution channels that minimize cost. Home Depot’s new logistics initiative provides the company with economies of scale and a market advantage because it adds to their low-cost
Distribution channels for when, how and where an organisation’s products are distributed to their consumers. [REFERENCE] The organisation needs to carefully place where they want to distribute their products. For instance, they may have an expensive handbag, so they it would make sense to place it in upmarket department stores and boutiques so that the product is seen as being more exclusive and it also makes it more difficult to obtain if they aren’t available everywhere. [REF] However, if the product is seen as too difficult to obtain, it could affect the overall opinion of the product, which could result in less sales as consumers in developing countries would not consider it a necessary purchase so may choose to go without it.
In general merchandise retailing, Wal-Mart’s primary competitors are Target and Kmart. Retail superstores such as Circuit City and Bed, Bath, and Beyond, also provide retail competition. A survey found that the majority of respondents favored Wal-Mart over stores like Target and Kmart. Respondents claimed Wal-Mart offered lower prices, better variety and selection, and good quality. The needs of consumers is an important economic feature in all competitive environments. What attributes (price, variety, quality, etc.) prompt buyers to choose one retailer over another is very important in the competitive landscape.
By keeping their prices low, Walmart can easily pass that savings on to their customers and in return, their buyers are able to have a higher income and can spend their money on more products, preferably Walmart’s.
· The buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products),
12. Raman, K., and Naik, P.A., (2005), Integrated Marketing Communications in Retailing, [online] Available at: http://ramanassoc.com/yahoo_site_admin/assets/docs/IMC_in_Retailing.26100503.pdf, Accessed on: 1st April 2014
In this type of distribution channel the manufacturer can directly sell their products to the end customer. There is no other intermediaries in this distribution
...urselfers. The distribution strategy identifies the major channels through which the product will delivered and pushed through to the consumers.
Walmart’s marketing strategy focuses on ‘Everyday Low Prices”, which allows customers to shop anytime without waiting for a sale. Many competitors still use weekly advertisements with hope to gain market share. Walmart runs 13 advertisements per year, to showcase new items or reflect the season with items listed at regular everyday prices. The ‘everyday low price’ provides customers with piece of mind, that they do not have to wait for a sale to get a better deal.
Promotion. Finally comes promotion - informing the customer on the qualities and advantages of the product so that the potential buyer learns about the product, prefers it to those of the competitors, and has an opportunity to buy it at some place.
Q2. How did the sales and marketing affect operations when they began to sell standard pieces to retail outlets?
All choices made by Seven-Eleven are structured to lower its transportation and receiving costs. For example, its area-dominance strategy of opening at least 50 to 60 stores in an area helps with marketing but also lowers the cost of replenishment. All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation and also lower the inbound transportation cost from the manufacturer to the distribution center (DC). Seven-Eleven also requires all suppliers to deliver to the DC where products are sorted by temperature. This reduces the outbound transportation cost because of aggregation of deliveries across multiple suppliers. It also lowers the receiving cost. The information infrastructure is set up to allow store managers to place orders based on analysis of consumption data. The information infrastructure also facilitates the sorting of an order at the DC and receiving of the order at the store. The key point to emphasize here is that most decisions by Seven-Eleven are structured to aggregate transportation and receiving to make both cheaper.
products they want. The goal is to not only provide consumers with what they know they
The other day I walked into the supermarket to buy a box of Kleenex. I was faced with a variety of colors, textures, box designs, and even the option of aloe. All these features designed for a product to blow my nose into! Selection wasn't limited to the Kleenex section, either…I found abundance in every aisle. We seem to always want more - more choices, more variety, more time. In fact, even the word "supermarket" implies a desire for more than just a simple market.