ch03 retail mix

8/12/2019 Ch03 Retail Mix

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RETAIL MIX



Introduction

• Marketing mix was coined by James Culliton

• Popularized by Neil H Borden

•

The term of 4P’ by Jerome McCarthy.



Introduction

•

First, the marketer creates a product that willmeet the identified needs of the consumer

• Second, he carries out functions such astransportation, so the product can conveniently

reach the consumer.• Third, he communicates the benefits of the offer

to the consumer by carrying out variouspromotional activities such as personal selling,advertising and sales promotion.

• Lastly, he tackles the price mechanism andconsummates the marketing task by arriving at aprice that is acceptable to the consumer.



Introduction

• To create the right marketing mix, businesses

have to meet the following conditions:

– The product must have the right features, for

example, its appearance must be attractive, and it

must function well

– The price must be appropriate for the market so

that consumers will buy in large numbers andproduce a healthy profit for the retailer



Introduction

– The goods must be in the right place at the right

time. Making sure that the goods arrive when and

where they are wanted is an important operation

– The target group needs to be made aware of theexistence and availability of the product through

promotion. Successful promotion helps a firm to

spread costs over a larger output.



Introduction

• Product

– Identify, anticipate and satisfy customer’s needs

– Offer products and services that are required by

consumers

– Include the appearance, functionality and support



Introduction

• Price

– The only revenue generating

– Price can be varied according to geography, time

frame or volume

– Price can be also varied according to the level of

service



Introduction

• Place

– Involve how and where your product is distributed

and sold

– Who will sell? Yourself? A broker? A distributor?

– Will you run a retail store or sell only to retailers?

– For service, should it be delivered in person or

through the Internet or telephone – The place decision will impact on pricing and

promotion decisions



Introduction

• Promotion

– Product’s availability known to the target market

– Propagate the distinctive features of the product

– Communications media: advertising, personalselling (exe. Attending exhibition), sales promotion(exe. Special offers), and atmospherics (creatingthe right impression through the working

environment). – Public relations also falls under the purview of

promotion



RETAIL MIX

• Definition

– “a set of independent or interdependent

variables, which are available or created by the

retailer so as to fulfill the future objectives of theorganization”

• Dr RamKishen Y.



RETAIL MIX

• The independent variables are:

– Management of merchandise

– Monitoring pricing strategy

– Mastering location and SCM

– Maximizing store promotion

• When all the above independent variables

converge, they turn into interdependent or

dependent variables



RETAIL MIX

• MANAGING MERCHANDISE (PRODUCT)

– Merchandise mix: merchandise line, variety,

breadth, and depth

– Merchandise line: consists of products that are

directly related, because they are intended for the

same end use, and they are sold to the same

customer group. Exe: Men’s wear section

comprises formal wear, casual wear, accessories,

etc.



RETAIL MIX


– Variety: the number of different lines that the

retailer offers in the store. Exe. Men’s wear,

women’s wear, children’s wear, jewelry,accessories.etc

– The breadth (assortments): the number of

merchandise brands in the merchandise line.

• Exe. In men’s formal wear: the brands are Arrow, Polo,

Park Avenue, Van Heusen etc.



RETAIL MIX


– Depth: the average number of Stock Keeping Units

(SKUs) within each brand of the merchandise line.

– SKUs are the individual products that the store

carries, defined by size, color, style, and pattern



RETAIL MIX

• MONITORING PRICING STRATEGY

– Every Day Low Price: Wal Mart, Home Depot,

Staples

• Retail prices below the maximum retail price

mentioned (MRP) on the goods.

• Goods are sold at a level between the regular price at

which the goods are usually sold and the deep discount

price offered when a sale is held.



RETAIL MIX


– High-low Pricing: Retailers offer prices that are

sometimes above their competitor’s EDLP, and

they use advertisements to promote frequentsales.

– Retailers would mark down merchandise at end of

a season to clear stock



RETAIL MIX


– Predatory Pricing: it is a practice of a firm selling aproduct at very low price with the intent of driving

competitors out of the market or creating abarrier to entry into the market for potential newcompetitors

– Discounted Pricing: low prices are used as the

major tool of competitive advantage. Only workson high inventory turnover and lower operatingcosts



RETAIL MIX

• MASTERING LOCATION AND SCM

– Types of Retail Locations

• Free-standing location: no other retail outlets

– Advantages: no competition, low rent, often better visibility,easy parking and lower property rates

– Disadvantages: difficulty in attracting customers, no shared

costs like in shopping and lack of a variety of shoppers

• Business associated location

– CBD, Shopping centers



RETAIL MIX

• MASTERING LOCATION AND SCM

– Types of Consumer Goods and Location Decision

• Convenience Goods: low unit price

• Shopping Goods: high unit price

• Specialty Goods: a very high unit price

– Location: the standard is to be able to drive from a

distribution center to a store within a very limitedtime



RETAIL MIX

• Maximizing Store Promotion

– Store based promotions: point-of-sale (POS)

display (interior or exterior), window display

(themed, lifestyle), personal selling, in-store salespromotion, in-store advertising and a sale

– Market based promotion: sales promotion,

advertising, direct marketing, sponsorship and

public relations



Future of the Retail Mix

• The retail mix will become more customized

• Categories will change with time

• More competition will lead to innovative pricing

• Location and SCM will act on efficiency of sales

• Promotion will become theme-based

• The entire retail mix will become automated and

will be supported by very efficient CRM



Future of the Retail Mix

• ERP system acts as the foundation application

platform and data model necessary to support

a wide range of business functions throughout

the retail enterprise.

– Includes tightly integrated components spanning

corporate administration, advanced retail

planning, store operations and SCM



Questions for Practice

• Define retail mix. Explain the strategic

framework for retail mix with suitable

examples

• How is the retail mix different from marketing

mix? What is the future of the retail mix.

• Prepare a strategy that involves the 4M’s of

the retail mix for any retailer in your city.

ch03 retail mix

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