Retail strategy is a holistic marketing plan for a product or a service to reach the final retail channel and influence the consumers. This strategy covers everything from what retail channels a product or service will be available in to what should be the price or sales incentive to be given and how to display the product in the shelf.
Retail strategy is developed for product to be distributed through retail outlets. When a product is sold through a retail outlet, a number of factors affect the sale of the product.
It is important for a retail store to form a strategy to promote its goods and services and reach the right set of customers the primary objective of the retail strategies to increase sales as well as customer satisfaction equally.
Generally speaking, a retail plan is dependent on a lot of factors like products the store location of the store nature of customers and other multiple external factors like competition, physical and political restraints, seasonality, etc.
It is crucial that one considers all of these factors while planning and deciding the retail strategy.
The retail marketing strategy includes all of the elements of the traditional marketing mix:
- Retailers set a price that delivers value for the product and the complete shopping experience.
- Retailers buy product from producers or wholesalers that will most appeal to their target market.
- Retailers promote their offering, which includes the shopping experience, the products, the pricing, and broadly, the retail brand.
- Retailers create the right place, which is the point of purchase for the buyer.
Factors in Retail Strategy
Some of the factors as already mentioned below are:
- Pricing/discounting of the product
- Incentive structure followed
- Promotions planned
- Placing of the product
- Display attractiveness
- Incentive structure for the retailers
- Overall Consumer Behavior
Strategy for effective market Segmentation
Market segmentation is the process breaking down an entire heterogeneous market into small markets or segments of customers that are identical in terms of some characteristics like needs wants and buying behavior. Retail markets like any other sort of business, may enjoy the benefits of segmenting the markets. Due to increased competition, mass marketing approach is not feasible all the time.
Consumers have various retail formats to shop and distance is not an obstacle these days. A consumer can buy any consumer electronic item form a nearby shop or from a super bazaar; he may also visit to electronic Gallery to buy the same. Therefore, in order to attract customers and sustain them requires market segmentation where a retailer divides his customers into smaller groups and approaches them with different set of promotional programmes.
For effective market segmentation, the following two strategies are used by the marketing force of the organization:
Understanding Consumer Behavior:
Market segmentation helps a retailer to understand why consumers behave differently in a same set of marketing and promotional efforts. Once a heterogeneous market is divided into few homogeneous groups, it becomes easy for a retailer to develop an effective marketing & promotional strategy.
Deciding Store Location:
Market segmentation helps a retailer in deciding locations for its new outlets in case of expansion. The retail stores may be set up as per the concentration of target population. A location which is attractive and has good traffic flow but serves no target market is of new use to a retailer.
Deciding Merchandise assortments:
A retailer is always bothered about which item of inventory should be bought and displayed on the store’s shelves. Once the market is segmented, retailer can decide which item will go on the shelves. For a merchandise decision to be made successful, a perfect understanding of particular target market is essential.
Deciding retail marketing mix:
Marketing segmentation helps a retailers in deciding 7ps (Product, Price, Place, promotion, People, Procedure and presentation) depending upon the target market to serviced.
Segmentation helps a retailer in positioning itself in a particular target market. For Instance, Ebony and Shopper’s stop have positioned themselves for higher income level while Vishal Mega Mart and Big Bazaar have targeted the Indian middle class.
Deciding promotional campaigns:
Segmentation helps a retailer in deciding and developing accurate promotional campaigns that hit target at right time and at right place.
Concentration (Niche) Strategy
Under this strategy, an organization focuses going after large share of only one or very few segment(s). This strategy provides a differential advantage over competing organizations which are not solely concentrating on one segment.
For example, Toyota employs this strategy by offering various models under hybrid vehicles market.
Under this strategy, an organization focuses its marketing efforts on two or more distinct market segments.
For example, Johnson and Johnson offers healthcare products in the range of baby care, skin care, nutritionals, and vision care products segmented for the customers of all ages.
Strategies for Market Penetration
Market penetration strategies include the following:
It is setting the price of the product or service lesser than that of the competitor’s product or service. Due to decreased cost, volume may increase which can help to maintain a decent level of profit.
Increasing product or service promotion on TV, print media, radio channels, e-mails, pulls the customers and drives them to view and avail the product or service. By offering discounts, various buying schemes along with the added benefits can be useful in high market penetration.
High Product Distribution
By distributing the product or service up to the level of saturation helps penetration of market in a better way. For example, Coca Cola has a very high distribution and is available everywhere from small shops to hypermarkets.
If a retail organization conducts SWOT Analysis (Strength, Weakness, Opportunity, Threat) before considering growth strategies, it is helpful for analyzing the organization’s current strategy and planning the growth strategy.
An American planning expert named Igor Ansoff developed a strategic planning tool that presents four alternative growth strategies. On one dimension there are products and on the other is markets.