RM_Unit_3_New[1].pptx

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What Are the
Three Most Important Things in Retailing?
Location! Location! Location!

Why is Store Location Important for a Retailer?
• Location is typically prime consideration in
customer’s store choice.
• Location decisions have strategic importance because
they can help to develop sustainable competitive
advantage.
• Location decisions are risky: invest or lease?

Before choosing a retail store location, define
how you see your business, both now and in
the future.
1. What do your customers look like?
2. Can you visualize your building?
3. Do you know what you want to sell and
what you want your business to be
known for?
4. Have you determined how much retail
space, storage area, or the size of the
office you need?

Without the answers to these basic questions, it
will be hard to find the perfect location for
generating the maximum amount of profit for
your retail store.

Retail Locations
• A space you lease for the selling of goods to consumers.
Traffic
Transportation
Parking Facility
Visibility
Amenities Available
Store Composition
Product Mix Offered
Term of Occupancy
Specific Site
Legal Issues
Competition and Neighbors
Location of Costs

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Types of Retail Locations
1. Free Standing Sites
• City or Town Locations
– Inner City
– Main Street
2. Shopping Centers
– Strip Shopping Centers
– Shopping Malls
3. Other Location Opportunities

Unplanned Retail Locations
• It is free standing retail outlet
located on either a highway or
a street; there are no adjacent
retailers
• Location for individual Store
unconnected to other retailer

Advantages:
– No Competition
– Rental costs are low
– Larger space may be obtained
– Convenience
– Better road and visibility
– More parking space
– Few restrictions
Disadvantages:
– Initial customers may be difficult to attract
– Many people like variety in shopping
– Costs such as outside lighting, security, etc.. Are not
shared

2. Merchandise Kiosks –
Definition: A small, enclosed stand from which
merchandise is sold, often placed in the common
area of a shopping center or public concourse
(Open Space)
• Small temporary selling stations located in walkways
of enclosed malls, airports, train stations or office
building lobbies.

3.City or Town Locations
• Gentrification is bringing population back to the cities.
• Urban Locations particularly cities have attractions for
retailers. Traffic is limited due to congestion in the inner cities
and parking problems reduce consumer convenience
Advantage to Retailers:
•Affluence returned
•Young professionals
•Returned empty-nesters
•Incentives to move provided by
cities
•Jobs!
•Low occupancy costs
•High pedestrian traffic

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4. Central Business District (CBD)
• CBD is the traditional downtown business
area in a city or town
• Due to its daily activity, it draws many
people and employees into the area during
business hours
• The CBD is also the hub for public
transportation, and there is a high level of
pedestrian traffic (Number of people& Type
of People)
• The CBD has a large number of residents
living in the area

Disadvantages:
• High security required
• Traffic and delivery congestion
• High rent and high cost for property
• Shoplifting
• Parking is poor
• Evenings and weekends are slow
Advantages:
• Excellent goods/services assortment
• Draws people into areas during
business hours
• Hub for public transportation
• Pedestrian traffic
• Residents
• Wide range of prices and customer
services

6. Shopping Centers
Group of retail shops, restaurants, and other
businesses with a common interest in soliciting sales.
The facility is developed as planned commercial
location and typically offers private, off-street
parking facilities or areas.
A shopping center generally encompasses no less
than 800,000 square feet of shopping space

• Parking
• Security
• Parking lot lighting
• Outdoor signage
• Advertising
• Special events for customers

7. Shopping Malls
• A shopping mall is a building or group of
buildings that contains stores. The stores are
connected by walkways so that consumers
can easily walk between the stores.
• Malls can be built in an enclosed or open-
air format.
• A typical one houses department stores,
boutiques, movie theaters, photography
studios, and other specialty stores.

• Regional shopping malls (less than 1 million
square feet)
• Super regional malls (more than 1 million
square feet)
The South China Mall in Dongguan, China

Advantages and Disadvantages of Shopping Malls
Advantages:
•Many different types of stores
•Many different assortments
available
•Attracts many shoppers
•Main Street for today’s
shoppers
•Never worry about the weather
•Comfortable surrounding to
shop
•Uniform hours of operation
Disadvantages:
Occupancy costs are high
Tenants may not like mall management
control of operations
Competition can be intense

8. Outlet Centers
These shopping centers contain mostly manufacturers and
retail outlet stores

• An outlet store or factory outlet is a brick
and mortar or online retail store in which
manufacturers sell their stock directly to the
public.
• Typically large, mostly unattractive
warehouses filled with defective or second-
quality merchandise.
• Everything was sold at a discount. The less
expensive the item, the more that was wrong
with it.

9. Theme/Festival Centers
• Located in places of historic
interests or for tourists
• Anchored by restaurants and
entertainment facilities

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10. Other Location Opportunities
• Airports
• Resorts
• Store within a Store
• Temporary or pop-up stores

Internal & External Atmospherics
Atmospherics:
It refers to the design of an environment
through visual communications, Lighting,
color, music and scent to stimulate customers
perceptual and emotional responses and
ultimately to affect the purchase.

Definition of Atmospheric
“The changes made to the design of buying environment that
produce special emotional effects that subsequently
enhance the likelihood that a purchase will take place.”

1. Enhances the image of the retail
outlet
2. Attract new customers
3. Generate excitement
4. Ensures optimum utilization of
retail space
5. Ensures effective and desired
presentation of the merchandise
6. Influences the service quality
experience
Role of Atmospheric in Retail Strategy

a) Envelop: The internal structure and
decoration of the building that provides the
physical boundaries within which shopping
takes place .
b) Internal Layout: Store layout refers to the
interior retail store arrangement of
departments or groupings of merchandise.
• The physical environment of a store constitute
tangible elements like land, building,
equipment and fixtures put together
creatively for the convenience of customers .

c) Signage: These are specific lettered messages which guide customers
towards the store and merchandise.These facilitates communication
process inside and outside the store.

d) Visual Merchandising: ( Good Display)
• Its is defined as the presentation of products
in order to sell them .
• This initial point of interaction with a
potential customer is in the window
displays of the storefront.
• The customers seeing new things in the
window.

e) Colors: Very often, it is the color that
creates a first impression on the mind of
anyone looking at an object, color has the
ability to attract customers attention, retain
it and encourage them to purchase.
• Hue is the name of the color like Blue,
Green, Red and so on . Hues are basically
classified as warm colors and cool colors .
While warm colors are those that create a
more comfortable and informal atmosphere,
cool colors create more formal ,lonely and
chilled atmosphere.

f) Lighting: It is also important , though often
overlooked , element in a successful store
design is lighting
• Brighter lighting in a store also influences
shoppers to examine and handle more
merchandise
• Retailers have learned that different types
and levels of lighting can have a significant
impact on sales

g) Smells: Smell is believed to be the most
closely linked of all the senses to memory
and emotions.
• Bakeries , Coffee shops, Popcorn vendors in
movie theatre , and specialty shops that sell
coffee or tobacco often attract the customers
through the smells that emanate from the
products.
• Retailers hope that using smells as an in-
store marketing tool will put consumers
“ in the mood”

h) Sounds: Retailers have piped music, such as
Muzak, into their stores for generations,
believing that a musical backdrop will
create a more relaxing environment and
encourage customers to stay longer.
• Researcher believe that while the tempo of
musical affects how long shoppers stay in
a store, the type of music may be just as
influential on how much they purchase.

2. External Atmospherics
• External atmospheric refers to all aspects of
physical environment found outside the store. It
significantly affects store traffic and sales.
• Elements of Exterior atmospherics my include
like storefront, Uniqueness, Entrances,
Surrounding store, Display windows, Height of
the Building, Parking Facilities and size of the
Building

Place of the Location: The
exterior store design includes
the place where the store is
located .
In case the retail store is located
in a shopping centre or mall the
architecture and the overall
look of the mall or center have
to be taken into considerations

b) Marquee: The store marquee and the store
frontage also play an important role in
influencing the perception of customers
about the store.
• The store marquee is the first mark of
identification of the retailers. It helps the
retailer to identify the store and attracts
customers.

Store entrance: The store entrance should
be designed to encourage the customer into
the store.
A store may also consider having more than
one entrance or windows in such case the
entrance looks similar to a shopping arcade
and such an entrance is often termed as an
arcade front.

Basic Shop Front
1. Straight Front : Parallel to the Street
2. Angled Front : Viewing angle

d) Display Windows: Display windows are
very common features among retailers
dealing in garments and gift items .
• During festive seasons, retailers display
their selective merchandise along with their
respective prices or discounts offered to
attract pedestrian traffic, particularly the
price conscious shoppers.

Walkways: Walkways play a very important role in building up a store’s
exterior image. A wide and rich walkway makes a very unique feature of a
store’s image, when compared to narrow and constrained walkway

f) Size of the Building: The height of the
building may either be disguised or non
disguised.
• The height of a building is said to be
disguised if a portion of the building is
below the ground level.
• The height of the building is said to be non
disguised if all the floors or the whole
buildings is visible to pedestrians from the
ground level .
• Retailers in this type of buildings should
study the perception of the target customers

g) Awning: An awning or overhang is a
secondary covering attached to the exterior
wall of a building.
• Awnings are also often constructed of
aluminum understructure with aluminum
sheeting.
• The location of an awning on a building may
be above a window, a door, or above the
area along a sidewalk.
• In commercial buildings, an awning is often
painted with information as to the name,
business, and address , thus acting as a sign
or billboard.

Retail Positioning
• Situation/Arrangement
• Retail Positioning: Where a store
situates itself in the consumer market.
Done by:
–Product
–Price
–Place
–Promotion

Examples:
• Some stores are positioned with the lowest
possible prices and least amount of service.
Others are positioned for the best values for
fashion forward career apparel.

Target Marketing
• Target Marketing: Defining the specialized niche of
the market to whom the company wishes to make
the greatest appeal.
– Retailers do this by:
• Merchandise Policies: guidelines the company
follows to keep inventory choices on track.
• Operational Policies: designed to make
customers feel good about shopping at the
store.

Policies
• Merchandising Policies: Specific
guidelines established by
management for the company to
follow to keep inventory choices on
track.
• Operational Policies: Specific
guidelines, established by
management, to make the store
appealing for the target market
through physical appearance and
customer services.

Buying Motives
• Buying Motives: Reasons why
people buy what they buy (what
motivates them)
– Product Motives: based on
qualities or images of certain
products
– Patronage Motives: buy from
certain stores

Competition
• Direct Competition: between 2 or more retailers using the same
type of business format. (ex: GAP, Express)
• Indirect Competition: between 2 or more retailers using different
types of business formats to sell the same type of merchandise.
(ex: Dept store/grocery store both sell pantyhose)
• Vertical Competition: between businesses at different levels of the
supply chain. (ex: company that sells to stores and also has a
factory outlet store)

Product Strategy
• Assortment: range of stock or
total selection a retailer carries.
– Assortment Breadth (width):
refers to the number of
different item categories or
classifications offered by a
store.
– Assortment Depth: indicates
the quantity of each item
available in the assortment of
goods offered.

Price Strategy
• Prestige Pricing: Setting high prices on items to attract
customers who want quality and status.
–Usually in even numbers (ex: $48, not $47.99)
• Price Promoting: Advertising special price reductions to
bring in shoppers. Can build traffic to buy other items as
well.

Place Strategy
• Site Location: Prime location is important to attracting the right
customers.
• Types of store clusters:
– Central Business Districts: In cities or towns, stores and offices
– Neighborhood Shopping Centers
– Community Shopping Centers: with 1 primary store
– Regional Shopping Centers: Malls. Draw customers from at
least a 10 mile radius.
– Super-Regional Centers: Largest malls. 6-8 Anchor stores, 150
specialty stores, eateries.

Place Strategy
• Market Coverage: The amount of
concentration a retailer has in a customer
area, such as intensive, selective, or
exclusive.
• Facilities Design: Store design to create a
strong visual identity with the right
ambiance for the target market.
• Store Exterior: Often creates a customer’s
first impression.
• Store Interior: Includes selling areas and
sales support areas. Should be functional
and welcoming for customers.

Approaches of Positioning
1. Product Differentiation : Unique or
exclusive products or brands.
2. Service or Personality augmentation:
Convenient location of the retail outlets,
Working in Sundays and holidays,
knowledgeable and courteous staff, home
delivery .
3. Price Leadership: McDonald chain al over
the world is known for offering best value
for money. Wal-mart is also known to
follow this.

Building Retail Store Image
Store Image?
• Image can be described as the overall look of
a store and the series of mental pictures and
feelings it evokes within the beholder.
• While store layout, presentation, signing
,displays and events can all change to reflect
newness and excitement from week to week,
season to season, they must always remain
true to underlying store image.

Building Retail Store Image
1. An Identifiable Store Name
2. A Powerful Visual Trademark
3. An Unmistakable Store Front
4. An Inviting Entrance
5. A Consistent and Compelling Store Look
and Hook

1. Identifiable Store Names
• Sets the tone and provides
a store identification.
• Distinguishes a store in the
customer’s mind.
• Store name should be easy to say and
remember

2. Powerful Visual Trademarks
• Provides a visual image to accompany a
store name
• Combine words, pictures, colors, shapes, and
styles to make it stand out.
• Store should be identifiable even without
seeing store name.

3. Unmistakable Store front Traffic-Stoppers
• Provide instant recognition and recall
• Must project a welcoming, clear, and concise
image of what’s inside.
• Use thoughtful combo of exterior
architecture, signage, and window displays.

4. Store Entrance
• Mall retailers easily lure(attract) costumers
in with wide open entrances from the main
mall
• Visual clutter near store entrance may turn
off customers
• Street retailers need an unobstructed and
welcoming doorway to attract nearby
motorists.
• In all types of store entrances , customers
need to get the impression that they will be
comfortable and welcome.

5. Store Look and Hook
a) Visual Look
• An inviting entrance is crucial for a positive
first impression, but if the inside store
messages create feelings of inconsistency or
confusion.
• Inside store should be organized and
consistent to limit confusion.

b) Visual Hook
• A visual hook is a call to action that diverts
a customers attention to your store.
“Stop! There’s something here for you!”
• Should combine all visual merchandising
components for more memorable first
impressions.
• An exciting entrance presentation, an
effectively signed promotional offering, a
powerful interior display, in-store
animation or events to draw the customers
in.

Retail Supply Chain Management
Supply Chain Management
Supply Chain management is a systems
approach to managing the entire flow of
information, materials, and services from
raw materials suppliers through factories
and warehouses to the end customers.
Definition
• According to Cooper and Ellram, “ Supply
chain management is an integrative
philosophy to mange the total flow of
distribution channel from the supplier to the
ultimate user”.

Traditional SCM Modern Day SCM

Components of SCM
1. Procurement
a) Material Planning
b) Material Schedule
c) Supplier( Relationship with suppliers)
d) Procurement

2. Processing
• For a lean supply chain the emphasis today
is not on curtailing the
processing/manufacturing cost through
economics of scale.
• Factories to produce standard products in
millions in order to reduce manufacturing
cost.

3. Distribution
• Traditionally the role of distribution in the
business process is warehousing
transportation.
• To make available the right product, at the
right place, at the right time , and at the least
cost.
• Requirement fulfillment is done through
distribution network.

Objectives of SCM
1. Minimizing the time
2. Minimizing work in progress
3. Improving quality
4. Reduces transportation cost
5. Reduces warehousing cost
6. Service Orientation( Service to customers)
7. Improving Pipeline visibility
8. Improving value

Functions of SCM
1. Strategic function
a) Strategic network optimization, including
the number, location, and size of the
warehouses , distribution centers and
facilities
b) Strategic partnership with suppliers,
distributors and customers creating
communication channels for critical
information .

c) Product design co-ordination, so that new
and existing products can be optimally
integrated.
d) Information Technology infrastructure, to
support supply chain operations.
e) Where-to- make and what- to – make buy
decisions
f) Aligning overall organizational strategy
with supply strategy.

2. Tactical Function
a) Sourcing contracts and other purchasing
decisions.
b) Production decisions, including quantity,
location, and quality of inventory.
c) Transportation strategy , including
frequency, routes and contracting.
d) Milestone payments
e) Focus on customer demand
f) Benchmarking of all operations against
competitors and implementation of best
practices

3. Operational Function
a. Daily production and distribution planning.
b. Production scheduling for each
manufacturing facility.
c. Demand planning and forecasting, Co-
ordinating the demand forecast.
d. Source planning, including current
inventory, in collaboration with all suppliers.
e. Inbound operations, including
transporations from suppliers and receiving
inventory

f. Production operations, including the
consumptions of materials and flow of
finished goods.
g. Outbound operations, including all
fulfillment activities and transportation to
customers.
h. Order Promising, including all suppliers ,
distribution centers, and other customers.

Pricing
Introduction to Price
• A Company must set its price in relation to
the value delivered and perceived by the
customer
• Price communicates the value positioning of
the product.
Price= Cost + Profit

Price
• It is revenue to the seller
• It is the perceived value of the goods to the
buyer
• As the consideration given in exchange for
transfer of ownership, price forms the
essential basis of commercial transactions.

Pricing objectives
• Survival
• Maximum current profit
• Maximum market share
• Maximum market skimming
• Product-quality leadership

Pricing Policy(Factors)
• Selecting the price objective
• Determining demand
• Estimating Costs
• Analyzing Competitors-Costs, Prices, Offers
• Selecting a Pricing Method
• Selecting the final price

Pricing Methods
Pricing
• Pricing method or strategy is the route
taken by the firm in fixing the price.
• The method/strategy must be appropriate
for achieving the desired pricing objectives

Setting Pricing Policy
1. Selecting the pricing
objective
2. Determining demand
4. Analyzing competitors’
costs, prices, and offers
5. Selecting a pricing
method
6. Selecting final price
3. Estimating costs

Pricing Methods
1. Cost Based Pricing
a) Mark-Up Pricing ( Cost plus Pricing)
b) Absorption cost pricing (full cost pricing)
c) Target rate of return pricing
d) Marginal cost pricing
2. Demand Based Pricing
a) Skimming pricing
b) Penetration pricing

3. Competition Oriented Pricing
4. Product line pricing
5. Tender pricing
6. Affordability based pricing
7. Differentiated pricing
8. Administrated Pricing
9. Flexible Pricing
10. Rigid Pricing
11. Perceived value pricing/ Psychological
Pricing
12. Product Bundling/ Packaging

1. Cost Based Pricing
a) Mark-Up Pricing ( Cost plus Pricing)
• A firm will consider total cost per unit or
average cost and determine a markup,
depending upon various considerations such
as competition, availability of substitutes
etc..
Price= Avg cost + Markup price
• Usually used by:
Distributors, Marketing firms etc..

b) Absorption cost pricing (full cost pricing)
• Mainly used by manufacturing firms
• It uses standard costing techniques
• It includes:
Fixed cost
Variable cost
Selling and administering cost
Advertisement cost
• It is also known as full cost pricing

c) Target rate of return pricing
• Under target return pricing a producer
rationally decides the minimum rate of
return that the product must earn .

d) Marginal cost pricing
• The price of the product is the sum of the
variable cost plus a profit margin.
• It takes cost and demand into consideration
while fixing the price.
• It aims at maximizing contribution towards
fixed cost.
• It gives flexibility to recover the fixed cost
depending on the market condition.

2. Demand Based Pricing
a) Skimming Pricing
• Initially the products will be introduced in
a high price and subsequently settle down
for a lower price.
Example: Mobile Phones, Televisions etc…
Most of the electronic items

b) Penetration Pricing
• Initially introduced at a lower price and
increases its price as its demand in the
market increases.
• Good to capture new market
• Opposite of Skimming.
• Keep the product out of competition for
longer time.
Example: DTH Services, Magazines, TV
Channels etc…

3. Competition Oriented Pricing
• It need not mean that pricing the
commodity matching its competitors, it can
also be the following:
- Premium Pricing
- Discounted Pricing
- Parity Pricing/going rate pricing

4. Product line Pricing
• The products in given product line are
related to each other.
• The manufacturing cost of these products
also will not be much different.
• It is mainly indented to get optimum profit
from the line
Example: Pulsar 150, 180, 200, 220

5. Tender Pricing
• Industrial products
• The customers go by competitive bidding
through sealed tenders.
• The sellers can only get the best possible
price.
• He should thoroughly analyze the
competitors.

6. Affordability based Pricing
• Essential commodities
• Social welfare pricing
• Items usually distributed through public
distribution system
• Subsidies may be involved
Example: Chick shampoo, Akash, medicine
etc..

7. Differentiated pricing
• Different price for the same product in
different location.( SanDisk cruzer Pen-drive,
Petrol)
• The price difference may also be made in the
case of customer class.
• Volume of purchase. ( Offer packs Lux soap,
Colgate value packs etc)

8. Administrated Pricing
• Administrated pricing are there that are
statutorily determined by the government
Eg: Petroleum prices, Sugarcane prices, Prices
of fertilizers are fixed by the government
9. Flexible Pricing
• Under flexible pricing firms keep their prices
flexible to meet the challenges or change in
demand
Eg: Agriculture products

10. Rigid Pricing
• Rigid pricing suggest that firms should
follow a stable pricing policy irrespective of
the phase of the economic cycle.
Eg: Consumer would not eat less if there is
recession nor would they eat if their income
rises

11. Perceived value pricing/ Psychological
Pricing
• According to perceived value pricing value
of goods for different consumers depends
upon their perception of utility to the good
Eg: Tanishq Jewellery, Titan Watches
12. Product Bundling/ Packaging
• Under Product bundling two or more
product are bundled together for a single
price
Eg: Hotels providing free breakfast as part of
room tariff

Retail Service Quality Management
What is a Service?
• A service is any act of performance that one
party can offer another that is essentially
intangible and does not result in the
ownership of anything.
• Customer Service is the set of activities &
Programs undertaken by retailers to make
the shopping experience more rewarding for
their customers.

Some of the Services provided at the Retail
Sector
1. Acceptance of Credit Cards
2. Alterations of Merchandise ( Eg: Dress Alter)
3. Credit Facilities
4. Child Care facilities
5. Home Delivery
6. Demonstrations
7. Trail Room
8. Parking

9. Extended Store Hours
10.Gift Wrapping
11.Special facilities for Handicapped Customers
12.Play area for Children( In Hotel)
13.Rest Rooms
14.Warranties
15.Repair Services
16.Return Privileges

Managing Service Quality
• Based upon this service-quality model,
researchers have identified the following
five determinants of service quality, in
order of importance:
1. Reliability: Availability of
Products/Brand , Accuracy of Billing
2. Responsiveness: Giving Prompt Attention
& Service
3. Assurance: Trust( Guarantees/Warranties)
4. Empathy: Personalized Service
5. Tangibility: Appearance of Store & Sales
People/Store Arrangement

Marketing of Services
Continuum of evaluation for different types of Products

GAP Model for Improving Retail Services
Quality
• When the customers expectations are greater
than their perceptions of the delivered
product or services , customers are
dissatisfied and feel that quality of retailer’s
service is poor .
• The retailers need to reduce the service gap.

1. Knowledge Gap
• If retailers do not have accurate
information on what customers need, it may
result in poor decisions
• Identify the gap between the customers
expectation
• Conducting Surveys
• Feedback about the service
• Interacting with customers
• Customers complaints
• Feed back from store employee

2. Standard Gap ( Setting Service Standard)
• Use the information collected In the
previous step, to set standards & develop
systems for delivering high quality service.
• Developing innovative solutions to solve
service problems
• Setting Service goals
• Measuring service performance

3. Delivery Gap ( Meeting & Exceeding service
Standards)
• Retailers must ensure that service
performance meets service standards or
exceeds the service goals
• Provide training
• Ensure that all employees how their jobs
contribute to customers satisfaction

4. Communication Gap ( Communicating the
service promise)
• Retailers generally raise the expectations of
their customers through advertising & other
forms of communication.
• If any of their communication channels
raise customer expectation to unrealistic
levels, the actual experience at the store will
disappoint customers

For Example
• Convenient Car Parking
• Extended Working Hours
• Appropriate merchandising
• Availability of Quality Products
• Fair Price
It is essential for every supermarket to
provide for customer service.

Merchandising and Category Management
Merchandising:
• Activities involved in acquiring particular
goods and/or services and making them
available at the places, times, and prices and
in the quantity that enable a retailer to reach
its goals.

Merchandising Decisions
1. Width and depth of assortment
2. Quality level
3. Brands to carry
4. Price levels

Merchandise Planning
1. Target market desires
2. Retailer’s institutional type
3. Market-place positioning
4. Defined value chain
5. Supplier capabilities
6. Costs
7. Competitors
8. Product trends

Variations on Merchandising
1. Micro merchandising: Retailer adjusts
shelf-space allocations to respond to
customer and other differences among
local markets
2. Cross merchandising: Retailers carry
complementary goods and services to
encourage shoppers to buy more

Category Management
• Category management is a process that
involves managing product categories as
business units and customizing them [on a
store by store basis] to satisfy customer
needs. (Nielsen)

Category management
• It is a retailing and purchasing concept in
which the range of products purchased by a
business organization or sold by a retailer is
broken down into discrete groups of similar
or related products;
• These groups are known as product
categories (examples of grocery categories
might be: tinned fish, washing detergent,
toothpastes).

1. Define the category (i.e. what products are
included/excluded).
2. Define the role of the category within the
retailer.
3. Assess the current performance.
4. Set objectives and targets for the category.
5. Devise an overall Strategy.
6. Devise specific tactics.
7. Implementation.
8. The eighth step is one of review which takes
us back to step 1.

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