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Market 1

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retail marketing

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Market 1

  1. 1. Overview • Retail strategy has several components in a process. • Begins with a “mission statement” • Markets are selected based on their attractiveness. • Profits are due to sustainable advantages.
  2. 2. Identifying Market Opportunities June 25, 2002
  3. 3. 1. Define the business mission 2. Conduct a situation audit: Market attractiveness analysis Competitor analysis Self-analysis 3. Identify strategic opportunities 5. Establish specific objectives and allocate resources 7. Evaluate performance and make adjustments 6. Develop a retail mix to implement strategy 4. Evaluate strategic alternatives Steps in the Strategic Retail Planning Process
  4. 4. Elements in Retail Strategy • Target Market – Customer Needs • Retail Format – Method for Satisfying Needs • Bases for Building Sustainable Competitive – Defending Position Against Competitors
  5. 5. Criteria For Selecting A Target Market • Attractiveness -- Large, Growing, Little Competition ===>Profitable • Consistent with Your Competitive Advantages • Actionability: Will respond as a segment to your format.
  6. 6. Mission Statement and the Household • “Generic markets” for retailers: • Products lie on a “goods and services” continuum: • Recognition that households have basic needs for products on this continuum.
  7. 7. Can You Develop a Sustainable Competitive Advantage by: • Eliminating a line of merchandise? • Offering the lowest prices? • Eliminating less profitable locations? • Increasing your level of advertising? • Discontinuing services?
  8. 8. Basis for Competitive Advantage Retail Firm •Low Cost •Large Size •Efficient Distribution, Operations • Unique Knowledge • Loyal Employees Sources of Capital Vendors, Suppliers Customers
  9. 9. Michael Porter’s “Five Forces” Models • Bargaining Power of Suppliers • Bargaining Power of Customers • Threat of Entry of New Firms • Threat of Substitutes • Rivalry of Competitors • “Attractiveness” is associated with profitability, not ease of entry.
  10. 10. Bargaining Power of Suppliers • Few, powerful suppliers • Several, highly competitive suppliers
  11. 11. Threat of Entry • Markets that are difficult—high barriers to entry—remain less competitive, and remain “attractive.” • Geographic markets can become over- stored due to low barriers to entry, leading to “unattractive” price competition.
  12. 12. Competitive Rivalry • Price competition • Nonprice competition
  13. 13. Threat of Substitutes • What is the basic household need? • How do the service output levels affect substitutability? • How does decreasing services provided affect competition?
  14. 14. Sources of Competitive Advantage More Sustainable • Location • Customer Loyalty • Low Cost Supply Chain Management • Information Systems • Exclusive Merchandise • Buying Power • Customer Service • Committed Employees Less Sustainable • Better Computers • More Employees • More Merchandise • Greater Assortments • Lower Prices • More Advertising • More Promotions • Cleaner Stores
  15. 15. Sustainability of Retailing Functions: • Managing effective breadth and depth of assortment. • Minimizing assortment to minimize stock-outs. • Information through experienced sales people. • Economies of the chain. • Extending credit. • Aligning with specific vendors for exclusive displays. • Using web-pages and point-of- purchase displays to provide customer information. • Providing services that cannot be easily provided without spatial convenience. • Providing convenience through large-store, one-stop shopping experience.
  16. 16. Approaches for Building Customer Loyalty • Unique Positioning • Customer Service • Information About Customers (Database Retailing) • Unique Merchandise • Location
  17. 17. Vendor Relationships • Low Cost - Efficiency Through Coordination – Electronic Data Interchange (EDI) – Functions Performed By Most Efficient Party • Exclusivity • Difficult to view this as a long-term sustainable advantage without guaranteeing vendor’s commitment.
  18. 18. Challenges to High Quality Customer Service • Difficult to achieve • People are not machines -- Inconsistent • Retail sales associates at bottom of labor pool • Organizational culture is difficult to maintain with system growth. • Shoppers are showing that they are willing to accept less customer service in the shopping process.
  19. 19. Regulatory Environment • Sales taxes on all retail e-commerce • Regulation of distribution • Maximum resale price maintenance • Enforcement of Robinson-Patman Act • Third-party payers, such as insurance and government entities. • Restrictions on store size

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