Merchandising in Retail Marketing. MBA Marketing study material.

From at the beginning of choosing specific products to sell, buying it in wholesale till the end of the process by resale it to the end users and make a profit is a model of merchandising in the retail marketing environment.  Merchandising is a common practice of every set of business where products are displaying and selling to the end users. To influence the consumers and increase the sales volume is the main function of merchandising, whether it’s digital or in-store.

Merchandising:

“It is a process of offering a right product, with a right quantity, in right place, at right time to the right person to meet the organization’s financial goal”

Merchandiser:

“A person whether a wholesaler or a retailer, who buy the products or goods from the several sources for resale to the end users to make a profit is called as a merchandiser”.

Merchandiser always bond to a higher standard of duty of care as he supposed to have expert knowledge about products he engaged in.

Role of Merchandiser:

A merchandiser typically responsible for-

Planning and Forecasting:

Selecting a product category and Forecasting the budget and sales in the selected area.

Leading and Sourcing:

Leading and guiding the team and searching for various appropriate sources to purchase the products. Making a purchase order with suppliers.

Maintaining budget:

Making sure about the cost of products and budget planned. Work on the cost of the products

Co-ordinating and Controlling:

Co-ordinating with the suppliers about the shipment and controlling the stock or inventory purchase.

Evaluating Sales:

Analysing the performance of product and process and evaluating sales and profit margin.

Retail Merchandising Management Process:

·         Analysis:

It is vital to understand the needs or wants of consumers to the retailer. A retailer needs to identify and analyze target audience before pitching the products.

·         Planning:

Planning involves the process of selecting the right product, from the right supplier and sells it at the right price, in right place and at right time and quantity.

·         Acquisition:

Retailers need to take a lead to purchase the selected products in the estimated budget by appropriate suppliers. Retailers can purchase the goods from one or more than one suppliers.

·         Pricing:

In this step, retailers need to make a decision on the pricing structure of the products which are going to sell. It’s important making sure about the profit margin considered while making a price structure.

·         Handling and Control:

Maintaining a stock of goods is very important and costly process for every retailer. This is a process of spending money on maintaining a stock of goods at right time and in a right condition.

As we can see in this post, merchandising is a routine activity of every retailer. In retail, no one can avoid the merchandising.

What is Trade Area Analysis in Retail Marketing. MBA Marketing study material.

Location is one of a very important factor in retail marketing strategies. Consequently, analysis of trade area for retail store allied with distinct planning with complex processes. Trade area analysis is a study of the contiguous geographic area to measure the key statistics affecting the store performance. The aim of this post is to demonstrate the concept and process of trade area analysis in retail marketing. 

The concept: Trade Area Analysis

Trade area analysis is a method, technique or study to provide an understanding and visualizing the approximate extent and scope of a geographic area for trading. This analysis also helps to make available the information like store backing, local market opportunities, competitive data, and barriers that would discourage consumers from visiting the site.

A trade area may include a city, district, state, country or even beyond the country for international retail business strategies.A figure below indicates the layers of trade areas:

·         Primary area: Highest store customer’s density (approx. 60-80%)

·         Secondary area: Medium store customer’s density (approx. 10-20%)

·         Territory area: Lowest store customer’s density (remaining)

Approaches to Trade Area Analysis:

1.      GIS Mapping Software:

Geographic Information System (GIS) is a digital mapping software which provides a geographical data with mapping techniques to select the trade location accurately.  It combines the mapping with data for key locations to the graphical view including demographic factors of population, data on customer purchase and competitor’s data. Currently, there is more such software are available in the market.

2.      Radial Analysis:

Radial or ring-based analysis is the easiest method of trade area analysis in retail. This analysis assumes that the trade area is round or a ring and store are located in the center of this ring. It is executed by calculating demographic variables that fall in the selected circular area from the store.

Above image of the radial, the analysis indicates the store located at the center of the ring. Dots are the demographic sites. Red dots are fallen within 5 miles of radius.

3.      Gravity Model:

A gravity model of trade was firstly presented by Jan Tinbergen in 1962. It is based on bilateral trade flows between two different geographical distances can be measured by applying Newton’s gravity equation. This model suggests that two relative economic distances attract each other to trade. Below is the equation of gravity model:

1^st Area population * 2^nd Area population / Distance between Area

4.      Drive Time Analysis:

This is GIS-based analysis to indicate that how many people live within 30 minutes of drive time from a store? It also helps to calculate the overlap between the distances measured in time from the store. It is most recent trending and used software to analyze trade area. It is a study of the road network which combines the advanced digital GIS modeling technology to gives an accurate data.

Above image of drive time analysis showing areas that can be reached within 5, 10 and 15-minute drive times from the selected store location.

Store Location and Layout in Retail Marketing. MBA Marketing study material

Designing a retail store location and layout is a process of using store place in a premeditated and tactical way to influencing the customers and boost the sales margin. Store location and layout designing are directly affected by consumer’s buying behavior. The escalation in footfall into the store place mostly depends upon the interior, layout, location of the store. This post gives a wide-ranging overview of store location and layout in retail marketing.  

Types of Retail Store Location:

1.      Mall Space:

Malls consist big center in which many brands and retailers are competing with each other under one roof as discuss in types of retailers. There are a variety of stores and shops format in mall space. Leasing amount in the mall is much bigger as compared to other locations.

2.      Shopping Centres:

These are the strip malls, commercial building with retail shops or shopping complex where there is a range of retail shops exist. Leasing contract with shopping centers indulgent than a mall. There are minimum 3 units up to 20 shops in one building with limited parking area.

3.      Downtown Area:

Downtown is a core area which is located in heart of the city. Getting a store on lease basis is much easier with fewer rules. The store may locate in a commercial building or strip shops. It’s a premium choice of store location in this kind of area but limited parking space is a big issue for this.

4.      Free Standing Locations:

Free standing location is any area or single detached building or residence which can be used for business operations. This can be located in the neighborhood, any busy highways or residential areas. This is beneficial in terms of leasing amount with free from rules.

5.      Home-Based:

Initially, all the businesses get a kick from home itself, but some of the businesses are taking a decision to continue with it in the home itself. This location is inexpensive and reliable but a challenge is to attract customers in this kind of locations.

Types of Retail Store Layout:

1.      Straight Layout: Ideal use of walls and create a free space to move freely :

2.      Diagonal Layout: Crosswise arrangement of racks:

3.      Angular Layout: Curve shape arrangements with a sophisticated design:

4.      Geometric Layout: Trendy design with symmetric arrangements with racks.

5.      Mixed Layout: Mixture of Diagonal, geometric and angular layout space:

Retail Marketing Segmentation. MBA Marketing Study Material.

Segmentation is one of a very dynamic and expedient tool for marketing. This post is an effort to clarify what is a segmentation and how the segmentation is beneficial for retail business practices to gain competitive advantage.

What is Market Segmentation?

Market Segmentation is a dissemination of total market into small groups according to some communal features to approach a target market for potential customers. The aim of segmentation is to identify a group with an uppermost probability buy products or services and organization can direct all marketing efforts to that group.

Retailers can be relish by adopting the market segmentation process in their business to attract customers and sustain them for a longer period of time.

Segmentation Process in retail Marketing:

Below figure can make you clear about the overall process of market segmentation.

Parameters of Retail Market Segmentation:

1.      Geographic Segmentation:

Dividing a market into a subgroup according to geographic place is called as a geographic segmentation. This segmentation can be done with the location of city, country or region, a climate of location, size of the population or through the density of area market can be divided into urban, suburban, rural etc.

2.      Demographic Segmentation:

Demographic segmentation consists the process of dividing a market into sub-segments according to age, gender, religion, language, income, marital status, education, occupation, employment or culture etc.

3.      Psychographic Segmentation:

In this type of segmentation, a market can be divided into a subgroup according to the psychology of customers. Subgrouping can be done in this segment through analyzing interest, hobbies, lifestyle, values, and ethics, learning involvement, perception, and attitude of people.

4.      Behavioral Segmentation:

In behavioral segmentation, retailers need to analyze the curiosity and behavior of people while purchasing a product or services by segmenting a market into a subcategory. A market can be categorized by frequency of purchase, user status or user rate etc. It can be divided into a subgroup of loyalty status or awareness about product or service etc.

Above are the common parameters of segmentation which can help to focus on marketing efforts.

Types of Retailers. MBA Marketing Study Material

Retailer or the retail store is a business enterprise where the product or service is placed to sell it to the end users for their personal use. There is a range of different ownership structures of retailing. Let’s have a look one by one:

1.      Department Store:

Department store is a big organization with complex offerings of a wide range of products. It can be one company who is managing collective small retail stores. In this type of store, retailers are offering a various range of pricing. It offers a deep assortment of product where customers can get almost all the products under one roof.

2.      Speciality Store:

As name stats itself, these stores are focused on only one product line with a deep assortment. Specialty retailers are selling a specific category of products. In this type of store, retailers are offering customer expert knowledge and high level of services with value-added services like selling related products in the same outlet.  

3.      Supermarket:

Usually, Supermarkets are the self-service store that offers a range of food and beverage products as well as household items. In the supermarket, products are properly assorted and placed in a specific manner for customer’s convenience. It is an advanced form of a grocery store. The aim of supermarkets is to offer the variety of items with low margin and with high volume sales.

4.      Discount Store:

Discount Stores are self-service outlets with a range of products which offers low price or a huge discount on buying. Generally, discount retailer’s resale the end of the line and returned goods at discounted prices. Discount retailers are engaged in both hard and soft goods but with limited options and variety.

5.      Warehouse Store:

Warehouse stores are large or medium stores in which goods are stocked and packaged in large quantity and sell it at lower than competitive prices.

6.      Convenience Store:

These are the self-service stores usually located near to the residential area for customer’s convenience offering a narrow variety of products which fulfill daily essentials of people such as grocery, food, medicines etc. Convenience stores are open for long hours of time.

7.      E-Tailer:

E-commerce businesses specially engaged in retailing are called as E-tailer. E-tailers are the retailers who sell their products on online shopping websites through the internet. These type of retailers are providing a home delivery of product to the customer.

8.      Chain Store or Franchises:

Franchise or chain store is a retail business model where a retailer buys an ownership of a big brand with its rights to sell its product in the local area.  Chain store brings together local ownership. The aim of this type of store to expand the business of one particular brand and to aware the people about the organization that they can conveniently purchase the product in the local market.

9.      Malls and Shopping Store:

This is a modern concept of retailing where all the retail brands get together to sell their products under one roof of large center. This concept is getting very popular because of its deep assortment and variety of products at one place. Malls may include supermarkets and hypermarkets and specialty stores as well.

The above types of retailers or retail stores can be customized according to the circumstances to meet the demand of customers.  

Product Retailing Vs. Service Retailing. MBA Marketing Study Material.

Service section in every economy is as important as a product since it’s been proved that public spent 50% of its earning for all personal use of service. This post describes the differences between product retailing and service retailing.

Product Retailing	Service Retailing
Products are tangible in nature, consequently, overriding factors in product retailing which define the success of product are cost and quality of a product.	Services are intangible in nature, hence factors that overriding in service retailing which describe the success of service are timeliness, behavior and knowledge of service delivery professionals.
As products are physically available the relationship between retailers and customers can be developed by the frequency of consumer’s visit to the outlet or website in case of online business.	In case of service retailing, services are not physically available and cannot be touched and so the relationship between retailers and customers can be developed by only start buying it at least once.
In product retailing, it can be sorted, arranged and organized well.	In service retailing, services are intangible in nature and so cannot be sorted.
Standardization is an important factor which can be maintained in product retailing through a consistency in the production method.	In case of service retailing, standardization cannot be maintained due to the involvement of human being as service delivery professionals.
Transfer of ownership is possible in case of product retailing. Once the product gets purchased by consumers the ownership of the product is transferred automatically from the retailer to the consumer.	Transfer of ownership is not possible in case of service retailing. Consumers are the end users of service hence the ownership will remain with service provider only.
Products are not perishable and can be stored for future use. In product retailing, production is the first process where a product can be invented before storing it.	Services are perishable and cannot be stored for further use. Production and consumption is a simultaneous process in service retailing. Therefore it’s difficult in this case to balance supply and demand in same time.
In a product retailing, customers or the end users are not necessarily present at the time of a transaction.	Here at service section, customers or end users must be physically present at the time of service delivery transaction.

What is Retail Marketing? MBA Marketing study Material.

The concept of retail shops transformed over the period of time from small booths and roadside sellers to the big modish shopping malls of the modern age. This post gives you a complete detail about what is retail marketing? Before going to the retail marketing, first, let’s have a look at the meaning “Retail”.

What is Retail?

Retailing embraces business activities of selling a product or service to the consumers for their personal, family and household use.  Purpose of retail is the sale of the product to final consumers. Retailers are always performed as an intermediate between manufacturer and consumers. Retailers accumulate the variety of products from different sources and sell it in small quantity to the consumers. In many industries, manufacturers have modified their products with the help of retailer’s reviews and feedbacks. Further, Retail environments factors can be alienated into:

• The macro environment includes following state and local laws that confirm business activities are fair and do not take advantage of the consumers through unrealistic pricing, wrong advertising, and disingenuous promotions.
• The micro environment involves considering customers and competitors as a whole.

What is Retail Marketing?

Retail marketing comprises the range of marketing activities undertaking by retailers to influence the consumers or the end users to buy the product or service for their personal use. Retail marketing aims to increase the awareness and interest of product or service which can influence the people to buy it for their use. It simply the promotion of products or services in the market to in an effort of generating sale from end users. There are many different strategies to approach the consumers like advertising, PR etc.

Retail Marketing Mix: 4 P’s of Retail Marketing.

Approaching a right marketing mix can lead to the profitable growth and higher returns on investment. Below, you will find 4 P’s of retail marketing:

1.      Product:

In retail marketing, product decision includes deciding what goods or services should be offered for sale to a particular set of consumers. Selection of product category is very important in product mix. The categories involve durable goods such as appliances, furniture, electronic goods and sports equipment and food, soft goods or consumables such as clothing, furnishings, cosmetics, paper goods and other items with a typical lifespan of a year or less. Product mix involves each decision which varies from product choice.

2.      Price:

Price mix in retail marketing involves a set of decisions taking by retailers for their product aims to reach up to the profit margin. Pricing decisions can be taken by considering policies such as everyday low pricing, high-low pricing, competitive pricing, psychological pricing etc. In retail marketing, a price can be decided by considering the cost of the product plus transportation, apart from these costs all other costs are negligible.

3.      Place:

The place is a key element of retail marketing mix. Where to sell a product or service? An answer to this question decides the location of the business. In retailer’s point of view, location or place is very important element because these decisions concerning the distribution channels to be used and their management, the locations of outlets, methods of transportation and inventory levels to be held. The aim is to certify that products and services are available in the proper quantities, at the right time and place.

4.      Promotion:

Increase the sales volume of a product through influencing customers to buy it is the main objective of promotion mix in retail marketing. To promote the product, retailers have to obtain various strategies such as print advertisements, television advertisement, internet marketing, outdoor billboards, radio, Magazine advertisements, PR campaigns etc.  Promotion mix can be influenced by factors such as the competitive retail environment, the profit margin on sales and the budget available for promotion purposes.

These are the fundamental retail marketing mix in every retailing business.