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Summary Retail Strategy and Marketing (lectures, knowledge clips and book)
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This is a complete summary of the lectures, the knowledge clips and the Retailmarketing book by Frank Quix.
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Summary Retail Strategy and MarketingRetail = selling things directly to consumers. All activities by companies that focus on the direct
delivery of goods, services and information through all available channels to the consumer (end
user), where goods and services are paid out of the net income of the consumer. Retail is the last
step in the business/value chain as it redistributes products to the end user. Retailers buy
directly from manufacturer or from an wholesaler (extra intermediary).
Direct sales = goods and services are sold directly to the consumer without the intervention of an
intermediary e.g. AH / Amazon vs. Unilever
Retail expenditures on goods: goods that you can take home and goods that can be consumed
immediately (restaurants).
Retail expenditures on services: financial services, communication services, insurance, travel,
entertainment.
Manufacturers are more and more becoming retailers themselves.
Retailing = all business management activities that focus on the direct sales of goods and
services to consumers, provided that the goods and services are paid out of the net income of the
consumers.
Retail trade = that part of the total economic activity that deals with the sales of goods and
services directly to consumers.
Different forms of retail: online retail, market trade, door to door sales, house parties, vending
machines, e-commerce.
Traditional retail function: redistribution of goods from manufacturer to consumer, goods
producing process, products were pushed through business chain to customer, power was in
hands of the seller, manufacturer decided what was sold in store. Focused on the
distribution/reallocation of goods in terms of
- Time: retailers had stock function, bridge period between completion of production and
moment of purchase. Products were ‘waiting’ at retailer. Production and consumption do
not take place at the same moment.
- Place: place of production and consumption are not the same, distribution needed.
- Quantity: on one hand manufacturers produce large quantities due to cost efficiencies
and on other hand customers only want to buy some items, so retailers enable customers
to buy the quantities they want.
Change: retailers no longer only focused on distribution, but rather on meeting customer
demands / creating a customer needs assortment. From minimising costs within value chain to
minimising transaction costs for consumer.
Current retail function: retailers should create a demand related assortment. Customer decides
what they want to have, when they want to have it and through which customer touchpoints
(how). The customer is on top: demand satisfying process, demand pull, buyer’s market. Retailer
makes use of the marketing mix to satisfy customer needs.
Evolution in distribution almost everyone can become a retailer.
Evolution of value chain value web: network of connections in which the consumer is central
and in which everybody can sell to everybody. Easy to buy everywhere in the world.
Why does retail still exist? Retail can only exist as long as the (transaction) costs of distribution
via the retailer are lower than costs of direct distribution (also includes risk, for example of
keeping stock). T2 + T3 < T1
,Transaction cost matrix: transaction cost triangle (T1 < / > T2 + T3) in old economy and new
economy with internet.
- Bricks and mortar / Threatened intermediaries: in old economy transaction costs were
in favour of physical stores, in new economy transaction costs are in favour of e-retailers.
Threat to physical retailers, market share e-retail increases (also within the own
company when retailer has online and offline presence).
- Supplemented direct marketeers: old and new economy are in favour of direct
marketeers. These revenues were already not part of retail, so no threat for retail,
however position of direct marketeers can increase, therefore they can steal away
market share of physical retailers.
- Clicks and bricks / Supplemented intermediaries: hybrid / multichannel retailers.
- Clicks and order / Cybermediaries: before internet transaction costs were in favour of
direct marketeers, with internet transaction costs are in favour of retailers.
Opportunities for online retailers / pure players/cybermediaries. Pure players have
large revenue growth, however they have a hard time being profitable, due to costs.
Pricing and costs in online retail
o Marketing costs: consumers are not familiar with new online players, takes a lot
of time, effort and money to attract customers to your website. Costs to generate
traffic.
Content creation
CPC (cost per click) / CPM (cost per mile) / CPS (cost per sale)
o Fulfillment costs: costs for fulfilling the logistic transaction (delivery, returns,
stock).
o (Picking costs: )
Online margin is growing, operational margin is decreasing market is moving to expensive /
less profitable part of business.
Forward integration = manufacturer takes over (part of) the function of the retailer. e.g.
manufacturer opens own store.
Backwards integration = retailer takes over (part of) the function of the manufacturer. Move
back in the value chain. Retailers do not necessarily own production facilities, but they do
manage and direct the production process.
Better control over the supply chain
Cost benefits
Classification criteria retail: classifying retailers gives better view on what the market looks like.
- Statistical: classification by type of goods, non-food vs. food. Subsections within these
two categories.
- Online vs. offline channels: looks from which channels sales are coming from, e-tail vs.
retail. Traditional retailers created web shops as online presence was necessary and
online retailers opened stores to have interaction with customers.
Online retail
o Pure players = retailers with only an online presence. e.g. Wehkamp
o Omnichannel players = retailers with different customer touchpoints through
different channels. e.g. AH
- Size of the company:
o Chain stores = retailers with more than 100 employees.
o Small and medium enterprises = retailers that have between 10-100 employees.
, Chain stores have become more present than small and medium enterprises, they have
gained majority of market share.
- Legal form of cooperation/collaboration:
o Franchise organizations = license a store to private owners / entrepreneurs.
Independent entrepreneur (franchisee) joins a business system (franchisor).
Hard franchising = strict rules on every aspect of the marketing mix for
entering a central organization.
Soft franchising = freedom for the independent entrepreneur to do their
own thing.
o Buying organizations = independent retailers, often on cooperative basis, that try
to improve their conditions by bundling their forces in terms of purchase
volume. Buy more efficiently and cheaper in order to make own positioning
stronger.
- Operational: shows on what operational aspect a retailer is focused.
o Logistic oriented = companies with high turnover ratio (products are sold
quickly) and low profit margins (goes with relatively cheaper products). e.g.
Zeeman
o Sales oriented = companies focused on discounts and have a changing range of
products (what you will find in store can be a surprise). e.g. LIDL
o Buying oriented = companies with medium to low frequency purchases and
thematic advertisement, assortment doesn’t change that often. e.g. Tommy
Hilfiger
- Shopping behaviour: certain shopping behaviour shows certain characteristics within a
store.
o Hedonistic (fun shopping, all about the experience) vs. utilitarian (functional
shopping, spend as less time as possible, convenience)
o Daily vs. non-daily (buying durable consumer goods)
o Low vs. high level of involvement
Product groups based on involvement level and store size
Convenience goods = products that are bought in big stores, little
attention paid to the product, low involvement.
Preference goods = low level of involvement, little personal service, small
store.
Specialty goods = high level of involvement, purchase at small store
because of personal service.
Shopping goods = high level of involvement, large floor areas.
Marketing = management process responsible for identifying, anticipating and satisfying
customer requirements profitably. Meeting customer demand while earning money with it.
Consumer marketing = all marketing aspects that are focused on satisfying the needs of the end
user.
Internal marketing mix: presentation, personnel, physical distribution, productivity.
External marketing mix: product, public, place, promotion, price.
- Retail marketing = marketing communication is focused on final customer. Demand
driven, anonymous target group, wide assortment due to the consumer needs, place is
consumer leading (convenience for consumer), store oriented promotion, price is based
on a raise and the purchase price, 9 P’s in marketing mix (both internal and external),
marketing done by purchasing department.
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