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Retail Marketing Quix & van der Kind 1st Edition English Summary
Summary book all chapters excluding 21 (physical distribution) Retail Marketing by Frank Quix and Rob van der Kind 1st Edition English ISBN 978-90-01-80792-4
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1Giulia Nicolai
Retail Marketing Summary
Frank Quix & Rob van der Kind
First edition – English
Part 1: Description of the Industry
1. Retail Marketing
2. Goods Retail: The Classification Criteria
3. The Retail in International Perspective
4. Trends in Retail Towards 2020
Part 2: The Market Strategic Process in Retail
5. The Strategic Process in Retail
6. A Closer Look at the Strategic Process in Retail
7. Dynamics of Retail
Part 3: External Analysis
8. Environmental Exploration
9. Competitor Analysis
Part 4: Internal Analysis
10. The Sales Concept in the Commercial Retail Function
11. Sales from the Perspective of the Establishment
12. Sales from Product Groups
13. Profitability
Part 5: Translation from Analysis to Strategy
14. From SWOT to Marketing Mix
15. Public or Target Group
16. Product or Product Range
17. Location of the Establishment
18. Price
19. Promotion
Part 6: Internal Marketing Mix
20. Personnel
21. Physical Distribution
22. Presentation
Part 7: Control
23. Control of the Implementation
24. Control Instruments
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Giulia Nicolai
Chapter 1 – Retail Marketing
1.1 The concept of Retailing
Retailing is defined as all business management activities that focus on direct sales of goods and
services to consumers, provided that the goods as services are paid out of the net income of the
consumers. Direct marketing deliveries directly to the consumer. Companies that use brokering to
deliver products fit under trade marketing (e.g. Unilever).
Retail expenditures can be divided into (1) expenditures on services, such as insurance, medical
services, leisure trips and (2) expenditure on goods. The goods sector often only sell to individuals,
whilst the service sector also supplies to businesses. Goods retailers are more and more often now
including service packages in their product ranges.
1.2 Retail
Retail is that part of the total economic activity that deals with the scale of goods
directly to consumers. Retail is located at the end of the business chain, so it is the
final link in the process of supplying goods to the consumers. Intermediate
environment in the business chain is formed by customers and suppliers (e.g.
manufacturers). Wholesale dealers, more common in the past, solve imbalances
between large manufacturers and small storekeepers. The problem with the
business chain is that the supply process is very product specific.
The old function of retail was “the redistributing the flow of goods from
manufacturer to the consumer by time, location and quantity”. Redistribution was
necessary in the past because of the industrial revolution and mass production.
Redistribution in time involves the stock function of retail: bridging the period
between completion of the production by the manufacturer and the date of
purchase by the consumer, often caused by the occurrence of irregularities between
demand and production.
Redistribution to location involves the geographical function: the place of
production is rarely the same as the place of consumption. The goods must therefore
be delivered to the final place of demand.
Redistribution in quantity involves solving the differences between output qualities
with manufacturer and input qualities with consumer. Output quantity of
manufacturer should be divided into numbers of smaller quantities.
1.3 Changing function of retail
In the past, retail was considered to be a goods production process (industrial approach to
distribution). Also, retail consisted mostly of product specialty stores, small specialized stores.
Nowadays, power has shifted from retail suppliers to retail consumers. The transition from seller’s
market to buyer’s market caused an oversupply, so consumer determines what, when and where to
buy. This reflects to general shift from an industrial economy to a service economy.
The function of retail has changed from “redistributors in time, location and quality of a product
range” to “supplier/maker of the consumer-based demand related product ranges in an appropriate
supply environment”.
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The element with which the retailer responds to the consumer needs is called the marketing mix. It
leads to a supply formula that follows the consumer needs: a consistent and weighed composition of
the marketing mix elements, leading to a recognizable and logical proposition for the target group.
1.4 Consequences of the changing function of retail
Retail becomes more difficult as to be successful you now need knowledge of the consumer needs,
insights into trends, knowledge of purchasing methods, knowledge of methods to communicate with
the consumers and sometimes knowledge of developing your own production lines.
Old chain
E.G. New Business Chain, Do It Yourself (DIY) Industry: In the past if you
wanted to DIY you had to go to different stores to buy individual pieces,
wait for assistance and pay separately. It was a time consuming and
expensive process. There was usually a brokerage, where the wholesale
dealer also worked as a distributor. In the new business chain, retail is
tailored to the consumer’s needs. The supply of products is usually is in the
hands of manufacturers from various business chains; so, the retailer’s
New chain
task is to combine products from the same business chain to arise a
demand related product range.
No longer about selling products that are in the market but also about
providing products that a client demands, if needed by developing and
producing own retail brands, known as private labels. Wholesale dealers
function now is to presort for the demand-related retail product ranges, a collecting function rather
than a distribution function. Franchisor (collecting wholesale) is a retail supplier that is not restricted
to supplying a product range but also takes over other components of the marketing mix such as
promotion, store layout etc.
Function changes explained in two extremes, (1) manufactures that take over
parts of the retail function through forward integration, (2) and retailers that
take over parts of the wholesale designers, or manufacturers who function
through backwards integration.
1.5 Position of retail in economic theory
Retail arise when the costs of newly added link (retail) are less than the
economics of scale of the industrial mass products. Emergence of retail, as
separate in the business chain, can be linked back to the economic
transaction cost theory: due to the shift of power from manufacturer to
consumer it is no longer about minimizing the cost within the business chain
from the view of the manufacturer, but to minimize the find or search
problems of the consumer. Search costs of consumer consist of (1) the hassle
T1 > T2 + T3
of buying products (relocation, price, finding), and (2) the pleasure derived
T = costs involved in the direct distribution
from shopping. Consumer will find a shop balancing costs and benefits. Retail from the manufacturer to the consumer.
only arises if transaction costs from manufacturer to consumer are higher T2 = costs involved in the supply from the
manufacturer to the retailer
than from manufacturer to retailer to consumer. T3 = costs involved in the supply from the
retailer to the consumer
With the internet is has become much cheaper for manufacturers to supply
directly to consumers. However, some manufacturers still want a retail network as, today, a large
part of products can be sold via traditional channels, where retail is needed. In some sectors (books,
music, travel), the need for retailers is diminishing.
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Online retail within the transactional cost theory
T1<T2+T3
Upper right – the threatened established retail (bricks and
Direct Threatened
mortar): With the internet, transaction costs benefit e-
marketing retail
opportunities tailers. Most threatening for retailers as instore sales
decrease.
New economy Upper left – strengthening direct marketers: Internet didn’t
Pure players Opportunities
change benefit of transaction costs to direct marketers.
for retail
Relative position and technical possibilities of direct
marketers will become stronger thanks to the internet.
T1>T2+T3
T1<T2+T3 Old economy T1>T2+T3
Lower left – the area of the pure players (clicks and order): New opportunities for retail distribution
systems that offer goods via the internet, to fine tune supply and demand respectively. Cyber
mediairs or pure player aka Amazon, Zalando etc.
Lower right – multichannel or cross channel providers (clicks and bricks): Hybrid companies that start
up an internet sales channel from the established retail or pure players who build fixed retail from
an existing internet channel (Hema, Zara etc.).
Analysis of the developments based on the transaction costs matrix
- Established retail (upper right) in certain industries will suffer market share loss in favour of
internet providers.
- Not all pure players (lower left) are able to make sales profitably because of:
o Market expenses: due to unfamiliarity of consumer, it takes time, effort and money
to attract visitors to internet sites. Often, ‘pre-order’ marketing costs exceed margin
that is earned on the order.
o Fulfilment costs: Often misjudge external operations (home delivery etc.).
Improvements possible by minimizing inventory.
- Multichannel, providers or cross-channel providers are winning. Key performance
indicators appear more favorable than those of pure players.
1.6 Marketing and retail marketing
The marketing concept
Marketing is the part of the business process that deals with the marketing or sale of products.
Different definitions depart from different angels. Kuhlmeijer’s fits with the old business chain
(marketing as goods producing process) while Kotler’s definition fits with the new business chain
(marketing as demand satisfying process). Similarities are that marketing is equated to the process
control of the flow of goods from the manufacturer to the consumer and no specific function is
assigned to retail in production process.
The supposed passivity of retailers in process control is no longer consistent with reality. Retail has
taken control of the chain. The new definition (Institute for Marketing Studies) of marketing is:
“Marketing is the management process responsible for identifying, anticipating and satisfying
customer requirements profitably”. Here marketing is regarded as a management process and no
longer flow of goods process, so involves production process. It is also possible for the location of
marketing in the business chain to shift.
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Giulia Nicolai
Consumer marketing
Consumer marketing is all marketing efforts aimed at the satisfaction
of the final consumer. It is distinguishable between retail marketing
and trade marketing.
Characteristic Retail Marketing Trade Marketing
Supply chain Horizontal Vertical
Business process Demand driven Product driven
Target group Anonymous Known
Product range Wide/very wide Small
Demand characteristic Assortment driven Product driven
Place Consumer leading Costs leasing
Expansion Once-off Rearrangement
Price Surcharge calculation Cost price calculation
Promotion Store oriented Product oriented
Marketing mix 8 P’s 4 P’s
Purchase Primary activities Support activities
Time horizon Short term Long term
Marketing function Purchase Sale
Returns criteria Return on sales Return on investment
Supply chain: Manufacturer can only manufacture a limited product range, but a retailer needs more
expansive product range. They need various brands because you are trying to attract more than one
type of customer, so marketing of a retailer is horizontally focused (width), while marketing effort of
supplier is vertically oriented.
Business process: Retail is demand driven because in retail there is a relatively low investment
associated with changes in the product range, so it is easier to follow consumer demands.
Product and product range: For manufacturers of consumer products it is easy to define a product
line. In retail, the product supplied cannot be defined by as a single product. The customer-driven
product range is what gives retailers their added value for consumers (terms: product range
portfolio, product range control). Consumer preferences change over time causing a need for a
portfolio adjustment. Too much adjustment can be harmful to the store concept as products slip
though the range and remain unnoticed. Sorting per range is an important element in a retailers
marketing mix and is often incorporated in the purchase function. One should understand the retail
product as the store concept which refers to the balanced composition of marketing mix. A
beautifully composed product range can go wrong if the presentation principles are not completed,
the wrong store location is selected, an incorrect price level is set, or an incorrect advertisement
method is used.
Location: Retailers investments for opening a store are lower than for industrial businesses so they
can change location faster and rearrange. The location decision is based on sales maximization
rather than cost minimization. Retail itself is the outlet channel.
Marketing mix: trade marketers interpret L of location as the outlet channel, so the goods they sell
must then be sold again by retailers to consumers. In retail, the marketing mix consists of (1) the
external mix aimed at generating interest for the formula and, (2) the internal mix, aimed at
converting general interest into actual purchasing behavior. External focus on brand reputation and
image of formula (generating interest), consists of Public, Product, Location, Price and Promotion.
The internal mix focuses on effectiveness as a selling machine (generating a transaction), and
consists of Presentation, Physical Distribution, Personnel and Productivity.
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