Concept of Retailing:
Principles of Retailing Concept:
1. Customer orientation
The retailer determines the attributes and needs of its customers and endeavors to satisfy
these needs to the fullest.
It establishes and monitors standards of customer satisfaction and strives to meet the
clientele’s needs and expectations related to the product or service sold by the business.
Business strategies that tend to reflect a customer orientation might include: developing a
quality product appreciated by consumers; responding promptly and respectfully to consumer
complaints and queries, and dealing sensitively with community issues.
2. Coordinated effort
The retailer integrates all plans and activities to maximize efficiency. Today, retailers are
integrating their physical stores with e-commerce sites, a telephone sales channel, and an eBay
type solution to move out dead inventory items as rapidly as possible.
Some retailers are sophisticated enough to be emphasizing different merchandise in each
channel. The whole multi-channel system is generally tied together with a database that
captures customer information, manages inventory, identifies buying trends and facilitates
more effective merchandise management.
Need a solution to manage multi-channel retail operations?
3. Value-driven – Four unique management strategies
The retailer offers good value to customers, whether it be upscale or discount. This means
having prices appropriate for the level of products and customer service. Here are four
strategies you could try today to drive value:
3a. Hoshin Kanri
The Hoshin Kanri technique is often described as a target-means strategy. The Japanese word
‘hoshin’ means ‘shining metal pointing direction’; ‘kanri’ means management or control. It is
described as a system for translating an organization’s vision and objectives into actionable and
measurable strategies throughout the company. It is a process for focusing many resources on
a few high priority issues to achieve a breakthrough.
The greatest strength of this system is its ability to translate qualitative, executive goals into
quantitative, achievable actions. It has proven its usefulness in the implementation of concepts
like Total Quality Management (TQM) and Total Quality Environmental Management (TQEM).
It generally describes characteristics of the product or process as a function of the
characteristics of the organization that produces it. From the Hoshin Kanri perspective, the
success of the product or process development is directly linked to the ability of an organization
to put into practice its strategic goals.
3b. Kaizen
‘Kaizen’ is often translated in western literature as ongoing, continuous improvement. In
contrast to the traditional emphasis on revolutionary, innovative change on an occasional basis,
Kaizen advocates uninterrupted, ongoing incremental change.
Originally a Buddhist term, Kaizen comes from the words ‘Renew the heart and make it good’.
Adoption of the Kaizen concept requires changes in the ‘heart’ of a business’s corporate culture
and structure, since Kaizen requires companies to translate their corporate vision into every
aspect of a company’s operational practice.
Kaizen can be implemented in corporations by improving every aspect of a business process in a
step-by-step approach, while gradually developing employee skills through training and
increased involvement. The key areas in implementing Kaizen are:
Shop floor – GENBA
Product – GENBUTSU
The facts – GENJITSU
By pursuing improvements in the three ‘GENs’, a manager develops an eye for problems.
Gradual enhancements to the key operations – product development, manufacturing, service
and sales – multiply into greater success, sustainable competitiveness and good business
performance.
3c. Poka-Yoke
Poka-Yoke is the Japanese term for mistake-proofing. It is designed either to prevent an error
from happening or to make an error obvious at a glance.
Therefore, a product development process that respects Poka-Yoke logic aggressively seeks to
eliminate the possibility of errors and waste and to increase resource efficiency in the entire
product lifecycle.
3d. Multi-disciplinary optimization (MDO)
‘Multidisciplinary optimization’ (MDO) is an emerging discipline that relies on mathematics,
statistics, operations research and computer science. Objectives and environmental constraints
are stated in terms of mathematical equations, and the best solution obtained via a solution of
those equations.
There is a more qualitative version of the MDO method that uses the same algorithm. It is more
comprehensive than the quantitative method, since it includes all relevant components. On the
other hand, in this broader version of MDO, a number of components are not easily quantified.
The qualitative MDO must therefore include a degree of subjectivity.
MDO is a useful tool for product or process optimization. The equations can be defined so that
the objective is to maximize quality and resource efficiency and to minimize cost, and thus to
maximize value. However, it is important to identify and define all design parameters in order
to achieve the desired result.
4. Goal orientation
The retailer sets goals and then uses its strategy to attain them. Goal orientation is the degree
to which a person or organization focuses on tasks and the end results of those tasks.
Strong goal orientation advocates a focus on the ends that the tasks are made for instead of the
tasks themselves and how those ends will affect either the person or the entire company.
Studies have also used goal orientation to predict sales performance, goal setting, learning and
adaptive behaviors in training, and leadership.
Significance of retail industry
E-Tailors: An E-tailer is a person or company that sells products on the Internet.
A retail business that sells goods online over the Internet from a website.
Marketing concepts applied to retailing in the retail store:
1. Understanding and embracing the era of customer focus
marketing experts look across history in terms of eras. The present day has been
deemed the marketing era of customer focus. Compared to past eras centering on
product or advertising, it is particularly important that we are putting the customer first
in everything we do. In my company, we have recently made policy changes to reflect
this evolution, adopting a total customer service strategy in which we put the customer
first in any situation. As a store manager, whether I am interacting directly with a
customer, handling a complaint, training my staff or rearranging the product on my
sales floor, I do so with the purpose of creating the best possible experience for
customers.
2. Features vs. benefits
It is critical that any associate involved with sales understands the difference between a
feature and a benefit, and how to communicate both to customers effectively. A feature
is a physical attribute of the product (color, size, material, etc.) while a benefit is the
customer’s intangible gain from these aspects—literally, how the specific features work
together to benefit them. Everyone working the sales floor should be able to explain the
technical aspects of the product they are selling, but what really makes a successful sale
is the benefit: painting a picture for the customer of how much better her life will be
after purchasing this product. This is the turning point to transition a browser into a
buyer.
3. Positioning
while the actual positioning of a brand should occur at the corporate level, it’s
important that store associates understand the concept and how their brand is
positioned. This means knowing what space your brand is competing in—what are the
attributes your brand wants to be known for? Brand positions can range from high
quality, good value, convenience, low cost, etc. depending largely on the industry.
4. Points of Difference
Understanding where your brand lies on a perceptual map should also tell you who your
direct competitors are. A smart salesperson keeps tabs on the competition and uses
points of differentiation in her sales pitch to set her company’s product apart from
similar competitor products. Points of parity are attributes that are expected of all
products competing in a given product category, while points of difference represent
those features and benefits unique to a given product. It is expected that a shoe from a
high fashion brand will be stylish (point of parity); if said stylish shoe is also unusually
comfortable, durable, etc. this can set it ahead of the competition (point of difference).
Elaborating on standard, expected features of a product—points of parity—is a waste of
everyone’s time. Highlighting the product’s points of difference is imperative to a
successful sales pitch.
5. Purchase Process
what particularly fascinates me about marketing is the human behavior/psychological
aspect of it. Marketers spend a lot of time researching how the brain works and how to
affect human behavior, and a basic knowledge can work wonders in sales. A generic
consumer purchase process has been outlined (see graphic below) which can be applied
to any purchase decision; depending on the type of product, consumers may spend
more or less time on certain steps and some steps could be skipped all together.
Driving Forces for Retailing
Marketing retail equations:
One can look at the marketing – retail equation from two perspectives – one being that of a
manufacturer and the second from the point of view of the retailer. With the growth of
industrialization and urbanization, the distance between the manufacturer of a product and the
actual consumer has increased. In our world, many products are manufactured in one country
and sold to a market in another. Most producers no longer sell their products or services
directly to the consumer, but instead, use intermediaries to get their product to the final
consumer. The marketing channel design is largely based on the level of service desired by the
target consumer. Here, the retailer provides valuable inputs to the manufacturer on the
products and the consumers.
Some of the most common marketing channels are illustrated below:
Consumer- Retailer - Wholesaler -Manufacturer
Consumer- Retailer -Manufacturer
Consumer-Manufacturer
Manufacturers or suppliers that offer products for immediate consumptions are known as
direct manufacturers or suppliers e.g. Eureka Forbes, whose door-to-door salesman offer its
products directly to customers is an example of a company which offers its products directly to
the consumers. The Direct Mail order business companies are another example.
More traditional manufacturers or supplies are associated with delayed consumption e.g.
shown below. Companies, which deal primarily with immediate consumption, are known as
service providers, while those that deal with delayed consumption are retailers. An example of
a service provider under this definition would be a cinema, while a retailer in the same sector
would be a video shop.
The other perspective of looking at the marketing retail relationship is from that of the retail
industry itself. Every retailer needs marketing. The marketing efforts of a multi brand retailer
like Food World and Shopper’s Stop are different from those of an own brand retailer like
Westside. However, the basic principles of marketing are no different for a retailer than for any
other supply organization. What different is the immediacy of many retail marketing exchanges,
and the range of activities that can be undertaken by the retail marketer in order to achieve a
profitable exchange with a customer.