Chapter 4
Retail Marketing Mix
The various communication devices are used to educate, inform and
generate awareness about the merchandise and the services offered by
the retailer. These efforts also aim at building store image. The most
common modes used for promotion are advertising, sales promotion,
personal selling, public relations and publicity.
Retailers usually employ a combination of various elements of
promotion mix to achieve promotional and business objectives. The
degree and the nature of usage of each of the promotion methods
depend on the objectives of the retail firm, product, market profile and
availability of resources. Small retailers generally depend on point-of-
purchase material provided by the companies which provide the
merchandise.
Promotion mix employed by the retailers should be compatible with the
desired store image, provide scope for modification if need arises and fit
within the budget allocation. Therefore, various retail promotion
methods can be compared on the basis of degree of control, flexibility,
credibility and cost associated with them.
The four important types of retail marketing mix are
discussed below:
1. The ‘Product’ Mix:
Every organization has a product mix that is made up of product lines.
The variety of products that a company produces, or that a retailer
stocks is known as ‘product line’. It is a broad group of products,
intended for similar uses and having similar characteristics. The product
mix is the set of all the products offered for sale by a company.
It refers to the length (the number of products in the product line),
breadth (the number of product lines that a company offers), depth (the
different varieties of product in the product line), and consistency (the
relationship between products in their final destination) of product
lines. Product mix is sometimes called ‘product assortment’.
The basic components of product mix are:
(i) Services
(ii) Packaging
(iii) Brand
(iv) Product Item and
(v) Product line
The various product mix strategies are:
(i) Launching new products from time to time
(ii) Alteration of Existing Products
(iii) Eliminate an entire line or reduce assortment within it
(iv) Trading Up
(v) Trading Down
(vi) Product life cycle management
The retail product mix is device so as to develop an appropriate
promotion strategy for the store depending on the target market to be
reached. Once the target market is identified and positioning strategy
defined, the retailers employ various tools of product mix to reach out to
consumers. These efforts also aim at building store image.
2. The ‘Price’ Mix:
Price has always been one of the most important variables in retail
buying decision. It is the factor which makes or mars a retail
organization. It is also the easiest and quickest element to change.
Pricing helps an organization to achieve its objective. This is particularly
significant for new market entrants who need to first establish a brand
and then enjoy increasing profits as the brand gets market acceptability.
For a customer, price is the main reason to visit a particular store.
A pricing strategy must be consistent over a period of time and consider
retailer’s overall positioning, profits, sales and appropriate rate of return
on investment. Lowest price does not necessarily neet be the best price,
but the lowest responsible price is the best right price. The difference
between price and cost is the profit, which can be very high when the
salesperson wants to exploit an urgent situation.
The components of price mix are:
(i) Organizational objectives
(ii) Competition
(iii) Cost and profit
(iv) Credit terms
(v) Discount etc.
(vi) Fixed and variable costs
(vii) Pricing options
(viii) Pricing policies
(ix) Proposed positioning strategies
(x) Target group and willingness to pay
3. The ‘Place’ Mix:
The retailer should keep in mind the fact that his ‘product’ should be
available near the place of consumption so that the consumers can easily
buy it. If the brand preferred by the consumer is not easily available at a
convenient location, he may buy some other brand in the same product
category.
Hence, the retailer has to ensure that the product is available to the
target consumers whenever required. There are two major components
of place: marketing channels and physical distribution (logistics
management). Channel decisions affect considerably the elements of
marketing mix and involve a long term commitment of resources.
Following are the components of a retail price mix:
(i) Distribution channels
(ii) Intermediary
(iii) Distance Factor
(iv) Inventory Level
(v) Transportation
(vi) Warehousing and Storage
4. The ‘Promotion’ Mix:
After deciding upon the budget, retailer should determine the
appropriate promotional mix – a combination of advertising, public
relations, personal selling and sales promotion. Small retailers having
limited funds may use store displays, hoardings, direct mail, flyers and
publicity methods to attract customer traffic, while on the other hand,
retailers having no bar on finance, may use print or television media for
their sales promotion activities.
Definition of 'Product'
Definition: A product is the item offered for sale. A product can be a service or
an item. It can be physical or in virtual or cyber form. Every product is made at a
cost and each is sold at a price. The price that can be charged depends on the
market, the quality, the marketing and the segment that is targeted. Each product
has a useful life after which it needs replacement, and a life cycle after which it
has to be re-invented. In FMCG parlance, a brand can be revamped, re-launched
or extended to make it more relevant to the segment and times, often keeping
the product almost the same.
Description: A product needs to be relevant: the users must have an immediate
use for it. A product needs to be functionally able to do what it is supposed to,
and do it with a good quality.
A product needs to be communicated: Users and potential users must know why
they need to use it, what benefits they can derive from it, and what it does
difference it does to their lives. Advertising and 'brand building' best do this.
A product needs a name: a name that people remember and relate to. A product
with a name becomes a brand. It helps it stand out from the clutter of products
and names.
A product should be adaptable: with trends, time and change in segments, the
product should lend itself to adaptation to make it more relevant and maintain its
revenue stream.
