RETAIL MARKETING MIX

• The retail marketing mix

Marketing is an underlying philosophy that
guides business activities, but how does a
retailer do marketing? A retailer must engage
in planning, research and analysis before
implementing a marketing strategy. At the core
of any retail marketing plan is the mix
consisting of the four Ps (Product, Price, Place
and Promotion) of marketing.
 Retail Marketing Mix: The Four Ps of Retail
Marketing
• Retailers use various advertising and communication tools to grow
awareness and considerations with future customers. Finding the right
marketing mix can lead to a profitable growth and a higher return on
investment. By considering the right advertising strategy retailers can
persuade consumers to choose to do business with their retail brand.
The fundamental approach used my modern retailers in marketing
their products is the Four Ps of Retail Marketing.
• Product: There are two primary types of merchandise. Hard or
durable goods like appliances, electronics, and sporting equipment.
And soft goods like clothing, household items, cosmetics, and paper
products. Some retailers carry a range of hard and soft items like a
supermarket or a major retail chain while many smaller retailers only
carry one category of goods, like a boutique clothing store.
• Price: Pricing is a key element to any retail strategy. The retail price needs
to cover the cost of goods as well as additional overhead costs. There are four
primary pricing strategies used by retailers:
i. Everyday low pricing: The retailer operates in thin margins and attracts
customers interested in the lowest possible price. This strategy is used by
big box retailers like Wal- Mart and Target.
ii. High/low pricing: The retailer starts with a high price and later reduces the
price when the item’s popularity fades. This strategy is mainly used by small
to mid-sized retailers.
iii. Competitive pricing: The retailer bases the price on what their competition
is charging. This strategy is often used after the retailer has exhausted the
higher pricing strategy (high/low pricing).
iv. Psychological pricing: The retailer sets the price of items with odd numbers
that consumers perceive as being lower than they actually are. For example,
a list price of $1.95 is associated with spending $1 rather than $2 in the
customers mind. This strategy is also called pricing ending or charm
pricing.
• Place: The place is where the retailer conducts business
with its customers. The place can be a physical retail
location or a non-physical space like a catalog company or
an e-store. While most retailers are small, independently
owned operations (over 90%), over 50% of retail sales are
generated by major retailers often called “big box retailers”
(see the list of the top 20 big box retailers below).
• Promotion: Promotion is the final marketing mix
elements. Promotions include personal selling, advertising,
sales promotion, direct marketing, and publicity. A
promotional mix specifies how have a wide range of
objectives, including increasing sales, new product
acceptance, creation of brand equity, positioning,
competitive retaliations, or the creation of a corporate image
 Product
• Products are also termed as Merchandise. Product refers to the bundle of
tangible & intangible attributes that a seller offers to a buyer in return of a
particular predefined amount of payment in a particular mode. The different
products that the store offers are termed as the Merchandise Mix. Therefore the
Product Mix is the total variety of products a firm sells.

Product mix
• It is a combination of product lines within a company. A company like HUL has
a numerous products like shampoos, detergents, soaps etc. the combination of
all these products lines is the product mix.

Product lines
• It generally refers to a type of product within an organisation. As the
organisation can have a number of different types products, it will have similar
number of product lines. Thus, in Nestle, there are milk based products like
milkmaid, food products like Maggi, chocolate products like kitkat & other such
products lines.
Length of the product mix
• If a company has 4 product lines & 10 products within product lines than
the length of the product mix is 40. Thus, the total number of products
against the total number of product lines forms the length of the product
mix. This equation is also known as product line length.

Width of the product mix

• Where product line length refers to the total number of product lines & the
products within the product lines, the width of the products mix is equal to
number of products lines within a company. Thus, taking the above
example if there are four product lines within the company & ten products
within each product line then the product line is four only.

Depth of the product mix

• It is fairly easy to understand what depth of the product mix will mean where
length & width were a function of the number of product lines, the depth of
the product mix is the total number of products within a number line.
 DECISION RELATED TO SELECTION OF GOODS
(MERCHANDISE MANAGEMENT)
• Inventory & Merchandise manager is required to train, coach & direct customer service
associates in customers service, receiving processes, product merchandising & labeling
compliances, housekeeping & other tasks for efficient store operations.
• Merchandise plan should:
• Develop better merchandise assortment plans at Store. Increase store promotion profitability &
increase turns. Make better pricing decisions for improved margins.
• Determining cost & profitability of each category of product. Setting merchandise budgets &
plans considerations & methods.
• Definition & assessment of control techniques break even analysis, EOQ, re-order levels JIT,
cyclical provision, stock control procedures, rate of stock –turn, DPP. Appraisal of stock-
holdings methods & stock taking methods-analysis & control of stock loss.
• Principles of stock presentations- product positioning, management. Application of
information technology to merchandise management. Control & evaluation of branches,
departments-profitability.
• Assessment & Selection of suppliers merchandise & location. Evaluation & selection of
distribution channels; supply chain management; negotiations and considerations. Selection of
suppliers-methods & consideration. Selection of merchandise, determination of order
quantity-influences & considerations.
 Pricing
• Price must support the other elements of the marketing mix.
Pricing is difficult and must reflect supply and demand
relationship. Pricing a product too high or too low could mean
lost sales for the organisation.
Pricing Factors
• Pricing should take the following factors into account:
I. Fixed and variable costs
II. Competition
III. Company objectives
IV. Proposed positioning strategies
V. Target group and willingness to pay
• An organisation can adopt a number of pricing strategies, the
pricing strategy will usually be based on corporate objectives.
 Types Of Pricing Strategies
1.Penetration Pricing- Here the organization sets a low price to
increase sales and market share. Once market share has been
captured the firm may well then increase their price.
• Example - A television satellite company sets a low price to get
subscribers then increases the price as their customer base
increases.
2. Skimming Pricing- The organization sets an initial high price
and then slowly lowers the price to make the product available to
a wider market. The objective is to skim profits of the market
layer by layer.
• Example - A games console company reduces the price of their
console over 5 years, charging a premium at launch and lowest
price near the end of its life cycle
3. Competition Pricing -Setting a price in comparison with
competitors. In reality a firm has three options and these are to
price lower, price the same or price higher than competitors.
• Example- Some firms offer a price matching service to match
what their competitors are offering. Others will go further and
refund back to the customer more money than the difference
between their price and the competitor's price.
4. Product Line Pricing -Pricing different products within the
same product range at different price points.
• Example- An example would be a DVD manufacturer offering
different DVD recorders with different features at different
prices e.g. A HD and non HD version.. The greater the
features and the benefit obtained the greater the consumer will
pay. This form of price discrimination assists the company in
maximizing turnover and profits.
5. Bundle Pricing- The organization bundles a group of products at
a reduced price. Common methods are buy one and get one free
promotions or BOGOFs as they are now known. Within the UK
some firms are now moving into the realms of buy one get two
free can we call this BOGTF I wonder?
• Example- This strategy is very popular with supermarkets who
often offer BOGOF strategies.
6. Premium Pricing -The price is set high to indicate that the
product is "exclusive"
• Examples -products and services using this strategy include
Harrods, first class airline services, and Porsche.
7. Optional Pricing -The organization sells optional extras along
with the product to maximize its turnover.
• Example-This strategy is used commonly within the car industry
as I found out when purchasing my car.
8. Psychological Pricing -The seller here will consider the psychology of price and the
positioning of price within the market place.
• Example- The seller will charge 99p instead £1 or $199 instead of $200. The reason why
this methods work, is because buyers will still say they purchased their product under
£200 pounds or dollars, even thought it was a pound or dollar away. My favorites pricing
strategy.
• 9. Cost Plus Pricing -The price of the product is production costs plus a set amount
("mark up") based on how much profit (return) that the company wants to make.
Although this method ensures the price covers production costs it does not takeconsumer
demand or competitive pricing into account which could place the company at a
competitive disadvantage.
• Example - a product may cost £100 to produce and as the firm has decided that their
profit will be twenty percent they decide to sell the product for £120 i.e. £100
10.Cost Based Pricing -This is similar to cost plus pricing in that it takes costs into account
but it will consider other factors such as market conditions when setting prices.
• Example- Cost based pricing can be useful for firms that operate in an industry where
prices change regularly but still want to base their price on costs
11. Value Based Pricing- This pricing strategy considers the value of the product to
consumers rather than the how much it cost to produce it. Value is based on the benefits
it provides to the consumer e.g. convenience, well being, reputation or joy.
• Example- Firms that produce technology, medicines, and beauty products are likely to us
 APPROACHES TO PRICING

Types of Pricing Approaches

• Cost-Based Pricing Approaches
• Buyer-Based Pricing Approaches
• Competition-Based pricing Approaches
 1. Cost Based Pricing Approach:
• These pricing approaches are the simplest one in which the cost of product or
service is added with a certain proportion of markup as profit to ascertain a certain
price. Examples include construction businesses that estimate the cost of any project
and submit their bid by adding a certain portion of profit to their estimated cost.
Moreover Accountants, Lawyers and other professionals charge a price of their
services by adding the cost of work with a certain proportion of markup.
• Markup pricing is not regarded as an effective pricing model as it ignores both
demand and the pricing of competitors. Therefore, it is almost impossible for a
business to keep its price as best one by adopting this category of pricing. But still
Cost based pricing is popular due to the following reasons.
1. It makes pricing simpler so the marketers do not change the price of their product
or service with the changing demand.
2. When the majority of businesses in the market adopt this pricing model, there
would be minimum price competition due to similarity in prices.
3. Generally cost based pricing looks fairer for both buyers and sellers as buyers are
not exploited under condition of higher demand and also the seller can earn a
reasonable profit in such pricing.
 2. Buyer Based Pricing Approach:
• These pricing approaches is extensively applied by many organizations in which
the perceived value of buyer is regarded as a base for Setting Price for a product or
service. In this pricing model the value of product or service is perceived by
customers that give the guideline for the price of that product or service. In other
words the price is not set after the production of product, but before the production.
This means that the organization considers the customers along with their
perception about certain product or service. On this basis, the business sets a
certain price and then starts manufacturing that product. The expected value and
price provide guideline for the cost and design of the product so that it can match
the perceptions of the customers.
• It is difficult for a business organization to ascertain the different perceived value
by the customers on different products. For this purpose these organizations
conduct surveys and experiments. If a business keeps the price of its product higher
than the perceived value of customers, then its sales are affected. On the other
hand, if a business keeps its product’s price lower, then maybe its sales increase,
but the profit does not increase accordingly. Therefore, those organizations, which
want to adopt this value-based pricing strategy, should keep the price of their
products in accordance with their perceived value by customers. But more effective
strategy is that the businesses should try to deliver more value to the customers
than they perceived in order to retain them as loyal customers.
 3. Competition-Based Pricing Approach:
• In this pricing model, businesses keep the price of their products or services
on the basis of the prices of their competitors. Also, customers in the market
perceived value to any product or service in relation to prices of similar
products of competitors. So there is some sort of going rate pricing in which
the prices of products are altered according to changes in the prices of
competitors. For example, steel or fertilizer manufacturing businesses face
oligopolistic competition in which they charge almost similar prices in the
market same like the competitors. There is a market leader whose price is
followed by all other smaller competitors. When the price of market leader is
changed, other competitors in the market also adjust their prices accordingly.
Some smaller business may keep a slight difference in their price as
compared to the market leader, but this slight difference remains constant in
different conditions.
• There is one big advantage of adopting this ongoing rate of competition
based pricing, which is the prevention of price wars in the market among
competitors.
• Price sensitivity
Price sensitivity can be defined as the degree to which consumers' behaviors are affected by
the price of the product or service. Price sensitivity is also known as price elasticity of
demand and this means the extent to which sale of a particular product or service is
affected.
• Value pricing
Definition of value-based pricing. The term is used when prices are based on the value of a
product as perceived from the customer's perspective. The perceived value determines the
customer's willingness to pay and thus the maximum price a company can charge for its
product.
The term is used when prices are based on the value of a product as perceived from the
customer's perspective. The perceived value determines the customer's willingness to pay
and thus the maximum price a company can charge for its product.
• Markdown pricing:
• Temporary reduction in the selling price of an item to stimulate its demand or to
drive a competitor out of the market. Permanent markdowns are created to
remove a slow-selling item from the inventory.
• A simple definition of markdowns is the difference between the original retail
price and the actual selling price. Markdown dollars are calculated by subtracting
the Actual Selling Price from the Original Selling Price. Markdown percent is
Markdown dollars divided by Sales
 Place
• Retail Location is considered to be one of the most important
elements in retail decision.
• The right location is often critical to the success of a business.
• Factors to be considered while selecting a Place
• Density of Target Market
• Uniqueness of retail offering
• Legal Considerations
• Environmental Issues
• Local Competitions Traffic
• Density
• Cost of location
• Proximity to other business
• Adequate space for parking
 Retail Supply Chain
• A supply chain is a system of organizations, people, activities,
information, and resources involved in moving a product or service
from supplier to customer. Supply chain activities transform natural
resources, raw materials and components into a finished product that
is delivered to the end customer.
• Supply Chain Management is concerned with the management of the
flow of goods, flow of cash, and flow of information internally and
externally of a company or a group of companies that share the same
value chain.
• It includes the movement and storage of raw materials, wok-in-
process inventory and finished goods from origin to point of
consumption. Supply chain management has been defined as the “
design, planning, execution, control and monitoring of supply chain
activities with the objective of creating value to customers, building
a competitive infrastructure, leveraging logistics, synchronizing
supply with demand and measuring performance.
1. Planning: A plan or strategy must be developed to address how a given
good or service will meet the needs of the customers.
2. Sourcing: This component involves building a strong relationship with
suppliers of the raw materials needed to make the product the company
delivers.
3. Making: This is the manufacturing section of Supply Chain
Management. The product is manufactured, tested, packaged and
scheduled for delivery.
4. Delivering: This component in Supply Chain Management is logistical
and involves the company creating warehouse networks, coordinating the
receipt of orders from customers, deciding on the transportation and
shipment methods, and setting up invoices to receive payment.
5. Returning: This is the final, service oriented part of the supply chain. In
this component, the company tries to create a network that is responsible
for receiving defective products or excessive amounts of them, as well as
maintaining the original products sent to the customer.
• Logistics management is the function of managing the total flow of
materials which includes movement of raw materials from suppliers, in
process within the firm and movement of finished goods to the customer.
1. Order Processing
2. Transport Management
3. Inventory Management
4. Ware Housing
5. Materials Handling
6. Packaging
7. Production Scheduling
8. Information System
• Retail Promotional Strategies
Sales promotion strategies are powerful tools to give marketing campaigns an extra
edge in attracting new customers. Sales promotions rely on consumers’ price
sensitivity to encourage them to try new products. Retail promotion is simply the way
the retailers communicate with their publics. They exchange meanings with them
through the messages they create and the media they use.
• Setting Promotional Strategies
1. Building Awareness
2. Create Interest
3. Provide Information
4. Stimulate Demand
5. Reinforce the brand
 Promotional Mix
• The communication or promotion mix includes the following four
ingredients
• Advertising: It is defined as any paid form of non-personal presentation and
promote of ideas, goods and services by an identified sponsor. It is
impersonal salesmanship of mass selling, a means of mass communication.
• Publicity: It is non-personal stimulation of demand for a product, service or
a business unit by placing commercial significant news about it in a
publication or obtaining favorable presentation of it upon radio, television,
or stage that is not paid for the sponsor.
• Personal Selling: It is the best means of oral and face-to-face
communication and presentation with the prospects for the purpose of
making sales. There may be one prospect or a number of prospects in the
personal conversation
• Sales Promotion: It covers those marketing activities other than advertising,
publicity and personal selling that stimulate consumer purchasing and dealer
effectiveness. Such activities are displays, shows, exhibitions,
demonstrations and many other non-routine selling efforts at the point of
purchase.
 Nature of Promotion
• It is Informative process
• It is persuasive process
• It is motivating process
• Brand Switching
• Promotion is an investment
• Promotion is directed towards a target group
• Promotion calls for economics
 HUMAN RESOURCE MANAGEMENT IN
RETAILING
Human Resource Management
• Human Resources Management is defined as
managing (planning, organizing, directing &
controlling) the functions of employing,
developing, and compensating human
resources resulting in the creation &
development of human relations with a view
to contribute proportionately to the
organizational, individual & social goals.
 DIFFERENCE BETWEEN PERSONNEL MANAGEMENT & HRM
PERSONNEL
MANAGEMENT

• Means persons employed. PM views man as economic man who works

for salary.HRM treats people as human beings having economic, social &
psychological needs
OBJECTIVES OF HRM
1. Societal Objectives: To be ethically & socially responsible to the needs
& challenges of the society
2. Organizational Objectives : To recognize the role of HRM in bringing
the organizational objectives
3. Functional Objectives: To maintain the dept’s contribution at a level
appropriate to the organization’s needs. Resources are wasted if HRM is
4. less sophisticated to suit the organizational demands.
5. Personal Objectives: to assist the employees in achieving their personal
goals to enhance the individual contribution.
 IMPORTANCE OF HUMAN RESOURCE
MANAGEMENT
1. Human Resource Management in the Nation’s Well-Being: A nation
with abundant physical resources will not benefit unless HR makes use
of them. HR with the right attitude is responsible for making use of
national resources
2. Man vis-à-vis Machine: Most of problems in the organization are
human, social, psychological rather than physical, technical or economic.
3. HRM is a central subsystem: HRM operates upon and controls all other
subsystem. Social significance, proper management of the personnel
enhances their dignity by satisfying their personal needs.
4. Professional Significance: By providing healthy working environment it
promotes team work in employees
5. Significance for individual Enterprises is achieved, by creating the right
attitude among employees through effective communication.