We’re all aware of the experience of retail brick and mortar establishments but do we really know what makes them tick? In this article, I’ll cover the marketing involved in retailing.
Retailing is the activities associated with marketing to the final consumer. Its nature is monopolistic competition between many firms and involves product differentiation. But like marketing strategy, retailing makes its own mix of patronage factors. The Retailing mix involves pricing, quality, convenience, services, variety, and atmosphere. There are different pricing pricing methods like marginal analysis, pricing strategies like skim-the-cream pricing and penetration pricing, and pricing policies like discounts that I covered in-depth in the previous article. Quality is usually associated with the branding of such products I also covered more in depth in a recent article. Convenience which strictly refers to the timing and location that fits the customer’s needs. Services provide the customer complementary services to their purchased products and a great example is Home Depot where you can schedule experts for home installations. Variety, whether depth or breadth, provides the customer value in shopping at particular retailing establishments. And lastly atmosphere, which gives the customer a sense of belonging in the retailing establishment.
There are many types of retailing types split into the categories of Conventional, Mass Merchandisers, and E-Commerce. The Conventional retailers buy low and sell high in the form of single or limited line stores with a given specialty like home improvement and discount department stores that carry a great assortment in breadth like Target or Walmart. Mass Merchandisers buy low and sell low usually in mass quantity. Mass Merchandisers come in the form of supermarkets like Safeway and warehouse discount houses like Costco. E-Commerce had been a recently new phenomenon which took off in the 90’s during the tech boom with leading e-tailers like Amazon and eBay emerging victorious among competitors. E-Commerce’s major target market is mainly made up of the tech savvy X and Y generations, between middle to high income, and the male gender due to the demographic spending more money online, spending less time online, and men being less apt to return goods. Although, the major challenges to E-Commerce today is the security, privacy, and customer service operations that is usually provided.
Over the recent decades, marketers noticed a few trends in retailing. Between the 50s to 70s there had been growth in demand for consumer goods particularly in suburban neighborhoods and retailers began implementing decentralized management to promote autonomy. Particularly during the 70s, there had become too many assortments of department stores competing which began the rise of mass merchandisers. The aforementioned Retailing mix also experienced many trends during the past few decades. Low price bargain basements, clearance, outlets, and dollar stores like the Dollar Tree became prevalent in low income neighborhoods. Strategic Marketing Planning became a common practiced strategy for developing goals, to analyze target markets, and to develop the proper marketing mix. Many companies like Nordstrom re-emphasized services like price matching and return polices while also developing their atmospherics for customers. Centralized management more recently became a common strategy to discourage the autonomous operations that were practiced decades prior. Industrial concentration finalized these trends as bigger department stores became fewer due to store mergers and acquisitions that created this oligopolized retailing industry we know today.
We may now walk into these retailing establishments with a deeper understanding and respect for the progression of the retailing industry we’ve taken advantage of for so long.
