Thursday, November 17, 2011

What is Internal Marketing?

Holistic marketing incorporates internal marketing ensuring that everyone in the organization embraces appropriate marketing principles, especially senior management. Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well.

It makes no sense to promise excellent service before the company’s staff is ready to provide it.

Internal marketing must take place on two levels. At one level, the various marketing functions sales force, advertising, customer service, product management, marketing research must work together. Too often, the sales force thinks product managers set prices or sale quotas “too high” ; or the advertising director and a brand manager cannot agree on an advertising campaingn. All these marketing functions must be coordinated from the customer’s point of view.

At the second, other departments must embrace marketing; they must also “think customer.” Marketing is not a department so much as a company orientation.

Internal marketing thus requires vertical alignment with senior management and horizontal alignment with other departments, so everyone understands, appreciates, and supports the marketing effort.

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Saturday, November 12, 2011

Why is Store Location Important in Retailing?

Store location is an important decision for a retailer due to following reasons:

First, location is typically the prime consideration in customer’s store choice decision. For instance, when choosing where you’re going to have your car washed, you usually pick the location closest to your home or work. Most consumers similarly shop at the supermarket closest to them.

Second, location decisions have strategic importance because they can be used to develop a sustainable competitive advantage. If a retailer has the best location, that is, the location that is most attractive to its customers, competitors can’t easily copy this advantage and are relegated to occupying the second best location.

In addition, many Western European countries restrict retailing to specific areas and then restrict the sizes of the stores that can be built.

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Case study level 5 leadership.

What information does retailer need?

Definition of Retail Market Strategy.

Retail Format - Internet Channel

E - Retailing High Potential
Shopping over the Internet provides the convenience and safety benefits offered by catalogs and other non store formats. However, the Internet, compared with store and catalog channels, also has the potential to offer a greater selection of products and more personalized information about products and services.

  1. Broader Selection: One benefit of the Internet channel, compared with the other two channels, is the vast number of alternatives available to consumers.

People living in Columbus, Ohio, can shop electronically at Harrod’s in London in less time than it takes them to visit their local supermarket.

2.  More Information to Evaluate Merchandise: An important service offered by retailers is the provision of information to help customers make better purchase decisions. Some catalogs provide only a few facts about each item, such as price, weight, and brand/model, along with a photograph. Other catalogs offer much more detail about each item carried.

Stores also differ in the information they make available to consumers. Specialty and department stores typically have trained, knowledgeable sales associates, whereas most discount stores do not.

Unlike in catalogs, the information on an electronic channel database can be frequently updated and will always be available – 24/7, 365 days per year. Furthermore, retaining knowledgeable sales associates difficult and, in many cases, not cost effective. The cost of adding information to an Internet channel is likely to be far less than the cost of continually training thousands of sales associates.

In addition, when using the Internet channel, customers can format the information so that they can effectively use it when evaluating products. In contrast, customers in stores usually have to inspect each brand, one item at a time, and then remember the different attributes to make a comparison.

Virtual communities, networks of people who seek information, products, and services and communicate with one another about specific issues, are examples of these problem-solving sites. For example, iVillage ( is a virtual community for women, with sub communities for pregnant women, women with babies, and working women.

  1. Personalization: The most significant potential benefit of the Internet channel is its ability personalize the information for each customer economically. Catalogers cannot economically tailor their merchandise and information to the needs and preferences of all individual consumers. To be cost effective, they have to send the same catalog to a large segment of customers.

To online chat provides customers with the opportunity to click a button at anytime and have an instant messaging e-mail or voice conversation with a customer service representative.

  1. Selling Merchandise with “Touch and Feel” Attributes: When you buy products, some critical information might be “look and see” attributes like color, style, and grams of carbohydrates or “touch and feel” attributes like how the shirt fits, the ice cream flavor tastes, or the perfume smells, Fit can only be predicted well if the apparel has consistent sizing and the consumer has learned over time what size to buy from a particular brand. Due to the problems of providing touch and feel information, apparel retailers experience return rates of more than 20 percent on purchases made through an electronic channel but only 10 percent for purchases made in stores.

  1. Role of Brands: Brands provide a consistent experience for customers that helps overcome the difficulty of not being able to touch and feel merchandise prior to purchase online. Because consumers trust familiar brands, products with important touch and feel attributes, such as clothing, perfume, flowers, and food, with well know name brands are being sold successfully through non store channels including the Internet, catalogs, and TV home shopping.

Consider branded merchandise like Nautical perfume or Levi’s 501 jeans.

Using Technology:

Retailers with electronic channels are using technology to convert touch and feel information into look and see information that can be communicated through the Internet. Web sites are going beyond offering the basic image customers the opportunity to view merchandise from different angles and perspectives using 3D imaging and/or zoom technology. The use of these image enhancing technologies has increased conversion rates (the percentage of consumers who buy the product after viewing it) and reduced returns.

To overcome the limitations for trying on clothing, apparel retailers have started to use virtual models on their Web sites.

Perceived Risks in Electronic Shopping:

Although most consumers have had the opportunity to try out electronic shopping, they also have some concerns about buying products through an electronic channel. The two critical perceived risks are :

(1) The security of credit card transactions on the Internet and
(2) Potential privacy violations.

Consumers also are concerned about the ability of retailers to collect information about their purchase history, personal information, and search behavior on the Internet. Consumers may be worried about how this information will be used in the future

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Benefits of Catalog Retail Channel

Que. : What are the benefits of Catalog Retail channel?

Ans. :The catalog channel provides some benefits to customers that are not available from the store or Internet channels.

1. Convenience 
2. Safety 
3. Quality of Visual Presentation

1.  Convenience :

Brows Where ever You Like
Catalog, like all non store formats, offer the convenience of looking at merchandise and placing an order on any day at any time from almost anywhere. With catalog, consumers have the added convenience of not being restricted to a place with Internet access and a computer; they can look through a catalog on the beach or propped up in bed.

Consumers can refer to the information in a catalog anytime by simply picking it up from the coffee table. The development of “magalogs,” catalogs with magazine-type editorial content, enhances consumers’ desire to keep catalogs readily available.

2.  Safety:
Security in malls and shopping areas is becoming an important concern for many shoppers, particularly the elderly. Non store retail formats have an advantage over store-based retailers in that they enable customers to review merchandise and place orders from a safe environment their homes.

3.  Quality of Visual Presentation: 
The photographs of merchandise in catalogs, while not as useful as in-store presentations, are superior to the visual information that can be displayed on a CRT screen.

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Friday, November 4, 2011

Building A Sustainable Competitive Advantage

Que. Explain the concept of Sustainable Competitive Advantages to a retailer. List Seven important opportunities for retailers to develop SCA.

Ans. : The final element in a retail strategy is the retailer’s approach to building a sustainable competitive advantage. Any business activity that a retailer engages in can be the basis for a competitive advantage, but some advantages are sustainable over a long period of time, whereas other can be duplicated by competitors almost immediately. 

    For example, it would be hard for Starbucks to establish to establish a long term advantage over Seattle’s Best Coffee by simply offering the same coffee specialties at lower prices.

Establishing a competitive advantage means that the retailer, in effect, builds a wall around its position in a retail market.

Over time, all advantages will be eroded due to competitive forces, but by building high, thick walls, retailers can sustain their advantage, minimize competitive pressure, and boost profits for a longer time. Thus, establishing a sustainable competitive advantage is the key to positive long term financial performance.

Seven important opportunities for retailers to develop sustainable competitive advantages are as follows:

(1) Customer Loyalty,
(2) Location,
(3) Human Resource Management,
(4) Distribution and Information Systems,
(5) Unique Merchandise,
(6) Vendor Relations, and
(7) Customer Service.

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Definition of Retail Market strategy

A retail strategy is a statement identifying

(1)    Retailer’s target market,

(2)    Format the retailer plans to use to satisfy the target market’s needs, and

(3) Bases upon which the retailer plans to build a sustainable competitive advantage.

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