The traditional marketing mix is one of the most famous marketing terms. Its elements compose the basic components of a marketing plan. Also known as the Four P’s, the marketing mix consists of price, place, product and promotion. However, the retail marketing mix differs from the traditional marketing mix. It is made of 6 Ps: product, place, promotion, price, presentation and personnel. Although some of the elements are the same, these two concepts differ. In order for a business person to create a new retail business, he has to establish an effective retail marketing mix.
And in order to do that, there are steps that need to be followed, going through these elements one by one. However, before getting into the elements of the retail marketing mix, a target market needs to be identified first:
A target market is a group of customers that the business has decided to aim its marketing efforts and merchandise towards. This group is identified by geographic location, demographics and psychographics.
It has to be a specific group of people that have at least one of those elements in common. Once the target market has been identified, the elements of the retail mix are analyzed one by one. I analyzed these elements according to the Giant Eagle in Mc Intyre Square:
Product defines the physical product or service offered to consumers. In case of Physical products, it also refers to any services that are part of the offering. There are certain decisions that need to be made before distributing a product. These include: Brand name, Styling, Quality, Functionality, Safety, Packaging, Warranty, Accessories and services, and Repair and support. Product is the first element of the retail marketing mix. This is the most important element because it is the merchandise itself. A lot of time and consideration has to be put in figuring out and deciding on the product. The business people must line up a series of proposals before deciding on the final product that will best fit the target market. In addition, there are a few questions that need to be answered concerning the new product:
1.The benefits of the product 2.The differential advantage it has over the competition 3.The position within the market In Giant Eagle, they have the best quality selected products from all the recognized brands. On top of those, they have their own label brand that offers the same products at a cheaper price, with the same quality and taste.
It is important to inform customers about the products in order for them to want to purchase them. This is where “promotion” comes in. Promotion consists of communicating the benefits of products to the customers. This mainly involves four steps: Advertising, personal selling, sales promotion and publicity. These steps are necessary in order for the target market to be aware of what to expect from the products. – Advertising consists of any non personal paid form of communication of products in the prime media. Meaning, any communication of products using television, radio, magazines, billboards, etc.
It is intended to inform the target market about the products. – Personal selling involves oral communication with potential buyers with the purpose of making a sale. It focuses on developing positive relationships with the target before attempting any sale procedures. Good public relation doesn’t only help a product to sell; it also helps to handle negative attention. – Sales promotion is providing encouragement to customers or to the distribution channels in order to increase sales in short term. It involves special offers or money off coupons. – Publicity is the communication of a product by placing information about it in the media without paying for the media space directly. In a retail marketing mix, most retailers spend their promotional money locally in order to attract their target market in the closest area. Giant Eagle has television commercials; however they are not their main focus. They rely more on publicity and magazines posted to customers with advantage cards.
Place refers to how an organization will distribute its products or services. It is also known as distribution, channel, or intermediary. Effective distribution is important in order for the organization to meet its overall marketing objectives. This consists of the following distribution strategies: There are two types of distribution channels; the direct channel and the indirect channel. The direct distribution consists of the manufacturer distributing the goods or services directly to the consumer. The indirect distribution involves intermediaries in distributing the goods to the consumer, for example; manufacturer =>wholesaler=>retailer=>consumer.
In a retail marketing mix, location is very important. The place is part of the biggest investments of the business person, as it has to be located in an easily reachable location. The more accessible a place is, the more expensive it is to get it. And also, the location includes the nearest competition. Giant Eagle does a great job when it comes to location. There are about 4 different Giant eagles in my area. This is what attracts them many clients.
Pricing is very important because it is the only element that generates a turnover for the organization. Price supports the remaining P’s, as they are the variable cost. Pricing is difficult as it must follow the laws of supply and demand. However, the pricing response of competitors must be taken into consideration when deciding on prices. Pricing should take into consideration the following factors: fixed and variable costs, competition, company objectives, proposed positioning strategies, and target group and willingness to pay. An organization can make use of a number of pricing strategies.
These strategies are based on the goals and objectives of the company. The types of pricing strategies go as follows: -Penetration pricing: The price charged for a product or service is set low in order to increase sales and market share. Once this is accomplished, the price is increased. -Skimming pricing: The price charged for a product or service is set high because there is a large competitive advantage. However, the price will relatively decrease due to increased supply and in order to expand the market. -Competition pricing: The price charged for a product or service is set in comparison with the competitors. -Product line pricing: Pricing a range of product or services at different price points. For example, one wants to purchase a new laptop.
At the store, there are different types of laptop, with different features, different brands. One would be willing to pay a greater price for greater features. -Bundle pricing: The Company bundles a group of products at a reduced price. For example a dining table at $100, the dining chairs at $30 each (4 chairs) and the whole set at $200. -Psychological Pricing: This is when the seller considers the emotional response instead of the rational basis. For example the price will be 99 cents rather than $1 or $1999.99 rather than $2000. -Premium pricing: The price of the product or service is set high to reflect its uniqueness. For example, First class airline services, five star hotels, etc. -Promotional pricing: Price is set to promote a product.
Example, buy one get one free, 50% off all products, etc. In a retail marketing mix, the correct price is very important because it will help to bring about sales. Usually, the higher priced products were known to have the best quality. However, due to the recession, most companies have opted for the lowest price strategies. Giant Eagle prices are not the cheapest, however they are affordable. Compared to other stores, they tend to overprice some of their products, which would chase away customers.
The presentation of a store is just as important as the previous elements. It is the outside of the store that will initially incite potential customers to walk in. The presentation makes the expectations of a potential customer. This is why it is so important. At Giant Eagle, the presentation attracts customers to go in and shop. At the entrance there is the vegetable section which is very refreshing and attractive. It makes the customer want to walk in and shop for those fresh vegetable.
The stores employees will make or break the reputation of the store. If their customer service is not impeccable, then no one will want to go buy from them, despite the fact that their products are great and their location is ideal. This is why employees have to be trained to keep their personal matters out of the working place, especially when they have to interact with customers. Overall, retail marketing mix differs to the traditional marketing mix in the way that there are two additional elements to it. These elements will make the entire mix more than the previous 4.