Retailing - Unit 2 BBA 5.docx

BBA 5 – Retailing (marketing Specialisation) UNIT 2
1 By Nisha Hariyani
Retail Trade area analysis
Retail trade area analysis is the process of identifying and understanding the geographic area
where a retail store draws its customers. The purpose of this analysis is to determine the size
and characteristics of the store's target market, which can inform decisions about marketing,
site selection, and merchandising.
Here are some steps involved in conducting a retail trade area analysis:
1. Define the trade area: The trade area is the geographic area where the majority of a
store's customers live or work. It can be defined using various methods, such as drive-
time analysis, radius mapping, or demographic data.
2. Collect data: Data can be collected from various sources, such as the US Census
Bureau, market research firms, and customer surveys. The data can include
demographic information, consumer behavior, and economic indicators.
3. Analyze the data: The data can be analyzed to identify trends and patterns in consumer
behavior, such as shopping habits, spending patterns, and brand preferences.
4. Segment the market: The market can be segmented based on factors such as age,
income, ethnicity, and lifestyle to better understand the store's target audience.
5. Compare to competitors: The trade area can be compared to competitors' trade areas to
identify potential areas of overlap or opportunities for market expansion.
Use findings to inform decisions: The findings from the retail trade area analysis can be used
to inform decisions about marketing strategies, site selection, and merchandising. For
example, the analysis may reveal that the store's target audience is primarily young families
with children, which could inform decisions about product offerings and advertising
campaigns.
A retail trade area can be divided into three parts based on distance from the store and
customer behavior: primary trade area, secondary trade area, and tertiary trade area.
1. Primary trade area: This is the area closest to the store, typically within a 5-10 minute
drive time, where the majority of a store's customers live or work. This is where the
store's marketing efforts are most focused. Example: A grocery store may have a
primary trade area consisting of the surrounding neighborhoods within a 5-minute
drive.
2. Secondary trade area: This is the area beyond the primary trade area, typically within a
10-20 minute drive time, where customers may be less frequent but still important to
the store's business. Example: A clothing store may have a secondary trade area
consisting of the surrounding suburbs within a 15-minute drive.

2 By Nisha Hariyani
3. Tertiary trade area: This is the area beyond the secondary trade area, typically within a
20-30 minute drive time, where customers are infrequent but may still make
occasional visits to the store. Example: A home improvement store may have a tertiary
trade area consisting of neighboring towns within a 30-minute drive.
The trade area can also be classified based on customer behavior:
1. Core trade area: This is the area where the store's most loyal customers live or work.
Example: A coffee shop may have a core trade area consisting of the downtown
business district where many of the store's regular customers work.
2. Fringe trade area: This is the area where customers are less loyal and may only visit
the store occasionally. Example: A movie theater may have a fringe trade area
consisting of the surrounding suburbs where customers may visit once in a while.
3. Temporary trade area: This is the area where customers may come from during special
events or promotions. Example: A sports store may have a temporary trade area
consisting of neighboring towns during a big sporting event or championship game.
Site selection for retailing

3 By Nisha Hariyani
Site selection for retailing is a critical decision that can have a significant impact on the
success of a retail store. Here are some factors to consider when selecting a site for a retail
store:
1. Location: The location of a retail store is crucial, as it can determine the level of foot
traffic, accessibility, and visibility. The store should be located in an area that is easily
accessible by car, foot, and public transportation. Ideally, the store should be located
in a busy commercial area or a high-traffic location, such as a shopping mall or a
downtown area.
2. Demographics: The store's target market should be located within the trade area.
Demographic factors to consider include age, income, education level, and lifestyle.
For example, a store selling luxury goods may be more successful in an affluent
neighborhood.
3. Competition: The level of competition in the area should be considered, including the
number of competitors, their size, and the types of products they offer. A store should
be located in an area where there is enough demand for the products it offers, but not
too much competition.
4. Rent and Lease: The cost of rent and lease should be considered when selecting a site.
The rent should be affordable and within the store's budget, while the lease terms
should be favorable to the store's needs.
5. Zoning and Regulations: Zoning laws and regulations should be considered when
selecting a site, as they can affect the types of businesses that are allowed in a
particular area.
6. Parking: The availability of parking can affect the convenience of shopping at the
store. The store should have enough parking spaces for customers, and the parking
should be easily accessible and safe.
7. Infrastructure: The availability of infrastructure, such as electricity, water, and internet
connectivity, should be considered when selecting a site. The store should be located
in an area where infrastructure is available and reliable.
8. Store Size: The size of the store should be appropriate for the store's needs and budget.
A store that is too small may not be able to accommodate enough products, while a
store that is too large may have higher overhead costs.
Store formation size and space allocation

4 By Nisha Hariyani
Store formation size and space allocation are important considerations when planning a retail
store. Here are some factors to consider when determining the store size and space
allocation:
1. Product assortment: The size of the store and space allocation will depend on the types
and variety of products that will be sold. A store selling a wide range of products may
require a larger space compared to a store that specializes in a few product categories.
2. Customer traffic: The size of the store and space allocation should be based on the
expected customer traffic. A store with high customer traffic may require a larger
space to accommodate more customers, while a store with lower customer traffic may
require a smaller space.
3. Layout: The store layout should be considered when determining the store size and
space allocation. The layout should allow for easy navigation and efficient use of
space. For example, a store with a narrow layout may require more vertical space to
maximize the use of the space.
4. Sales and revenue projections: The size of the store and space allocation should be
based on the projected sales and revenue. A store with higher projected sales may
require a larger space to accommodate more products and customers.
5. Inventory management: The size of the store and space allocation should be based on
the inventory management system. A store with a larger inventory may require a
larger space to store the products, while a store with a smaller inventory may require a
smaller space.
6. Amenities: The size of the store and space allocation should include amenities such as
restrooms, break rooms, storage rooms, and offices. These amenities will affect the
overall size of the store and space allocation.
7. Regulations: The size of the store and space allocation should consider the local
regulations and building codes. For example, fire safety regulations may require a
certain amount of space between aisles or a minimum ceiling height.
In terms of space allocation, the space should be divided into different areas such as sales
floor, storage areas, offices, and restrooms. The sales floor should be allocated the largest
space to display products and facilitate customer traffic. The storage area should be allocated
space for inventory storage, while the offices should be allocated space for employees to
perform administrative tasks.
store security and credit management.
Store security and credit management are two important aspects of managing a retail store.

5 By Nisha Hariyani
Store security refers to the measures taken to prevent theft, fraud, and other security breaches
within the store. Here are some common store security measures:
1. Surveillance cameras: Installing security cameras can help deter theft and identify
suspects if a theft occurs.
2. Security guards: Hiring security guards can also help deter theft and provide a physical
presence in the store.
3. Alarm systems: Alarm systems can be set up to alert store employees and security
personnel if a security breach occurs.
4. Access control: Limiting access to certain areas of the store, such as stockrooms or
cash registers, can help prevent theft and fraud.
Credit management refers to the process of evaluating a customer's creditworthiness and
managing their credit accounts. Here are some common credit management measures:
1. Credit checks: Before extending credit to a customer, it is important to check their
credit history and score to assess their risk level.
2. Credit limits: Setting credit limits for customers can help manage the risk of default
and prevent customers from exceeding their means.
3. Payment terms: Establishing clear payment terms, such as due dates and penalties for
late payment, can help ensure timely payment and prevent defaults.
4. Collection procedures: Having clear procedures for collecting overdue payments can
help minimize losses and maintain cash flow.
Effective store security and credit management are important for the success and profitability
of a retail store. By implementing these measures, store owners can help protect their assets
and maintain good relationships with their customers.
Merchandise Planning
Merchandise planning is the process conducted by a retailer to ensure that the right product
is available to the customer at the right place, time, quantity and price. This process involves
selecting the products the retailer will carry and determining the purchase quantities of these
products. Merchandising has become more complex because of changes in the retail industry
such as consolidation, global sourcing, higher levels of competition, increasing product
variety, reduced life cycles and less predictable demand. Enhancements in information,
manufacturing and distribution technology offer potential to reduce the large markdowns due
to excessive inventory and lost sales opportunity due to sell-outs currently prevalent in this
industry.

6 By Nisha Hariyani
What is Merchandise Planning? Definition
Merchandise planning is a method of selecting, managing, purchasing, displaying, and pricing
the products in a manner that brings in maximum returns on investment, value addition to the
brand name by satisfying the consumer needs while avoiding the creation of excess inventory.
Moreover, merchandise planning is about striving to make the right product available, at the
right time, in the right place, in the right quantities, and at the right price. You can also make
use of appropriate merchandise inventory software for streamlining your inventory operations.
Or, as Shopify says, in layman terms, “if I want to buy product X with color Y and size Z from
your shop, you have that available when I come knocking.”
Planning Merchandise can reduce markdowns, out of stocks, and overstock scenarios.
Next thing you might be thinking,” so, how to do this, how to plan merchandise?”
Retail merchandise planning is exactly what it sounds like — a way to select, manage,
purchase, display, and price merchandise in an efficient way that ensures you have the right
products available at the right time. By doing so, you increase your potential for a maximum
return on investment (ROI). You also cut down on excess inventory, and maintain — and
build — goodwill and your reputation with customers who know you’ll have what they want
when they want it.
The benefits of retail merchandise planning include:
 Fewer markdowns of excess/outdated/depreciated stock and increased revenue due to
the right products being available
 Increased inventory turnover and decreased inventory carrying costs in the warehouse
due to a reduction in unwanted inventory
 Fewer out-of-stock situations and unsatisfied customers
 Increased ROI due to strategically ordering the products that generate the most
revenue
STEPS INVOLVED IN RETAIL MERCHANDISE PLANNING
While merchandise planning varies greatly based on things like industry and specialty, there
are basic steps that are involved no matter the size or niche of the business.
1. PERFORM A POST-SEASON ANALYSIS
The first thing you need is an understanding of how things went during the previous sales
season, and you’re going to get that with data. Look at basic things like total sales, but also
include a look into specific results like revenue of a particular item or category.
Next, it’s time to analyze the results by comparing those numbers to the planned numbers
from the same year to gain context. Where are things going? What was the marketing? How
was the economy? Examining this data means you have not only accurate numbers, but also
context around those numbers.

7 By Nisha Hariyani
2. FORECAST SALES
With the data accrued from your post-season analysis, it’s time to move on to forecasting
demand, which should include sales for each department, category of products, and the
addition of new products/elimination of products that are no longer performing.
When looking at products that are part of your merchandise plan, be sure to review the sales
potential, analyze the market demand, and research marketing channels and strategies.
Once you have past and present data and take into consideration the impact of trend/demand
variations, you can settle on a final prediction for each product and decide if it’s worth
ordering that item for your store (and how much you need to purchase).
3. PLAN AND IMPLEMENT THE ASSORTMENT
Once you know what merchandise to stock, it’s time to get a bit more specific and arrange
the products based on their categories. For example, a food section, a wearables section, a
cosmetics section, etc. and specifics like sizes, colors, and brands.
Ensure there’s a proper assortment, that related items are grouped together for easy access
for customers, and that there’s adequate SKUs of each category without going overboard in
any one section.
4. CONTROL MERCHANDISE
There needs to be a balance between the merchandise that you buy and sales, and that can be
achieved by creating daily or weekly sales reports for each item. This helps ensure that items
are being reordered before reaching dangerously low stock levels, and that you’re not
overbuying so much that you’re forced to offer clearance sales, discounts, or offers that eat
into your bottom line.
Analyze and Compare Previous Sales to Forecast Demand
The first thing you need to do is analyze the previous seasons’ sales data and revenue of each
product and the business for each week as a whole along with market surveys and consumer
demands you can forecast demand for the current season.
Demand forecasting is the pillar around which the strategy is crafter because, based on this, the
stocks are stuffed up. Forecasting involves the anticipation of how a customer would behave
during a sales season.
A sales forecast is the primary step in figuring out the amount of inventory is needed and at
what time. In detail, the estimates should tell you about the number of the products required to

8 By Nisha Hariyani
purchase, the selling price of the products, and if it is needed to add new products to the
merchandise assortment.
Mostly in sales or demand forecast planning, there are two approaches one is
1. top-down planning and
2. bottom-up planning.
In top-down planning, the senior management figures out the demand and sales plan, and then
it is given to the merchandising team.
On the other hand, bottom-up planning is that in which the mid-level department managers
estimate the demand. Data derived from both approaches are then added to get the total demand
figures.
Follow these given points to forecast the merchandise requirements
 Analyzing Past Sales Data: As mentioned previously, reviewing the sales data of past
seasons of the same period and comparing them with the current sales trends can be
very helpful to catch the pattern of bias in the customer’s choices.
 Analyzing the economic state of the market: Be very sure that you know the
financial condition of the market because recessions can affect the spending pattern of
the consumers.
 Reviewing the sales potential of the product: Compare the market demand of the
product and calculate the possibility of that product.
 Research the market for new marketing strategies of the competitors: Marketing
strategy is also critical apart from the demand forecast. Find out if there’s a new way
you can market your product, or are people looking for a new product, or do you need
to introduce a new merchandise line in the market.
 Accumulating the data and Creating the final merchandise forecast: After
carrying out all the analysis and calculations, then you can compile all the data and
come to a final prediction for each product. And, only then you add more inventory to
your warehouse.
Deciding on the Merchandise Needs
Now after you have forecasted demand and you know how much you need to plan how you are
going to buy and manage the products so that you can provide the right product, at the right
time and in the right place to your beloved customer.
Now there are steps you need to take to plan your merchandise.
(1) Budgeting
(2) Assortment Plan
Budgeting is the first stage of merchandise planning because, first, you need to know how
much of your money will be invested or how you can minimize it.

9 By Nisha Hariyani
The budget comprises five sections.
1. The sales plan – Projecting the amount of each product that will be sold this season
from each retail outlet, online platform, or marketplaces.
2. Inventory plan– this will tell you how much inventory you need to stock to achieve
the demand.
3. The planned reductions – This is a backup. It’s the reduction in a product’s quantity
in case the product does not perform.
4. Planning the purchase levels – Planning of how much a single product will be
procured.
5. Deciding on gross margin – the difference between the selling price and the COGS

10 By Nisha Hariyani

What are Assortment Strategies?
Assortment strategies refer to the plans that retailers (in-store and e-commerce) use to
determine the optimal product mix for their daily inventory. They are important to the retail
industry since customers directly interact with the product mix on display and make purchase
decisions based on what they see.
Components of Assortment Strategies
Assortment strategies are defined according to two main factors:
1. Product Width
Product width refers to the range of product lines that a retailer offers. For example, a
supermarket may offer product lines ranging from food items to cosmetics and over-the-
counter medical supplies. They are all the product lines that are available to customers and
combine to make up the product width offered by the retailer.
2. Product Depth
Product depth is the variety of products offered under each product line. For example, if the
retailer in question is a specialized cereal store, they are likely to offerhundreds of options
for cereal. The variety determines the product depth.
Assortments strategies are determined by the product width and depth that a retailer chooses
to offer and ideally result in optimal product mixes that drive sales and increase the
likelihood of customers making positive purchase decisions. The strategies employed may be
dependent on the physical capacity of stores – smaller stores generally lack the space for
high product width and depth and tend to focus on one or the other.
For example, a specialty retailer, such as a cereal store, is likely to show narrower product
width (few product lines), but high product depth (numerous options for each product line).
That is, they are likely to offer only cereal but will also provide many options of cereals to
choose from.
Types of Assortment Strategies
1. Wide assortment
A wide assortment strategy is used when retailers aim to offer a lot of different product lines
or categories, but with lesser depth in each category. It aims to provide more variety in the
types of product lines offered but does not provide a high number of products in each
product line.
For example, a grocery store that provides a lot of different products, but only stocks one or
two brands for each type of product, is employing a wide assortment strategy.

2. Deep assortment
A deep assortment strategy aims to provide a large number of options within a particular
product category. It is common for specialty stores that focus on one or a few products to
utilize a deep assortment strategy.
For example, a supplement store is likely to offer many options for buyers of protein
powders – it is using a deep assortment strategy by focusing on fewer product lines but with
high depth and variety within each product line.
3. Scrambled assortment
Retailers using scrambled assortment strategies aim to offer products that are outside of their
core business operations in order to attract more clients from different markets.
For example, a store that is famous for its smoothies starts selling fresh fruit and packaged
food, which allows it to target a wider audience, including people who wish to make
smoothies at home.
4. Localized assortment
A localized assortment strategy allocates the product mix based on the preferences of the
local population and the characteristics of the geographical region. This allows the retailer to
cater to different demands according to geography and thereby increase sales.
For example, a clothing retailer like Zara does not sell the same clothing inventory in a store
in Mumbai, India, as it does in Vancouver, Canada. This is because the population in
Vancouver requires warmer clothing for snow and the winter season, whereas the population
in India exhibit different clothing preferences and requirements.
5. Mass-market assortment
Mass-market assortment strategies are used by stores with large physical storage capabilities,
such as Walmart and Amazon. They aim to appeal to the mass-market and offer as many
products and varieties as possible, catering to a much bigger customer base.
Importance of Assortment Strategies
If used effectively, assortment strategies can boost sales and help the retailer grow its
customer base. They are important because they determine the goods that a customer
interacts with, which leads to a purchase decision. Assortment can vary according to seasons
– an ice cream store may offer different flavors in the summer and different flavors in a
monsoon season.
Similarly, a clothing retailer is likely to stock different clothes in spring and in summer
(probably more beachwear) than it does in winter (more jackets). This caters to the public

demand and increases sales. Similarly, in supermarkets, complementary goods, such as
toothbrushes and toothpaste, are assorted strategically so that customers are persuaded to buy
more than they intended to.
However, assortment strategies can be disadvantageous if the product mix and allocation
doesn’t appeal to the population visiting the store (or the website, for e-commerce retailers).
For example, offering too much variety within a product line can frustrate customers because
it makes it harder to make a decision. At the same time, providing too little variety can be
disappointing to some customers and can negatively impact sales revenue.
Therefore, it is important to conduct extensive market research related to a number of
factors, such as the target customer group, location, climate, and other customer-based
preferences, before designing the appropriate assortment strategy and product mix.
BRANDING DECISIONS – 4 BRAND STRATEGY DECISIONS TO BUILD
STRONG BRANDS
Brand Positioning – Branding Decisions
A brand must be positioned clearly in target customers’ minds. Brand positioning can be
done at any of three levels:
 on product attributes
 on benefits
 on beliefs and values.
At the lowest level, marketers can position a brand on product attributes. Marketing for a car
brand may focus on attributes such as large engines, fancy colours and sportive design.
However, attributes are generally the least desirable level for brand positioning. The reason
is that competitors can easily copy these attributes, taking away the uniqueness of the brand.
Also, customers are not interested in attributes as such. Rather, they are interested in what
these attributes will do for them.
Brand Name Selection – Branding Decisions
When talking about branding decisions, the brand name decision may be the most obvious
one. The name of the brand is maybe what you think of first when imagining a brand – it is
the base of the brand. Therefore, the brand name selection belongs to the most important
branding decisions. However, it is also quite a difficult task.
We have to start with a careful review of the product and its benefits, the target market and
proposed marketing strategies. Having that in mind, we have to find a brand name matching
these things. Naming a brand is part science, part art, and certainly a measure of instinct.
Although finding the right name for a brand can be a challenging task, there are some
guidelines to make it easier. Desirable qualities for a brand name include:
 It should suggest something about a product’s benefits and qualities. Think of the
wadding polish “Nevr Dull”. The brand name indicates the benefit of using this product: the
treated metal will never be dull.

 It should be easy to pronounce, recognise, and remember. iPod and Nike are certainly
better than “Troglodyte Homonculus” – a clothing brand.
 The brand name should be distinctive, so that consumers don’t confuse it with other brands.
Rolex and Bugatti are good examples.
 It should also be extendable. Think of Amazon.com, which began as an online bookseller
but chose a name that would allow expansion into other categories. If Amazon.com had
chosen a different name, such as books.com, it could not have extended its business that
easily.
 The brand name should translate easily into foreign languages. The Ford Pinto line had
some struggles in Brazil, seeing as it translated into “tiny male genitals”. Or the Mitsubishi
Pajero, which means in Spanish “man who plays with himself and enjoys it a bit too much”.
More famous: Coca-Cola reads in Chinese as “female horse stuffed with wax”.
 It should be capable of registration and legal protection. In other words, it must not
infringe on existing brand names.
Brand Sponsorship – Branding Decisions
Branding decisions go beyond deciding upon brand positioning and brand name. The third of
our four branding decisions is the brand sponsorship. A manufacturer has four brand
sponsorship options.
1. A product may be launched as a manufacturer’s brand. This is also called national
brand. Examples include Kellogg selling its output under the own brand name
(Kellog’s Frosties, for instance) or Sony (Sony Bravia HDTV).
2. The manufacturer could also sell to resellers who give the product a private brand.
This is also called a store brand, a distributor brand or an own-label. Recent tougher
economic times have created a real store-brand boom. As consumers become more
price-conscious, they also become less brand-conscious, and are willing to choose
private brands instead of established and often more expensive manufacturer’s brands.
3. Also, manufacturers can choose licensed brands. Instead of spending millions to
create own brand names, some companies license names or symbols previously
created by other manufacturers. This can also involve names of well-known celebrities
or characters from popular movies and books. For a fee, they can provide an instant
and proven brand name. For example, sellers of children’s products often attach
character names to clothing, toys and so on. These licensed character names include
Disney, Star Wars, Hello Kitty and many more.
4. Finally, two companies can join forces and co-brand a product. Co-branding is the
practice of using the established brand names of two different companies on the same
product. This can offer many advantages, such as the fact that the combined brands
create broader consumer appeal and larger brand equity. For instance, Nestlé uses co-
branding for its Nespresso coffee machines, which carry the brand names of well-
known kitchen equipment manufacturers such as Krups, DeLonghi and Siemens.
Brand Development – Branding Decisions
Branding decisions finally include brand development. For developing brands, a company
has four choices: line extensions, brand extensions, multibrands or new brands.
Retail Allocation Systems

Having sufficient stock levels is a vital component of any successful retail business, and is
something rendered ever more important by changing consumer habits. Immediacy has
become a dominant force in retail, and has significantly enhanced the need for stock to be
available in the right place, at the right time. Using a retail allocation system is the best way
to make retail allocation a more efficient process, in order to meet new and increasing
demands.
1: Implement a retail allocation system
Using retail allocation systems and software helps retailers adopt new approaches to stock.
Data can be gathered, interpreted and analysed from shopper behaviour and habits, in order
to get a more localised and specific idea of what sells well in different locations. The process
is sometimes referred to as ‘localisation analytics’ and supports effective store grading. Items
that may be big sellers in a certain location may not sell nearly as well in another.
Recognising and monitoring this can ensure that stock is allocated to the location it is needed
most, avoiding low or overstocking.
2: Learn from your data
This also provides the opportunity for retailers to encourage sales by pushing stock of a
similar type, or that a certain type of shopper may favour, to certain locations. Having a
system that allows this information to be analysed for future forecasting is something
retailers can profit from. Not only are retailers able to react to trends, they are even able to
predict them. The power of data within retail allocation is significant.
3: Pre-allocate stock
The way in which a retailer deals with their pre-allocation is important to consider during
initial stock intake. Pre-allocation refers to products that have been decided at the time
of purchase order management, and has the advantage of reduced handling time at the
distribution centre, thanks to an ‘in and out’ approach.
Using a retail allocation system which recognises and flags pre-allocated stock is highly
beneficial in any retail allocation strategy. This removes the need for it to be subject to a put-
away process, meaning that it can make its way to retail outlets much more quickly, fulfilling
customer demand faster, and increasing sales potential. As well as improving relationships
with customers, who are more likely to be satisfied, smoother-running warehouse IT
systems thanks to pre-allocation can also mean that suppliers are kept happier.
4: Reacting quickly to changes
Manual allocation is a useful secondary process, for example if there has been a smaller
number of products delivered than anticipated, and another delivery needs to be allocated
soon afterward.
5: Ensuring stores have the right product
Retail Assist’s retail allocation system within Merret also has the functionality to define and
recognise allocation exclusions. This can be particularly useful for global retailers trading in
lots of different countries: for example, do not allocate certain products to certain countries
due to dress codes or product unsuitability.

Merchandise Pricing
A retailer must price merchandise in a way that besides satisfying the customers, achieves
profitability for the firm. Pricing is a crucial exercise due to its direct relationship with a
firm’s goals and its interaction with other retailing matters. A pricing policy, if not
appropriate, send a store out of competition.
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 be the best price, but the lowest responsible price is the best right price. The
difference between price and cost is profit which can be very high when the sales person
wants to exploit an urgent situation.
1. Pricing Options:
(i) Predatory Pricing:
It involves large retailers that normally seek to produce competition by selling merchandise
at very low prices and create the situation where it becomes difficult for small retailers to
stay.
(ii) Prestige pricing:
ADVERTISEMENTS:
It assumes that customers will not buy merchandise displayed if price fixed are too low. It is
based on the price-quality association.
(iii) Price lining:
A pricing practice where by retailers sell merchandise at a limited rate/limited range of price
points, where each point represents a different level of quality.
What are retail promotions?
Retail promotion refers to a variety of marketing activities and techniques designed to
attract customers to a retail store or e-commerce platform and encourage them to make a

purchase. These activities can include advertising, sales promotions, public relations,
personal selling, and direct marketing.
1. Retailers use promotion to increase awareness of their brand and products, create
interest, and motivate customers to make a purchase. Some common types of retail
promotions include:
2. Sales: This involves offering discounts or reduced prices on products to encourage
customers to buy.
3. Coupons: Coupons are discount offers that can be redeemed by customers when
making a purchase.
4. Contests and giveaways: These involve offering customers the chance to win
prizes or receive free products by participating in a competition or taking a
specific action.
5. Loyalty programs: These reward customers for making repeat purchases or for
their loyalty to the brand.
6. Events and experiences: Retailers may host events or offer unique shopping
experiences to attract customers to their store or website.
Effective retail promotion requires careful planning and execution to ensure that the
marketing activities align with the retailer's overall business goals and target customer
preferences.
A retail promotion is a persuasive marketing strategy designed to drive sales. Most retail
promotions appeal to logic and urgency. They communicate to consumers, “This is a
great deal, and you don’t want to miss out.”
When you run retail promotions, use integrated marketing to reach prospects on
multiple channels. Incorporate both print and online advertising, including email,
organic social media posts, and paid advertising when possible.
You can use retail promotions for either brick-and-mortar or online store marketing.
Successful promotions provide a boost in sales and may convince indecisive prospects
it’s time to buy.
Retail Promotion Mix and It’s Components
(a) Sales Promotion:
Sales promotion programs are used by a wide range of organizations in both the consumer
and business markets, though the frequency and spending levels are much greater for FMCG
goods. Sales promotion describes promotional methods using special short-term techniques
to persuade customers of a target market to respond or make purchases. As a reward,
retailers offer goods at an affordable price or provide with certain gift items.

Sales promotions are usually confused with advertising. For instance, a television
advertisement mentioning a contest awarding winners with a free trip to a foreign country
may give the contest the impression of advertising. While the delivery of the marketer’s
message through television media is certainly labeled as advertising, what is contained in the
message, namely the contest, is considered a sales promotion.
(b) Publicity:
Publicity refers to any non-paid communication to promote an organization or its products
and services in public media. The publicity differs from advertisement in following senses.
(i) In case of advertisement, sponsor bears all the expenses while in publicity, media is not
paid for the presentation.
(ii) In advertisement, how the message will be shown, what text will be used and when and
where it will be shown, everything by and large is in the control of the concerned company,
whose products are to be shown and who is bearing the broadcasting expenses.
(c) Advertising:
Advertising is multidimensional. It is a form of mass communication, a powerful marketing
tool, a component of the economic system, a means of financing the mass media, a social
institution, and an art form, an instrument of business management, a field of employment
and a profession.
Advertising may be sign, a symbol, an illustration, an ad message in a magazine or
newspaper, a commercial on the radio or on television, a circular dispatched through mail or
a pamphlet etc. Non – personal advertising would mean that it is not on a person-to-person
basis. Goods, Services, Ideas for action would mean making a consumer aware about the
product of the firm. Paid by an identified sponsor implies that the advertiser has to pay the
media for the services it seeks.
(d) Public Relations:
It is essentially an art of persuasion in order to influence people. The process includes human
behaviour and manner in which people react to certain situations. It is defined as “the
management function which evaluates public attitude, identifies the policies and procedures
of an organization for public interest and executes a programme of action (and
communication) to earn public understanding and acceptance”.

(e) Personal Selling:
Personal Selling involves person-to-person communication with the prospect. It is a process
of developing relationships, discovering needs, matching the appropriate products with these
needs and communicating benefits through informing, reminding, or persuading. Personal
selling is thus, considered as a process that adds value. The salesperson attempts to
understand consumer’s needs and fit the product to meet those needs.
Retail layout planning
Retail layout planning refers to the process of designing the physical layout of a retail store
or e-commerce platform in a way that maximizes sales and enhances the customer shopping
experience. The goal of retail layout planning is to create a space that is visually appealing,
easy to navigate, and encourages customers to make a purchase.
Some key considerations for retail layout planning include:
1. Store layout: The layout of the store should be designed in a way that makes it easy for
customers to navigate and find what they are looking for. This can be achieved by
creating clear signage, grouping related products together, and placing popular items
in highly visible areas.
2. Visual merchandising: Retailers should consider how they display their products,
using techniques such as color blocking, creating eye-catching displays, and placing
complementary items together to encourage impulse buys.
3. Lighting: Proper lighting can make a significant difference in how customers perceive
a store and its products. Retailers should consider the brightness and color temperature
of their lighting to create a welcoming and visually appealing space.
4. Traffic flow: The flow of foot traffic through the store should be carefully considered
to ensure that customers can move freely and easily from one area to another. This can
be achieved by creating a clear entrance and exit, strategically placing displays and
merchandise, and using floor markings or signage to direct customers.
5. Online layout: E-commerce platforms should also be designed with a clear and easy-
to-navigate layout, including clear product categories, search functionality, and easy
checkout processes.
By carefully considering these and other factors, retailers can create a retail layout that not
only enhances the customer shopping experience but also maximizes sales and revenue.
Type of store layout

There are several types of store layouts that retailers can choose from, depending on their
business goals, product offerings, and target customers. Some common types of store layouts
include:
1. Grid layout: This is a straightforward and efficient layout that uses a grid pattern to
display products in aisles. This layout is commonly used in grocery stores and other
large retailers.
2. Loop layout: This layout uses a circular path that guides customers through the store,
with merchandise displays placed around the perimeter of the store. This layout is
commonly used in department stores and large specialty retailers.
3. Free-flow layout: This layout has no set pattern and is designed to encourage
customers to explore and discover products on their own. It is commonly used in
boutique stores and specialty shops.
4. Angular layout: This layout uses angled walls and merchandise displays to create a
visually interesting space that encourages customers to move around the store. This
layout is often used in fashion and home decor stores.
5. Racetrack layout: This layout combines elements of the grid and loop layouts, with a
central aisle that loops around the store perimeter. This layout is commonly used in
large retailers and department stores.
6. Boutique layout: This layout is designed to create a luxurious and exclusive shopping
experience, with carefully curated displays and limited product offerings. This layout
is commonly used in high-end fashion and luxury goods stores.
Retailers can also combine elements of different store layouts to create a customized layout
that best meets their specific needs and goals.
Retail atmosphere
Retail atmosphere refers to the overall sensory experience that customers have when they
visit a retail store or e-commerce platform. It includes a combination of visual, auditory,
olfactory, and tactile stimuli that contribute to the overall impression that customers have of
the store.
Some key elements of retail atmosphere include:
1. Store design: This includes the layout of the store, the use of colors, lighting, and
signage, and the overall visual appearance of the space.
2. Music: Background music can have a significant impact on the atmosphere of a store,
influencing customers' moods and behavior.

3. Scent: The use of pleasant scents can create a more inviting and appealing atmosphere
in a store.
4. Temperature and humidity: The temperature and humidity of a store can impact
customers' comfort and overall impression of the store.
5. Customer service: The attitude and behavior of employees can significantly impact the
atmosphere of a store, creating a welcoming and friendly environment or a tense and
uncomfortable one.
6. Store layout: The layout of a store can impact the atmosphere by creating a sense of
spaciousness or intimacy, and by guiding customers through the store in a way that is
intuitive and easy to navigate.
7. Visual displays: Retailers can use visual displays such as mannequins, product
displays, and window displays to create a sense of excitement and interest in their
products.
8. Product packaging: The packaging of products can contribute to the overall
atmosphere of the store, with attractive and well-designed packaging creating a sense
of quality and attention to detail.
9. Technology: The use of technology in a retail store, such as interactive displays,
digital signage, and virtual reality experiences, can create a modern and innovative
atmosphere that appeals to tech-savvy customers.
10.Branding: The branding of a store can contribute to the overall atmosphere, with a
consistent and well-executed brand image creating a sense of trust and familiarity
among customers.
11.Ambience: The overall ambience of a store can be influenced by factors such as the
level of noise, the presence of background chatter, and the level of activity in the store.
By carefully controlling these and other elements, retailers can create a retail atmosphere that
is aligned with their brand image and appeals to their target customers. A positive retail
atmosphere can enhance customers' overall shopping experience, increase the amount of
time they spend in the store, and ultimately lead to increased sales and customer loyalty.
The retail promotional mix strategy is a combination of different promotional tools that
retailers use to communicate with their customers, increase sales, and build brand awareness.
Here are some common elements of a retail promotional mix:
1. Advertising: This includes paid advertising through channels such as television, radio,
print, and online media. Retailers can use advertising to reach a wide audience and
build brand awareness, promote specific products or services, and create a sense of
urgency around sales and promotions.

2. Sales promotions: These are short-term tactics designed to encourage customers to
make a purchase, such as discounts, coupons, and limited-time offers. Retailers can
use sales promotions to generate traffic and sales during slow periods, clear out excess
inventory, or promote new products.
3. Public relations: This involves building relationships with the media and the
community to generate positive publicity for the store. Retailers can use public
relations to increase brand visibility, enhance their reputation, and create a sense of
trust and credibility among customers.
4. Personal selling: This involves one-on-one interactions between sales associates and
customers, often used in high-end retail environments. Retailers can use personal
selling to build rapport with customers, provide personalized recommendations, and
create a sense of exclusivity around the shopping experience.
5. Direct marketing: This includes targeted marketing campaigns using direct mail,
email, and other forms of direct communication. Retailers can use direct marketing to
reach a specific audience with tailored messages and offers.
By using a combination of these promotional tools, retailers can create a comprehensive and
effective retail promotional mix strategy that reaches their target customers, builds brand
awareness, and drives sales. It is important for retailers to carefully consider their
promotional mix strategy based on their business goals, target customers, and available
resources.
Retail store sales promotional schemes
There are various sales promotional schemes that retail stores use to increase sales and attract
customers. Here are some examples:
1. Discounts: One of the most common promotional schemes is offering discounts on
products. This can include percentage discounts, buy-one-get-one-free offers, and
other similar promotions.
2. Coupons: Retail stores often use coupons as a promotional tool to encourage
customers to make a purchase. Coupons can be distributed through various channels,
such as email, social media, and print advertising.
3. Limited-time offers: Retail stores may offer limited-time offers to create a sense of
urgency and encourage customers to make a purchase. This can include flash sales,
one-day-only deals, and other similar promotions.

4. Free gifts: Retail stores may offer free gifts with purchases as a way to incentivize
customers to buy products. This can include free samples, free accessories, or other
similar gifts.
5. Loyalty programs: Retail stores may offer loyalty programs to reward customers for
repeat purchases. These programs can include points-based systems that customers can
redeem for discounts or other rewards.
6. Referral programs: Retail stores may offer referral programs to incentivize existing
customers to refer new customers to the store. This can include discounts or other
rewards for both the referrer and the new customer.
7. Contests and giveaways: Retail stores may hold contests or giveaways to attract
customers and create buzz around their products. This can include social media
contests, in-store raffles, or other similar promotions.
8. Bundling: Retail stores may bundle products together and offer them at a discounted
price to encourage customers to buy more.
9. Price matching: Retail stores may offer to match the prices of their competitors to
prevent customers from going elsewhere.
10.Cashback offers: Retail stores may offer cashback on purchases made during a
specific period. The cashback can be redeemed on future purchases at the store.
11.Financing options: Retail stores may offer financing options, such as zero percent
interest or low monthly payments, to encourage customers to make larger purchases.
12.Trade-in programs: Retail stores may offer trade-in programs where customers can
exchange their old products for a discount on a new product.
13.Charitable donations: Retail stores may donate a portion of their sales to a charity or
cause to incentivize customers to buy from them.
14.Seasonal promotions: Retail stores may offer promotions around specific holidays or
seasons to create excitement and encourage customers to buy gifts or seasonal items.
15.Personalized promotions: Retail stores may use data on customers' past purchases and
preferences to offer personalized promotions, such as targeted email campaigns or
exclusive discounts for loyal customers.

Retailing - Unit 2 BBA 5.docx

Recomendados

Recomendados

Más contenido relacionado

Similar a Retailing - Unit 2 BBA 5.docx

Similar a Retailing - Unit 2 BBA 5.docx (20)

Más de NISHA SHAH

Más de NISHA SHAH (20)

Último

Último (20)

Retailing - Unit 2 BBA 5.docx