Retailing is a process that encompasses all the activities that sellers use to add value to the products that they sell to customers for personal use. An effective retailing strategy takes into account all the 4Ps of the marketing mix, which include price, place, product, and promotion (Grewel & Levy, 2011). The factors that determine the choice of a retailer include the channel structure, channel member characteristics, and the places where the target customers expect to find the product. Manufacturers usually select the level of distribution intensity that enables them to reach the target market while maintaining their brand image. In intensive distribution intensity, the manufacturer uses as many retailers as possible to reach customers. By contrast, exclusive distribution intensity involves partnering with select retailers to sell the product. Selective distribution involves collaborating with several but not all retailers to sell the products.
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The three main categories of retailers are food retailers, general merchandise retailers, and service retailers. The main advantage of retail stores is that they provide browsing opportunities to customers. This enables customers to enjoy personalized services, instant gratification, and cash payment (Grewel & Levy, 2011). A multichannel retailing strategy involves using stores, catalogs, and the internet to reach customers. This strategy leads to increased sales and an improved understanding of customers’ purchasing behavior. The difficulties associated with multichannel retailing include establishing an integrated CRM system, maintaining a consistent brand image, pricing, and delivering products across different channels.
Evaluating the strength of the retailer is important because it can help manufacturers to boost their sales and profits. Retailers with high bargaining power such as Wal-Mart can significantly suppress the manufacturer’s profit margin, which in turn leads to losses. Similarly, a retailer with a limited branch network limits sales because it cannot reach a large number of customers. Manufacturers should consider their product categories and positioning strategies when choosing the level of distribution intensity. Intensive distribution intensity is likely to increase sales for products that target the mass market. By contrast, premium brands that target a niche market should be sold using the exclusive distribution strategy.
What I Learned
First, it is important to conduct a situation analysis to determine the retailer’s strength and image, as well as, the channel member characteristics. This helps in selecting the right retailer to distribute a given product (Grewel & Levy, 2011). Second, an effective retailing strategy should be based on an integrated marketing mix. Pricing and distribution strategies should reinforce the product strategy by enhancing the brand image. Moreover, promotional activities should improve retailing by creating the appeal or desire that motivates customers to purchase the product.
Connection to Current Business and Marketing Issues
Globalization and high competition are the main business issues that influence retailing. Businesses are increasingly adopting distribution channels with few intermediaries to maintain competitive prices. Given the high rate of globalization, retailers have to use multichannel distribution systems that consist of physical stores and online stores to reach the global market. The ability to understand and to fulfill customers’ shopping needs is a major marketing issue that shapes retailing. In order to improve customers’ shopping experience, businesses have to use multichannel distribution systems that facilitate the convenience of an online store while maintaining the ambiance of a physical store.
Grewel, D., & Levy, M. (2011). Marketing. New York, NY: McGraw-Hill.