Retail Market Strategy

Retail Strategy – is a statement

identifying (1) the retailers target
market (2) format the retailer
plans to use to satisfy the target
market’s needs (3) bases upon
which the retailer plans to build
a sustainable competitive
advantage
Target market – the market
segment(s) towards w/c the
retailers plans to focus its
resources and retail mix
Retail format – suggest the
type of retail mix used by
retailer to satisfy the needs of
its target market
Sustainable competitive advantage – an
advantage over the competition that is not
easily copied & thus can be maintained
over a long period of time.

TARGET MARKET & RETAIL FORMAT

Retailing Concept – mgt orientation that
focuses a retailer on determining the needs
of its target market & satisfying those
needs more effectively & efficiently than it
competitors
Retail Market – is a group of
consumers with similar needs
(a market segment) that is
serviced by a grp of retailers
using similar retail format to
satisfy theme
Building a Sustainable Competitive Advantage
- means that the retailer, in effect, builds a
wall around it position in a retail market.
7 Important opportunities for retailers to
develop SCA
1. Customer Loyalty
2. Location
3. Human Resource Management
4. Distribution and Information System
5. Unique Merchandise
6. Vendor Relations
7. Customer Service
Customer Loyalty – customers are committed
to buying merchandise and services to a
particular retailer.
Loyalty – customers will be reluctant to
patronize competitive retailers.
Some ways retailers build loyalty
1. Developing strong brand for the store or
store brands
2. Developing clear and precise positioning
strategies
3. Creating an emotional attachment w/
customers through loyalty programs.
Retail Branding – store use brands to
build loyalty in much the same way
that manufacturers do.
- stores often have merchandise with
their store’s name on it,
- a retail brand, whether it is the
name of the retailer or a private
label, can create an emotional tie
with customers that builds trust and
loyalty
Positioning – involves designing and
implementation of retail mix to create an
image of the retailer in the customer’s
mind relative to its competitors
- emphasizes that the image in the
customer’s mind is critical.
- retailers needs to research what its
image is & make sure that it is consistent
with what customers in its target market
want.
Loyalty Programs – part of an overall
customer relationship management
- use of loyalty cards
Data warehouse – purchases from loyal
customers are store in a huge database
- from this data warehouse analyst
determine what types of merchandise and
services certain groups of customer are
buying and retailers can tailor their
offerings to better meet the needs of their
loyal customers.
Location – location is the critical factor in
consumers’ selection of a store.
Human Resource Management –
knowledgeable & skilled employees
committed to the retailer’s objectives are
critical assets that support the success of
companies.
- develop programs to motivate & coordinate
employee efforts, provide appropriate
incentives, fostering a strong positive
organizational culture/environment &
managing diversity
Distribution & Information System
- all retailers strive to reduce operating
cost – cost associated w/ running the
business- and make sure the
merchandise that customers want is
available.
- how they can offer better service,
increase the breath & depth of their
merchandise assortments or lower
prices to differentiate themselves from
others
Unique Merchandise – products
developed & marketed by a retailer &
available only from retailers.
Vendor Relations – by developing strong
relations with vendors, retailers may gain
exclusive rights to (1) sell merchandise in a
specific region (2) obtain special terms of
purchase that are not available to
competitors who lack much relationships
(3) receive popular merchandise in short
supply.
Customer Service – offering excellent
customer service.
- good service is a valuable strategic
asset.

* To build a sustainable competitive

advantage, retailers typically don’t
rely on a single approach.
Growth Strategies
4 types of growth opportunities
1. Market Penetration growth opportunity – involves
realizing growth by directing efforts toward
existing customers using the retailer’s present
retailing format.
- include opening more stores in the target mkt
and keeping longer hours
- Cross selling – the sales associates in one department
attempt to sell complementary merchandise from other
departments to their customers.
2. Market Expansion – involves using existing retail
format in new market segments.
3. Retail Format Development – an opportunity in
w/c a retailer develops a retail format – format
w/ different retail mix – for same target market
4. Diversification – is one w/c retailers introduces
a new retail format directed toward a market
segment that’s not currently served by the
retailer.
- either be related or unrelated.
*Related diversification – retailer’s present target
mkt or retail format share something in common
w/ the new opportunity
*Unrelated diversification – lacks any
commonality bet. present bus. & new bus.
*Vertical Integration –is a
diversification by retailers into
wholesaling or manufacturing.
International Expansion – can be
risky because retailers must deal
with different government
regulations, cultural traditions,
supply chain considerations &
languages
Keys to Success (4 characteristics retailers
that have successfully exploited int’l.
growth opp.)
1.A globally sustainable advantage
2.Adaptability – recognize cultural
differences – adapt their core strategy to
needs of the local mkts.
3.Global culture – must think globally
4.Financial resources – expansion into int’l.
mkt. requires a long term commitment &
considerable upfront planning
4 Approaches (Entry Strategies) when
entering non domestic mkt.
1. Direct Investment – involves a retail firm
investing in and owning a division or
subsidiary that operates in a foreign
country.
2. Joint Ventures – is formed when the
entering retailer pools its resources w/
local retailer to form a new company in
w/c ownership, control, & profits are
shared. It reduces the entrants risk
3. Strategic Alliance – a collaborative
relationship between independent
firms
4. Franchising – offers the lowest risk
and requires the least investment.
- the entrant has limited control over
the retail operations in the foreign
country, potential profit is reduced, and
the risk of assisting in the creation of a
local domestic competitor is increased
Strategic Retail Planning Process
- entails the set of steps a retailer
goes through to develop a
strategic retail plan.
- it describes how retailer select
competitive target mkt segments,
determine the appropriate retail
format & build sustainable
competitive advs.
Strategic Retail Planning Process
1. Define the bus. mission statement
mission statement – a broad
description of a retailer’s objectives &
the scope of activities it plans to
undertake
- defines the general nature of the
target segments and retail formats of
which the firm will focus
Managers should need to ask these
Q’s in developing MS
1. What bus. are we in?
2. What should be our bus. in the
future?
3. Who are the customers?
4. What are our capabilities?
5. What do we want to
accomplish?
Vision
SM Prime aspires to be the world-class Filipino brand in the integrated
property development industry that acts as a catalyst for economic
growth, committed to deliver innovative and sustainable lifestyle cities,
thereby enriching the quality of life of millions of people.
Mission
SM Prime commits to the following mission:
•To constantly meet the ever-changing needs of the customer
•To increase shareholder value and to deliver sustainable long-term
growth
•To be the employer of choice
•To nurture communities where we serve
•To act as a catalyst for economic growth.

Values
•Focus. Hard Work. Innovation. Integrity. Prudence.
SM Prime reviews its Mission, Vision and Values at least every three (3)
years.
2. Conduct of Situation Audit
- an analysis of the opportunities &
threats in the retail environment & the
strengths & weaknesses of the retail
business relative to its competitors.
Elements in a Situation Audit
1. Market Factors – size, growth,
reasonability, business cycles
2. Competitive factors – barriers to entry,
bargaining power of vendors, competitive
rivalry
3. Environmental Factors –
Technology, Economic, Regulatory,
Social
4. Analysis of Strengths &
Weaknesses Analysis – indicates
how well the business can seize
opportunities & avoid harm from
threats in the environment. 8/3
3. Identify Strategic Opportunities –
4. Evaluate Strategic Opportunities –
evaluation determines the retailer’s
potential to establish a SCA & reap
long-term profits from them.
5. Establish Specific Objectives and
Allocate Resources – establish a
specific objective for each
opportunity
6. Develop a Retail Mix to
Implement Strategy –
7. Evaluate Performance &
Make Adjustments – evaluate
the results of the strategy &
implementation program.
Seatwork in ¼
Identify a store or service
provider that you believe has
an effective loyalty program.
Explain why?
Assignment ½ yellow pad
Why is it important to have a
financial strategy?