Retail

Management
Mkt 531
Revision
Starbucks SWOT
• The wheel of retailing
concept was introduced
by McNair from
Harvard University
• The idea itself intends
to describe how the
retail institutions
transform during their
evolutionary life cycles.

Wheel of Retailing
• Step 1 of the Wheel of retailing – Establishing and penetrating in
the market
• The theory pays attention to the new retailers which often enter the
market place with low prices as well as low profit margins and
sometimes low status.. Example – When book stores like Barnes and
nobles started, they started by a unique model of bringing all the
books under one roof with amazing discounts. This was the first
stage for them in the wheel of retailing.
• Step 2 of the Wheel of retailing – Expanding in the market
• During the time and while they gain more experience of the market,
these retailer businesses strive to enlarge their customer base with
the purpose of increasing sales, gaining a higher profit margin as
well as acquiring a significant market share. Example – Barnes and
nobles then started expanding the market with more and more stores
so that they increased their sale, their brand value and ultimately,
their margins started increasing as well.
• Step 3 of the Wheel of retailing – Stabilized business model attracting margins.
• In this stage of the Wheel of retailing, the company is already in an established
position and hence the rates are enough to get a decent margin. Because of the
margin it is getting, the company keeps expanding moderately and increases its
reach to attract as well as retain more customers. Example – Once Barnes and
nobles established itself strongly, the margins grew and it created more and more
showrooms. The result was that a lot of small shops closed down and most people
flocked in Barnes and nobles.
• Stage 4 of Wheel of retailing – The entry by another retail competitor who
challenges, and then brings down the original.
• By adding higher qualitative products to the market or by providing additional
services, or by simply moving to a better market location the retail businesses then
target another segment. Therefore, their operations and facilities increase and
become more expensive. Ultimately, these retail businesses might emerge as a high
cost price retailer. Overall, in this stage, the cost is high for the original retailer.
Therefore, this presents an opportunity for another retailer who can then enter in the
market again in stage 1, with an objective to penetrate the market. Example –
When Barnes and nobles established itself strongly, people still had to visit the
store. Thus, Amazon entered the market with its own unique retail offering. People
could now browse books and order them from their home and get it home delivered
• Based on this, the wheel of retailing concept is seen as a
cycle and an evolutionary theory and it represents one of
the theories of structural change in retailing. As the
theory involves the beginning represented by one state
and return to the same state after some time in the future,
the theory is perceived as being cyclical.
• The discussed theory cannot apply to all retail businesses
as there are also businesses such as boutiques, vending
machines and convenience stores which are being
operated with a high margin basis from the entry phase.
Barnes and Nobles
 Attitudes
Towards
Lifestyl
Shopping e
Retail
Shopper

Demographics
Needs/
Desires
Environme
ntal Factors

Retail Customer
 • AGE
• GENDER
• POPULATION
• GROWTH RATE
• LIFE EXPECTANCY
• LITERACY
• LANGUAGE SPOKEN
• HOUSEHOLD SIZE
• MARITAL STATUS
• FAMILY STATUS
• INCOME
• RETAIL SALES
• MOBILITY

Consumer
• PLACE OF RESIDENCE
• OCCUPATION
• EDUCATION

Demographics • ETHNIC BACKROUND

• The Retailer through this can find his/her ideal customer, the one
customer that represents their target market and should know this
individual intimately, for example: daily routine, interests, hobbies, etc
• You should know them as you would an “imaginary friend”
• Now it is scary for a retail business to have just one Ideal Customer, so
you can break down different product offerings to different ideal
(target) customers.
• Lets take Khaadi for example. In a interview Shamoon Sultan revealed
the Ready to wear and Unstitched have two different customers, and its
never both but one or the other. He further delved into explaining that
if the population of women in the workforce were to increase so would
the sales of RTW and unstitched would become obsolete. This tells us
he knows his ideal customer and their demographic.

Consumer Demographic
• The most important markers in demographics marketers
focus on is gender , age and income.
• Retailers generally find it useful to group people
• People in the same generation often share similar
interests and life experiences.
• Genders share similar needs
• This will also help establish market size

Demographics
• In a study titled, “Men Buy, Women Shop,” researchers at
Wharton’s Jay H. Baker Retail Initiative and the Verde
Group, a Toronto consulting firm, found that women
react more strongly than men to personal interaction with
sales associates. Men are more likely to respond to more
utilitarian aspects of the experience — such as the
availability of parking, whether the item they came for is
in stock, and the length of the checkout line.

Lets first Examine why its

crucial to look at Gender
• You cannot market to men the same way you market to
women.
• It’s not a simple transformation of changing colors, fonts
or packaging.
• Men and women are different biologically,
psychologically and socially.
• Of course, when it comes to attractiveness, both genders
want to garner attention, but each for different reasons.
• For men, looking good is looking strong, confident,
authoritative, adventurous – a standout.
• Men concentrate on looks to the extent that it signals
something about what they do, have done or can do.
• Regardless of how much a woman wants to attract in the
contest of beauty and brains, their focus is on hope and
details, and they concentrate on how appearance reflects
their inner being.
Dolce and Gabanna
• Jill Avery, senior lecturer at Harvard Business School
found that most men fear being interpreted as feminine,
more so than women fear being interpreted as masculine.
• So essentially the same product would be marketed to
men differently rather than the way it is presented to
women
Both Ads
• Men like to hear benefits that are functional and relevant to them -
body wash to wash away the dirt, or their face wash to cleanse their
pores.
• Women generally prefer more descriptive articulations that bring the
products to life - with moisturisation, supple skin, nourishment and
other aspirational adjectives.
• Even when women buy for their men, they look for a promise of
efficacy that produces a desirable result. “Leaves hair smooth and
shiny” or “leaves skin lightly scented” are claims that can appeal to
women for themselves, or bring to life how they would like their
men to look or smell.
• Notice even in the advert as for the men, the focus is on the function
and outcome with power words used whereas in the women it is
more of a descriptive nature explaining essential elements before
talking about the outcome and specifically raises the word price in it
as women are considered to be more price conscience and
comparative shoppers then men
• The language used to communicate in marketing campaigns to
women will be more adjective laden and descriptive in nature
because the essentially aim will be to connect
• Logic vs Emotion
• Women are influenced by emotions and tactile experience significantly more
when it comes to forming a decision. Males need fewer details, fewer steps,
and often demand a clear description and functionality guide if the
product/service is complicated.
• Luxury vs Utility
• When marketing to men and women, remember that men are operating on a
“must-have” basis, in that they are ready to pay a solid amount if the item is
desired. Women, on the other hand, are “deal seekers” who look for
practicality and low to moderate pricing.
• Simplicity vs Detail
• Generally, men prefer clear guidelines and solutions that require fewer
efforts to converse. Women prefer loads of details, descriptions, and
comparisons as they deem such information credible and worthwhile.
• Male vs Female
• The gender of the product is obvious but important to mention. Men are
indeed attracted to products and services that are marketed as for males,
therefore, functional, and problem-solving. Women focus on the efficiency
and utility of the product and give no attention to gender as the result is more
important
• Brand vs. Price
• A 2008 Massey University study of more than 200 shoppers
conducted by Dr. Gurvinder Shergill and student Yiyin Chen
concluded that women care more about comparison shopping,
bargain hunting and getting a lower price at outlet stores. On the
other hand, men were more willing to shop at traditional department
stores to find well-known brand names, regardless of the price.
• Emotion vs. Function
• Women are looking for an emotional, tactile experience when they
shop, according to Juniper Park, an ad agency in Toronto. Men aren't
looking for words like "touch" or "smile" in ad copy, but women find
this approach thoughtful. To target women, advertisers have to think
about how women use the product differently. For instance, with a
new shaving cream, they have to take into consideration that women
shave in the shower while men typically don't. The product has to be
rust-proof and slip-proof and emphasize the moisturizing component.
• Women are looking for decisions that are "right for their families" or
that "help them bring out the best version of themselves." Women
want goods that make their friends happier, get the job done faster
and provide a little bit of encouragement along the way.
• Practicality vs Luxury
• A May 2010 ZipRealty Inc. survey found that men and women
homebuyers respond to different "must-haves" and "deal-breakers"
while shopping. The survey showed that a higher percentage of
women reported storage space and a large yard as a high priority,
compared with men. Also, 60 percent of women (compared with 49
percent of men) said they wouldn't consider a home with small
bedrooms.
• Men looked for perks like a great view (44 percent, vs. 33 percent of
women) and a luxurious bathroom (28 percent, vs. 23 percent of
women) and guest bedrooms (70 percent, vs. 63 percent of women).
In general, men are more turned off by pictures of outdated furniture
or unkempt landscaping in online photos. They are more likely to be
turned off by the lack of curb appeal when looking in person.
• Detail vs Simplicity
• NeuroFocus, a company that specializes in determining
differences in brain-stimulus responses of men and
women, says there are some fundamental variations in
males and females. For instance, female brains have
stronger connections between the right and left
hemispheres, meaning that their language and memory is
very much in touch with their emotions. Women also
have a larger hippocampus region, which translates to
better recall of detailed information. Men have superior
spatial ability and problem-solving processes.
• When marketing to women, use loads of detail and
emotional cues. For men, keep it simple, but show
important design elements.
Now for Generational
segmentation
 Generation Name Births Start Births End

Baby Boomer
1946 1964
Generation

Generation X (Baby
1965 1979
Bust)
Xennials - 1975 1985

Generation Y - The
Millennials - Gen 1980 1994
Next

Generational Cohorts
Millennial vs Gen z
 Millennial Gen X Baby Boomers

More Disposable
Diverse Astute Customers
Income

Want to achieve high

quality of life which Least Likely to trust Leisure time is high
contradicts with the “live
Sales Pitches priority
to work” credo they are
against

Gen Y shows the

same patterns around Much less Inclined to
Maintaining Youth
the world due to their buy Status Products
connective nature
How generational
demographics play into
marketing and consumer
understanding
Both Eva And Habib Ad
Income Segmentation
• Although a self assessment tool, Keirsey’s division of
people can actually give us Four major types of
temperament and is used in leading brands like Cocoa
Cola, IBM, 7-Eleven, Bank of America, etc..

Keirsey Temperament
Sorter
 • So as we have discussed psychographic segmentation is
a method used by marketers to find the best customers
for their products (Ideal Customer)based on the
customers’ interests, needs, and behavior.
• This allows you to tailor offerings to your customers
based on their needs and ideals, a sort of way to mirror or
read their minds.

What Is Psychographic Segmentation?

• Once you have the basics down, you need to ask yourself
some questions relating to your target audience. What
principles do your customers have? What motivates
them? What do they believe in? What are the drivers
behind their conscious and unconscious decisions?
• The most basic form of doing this is utilizing social
media **
• Opinions are another major factor in psychographic segmentation. Opinions
can be classified to some extent. For instance, they can be grouped by what
they relate to. These groups include customers themselves, social issues,
political issues, economics, business, education, products, and services.
• The majority group opinions will help you quickly identify which opinions
your customers have about a variety of topics.
• Interests are one of the most important determining factors for
psychographic segmentation because they are quite straightforward. Online,
people come together and form the so-called “interest tribes” or communities
dedicated to discussing certain topics within a particular interest.
• That being said, the good news is that the Internet pretty much does the job
for you. All you need to do is start researching and joining relevant groups
and communities to get involved more.
• If you don’t know what’s up, you won’t be able to adapt and update
your marketing campaign to fit these new interests the tribes develop.
• Like interests, activities are pretty straightforward.
Activities include every task performed and action
completed by your target customer units within a day, a
week, a month, a year, or a decade.
• Activities can be grouped by the sphere of life they
belong to as well as how often they are performed, for
how long they are performed, how enjoyable they are, the
circumstances surrounding the activities, and so on.
• The easiest way to get started with this psychographic
factor is by looking at the spheres they cover. These
include work, social events, hobbies, vacations,
community, club memberships, and entertainment. Note
that these can overlap at times as well.
• When classifying activities, think about the basic structure
of your customer’s day. Do this for every customer unit:
• ✶ Which activities does the customer perform
regularly and which ones are performed rarely?
• ✶ Is there a specific schedule for these?
• ✶ Which activities are they forced to perform, and which
activities do they perform voluntarily?
• ✶ Do they spend money on the activity?
• ✶ How engaged are they with the activity?...and so on
• Values, values are an essential psychographic segmentation factor to work with.
Now you have consumers who are aware of climate change, sustainable products,
ethical sourcing, etc.. Brands need to be aware if customers value reflect they
must adopt the values themselves
• Personality can also play a key role in your psychographic segmentation
campaign.
• Some marketing techniques and elements like social proof, authority, scarcity,
and innovation can help you better understand the psychology of your customers
and determine their personality traits.