What is Retail Marketing?

What is Retail Marketing?

The concept of retailing can be traced back deep into history and the development of human civilizations. However, until about half a century ago, retailers were at the end of the supply chain and their key function was to sell products offered by manufacturers.

Retailers had some influence on the products made but much emphasis was placed on pushing (selling) manufactured goods. 

But a new approach to business emerged which laid the founding principles of marketing. These principles brought about a new way of looking at business development which revolutionized modern business practices.

To date, through successful adoption and application of marketing, detailed knowledge and understanding of the customer, and careful management and planning of retail operations.

Retailers have shifted the power and control in the supply chain from the manufacturer to the retailer.

In this section, we are going to learn about different views of the role and importance of marketing in retail. 

The purpose of the following series of activities is to develop your understanding of the elements of the marketing mix and examine how retailers apply the mix.

You must check your understanding of the meaning of the term ‘marketing’ before you proceed

The retail marketing mix

Marketing is an underlying philosophy that controls business activities, but how does a retailer do marketing?

A retailer must engage in planning, research, and analysis before implementing a marketing strategy. At the core of any retail marketing plan is the mix consisting of the four Ps (Product, Price, Place, and Promotion) of marketing.

The following images show retail examples of each of the elements of the mix and the next activity describes each element of the mix further.

Marketing communications in retailing

For a retailer, it is important to understand how to promote products and communicate with customers as this affects overall success.

In the retail industry, promotion is frequently called marketing communications and this is the term we will use for the rest of this section.

The following activities aim to give you insight into the meaning of the term ‘marketing communications and identify the key considerations of marketing communications plans.

Marketing communications in practice

Under the banner of marketing communications (in practical terms), retailers have to decide what messages they wish to send to their customers and how to convey the message.

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There are three key areas to consider when planning marketing communication activities:

  • the message
  • the media
  • the communication tools.

The following image illustrates these three areas of consideration: the message, the communication tool (advertising), and the media (outdoor).

What is Retail Marketing?

 

We are going to explore each of these elements in turn but before doing this we need to consider the basic model of communication.

The linear model of communication

All businesses need to engage the attention of their customers and marketing communications are the mechanism that facilitates this process.

Retailers plan communication campaigns seeking to inform, persuade, build relationships, and create interest from specific target customers.

In its simplest form, communication is a two-way exchange between two parties.

What is Retail Marketing?

The linear communication model

What is Retail Marketing?

 

According to Fill ( quoting Theodorson and Theodorson), this is a linear model that emphasizes the ‘transmission of information, ideas, attitudes, or emotion from one person to another, primarily through symbols.

The model and its components are straightforward but it is the quality of the linkages between the various elements in the process that determine whether a communication event will be successful.

In other words, does the message sender (source) use the right language and images (encoding) to create a message, which can be interpreted (decoded) by the message recipient (receiver)?

Successful messages need to be heard over and above interruptions (noise) and ultimately the realms of understanding of the message sender and the message receiver should overlap.

Retail marketing communications rely, to a large extent, on these principles of communication being successfully implemented.

It is important to note that noise can be created by physical factors, like actual sounds and individual behavior, but also cognitive factors.

Cognitive distractions tend to be abstract and are things that interfere with our perceptions and interpretations of messages.

A cognitive distraction might occur if the encoding of the message was inappropriate so the receiver found the message difficult to understand, e.g. a message that is garbled or uses language that is too complex.

Retailers need to ensure when they send communication messages that the target for the message has the greatest opportunity to receive the message. This can be achieved by tailoring the message and carefully planning when and how the message will be received and the media that will carry the message.

The message

Getting heard over the noise in the world of communications is a key challenge in the communication industry.

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Creative advertising and communication agencies specialize in developing messages that the target audience can hear (receive), in other words, messages that cut through the noise.

The message(s) a company sends to its customers is critically important to the success of a business.

In retailing, communication messages help to position the retailer as a ‘brand’ in the minds of customers and highlight the difference between products and brands and the significance of branding in retailing.

Now we are interested in how companies create brand messages, which ultimately define what a company stands for and how it is positioned in the minds of its customers.

The marketing communication mix

Retailers should consider the range of communication tools that they can mix to communicate their marketing and branding messages.

Advertising, sales promotion, public relations, digital marketing, direct marketing, and personal selling are examples of important marketing communication tools widely used in the retail industry and other industry sectors.

What is Retail Marketing?

 

The communication mix and the interrelations between media tools and audiences. 

The figure above indicates an interrelationship between the target customers, the tools, and the media.

This is because the tools a retailer might choose to target a particular audience will affect the media used to carry the message.

It is important to note that deciding on the tools and media involves a complicated set of decisions.

Indeed Davies (2001) suggested there are over 2,000 different combinations of interlinked decisions to consider that could affect marketing communication planning.

To make such choices, retailers need to select a blend of tools and media that will reach the target audience.

Each tool in the communication mix has different characteristics, which affect how they are used in conjunction with the media and communication messages.

Four important characteristics can help guide your choice of which communication tool to use for delivering particular marketing communication messages. The four characteristics are:

1. Communication potential – focuses on the ability of the communication tool to deliver a personal message, its audience reach, and the level of interaction offered.

2. Credibility – refers to how the communication tool is perceived by the target audience.

3. Cost – includes considerations about how much of the communication budget is required to use a particular tool, ratios of cost per contact, and the size of investment required to use the particular communication tool.

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4. Control – the ability to reach specific target audiences and flexibility to adapt to changes in the communication setting.

The characteristics of each of the communication tools affect how and where they are used, based on the level of:

  • Communication potential, e.g. television advertising is good at visually informing target consumers of key features and benefits, whereas sales promotions are a call to action, to encourage consumers to purchase for example.
  • Credibility required (tools are perceived and valued differently by the target audience, e.g. public relations score high whereas advertising scores low).
  • The cost which is a major consideration and the communication budget will influence the choice of communication tools.
  • Control that is required. (In other words, is the message that the target audience receives the same as the one the transmitter intended to send?)

What have you learned about marketing communications in retailing?

In this section, you have been introduced to some of the key areas of marketing communications – the message, the media, and the communication tools.

You have considered the basics of the communication model that underpins the development of marketing communication messages.

You have also explored what it takes to develop a communication message, how to use communications to build a brand, and the characteristics of the different media that might carry marketing communications.

In addition, you have identified a range of communication tools that make up the marketing communication mix.

Conclusion

In this article, we have explored the meaning of the terms retailing, marketing, and marketing communications.

We have also considered the importance of the marketing mix and identified the different communication tools that a retailer might use to interact and communicate with its target customers.

You have been introduced to a few theoretical concepts and ideas, which have been illustrated using real-world examples and cases in retail.

You have been introduced to some of the key areas of marketing communications – the message, the media, and the communication tools.

You have considered the basics of the communication model that underpins the development of marketing communication messages.

You have also explored what it takes to develop a communication message, how to use communications to build a brand, and the characteristics of the different media that might carry marketing communications.

In addition, you have identified a range of communication tools that make up the marketing communication mix.

The article has also aimed to introduce the importance of marketing and communication from a retail perspective.

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