A retail marketing strategy enables the business to create and implement ways of retaining existing customers while attracting new ones. The strategy should be affordable and yield results for you to consider it viable. To grow awareness and consideration with future customers, retailers utilize various advertising and communication tools. Finding the right marketing mix can lead to a profitable growth and a higher return on investment. By considering the right promotional strategy retailers can persuade consumers to choose to buy products in their store and to do continuous business with their retail brand. The fundamental approach used by modern retailers in marketing their products is the Four Ps of Retail Marketing.
Components of Retail Marketing
Retail marketing strategies have four main components that merge to make the business plan effective and are very well known to the practitioners. They include:
What this list does not include is how these components interplay with each other to create Customer Experience, or Perception of your store in the mind of your customers. In the last couple of decades, as the consumers become increasingly affluent, the role of Customer Experience has become more and more critical in growing demand for products and services.
The product you sell could be tangible or intangible. They can be durable; like appliances or furniture, or non-durable (consumable) products like grocery or clothing. However, regardless of the type of merchandise you sell, it is impossible to have a meaningful marketing strategy without knowing how your prospective customers experience these products. While packaging is vital in presenting the product to the market, businesses often indulge themselves with splashy graphics and “clever” catchphrases, instead of communicating what a customer will experience buying this product. Most new products fail due to poor availability and packaging.
When pricing, factor in all your overhead costs, competitor prices, demand, profit, and the initial cost of production. To maximize profit and ensure consistent selling, understand your chosen location's demographic and advantages to maximize profit.
Brick and mortar stores where a retailer conducts business with its customers is referred to as the place. Retail marketing strategists invest a lot of effort in matching physical locations of their stores with the right demographics of consumers for their products. The planogram specialists invest a lot of effort into organizing merchandise within the stores. These are necessary investments, but if you walk into a supermarket and are assaulted by smells of rancid or overpowering cleaning sprays, your desire to shop in such stores disappears immediately. It may sound basic, but unless your Place Marketing Strategy includes specific scheduled instructions for keeping the place attractive to all of your customer’s senses all the time, your strategy is not very effective.
Promotion gets an audience for your product. It is the “last mile” of your retail marketing strategy. Promotions include personal selling, advertising, discount coupons, printed flyers, and publicity. An effective promotional mix specifies how much attention and money should be paid to each tactic. Promotions may aim to increase sales, create brand equity, position, retaliate against competitors, or create a corporate image, among other objectives. Most product vendors communicate what the product is and what value it adds, but customers do not shop for “products” anymore. Customers “hire” products to obtain an experience they desire. Tasting the product sells a lot more effectively than pictures, videos or testimonials. Plus, customers still cannot taste anything online. Turning sterile, warehouse-like isles into vibrant market stalls, where shoppers can taste, sample and interact with vendor’s brand ambassadors, can be a very effective promotion strategy.
All the marketing strategies above require financial and human resources. The high cost makes it challenging for businesses to employ them. The process involves customer acquisition (CAC), a method of gaining a single customer. If the cost of acquiring a single customer is high, it raises the product's price, making it hard to sell.
Understanding your customer acquisition cost will enable you to determine your prices to make a profit. For the business model to be viable, the customer acquisition cost should be substantially lower than the customer’s lifetime value (LTV).
In-store product demonstrations or in-store sampling events are proven to deliver the best return on investment, i.e., the lowest CAC (customer acquisition cost). There is plenty of evidence that supports this statement. The reasons retail marketers tend to ignore this are:
However, if managed strategically, they: