Contemporary Retailing - Essay Example

? Marketing Table of Contents Table of Contents 2 PART I - Contemporary Retailing 3 PART II - E-Fashion Retailing 7 Reference List 13 PART I - Contemporary Retailing Answer 1 The subject of interior decoration has huge scope and is applicable to numerous fields of business. The term interior decoration goes with decoration of home, supermarkets as well as retail counters (McGoldrick, 2002). In this part of the study, the emphasis or the discussion will be on the interior store environment of retail outlets. The interior store environment is not just about the interior looks of the building, but it also encompasses factor such as product placement, movement space and overall functionality of a business. In addition, human resource is also a crucial part of this arrangement. For example, even the largest of houses can experience lack of space if the interior design is not good enough. On the contrary, better interior design of a tiny space can be more functional. Hence, it is evident that interior design is much more important than what it seemed at the first glance (Levy and Weitz, 2007). Now the subject of discussion and evaluation of this part of the study is whether designing an interior store environment is a science or an art by itself. Both the dimensions plays critical role in the designing process. For example, the interior outlook, designing the floors and creation of the ambience is an art whereas factors such as movement space, product placement, and lighting are critical parts of science. Furthermore, research studies have enumerated the fact that the interior store environment has a direct impact on shopper’s buying behaviour. Hence, on the basis of the analysis and discussion it can be concluded that the design of the interior store environment is a combination of science and arts. However, if the statement is evaluated i.e. whether design of the interior store environment is more of a science than an art, it is not possible to assign a significance level to each group as both science are arts needs to be equally applied in the process of designing the interior store environment. Thus, from the personal point of view I do not agree to the fact that design of the interior store environment is more of a science than an art. Answer 2 The question outlines about the approach of the retailers which has undergone a radical shift in the last 30 years. The question of discussion in this context will be how retailers have moved from being market – driven company to a market driving company. This shift has been termed as growth by various industry experts and practitioners around the world. The study will therefore mainly discuss about the factors that led to this drastic change and growth of the retailers. In addition, the potential implication of the same will be evaluated in the context of current market scenario. Before getting into deep, the study will throw light on the differences between the concepts of ‘market driven’ and ‘market-driving’. There are drastic differences between the two concepts; a company which is market driven mainly reacts to the need of the customers. These companies generally bring the changes in their system on the basis of the changes in consumer dynamics. On the contrary, companies which are deemed as market driving are more future oriented and have better ability to envisage the future. These companies constantly come up with new products and services and surprises customers with their innovative offerings. Now the statement which will be evaluated is ‘retailers have moved from being ‘market-driven’ to being ‘market-driving’ in that their power has increased significantly in the last 30 years’. The market driving approach has allowed them to experience the competitive edge as well as increased power (Bhasker, 2006). This is because the dependence on consumer preferences has greatly reduced as with constant innovation they are actually creating and changing the preferences of the consumers. On the contrary, a retailer which pursued market driven strategy have taken excess time to get them adjusted with the scenario. Hence, the argument of Kumar is absolutely justified and holds high relevance in the present context. Answer 3 There was a time when people used to exchange things for getting ownership for something. People used to call it barter system. After that slowly with the development, the concept of business transaction that involved currency exchange for gaining ownership of any goods and services emerged. This is often dubbed as the foundation of marketing. Since, then marketing became a close part of business as without marketing activities business actually became incomplete. With the passage of time, the scenarios have changed dramatically and modern techniques have emerged in marketing. One of the most fascinating and exciting form of marketing emerged in the form of branding (Bhusry, 2005). The concept of branding is simple i.e. giving identity to a product that in turn enhances the visibility of a company to a great extent. In the earlier days, companies used to brand their products so as to increase the visibility of that product and boost sales. However, with the development of marketing concepts nowadays companies are also branding themselves. The scenario is same for the retailers as well. For example, renowned retailers such as Walmart, Target corporations, Macy’s etc are best known as brands and not famed for selling branded products. Thus, it clearly points out to the fact that retailers have been able to gain several benefits for positioning them as a brand in the market. Studies have shown that these companies have been able to strengthen their competitive position through greater visibility, accessibility and trust that is has generated in the minds of consumers. On the contrary, there are several other retailing corporations which have failed to make a mark due to their inability to position themselves as a brand in the market. Figure 1 – Market Share of Retailers (Source: Davidbajek, 2011) The market share graph above clearly justifies the fact that retailers positioning them as a brand has truly improved their competitive position in the market place. Answer 4 Business houses around the world seek constant growth so as to ensure they do not reach saturation point and ultimately starts to shrink. A number of studies as well as a real life example have shown that companies that have failed to diversify their offerings during the maturity stage of the business life cycle have experienced stand still position. There are numerous ways by which companies can actually experience growth and especially for retailers the possible growth strategies are discussed below. One of the basic diversification strategies is modification of the store ambience. Although, there is no scientific evidence, but reports have shown that modification of store ambience leads to increased customer footfall. Retail design is a commercial and creative discipline that amalgamates various business areas of expertise in the process of designing and constructing the retail space. Retail design is often dubbed as a specialized practise of interior design and architecture. However, it also encompasses several other elements such as industrial design, interior decoration, ergonomics, graphic design and advertisements. Eminent scholars such as Patrick (1987) stated that “the psychological dimensions of ambience, which is created by concrete stimuli in the store, are the affective components of pleasure, arousal, and dominance and the cognitive component of information rate” (p. 568). Thus a positive atmosphere can be created with the help of a combination of a better environment and quality offerings. In the similar way, Levy and Weitz (2007) emphasized that retailers around the world acknowledges the significance of product diversification as one of the viable to embrace growth. Another growth strategy for the retailers is to diversify their product line. For example, an apparel retailing company can diversify their product line by offering grocery items to the consumers. Furthermore, a retailing company can also brand its name so as to increase the visibility. Apart from that a retail outlet can differentiate itself by offering products at low price or offering bulk discounts. Hence, from an overall viewpoint it is obvious that to embrace growth strategic changes need to be implemented. Answer 5 Michael Porter has described three generic strategies that are named as differentiation strategy, cost leadership strategy and focus strategy. The cost leadership strategy describes a company to be a low cost producer and that allows producers to offer products at a low price. The firms sell the products either sells these products at an average industry price and earn more profit or sells below industry prices so as to gain more market share. The differentiation strategy on the other hand describe a company's continuous efforts in developing new products and services that offers unique attribute and are highly valued by the consumers. One of the greatest advantages of pursuing a differentiation strategy is that it allows companies to charge a premium price for the value addition made to the product. Now the question of discussion is to what extent is Porter’s generic strategies of cost leadership and differentiation are mutually exclusive alternatives in the context of retailing (Varley and Rafiq, 2004). A company pursuing cost leadership strategy means it is producing at a low cost and sells according to the desire. However, maintaining a low cost of production is also possible if the company is managing a diverse portfolio of products. Therefore they cannot be regarded as mutually exclusive to each other. If the same is being evaluated through niche segment strategy of the porter generic strategies, it can act as an alternate to the differentiation strategy. This is because niche strategy and differentiation strategy cannot progress at the same time. Hence, from the discussion and analysis it can be stated that to a certain extent the mutual exclusive alternates are true because a relating firm can pursue cost leadership as well as a differentiation strategy at the same time. However, it needs to ensure that the production cost is low and selling price is affordable. PART II - E-Fashion Retailing Answer 1 In the last few years, numerous e-retailing sited have cropped up to capitalize on the opportunities provided by this segment of business. The competition has also resulted in the emergence of numerous small and large ventures. According to reports, the industry is presently a billion dollar industry and with the given growth rate it is expected the industry will soon one of the highest contributors to the global economy. According to reports, in a number of countries e-retailing is one of the fastest growing industries with an average growth rate of 15% (Harris and Botten, 2012). The question to be evaluated is the statement, ‘consumer acceptance is the most significant driving force currently affecting fashion e-tailing growth’. The notion of consumer acceptance describes the extent to which the target consumers are accepting and acknowledging the offerings of a company. In the context of e-tailing industry, consumer acceptance is playing a decisive role. The encouraging fact is that the consumer acceptance rate is high for this industry which is fostering companies to bring continued innovation in this segment and bring revolutionary changes. Moreover, the high acceptance rate is also encouraging marketers to try out new things. In order to show that the consumer acceptance rate of this industry is high, the growth rate and industry value are most appropriate factor. The online apparel retailing witnessed a growth from $172 billion to a whopping $329 billion in the last few years (Zhou, Dai and Zhang, 2007). Some of the key reasons that have increased the acceptance rate among the consumers are the wide range of alternatives, convenience, original services, low price, and easy access to information, product comparison, personalized shopping window and easy payment options. On the contrary, the low level of consumer acceptance would have led the industry towards the edge. Hence, it can be concluded that high consumer acceptance is of the most significant, if not the most driving force currently affecting fashion e-tailing growth. Answer 2 The apparel e-retailing industry is currently witnessing a booming phase. One of the interesting features of this industry is that it is the continuous innovation. From product display mechanism and website interface to a payment gateway and delivery channels, innovation is visible in every sphere of this industry. Furthermore, technological growth is another key factor towards the growth of this industry. Hence, it is obviously a factor which is being considered by the marketers to attract customers and offer them with a quality experience (Buckley, 1987). Technology is probably the most vital tool that will help the industry to embrace development in the future. However, only the overall development of technology will not enable a company to witness developments as equal efforts from the company to capitalize on the opportunities provided by the firm (Botha, 2004). A number of activities needs to be carried out in this process and it requires high amount of creativity and innovation on the part of the company. Technology is just the platform but how the platform has to be used depends entirely upon the company. The following are the ways by which e-retailers can make use of technology so as to develop their business in future: - 1. Development of mobile application can be a way out for the companies to boost sales. Nowadays, a high percentage of people are using smart phone that supports mobile shopping. In addition, the development of mobile shopping window will allow the company to target mass customers. 2. Online Tracking System: - With the assistance of technology companies must develop an online tracking system so as to underpin the areas from where most of the shopping is done. This will help the company selecting the location of the warehouse and devise marketing strategies for the untapped areas. Answer 3 A business without proper promotion is bound to fail in the market. Various examples portray how a well designed and well developed product failed in the market due to improper promotion. For an e-retailing business, the promotional mix will obviously differ from that of the usual promotional mix such as personal selling, advertising, direct marketing and PR (Laudon, 2011). In this context, the promotional mix comprises of internet marketing, social media marketing, direct marketing (through email and customized posts) etc. Some of the promotional strategies that can be used by the e-retailing companies are as follows: - 1. Designing and Promoting the Interface of the Store: - The significance of the store’s interface in an e-retail business is important for a number of purposes. The internal ambience in this context is the interface of the website being designed by the company. One of the most significant factors comes in the form of strong and positive influence on the buying behaviour of the consumers. Furthermore, it also adds to the shopping experience of the consumers. For example, it has been observed that the waiting time of the consumers greatly depends upon the interface of shopping platform i.e. customer likes spending more time in a store that offers an attractive and dynamic interface. 2. Social Media Advertisement: - Another viable option which will increase the scope as well as the visibility of the outlet is the use of social media. The retailing company can use digital banner advertisements in the social media pages that can increase the selling opportunity to a great extent. In this context, the advertisements posted on the social media pages will redirect the user to shopping sites. 3. Direct Mailing: - In future, the effect of mass marketing on consumers is a subject of concern among the marketers. Hence, the most feasible way is to market directly to the con consumers through customized offerings. Answer 4 The emergence of internet has opened a new door for the marketers to carry out communication activities. Traditionally, the marketing activities or the communication activities used to be carried out with the traditional methods such as television advertisements, radio advertisements, newspaper advertisements and other traditional mechanisms. However, the communication mix has undergone a pragmatic shift after the materialization and commercialization of internet (Laudon, 2011). For example, in the context of fashion retailing, the new communication mix that has emerged due to the development of internet has provided a number of new openings. The most common one is the better understanding of the consumer needs. With efficient communication system retailers now understands the requirement of consumers in detail and that in turn allows them to manufacture and sell products that fulfils their needs. The change in communication mix is visible in almost every sphere of business, but in this section, discussion will be only done about the fashion e-retailing industry. The industry has undergone a radical shift after the materialization of internet for the purpose of promoting communication. Now the new opportunities that have taken place or have appeared in this industry are as follows: - 1. Increasing Visibility: - One of the most evident opportunities provided by internet technology is the increased visibility of the offerings. Placing advertisements on social media, company websites and third party vendors allows the company to stand out among the mass. 2. Fostering Two way communication: - The new technology has allowed companies to carry out two way communication. The two way communication allows companies to analyse important feedbacks of the consumers and hence devise strategies according to the market situation. 3. Instant Process & Secure Payment: - Technology has also allowed companies to ensure the transaction process becomes instant and customers are able to pay through secured gateways. The emergence of SMS services and e-mail services on financial transactions has further added to the security packages. Answer 5 The physical store environment comprises of a number of elements such as lighting, music, directional signage, layout as well as the placement of the products and services. In contrast, an online store comprises factors such as interactivity, interface, navigability and online atmospherics. Together these elements play a crucial role in attracting a customer. Studies have shown that if the consumer likes the interface and overall design of the website he/she becomes a loyal customer and even becomes a word of mouth promoter for the company. The online retailing environment is of utmost importance to the company as it is the gateway to the store. Companies therefore put in storing efforts to develop the interface of the website. Moreover, a consumer also relates an online store through its website. One of the most vital elements of the internal atmosphere is the ease of navigability. Better navigation is a great way of offering a quality experience to the consumers. In addition, the website design and searching window is equally important. According to a report, it has been found that the users of ebay.com consider the interface to be highly interactive and the easy navigation facility acts as a major driver. In the similar way, for a fashion retailing company the significance of e-design area is paramount ((Goel, 2007). For example, if the products are displayed properly in the website, the customer engagement will remain high and can also act as a major sales boosting factor. A website that offers easy and custom search facilities receive greater appreciation from the customers and they also like to shop from particular website only if supportive activities such as payment gateway, service and delivery are of good quality. For example, despite the presence of numerous online stores ebay.com and amazon.com continues to be the market leader because of their simple interface and better navigation coupled with availability of a wide range of alternatives. Reference List Bhasker, B., 2006. Electronic Commerce: Framework, Technologies and Applications. 2nd ed. New York: McGraw-Hill Education. Bhusry, M., 2005. E-Commerce. New Delhi: Firewall Media. Botha, J. A. R., 2004. E-Commerce. Cape Town: Juta and Company Ltd. Buckley, P. G., 1987. The Internal Atmosphere of a Retail Store. Advances in Consumer Research, 14 (1), p.568. Davidbajek, 2011. Department Store’s Market Share. [online] Available at: [Accessed 17 December 2013]. Goel, R., 2007. E-Commerce. New Delhi: New Age International. Harris, D., and Botten, N., 2012. CIM Coursebook Introductory Certificate in Marketing. London: Routledge. Laudon, K. C., 2011. E-Commerce: Business, Technology, Society. 4th ed. New Jersey: Pearson Education Inc. Levy, M. and Weitz, B. A., 2007. Retailing Management 6th ed. Boston: McGraw-Hill. McGoldrick, P. J., 2002. Retail Marketing. 2nd ed. London: McGraw-Hill. Varley, R. and Rafiq, M., 2004. Principles of Retail Management. Basingstoke: Palgrave Macmillan. Zhou, L., Dai, L. and Zhang, D., 2007. Online Shopping Acceptance Model — A Critical Survey Of Consumer Factors In Online Shopping. Journal of Electronic Commerce Research, 8 (1), pp. 41-62. Read More