Chapter 4: Broader Perspective

Question 1

1. Strategic retail marketing policy
   Consists of the following steps:

Answer 1

1. Market segmentation and target group selection: the retailer identifies groups of customers with a certain degree of homogeneity in terms of underlying characteristics, needs or behaviour (mkt segm.) and then chooses one or more segments that he wants to have as his primary customer group.
2. Branding and positioning: what the retailer wants to do for a certain segment of customers
3. Determine channels (offline, online) and format strategies (small vs large stores ecc) he want to serve to customers
4. Location policy: where do I want to serve the customer (1 store in city centre vs locations in shopping centres of smaller towns…)

Question 2

The strategic retail marketing policy is a

Answer 2

long-term policy and is reviewed only in the event of drastic changes in the market or failure of a particular strategy (generally done based on an extensive external and internal analysis and often changing only part of the strategy).

Question 3

2. Tactical retail marketing policy (or ‘retail mix’)
   The aim is to consistently translate the strategic policy into the tactical policy. Consists of the following elements:

Answer 3

1. Communication policy: how to advertise? The retailer determines the most important information channels and touchpoints to reach the consumer (before IT mainly via tv, radio and print media adv - before IT via social media and mobile devices of consumers)
2. Presentation policy: how to organize stores offline and online (layout, floorpan..)
3. Assortment policy: determines the roles per category, how the assortment per category is structured and the width(ampiezza) and depth of the assortment
4. Price and promotion policy: what is the price level and what promotions to offer?
5. HR policy: how the retailer wants to maintain contact with customers with what forms of service

Question 4

Definition of Strategy: the expressed and applied collective pursuit of an organisation. Functions of a strategy: a strategy fulfils the following functions

Answer 4

1. Identity
2. Differentiation
3. Criterion for the result
4. Framework for planning and daily action
5. Motivation

Question 5

1. Identity

Answer 5

A strategy should lead to a description of the company’s identity: the mission statement is a short, concise representation of what the business stands for
● e.g.. Zeeman “Good qualitative fashion and household textiles for the lowest price”)
● e.g. Wehkamp “Make the lives of all families in the Netherlands more beautiful and easier”)
● e.g. HEMA “Making daily life, better, easier and more fun”

Question 6

2. Differentiation

Answer 6

Effective while talking about positioning and respecting competitors.
The unique selling proposition (UPS) is a product characteristic relevant to the consumer, which distinguishes itself from the characteristics of competing products and which cannot easily be imitated (e.g. the own designs at IKEA).
● e.g. Lush UPS “vegetarian, vegan and cruelty-free cosmetics”.
● e.g. Jumbo promises to provide the lowest price possible

Question 7

3. Criteria for result

Answer 7

The company’s objective must be clearly stated and in measurable terms. We distinguish
→ Hard objectives: more about KPIs used in financial budgeting, such as sales, profit, costs and productivity
→ Soft objective: concern the realisation of customer perceptions (e.g. Kruidvat wants to evoke the image of ‘always advantageous”)

Question 8

4. Framework for planning daily actions

Answer 8

We must ensure that short-term activities (tactics) fit into the long-term framework. Means to decide a road to follow, to reach a long term objective. Short term tactics Vs long-term strategy

Question 9

5. Motivation

Answer 9

A strategy can play an important role in motivating the organization. Be sure that people within the company are motivated, knowing what to do (work routines and procedures) + knowing why do to it (strategic plan) = motivation

Question 10

Five phases of the strategic process

Answer 10

1. Analysis
2. Dynamic SWOT
3. Formulating a strategy
4. Tactical implementation (here there are the why and what)
5. Evaluation

Question 11

Phase 1: Analysis
We can divide this phase into internal and external analyses:

Answer 11

External analysis
o Environmental exploration: Includes those factors that affect the company from the outside. These may be economic (spending capacity of consumers, general economic development), socio-demographic (average age of the population), psychographic factors (lifestyles and attitudes)
o Analysis of competition: competition is an external factor that influences the business. However, since competition in the retail sectors is very strong and developing rapidly, it is important to carry out the competition analysis as a separate part of the analysis phase.

Internal analysis
o Consists of analysis of strengths and weaknesses: The factors that can influence a company from within.

Question 12

Phase 2: Dynamic SWOT analysis (or ‘situation analysis’ or ‘strategic audit’)

Answer 12

The traditional SWOT analysis is generally used to make a straightforward point-by-point list of strengths, weaknesses, opportunities, threats. However, the dynamic SWOT is designed in such a way that strengths, weaknesses, opportunities, and threats are combined directly with each other.

Question 13

1. Strengths/Opportunities:

Answer 13

Attack strategy

An ideal situation. A lot of opportunities and the company is ideally placed to tackle the future.

Question 14

2. Weaknesses/Opportunities: Improve strategy
   Many opportunities, but the internal conditions are not suitable for making these.

Answer 14

Improve strategy

Many opportunities, but the internal conditions are not suitable for making these.

Question 15

3. Strengths/Threats:

Answer 15

Defend strategy

The external circumstances are not favourable, but the company is sufficiently equipped to cope with them. A defensive strategy is needed. The weaker competition will automatically fall away as a result of the external threats.

Question 16

4. Threats/Weaknesses:

Answer 16

Withdrawal strategy

the company is in the most unfavourable circumstances, consider getting out.

Question 17

How does dynamic swot work?

Answer 17

1) Inventory of items (identification): Identify the traditional strengths, weaknesses, opportunities and threats.
2) Finding combinations: Some combinations can be irrelevant. In this phase we funnel the combinations that remain, try to get to the core of the combinations and place them in one of the four quadrants.
3) Determining the relative importance of each factor: Weight the combinations and translate them into manageable terms. By giving a certain weight, you determine which combinations are actually important. It is necessary to apply a prioritisation: it is mainly the observations in the extreme corners of the matrix that should be the primary focus of attention (see graph below left).
4) Clustering the results: cluster the results into focus area with a view on separating out dynamic SWOT combinations that are related to specific parts of the strategic retail-marketing policy (see graph below right)

Question 18

Phase 3: formulating a strategy
For developing a strategy, a corporate or business strategy and a functional strategy are needed:

Answer 18

1) Corporate strategy
Use the results of the dynamic SWOT analysis to define the policy to be pursued in the coming years (Mission and business you should be in) given the market conditions and its own possibilities, threats, opportunities… In short, what will be the corporate strategy.

2) Business strategy
Policy for years to come. Tactics to beat the competition.

3) Functional strategy
After defining the corporate strategy, all business units must translate the strategy for their own function/department to implement the policy. Means find the operational methods to implement the tactics.
Functional strategies in retail are for example the purchasing strategy, the sale strategy and the logistic strategy. Those strategies may have consequences for all functions in the company and for channel strategies…
A good strategy therefore includes not only the overall corporate strategy, but also the breakdown of this corporate strategy into sub-functions. These function strategies must be tested for their compatibility with the corporate strategy.

Question 19

Phase 4: tactical implementation

Answer 19

Determining what the aim is (the ‘telling’) and actually releasing the aim (the ‘doing’) are two different things.

For the strategy to be realised, it has to be complemented by period planning, comprising short-term plans intended to move things gradually along towards the objective step by step. This is what we call the tactical retail marketing policy.
These action plans are referred to as functional plans for the retail-support functions, and marketing plans for the primary commercial functions.

Question 20

Phase 5: Evaluation

Answer 20

Evaluation of all the tactics we put in place. Evaluation means not only determining whether agreements are being complied with, but also monitoring how the strategic and tactical retail-marketing process is being managed. For reasons of consistency, it is recommended that the evaluation or control instruments be the same as those used in the analysis phase.