The retail marketing mix and the

5 retail product

This chapter should enable you to understand and explain:

l what constitutes the marketing mix;
l the importance of targeting and the marketing mix;
l a model of the relationships between components of the mix;
l the pressures to increase the four Ps of the mix for services;
l what constitutes a product; and
l the aspects of store layout and atmospherics which affect demand.

When you have finally decided to use a retailer you have probably been influenced by a
promotional campaign, have assessed the product offer, considered whether you are
willing to pay the price, and finally thought about how easy it would be to buy it. Each
of these aspects of purchase is part of the marketing mix, which is carefully planned by
marketers in an attempt to convince you to utilize a particular outlet or make a transac-
tion. The four Ps – product, price, promotion and the place (channel) of purchase – are
the basic ingredients of the marketing mix. However, these ingredients mask a major
role of the retailer which is to select and acquire the goods they plan to sell. There is a
need for retailers to devise and implement a well-developed merchandise plan in order to
be a successful retailer. This will ensure that the proper assortment of goods and services
is made available, based upon historical demand patterns and the strategic positioning of
the company or store as a brand.
When considering the marketing mix, the part dealing with merchandise becomes
part of the product. Because merchandising is so important to the success or otherwise of
a retailer it is dealt with in a separate chapter (see Chapter 6, Merchandise management)
although merchandising falls within the category of the product. Merchandising is a key
area as traditional retailing is positioned as the final distribution stage in the channel of
sales to the consumer. This is not to deny the importance of the rest of the mix. Each of
the areas which make up the marketing mix involves a complex set of management deci-
sions which have to be taken into account for the retailer to prosper. This is both for the
individual mix strategy and for the combined effect of the whole mix on the target mar-
ket sub-groups. In fact the mix has to be combined across its different parts so that each
aspect of the mix reinforces and reflects the other parts of the mix. This creates a synergy
effect, where the whole becomes greater than the sum of the parts. The combined mix
has to be positioned so as to create a clear proposition for the customer. As Ries and
Trout (1981) commented: ‘Positioning is not what you do to a product; positioning is

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what you do to the mind of the prospect.’ This chapter’s information will, therefore,
provide you with an overview of the most important considerations for planning the
marketing mix.

WHAT IS THE MARKETING MIX?

It is customary to accept the classic marketing mix to be made up from the four Ps of
product, price, promotion, and place (channel service).

1 The product is the totality of the offer which will normally include the services, store
layout, merchandise. It will also include the company, and product brand name.
2 The price is what the customer has to be willing to pay in exchange for the benefits
of the product and channel service. The price is related to a perception of value based
upon the way the whole of the marketing mix creates an image of the transaction
experience.
3 The promotion is the means by which the retail offer is communicated to the target
groups in order to inform and persuade different segments of the benefits of utilizing a
specific retailer’s outlet or to make a purchase.
4 The place is based on the retailer’s activities in supplying a channel service. This
includes the logistics of inventory management systems.

Kotler et al. (1999) indicate that the marketing mix is one of the key concepts in modern
marketing theory. The definition of the marketing mix is provided as:

the set of controllable tactical marketing tools that the firm blends to produce the
response it wants in the target market.

Figure 5.1 illustrates the approach to the interrelated nature of the marketing mix
favoured here. While the four Ps are a traditional way of understanding the key aspects
of marketing which are within the control of the company or managers, there are altern-
ative approaches where authors stress the need for an expansion of these four compon-
ents. This is an interesting development because the four Ps were provided by McCarthy
(1978) as an abridged version of a much wider range of what were termed ‘marketing
ingredients’. McCarthy based his four Ps upon a simplified version of a range of twelve
marketing ingredients offered much earlier by Borden (1965).

THE MARKETING MIX FOR SERVICES – ARE THE FOUR PS SUFFICIENT?

The adaptation of the marketing mix by authors such as Booms and Bitner (1981) has
been based upon arguments which stress that the four Ps’ marketing mix is more appro-
priate to manufacturing than to service companies, such as are found in retailing. For
example, Booms and Bitner add the three extra Ps of people, physical evidence and pro-
cess (see Fig. 5.2). Authors such as Booms and Bitner argue that the marketing mix of
four Ps is not comprehensive enough. The major difference is argued to be the intangible
element of human behaviour, where quality and its control is of paramount importance.
We believe that there is enough scope in Fig. 5.1 to incorporate each of the additional
areas of Booms and Bitner.
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The retail marketing mix and the retail product

Fig. 5.1 The marketing mix

For the present it is believed the four Ps offer an adequate framework into which the
differences can be incorporated. The main task of marketers in retail is to understand
many of the complexities of the marketing mix contained in this chapter in order to
ensure they will be better prepared to plan, control and manage different types of retail
operations. Retail managers have to control the aspects of the marketing mix which have
most bearing on the demand creation and satisfaction level of consumers. While it is
obvious that there are differences between manufactured and service products, the
framework of the four Ps is sufficient for retail planning purposes, based on the content
of this chapter and the following chapter on merchandise management. The four mix
categories do not presuppose the relegation of service product considerations to sec-
ondary importance. On the contrary, the four categories should ensure that within any
mix formulation greater emphasis will be placed on the integration of all the different
service management considerations.
Whatever approach is taken to the classification of the controllable aspects of market-
ing there is a need to realize that purchases do not take place unless customers know:
l that an offer exists;
l where it is best to purchase the offer;
l that it offers value and is affordable;
l that the offer is likely to satisfy the need for which it is required.
The essentials of the marketing mix for retail are explained fully in the next chapters of
this book. First, however, it is important to understand how the target market plays an
essential part in the formulation of any retail mix strategy.

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 Fig. 5.2 The marketing mix for services

The marketing mix for services

Source: Reprinted by permission of the American Marketing Association from Booms and Bitner, 1981
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The retail marketing mix and the retail product

TARGET MARKETS
The fundamental starting point for the creation of a successful marketing mix strategy is
to ensure that the target market is clearly defined. While the target market is not part of
the mix, its role in dictating the different ways the mix is used makes it indistinguishable
from the concept, and of paramount importance. In any management decision which is
related to the marketing mix, the customer base or target market is always the initial
focus of all marketing mix activity. This is because the potential consumer has to remain
the focus for all retail decision-making. For example, we need to know what minimum
and maximum level of price or what retail offer proposition will be acceptable to target
consumers.
The retail market is made up of actual and potential consumers. This total available
group of consumers will be analysed and a decision made as to which segments or sub-
groups will be targeted. The segments would probably have been identified as part of the
marketing planning process and would have been specified at the time of the setting of
objectives. A clear specification of the target market allows for a number of benefits,
including improved levels of understanding of:
l the characteristics and needs of the group targeted;
l the main competitors;
l the changing/developing needs of targeted consumers.

Benefits of targeting
1 A fuller understanding of the unique characteristics and needs of the group to be satisfied is
reached. The target market acts as a reference point for retail marketing decisions, especi-
ally as to how the marketing mix should be planned. This should lead to greater effective-
ness for the mix, which in turn provides for the success of the programme.
2 A better understanding of the main competitors is gained because it is possible to detect
those retail companies who have made a similar selection of target markets. If a company
does not clarify the markets it wishes to target, it may treat every other company in its sec-
tor as an equal competitor. Once main competitors are identified, their marketing efforts
can be more closely followed – or benchmarked if appropriate – so as to improve marketing
decision-making.
3 Improvements are possible in the understanding of the changes and development in the
needs of the target market. Awareness and knowledge of retail demand is heightened due
to the scrutiny focused upon the target group’s actions and reactions to slightly different
forms of the marketing mix.

Target markets are often based upon socio-economic groups, geographic location,
age, gender, income levels, shopper type, benefits sought, purchase behaviour and atti-
tudes. The target market acts as the focus for tailoring the mix so that target customers
will judge it to be superior to that of the competition. Segmentation and target market-
ing is central to marketing because different customer groups should dictate the search
for the correct marketing mix strategy. (For further discussion, see Chapter 10, Methods
and approaches to retail strategy and marketing planning.)

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 Target markets

MINICASE 5.1

Product decisions – the shop as a destination? FT

Is shopping a leisure activity? Behind that question entertainment complexes in Continental Europe.
lies a raging debate over the design and management However, he cautions that the retailing element itself
of shopping centres in which a growing number of must contain a leisure theme. White goods super-
real estate professionals are arguing that the two are stores and food supermarkets, he says, will not be a
inextricably linked. ‘Shopping is leisure,’ says John feature. ‘We’re thinking of music superstores, book-
Milligan, partner in the retail practice at property shops, that sort of thing,’ he says. ‘The shopping
consultants Jones Lang Wooten. ‘If you don’t make centre has to be a destination,’ he argues. ‘It’s a day
it a leisure activity, you’re dead.’ The introduction of out.’ However, Michael McCarty cautions against a
a cinema, with its evening operating hours, entices a headlong plunge into leisure/retailing development.
far wider range of food retailers than may be pre- ‘The conventional wisdom is that the entertainment
pared to occupy a shopping centre and these may be and leisure component can enhance the value of a
prepared to pay far more for the space. Thus, the retail development,’ he says. ‘But it is not a panacea
addition of a cinema encourages further daytime for a bad centre. It will make a good centre better
shopping and the growth of food courts, leading to a but it will not make a bad centre survive.’
virtuous circle resulting in higher revenues for every-
one. Mr Ronson (Heron) is developing retailing/ Source: Norma Cohen, Financial Times, 1998

Retailing in shopping centres may need to target the leisure segment of the market in
order to encourage that group to use other retail facilities such as food courts and shops.
Minicase 5.1 introduces the debate as to what product types should be available in a
shopping centre, based upon the link between shopping and leisure.
The marketing mix is put together to ensure the highest expected outcome of demand
from the customer. Therefore, when the marketing mix is delivered to the target market
it has to produce an outcome of higher value than any competing form of retail offer.
What we have to consider is that all retail purchases are related to a cost for the con-
sumer. The marketing mix amalgam has to create greater value than the travel costs if a
car or transport is used, the time costs which have to be taken from an individual’s total
time budget for leisure as well as shopping, etc. Figure 5.3 is a simple illustration of the

Fig. 5.3 Components of the derived value of purchase for the customer

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The retail marketing mix and the retail product

components of a purchase situation, with the customer-derived value being an outcome

of a deduction of value from costs. The figure reflects the need to create perceived or
actual positive outcomes from any creation of a retail marketing mix strategy. The object-
ive of creating high levels of derived value should be borne in mind when assessing the
underlying concepts that follow. Some aspects of value and costs are discussed more
fully in Chapter 3 and later in this chapter.

THE RETAIL PRODUCT

The effectiveness of planning the marketing mix depends as much on the ability to select
the right target market as on the skill in devising a retail offer which will generate high
levels of satisfaction. A product is anything that can be offered to a market that may sat-
isfy a need or a want. This means a combination of goods and services, which includes
the store, the staff and the merchandise. In retailing the complete retail offer of location,
price levels, merchandise, store layout or method of selling, brand name and service pro-
vided play a pivotal role in a firm’s existence and long-term success or survival. The con-
ception of the store has to take into consideration the internal and external design
fittings and features as well as all the myriad ways the brand, merchandise and pro-
motional messages communicate with the customer. The shopper has to believe that the
merchandise, or outlet, offers added value in order for it to be successful. Retailing com-
prises everything an individual or customer receives – both favourable and unfavourable
– as part of the total retail transaction. It should be noted that Chapter 6 is dedicated to
a full explanation of the role and functions of merchandise management, which is an
important aspect of any discussion of the marketing mix.

A BREAKDOWN OF RETAILING AS A PRODUCT

The formulation of a successful retailing operation involves a combination of:

l service;
l quality;
l merchandise;
l brand name;
l features and benefits;
l atmospherics.

If you envisage the situation where you have taken a holiday and you need to have your
hair styled you will call upon many of the above as clues as to whether or not to use one
hairdresser rather than another. If you walked around the area the location in terms of
other buildings and retail outlets may give you some clues as to the type of service you
could expect. You would probably look in the salons to see what the other customers
looked like, the age and dress of the staff, the internal fixtures and fitments and decide
whether the interior was comfortable enough to wait for a stylist. Perhaps you would see
a Vidal Sassoon branded fascia on one salon and this may make the difference in the
decision made. All these intangible and tangible product factors will have a bearing on
the choice made by consumers. Of course, some of the other aspects of the marketing

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 A breakdown of retailing as a product

mix such as price will also have an influence but the product attributes are an important
means of communicating the promise of a specific retail experience.

Service
An agreement to service provision is concerned with creating the level of services to be
offered. In a store, how much of the service should the client be expected to perform and
how much should be provided by staff? For example, in supermarkets the self-service of
food and the customer carrying their own purchased items are now thought of as accept-
able – and at times desirable – by clients. The use of automatic teller machines (ATMs) at
banks extends the availability of the cash retrieval service (and others) beyond typical
bank hours, and also allows customers to estimate roughly how long a transaction will
take. There are also systems for self-scanning of goods which cut down on the cost of
time. A retail operation has to be able to deliver high levels of service. These are judged
through the five dimensions that can be used to measure service quality:
l tangibles – such as uniforms, toilets, mirrors, fitting rooms;
l reliability – based upon the ability to perform the service dependably and accurately;
l responsiveness – by reacting in a timely manner with the right level of knowledge and
courtesy;
l empathy – demonstrated by providing a caring, individualized service performance
for customers;
l assurance – to provide credibility that the service standard will be upheld.
A full discussion of service and quality management is contained in Chapter 4.

Quality
A decision regarding quality involves deciding on quality standards and implementing a
method of assurance on the performance level of staff and facilities. The management of
quality is becoming an increasingly important management function. It is important to
create a good quality reputation for the product and service offered as this provides a
positive image for the company or organization and is a major advantage in countering
the perception of risk which, for many retail consumers, is high. Retail service providers
are more likely to be successful if they can be depended upon to deliver higher quality
service levels than their competitors. Success through quality is often seen as, for certain
product categories, the outcome of a relationship between a customer’s prior expecta-
tions of service delivery and the perception of the actual service experience. Quality is
also used strategically: as a way of differentiating merchandise and of positioning the
offer or retail outlet in an exclusive way. However, an exclusive position does bring with
it the added problems of needing to source more widely to continue to find unique mer-
chandise and having to bear additional overhead costs as a consequence of exclusivity.

Merchandise
Retailers need to decide on the merchandise to offer by engaging in the sorting process of
assembling a range of goods and services from a variety of suppliers. The depth and

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width of this range will depend on the specific strategy of each retailer, who must decide
how different products will fit into the overall range of products they offer to the mar-
ketplace (Chapter 6 offers a more detailed description of the role of the merchandise
manager). A retailer must also decide on whether to include various brands in the range,
and whether the offer of traditional or new products should be included. The range of
the offer and how each product matches or complements the chosen positioning of the
retailer is an important retail consideration; for example, is the company maintaining an
upmarket, mid-market or economy position? The decision regarding the range of pro-
ducts is also important as it affects the need for space for display at the point-of-sale
as well as stockholding. The width and depth decisions over the range of merchandise to
offer have to be linked to both the expectations and the financial considerations of the
consumer target group. Decisions over merchandise have to take into account that a con-
sumer may want to choose to purchase from a range of different types of goods. This
could encompass the following categories.

National brands
These are the brands which are heavily promoted by companies, such as Sainsbury,
Boots and Kwik Fit, to achieve consumer awareness and preference, for example,
Kellogg’s (see Chapter 12 for a discussion of brand management). For the retailer the
problem in offering a range which is predominately made up of national brands is that
they have no exclusivity and are open to price competition from low-cost retailers dis-
counting national brands.

Advantages of own-brands for retailers

l Good value perceptions which by association enhance store image and may build loyalty.
l Quality improvement of own-brands leads to the belief that they are equal to, or better
than manufacturers’ brands. As such, the development of own-brands may provide for an
enhanced corporate image.
l Own-brands provide a communication function by reinforcing the retailer’s name in the
consumer’s own home environment.
l Retailer promotions can benefit both the retailer and the own-brand products.
l Strategic advantage can be gained if competitors do not have own-brand products.
l More able to create a superior brand through own specification and quality control. The
own-brand merchandise then acts as an inducement to visit the store.
l Can be a fast route for new product development and product innovation.
l Supply control as own-brand products cannot be obtained elsewhere.
l Own-brands often have credibility as it is generally assumed by the public that own-brands
are sourced from leading manufacturers.
l Financial benefits are the improved control of pricing policy, stock levels and display space.
Higher margins (characteristically 5–10 per cent better) and manufacturers’ promotional
expenses are avoided. Also, allows for a competitive balance and greater bargaining power
in relation to leading manufacturers.

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 A breakdown of retailing as a product

Own-brand
Own-brand (sometimes termed own-label) is discussed in detail in Chapter 12. As the
larger retailers look for competitive advantage in the marketplace, own-brands have
become one of the key weapons in the battle for improved financial returns, channel con-
trol and consumer loyalty. In the growing confrontation between manufacturers’ and
own-brands, retailers can be found to enjoy a number of advantages and increasing mar-
ket power (see below). Initially positioned as a cheaper value-for- money alternative to
national brands, own-brands are now marketed with the advantage of a ‘quality’ focus.
Nowadays a retailer can offer the advantage of exclusivity and have greater control over
all aspects of the product. Thus they need not enter into heavy advertising as do national
brands, which may give the flexibility of being able to offer lower unit prices.

Licensed merchandise
The importance of TV or film characters has led to the addition of images and symbols
on a range of merchandise from everyday items to clothing. Disney characters, Bart
Simpson, etc. have appealed to the children’s market and led to major opportunities for
increasing the desirability of different types of merchandise.

Franchised products via concessions in a store

An advantage may be gained through an exclusive deal with a manufacturer (for example,
Clinique, Principles, Alexon, etc.).

MINICASE 5.2

Supermarkets sew up the clothing market

Although the size of Tesco and Asda’s ranges The George clothing range at Asda relies
are similar, in Compability’s survey for Retail on one name and one name only, while Jeff
Week, Tesco has the edge. With 2,244 options, & Co articulates the offer via a number of
Tesco’s clothing offer is 10 per cent big- sub-brands. For example, 14oz for denims,
ger than the George range, which has 2,049 CMT for tailoring and Navy Blue for relaxed
options, and more than 50 per cent bigger weekend wear. The bulk of Tesco’s range
than the clothing offer at Sainsbury’s, which carries the ‘Designed for Tesco’ label. The
has 1,450 overall options. The survey counted newer and more aspirational FlorenceFred
every option for styles and colours for cloth- branding is not yet available in accessories
ing, footwear and accessories. and footwear, and is at the moment a small
Tesco’s wider range is mainly due to its element of the range.
extensive Essentials offer for women. The In terms of environment, the trading area
Essentials – underwear and hosiery – at Tesco for Jeff & Co is far better differentiated from
dwarfs the choice in Asda and Sainsbury’s. the rest of the store than the clothing ranges
Interestingly however, both the George chil- at Tesco and George. Frosted glass panels,
drenswear range at Asda and the Adams illuminated wardrobe display units and spot-
range at Sainsbury’s have more options than lights make for a classy atmosphere. Florence
the children’s range at Tesco. George has the Fred, on the other hand, does not appear to
widest choice of footwear. have been given the same level of support.

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Elements of the range incorporate sophist- tially higher than both Tesco and George,
icated colours and fabrics, which would be and while the Sainsbury’s customer is argu-
better emphasised in a more intimate area, ably better off, it remains to be seen just how
like the one developed for Jeff & Co. George much impact a 19-store proposition will have.
of Asda combines a lot of product on display Asda has more large-spaced stores than
with wide aisles for ease of navigation, and either Tesco or Sainsbury’s and with excel-
clearly demarcated sections. lent prices and ranges will remain the biggest
From a product point of view, Tesco is well apparel selling supermarket group for the
on the way to developing a lifestyle brand foreseeable future. However, Tesco is aggress-
with the launch of FlorenceFred, but it ively expanding space dedicated to clothing
falls short from a presentation perspective. and plans to sell its ranges from 140 super-
Sainsbury’s has made a big impact with the stores and 46 hypermarkets by next year.
stylish shopfit and wearable appeal of the Jeff Ultimately the emergence of stronger cloth-
& Co clothes. But the range is still in honey- ing ranges within the supermarket sector will
moon mode, and as yet unhindered by the inevitably increase the pressure on already
usual problems of broken size ratios and struggling middle-market players.
fragmentation. Jeff & Co prices are substan- Source: Compability Report, Retail Week, 8 June 2001

Brand name
The store exterior and brand name is the initial impression that a customer will have of a
store. Branding is also an important portable communication tool which can be utilized
on the retailer’s bags and packaging of its own-label products. A brand name which is
well known and associated with high satisfaction levels imparts an improved image and
added value to the product or the store. This can lead to store loyalty or consumers
insisting on the product by brand name and being less price sensitive (Chapter 12 dis-
cusses branding in great detail). These days a retail brand name may be a national brand
or an own-label brand. Brand names can be family brands where each of the company’s
products adopts the same brand name. Umbrella brands which use a corporate brand
symbol are being used to project a consistent image across countries. Nestlé’s brand
policy, for example, uses umbrella and sub-umbrella branding; corporate branding takes
place with Nestlé, Carnation, Maggi, C&B, Chambourcy, Buitoni, Findus, Friskies, Herta
and Libby’s, while sub-branding is used for Nescafé, Nestea, Nestum, Sveltesse and Lean
Cuisine. Additionally, individual product brand names such as Nido, Milo, Crunch and
KitKat are used, where each product is branded differently. It is argued that it is difficult
to create marketing success across a wide range of products owing to the problem of
providing complex brand values to dissimilar products. Marks & Spencer was renowned
for having built their success on an umbrella own-brand, St Michael, which was associ-
ated with added value but which may now be weaker than in previous times.
Some companies opt for individual brand names such as those associated with the
Debenham’s organization. The individual brand name approach allows the retailer to
search for the most appropriate brand name; its weakness is that the promotional budget
for each brand has to be sufficiently large to support that brand. With individual brand-
ing, a company is able to position brands and products at the cheaper end of the market
without the brand damaging the image of the rest of the company’s brands. In addition,
if there is bad publicity for one of the company’s brands then the other company brands
do not necessarily suffer.

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With umbrella or family brands there is a spin-off effect for each of the brands from
the expenditure on any one brand. Conversely, if one of the family brands attracts poor
publicity, because of association there will be damage to the other brands. For family
branding, careful attention has to be given to the quality control of the products. One
other benefit of family branding is that each product brand performance (PBP) can be
measured against the overall family brand performance (FBP). That is to say, when FBP
is divided by PBP and the quotient shows an increase over time, without good reason, it
may mean that the product brand needs modification, revitalization or a detailed review.

Product levels
The product can be thought of as being an amalgam of four different levels – the core
product; the facilitating product; the supporting product; and the augmented product.
A product includes everything that the customer receives and this includes the basic
level of the core product which is made up of the delivery of benefits and features. We
know that consumers buy products for the benefits they deliver to them, as this is the
basic outcome value assessment associated with the purchase. Every retail product is a
package of problem-solving services that will be successful if the package is valued
enough. A holiday consumer in a travel agency is looking for the benefit of relaxing in
the sun and having no hassle in the journey or stay. They leave the detail to the travel
agent. As Levitt pointed out, the buyers ‘do not buy quarter inch drills; they buy quarter
inch holes’. Marketing staff have to uncover the subtle benefits that the consumer seeks
when utilizing a retail distribution channel or purchasing a retail product. There are also
the different features that are the tangible aspects of the product which help to differenti-
ate it from competitors. Adding in the right features increases the probability that a pur-
chase will occur. The features will be the size of the entrance, the aisles and the fixtures
and fittings of the store.
The facilitating aspects of the product in a store must be present for the customer to
utilize the services of the core product. This will be the service and goods such as check-
out and credit card facilities, if clothing then mirrors and fitting room, signage and easy
access around the store, acceptable merchandise.
Core products require facilitating products but do not necessarily have to include sup-
porting products. In fact the discounter stores ensure that their cost-leadership strategy is
adhered to by having only a minimum of supporting products. Such extras as a play area
for children, baby change facilities, higher employee numbers operating fast checkouts,
free gift wrap service, free delivery, and so on are all supporting products which may be
planned into the product offer.
The augmented product includes aspects of atmosphere and the interaction of the
customer with the company. Retailers should take the opportunity to consider factors
such as the appropriateness of in-store music at different periods in the week as well as
at weekends when the market profile of their customers may change and the need for
supporting services will vary e.g. gift wrapping service, loyalty programme benefits,
etc. Retail outlets in London are now incorporating advanced thinking as to what can
be offered as an augmented product. There are MTV booths for males to relax in
while females shop, and there are additions such as juice bars and DJ booths that are
able to bring about change in consumer attitudes as to what is expected as a shopping
experience.

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STORE LAYOUT
The store is a product in its own right. The customer’s product decisions can be
enhanced, or ruined, by the type of planned store layout. Stores should be designed to
facilitate the movement of customers, to create a planned store experience and to allow
the optimum presentation of merchandise. The traffic flow of customers has been
influenced through the clever design of displays, aisles, signage and overall layout. This
also involves the full use of the floor area – to utilizing obscure and unproductive areas.
The retailer’s goal has to be a store layout which reflects the brand position of the store
and ensures the most effective use of the space. It also has to be designed on a proactive
rather than a passive basis. This is because the understanding of how customers shop for
specific categories of merchandise should be incorporated into the way it is exhibited or
displayed within an overall store layout. Donovan and Rossiter (1982) found that the
effect of store-induced pleasure is a very dominant determinant of either approach or
avoidance behaviour as well as in-store spending patterns. The results of their study indic-
ated that arousal, or the feelings of alertness and excitement created by means of store-
induced emotion led to increased time spent in the store by customers and also produced
a higher willingness to interact with sales personnel.
Proactive planning should therefore be based upon the manipulation of the in-store
experience rather than accepting a passive, totally random experience for customers.
Proactive planning accepts and responds to the data showing that store layout can
influence the customer’s shopping behaviour and perceptions. It is well known that the
use of different layouts and aisle design will influence the patterns of traffic flow past the
principal merchandising groups. The correct display of merchandise in a highly fre-
quented area can dramatically increase sales; conversely, a poor display will have a
negative effect. There is also the time factor related to any shopping trip. Those stores
with an appropriate number of checkouts for the square area of the store may influence
the shopper to spend longer browsing and purchasing if they believe the checkout time is
efficient.
Customers have to feel happy and comfortable in an environment if they are to relax
and stay for any length of time. Customers are more likely to want to enter and shop in a
store when their senses are satisfied by the way the store environment has been planned.
The ambience of the store has to be right for that store’s positioning. For example, a dis-
count store with narrow aisles, high density merchandise, bold signs and loud music has
consistency with the rest of the marketing mix and this reinforces the perception of low
price.
There is a whole variety of layouts available for consideration but the retailer’s choice
should be determined by the merchandise, the size and type of space available and cost
involved. Layouts can contain one or a combination of the following:

l Grid pattern layout – is characterised by the regimentation of the layout into long
rows of parallel fixtures, with straight aisles. If the aisles are too short, the customer
will look to the next aisle – so for maximum effect the aisles have to be long enough
so that the customer looks at the merchandise on the shelving as they pass. The layout
produces a maze effect as it constrains the customer: they are unable to pass through
the rows because there is no opportunity to move at right angles until the end of each
row. The merchandise counters are arranged to produce long barriers to cross-aisle

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 Store layout

Fig. 5.4 Grid store layout for a chemist

traffic flow. This channels the customer past different store sections. Supermarkets or
retailers of fast-moving product lines normally adopt this format.
l Free-flow layout – is based upon an irregular pattern with some logic of attempting to
create a flow but which allows the customer the choice of whether to move between
the fixtures or not. The design allows for more unstructured flows of store traffic. It
allows for more relaxed customer shopping and for impulse purchases as customers
are drawn to areas they are interested in. This type of layout style is to be found in
many clothing stores.
l Boutique layout – is a variation of the free-flow layout pattern whereby the depart-
ments or sections are arranged in the form of individual speciality areas that can cater
for specific customer requirements. This approach is more likely to be adopted by spe-
cialist or department stores.
Examples of the layouts described are shown in Figs 5.4 –5.6.

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 Themarketing
The retail retail marketing mixretail
mix and the and the retail product
product

Fig. 5.5 Free-flow layout

126 126
 Store layout

Fig. 5.6 Boutique-style layout

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The retail marketing mix and the retail product

Atmospherics
The act of a retail purchase entails a number of social and psychological states related to
the place and time of that purchase occasion. These are based upon:

l the environmental and physical aspects of place – which include atmospherics and
visible components of the store and the store’s location;
l the social surroundings – which involves the interaction with other shoppers in terms
of judgements of their characteristics and appearance and whether the retail outlet is
crowded or not. Crowding can affect behaviour in different ways. Consumers learn to
cope with crowded retail outlets by allocating their time by postponing, rescheduling,
aborting or focusing their purchase behaviour;
l the temporal aspects of the occasion in terms of the time of day, week or year – which
may be based upon a seasonal aspect to the shopping experience such as Easter or
Christmas. This will lead to different levels of crowding, visual and olfactory changes;
l the objective of the shopping trip will affect the emotional state of the individual as a
routine shopping task is not the same as one where high expenditure or importance of
purchase is present;
l the predisposition of the individual will also affect the purchase behaviour. For exam-
ple, a specific mood state will lead to distinct purchasing behaviour.

The above five factors need to be understood as a composite whole as each will affect the
other and provide an overall synergy which will have an impact on the type and timing
of the retail purchase.
Atmospherics can enhance the shopping experience through environmental changes
which affect the emotional response of customers. Atmosphere is perceived through the
different elements in the same store environment which are planned to interact with an
individual’s senses. This should be understood as a holistic experience where each part of
sensory marketing works in combination with the other atmospheric elements. Sensory
triggers create a number of changes in the customer’s emotions which can influence the
type and amount of demand for different types of merchandise in the store. The main
sensory mediums are:

l Visual – colour, brightness or variation of light, size, shape, texture.

l Aural – volume, pitch, beat, harmony – recognized/favoured music. This is based
upon the notion that music is composed of at least three primary dimensions: a phys-
ical dimension (volume, pitch, tempo, rhythm), an emotional tone, and a preferential
dimension (the degree to which a shopper judges they like the music).
l Olfactory – scent, freshness – merchandise such as leather, bakery items, food, etc.
This comprises ambient scent which should be distinguished from non-ambient
scent. Ambient scent is the scent that does not originate from any particular object
but is present in the environment while non-ambient scent is given off by objects. Both
are controllable by the retailer. Scent includes the affective quality of the scent (i.e.
how pleasant it is), its arousing nature (i.e. how likely it is to evoke a physiological
response), and its intensity (i.e. how strong it is).
l Tactile – softness, smoothness, shape – surface and display area by feel/touch.

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 Store layout

Fig. 5.7 Stages related to sensory marketing

The use of space, colour, walls, pillars, floor coverings, lighting, music, scent and so on
can be controlled by the retailer. The combinations of these planned ‘physical messages’
is known as atmospherics. Atmospherics can be defined as:
The changes made to the design of buying environments that produce special emo-
tional effects that subsequently enhance the likelihood that a purchase will take place.
The type of merchandise offered and the method of its display – down to the style and
pose of mannequins, reinforce this. Atmospherics are created by the combination of a
whole series of cues and stimulants to produce the desired ambience and emotional
response from the group of target customers. The emotional state of the shopper will
lead to an increase or decrease in the planned level of purchases. It is essential to know
what factors stimulate and please consumers as the result will capture individuals for
longer periods in a store and make them more susceptible to merchandise offers. Figure
5.7 indicates the links which drive the stages of retail atmospherics. Therefore, the design
of stores has to strive to produce an efficient layout with the qualities of ambience that
attract members of the target market. The following list of factors is useful but not
exhaustive:
1 Space must be used effectively, with territorial areas planned to break up the store
into logical sales sections and functional areas such as changing rooms, restaurants
and pay points. The store’s layout has to be planned for optimum circulation around
the store. It should not be forgotten that the entrance to a store, both outside and
inside, has to transform the customer’s attitude and to create a promise of the experi-
ence to come.
2 Layout should be planned to encourage customers to circulate in specific patterns so
as to visit as many merchandise areas as possible in order to achieve the optimum pro-
ductive layout. The retail layout logic has to be easily comprehensible so that the
potential customer quickly understands and assimilates the route they can negotiate
past the merchandise. This is often achieved by the use of different floor coverings or
textures which act as clues to the customer. It may also be accomplished through the
use of clear appropriate signage which reflects the positioning of the retail outlet.
3 Stimulants to the senses to improve sales must also be planned. Music can be changed
to suit the type of shopper in the store such as playing ‘younger’ background music
just after the school day ends. Faster or slower music will affect the speed at which
shopping occurs; national music, such as French or German tunes, played in a super-
market will increase the sales of a particular country’s wines. Classical music will lead
to sales of more expensive wines. Another option available is to vary the tempo of the
music, at different times of day or in different areas, to influence the pace of in-store

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The retail marketing mix and the retail product

traffic movement. For example, when a higher turnover of customers is required in

the restaurant around lunchtime, increasing the tempo of the music will achieve this
behavioural effect. As evidence of the arousal effect of music, Vanderark and Ely
(1993) found that high tempo and high rhythmic content in the music led to an
increase in physiological arousal among consumers. While the effect of music can be
beneficial, many stores do not have music apart from at the Christmas shopping
period. Yalch and Spangenberg (1990) conducted research in a department store set-
ting where they compared the effects of foreground music (top 40 music played), and
background music (instrumental easy listening), in relation to a no-music control
group. It was found that younger shoppers (under 25) perceived that they had spent
more time shopping in the easy listening condition, whereas older shoppers perceived
that they had shopped longer when top 40 music was being played. From the results,
the authors concluded that encountering atypical environmental factors (e.g. unfamil-
iar music) might adversely influence consumers’ time perceptions. In addition, the fra-
grances and scents of perfumes, leatherwear, houseplants and so on may influence
customers to purchase. The aroma of fresh bread, pastries, cheese, coffee, chocolate,
etc. can stimulate sales and some stores or restaurants extract the aroma, pumping
it outside their building to attract the passing public. Supermarkets may position a
gondola of flowers in the entrance of the store to provide customers with the welcome
sight of the blooms and the fragrance of their scent. Spangenberg et al. (1996) exam-
ined the effect of ambient scents in a simulated retail environment. The conclusion
was that the subjects had more positive evaluations and behaviours of the environ-
ment in the scented rather than the unscented group. One other interesting finding
was that the type of scent did not matter, as even effectively light scents were able to
generate enhanced perceptions. Moreover, the intensity of the scent (within an accept-
able range) did not alter the overall results.
4 Lighting is an important mood setter and very useful in the production of a desired
ambience. Lighting can be soft, bright or produce colour washes. Merchandise can be
highlighted by directional lighting or with a combination of low-voltage and energy-
efficient systems. Different types of lighting can be used in combinations to create
interesting contrasts throughout a display area. The use of sophisticated lighting sys-
tems allows the retailer to adapt the ambience at regular intervals. This can alter per-
ceptions of the size of different areas, complement the merchandise by bringing out its
colours and direct the attention of the customer’s gaze. Glass shelving with lighting
in a toiletries area can communicate a bright, clean set of merchandise. One other
important aspect of lighting is that in fitting rooms or where there are mirrors to view
merchandise the lighting should be flattering.

From a strategic marketing stance, it is important that in highly competitive retail sectors
the layout of the store is planned in order to reflect the desired market position (see
Chapter 10 on retail planning). The position has to be planned in conjunction with clear
ideas as to how the atmospherics will differentiate the store as a brand from its compet-
itors. Store layout planners must also take into account who the target segments of the
market are and what sort of buying experience they may seek from the store. For exam-
ple, Boots utilize hard floors to enhance the image of cleanliness, and blue and white
colours which are cool and have associations with health and clinical practice. However,

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The retail marketing mix and the retail product

MINICASE 5.3

M&S hopes tills will revive with sound of music FT

Marks and Spencer is to launch a subliminal put off by the thumping music and youth
attempt to lure back shoppers: playing back- culture of a traditional record store. In the
ground music in its stores. The struggling US, piped music CDs are becoming big busi-
retailer has held out against the high street ness with Guess, Old Navy and Starbucks,
canned music barrage, allowing its British the coffee house group, all getting in on the
shoppers to seek out sandwiches and knitwear action. One of the first retailers to make the
in dignified silence. But M&S is so confident discovery was Victoria’s Secret, a lingerie
the initiative will be a success, that it hopes company with nearly 800 stores across the
shoppers will be willing to fork out for the US. In 1988, it started selling compact disc
soundtrack of their visit. The tunes on offer and tape cassette compilations of the classical
will come from M&S-branded compact music playing in its stores. Of the 11 classical
discs, supplied by Universal, the entertain- albums to have sold more than 1m copies
ment conglomerate, and are on sale in about in the US, five are from the Victoria’s Secret
160 stores. collection.
M&S is not the first retailer to offer CDs
in an attempt to appeal to customers who are Source: Lisa Clifford, Financial Times, 26 July 2001

lighting is utilized to make the products stand out and provide effects that are more
dramatic. Boots utilize glass shelving to display their gift items and cosmetics. This in
conjunction with the lighting creates a quality association for the displays. The Body
Shop have the fragrance of their merchandise but this is complemented by the use of
bright, earthy colours such orange and dark greens, as well as mirrors and clever lighting
to provide their own unique atmospherics. Boots uses a combination of layouts. Grid
patterns are utilized for everyday items such as shampoo and toothpaste whereas free-
flow layouts may be adopted for other parts of the store. The Body Shop has adopted the
free-flow layout.

Aspects of atmospherics and store layout

These may affect:
l the speed at which consumers move from one point to another in the store
l the degree of well-being felt by the staff working in the store environment
l the total sales revenue, sales patterns and type of product sold
l the image the consumer has of the store and its merchandise

CONCLUSION
You should now be aware that marketing mix decisions have to be linked to achiev-
ing the objectives of the company or organization and should be coupled to accept-
ability throughout the company. While marketing departments often lead in setting the

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 Conclusion

marketing mix strategy they should not ignore input from others, nor should they fail to
check with others that the strategy will be workable from an operational standpoint.
The marketing mix offers the range and spread of alternative strategies by which a
retail marketer can influence demand. For any retail marketer, while the available range
is very similar the choice is not. The process of mix formulation and balancing is quite
often unique to each organization because the way the mix is combined allows the com-
pany to provide the augmented product with which it will compete with others. In the
competitive retail marketplace, a business can be successful only if its complete market-
ing mix offer matches what the consumer wants. To be truly successful, the offer has to
be as good as – but preferably better than – that of the competition. The marketing mix
is planned and co-ordinated by marketers, so the onus is on marketing to control the
inputs in such a way that the overall effect maximizes the demand and satisfaction of the
consumer.
Product planning allows a retail company to understand and pinpoint marketplace
opportunities so that the merchandise range can be co-ordinated to ensure that success-
ful products are maintained and undesirable ones deleted. It allows for an understanding
of the complexity of the retail product so that aspects of service and quality are consid-
ered as part of the overall retail offer. This section on the retail product is brief as the fol-
lowing chapter (Chapter 6) is devoted solely to the important area of merchandise
management. It discusses the different approaches to planning and controlling merchand-
ise in terms of the width and depth issues, the assessment of stock levels and issues in
buying.

EXERCISES
The exercises in this section relate to the issues discussed in this chapter. It is suggested that you
work through them before moving on to Chapter 6.

1 Go to the high street and select two different types of small-sized stores in order to create a floor
plan of their layout. Mark the way the entrance is shaped and types of merchandise that are in
different areas of the store. Try to create this to scale. Also, provide some analysis as to the
height of different in-store displays. Provide a strengths and weaknesses analysis of your findings.

2 Visit at least two large department stores and note the way the overall marketing mix has been
formulated. Do you think the product is well integrated with the in-store promotion, window
display, pricing policy, etc.? For example, does the total retail product offer and experience
match other visible signs of the marketing mix? Produce a report to the manager on what
changes are required to improve the current situation.

3 Create a list of the atmospherics you would expect to find in leading supermarkets. Now visit two
different supermarkets and find what additions or subtractions need to be made to your list.
Based upon your findings you are required to write a report to a charity shop to offer advice on
how to improve the atmospherics of the shop.

4 Choose two retail stores in the high street (such as Boots and The Body Shop). Visit the stores and
provide a breakdown of the way the fascia, window display, atmospherics, staff uniforms, pack-
aging and layout create an image and positioning for the company using the following grid as a
guide. Also, provide advice on any areas in which improvement could be made.

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The retail marketing mix and the retail product

Visit and make notes at: Make notes on:

l Boots Fascia

l The Body Shop Window display

l Type of materials used in store display

l Staff uniforms

l Atmospherics, etc.

Learnt from study the concepts of: Practical aspects that any other company
could utilize to improve their business?

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