Chapter 3 MKM 133

Donald Norman

who said, “Market segmentation is the natural result of vast differences among people.
“

Market Segmentation

gives a clear understanding of the retail customers’ requirements. With the clear understanding of market segmentation, the retail managers and marketing personnel can develop strategies to reach out to the customers with specific needs and preferences.

Market Segmentation

It is a process by which the customers are divided into identifiable groups based on their product or service requirements. Market segmentation is very useful for the marketing force of the retail organization to create a custom marketing mix for specific groups.

Organized Retailing

 is a large retail chain of shops run with up-to-date technology, accounting transparency, supply chain management, and distribution systems.

Unorganized Retailing

is nothing but a small retail business conducted by an owner or a caretaker of the shop with no technological and accounting aids.

Retail Strategy

It is a plan designed by a retail organization on how the business intends to offer its products and services to the customers. There can be various strategies such as merchandise strategy, own-brand strategy, promotion strategy, to name a few.

Retail Strategy

Includes identification of the following −

• The retailer’s target market.

• Retail format the retailer works out to satisfy the target market’s needs.

• Sustainable competitive advantage.

Concentration (Niche) Strategy

Under this strategy, an organization focuses going after large share of only one or very few segment(s). This strategy provides a differential advantage over competing organizations which are not solely concentrating on one segment.

For example, Toyota employs this strategy by offering various models under hybrid vehicles market.

Multi Segment Strategy

Under this strategy, an organization focuses its marketing efforts on two or more distinct market segments.

Price Penetration

It is setting the price of the product or service lesser than that of the competitor’s product or service. Due to decreased cost, volume may increase which can help to maintain a decent level of profit.

Aggressive Promotion

Increasing product or service promotion on TV, print media, radio channels, e-mails, pulls the customers and drives them to view and avail the product or service.By offering discounts, various buying schemes along with the added benefits can be useful in high market penetration.

High product distribution

By distributing the product or service up to the level of saturation helps penetration of market in a better way. For example, Coca Cola has a very high distribution and is available everywhere from small shops to hypermarkets.

Growth Strategies

If a retail organization conducts SWOT Analysis (Strength, Weakness, Opportunity, Threat) before considering___?___, it is helpful for analyzing the organization’s current strategy and planning the growth strategy.

Ansoff’s Matrix

An American planning expert named Igor Ansoff developed a strategic planning tool that presents four alternative growth strategies. On one dimension there are products and on the other is markets.

Market Penetration

Company focuses on selling the existing products or services in the existing market for higher market share.

Market DEvelopment

Company focuses on selling existing products or services to new markets or market segments.

Product Development

Company works on innovations in existing products or developing new products for the existing market.

Diversification

Company works on developing new products or services for new markets.