Unit 5

Retail Marketing and Promotion

In this unit, you will understand the importance of marketing to a retailer's long-term growth, profitability and survival. You will examine the use of promotional techniques that are essential to an understanding of successful retail trading.

All retailers are trying to sell goods or services, and need to identify potential customers and understand their needs and wants. Retailers must then use this information to set appropriate prices. Good marketing and promotion techniques support product sales and ensure business survival. Retailers must research markets and customer needs to ensure that they can market and promote services appropriately to attract customers to the business.

On completion of this unit, you should understand:

the strategic marketing objectives of retail businesses
the market research techniques used by retail businesses
the position of promotion within the marketing mix in a retail environment
how a retail business can evaluate the success of a promotional campaign

The unit focuses on two different retailers and your research will be centred around one business from column A and one from Column B. You may choose alternative retailers from these, but your tutor must agree with your selection.

A	B
Ikea	Sainsbury
Matalan	Selfridges
B&Q	Harvey Nichols
TK Maxx	Asda
Focus DIY	Next
JJB Sports	Tesco

THE ASSIGNMENT

You are a marketing consultant for B7 Innovation.

B7 is described as a marketing agency, marketing consultancy and innovation agency. We specialise in brand positioning and innovation, set up by ex-directors and consultants of New Solutions, The Value Engineers, The Henley Centre and Fitch.

Our work includes:

creating new brands and brand positioning, and re-positioning existing brands for growth
generating new product ideas/new product development (NPD)
positioning new products and brands
developing brand stretch ideas
marketing strategy and brand strategy
defining the 'killer' communications brief
ideation and facilitation of creative workshops

www.b7innovation.com

The business represent brands such as Pimms, Walls, BBC, Knorr, Grolsch, Pepperami and Dove. They have been approached by Aldi – this discounter is struggling to survive in the highly competitive food market and needs your help to develop their marketing and promotional campaigns.

Task 1: Marketing objectives

Before any retailer can embark on a marketing and promotional campaign, they must set themselves objectives about what they hope to achieve. These objectives can include:

business growth
moving into new markets
extension of product ranges
increasing market share
increasing profitability
diversification – this includes launching new products in existing markets or moving into new markets
brand building and establishing own brand goods
raising awareness of products or services
creating a distinctive market presence

Task 1a

You need to prepare a presentation to Aldi that explains what the marketing objectives of your two retailers are.

[Evidence for P1]

Task 1b

Write a short report analysing these objectives and explain how they relate to the target markets of each retailer.

[evidence for M1]

Task 1c

Your report should evaluate the strategic objectives of the two retailers, and you should give recommendations for improvements.

[Evidence for D1]

Task 2: Research Techniques

Before Aldi can plan a marketing campaign they must first carry out research to identify their target customers and to gain knowledge of their competitors. You need to advise the directors of Aldi of the research techniques they can adopt. You should produce a guide for them that explains the purpose of market research:

to identify target markets
to identify customer needs
to determine sales trends
to gain knowledge of competitors' position in the market
to evaluate existing promotions

There are a number of ways to carry out market research.
Copyright: iStockphoto.

You also need to explain the techniques the company can use for market research, considering:

primary research, e.g. surveys - questionnaires, telephone surveys, street interviews
focus groups
observation - visual, CCTV
loyalty cards
secondary research - internal records, sales data, published
statistics - government, trade organisations; specialist agencies - Mintel, Dunn and Bradstreet
qualitative and quantitative data
advantages and disadvantages of different methods of research - cost, time, accuracy, reliability, fitness for purpose, possibility of bias

Using class notes and the supplementary sheets, you need to look at how Aldi can segment their market. You should consider:

classifying customers using socio-economic groups
lifestyle, age, gender, ethnicity
location
employment
family composition

You can get further information on market research by looking at these presentations:

[Evidence for P2]

Task 3: The Marketing Mix and Promotional Techniques

For all the retailers you chose in Task 1, you need to investigate how they use the marketing mix and, in particular, how promotion is positioned in the mix.

The marketing mix is made up of the four Ps: Product, price, promotion and place. When describing this for your retailers you should consider:

These include:

Place: location, e.g. local town centre, out-of-town retail parks; accessibility, nearness to customers and transport links; location of competitors; home deliveries, direct selling; proximity to 'honey pot' locations, e.g. tourist attractions, entertainment, catering, leisure facilities; future expansion possibilities	Price: factors affecting price, e.g. costs, supply and demand, mark-up, taxation; pricing strategies, e.g. discounting, multi-buy offers, vouchers, sales
Promotion: promotional budget; target audience; promotional methods; advertising - press, radio, television, cinema, internet, catalogues, direct mail, window displays and posters, in-store displays, point-of-sale advertising; press releases; telemarketing	Product: unique selling points (USPs); product differentiation; product life cycle; branding; own brand; after-sales service; niche markets

Task 3a

Your report should include examples of how each retailer utilise elements of the mix and how they use promotional techniques to expand sales and profitability (you could include magazine adverts, direct mailings, catalogues, offers, etc.)

[Evidence for P3]

Sales in prominent stores can also help with brand awareness.
Copyright: iStockphoto.

Task 3b

Compare how the two retailers you have studied have used the marketing mix to expand their market share looking at the similarities and differences between them.

[Evidence for M2]

Task 4: Evaluating a Promotional Campaign

Promotional spending is high amongst retailers due to the competitive nature of the market. The Directors of Aldi will want to know how they can ensure their spending has an impact on sales and profitability.

Task 4a

You need to give a presentation explaining how a business like Aldi can evaluate the success of a promotional campaign.

You should consider a number of different evaluation strategies:

financial, e.g. increased turnover, higher stock turn, higher profitability, higher costs due to expansion of business
physical, e.g. increased customer numbers, need for more selling and storage space, more frequent ordering
customer feedback, e.g. questionnaires, coupons, loyalty cards, follow-up surveys, comment cards, level of customer enquiries

[Evidence for P4]

E-commerce order numbers are easy to track.
Copyright: iStockphoto/DSGpro.

Task 4b

With specific reference to the two retailers you have been studying, explain how their promotional activities can be evaluated.

[Evidence for M3]

Task 4c

Select a promotional campaign for one of the retailers you are studying (this could be for one product or for a range of products) and evaluate how successful you think it has been using the techniques described in task 4a. For example, you could carry out a questionnaire, investigate sales numbers before and after the campaign or look at stock ordering.

[Evidence for D2]

Related lesson plan:

Business Principles in Retail - Overview

Business Principles in Retail - Tasks