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Retailing: the marketing era

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HARDWOOD PEOPLE

HARDWOOD PEOPLE

I Irc rtrar keting eortccpt *ill bc wicle lr lreecpled lr1 rctltilcr' aicordilts to a neu sludl' by Managcment Horizotts, Inc. entitlcd, Tht' Chungittg Role o.l tlrc .\lurkt'/itr,q I)urt'tion itt Rt'tutling.

'['hc "markcting conccpt " is not rcallv neu to U.S. corporations. It rvars integratccl into the opcrating philosopliics ol sotttc rnajor U.S. Ittartufact urin-rr l'irrns back in thr' 1950s ancl 1960s. As thc report crplains, "the marketing conccpt rvhich emphasizcs: a eotl.ulll{Jt ttlltrket ()rir'lllilli()ll o inte-sratcd n)altagerrent o1' scparatc br.rsiness l'ttnctiotrs r contributing to thc'marketing mir'

. return on investment goals ri es l timelv re5ponse lo kc) ehltngr't rnade in the operating environment o1 these companies." These changes inclr"rded: e litt[' produel differentiation o large rnarketing budgets r port \\'or ld \\'ar I I le str ue I ur lltg ot dcnrogra;lhics ancl lifcstyles r p|rrtlrr-lirtlt .ltl.ti.ilr ()ul\lrinning denrand dcrcloptncttt itt cottsuttter bcltar ior trackirtg r refinenrenl in Irtarkcl rcsearclt a.nd rtiarket sltalc Ittc:isurctltcr)l o dereloprrtcttts in tttcdia itttcl eortt munication cl'licicncy'

. increased emplrarir ()ll \lrill(r!i!' planning

During the same pcririd, ancl inltt thc 1970s, retailing greu rapidll'. Thc prinrarl c()ncern for mosl rt-tailcrs was hou to erpand ph1'sical t'acilitics rapidlr. Htrrrcrer. a\ the report poirttt out, during the 1974-1982 period, real salcs gro*tlr sloried substantiall)' as thc busincss environmenl underll'ent a serics of changcs. A number of resulting retail trcnds, paralleling those experienced earlier b1' manufacturers, enrerged: r littlc rrrriir rdtrlrl \t()r e r)r :lr)r C t1'pe di1 f crcntiatIot.t large advertisittg atrcl prontotton al budgets

. profound changcs in "tr.aditiort al" shopping bchar.iors lront changcs in dernographics and lil-cst y'les or crstorirtg r llqr,q.llrprrrcll) ilt n)onitorittg errrtsumer shopping patterns r increascd availability of relativcl.v inerpcnsivc markct research inforrnalion o prou'lh in narrorver, morc targeted cost -cl-f'ect ivc advcrtising. o Increasccl concern with strategic planning

"Now," statcs the report, "rctailing is entering a nc\\ phase, thc marketing era. \\'c crpeel it to eoltlittttc through 1990 and tcl bring ntclre lavttrable real retail sales -qrou'tl't than thc 1914-1982 period, but a qtrite modcsl rate compared to the 196l-1973 time frame."

This new era will be characterized by moderate growth and intense competition, challenging retailing corporations with new success requirements.

As the report illustrates, "the marketing concept provides a basic or fundamental philosophy for running a business-being more than an organization concept or theoretical idea. Furthermore, adoption of the marketing concept in retailing yields a new approach to marketing strategy." Using the concept allows retailers to choose a market position, to design the supporting elements of the business and to engineer desired financial goals.

"Proper priority setting of all strategic options, as to whether they are core or fringe, helps marketing driven companies engineer profit and sales growth at acceptable ROI," states the report.

By definition, the survey lists four characteristics of a marketing (as opposed to the merchandising) orientation in retailing:

(l ) Dstinctive primary business orientation, towards consumer and competitive market position as opposed to a business/ line of trade, product or vendor orientation.

(2 ) Clear management direction, coordinated business functions supporting customer needs vs. management of individual functions to achieve best performance within each functional area.

(3 ) Forward planning orientation, orientation to future market opportunities and market share vs. this year beating last year.

(4 ) Practical performance measurement, focused on measurement of market opportunities, market share, and return on investment vs. emphasis on sales gains, gross margins, inventory turns.

Based on the definition and distinction between the marketing vs. merchandising orientations, as outlined above, Management Horizons conducted an extensive survey of chief marketing executives of retailing companies to analyze the current and future impact of the marketing concept in retailing.

Among the key findings were: tunt to pase 44)

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