Marketing is a management function whose purpose is to identify, anticipate and satisfy the needs of consumers profitably. The process involves identifying the wants and needs of customers then subsequently developing a value in goods and services offered to consumers in order to satisfy their needs and wants as well as achieve profit for the business. Thus, marketing’s objective is to create satisfaction for the consumer by creating relationships that are value based in conjunction external and internal business units. Therefore, a marketing process entails creating a balanced trade-off between the business’ resources and goals against opportunities and wants in the market.
Marketing principles are the tools that aid in the creation of an effective marketing plan. However, these are not effective if applied on their own, therefore; current market trends have to be observed and integrated in the application of these principles in any marketing process. The changing trends that affect markets may include technological advances, cultural shifts, fashion trends, economy changes and competition shifts. A case in point would be exemplified by the emergence of e-marketing. Most companies have had to shift towards the use of technological advancements such as e-mail marketing to market their products as opposed to old conventional ways such as newspapers and mass media.
The marketing principles can broadly be categorized into four categories referred to as the four P’s: Product, Place, Price and promotion. The product principle requires that a product or service be distinctly valuable to a buyer and this principle can be judged by demand and supply. This principle employs tactics such as packaging, branding, installation, warranty, after sales service, accessories, instructions and features. The place principle involves the effort to get the product to the consumer in time and place conveniently. Tactics deployed under this principle include establishing wide distribution channels and opening many outlets-just to mention but a few. The price principle pegs its determinants on the value in the product determined by the level of innovation in the product. Tactics used include introduction price, discounts, allowances, level pricing, geographic terms and price flexibility. These should be employed according to value attained by the consumer and they should ensure profitability to the company.
Finally, the promotion principle can be defined as the communication element of marketing. Tactics applicable under this principle may include advertising, sales promotion and personal selling. Conclusively, a marketing plan involves the analysis of the operating market and application of the principles as tools of marketing. In summary this can be viewed as an internal analysis of factors that can be changed and controlled (the four P’s) as well as external analysis of the market forces which a marketer has no control (Competitors& technology). This paper will address the challenges posed by retail marketing in the United States of America’s food retail industry and how a marketing strategy can be developed to improve their sales.
According to The Food Marketing Institute (FMI) the food stores retail industry in the U.S faces five major challenges. These include changing competition trends, food safety, technological changes, labor shortages and government regulations relating to food retailing. Unlike in the past times when these stores had supermarkets as their main competitors; the present times have seen new upcoming competitors such as restaurants, super-centers and warehouse clubs. An FMI survey indicated that 26% percent of the surveyed consumers buy their food from super-centers, whereas; 14% percent buy from warehouse clubs.
The restaurants posed a challenge too because the survey indicated that 75% percent of the surveyed people eat out at least once a week with those aged 15 to 24 years eating out at least three times a week. This competition coupled with the already existent competition from supermarkets is bound to overwhelm retail food stores. The food safety problem is also an issue especially with rising concerns about bioengineering-with 7% of the consumers laying blames on the retailers. Government regulations implemented by the Occupational Health and Safety Administration (OSHA), USDA, FDA and the Federal Trade Commission (FTC) in the business creates a complexity of regulations for the industry (exemplified by a rule restricting packaging of any load into a shopping bag which is more than 15 pounds). Technological advances pose challenge too with hardware obsolescence occurring almost annually and the annual internet year (48 days) being too short for any substantial marketing via web. Labor shortages are also rife with unemployment at 3.9 (‘Food Retailing Challenges’, 2000).
The retail food industry has various tools under the four principles that it can successfully employ to improve its marketing strategy and raise its sales and profits. Under the product principle the first evident problem at the moment is the food safety concerns by consumers. These stores could improve customer confidence by introducing alternative product lines that are organically produced. This would ease the concerns about bioengineered foods and those that may high chemical residue levels. Similarly, they could offer consumers information through product labels. These labels would detail how production was carried out as well as the source (farm to fork policy). These measures will improve the consumers’ perceptions on safety, and thus; increase sales because consumers will shop confidently. These small stores could also increase their product lines to incorporate products such as pharmaceuticals and beauty products. This could be realized by allying themselves to other equally smaller businesses such as drug-stores. This would attract more customers that came to buy other products that may not be food products, and thus; increase food products sales.
The offering of different varieties of goods would also in essence create a ‘shopping experience of entertainment’ that is common in today’s shopping trends (‘Grocery Stores’, 2010). The trends in shopping experiences these days depict that consumers would like to access many products under one roof and have a greater sampling capability. This has been noted to increase impulsive buying and this would work well for retail food stores. Additionally, these stores could introduce label brands distinct for their stores. The products under these labels may be manufactured within the store or by third party purveyors through contractual agreements. This would offer cheaper goods to consumers distinctly branded and packaged according to the needs of customers that could be determined by research. These food stores could also restaurant-like tailored services that allow consumers to eat out while at the stores; this would help capitalize on the high percentage of consumers that love to eat out. This can be done by introduction of delicatessens that offer products made within the store as exemplified by other larger stores in the retail industry.
Finally, the stores would also capitalize on quality enhancement that is fostered by specialization. For example some stores would drop other food product lines and specialize on one product line such as meat products. This kind of specialty coupled with an extensive line of specialized meat products offered well could create consumer trust and loyalty for such specialized small stores. This is because such stores can be able to personalize their services (‘Micro-strategy’, 2010).
In line with the place principle the small stores could also employ some tactics that would reduce their disadvantage of a limited network. These stores could take up franchises offered by larger stores at a fee and use these to capitalize on the brand names of the bigger stores and advertising at a franchise fee. This would not only be advantageous to their promotional principle, but; it would also improve their sales because they can take advantage of the purchasing power held by the bigger franchise owners. This is because they can be able to order via them, and thus; take advantage of the economies of scale at this level. An introduction of home delivery for shopping done via e-mail or phone to the local proximity of the store may also improve convenience and attract more consumers to these local stores. This would create a positive edge for local food stores because larger stores such as Wal-mart have no personalized services of this kind, and thus; the convenience created will be a plus.
Under the pricing principles there are several means via which these stores would source cheaply, and thus; cut their prices. They could take advantage of economies of scale provided by mergers and franchises in purchasing supplies. These relatively cheaply sourced goods would enable them to cut their prices (Pegels, 2005). The in store manufactured and privately labeled goods such as pastries would greatly reduce high prices that result from brands and packages. The consumers could also be offered discounts on their shopping done via online coupons and saving cards. This would offer lower prices that would attract consumers to their local stores. Merging of smaller stores could also allow them to produce some lines of products for themselves economically, and thus; transfer the low price advantage to their consumers.
The promotional element can best be realized if the smaller stores merged to create a combined force for advertising their goods and services to the general public. Similarly, the affiliation to franchised stores would allow them to make relatively smaller contributions that can later be pooled for joint advertisements. The personalizing of service by home delivery mentioned earlier could also serve as a promotional tactic for local stores. Local stores could also result to cheaper modes of locally advertising via text messaging. This could be made possible by maintaining a database of all numbers of clients that make orders via the initiated home delivery personalized service. Thus, the service will not only offer personalized attractive service, but; also act as a source of customer information that can be used later in the marketing process(Plunkett, 2009).
Conclusively, the smaller stores should try to match service quality to the larger retailers and in cases where they cannot match prices they could compensate by better personalized services or more specialization.
‘Food Retailing Challenges’, (May, 2000). Challenges Outlined in State of the Food Retail Industry Address by Food Marketing Institute, Food and Drink Weekly.
‘Micro-strategy’, (2010). Retail Solutions, Viewed at, http://www.microstrategy.com/Solutions/ByIndustry/Retail.asp. 12th June, 2010.
‘Grocery Stores’, (2010), Grocery Stores: Industry snapshot. Viewed at, http://business.highbeam.com/industry-reports/retail/grocery-stores viewed on 12th June, 2010.
Pegels, C. C. (2005). Proven Solutions for Improving Supply Chain Performance: Outsourcing and purchasing, Charlotte, NC: IAP Publishers.
Plunkett, W. J., (2009). Plunkett's Food Industry Almanac 2009 (E-Book): Food Industry Market research, statistics, trends and leading companies. Plunkett Research.