Access to mkt step 1:
analysis
Strategic Access to Market
S1 – Analysis Strategic Access to Market Course BBA4
What we are doing today
1. Course Key concepts
2. Understanding key channel actors: the retailers
3. Understanding key channel actors: the shopper
S1 – Analysis Strategic Access to Market Course BBA4
1. KEY CONCEPTS
S1 – Analysis Strategic Access to Market Course BBA4
Marketing channel: definition
Managing the access to the market (or go to market) implies structuring and managing
the marketing channels of the company
DEF. A marketing channel is a set of interdependent organizations involved in the
process of making a product or a service available for consumption or use by
consumers or industrial users
It is different from the supply channel !!! This latter is used to supply the materials to
produce a good
S1 – Analysis Strategic Access to Market Course BBA4
MC - Typical Simplified Representation
MANUFACTURER
RETAILER/S
PLEASE NOTE: In this course we will focus on B2C markets; this representation holds also for B2B
markets, where end customers are represented by firms and retailers are usually called distributors
Which is their role?
moving goods from producers to end
clients
Covering 3 gaps:
Time
Place
Possession
Are channel decisions really important financially for
the firm?
▪ Cost of production 5/10
▪ Price to retailer 40
▪ Sunglasses price at the store €120
Revenue to manufacturer : 25/30
Revenue to retailer : 80
Consumer pays for distribution:
67% of price paid!
S1 – Analysis Strategic Access to Market Course BBA4
MC Flows REMEMBER: there are also reverse
flows!
S1 – Analysis Strategic Access to Market Course BBA4
Key concepts in go to market: property principle
What defines who is in/out of the channel: only who gets the property of the good is a
channel member
Property implies full responsibility of the good assumption of the full risk: product
can be destroyed, damaged or stay unsold
Change in the property implies total loss of the control of the marketing activity from
the manufacturing company: no possible impose the price to retailers, not in-store
disposition we will try to condition that with trade marketing
Who takes the property of the good is considered a channel actor
S1 – Analysis Strategic Access to Market Course BBA4
The to go market process
To define the best access to the market and build a sustanable competitive
advantage throught the channel management activity, companies’d follow a 4 step
process:
1. ANALYSIS: shoppers’ behavior, retail sector, competitors’ distribution strategy
2. DISTRIBUTION STRATEGY
3. STRATEGY IMPLEMENTATION
4. CONTROL OF THE RESULTS
S1 – Analysis Strategic Access to Market Course BBA4
2. UNDERSTANDING CHANNEL ACTORS: THE RETAILERS
S1 – Analysis Strategic Access to Market Course BBA4
Retailer Definition
An organization/a firm whose main activity is buying & selling
+ that creates value for its customers (end users)
Not only buying/selling but also additional services
RETAILING: the set of retail business activities
Relevance - Sector dimension
▪ Turnover :
▪ > 27,000 billions Dollars in USA in 2022 (estimated)
▪ > 3,550 billions Euro in Europe in 2022 (estimated)
▪ Employees: around 20-25% of non agricultural
workforce
▪ Relationship with GDP:
▪ Counts for around the 25% of the countries Gross Domestic
Product
▪ The closure of stores due to national vacations of few days during
an year can cause movements of - 1-2% of the GDP
Relevance - Role in mktg channels
What if retailers do not exist?
What if each manufacturer should reach each shopper?
What if each shopper should reach each manufacturer?
Relevance - Role in mktg channels
The presence of retailers in the channels creates:
• Efficiency: reduced distribution costs both for manufacturers
and shoppers
• Efficacy: allows shoppers to buy:
– What they want
– When they want
– Where they want
– How they want
They create utility of SPACE, TIME and POSSESSION
Relevance - Role in mktg channels
How?
By providing SERVICES to shoppers:
▪ Logistic services:
▪ Assortment breadth = n° of categories
▪ Proximity
▪ Hours of opening
▪ Breaking bulk = decompose big cartons & Holding inventories
▪ Information services:
▪ Assortment depth = n° of alternatives per category
▪ Pre-selection = choice among all possible offer by manufacturers
▪ Salespeople
▪ In-store info
▪ Other services
Relevance - Career opportunities
▪ Management opportunities retailers are relevant firms they look for
different profiles!
- store managers (mil. Euro Budgets)
- buyers
- category manager
- brand managers
- mktg managers
+ HR, finance, accounting, supply chain managers…
▪ Entrepeneurial opportunities
Retail entrepreneurs
Sam Walton
Ingvar Kamprad
Retail managers
Apple Store Leader program
Retail trends affecting MC
1. From …
small, local, entrepreneurial realities
… to
Big, global, international firms
Which is the biggest firm in the world?
Walmart
>11,000 retail units
28 countries
> 520 billions $ in 2019
2.2 millions employees
Source: NRF, 2019
Concentration in Retailing
4% OF ALL RETAIL FIRMS IN US
ACCOUNTE FOR NEARLY 80%
OF TOTAL SALES!!
Retail trends affecting MC
2. From …
Just buying selling activity (logistic services)
… to
Extension of the core activity
▪ Manufacturer service entrance: Vertical integration private labels
▪ Service sector entrance: finance, assurance, travel…
Retail trends affecting MC
3. From …
Passive receptors of manufacturers’ offer
… to
Active marketing subjects
▪ Marketing
▪ CRM: Loyalty programs
Note: They are closer to the end customer!
S1 – Analysis Strategic Access to Market Course BBA4
Types of retailers
Retailers can be classified basing on:
TYPE OF MERCHANDISE THEY SELL
ASSORTMENT: breath, depth, n° of stock-keeping units (SKU)
SERVICES OFFERED
PRICES, linked to their costs
On these characteristics we can define the main STORE FORMATS
1. Food retailers formats
SUPERMARKET
▪ 400-2,500 sm
▪ around 30,000 SKUs
▪ Self- service
▪ Born in UK
NOTE: food includes nonfood items such as health & beauty aids, hose cleaning
pdts and other general merchandise
1. Food retailers formats
HYPERMARKET
▪ > 2,500 sm
▪ usually very big (100,000-300,000 sm)
▪ Around 40-60,000 SKUs
▪ Combination of food (60-70%) and non food (30-40)
▪ Born in France
1. Food retailers formats
CONVENIENCE STORES
▪ in convenient locations
▪ usually small
▪ Limited assortment
▪ Speedy check out
▪ High prices
▪ Extended hopening hours
1. Food retailers formats
DISCOUNT
▪ Low prices
▪ Basic atmosphere
▪ Limited variety
Original HARD (born in Germany) vs. SOFT (UE)
2. Non Food retailers formats
DEPARTMENT STORES
▪ Broad variety
▪ Deep assortment
▪ High service level
▪ Distint departments look like a collection of specialty stores
▪ Pleasant ambience
2. Non Food retailers formats
SPECIALTY STORES
▪ Limited n° of complementary pdt categories
▪ Deep assortment
▪ High service level
2. Non Food retailers formats
DRUGSTORES
▪ Specialty stores concentrated on health and personal grooming pdts
2. Non Food retailers formats
CATEGORY SPECIALISTS or CATEGORY KILLERS
▪ Big stores
▪ Narrow but deep assortment complete in a category
▪ Self-service
2. Non Food retailers formats
EXTREME-VALUE RETAILERS
▪ Very low price
▪ Limited merchandige
▪ Sometimes everything at the same cheap price
2. Non Food retailers formats
OFF-PRICE RETAILERS
▪ CLOSEOUTS: end-of-season merchandise
▪ IRREGULAR: merchandise with minor mistakes in construction
▪ OUTLETS
▪ FACTORY OUTLETS: outlets hold by manufacturers
S1 – Analysis Strategic Access to Market Course BBA4
Types of ownership
Additional criterium to classify retailers:
INDEPENDENT, SINGLE-STORE: entrepreneurial activity VOLUNTARY
COOPERATIVE GROUPS to gain better prices from suppliers
CORPORATE CHAINS: several stores with usually centralized decision making
FRANCHISING: contract according to which a franchisor allows the franchisees
to operate a store using the name and the format he developed
S1 – Analysis Strategic Access to Market Course BBA4
Retail channel
DEFINITION:
The way a retailer sells and delivers merchandise and services to its customers
The most common is the STORE
But it’s not the only one…
S1 – Analysis Strategic Access to Market Course BBA4
Retail channels other than stores
INTERNET CHANNEL e-commerce/m-commerce
CATALOG CHANNEL: 3.1% of retail sales in US
TELEVISION HOME SHOPPING:
INFOMERCIALS: programs mixing entertainment with pdt demonstrations to
solicit orders by phone
DIRECT CHANNEL: eg. Avon; particularly effective in less developed countries
VENDING MACHINES
Online is hugely used to research info on purchases… But the
physical store is still a critical step in the purchase journey
Although e-commerce sales are growing at double-digit rates, the reality is
that the majority of retail sales still happen in stores
18 21
% %
Vending Machines
Beauty
Electronics
S1 – Analysis Strategic Access to Market Course BBA4
Retail trends
Multichannel retailing
More and more use of technology
S1 – Analysis Strategic Access to Market Course BBA4
Trends: Multi-channel retail
WHY:
1. Overcome single channel limitations
2. Increase customers satisfaction and loyalty
3. Gain insights into Shopping behavior
4. Expand Mkt presence
5. Build strategic advantage knowledge on channel coordination
6. Omnichannel offer see shopping trends
Use of technology in store but not only…
S1 – Analysis Strategic Access to Market Course BBA4
3. UNDERSTANDING CHANNEL ACTORS: THE SHOPPERS
End customers
MANUFACTURER
RETAILER/S
SHOPPERS
THEY DO NOT NECESSARILY
COINCIDE!
CONSUMERS
Manufacturers goal
Retailers goal
The buying process
Evaluation Post-
Problem Information Purchase
of purchase
recognition search decision
alternatives behavior
BEHAVIOUR
Cognitive dimension
A. The problem: why people shop?
A. Factors affecting the perception of the
need
IDENTIFICATION
THEORY
Playing a certain role
STIMULUS THEORY AFFILIATION THEORY
Contrast loneliness
Avoiding routine
SHOPPING MOTIVATIONS
Self-rewarding Looking for social contacts
Discovering trends
Belonging to a group
Looking for sensorial stimuli
Doing physical activity Sharing interests
ASSERTING THEORY
Making a deal
Acquiring a superior status
Optimizing the choice
B. Information search
PRE-PURCHASE SEARCH ONGOING SEARCH
• Involvement in the purchase • Involvement in the product
DETERMINANTS • External Environment • External Environment (market)
• Situational Factors • Situational Factors
• Building a data base
to be used in the future
• Taking a better
MOTIVATIONS • Nice and pleasant
purchase decision
purchasing
experience
• Increasing the knowledge • Increasing the knowledge
of the product and of the mkt of the product and of the
RESULTS
• Better purchase decision market
• Satisfaction for the purchase • Satisfaction arising from
the search process
C. Evaluation of the alternatives:
Multi-attribute Models rational
Fishbein Approach for Measuring
Customer Value Perceptions
Perf Importance* Perf Importance*
Attributes Importance Competitor Performance Competitor Performance
A Competitor B Competitor
A B
Attribute 1 X1% V1 X1%*V1 V1 X1%*V1
Attribute 2 X2% V2 V2
Attribute 3 X3% V3 V3
Attribute 4 X% V V
Attribute 5 X% V V
Attribute 6 X% V V
Attribute 7 X% V V
Attribute n Xn% Vn Xn% * Vn Vn Xn% * Vn
Total Value n n
Σ1 (Xn% * Vn) Σ1 (Xn% * Vn)
Competitive Ratio = Total ValueA / Total ValueB
The customers may also not be rational in the
evaluation … role of experience and emotions
D. Purchasing choices
▪ The variables considered in empirical researches on purchasing behavior are
related to:
▪ Store environment
▪ Customer traffic fluxes
▪ In-store atmosphere
▪ Store crowding
▪ In-store marketing
▪ In-store communication
▪ Selling and displaying space
▪ Assortment
▪ Promotions
▪ Prices
2 types of shoppers
CREATE CUSTOMERS
PROFILES
ECONOMIC/FUNCTIONAL SHOPPER
RECREATIONAL SHOPPER
2 types of shoppers
ECONOMIC SHOPPER
- Duty, routine
Social
motives - Way to have
products Need - Not comparing - Convenience Tendency to
available arising different alternatives and cheapness being
- Low because of indifferent to
- Low frequency of - Low
involvement a change in the shopping
Personal visit of the stores sensitivity to
the current and purchasing
motives - Other ways of the store
status - Use of objective experience
spending time atmosphere
information
Motives
SEARCH CHOICE OF
SHOPPING PERCEPTION THE STORE Post-
Motives
ORIENTATION OF THE NEED • Attributes purchase
TIME satisfaction
SOURCES • Atmosphere
Motives
2 types of shoppers
Motives
SEARCH CHOICE OF
SHOPPING PERCEPTION THE STORE Post-
Motives
ORIENTATION OF THE NEED • Attributes purchase
TIME satisfaction
SOURCES • Atmosphere
Motives
- Willingness to - Sensitivity to Tendency to a
Social - Pleasant way
Need compare different most of the favourable
motives to spend time
arising alternatives services of the evaluation of
- High because of store the shopping
a change in - Intense use of
involvement and purchasing
the desired information - Importance of
- Social the store experience
Personal status - Personal and
relationships atmosphere
motives unpersonal sources
- Getting of information
informed
RECREATIONAL SHOPPER
Shoppers evolution
▪ Population age patterns old/young shoppers
▪ Ethnic mix managing diversity
▪ Education trend more demanding
▪ Family structure smaller/more variety
▪ Role of women from housecare to work
▪ Role of technology multichannel shopper
Thanks for your attention !
Any question?
