The concept of retailing involves selling products or services to customers. While you may think of a retail sales channel as a brick-and-mortar store, that is actually only one kind of retail. Retail sales can happen through online shopping or even direct sales. What constitutes a retail sale is that the end user of the product or service is also the buyer.
The functions of retailing and retail marketing are based on the four P's: product, price, place and promotion. These are the basic foundations of any retail business, and you may hear them referred to as the "marketing mix". Each of these four fundamentals must work in conjunction with each other in order to create an aligned marketing strategy that is designed to capture the attention of the consumer.
The first step to creating a successful retail business is having the right product for your audience. It is important to understand the needs and challenges of your target market. Conduct market research to see where the gaps are in the market and how your business can fill them. Do not sell a product that you think customers will like; sell a product that they need.
One of the critical factors of your product is the packaging. Instead of being just an afterthought, note that packaging adds to the user experience. It is a way to inform consumers about your brand and its values, and it is also a way to stand out in the market.
Consider top-performing brands and their unique packaging. Take Apple, for example. All of their packaging design is minimalist and is aligned very closely to their visual brand strategy. It is easy to spot an Apple product from afar in a sea of products.
Be sure to align the product and the packaging with the key values and goals of your target market. For example, if your audience values sustainability, source environmentally friendly materials to create your product. Continue that into your packaging and reuse recycled materials instead of single-use plastics.
In the concept of retailing, price plays a critical role in the buying decision. Your price must cover the cost of the goods in addition to overhead costs with enough margin for you to make a profit. There are many pricing strategies retailers can use:
- Everyday bargain pricing: Some retailers choose to keep their prices low all the time. While they have thin profit margins, they make up for it in volume of customers.
- High/low pricing: For some retailers, it is more profitable to keep the pricing of a product high and only lower it when the product is no longer trendy or in season.
- Competitive pricing: This pricing strategy involves pricing products based on what direct competitors are doing.
- Charm pricing: This involves using odd numbers, such as $4.95 instead of $5.00. Consumers associate $4.95 as being closer to $4.00 than $5.00, which makes that price more attractive.
- Value-based pricing: Retailers who take this route price products based on what they are worth to customers and not how much the product costs to make.
In retailing, place is a critical factor because this is where the sale between the retailer and the customer occurs. The place can be a retail store, online, pop-up shop, farmer's market, street-side stand or anywhere else your customers are found. When selecting the place for your retail operation, it is important to conduct research to see where your target audience shops the most.
The retail services definition also includes promotion, which is the process of communicating the benefits of your product to the consumer. There are several ways to promote your products to entice customers: advertising, personal selling, sales promotions, direct marketing and public relations.
When deciding on which promotional channels to use, it is important to first establish your goals for the promotion. For example, public relations is a good way to increase brand awareness, while sales promotions are a good way to increase revenue in the short term.