OBJECTIVES
As a person with knowledge of retail marketing, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how retail marketing is thought up, formulated and then imparted down into the subsidiaries of the company or organization. The author hopes to have an in-depth understanding as to how the retail marketing enables companies and organizations to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon i.e. innovation and diversity. Innovation was discussed with regard to retail marketing where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
EXECUTIVE BRIEF
This essay utilized Sasa Cosmetics as the model organization to review its present retail marketing strategies and how they dealt with critical situations. From the analysis, key trends in the retail marketing strategies were then identified, how it worked and its effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess these retail marketing strategies with regard to its suitability to critical situations, during which the internal capabilities of these retail marketing strategies in relation to the strategy being followed was determined also. An overall analysis of the performance and effectiveness of the retail marketing strategies of Sasa Cosmetics was also conducted to assess and compare the capabilities of these retail marketing strategies with those of others. Gaps in the retail marketing strategies and environment were then identified.
Finally, several choices of strategies to improve the retail marketing strategies of Sasa Cosmetics as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.
INTRODUCTION
Retail marketing can be defined as the efficient and effective implementation of the retail policies and tasks necessary to satisfy a firm's customers. Retail marketing focuses on the careful management of the processes involved in the production and distribution of products and services (2000).
More often than not, small companies don't really have the capabilities to implement effective retail marketing strategies. Instead, these companies engage in activities that various schools of management typically associate with retail marketing. These activities include the manufacturing of products, product development, production and distribution.
However, retail marketing deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with retail marketing. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, retail marketing includes the analysis and management of internal processes.
Sasa Cosmetics will be the model business entity that will be used in this research based on their history in retail marketing.
COMPANY OVERVIEW
A. Company Mission / Corporate Objectives
Sasa Cosmetics aims for sustainable growth as a broad market leader in the beauty and cosmetics industry as well as for segment leadership. In both cases, the beauty products of Sasa Cosmetics will play a crucial part. The company is able to establish its broad leadership usually by acquiring other strong cosmetics companies and their products, which are then combined into a new, larger company. Offering training to its employees, improving the company operations, and the introduction of new technologies then reinforces the positions of Sasa Cosmetics. This practically results in economies of scale that is able to create a distribution network for both the local and international beauty products of the company. If a market is already in the control of other companies, Sasa Cosmetics devotes its attention towards the development of a premium segment with its various beauty products.
The mission of Sasa Cosmetics is to secure the growth of the business in a sustainable manner, while at the same time constantly improving the company’s profitability. The strategy to achieve this involves four elements:
RETAIL MARKETING STRATEGY AND TACTICS
In order to sustain its growth on the international level, Sasa Cosmetics builds its business on four (4) main retail marketing strategies.
- The first is building a strong local operating platform, and then testing it over time to determine if profitable growth would be possible through the selection of the right brands and creation of the structures fro distribution to supply a local national market.
- The second is broadening the portfolio in order to make way for international brands to give access to those not supported by the local brands. Global perspectives are also gathered to help optimize both the local and global brands. By broadening the portfolio, Sasa Cosmetics is able to meet the consumer’s needs and minimize the costs of local infrastructures (Grönroos, 1994).
- The third positioning strategy involves a balanced portfolio of countries among established and developing markets. In this instance, the established markets will provide the funds to invest in developing markets that have lower GDPs but possess a tremendous potential for growth and development.
- The last strategy involves market consolidation which would help in the securing of positions and the creation of shareholder values. Sasa Cosmetics strives to be in the top position on each market.
Loyalty = Understanding Customer Value and Needs
Gone are the days when employees work on their desks for eight hours a day. Today’s employees want to become as productive as possible while in their offices and interact with different individuals and groups in different settings. The technological advancement in wireless technologies has allowed workers and employees to access communication tools in new settings. Because of this rigorous and hectic schedule of employees, it became imperative for them to indulge in simple yet affordable beauty products and other cosmetics to help them maintain their beauty in spite of the pressure of every day’s work.
Loyalty = Understanding Customer Wants
A. Convenience
Sasa Cosmetics’ dedication to quality for almost three generations now has led to the satisfaction of millions and millions of its customers worldwide. Sasa Cosmetics’ beauty products were created by a group of people who pursued the best quality and craftsmanship. The beauty products of Sasa Cosmetics that its customers use today are still being manufactured using nothing but the original and unparalleled raw materials discovered three generations ago. Their natural ingredients and bright colors are obtained by using only the purest ingredients.
B. Health
The raw materials used in the production of Sasa Cosmetics beauty products are able to meet the high quality standards and specifications. The packaging materials where Sasa Cosmetics beauty products are sold are also being subjected to strict quality standards. In line to Sasa Cosmetics’ policies in product safety, appropriate measures are taken in the manufacturing of Sasa Cosmetics beauty brands to prevent the possible contamination of the products. Sasa Cosmetics manufacturing plants implement the principles of the HACCP (Hazard Analysis and Critical Control Points) system as a testament to their dedication to quality.
C. Product Innovation
Sasa Cosmetics bases its pricing strategies on several key trends that continuously shape the global marketplace of cosmetics. One particular trend is labeled as “premium-tization” (1981). This phenomenon causes the polarization of different markets. This would then trigger the consumers to demand and pay much higher prices for perceived quality. However, discounting in prices is also simultaneously taking place, therefore squeezing out the middle range. More often than not, supermarkets undergo internationalization which leads to a tighter squeeze for shelf space.
STRATEGIC OPTIONSDeriving from the analysis between the industry, retail marketing and capabilities of the company involved, many strategic options would become imperative. It is therefore essential to evaluate these strategic options as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders.
A. Business Level StrategyThere is definitely a need to reconcile both the inside-out and outside-in capabilities. While Sasa Cosmetics’ retail marketing strategies involve focusing on their core competencies with market position following its resource base, the company will be put into a disadvantageous position should they choose to neglect both the macro as well as the cosmetics industry environment. Therefore, Sasa Cosmetics has to be aware of the latest retail marketing changes, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as market sensing, customer linking, channel bonding and technology monitoring.
The advantages enjoyed by Sasa Cosmetics may come in the form of increased revenues. Knowing what the market demands and the latest trends could help the company fully exploit its research and development capabilities to come out with beauty products which are not only cost-effective but also high in quality. The strategic option can even be used as a retail marketing tool where the focus is on staying close to their customers and listening to their feedbacks. On the flip side of the coin, there will be a huge mobilization of resources involved, and the associated risks bestowed on Sasa Cosmetics.
Nevertheless, the mentioned strategic option seems the most practical in the wake of globalization, since there is a sudden shift towards a more integrated and independent world economy. The key stakeholders too should not have any objections so long as Sasa Cosmetics’ core business is not threatened. By virtue of the company’s centralized control of its business, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of operations.
Understanding the strategic importance of retail marketing and management is something that Sasa Cosmetics has to be familiar with. This company normally practices a centralized and globally scaled configuration of operations and capabilities. This allows information dissemination to be retained.
B. Network Level Strategy
There are various strategic options available for Sasa Cosmetics. These are enumerated as follows:
· Tie up with various local cosmetics companies
· Collaborate with major competitors
· Alliances with leading raw materials suppliers
RECOMMENDATIONS
A tie-up or merger with various local cosmetics companies offers tremendous benefits in terms of access to their retail marketing policies, infrastructure and even their resources. However, Sasa Cosmetics must not lose sight of its core competencies while pursuing these tie-ups. Otherwise, the image of this company might be put in jeopardy.
Meanwhile, the collaboration of Sasa Cosmetics with its major competitors can be seen as a ridiculous move at first. However, upon close examination, this move could pave the way for this company to improve even more its retail marketing strategies. The bottom line is both sides would be able significantly gain in such an alliance. Sasa Cosmetics’ strengths in beauty products development combined with the retail marketing strategies of their competitors can transform them suddenly into an unbeatable force to reckon with ( 1998). One possible setback, however, is the differences in the cultures of the companies involved. Another possible setback could be whether any of Sasa Cosmetics’ competitors has the need to form alliances.
The third option also focuses on alliances, but this time with either one of the suppliers specializing in beauty products and other raw materials. The benefits of these alliances should outweigh the costs in the long run.
In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether Sasa Cosmetics could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any merger or alliances may also involve the sharing of expertise. This company has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the company’s values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, Sasa Cosmetics will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options.
RECOMMENDED RELATIONSHIP MARKETING STRATEGIES
Sasa Cosmetics can integrate the implementation of the subscription business model as part of its relationship marketing strategies towards their clients and customers. The subscription business model has been widely used by most fashion and cosmetics companies, but the application of this model has started to spread up to this time. Instead of selling the cosmetics directly, Sasa Cosmetics can engage in a process of selling their monthly or yearly access to a particular cosmetic. As a result, the company will be able to convert a one-time sale of a cosmetic into a recurring sale of a service.
Effect on Sasa Cosmetics
Sasa Cosmetics will surely benefit because of the fact that they are guaranteed of a constant revenue stream. This will significantly reduce the uncertainty and the risk-taking of Sasa Cosmetics. Also, most of the time, the subscription pricing structure is carefully designed in order to make sure that the revenue stream from the recurring subscriptions could be significantly higher than the revenue coming from simple one-time purchases. In most subscription schemes, it also induces the increase of the company’s sales through disallowing the subscriber’s option to either accept or reject any specific product. This triggers the reduction of customer acquisition costs, and allows the implementation of a personalized marketing or database marketing.
However, subscription business models also have their disadvantages. Sasa Cosmetics needs to invest to a large infrastructure in order to help in the management and monitoring of subscriptions.
Effect on Sasa Cosmetics Customers
Sasa Cosmetics consumers can also benefit greatly from this business model. If they will be able to buy Sasa Cosmetics products regularly, then they will significantly benefit from the convenience. However, since they will only have to make one particular cosmetic purchase decision, then they will just simply have to wait for the cosmetic to arrive. This model will be of great help for those consumers who are in search for structure and constancy in their hectic lives.
CONCLUSION
The results of the analysis carried out on the retail marketing strategies of Sasa Cosmetics indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the retail marketing strategies of Sasa Cosmetics could still be expected to improve faster than average.
The review of the company’s retail marketing capabilities and resources revealed very little inconsistencies regarding their overall strategies. This is coherent with their traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for the company.
The analysis among the industry environment as well as the retail marketing capabilities of Sasa Cosmetics revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of the company.
Also, Sasa Cosmetics has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.
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