Understanding Customer Needs and Target Marketing

Discuss about the Literature Review for Retail Grocery Store.

Different consumers perceive their desires and interests and determine the extensive collection of products on supermarket shelves. This variety stalks from diverse purchasing practices of the customers and their different demands that they seek from products (Breugelmans and Campo 2016). It is quite difficult to satisfy all customers within a competitive market with a single product or service. Companies undertake strategic direction and respond to them by offering a large number of products and valuable brands. Accordingly, it is noticed that companies have found it essential to convert the mass marketing process into a target marketing strategy where the focus would be shifted towards a particular group of customers (Londono, and Castano 2017). The target customers in the market can thus be identified by developing the market segmentation, where customers are aggregated into groups with similar buying characteristics and their specific requirements.

The literature review is thus focusing on the retail market promotions by identifying the target customers. The study would establish the insightful knowledge regarding the diverse promotional strategies that deal with the retail grocery stores for the in-out nonfood products. Some of the specific types of the promotional process, such as placement, discounts, and advertisements would be discussed in this study. The analysis of the product promotional strategy would be discussed. The effectiveness of these promotional strategies for satisfying the customers’ needs would also be highlighted in this study.

In-store retail marketing is often conceptualized as the trade promotion in some of the fields. It is a considerable key factor, which is quite necessary if supermarkets and brands need to achieve success. They often create the trial and ensure repeat purchases, especially for those that make impulsive sales. In usual cases, the grocery store needs to concentrate on the in-store promotions to make the fresh strategic direction, strengthen the loyalty of the customers and accordingly increase sales (Breugelmans, Campo and He 2014). However, while launching a campaign, the appropriate pricing structure, strong and well-improved in-store merchandising and attractive advertising encourage the success of determined promotional method of the grocery store. Therefore, in order to provide the appropriate product promotion process, the following types of the promotions would be much beneficial.

Highly advanced technology and the strategic innovations might perceive as the most difficult parts in the ultra-competitive grocery industry. However, some of the retail companies are looking forward to most useful ways of developing the better approaches for ensuring the success. Discount in the grocery products is one of those fruitful strategies that attract more customers and persuade them for the repeat purchase (Watson et al. 2018). It is considered as the most effective strategy that draws the attention of the loyal customers. The retailers cut down the prices of the products and provide the discounts to improve customer loyalty. It is noticed that the discounters are here to stay in many markets that becomes challenging for the mainstream players who need to address the challenge head on by fundamentally transforming their pricing structure, product assortment, and store experience (Ziliani and Ieva 2015).  Many instances prove the effectiveness of such promotional strategy adopted in the grocery stores.

Types of In-store Promotions

For example, it is noticeable that the discounts offered by the grocery retailers are formatted in a typical way, which is quite different to the traditional supermarkets. Aldi, one of the biggest retail chains have structured their discount process in a diverse way. However, it is noticed that their U.S. counterparts are double if compared to the size of their European stores, which estimate almost 10,000 square feet (Ft.com 2018). It is still smaller than the traditional stores, which determines the limited assortment of products on their shelves. Despite such limited shelf space, they have been increasing the number of discounts much significantly.

Graph 1: Aldi’s discount strategy

(Source: Ft.com 2018)

It has been observed that between the years of 2011 and 2016, Aldi store counts increased up to almost 17.6% across the US (Ft.com 2018). In fact, the growth of discount retailers in Europe could serve as a precursor to what have been predicted in the U.S. for the future prospects. It is even difficult to understand that whether this channel has that potentiality to capture a significant percentage of significant grocery marketplaces in US. It is even putting pressure on other retail channels since they have been looking forward to develop the more effective promotional strategy. Therefore, it can be suggested that the discount process is quite effective to promote the grocery products and increase the customer loyalty.

It has been observed that the remarkable presence of supermarkets in low-income and high-minority neighborhoods has the considerable potential to affect positively on the diet quality among those who are at greatest risk of obesity. The establishment of the in-store marketing strategies, which usually draw attention to healthier products, may turn out to be much effective, sustainable, and acceptable for improving diet quality and health of the people (Bogomolova et al. 2015). It has been observed that a several studies based on the in-store marketing strategies provide the ideas about the promote sales of healthier items in low-income, high-minority neighborhoods. The conducted study provides the knowledge in a greater way that persuades the customers to purchase from these stores. Product placement can be taken as the right approach to in-store grocery shop. It can help in determining the success of the brand. Retailers can identify the use off-shelf marketing through the displayed products that can boost the sales of the customers.  In some of the cases, it has been observed that many retailers put down the purchasable products with the belief that if these things are positioned at eye-level, these would be sold in a better way (Cohen et al. 2015). The customers seek the convenient location where they can reach out anytime as per their need.

Discounts as an Effective Promotional Strategy

Majority of the successful companies have the idea what parts of the store they need to own for participating in a competitive market. Tesco, the biggest retailer in UK market, has established their presence in different market to make their products available to the customers. It has the presence in 36 countries, including, South Korea, Ireland, and Thailand (Kumar, Anand and Song 2017). It is noticeable that the growing movement in grocery retailing is creating the coordination between manufacturers and retailers through managing the categories. This streamlining process of the distribution function provides the retailers considerable benefits over product management (Grewal et al. 2016). However, the approach sometimes tends to avoid the potential consumer benefits, such as the identification of the new products or managing the effective stocking of any particular brands. For instance, placing the grocery stores near the supermarket area would be much preferable. In fact, the grocery stores in the locality would also help in developing higher number of customer base.

Advertisement is another most preferable approach for establishing the right promotional strategy. It is observed that many methods are available for delivering promotions to the potential consumers, including trade deals, such as discounted sales to retailer by manufacturers, displays, point-of-purchase information, and featured advertising. Argentesi et al. (2016) opined that differences in consumer demands may influence the delivery method based on sales. This scenario emerges since the consumers vary in their latent proneness to the specific type of promotion, such as display, coupon, rebate, and sale. These customers are even influenced by the type of shopping trip. They consider the unplanned purchases on product, which is being more prevalent on major shopping trips. These trips especially occur when stores are selected for low prices or attractive promotions (Lamey et al. 2018). In fact, it is also noticed that the unplanned purchase of a promoted item reduces the number of stops on a trip. Hence, it can be implied that the effects of promotions on individual products depends on characteristics of the product, especially when the consumers are prone to compare the purchase products with the others available in the market.

Retail advertising suggests those ads that are encouraging the potential customers to procure a specific product or service. It is noticed that these ads often include the description of the specific products, sales dates, coupons, their prices, and a call to action. For example, the specific grocery product ad that includes he description of the ingredients and provides the insights of the healthy food are some of the ads that can be considered among this category. These ads are often compared to the products with prices that are pointing out the discounts offered (Shi et al. 2018). On the other hand, the image advertising specifies that it would never mention a particular product, store location, price, or other information about the business strategy. These ads have the potentiality to create an image in the consumers’ mind regarding the the product or service. Many perfume or cologne commercials feature a complete bizarre sets, lighting and close-ups of models demonstrating the things completely unrelated to the product with an attempt to create brand value of the product as hip or cutting edge. 

Product Placement and In-store Marketing

The grocery stores need to move ahead to develop most effective promotional strategy that can draw the attention of the customers. It helps these grocery shops to build a high level of the customer satisfaction as well as loyalty. There are different types of promotional strategy that grocery retail can adopt. Celebrity endorsement is one of the most helpful promotional strategies that attract a number of customers.  It has been observed that the grocery chain usually market various products that include toys, coolers, clothing, hats, foods, and so on. The celebrity endorsement helps in gathering more customers when the celebrities wear the promoted items that have the name of the brand printed in it (Zielke and Komor 2015). This promotion process has preferably the high level of success since the grocery chain is looking forward to make the most use of it.

Social media promotion is the most advanced tactic to gather the response from a larger base of the customers. People are highly influenced by the social media marketing. Hence, the grocery shop can adopt this promotional strategy to attract the customers towards the nearby stores. Customer referral incentive program is one of the types of promotions in the grocery shop, which encourage the customers to refer others and get the discounts or benefits (Gijsbrechts, Campo and Vroegrijk 2018). It even develops the positive ‘word of mouth’, which is essential for developing higher brand value. Giving away the branded promotional gifts is a strategic direction to promote the items and gather more customers. This strategy can be a part of the key chain that increases the brand value. These specific promotional strategies are much effective in developing the better promotional process for the grocery retails.

The effects of the discounters are much appreciated for opening bigger stores with innovative features. They are even expanding their collection of fresh and organic products as well as selling private-label products that beat out established brands of the competitors in taste tests. They offer the products at the lowest price to attract a larger number of customers. In fact, discounters are observed to be scoring higher than established companies on customer advocacy. The dramatic growth of discounters is expected to build profound consequences for the overall grocery industry in next few years (Hara and Matsubayashi 2017). It is noticed that the discounters are here to stay in many markets that becomes challenging for the mainstream players who need to address the challenge head on by fundamentally transforming their pricing structure, product assortment, and store experience. Some of these key players may also opt to launch a discount brand of their own to beat these discounters. On the other hand, the discounters must avoid the risks of overexpansion. Based on the judgments on markets they often move into another market and by ensuring that they have that potentiality to achieve a structural advantage over current players in those markets.

Coordination between Manufacturers and Retailers

Each grocery shop requires identifying their target customers by observing the needs and requirements. Defining the target customers allows creating an efficient market that can impact on the sales rate. The first step of identifying the target customer is to concentrate on the problems and needs. It is always necessary to understand the perceptions of the customers while purchasing any product (Bogomolova et al. 2015). The customer support is developed based on such identifications of the requirements. Once the marketers can identify the necessity of the customers, it would be easier to categorize the departments and offer the suitable product as per their needs.

Secondly, profiling the current customers would be helpful in such circumstances. The marketers need to gather the profile of the customers that have something in common with each other. It would require a greater understanding and insight to target the people. Accordingly, the product features would be added to satisfy their needs. However, if the customer base is completely diverse, the business would require more time to develop the different pattern. Next process is observation of the competition (Watson et al. 2018). The marketers can define the target audience by identifying the competitors in the market. Scrolling through their social media sites and other reports would help in understanding the target audience and building the product features. This variety stalks from diverse purchasing practices of the customers and their different demands that they seek from products (Bogomolova et al. 2015). It is quite difficult to satisfy all customers within a competitive market with a single product or service. It is considered as the most effective strategy that draws the attention of the loyal customers. The retailers cut down the prices of the products and provide the discounts to improve customer loyalty.

Conclusion

The literature study presents the considerable ideas regarding the grocery market promotions. It has been observed that grocery product promotions are the considerable key factors, which are quite necessary if supermarkets and brands need to achieve success. They often create the trial and ensure repeat purchases, especially for those that make impulsive sales. It is noticeable that the growing movement in grocery retailing is creating the coordination between manufacturers and retailers through managing the categories. This streamlining process of the distribution function provides the retailers considerable benefits over product management. While launching a campaign, the appropriate pricing structure, strong and well-improved in-store merchandising and attractive advertising encourage the success of determined promotional method of the grocery store. It is noticed that these ads often include the description of the specific products, sales dates, coupons, their prices, and a call to action. It can be implied that the effects of promotions on individual products depends on characteristics of the product, especially when the consumers are prone to compare the purchase products with the others available in the market.

References

Argentesi, E., Buccirossi, P., Cervone, R., Duso, T. and Marrazzo, A., 2016. The effect of retail mergers on variety: An ex-post evaluation. Technical Report, University of Bologna.

Bogomolova, S., Dunn, S., Trinh, G., Taylor, J. and Volpe, R.J., 2015. Price promotion landscape in the US and UK: Depicting retail practice to inform future research agenda. Journal of Retailing and Consumer Services, 25, pp.1-11.

Breugelmans, E. and Campo, K., 2016. Cross-channel effects of price promotions: an empirical analysis of the multi-channel grocery retail sector. Journal of Retailing, 92(3), pp.333-351.

Breugelmans, E., Campo, K. and He, H., 2014. An empirical analysis of the impact of cross-channel promotions in multi-channel grocery retailing.

Cohen, D.A., Collins, R., Hunter, G., Ghosh-Dastidar, B. and Dubowitz, T., 2015. Store impulse marketing strategies and body mass index. American journal of public health, 105(7), pp.1446-1452.

Ft.com. 2018. Aldi and Lidl lead charge of discount supermarkets. [online] Available at: https://www.ft.com/content/cbdf0bfa-fd61-11e3-bc93-00144feab7de [Accessed 29 Apr. 2018].

Gijsbrechts, E., Campo, K. and Vroegrijk, M., 2018. Save or (over-) spend? The impact of hard-discounter shopping on consumers’ grocery outlay. International Journal of Research in Marketing.

Grewal, D., Bart, Y., Spann, M. and Zubcsek, P.P., 2016. Mobile advertising: a framework and research agenda. Journal of Interactive Marketing, 34, pp.3-14.

Hara, R. and Matsubayashi, N., 2017. Premium store brand: Product development collaboration between retailers and national brand manufacturers. International Journal of Production Economics, 185, pp.128-138.

Kumar, V., Anand, A. and Song, H., 2017. Future of retailer profitability: an organizing framework. Journal of Retailing, 93(1), pp.96-119.

Lamey, L., Deleersnyder, B., Steenkamp, J.B.E. and Dekimpe, M.G., 2018. New product success in the consumer packaged goods industry: A shopper marketing approach. International Journal of Research in Marketing.

Londono, J.C. and Castano, R., 2017. Supermarket suggested shopping lists (SSSL), promotions and grocery purchases. The International Review of Retail, Distribution and Consumer Research, 27(2), pp.146-163.

Shi, Y., Lim, J.M., Weitz, B.A. and France, S.L., 2018. The impact of retail format diversification on retailers’ financial performance. Journal of the Academy of Marketing Science, 46(1), pp.147-167.

Watson, Z.A., Shanks, C.B., Miles, M.P. and Rink, E., 2018. The Grocery Store Food Environment in Northern Greenland and Its Implications for the Health of Reproductive Age Women. Journal of community health, 43(1), pp.175-185.

Zielke, S. and Komor, M., 2015. Cross-national differences in price–role orientation and their impact on retail markets. Journal of the Academy of Marketing Science, 43(2), pp.159-180.

Ziliani, C. and Ieva, M., 2015. Retail shopper marketing: the future of promotional flyers. International Journal of Retail & Distribution Management, 43(6), pp.488-502