790 The Marketing Book
forms: a review of these is provided by Mintel
(1999). Some schemes have proved prohibitively
expensive, necessitating their reduction or with-
drawal. Others have produced loyalty to the
loyalty scheme, rather than to retailers, giving
them a status similar to trading stamps, largely
abandoned in the 1970s.
In theory, a loyalty scheme which is well
thought out, rather than hastily bought in, can
yield considerable information benefits. To that
mass of EPoS data can be added information
about the income, family, age, etc. of the
purchaser. For the first time since the corner
shop, where most customers were known by
name, retailers have the potential to practice
elements of one-to-one micromarketing.
However, as many retailers are still grap-
pling to harness the full information benefits of
EPoS data, they can only scratch the surface of
this potential. While the concept of a ‘segment of
one’ makes obvious sense in business-to-busi-
ness marketing, retail marketing involves a vast
number of (relatively) small accounts. Com-
puters can be programmed to tailor incentives,
offers and communications to (assumed) cus-
tomer types, but mistakes will inevitably occur.
As loyalty schemes become imitated and institu-
tionalized, the challenge is to maintain customer
interest through innovations and added value,
while strictly controlling the costs of the
scheme.
Retail functions
Given the enormous breadth of activities that
comprise retailing, it is possible here to provide
only a glimpse of its major functions. A more
comprehensive treatment is provided in the
chapters of McGoldrick (2002). The emphasis
here is to:
1 Indicate the role of each function within the
overall process of marketing consumer goods.
2 Outline the significance of each function within
the strategic mix and within the value chain of
retailers.
Location
Store location decisions are probably the single
most crucial elements of retail marketing strat-
egy. They represent long-term investment deci-
sions which, if incorrect, are very difficult to
change. While good locations cannot alone
compensate for a weak overall strategy, a poor
location is a very difficult deficit to overcome.
Bad location decisions also undermine the asset
value of the retail organization; such stores are
difficult to sell.
The retail location decisions must address
macro and micro issues; they are often depicted
in three stages (Brown, 1992):1 Search– identifying geographical areas that may
have market potential.
2 Viability– evaluating the turnover potential of
the best available sites.
3 Micro– examining the detailed features of the
short-listed sites.Clearly, not all location decisions pass through
this sequence, and a great deal of intuition and
executive judgement are still applied. A num-
ber of more systematic techniques are available
to assist decision makers:1 Checklists. Very detailed lists of factors relevant
to location evaluations have been evolved and
are widely used. The factors include many
aspects of the population within the catchment
area, competition (existing and potential),
accessibility by car and by foot, and the specific
costs of developing a store on that site.
2 Geographic information systems(GIS). These can
provide detailed analysis of many checklist
factors, such as income, employment and
expenditure profiles, within specified localities.
3 Analogue methods. These extrapolate the
performance of a site under consideration,
based upon analogous sites already in
operation.
4 Regression models. These help to forecast
turnover by modelling the influence of location
factors which contribute to, or detract from,
the turnover of existing stores.