Page 99 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes 6.1 Financial Objectives and Goals of Retail Marketing

The financial objectives and goals of retail marketing are discussed below:
Understand Your Customer

It is imperative that you understand your target customer. If you primarily sell children’s
clothing, you should be targeting females in their 20s and 30s (moms). Your business should
take the time to know these women: what reaches them, what makes them tick, what they truly
need out of your product. Your understanding of your target customer will allow you to
communicate better with them, identify their market potential, customize product offers to
them according to various market segments and consider their needs during product changes
and updates.

Make Connections
A primary goal of retail marketing is understanding the connections between the customer’s
lifestyle and spending characteristics and why they choose one product over another. Using this
knowledge, businesses can develop their products with a competitive advantage. This requires
research and time as you delve into questions of brand loyalty, quality of product and pricing.
Improve Direct Marketing
Businesses must test to ensure that they are sending the appropriate message to the appropriate
households. They also must send this message at the appropriate time using the appropriate
media. Your communications must be spot on, selling the benefits of your product or service in
such a way that a prospect becomes a paying customer.

Increase Customer Loyalty
To increase customer loyalty, businesses must develop relationships with customers, continually
selling the value of the product in their situation. Never over or under sell; instead, operate with
integrity. Matching competitors’ prices, developing special rewards for loyal customers (frequent
purchase card with discounts, priority service or personalized offers) and referral programs can
all be effective avenues to increasing customer loyalty.
Make the Product Known

If you know your target customers, understand their needs and have developed the perfect
product, you have to get the word out. Using your knowledge of your customers, you must
communicate using the right channel. Using the above example of children’s clothing, you
should advertise your business in parenting and family magazines, on channels featuring
children’s programming and in or near toy and book stores.
Profit Maximization
Profit maximization is the short run or long run process by which a firm determines the price
and output level that returns the greatest profit. There are several approaches to this problem.
The total revenue–total cost perspective relies on the fact that profit equals revenue minus cost
and focuses on maximizing this difference, and the marginal revenue–marginal cost perspective
is based on the fact that total profit reaches its maximum point where marginal revenue equals
marginal cost.
Return on Investment
Return on investment (ROI) is one way of considering profits in relation to capital invested.
Return on assets (ROA), return on net assets (RONA), return on capital (ROC) and return on
invested capital (ROIC) are similar measures with variations on how ‘investment’ is defined.

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