[MUSIC] Nice to see you again. Today, we are going to learn the main elements to design a retail marketing strategy and the vital importance of having a sustainable competitive advantage. A retail strategy is a statement identifying the retailer's target market. The format the retailer plans to use to satisfy the target market niche and the business upon which the retailer plans to build a sustainable competitive advantage. I am going to explain each of these important elements. The first element, the target market is a market segment over which the retailer plans to focus the resources and retail mix. I'm going to use the example of a Spanish international brand, Springfield. Its target market are the millennials. Young Spanish men and women, not obsessed with fashion, with strong personality, and a unique sense of style. The second element is a written format. It describes the nature of the retailer's operation. That is the retail mix, that is composed of the type of merchandise and service offered. The pricing policy in the case of Springfield offers cool casual products with a great price. So price quality is a must, then there is the element of advertising and promotion. So for example, Springfield uses compelling seasonal campaigns, and special campaigns. There is another aspect that is the store design and the visual merchandising. The millennials that are very much media aware, they need an environment that can engage the audience. So, embracing their lifestyle and making the place where you would want to hang out. Another factor would be the location and the customer service. Usually, you choose heavy traffic locations with friendly customer service. The third one, what is a competitive advantage? It is an advantage over the competition. That is not easily copied and that can be maintained over a long period of time. Establishing a competitive advantage means that the retailer builds a wall around each position in the retail market. And over time, they erode, not due to competitive forces, but if you build a thick and high wall retailers can sustain their advantage for a longer period of time. There are seven opportunities to develop it. They are customer loyalty. Location, human resources management, distribution and information systems. Having unique merchandise. Vendor relation and customer relationship. So, I will start with customer loyalty. Can we build through retail branding? Positioning is designing and implementing a retail mix to create a clear, and distinct image of this written offer in the consumer's mind relative to the competitor. And finally, the loyalty programs are a very important part of the customer relationship management program. They are called the CRM's. In the case of Springfield, you have the club fanatics. The second factor, location, is still a critical factor in the consumer selection of a store. A third one, human resources management. Retailing is a labor intensive business in which employees play a major role providing services for the customer and building customer loyalty. So, having knowledgeable and skilled employees committed to the retailer's objectives is a critical asset. There is a fourth factor, that would be distribution and information systems. Retailer's struggle to reduce operating costs while making sure that the right merchandise is available when and where the customer wants it. Zara is a clear case doing this very well. A fifth factor, unique merchandise, either developing private label brands. Like for example, would be Aliada for the department store Corte Ingles in Spain or products that are developed and marketed by retailers and are available only in that retailer would be the case of Springfield. The sixth factor is a vendor relation. By developing strong relations with vendors over time, retailers may gain exclusive rights to, for example, sell merchandise in a specific region. They also can obtain special terms of purchase that are not available to competitors and receive popular merchandise in a very short supply. So IKEA, for example, develops a fantastic relationship with their suppliers. And this way, they can keep a very low stock. And the last one would be customer service. Offering good customer service consistently is difficult, because customer service is provided by retail employees and humans are less consistent than machines. And we also need to understand that to be a sustainable competitive advantage, retailers don't rely on a single approach. They need multiple ones. So an example would be, for example, McDonald's. What is the sustainable competitive advantage? Its value, good customer service, having a strong brand name and great locations. So I will see you in the the next class where we will learn the importance of omnichannel retailing, that nowadays is one of the key trends in retailing. [MUSIC]
