Retailers and the Marketing Concept

Retailers and manufacturers follow very different consumer strategies. This is because their structural differences profoundly affect the power and relative importance of key elements of the marketing mix. The common approach for manufacturers to the art of segmentation is to slice and dice a large target market into subgroups of homogeneous consumer needs to better serve with tightly targeted offerings. Manufacturers have the ability to target a small subgroup of consumers with a product brand and still generate viable sales. A retailer cannot slice and dice its customers at the brand level to the same degree. Retail coverage dictates the target audience for each store, which means that the audience is relatively heterogeneous. With the exception of hard discounters, retailers have to cultivate a mainstream brand proposition for their chains. The advantage of retailers is their ability to segment by shopping needs, provided they have the data on their customer's shopping behaviour. There is much more fluidity in retail branding, with old names being quick to disappear once a better/stronger player muscles in.