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Answering the key questions for today's consumers: why shop here? why buy now?

Broke, scared, aging, and fickle. These are hardly terms most people would associate with a powerful leader. Yet these are among the words that most accurately describe today's retail customers as a group. This is a consumer group that has more power and influence on how products are made and marketed than at any other time in history. Recognizing this tremendous influence, Business Week labeled the 90s the "Decade of the Customer."

Consumers as retail customers assume their role as monarch at a somewhat odd time. According to one cartoon in The New Yorker, the eighties were the decade of "Loot," followed by the nineties as a time of "Less." The eighties were a great spending spree for many people. All too frequently this purchasing was done with money that was borrowed. Consumers used Visas and MasterCards, often acquired easily over the phone or through the mail, to live the "good life" they read about and viewed on TV. The net result, as we move into this period of consumer leadership, is a shopping public who uses approximately 80 percent of their disposable income to service their debt load.

Prying extra dollars out of the debt-burdened shopping public is even more difficult for retail businesses because consumers are short on time, growing older, and becoming highly concerned about the reliability of their future income sources. This fickle group will change brands and/or stores at the drop of a hat to find the best value possible. They are also harder to reach, harder to attract, and more difficult to persuade with traditional promotional media.

Successful communication with these customers will depend on the retail manager developing a strategy based on his or her firm's internal environment, as well as the one it observes and anticipates externally. This must be followed with a positioning strategy that is clearly communicated to both internal and external customers. Progressive firms in all industries are realizing that until the internal customers (employees) are sold on the plan, the ability of the firm to successfully implement that plan is minimal at best. Answering the here and now questions will require a communications plan that is both comprehensive and consistent.

The Need for an Inside-Out Assessment

Successful communication between a retailer, or any other type of business, and its customers depends on the development of a carefully formulated marketing strategy, and the resulting marketing plan for the strategy's implementation. Such a plan is dependent on the solid foundation of a thorough assessment of the present state of key factors at work inside and outside the organization.

The organization must first look at its internal capabilities and limitations. Issues addressed here should include topics such as financial resources, human resources, locations, facilities, inventories/supplier relationships, and the degree of success in meeting existing performance objectives in the areas of sales, margins, and market share. The ability of the company's computer network to deliver accurate and timely information to decision makers is also a major factor in this internal assessment. Any existing problems or advantages in procedures for serving customers should also be identified as part of this assessment. When McDonald's went to its "Double Checked" campaign for the drive-thru window at its restaurants, it first should have determined that it had the resources and production system to consistently deliver the program it was introducing.

This comprehensive internal assessment must be matched with a thorough assessment of the external environment in which the firm operates. Trends with regard to competitors, general economic conditions, technology, the legal/regulatory environment, and relevant social/cultural considerations should all be addressed here. These trends will influence how much consumers are willing to pay, how they shop, as well as what they purchase. The adoption of a 55 MPH limit on all highways during the late seventies created a tremendous opportunity for retailers carrying CB radios. Social trends today toward conserving the environment are providing opportunities for producers and retailers with environmentally friendly packaging, as well as those stocking recycling storage containers.

This internal and external assessment should jointly address the issues of efficiency and effectiveness. Efficiency considerations center on the question of, "Are we doing things right?" Any wastefulness in terms of time, money, or equipment should be identified and corrected. Effectiveness considers the question of, "Are we doing the right things?" Selling food products high in fat, sugar, and calories can be done successfully today, but one must realize that the size of the market for such items is continually shrinking in numbers.

Another key outcome from this internal/external environment assessment should be the identification of procedures and practices that "drive-off" customers. Before any retailer begins to formulate a communication strategy to attract more of the business from existing customers, and new business from customers not presently being served, it first must identify and dispose of anything that drives customers off. Supermarkets failing to have adequate numbers of check-out lanes open during peak times drive their customers off. Time-consuming check and credit approval activities often only serve to tell customers their business is not really that important. One local retailer had a policy that top management was not even aware of that forced consumers to take a trip to the poorly named "customer service department" the third time an American Express card was used at the location in a single day. While there are certainly card-theft concerns, the resulting message was "after two times, we want you to go somewhere else and shop."

Standing Out From the Crowd

With the internal and external environment as its foundation, retailers must next determine how they wish to be seen by the shopping public. Finding a niche where an unmet or under-met consumer need exists, and then positioning the firm in the consumers' eyes as an alternative that fills that gap, is the real crux of the strategic positioning decision.

Being "special" is the real key to the here and now question. There are three categories of "special" a firm can try to achieve. First, it can price products especially low. Discount department store chains such as Wal-Mart, Kmart, and Target use this approach. Warehouse clubs, including Price Club and Sam's, have gone further down this special price trail.

The second option is to treat customers extra-special. Specialty store chains such as the Limited and Victoria's Secret, as well as specialty department stores like Nordstroms and Neiman Marcus, have achieved success by doing whatever it takes to keep customers happy.

The final special option is to become a specialist. Home Depot, Circuit City, and Toys 'R' Us are examples of successful stores that picked a product category and then took steps to become the dominant product provider in that area.

In the remainder of this article, the communication strategy most appropriate for each of these special options will be examined. The key in every instance is to provide a set of communications that is highly consistent with the positioning strategy adopted in the retailer's strategic plan.

Special Price Communications

Retailers offering special prices answer the question "Why shop here?" with the answer that you will save money if you do. Retailers realize that many shoppers do not desire, nor have the time, to look all over town for the store with the best price. They want a store that they can go to any day of the week and find good values for their money. This realization was certainly behind Wal-Mart's, "Always the lowest prices, Always" slogan.

These kinds of firms use some television ads and a large number of mail and newspaper inserts to communicate the simple message that shoppers will be treated well (though not pampered), and their dollars will stretch further here. The emphasis is on the availability of the products and on a consistent price that reflects a good value from the shopper's perspective. Wholesale clubs count on word-of-mouth communications as their primary medium.

Personal communications with store personnel should be friendly and efficient. Floor help must know where particular items can be found. Cashiers must be accurate and fast and should express the store's appreciation for the shoppers' business and invite them to return again.

Specialty Store Communications

Specialty stores and specialty department stores must communicate to customers that they will be treated differently here. Contrary to the stores discussed above, the message here centers on service, not price. Specialty stores must provide the extra-special service that leaps beyond customer satisfaction and into customer delight. All media, be it television, radio, outdoor, print, or personal, must focus on the special treatment message. The second message specialty stores must communicate concerns the merchandise offered. The products must be special in that they cannot be found on any corner in town. Retailers must know their customers well enough to offer the unique merchandise that surprises and excites them when they visit the store.

This is certainly not to say that price will never be addressed in specialty store communications. Sales do take place in the positioning alternative, but they must be special events truly designed to clear out merchandise that did not sell well or is at the end of its season. Marking merchandise up just to mark it down is a trap the specialty store must avoid.

The services these stores provide are costly for the firm, and if the customers are not willing to pay for them, they should be dropped. Most shoppers know that there is really no such thing as free delivery or gift wrap. Their cost structure must be built into the price of the merchandise. If the service is not something that can be communicated in a fashion that helps attract or retain customers, it only helps reduce the value of the store in the shopper's mind. Very few shoppers today are into indulgences that simply waste their money. Communications should focus on merchandise quality and personal service, not extravagance.

Communications by Specialists

For those firms that pursue the final positioning alternative, there is a more complex role for communications. Price, service, and merchandise availability all must come across through the various media employed. When a company picks a category, it must offer tremendous selection in that category; it must have a volume level that allows it to negotiate very favorable prices from its vendors; and it must have salespeople who can explain the merchandise and how to use it. Additional relevant services like credit, delivery, and maintenance should also be offered as required. The buying power of the specialist must be so great that even when all these services are added on, the price charged to the customer is still seen as an excellent value.

Newspaper ads and inserts are the primary mass media used by specialists. The message here is clearly focused on selection, price, and favorable financing terms. Television commercials complement the mix by stressing the bright atmosphere of the store and the vast selection of merchandise. These media get the customer into the store, but it is at that point that personal communications must take over.

Home Depot goes to construction sights to secure its sales personnel. It spends a great deal of time training and developing these already product-wise people and then compensates them in direct proportion to their ability to satisfy customers and move merchandise. Short-cuts and finishing tips are highly sought after by today's home improvement shopper. At the same time, the television shopper in a Silo or Circuit City wants to know which of the 300 models of television sets is right for his needs and budget. Selling the service agreement is often as important, or more so, for the store than getting the original purchase. This requires communications from employees with the ability to sell both goods and services.

Positioning to Deliver

In answering the why here, and why now questions posed in this article's title, the retailer must first determine how it is presently seen by its targeted customers and then how it wishes to be seen by this group. While it is a natural trap to want to be all things to all people, this is most certainly a quick route to not being anything to anyone. The retailer must become special in one of the three ways discussed for its targeted customer group. This decision must be based on both the internal strengths and weaknesses of the firm as well as the opportunities and threats in the external environment.

Once the positioning decision is made, the store must take steps to be in a position to deliver what customers have come to expect from this type of store. Then, and only then, is it in a position to begin providing consistent and appropriate communications to its external customers. If the store's employees can't answer the why here, why now combination, it is doubtful that their external customers will get a clear answer either.

Dr. Lucas is a professor in the Department of Marketing at Memphis State University.
COPYRIGHT 1993 University of Memphis
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Author:Lucas, George H., Jr.
Publication:Business Perspectives
Date:Mar 22, 1993
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