Retail Marketing Case Study – The Body Shop and the Retail Marketing Mix
Retail Marketing Case Study - The Body Shop and the Retail Marketing Mix
Technology and globalisation are the two largest and most significant influences on the world's economic landscape. Technology is the propelling force behind globalisation. Today's technology is extensive and rapidly progressing on a constant basis. This is inherent in the products widely available today. Satellites, VCRs, fax machines, e-mail, the internet, laptop computers, answering machines, photocopiers, digital watches, camcorders etc... All these would astonish even people who lived thirty years ago. The 'global village', as predicted by McLuhan, is now reality, Daniels & Radebaugh (1998:23).
Marketing & Retailing
"Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others," Kotler (1994:6).
Marketing can be explained as people satisfying their needs and wants through an exchange. Exchange is when a person acquires something they need or want from someone by sacrificing something in return. Therefore, it can be said that exchange is at the very heart of marketing, Baker (1990:189).
"Retailing is... a very visible form of economic activity, and one that exerts a major influence upon the lives of customers... The marketing concept may be simply expressed as the identification and satisfaction of consumer needs and wants, at a profit," McGoldrick (1998:1).
The Retail Marketing Mix
Just as marketing has a marketing mix so does retailing. The retail marketing mix can be defined as:
"...the total package of goods and services that a store offers for sale to the public. The retail mix, then, is the composite of all effort which was programmed by management and which embodies the adjustment of the retail store to its market environment," Lazar & Kelley (1961:237).
The retail marketing mix is composed of three main dimensions:
* Goods and service mix
* Physical distribution mix
* Communications mix
Lazar & Kelley (1961:238).
This is quite a broad framework of the retail marketing mix but is good in that it summarises the collective aspects of the mix under three main headings. These three main headings can be further broken down into the nine different elements of the retail marketing mix.
The nine different elements of the retail marketing mix are:
* Product Characteristics
* Price Considerations
* Customer Service
* Store Location
* Facilities
* Customer Communication
* Institutional Profile/Image
* Design
* Instore Ambience
Walters & White (1987:64).
This is illustrated in the following comprehensive framework for the retail marketing mix:
Product Characteristics
The product range is the most important factor to be considered here. The company must have a thorough understanding and knowledge of consumer expectations of quality, variety, style and individuality.
Price Considerations
"Customers are increasingly choosing vendors on the basis of long-term value...," Anonymous as cited by Kotler (1999:17).
However, price is still a vital element of the consumer's selection of retailer and consequently, their purchasing decision. Price is very important because it communicates the company's position in the market to the consumer. It is still too often assumed that consumers are attracted by 'value for money' alone. Other important factors include quality, design and uniqueness etc...
As Adam Smith commented, over two hundred years ago:
"The real price of anything is the toil and trouble of acquiring it."
Stoetzel (1954:153) suggests that consumers consider two price limits when deciding upon a purchase. One is an upper limit, any higher than this is considered too expensive. The second is a lower limit, anything below this causes the consumer to question the quality of the product.
Gabor, Granger & Sowter (1984:59) conducted a study of retail advertising which, led them to the conclusion that price acts as an informant to the consumer (a relative view was mentioned earlier). This is important in terms of new products being introduced alongside existing branded products.
Customer Service
"Increasingly, marketing is moving away from a focus on individual transactions and towards a focus on building value-laden relationships and marketing networks," Kotler (1999:450).
Consumer expectations are a huge determinant of the extent of customer service. For many consumers, the extent of the customer service is the very basis on which, they decide with what retailer their loyalty lies. Rainbow (1987:29) stated that the manner, appearance and knowledge of the sales personnel is extremely important to consumers.
It can be wrongly believed that customer service adds cost to the consumer and that it is only offered by retailers of expensive products. However, personal selling (one aspect of customer service) is often used for the selling of expensive and/or rarely bought products e.g, expensive men's suits.
Store Location
It is often though to be the most important aspect of the retail marketing mix. Store location relates to the convenience of the location to the consumers. Where to shop is often a decision based upon the provision of parking facilities, travelling distance, travelling time, ease of access etc... The convenience of the location is extremely important to consumers when deciding between retailers.
Retailers have an almost endless amount of factors to consider when deciding on a location for opening a new store. Many retailers have standard checklists for such a process. Some of the factors listed will be seen on all lists throughout the retailing industry but a huge amount will be specific to the retailer and the market in which it operates.
Nelson (1958:43) first developed a standard checklist over forty years ago. It was to be one of the most in depth checklists ever created. The checklist was made up of eight main categories and then further broken down into thirty-six particular elements for analysis.
Pope (1984:184) proposed the concept of a list composed of external and internal sources of information, for the evaluation of a potential site for a new store:
EXTERNAL SOURCES INTERNAL SOURCES
Population totals Retail sales
Population types Sales areas
Income Sales productivities
Unemployment Stock and stock areas
...
This is a preview of the whole essay
Nelson (1958:43) first developed a standard checklist over forty years ago. It was to be one of the most in depth checklists ever created. The checklist was made up of eight main categories and then further broken down into thirty-six particular elements for analysis.
Pope (1984:184) proposed the concept of a list composed of external and internal sources of information, for the evaluation of a potential site for a new store:
EXTERNAL SOURCES INTERNAL SOURCES
Population totals Retail sales
Population types Sales areas
Income Sales productivities
Unemployment Stock and stock areas
Retail sales Tenure types
Shopping centre composition Other performance indicators
Competition Sales forecasts
Branch position
Inflation
However, McGoldrick (1998:161) suggests a more complex but better understood framework for store location. The framework comprises of four main headings:
* Population
For example:
- population size, age profile, occupation classifications, current shopping patterns, income levels, household size, unemployment levels, housing density, life-style measures etc...
* Accessibility
For example:
- pedestrian flow, public transport, parking, road network, visibility, access for staff, access for transport and deliveries, pedestrian entry routes, car ownership levels etc...
* Competition
For example:
- existing retail activity, existing retail specification, competitive potential, department/product analysis etc...
* Costs
For example:
- purchase price of store, leasing terms, building costs, rates payable, maintenance costs, refurbishment needs, security needs, delivery costs, promotional/media costs etc...
Facilities
The retail package includes both external and internal facilities to the consumers. The target market of the retailer is a determinant of whether basic facilities or fully comprehensive facilities will be provided. Basic facilities are features such as parking, cloakrooms, elevators and escalators which, are very almost essential in all kinds of retail stores. The more comprehensive facilities are amenities such as child care, baby nappy changing rooms, fast transaction, drinks machines in clothing stores etc...
Customer Communications
"The role of customer communications is to make customers aware of the company offering and to integrate the important activities of merchandise display, internal signs, advertising and sales personnel," Haywood (1989:55).
Customer communications should:
* Attract new customers
* Increase the amount spent by existing customers
* Increase the amount of people walking into the store
* Increase the sales levels
* Help to create the image of the retailer
McGoldrick (1998:165).
Advertising & Promotions
Advertising can add emotional value to a retailer and its products if well integrated with the design and the environment of the store.
Publicity & Sponsorships
The rapidly increasing expense of media is steering companies towards other forms of attracting the attention of consumers.
Publicity can be defined as:
"...non-personal stimulation of demand for a product, service or business unit by planting commercially significant news about it in a published medium or obtaining favourable presentation of it on radio, television or stage that is not paid for by the sponsor," Alexander (1960:37).
Institutional Profile/Image
"Retailers are very interested in developing their image, but it is an evolutionary rather than a revolutionary process. Shops are competing with not only their rivals in the same market, but also with all others in the High Street, for a limited spend of money. They must attract, seduce and sell - if they don't the money will go elsewhere," Rune Gustafson, Marketing Director, Fitch & Co. (1986).
It is essential to the company to be aware of how it is perceived by consumers within its market place. Because image is an evolutionary process, developed over time, it is difficult to change even slightly.
Design
Design directly interacts with both the institutional profile/image and the instore ambience. It works to integrate both these elements of the retail marketing mix.
Instore Ambience
This can be described as the 'experience' or the 'atmosphere' the retailer projects. The ambience of the store should mirror the mood, tone, atmosphere, experience, atmosphere, character and quality of the retailer.
Customer services and customer communications should be integrated in such a way that it projects the instore ambience to the consumers through the use of media and design.
Space allocation, store layout and displays are all essential elements which, make up store ambience. Retailers can manipulate the layout of the store so that very little space is used, allowing for optimum consumer exposure to the products. Displays play a huge part in the consumer's decision-making process, they are part of the 'information environment,' Fletcher (1987:61).
There are three main formats for store layout: grid pattern layout, free-flow layout and boutique layout. The grid pattern layout, discussed by Lusch (1982:71), is identified by its rows of straight aisles and parallel fixtures with either little or no room to cross between them without having to walk all the way to the end of one of the corridors. This is a format commonly used by nearly all supermarkets. It has recently been implemented by stores who wish to portray an image of very low price goods. This format is beneficial in that it forces consumers to walk around all of the store and as a consequence they are made aware of the whole stock of products provided. Additionally, it wastes a very small amount of space, is easy to set up and look after. However, it can be quite boring and uninspiring; consumers may feel agitated and invaded that they are being forced to walk up and down all the aisles.
The free-flow layout, as discussed by McGoldrick (1998:301), moves away from the restriction of up-down aisles, allowing the consumer to move around more easily around fixtures which, are often organised in a more random method. Clothing retailers commonly use this format for store layout as it encourages consumers to look around; they feel relaxed and not compelled to walk around every area of the store as forced by the grid pattern layout. However, it does have its drawbacks. It is usually more expensive to the retailer and uses up more space. If the set-up is not well planned, it may make the store look a little disorganised.
A modification o the free-flow layout, the boutique layout, discussed by Rosenbloom (1981:67), is characterised by the fixtures being arranged according to speciality. For example, in a clothing retailer's store they might have one display made up of underwear, one made up of swimwear, one made up of sandals etc... This has the same drawbacks as the free-flow layout.
Rosenbloom (1981:69) identifies five different display techniques:
* Open Displays
- characterised by surrounding the consumer with the products, it motivates consumers to browse.
* Theme Displays
- the theme can be picked from a wide variety e.g, festivals, local or national events, season etc...
* Life-style Displays
- these usually include pictures of a specific type of person who uses the product to target a certain segment of the market, often used in clothing stores.
* Co-ordinated Displays
- items which, are frequently used in conjunction with each other are placed together in displays. It often motivates consumers to buy related items from the same range.
* Classification Dominance Displays
- these are used to imply that the retailer provides a comprehensive range of a particular product; these can be arranged so that every type, colour, size etc... is displayed together.
The Body Shop
The Body Shop is a manufacturer and retailer of skin and hair care products based on
natural ingredients. Based in the United Kingdom (UK) it is now an international
company operating in 47 countries, spanning 24 languages. Now with 1594 stores
worldwide the company employs over 4000 employees. The Body Shop made
£604.4 million in worldwide retail sales, a turnover of £293.1 million and an
operating profit of £38.1 million in the fifty-two weeks ended 28 February 1998.
The original company to produce and sell naturally based products, it created a whole
new market sector. With over 400 skin and hair care products and over 500 personal
hygiene and accessory items it is estimated that between 1997 and 1998 a sale was
made every 0.4 seconds with over 86 million customers visiting The Body Shop
stores worldwide.
Presently, the company's Chief Executive Officer is Patrick Gournay and Anita
Roddick, The Body Shop's founder, is Co-Chairperson with her husband, Gordon
Roddick.
The Body Shop's Retail Marketing Mix
Product Characteristics
The Body Shop produces and sells toiletries and cosmetics made with natural ingredients sourced from all over the world. The company are well known for creating an entire market for naturally-based products. The Body Shop products are broken down into seven main categories: aromatherapy, colourings (the make-up range), face, fragrance, body care, men and hair care.
It can be said that The Body Shop offer seven main product categories each with their own ranges, sometimes more than two or three, each with their own varieties in terms of colour, scent and skin type. Each body lotion, bath & shower gel, shampoo, conditioner, body wash, face wash, freshener, moisturisers, perfumes and after shaves come in either two to five of the different sizes on offer: 30ml, 50ml, 100ml, 125 ml and 250 ml. All the products are of very high quality and come packaged in recycled, or recyclable, or biodegradable packaging.
Aromatherapy
In this category, The Body Shop, offers six pre-blended ranges of body lotions, bath & massage oils and shower gels: balancing, clearing, easing, energising, relaxing and sensual. Additionally, they offer a selection of thirteen different pure essential single aromatherapy oils: bergamot, camomile, eucalyptus, geranium, lavender, lemon, peppermint, rosemary, sandalwood, ylang ylang, jasmine, rose and neroli. The pure essential single aromatherapy oils have their own body products aswell: body spritzer, body wash, body powder, body bar, bath essence and foaming milk bath.
Colourings
This is The Body Shop's make-up range. It is based on colour therapy, the theory that colours are mood enhancing. Under this category, the company offers seven different ranges of lip applications: fragranced colour sticks, lip treat, lip shine, cool gel lipstick, lip tint, lipstick, lipscuff and lip liner. Each of the ranges additionally offer between 2 and 28 different shades. For eyes, The Body Shop, offers nine different product ranges: eyeshadow in an extensive variety, eyebrow make-up, eyebrow powder pencil, eye definer in ten shades, continual eye colour, eye shine in four shades, everyday mascara, eye liner, brow & lash gel. For the face, the company offers brush-on-bronze, skin treat foundation and lightening touch concealer in six different shades.
Face
Three main types of products are offered: cleansers, fresheners (toners) and moisturisers. These come under all of the four different ranges of skin care offered: normal to oily skin, dry skin, normal to dry skin and oily skin. Also under this category, night supplement cream, eye supplement cream, exfoliating lotion, warming mineral mask, foaming gel scrub, conditioning cream scrub and intense moisture mask. The Body Shop also offers a Tea Tree range: face wash, body wash, freshener, oil, blemish stick, cover stick, facial moisture gel and soap bar for problem skin. Other face products include the four moisturisers: vitamin e, jojoba, aloe vera and carrot, the cucumber water and cleansing milk, the honey water and cream cleanser, the orchid & calendula water and cleansing milk and camomile eye make-up remover.
Fragrance
The Body Shop offers four different fragrances: oceanus, white musk, vanilla and ananya. Each of these different scents also have their own body lotion, bath & shower gel, body spray, perfume oil, soap bar and body powder.
Body Care
The Body Shop offers three different ranges of body care under this category: aloe vera, cocoa butter and vitamin e. Each has a cleansing bar, body wash and body lotion.
Men
These products are obviously intended for male use. A face range is offered with are the shaving in mind: face protector, face wash, face scrub, shaving cream and after shave gel. A male after shave and body care is also offered. Activist and No Debate after shaves on offer each with their own shave splash, deodorant, shower gel and soap.
Hair Care
The Body Shop offers four different hair shampoos and conditioners: ice blue, banana, brazil nut and coconut.
Price Considerations
As it was suggested earlier by Stoetzel (1954:153), there are two price ranges: the upper limit and the lower limit. This can be broken down into budget, mid-market and premium. The Body Shop can be said to be in the mid-market pricing range. Their products are priced slightly higher than for example, Superdrug and Boots own naturally-based product ranges but are not as expensive as for example, Clinique, Chanel or Estee Lauder. Prices range from 60 pence to £10.95.
Customer Service
The Body Shop was one of the first retailers to offer make-over services free of charge by their trained beauty consultants located in each of their outlets. Trained consultants also make use of colour charts and will offer facials.
In addition, employees of The Body Shop are friendly and willing to educate customers as they sell. This is inherent in the knowledge supplied by The Body Shop on a product's origins, its uses, whether it is part of the 'Trade Not Aid' scheme etc... For example, a customer can walk into an outlet and buy a body lotion and at the same time discover a story of how women in Brazil collect the country-named nuts, which are bought by The Body Shop, so that these women can support their families.
Store Location
The Body Shop keeps the consumer close to its heart when considering store location. They look closely at accessibility factors: public transport, parking, visibility etc... Of course, population and cost factors are also important but The Body Shop cares about its customers and focuses on them first. The company is not wholly concerned with competition. The company believes that they offer a truly unique product and service.
Facilities
The outlets of The Body Shop are not usually very large so facilities such as elevators and escalators are not required. Cloakrooms are also not required as clothing is not sold. Parking facilities are also not offered but are required by many customers. The outlets are small and don't demand that the company provide parking facilities just to accommodate customers coming to any specific Body Shop outlet.
Customer Communication
For the most part of the company's existence The Body Shop has held a firm stance against the use of advertising believing that beauty is reality and not the glamour that other retailers and company's in the cosmetics and toiletries industry portray in their marketing. Through social marketing The Body Shop's products have already been established as 'different.' This is a form of indirect advertising whereby the advertising is not actually carried out by the company but through editorial coverage in magazines and newspapers writing about the company, its products, its campaigns and its beliefs. Anita Roddick's ability in public relations to build a good reputation has helped make The Body Shop a top brand without the use of advertising.
However, the company has recently advertised certain promotions and heightened campaign awareness through posters being located in bus shelters, underground stations and on billboards. Additionally, The Body Shop makes extensive use of its shop windows, delivery lorries, offices etc... to communicate its ideas and attitudes.
Institutional Profile/Image
The Body Shop's core strategy of ethical, social and environmental responsibility: profits with principles, is executed through a number of campaigns and activities and is inherent in the products and services on offer. This can be directly related to the image of The Body Shop as a caring company who campaign for social and environmental improvement. Once said to have a rebel image, The Body Shop, is not afraid of taking risks particularly as the company's whole culture (a huge influence on the corporate image and the image of the company as perceived by the consumer) is immersed in a global revolution of human & civil rights, environmental protection and animal rights, guided by Anita Roddick's visionary, intuitive and creative leadership.
Instore Ambience
The Body Shop launched a new store design in 1997 winning them the Retail Week Store Design of the Year Award. The company states that the new design makes it easier to shop because the new system is totally flexible; that the product rather than the fixture talks to the customers. The new style of The Body Shop outlets is lighter and more contemporary; 'timeless,' as described in the company's Annual Report & Accounts 1998. The trademark green of The Body Shop however, is still present, to symbolise the naturalness and roots of the product ingredients, the planet Earth.
The boutique layout can be said to be applied within the outlets of The Body Shop. Products are arranged according to their function: face, make-up, hair etc... and displayed within their own ranges in terms of scent, colour and skin type. The store layout encourages consumers to wonder around the shop without feeling pressured to look at every single product and range and gives the customer the feeling that they don't have to make up their mind then and there.
Displays are arranged under the classification dominance method. This illustrates that The Body Shop provides a comprehensive range of each of its seven main product categories in a variety of sizes, types, colours, scents and skin types.
The atmosphere and mood of typical Body Shop stores is relaxed and friendly, inherent in the overall design of The Body Shop retail outlets.
SUMMARY
The Body Shop produces and sells naturally-based cosmetics and toiletries products. The company offers an extensive range of products and varieties within each of the seven main product categories: aromatherapy, colourings (make-up), face, fragrance, body care and hair care in terms of size, types, colours, scents and skin types.
The Body Shop products are priced within the mid-market range. Prices are from 60 pence to £10.95.
The customer service provided by The Body Shop stores includes make-overs, facials, colour charting and educating customers about the products and their origins.
The company closely considers its customers when deciding upon a new store location.
The Body Shop outlets are not large enough to demand that facilities such as elevators and parking lots are required.
The company makes extensive use of social marketing mainly through public relations.
The Body Shop once said to have a rebel image, has an image of ethical, social and environmental responsibility: profits with principles.
The Body Shop won an award in 19976 for their new store design. The new look is lighter, more contemporary and 'timeless.' The atmosphere and mood of the stores are relaxed and friendly.
The above summarises the retail marketing mix of The Body Shop in accordance to the framework provided by Walters & White (1987:64).
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