The distinction between "strategic" and "managerial" decision-making is commonly used to distinguish "two phases having different goals and based on different conceptual tools. Strategic planning concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment. On the other hand, managerial decision-making is focused on the implementation of specific targets." 
In retailing, the strategic plan is designed to set out the vision and provide guidance for retail decision-makers and provide an outline of how the product and service mix will optimize customer satisfaction. As part of the strategic planning process, it is customary for strategic planners to carry out a detailed environmental scan which seeks to identify trends and opportunities in the competitive environment, market environment, economic environment and statutory-political environment. The retail strategy is normally devised or reviewed every 3- 5 years by the chief executive officer.
The strategic retail analysis typically includes following elements:
At the conclusion of the retail analysis, the retail marketers should have a clear idea of which groups of customers are to be the target of marketing activities. Research studies suggest that there is a strong relationship between a store's positioning and the socio-economic status of customers. In addition, the retail strategy, including service quality, has a significant and positive association with customer loyalty. A marketing strategy effectively outlines all key aspects of firms' targeted audience, demographics, preferences. In a highly competitive market, the retail strategy sets up long-term sustainability. It focuses on customer relationships, stressing the importance of added value, customer satisfaction and highlights how the store's market positioning appeals to targeted groups of customers. 
Once the strategic plan is in place, retail managers turn to the more managerial aspects of planning. A retail mix is devised for the purpose of coordinating day-to-day tactical decisions. The retail marketing mix typically consists of six broad decision layers including product decisions, place decisions, promotion, price, personnel and presentation (also known as physical evidence). The retail mix is loosely based on the marketing mix, but has been expanded and modified in line with the unique needs of the retail context. A number of scholars have argued for the modified marketing mix with the inclusion of two new Ps, namely, Personnel and Presentation should be added to the marketing mix since these contribute to the customer's unique retail experience and are the principal basis for retail differentiation. Yet other scholars argue that the Retail Format (i.e. retail formula) should be included. The modified retail marketing mix that is most commonly cited in text-books is often called the 6 Ps of retailing (see diagram at right).
The primary product-related decisions facing the retailer are the product assortment (what product lines, how many lines and which brands to carry); the type of customer service (high contact through to self-service) and the availability of support services (e.g. credit terms, delivery services, after sales care). These decisions depend on careful analysis of the market, demand, competition as well as the retailer's skills and expertise.
The term product assortment refers to the combination of both product breadth and depth. The main characteristics of a company's product assortment are:
For a retailer, finding the right balance between breadth and depth can be a key to success. An average supermarket might carry 30,000-60,000 different product lines (product length or assortment), but might carry up to 100 different types of toothpaste (product depth). Speciality retailers typically carry fewer product lines, perhaps as few as 20 lines, but will normally stock greater depth. Costco, for example, carries 5,000 different lines while Aldi carries just 1,400 lines per store.
Large assortments offer consumers many benefits, notably increased choice and the possibility that the consumer will be able to locate the ideal product. However, for the retailer, larger assortments incur costs in terms of record-keeping, managing inventory, pricing and risks associated with wastage due to spoiled, shopworn or unsold stock. Carrying more stock also exposes the retailer to higher risks in terms of slow-moving stock and lower sales per square foot of store space. On the other hand, reducing the number of product lines can generate cost savings through increased stock turnover by eliminating slow-moving lines, fewer stockouts, increased bargaining power with suppliers, reduced costs associated with wastage and carrying inventory, and higher sales per square foot which means more efficient space utilisation.
When determining the number of product lines to carry, the retailer must consider the store type, store's physical storage capacity, the perishability of items, expected turnover rates for each line and the customer's needs and expectations.
Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from [the] retail establishment." Retailers must decide whether to provide a full service outlet or minimal service outlet, such as no-service in the case of vending machines; self-service with only basic sales assistance or a full service operation as in many boutiques and speciality stores. In addition, the retailer needs to make decisions about sales support such as customer delivery and after sales customer care.
Retailing services may also include the provision of credit, delivery services, advisory services, exchange/ return services, product demonstration, special orders, customer loyalty programs, limited-scale trial, advisory services and a range of other supporting services. Retail stores often seek to differentiate along customer service lines. For example, some department stores offer the services of a stylist; a fashion advisor, to assist customers selecting a fashionable wardrobe for the forthcoming season, while smaller boutiques may allow regular customers to take goods home on approval, enabling the customer to try out goods before making the final purchase. The variety of supporting services offered is known as the service type. At one end of the spectrum, self-service operators offer few basic support services. At the other end of the spectrum, full-service operators offer a broad range of highly personalised customer services to augment the retail experience.
When making decisions about customer service, the retailer must balance the customer's desire for full-service against the customer's willingness to pay for the cost of delivering supporting services. Self-service is a very cost efficient way of delivering services since the retailer harnesses the customers labour power to carry out many of the retail tasks. However, many customers appreciate full service and are willing to pay a premium for the benefits of full-service.
A sales assistant's role typically includes greeting customers, providing product and service-related information, providing advice about products available from current stock, answering customer questions, finalising customer transactions and if necessary, providing follow-up service necessary to ensure customer satisfaction. For retail store owners, it is extremely important to train personnel with the requisite skills necessary to deliver excellent customer service. Such skills may include product knowledge, inventory management, handling cash and credit transactions, handling product exchange and returns, dealing with difficult customers and of course, a detailed knowledge of store policies. The provision of excellent customer service creates more opportunities to build enduring customer relationships with the potential to turn customers into sources of referral or retail advocates. In the long term, excellent customer service provides businesses with an ongoing reputation and may lead to a competitive advantage. Customer service is essential for several reasons. Firstly, customer service contributes to the customer's overall retail experience. Secondly, evidence suggests that a retail organization which trains its employees in appropriate customer service benefits more than those who do not. Customer service training entails instructing personnel in the methods of servicing the customer that will benefit corporations and businesses. It is important to establish a bond amongst customers-employees known as Customer relationship management.
There are several ways the retailer can deliver services to consumers:
Place decisions are primarily concerned with consumer access and may involve location, space utilisation and operating hours.
Also see Site selection
Retail stores are typically located where market opportunities are optimal - high traffic areas, central business districts. Selecting the right site can be a major success factor. When evaluating potential sites, retailers often carry out a trade area analysis; a detailed analysis designed to approximate the potential patronage area. Techniques used in trade area analysis include: Radial (ring) studies; Gravity models and Drive time analyses.
In addition, retailers may consider a range of both qualitative and quantitative factors to evaluate to potential sites under consideration:
A major retail trend has been the shift to multi-channel retailing. To counter the disruption caused by online retail, many bricks and mortar retailers have entered the online retail space, by setting up online catalogue sales and e-commerce websites. However, many retailers have noticed that consumers behave differently when shopping online. For instance, in terms of choice of online platform, shoppers tend to choose the online site of their preferred retailer initially, but as they gain more experience in online shopping, they become less loyal and more likely to switch to other retail sites. 
See also Pricing Strategies
The broad pricing strategy is normally established in the company's overall strategic plan. In the case of chain stores, the pricing strategy would be set by head office. Broadly, there are six approaches to pricing strategy mentioned in the marketing literature:
See also Pricing
When decision-makers have determined the broad approach to pricing (i.e., the pricing strategy), they turn their attention to pricing tactics. Tactical pricing decisions are shorter term prices, designed to accomplish specific short-term goals. The tactical approach to pricing may vary from time to time, depending on a range of internal considerations (e.g. the need to clear surplus inventory) or external factors (e.g. a response to competitive pricing tactics). Accordingly, a number of different pricing tactics may be employed in the course of a single planning period or across a single year. Typically store managers have the necessary latitude to vary prices on individual lines provided that they operate within the parameters of the overall strategic approach.
Retailers must also plan for customer preferred payment modes - e.g. cash, credit, lay-by, Electronic Funds Transfer at Point-of-Sale (EFTPOS). All payment options require some type of handling and attract costs. If credit is to be offered, then credit terms will need to be determined. If lay-by is offered, then the retailer will need to take into account the storage and handling requirements. If cash is the dominant mode of payment, the retailer will need to consider small change requirements, the number of cash floats required, wages costs associated with handling large volumes of cash and the provision of secure storage for change floats. Large retailers, handling significant volumes of cash, may need to hire security service firms to carry the day's takings and deliver supplies of small change. A small, but increasing number of retailers are beginning to accept newer modes of payment including PayPal and Bitcoin. For example, Subway (US) recently announced that it would accept Bitcoin payments.
Pricing tactics that are commonly used in retail include:
Discount pricing is where the marketer or retailer offers a reduced price. Discounts in a variety of forms - e.g. quantity discounts, loyalty rebates, seasonal discounts, periodic or random discounts etc.
Everyday low prices refers to the practice of maintaining a regular low price-low price - in which consumers are not forced to wait for discounting or specials. This method is extensively used by supermarkets.
High-low pricing refers to the practice of offering goods at a high price for a period of time, followed by offering the same goods at a low price for a predetermined time. This practice is widely used by chain stores selling homewares. The main disadvantage of the high-low tactic is that consumers tend to become aware of the price cycles and time their purchases to coincide with a low-price cycle.
A loss leader is a product that has a price set below the operating margin. Loss leadering is widely used in supermarkets and budget-priced retail outlets where it is intended to generate store traffic. The low price is widely promoted and the store is prepared to take a small loss on an individual item, with an expectation that it will recoup that loss when customers purchase other higher priced-higher margin items. In service industries, loss leadering may refer to the practice of charging a reduced price on the first order as an inducement and with anticipation of charging higher prices on subsequent orders.
Price bundling (also known as product bundling) occurs where two or more products or services are priced as a package with a single price. There are several types of bundles: pure bundles where the goods can only be purchased as package or mixed bundles where the goods can be purchased individually or as a package. The prices of the bundle is typically less than when the two items are purchased separately. Price bundling is extensively used in the personal care sector to prices cosmetics and skincare.
Price lining is the use of a limited number of prices for all product offered by a business. Price lining is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. In price lining, the price remains constant but quality or extent of product or service adjusted to reflect changes in cost. The underlying rationale of this tactic is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices. Price lining continues to be widely used in department stores where customers often note racks of garments or accessories priced at predetermined price points e.g. separate racks of men's ties, where each rack is priced at $10, $20 and $40.
Promotional pricing is a temporary measure that involves setting prices at levels lower than normally charged for a good or service. Promotional pricing is sometimes a reaction to unforeseen circumstances, as when a downturn in demand leaves a company with excess stocks; or when competitive activity is making inroads into market share or profits.
Psychological pricing is a range of tactics designed to have a positive psychological impact. Price tags using the terminal digit "9", ($9.99, $19.99 or $199.99) can be used to signal price points and bring an item in at just under the consumer's reservation price. Psychological pricing is widely used in a variety of retail settings.
Because patronage at a retail outlet varies, flexibility in scheduling is desirable. Employee scheduling software is sold, which, using known patterns of customer patronage, more or less reliably predicts the need for staffing for various functions at times of the year, day of the month or week, and time of day. Usually needs vary widely. Conforming staff utilization to staffing needs requires a flexible workforce which is available when needed but does not have to be paid when they are not, part-time workers; as of 2012 70% of retail workers in the United States were part-time. This may result in financial problems for the workers, who while they are required to be available at all times if their work hours are to be maximized, may not have sufficient income to meet their family and other obligations.
Also see Personal selling
Retailers can employ different techniques to enhance sales volume and to improve the customer experience:
One of the unique aspects of retail promotions is that two brands are often involved; the store brand and the brands that make up the retailer's product range. Retail promotions that focus on the store tend to be 'image' oriented, raising awareness of the store and creating a positive attitude towards the store and its services. Retail promotions that focus on the product range, are designed to cultivate a positive attitude to the brands stocked by the store, in order to indirectly encourage favourable attitudes towards the store itself. Some retail advertising and promotion is partially or wholly funded by brands and this is known as co-operative (or co-op) advertising.
Retailers make extensive use of advertising via newspapers, television and radio to encourage store preference. In order to up-sell or cross-sell, retailers also use a variety of in-store sales promotional techniques such as product demonstrations, samples, point-of-purchase displays, free trial, events, promotional packaging and promotional pricing. In grocery retail, shelf wobblers, trolley advertisements, taste tests and recipe cards are also used. Many retailers also use loyalty programs to encourage repeat patronage.
Presentation refers to the physical evidence that signals the retail image. Physical evidence may include a diverse range of elements - the store itself including premises, offices, exterior facade and interior layout, websites, delivery vans, warehouses, staff uniforms.
The environment in which the retail service encounter occurs is sometimes known as the retail servicescape. The store environment consists of many elements such as smells, the physical environment (furnishings, layout and functionality), ambient conditions (lighting, temperature, noise) as well as signs, symbols and artifacts (e.g. sales promotions, shelf space, sample stations, visual communications). Collectively, these elements contribute to the perceived retail servicescape or the overall atmosphere and can influence both the customer's cognitions, emotions and their behaviour within the retail space.
Retail designers pay close attention to the front of the store, which is known as the decompression zone. This is usually an open space in the entrance of the store to allow customers to adjust to their new environment. An open-plan floor design is effective in retail as it allows customers to see everything. In terms of the store's exterior, the side of the road cars normally travel, determines the way stores direct customers. New Zealand retail stores, for instance, would direct customers to the left.
In order to maximise the number of selling opportunities, retailers generally want customers to spend more time in a retail store. However, this must be balanced against customer expectations surrounding convenience, access and realistic waiting times. The overall aim of designing a retail environment is to have customers enter the store, and explore the totality of the physical environment engaging in a variety of retail experiences - from browsing through to sampling and ultimately to purchasing. The retail service environment plays an important role in affecting the customer's perceptions of the retail experience.
The retail environment not only affects quality perceptions, but can also impact on the way that customers navigate their way through the retail space during the retail service encounter. Layout, directional signage, the placement of furniture, shelves and display space along with the store's ambient conditions all affect patron's passage through the retail service system. Layout refers to how equipment, shelves and other furnishings are placed and the relationship between them. In a retail setting, accessibility is an important aspect of layout. For example, the grid layout used by supermarkets with long aisles and gondolas at the end displaying premium merchandise or promotional items, minimises the time customers spend in the environment and makes productive use of available space. The gondola, so favoured by supermarkets, is an example of a retail design feature known as a merchandise outpost and which refers to special displays, typically at or near the end of an aisle, whose purpose is to stimulate impulse purchasing or to complement other products in the vicinity. For example, the meat cabinet at the supermarket might use a merchandise outpost to suggest a range of marinades or spice rubs to complement particular cuts of meat. As a generalisation, merchandise outposts are updated regularly so that they maintain a sense of novelty.
According to Ziethaml et al., layout affects how easy or difficult it is to navigate through a system. Signs and symbols provide cues for directional navigation and also inform about appropriate behaviour within a store. Functionality refers to extent to which the equipment and layout meet the goals of the customer. For instance, in the case of supermarkets, the customer's goal may be to minimise the amount of time spent finding items and waiting at the check-out, while a customer in a retail mall may wish to spend more time exploring the range of stores and merchandise. With respect to functionality of layout, retail designers consider three key issues; circulation - design for traffic-flow and that encourages customers to traverse the entire store; coordination - design that combines goods and spaces in order to suggest customer needs and convenience - design that arranges items to create a degree of comfort and access for both customers and employees.
The way that brands are displayed is also part of the overall retail design. Where a product is placed on the shelves has implications for purchase likelihood as a result of visibility and access. Products placed too high or too low on the shelves may not turn over as quickly as those placed at eye level. With respect to access, store designers are increasingly giving consideration to access for disabled and elderly customers.
Through sensory stimulation retailers can engage maximum emotional impact between a brand and its consumers by relating to both profiles; the goal and experience. Purchasing behaviour can be influenced through the physical evidence detected by the senses of touch, smell, sight, taste and sound. Supermarkets offer taste testers to heighten the sensory experience of brands. Coffee shops allow the aroma of coffee to waft into streets so that passers-by can appreciate the smell and perhaps be lured inside. Clothing garments are placed at arms' reach, allowing customers to feel the different textures of clothing. Retailers understand that when customers interact with products or handle the merchandise, they are more likely to make a purchase.
Within the retail environment, different spaces may be designed for different purposes. Hard floors, such as wooden floors, used in public areas, contrast with carpeted fitting rooms, which are designed to create a sense of homeliness when trying on garments. Peter Alexander, retailer of sleep ware, is renowned for using scented candles in retail stores.
Ambient conditions, such as lighting, temperature and music, are also part of the overall retail environment. It is common for a retail store to play music that relates to their target market. Studies have found that "positively valenced music will stimulate more thoughts and feeling than negatively valenced music", hence, positively valenced music will make the waiting time feel longer to the customer than negatively valenced music. In a retail store, for example, changing the background music to a quicker tempo may influence the consumer to move through the space at a quicker pace, thereby improving traffic flow. Evidence also suggests that playing music reduces the negative effects of waiting since it serves as a distraction. Jewellery stores like Michael Hill have dim lighting with a view to fostering a sense of intimacy.
The design of a retail store is critical when appealing to the intended market, as this is where first impressions are made. The overall servicescape can influence a consumer's perception of the quality of the store, communicating value in visual and symbolic ways. Certain techniques are used to create a consumer brand experience, which in the long run drives store loyalty.
Two different strands of research have investigated shopper behaviour. One strand is primarily concerned with shopper motivations. Another stream of research seeks to segment shoppers according to common, shared characteristics. To some extent, these streams of research are inter-related, but each stream offers different types of insights into shopper behaviour.
Babin et al. carried out some of the earliest investigations into shopper motivations and identified two broad motives: utilitarian and hedonic. Utilitarian motivations are task-related and rational. For the shopper with utilitarian motives, purchasing is a work-related task that is to be accomplished in the most efficient and expedient manner. On the other hand, hedonic motives refer to pleasure. The shopper with hedonic motivations views shopping as a form of escapism where they are free to indulge fantasy and freedom. Hedonic shoppers are more involved in the shopping experience.
Many different shopper profiles can be identified. Retailers develop customised segmentation analyses for each unique outlet. However, it is possible to identify a number of broad shopper profiles. One of the most well-known and widely cited shopper typologies is that developed by Sproles and Kendal in the mid-1980s. Sproles and Kendall's consumer typology has been shown to be relatively consistent across time and across cultures. Their typology is based on the consumer's approach to making purchase decisions.
Some researchers have adapted Sproles and Kendall's methodology for use in specific countries or cultural groups. Consumer decision styles are important for retailers and marketers because they describe behaviours that are relatively stable over time and for this reason, they are useful for market segmentation.
Manage research, learning and skills at NCR Works. Create an account using LinkedIn to manage and organize your omni-channel knowledge. NCR Works is like a shopping cart for information -- helping you to save, discuss and share.