Retailers have traditionally been viewed as traders and not brand builders. The practice of building brands finds its roots in manufacturing. The marketing process and marketing mix were formulated with producer brands in mind. Hence, retail marketing and branding are relatively new disciplines that have only recently begun to generate significant interest.
As retail marketers try to elevate marketing practices within their own organizations, they are often confronted with marketing concepts and practices that are not always relevant to the retail setting. To illustrate, the most basic concept of the marketing mix outlines 4 Ps – product, price, place, and promotions. "Place" is defined as the distribution channel. In retail, "place" refers to location, store layout and design, and size. Similarly, the "product" in a manufacturing setting refers to a concrete product with specific attributes and features. The "product" in the retail setting, on the other hand, refers to the multiple products that are carried within the store.
In short, the same techniques used to build producer brands cannot be wholly applied to retail brands. There are significant differences between producer brands and retail brands that necessarily require a different marketing and branding approach. We cannot force fit the marketing mix to retail marketing as this was created with producer brands in mind.
Producer brands vs. Retail Brands
Producer brands have concrete features and benefits. Safeguard or Coke, for example, have very specific product attributes. There's size, weight, variant, specific ingredients/properties, smell, and touted benefits. When it comes to retail brands like Rustan's or SM, however, we cannot describe them in the same terms because they are primarily experiential.
In a manufacturing setting, brand management is the primary responsibility of the brand manager. In retail, responsibility for the brand lies with the CEO, merchandising, and store operations. Even the security guard can affect the perception of your retail brand.
The brand management process in a manufacturing setting is careful, systematic, centrally decided and controlled. In retail, the brand management process is not linear or neat. It is a continuous set of feedback loops from store to head office; from customer to retailer; from operations to buying.
Producer brands typically have more narrow segmentation and positioning. Retail brands, on the other hand, compete for maximum market share across categories and customer groups within a specified catchment area. Retail brands necessarily have a more broad based segmentation and positioning.
A good producer brand can often achieve both price and volume premium. A strong retail brand cannot always command price, but will command volume premium.
Producer brands usually spend the majority of its advertising budget on mass media, while retailers spend most of its advertising on in-store communications.
Retailers need to become brand builders
Retailers will need to transition from being traders to brand builders. Trading focuses on maximizing short-term sales and profits, while branding focuses on building long-term customer loyalty and preference. As competition from both local and international players intensifies, building a strong position in customers' minds by becoming a trusted brand – a brand with strong and unique meanings and associations – is key to competitive differentiation and advantage.
However, being a champion of brand building in retail is challenging for several reasons. Retail is typically focused on the rapid expansion of selling space. Furthermore, tight cost-management and short-term trading pressures often require cutting corners and costs. These hinder investments that could otherwise be channeled to developing a strong brand franchise. Finally, very few marketing frameworks can be fully applied to the retail setting, pointing to a need for a disciplined and relevant approach to marketing in the retail setting.
Branding Happens In-Store
The battle for a strong brand is mostly won or lost in-store. Advertising is useless if the in-store experience is bad – you lose credibility when there is a disjoint between your claims and the actual shopping experience. Any retail marketing framework will have to look at the entire shopping experience and align these with the desired positioning. A store will have to be more than just a place where various products are sold. The store is the brand.
The retail industry is changing at a dizzying pace. Amidst tight competition, prices continue to drop. Customer loyalty is becoming elusive. In this environment, only the strong will survive – the best and most trusted brands. Branding is the secret weapon of retail marketing; it can create substantial value, but it is under-leveraged by most retailers.
Frances Yu is the Chief Retail Strategist of Mansmith and Fielders, Inc. She runs breakthrough Mansmith programs, 2nd Power Brands: Attaining Retail Marketing and Branding Excellence and Power Tools: Earning and Keeping Customer Loyalty. For comments and other inquiries, email