MARKET SELECTION &

RETAIL LOCATION ANALYSIS

Essential Retail Studies Tutorial 12

HS0802(HB)Group Members:JolInna AngNoor FakheerahTan MeilingAlex Wong

Q1) Why should retailers be concerned about selecting the right target market?

It will help to segment the market and thus, able to understand the customer needs and wants better.

It has to be measurable, accessible and substantial.

How are the concepts of target market selection and location related?

The target market selection will determine and limits the location of its target market.

The target market will be well developed at the right and correct location.

Q2.WHAT THREE CRITERIA SHOULD BE MET TO SUCCESSFULLY TARGET A MARKET?

It should be measurable, accessible and substantial.

Attractiveness of the segment Size of the segment (number of customers and/or

number of units) Growth rate of the segment Competition in the segment Brand loyalty of existing customers in the segment Attainable market share given promotional budget

and competitors' expenditures Required market share to break even Sales potential for the firm in the segment Expected profit margins in the segment.

CONTINUED the fit between the segment and

the firm's objectives, resources, and capabilities

Whether the firm can offer superior value to the customers in the segment

The impact of serving the segment on the firm's image

Access to distribution channels required to serve the segment

The firm's resources vs. capital investment required to serve the segment

Q3SOMEONE ONCE SAID THAT IF “YOU BUILD A BETTER MOUSETRAP, THEY WILL COME.” IF THIS IS TRUE, WHY IS IT IMPORTANT FOR A RETAILER TO SELECT THE CORRECT SITE WITHIN A TRADING AREA? EXPLAIN YOUR ANSWER.

When a retailer selecting a site, it building the mousetrap. Only when the mousetrap built at the correct place, it then will attract mouse, if mousetrap is put inside a metal box, there no way it can attract mouse to come.

Same logic, if the retailer’s target market is business people, and placed its shop at the neighborhood, it not possible to attract the target market into the shop.

Thus, the retailer in order to attract its target market of business people, it should have its shop located at the central business district, where most of its target market will be.

Selecting a correct site to set a shop within a trading area is crucial to the retailer, as it will directly affect its revenue, publicity and market size.

CONTINUED

Q4.IDENTIFY THE FACTORS YOU WOULD CONSIDER THE MOST IMPORTANT IN LOCATING A FAST-FOOD RESTAURANT.

COMPARE THESE FACTORS WITH THE FACTORS YOU WOULD USE IN SELECTING A SITE

Factors Fast-Food Restaurant

Supermarket

Local Demographics YesTraffic Flow & Accessibility Yes YesRetail Competition YesSite Characteristics YesCost Factors Yes Yes

COMPARISON Local demographics like the lifestyle of

customers are important to Fast-food restaurant, as if the lifestyle staying more at home and prefer to eat at home, then the restaurant will not be able to attract any customers.

However, if the lifestyles of the customers are also rushing for time, prefer fried food, and then the fast-food restaurant will be their choice. Local demographics are not that important to supermarket as it sell basic necessities which no matter which group of market will need it.

CONTINUED Retail competition is more important to supermarket

as the type of merchandises sell between its competitors are very similar, hard to differentiate, commonly is only differentiate by the brand.

While fast-food restaurant in term of the products there still differentiation, for example, Burger King famous for its burgers and KFC famous for its fried chicken.

Site characteristics like the ease of access of delivery is very important to supermarket, as their daily delivery of stock can be more than once and always bulk of stock delivered at one go.

Thus, if it inconveniences to deliver the stocks, the supermarket will be severely affected.

Q5.WHY IS IT SO HARD TO FIND THAT 100% RETAIL LOCATION?

Nothing is perfect in this world. You will get a little bit of good and bad in everything. Same goes for the location.

People moods, preferences, behaviour and thinking changes, as all these factors changes, demand for different goods and services changes too.

CONTINUED For eg. If you main target market is the

tourists, you set up a stall in Orchard Road, you might think it’s the 100% retail location.

Yes, that can be right but tourists do travel and don’t only go to Orchard Road. Some might go to heritage and cultural places and this might lead to a loss in revenue for the shop owner. Rent would also be high in Orchard, in turn leading in the high selling price which some customers would not be able to afford.

• You would only be able to focus and cater to the customers that travel to orchard but not the rest of Singapore. This way, you would neglect the part of the population that you are not able to reach out to.

• Other than that, there is also the environmental factor. If you choose countries which are prone to disasters, your shop and your life would be at risks at all time.

Q6. WHY DO SOME STORES CLUSTER AROUND WITH EACH OTHER?

Firstly, they can compete with other companies so that there will be competition. Beside competing companies also compare their products with competitors.

By doing this, both companies will improve on their products and their services. They can increase their range of products for the public to choose their products or services.

Next, they may provide better products than their competitors which may help them to eliminate their competitors.

DOESN’T BEING SO CLOSE TO THEIR COMPETITION HURT THEIR PROFITABILITY? The sales volume would be greater than

what they would achieved if they were located far apart from each other.

It will not hurt their profitability because there will be more targeted customers buying the sports products, will be drawn and patronise the site as the sports products are concentrated within the competitors.