The objectives are a translation of the mission statement into operational terms. They indicate the results to be achieved. The purpose of setting objectives is to give direction and set standards for the measurement of performance. Management normally sets both long term and short term objectives. One or two year time frames for achieving specific targets are short term. Long term objectives are less specific than short term target and reflect that strategic dimensions of the firm.
Good objectives are measurable, are specific to time and indicate the priorities for the organization. Two areas, which are important for retailers, are market performance and financial performance. Objectives may be set keeping these two areas in mind; examples include:
1) Sales volume targets
2) Market share targets
3) Retail expansion targets
4) Profitability to be achieved
6) Returns on investment.
Obtain and Allocate the Resources needed to compete:
The resources that a retailer needs are human as well as financial. Financial resources take care of the monetary aspects of the business like shop rent, salaries and payments for merchandise. Human resources are just as vital to the success of a retail operation as are financial resources and physical facilities. The human resources plane must be consistent with the overall strategy of the retail organization. Human resources management also involves a variety of issues such as recruiting that these activities be managed effectively and efficiently.
Develop the strategic plan:
At this stage the retailer determines the strategy by which he will achieve the objectives set forth. The target market is defined and the retail mix that will serve this audience finalized.
The target market is that segment of the consumer market that the retail organization decides to serve. There is no definite or best way for deciding upon and selecting the target market in which to compete. Often, the retailer begins by looking at the entire market in terms of both the size and consumer segments to which it might appeal. From these segments he identifies a smaller number of segments that holds the most promise for the firm – these are the possible targets. The retailer then zeroes in on these possible targets and applies a set of screening criteria to help select the final targets. A number of variables like the growth potential of each target market, the investment needed to compete, and the strength of the competition etc are normally evaluated for each segment in order o arrive at the ones which are most compatible with the organization’s resources and skills.
In order to be successful in segmenting the market, the retailer must ensure that it is:
1) Measurable – Is the segment measurable and identifiable?
2) Accessible – Will focusing marketing efforts on a particular market segment have a positive impact on eliciting the desired responses?
3) Economically viable – Is the segmentation variable shared by enough potential customers to justify the expense and effort of focusing marketing efforts on that segment?
4) Stable – Are the consumer characteristics stable indicators of the market potential?
Once the retailer has chosen the target market the retail mix needs to be determined. This involves determined the merchandise mix, the pricing policy ad the types of locations that the retail store will be located at, the services that will be offered at the store and the communication platform that will be adopted by the retailer. The positioning strategy is then formulated. Positioning is the image of the retailer in the customer’s mind. All the elements of the retail mix work together in creating this positioning strategy.
Implement the Strategy, Evaluate and Control:
The key to the success of any strategy lies in its implementing. To implement a firm’s desired positioning effectively, every aspect of the store must be focused on the target market. Merchandising must be single minded; displays must appeal to the target market; advertising must talk to it; personnel must have empathy for it; and customer service must be designed with the target customer in mind.
Once a strategy is implemented, managers need feedback on the performance of the new strategy. The effectiveness of the long term competitive strategy of the firm must be evaluated periodically. Such an evaluation covers all elements of the plan. This type of evaluation guarantees that the firm’s plan does not degenerate into fragmented ad hoc efforts that are not in harmony with the overall competitive strategy of the business. Management can also use the process to decide what changes, if any should be made in the future to ensure that the combination of retailing mix variables supports the firm’s strategy.