Introduction
The very word ‘retailing’ means nothing more than selling goods to people. This job is mainly done through the help of shops and other types of business outlets. Now, it is for sure that the fundamental understanding of retailing has changed a lot now from what it was in the previous century.
‘Retailing in the 21st century is far more exciting than what it was in the 20th century (Krafft and Murali, 2004). It is completely dependent on modern economics as it is emerging’. Globalization is certainly one of the main opportunities that have made the path smooth for retailing companies like Liberty of London. The competition is high. Therefore ‘each company is always trying to prove why they are different from the others and what extra benefit the customers can get from them’ (Keller, 2002 pp. 118).
The history of the product
Liberty is one of the leading luxury store business houses in the United Kingdom and is in retail business is in the retail industry. This departmental store has many strategies that have made them one of the growing retail businesses in the United Kingdom. Liberty has strategic reasons why they have decided to enter into various segments. Being one of the most profitable stores they are endowed with enormous resources that will make them a giant in any business they venture into. Their strategy states that in their business they have10% of the market in Britain. They want to grow stronger in United Kingdom Company business then ‘develop to the international market by increasing the exploring new opportunities, and then exploit the retailing services as well as E-commerce’. This is why this company has been expanding into the international market (Lee and Carter, 2005).
The production of the product
‘All brands in a competitive market have various challenges that they have to adhere or adjust to’. Just like products, the major challenge that a departmental store may face is the rise of competition. All companies in a competitive world have to accept real competition unless in a monopolistic type of market. ‘Competition can be defined as a group of firms, that offer a product, or class of products that substitute the products’ of Liberty. Innovation and brand diversification is the key to beating departmental store challenges and once Liberty identified its major challenges it had to ascertain its characteristics and specify strategic, objectives look at its strengths and weaknesses, reaction patterns,, and ways to react to these challenges to overcome them. To do this the management of liberty decided to take the bull by the horns. They have monitored the competitor’s expansion plans, size,, and other factors and decided to plan and game plan to counter the challenges (Armstrong G. & Kotler P. 2007 pp. 129).
Currently,,forare in considerationnew strategies that satisfied the profitability requirements of the Liberty of London departmental store are developed into a concrete prototype and in due course into a technically suitable and commercially acceptable luxury departmental store. This step in development is extremely important especially because it is the first effort to develop the departmental store into an acceptable entity in the market; ‘this step requires relatively large amounts of money- much time and money is needed for the eventual development of a technically effective luxury product store’. At this step, it can be determined whether the departmental store can indeed be developed into a technically effective and need-satisfying service industry (Armstrong & Kotler, 2007 pp. 132).
Firstly, the technical research engineering and technical testing attached to establishing experimental models and the final departmental store must be handled. ‘Many variations of the product are often developed before the most suitable alternative is found. Secondly, consumer preference texting must take place and this issue is very closely related to the prototype development and the main objective is to determine which experimental model complies best with the requirements that consumers set for the departmental store (Schaik, 2002 pp. 652).
In the third place, decisions must be made on the placing of the departmental store. ‘The objectives of effective presenting are to project the product physically to ensure convenient handling, to accomplish economic use and to help with the promotion of the product in the marketing situation’. The brand must also be selected for the new product and the brand forms part of the product image and normally serves as a symbol and strengthener of the product concept (Schaik, 2002 pp. 663).
Test marketing is another step in taken by liberty departmental store and now for the first time. The entire departmental store and its marketing strategy are subjected under ‘normal conditions to a relatively small number of well-chosen marketing situations’. In test marketing, Liberty department store considers whether to test marketing or not. ‘This decision is mainly determined by the nature and extent of the risks and the size of investment involved in the manufacturing and marketing of the new product’ (Keller, 2002).
The commercialization process is undertaken by the marketing and promotional committee in conjunction with all the other committees and the faculty. Basically after the validation event, course code is assigned and then the promotional activities begin. The course is made available to the public through prospectus and other mediums like billboard and posters (Lovelock, 2006)
Marketing objectives are made clear and the objectives of test marketing made in line. ‘Test marketing is normally done to gain more and better knowledge of expected sales; to test alternative marketing strategies, to locate possible product defects which slipped through during physical development; and to get a better idea of the reaction of the different market segments. In launching the departmental store, it is also necessary to take notice of the process through which potential customers become aware of the store, buy and try them for the first time and eventually accept or reject them(Schaik, 2002).
Marketing of the departmental store
Therefore, in order for the Liberty of London to attract and maintain its customers, the Four Ps rule should be considerably looked into. These are items that either attract or discourage a consumer from buying certain goods and services. This is broadly known as the Marketing Mix. This is inclusive of the products/goods being sold, price of the commodity, promotion activities, and place where buying and selling are to take place (Lee and Carter, 2005).
Product
‘The product or service one puts in the market should be that which is in demand by the customers. In order for a customer to buy from a departmental store, they should be influenced by some factor and have a want of products available in it hence placing demand for it. Again some of the factors that are accompanying a departmental store can make it patronized more (Allard, 2005).
The dominance of Liberty in the market can be credited to the brands (products) that it has to offer to the market. These are the obvious tangible wares that make the company get the accolades London. It offers products in the luxury line but also other products are available. ‘A major factor put into consideration when launching a new product is the cultures associated in the market of launch since different markets are defined by different cultural environments’. Among its major products, luxury line products have been applied as the trademark of the company (Kotler & Keller, 2005).
Pricing
‘After the design and launch of products as specified by different customer needs, the next logical step is setting up of prices’. The prices for products sold at departmental store charged inconsideration of other factors that affect the market situation. Due to competition, discounts can be adopted so as to attract more customers and maintaining the already existing customers during festive seasons. Again, ‘the price put to place does not necessarily be in terms of money but it can also be in exchange of things like duration, amount of commitment or efforts utilized among others’ (Kotler and Kevin, 2006).
This determines the sales and also whether there will be gains or losses made by the Liberty of London. ‘Several aspects are considered, however, the customer is given the priority on basis of what the customer perceives to be the real value’. When it comes to pricing its products, Liberty of London faces many hurdles, the main one being that the products sold are considered to be luxury and therefore they incur heavy taxation which has to be transferred to the consumer. It also targets those people who are affluent in the society. (Bitner & Booms, 1981).
The online shop has also contributed to the success of the company. As for every online retailer, designing a pricing strategy for Liberty of London is a tricky job. There will be a very little room for error in this area, as price hunters will go away or shift to the competitor if there is any bit of overpricing. Due to the price sensitivity of online buyers, Liberty of London plans to do value-added pricing. The extra small benefits and efficient distribution and after-sales services will make the customer feel that they have been charged fairly. To offer low prices to customers, Liberty of London can also consider practicing overall cost leadership. By achieving lowest production and distribution costs, it can price lower than its competitors and gain a large market share.
Placement/Place
This factor deals with how goods and services exchange hands. ‘Factors attributed to the settings of where goods are going to reach the customers include geographical positioning of the customers, the age group, and the social class of the anticipated customers among others. Mainly, it deals with the selling process and how various factors affect it. Therefore, the Liberty of London should put into consideration all these factors so as to reach each and every person who is in need of their products (Keller, 2002). Liberty of London online shop distributes its products all over the world. The retail stores that Liberty of London operates are for luxury wears and other products. Liberty of London gets benefits from products around the world and also for the retailers to gain benefit from them. When a customer places an order on the website, Liberty of London sends the product description to the retailer and the retailer will send the product to the customer.
To keep afloat in the cut throat competition, incentives are offered to the bulk breakers by giving them free samples which helps them consume more. ‘Agreements are also made with some customers baring them from buying goods from competitor companies due to loyalty’. Another challenge comes because of the different seasons that we have in the different demands. Ideally, luxury products are taken in large amounts in festive seasons, therefore during these periods the prices are supposed to be reduced to maintain sales and profitability of the company (Lee and Carter, 2005).
Promotion
Liberty of London already has a remarkable marketing communication; in fact it does marketing for many brands. It does not join forces with any other marketing agency for its promotion. It engages in outdoor advertising and so it uses its web portal for its ads.
‘This puts into consideration activities directed towards making know a given company in the market or elevating the image of a certain company. A lot of emphases should be put in place in this area because it is the backbone of marketing techniques’. Liberty of London starts from how the products are packaged to how the goods and services are delivered to the customers. For instance, ‘branding is a process which is directed towards giving a special identity to a company’. For Liberty of London to be known effectively in the market, it should embrace a brand that wholesomely defines its quality of its products and services. This in the long run will positively affect its sales (Ries and Jack, 2000).
Marketing communication should be put into full implementation to enable Liberty of London to make more sales. ‘Different types of customers are communicated to using different ways’. For example, new customers that are who have never patronized the store are given finer details about the Liberty of London when addressing them, unlike the already existing ones. Liberty of London strives to individually address the needs of each customer and not to generalize as this might affect a certain group especially the new customers to the store. For purposes of attracting more customers, care should be taken towards this factor (Patterson, 2008).
Liberty of London does fully embrace advertising as an effective tool in marketing. “Advertising largely aims at reaching out to the large population. This method tries to appeal and employ the customer to use a certain product of a certain company and it is fair because it does not discriminate among the customers”. If well designed, Liberty of London can make more sales, make known to their customers about any changes, bring to the market new products, take a lead in the eye of the public, deal with the competitive nature in the market, and attract more customers among other factors. When choosing a means of advertisement, Liberty of London should go for one that draws focus, brings a need and interest which leads a customer in deciding on buying the product. For advertising to be effective, the following steps should be followed. First, a research should be carried out in the market to establish the demand of the customers, the objective of the advert should be designed, an expenditure plan should be drawn, the medium through which the advert will be made should be chosen, a choice regarding the participants in the advert should be made, flow of words should be designed, observe the flow of the advert and hence put test the advert about a group of observers (Bagnall, 2005).
In addition, Liberty’s management does not note the fact that personalized type of services tends to improve sales. This can be achieved through having face-to-face interactive sessions. This enables the customers to ask questions about a type of product or service. “A personal touch to the customer creates commitment to given product”. On the part of the company, the quality of the product can improve because you get to learn about the needs of the customers (Keller, 2002).
The consumption of the product
The products marketed by Liberty of London are influenced by many factors not only the cost, access, and supply. Other factors that affect the demand of luxury product include social factors, demand factors which can be subdivided into advertising, change in population, change in real disposable income, Changes in wealth distribution, changes in the prices of competitors’ productions, inflation rates in the market, and government policy (Thomson and Rampton, 2006).
Luxury products at Liberty are not necessities and they can only be affected by the availability of substitutes in other cheaper stores market and it is this substitute that will affect the demand. Luxury products are always relatively elastic because people will consume them when with extra disposable income. It is only the will swift to the alternative and they will abandon the departmental store wholesomely. Therefore the changes in prices of their products will produce more than proportionate change in the quantity demand (Lovelock, 2006). The following chart shows how demand in the store is relatively inelastic.
From the chart above, I can comfortably say that when the price for the products and services changes,” the quantity demanded is changed positively or negatively depending on changes in the price”. The following factors are said to have an impact on the quantity demanded (Thomson and Rampton, 2006).
Changes in disposable income
Liberty of London will be affected if there is a change in disposable income of the consumer.” If disposable income for consumers decreases especially this period of economic downtown we mean that the consumers will have less to spend and thus they will buy the cheap luxury products”. In this case, they will move to those stores that are cheaper than Liberty of London products. This will mean that the demand will fall, as well as the quantity demanded (Thomson and Rampton, 2006). “The quantity will continue coming down if the price remains the same and the price remained the same”. It is a clear show that the changes in the demand were not due to price changes but were due to income levels changes (Thomson and Rampton, 2006).
Coming back to demand factors I can distinguish between:- Individual modifying demand factors , such as the physical characteristics of the individual customer, individual consumer,” individual reactions to sensory perceptions, individuals ethical and moral values and conceptions, intellectual capacities and general individual motivations”(Lee and Carter, 2005). “Social demand factors derive from the fact that consumer units live in a particular social environment and react to influences and stimuli emanating from the actions of other persons or groups, irrespective of whether they are members of a family, a particular group, a wider community or even the nation as a whole”. The economic position of consumers, as well as the legal socio-cultural factors, can influence consumer behavior towards the products sold by Liberty of London. Interpersonal and group influences in turn mainly derive from the following phenomena: the basis need of human beings for achievement; the need to feel equal and the need to show off and demonstration (Thomson and Rampton, 2006).
Economic demand factors include disposable income relative prices at any point in time; the influence of advertising on consumer behavior consumer credit facilities and certain technological and economic developments. Amongst these factors purchasing power is of primary importance. “The conscious concrete needs of consumer units can regardless of the variety of factors which create and modify such needs can only be converted into effective demand when they are supported by this factor, namely purchasing power”. Purchasing power is a conditioning and provisory factor in effective consumption and business success. The causative factors in a specific expenditure pattern must however be sought elsewhere, namely in the dynamics of the community and especially in the group context of both the consumer and Liberty of London (Kotare and Helena, 2004).
Having discussed the variables that impact consumer demand for the luxury products at Liberty of London, it is important to look at access and supply. When the supply for luxury products is changed the demand also changes. “Supply maybe due to increased in production and access of the product to the people involved” (Keller, 2002).
Conclusion and Recommendation
Close monitoring of the quality of products and customer satisfaction has ensured Liberty of London remains the market leader. To establish long-term customer relationships and hence, maintaining profitability, customer satisfaction will be crucial. As it is hard to measure customer satisfaction, even from the information recording of frequent buying behavior, etc, Liberty of London understands the importance of its web-design process, quality of products, and advertising as this will add to their information quality and system quality. The customer acquisition costs and repeat customers will also be carefully gauged.
The employment of the marketing mix by Liberty has helped in catapulting and putting it in the countries as the leading luxury store countrywide. Although few players are available in this turf, aggressive advertising and promotions have prevented small companies from penetrating the marketing and exerting or giving competition to the already established stores companies like Liberty. This shows that the key to “market penetration and dominance lies in exploiting the potential presented by the business mix.” By manipulating the different elements of the mix to the maximum, can ensure improved performance of the products and an increase in sales and profits (Lee and Carter, 2005).
References
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