Retail Business Analysis

Retail Business Analysis

Retail Business Analysis BUS620: Managerial Marketing Prof. Adebowale Onatolu October 31, 2011 Retail Business Analysis “Payless ShoeSource, Inc. is the largest footwear retailer in the United States. Payless has built its success by offering a large selection of shoes at very low prices, most selling for less than $15 as of 2004” (fundinguniverse. com, N/D, para. 3). Payless ShoesSource has implemented generic and segmentation marketing strategies in order to market their products successfully.

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This paper will analyze how the company has implemented these strategies and will discuss how these assessed strategies could be improved to impact the successful marketing of the product. Generic Marketing Strategies According to Mullins & Walker (2010), Robert Miles and Charles Snow identified four generic business strategies: prospectors, defenders, analyzers, and reactors. A prospector business strategy is primarily concerned with attaining growth through aggressive pursuit of new product-market opportunities.

Next, an analyzer business strategy is concerned with strong core business; actively seeking to expand into related product- markets with differentiated offerings or low-cost offerings. On the other hand, a defender business strategy focuses on maintaining a differentiated or low-cost position in mature markets. Finally, a reactor business strategy has no clearly defined product-market development or competitive strategy. Payless ShoesSource’s Generic Marketing Strategy Payless ShoeSource has implemented a defender business strategy.

They have implemented this strategy because they compete in an industry where the basic technology is not very complex and where it is well developed and unlikely to change dramatically over the short term. Payless has located and maintained a secure position in a relatively stable product area and offers a limited range of products compared with its competitors. Payless ShoeSource only offers value-priced footwear and accessories to its consumers unlike other competitors, such as Target and Wal-Mart stores, whom offer a wide range of products and services.

Payless tries to protect its domain by offering lower prices, higher quality, and better customer service than its competitors. “The company has been able to maintain its affordable prices by sticking exclusively to a self-service format, keeping a tight rein on cost structure, and insisting on efficient sourcing and inventory controls” (fundinguniverse. com, N/D, para. 3). Although Payless offers these main characterizations of a defender business strategy, they differ in one way.

Payless ShoeSource is at the forefront of technological and new product development. They provide consumers with “new product offerings, featuring merchandise that is right, distinctive and targeted for their customers including an increased selection of leather footwear. They also implement new technologies to enhance their ability to satisfy customers” (fundinguniverse. com, N/D, para. 1). Other than this differentiation, Payless can be considered a defender in their industry. Segmentation Marketing Strategies Market segmentation is the process by which a market is divided into distinct subsets of customers with similar needs and characteristics that lead them to respond in similar ways to a particular product offering and marketing program” (Mullins & Walker, 2010, p. 180). There are three effective strategies for segmenting the population: demographic, psychographic, and geographic. The characteristics that marketers focus on when they are segmenting the population based on demographics are age, sex, household life cycle, income, occupation, education, events, race and ethnic origin.

On the other hand, when marketers segment the population based on geographic, they focus on locations and regions where there is the most potential for sales potential and growth rates. They also determine the best location for their new store based on customer needs, cultures, climates, service needs, and competitive structures, as well as purchase rates for a variety of goods. Finally, marketers also segment the population by determining the way consumers behave, or psychographic characteristics.

The characteristics of this segmentation strategy are “based on consumer needs; on product usage patterns; on more general behavioral patterns, including lifestyle, which often cuts across demographic categories or varies within them; and, in organizational markets, on the structure of firms’ purchasing activities and the types of buying situations they encounter” (Mullins & Walker, 2010, p. 186). Payless ShoeSource’s Segmentation Strategy Payless ShoeSource focuses their segmentation business strategy on the demographics of their consumers. Payless ShoeSource targets as its main customers women from 18 to 44 years of age with household incomes of less than $75,000, and it estimates that in any given year, 40 percent of the women in this target group buy at least one pair of footwear at a Payless store” (fundinguniverse. com, N/D, para. 3). Payless also acquired Stride Rite in 2007, taking on the children’s demographic. “With this acquisition Payless is hoping to attract another breed of customers – those willing to pay a little more for their footwear – as some of its children’s shoes, for example, cost around $50 per pair” (Moon, 2007, para. ). Improvements to Impact Successful Marketing of Payless Products First, Payless ShoeSources’s generic marketing strategy could be improved by differentiating their products from competitors. Many times when you enter a Payless store you see shoes that are similar to name brand products, such as Uggs, but they are the generic version instead. Payless should add features to their footwear that make them seem unique. Customers need to perceive the product as having desirable features not commonly found in competing products.

According to the Encyclopedia of Business (2011), differentiation does not allow a firm to ignore costs; it makes a firm’s products less susceptible to cost pressures from competitors because customers see the product as unique and are willing to pay extra to have the product with the desirable features. Finally, a differentiation strategy “may lead to customer brand loyalty and result in reduced price elasticity. Differentiation may also lead to higher profit margins and reduce the need to be a low-cost producer” (Encyclopedia of Business, 2011, Differentiation Strategy section, para. ). Second, Payless ShoeSource’s segmentation marketing strategy could be improved by broadening their demographic market. Payless focuses on women ages 18 to 44 and children of all ages, however, if they expanded their target market to entice men to buy their footwear this would also lead to higher profit margins. Most men buy expensive work boots at one point in time, therefore, Payless could offer a unique work boot to men ages 18 to 44. They could also offer a high quality business dress shoe to men of these ages as well.

Even in today’s diverse world, men are still the breadwinners in most families; therefore, it would be an intelligent marketing decision for Payless to focus on expanding their segmentation market to hard working men as well. Conclusion In conclusion, Payless ShoeSource, Inc. is the largest footwear retailer in the United States, and they have accomplished this because they have implemented generic and segmentation strategies to successfully market their products. This paper has analyzed Payless’s defender business strategy and their demographic attributes used to segment their consumer market.

Finally, this paper also assessed that the generic marketing strategy could be improved by differentiating their products from competitors, and that the segmentation strategy could be improved by broadening their demographic market to target hard working men. Resources Encyclopedia of Business. (2011). Generic Competitive Strategies. Retrieved October 31, 2011, from http://www. referenceforbusiness. com/management/Ex-Gov/Generic-Competitive-Strategies. html Fundinguniverse. com. (N/D).

Payless ShoeSource, Inc. Retrieved October 31, 2011, from http://www. fundinguniverse. com/company-histories/Payless-ShoeSource-Inc-Company-History. html Moon, B. G. (2007). Payless Shoe Source Hits Its Stride. Retrieved October 31, 2011, from http://www. schaeffersresearch. com/commentary/content/payless+shoe+source+pss+hits+its+stride+/observations. aspx? ID=45337 Mullins, J. W. , Walker, Jr. , O. C. (2010). Marketing management: A strategic decision making approach (7th ed. ). Boston: McGraw-Hill Irwin.


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