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2.1 Introduction
The aim of this chapter is to present an overview of the essential terms and
conceptual basics which are necessary for a comprehensive understanding of the
research problem. This comprises the definition of retail and internal marketing.
To diagnose RM and propose solutions for a more effective RM management in
practice, previous research and theories are drawn on. The analysis of relevant
RM and IM literature, thus, helps to identify the appropriate theoretical and
conceptual basis. This identification process is a key reqnirement for improving
RM effectiveness. Moreover, it allows the research questions and associated
hypotheses to be positioned in the overall context, thus highlighting their contri-
bution to management practice and the development of insight related to RM
research. At the same time research gaps are made transparent.
In this chapter a theory is presented that is appropriate for explaining the
impact of RM activities on sales performance and on sales staff's attitode. Based
on this theory a conceptual model is developed to connect RM factors with sales
target figures and psychographic data in order to measure the direct and indirect
effects of RM on sales. These RM factors have been derived from a comprehen-
sive literature review. Their relevance for practice is summarized in chapter 2.5.
The specific objectives of this chapter are:
to understand and critically evaluate RM and IM management theory
to document and evaluate current RM and IM key models and frameworks
related to organisational performance
to examine the validity and reliability issues of current RM and IM research
to identify gaps in knowledge and deficits in research
to develop specific research questions addressing these gaps in knowledge
and the associated research objectives
The planned analysis of the effectiveness of RM addresses both internal and ex-
ternal target groups. RM effectiveness is measured in terms of its impact on sales
performance and the attitode of its internal target groups. This perspective
combines two sales formats, both franchise and branch outlets.
Other than the management of a branch format, the management of a
franchise format needs to pay particular attention to the fact that a franchisee is a
business owner in his or her own right. This makes it difficult for the franchisor
to enforce the implementation of concrete RM or service initiatives within this
system. The effective communication with the franchise partoer is a key factor in
developing a trusting relationship between headquarters and franchisee (Maritz
and Niemann, 2008: 20).
2.2 Retail marlreting 23
2.2.5.2 ~ercllluldisiug
Withiu the store the retailer offers a merchandise assortment to the customers
and one of his primary functions is to select the appropriate breadth and depth of
the assortment and the specific products. Subsequently, he tailors the offer to the
targeted customers' requirements (Krafft and ~antrala, 2006: 20). Therefore the
development and implementation of a merchandise plan and a product portfolio
is a siugularly important aspect of a retail strategy (Gilbert, 1999). Traditionally,
retailers have been promoting a siugle manufacturer or brand, which has been
developed to multiples so as to create differentiation. Consequently, a merchand-
isiug concept working with different categories with key brands is a relatively
new feature. According to Walters & Hanrahan (2000) the phases of mer-
chandisiug are listed as: marketing consideration, merchandise, strategy options,
type of customer base, financial considerations and merchandise assortment.
A critical factor iu merchandisiug management is related to availability and
flexibility. Thanks to modern technology it is easy to control and centralize mer-
chandise management through rapid communication with sales and stock depart-
ments. Delivery schemes, once the domain of manufactorers, can also be
controlled by retailers (Foord, Bowlby and Tillsley, 1996). This allows for the
meetiug of customer needs rapidly through more effective control over stock. In
iutemal marketiug the job represents the merchandise or product (Collius and
Payne, 1991: 265).
2.2 Retail marlreting 25
style which retailers need to live up to (Markham, 1998). Research shows that
the changes of lifestyle have affected people's shopping behaviour in terms of
their being more sensitive to the selling environment. Retailers are increasingly
starting to concentrate on the overall shopping environment and experience. Both
the demands for leisure goods and an entertaining shopping environment in
2.3 Concepts 27
which to purchase these goods must to be borne in mind by retailers (Krafft and
Mantraia, 2005: 16). In the HRM and internal marketing context location or
place or distribution may represent the physical workplace and meetings, con-
ference rooms and channels used to deliver training programs (Ahmed and
Rafiq, 2002: 34).
Table 1 represents the foundation for the theoretical underpinning of the re-
search. It justifies the definition of RM factors and presents their specific
relevance for the mobilcom-debitel retail network. This table is derived from the
previous five sections on the management of RM factors.
2.3 Concepts
To address the research aim and objectives, the literature is reviewed to identity
research needs and relevant constructs. This section covers concepts and theore-
tical findings of retail and internal marketing research.
The present project does not take an isolated view of the relationship between
RM and sales performance. It endeavours to offer an integrated perspective of
the cause-and-effect structures between the headquarters and the internal and ex-
ternal target groups. In accordance with the service profit chain concept, this
research model presents a functional chain covering central RM on the head-
quarters level. On the outlet level it embraces attitude and behavioural aspects of
sales personnel together with the degree of satisfaction with the perceived
service quality by customers and non-customers.
The service profit chain model highlights links between customer satis-
faction as well as employee loyalty and satisfaction. Moreover, it shows the
connection between these factors and an orgaoisation's overall profit This profit
is linked to customer loyalty and satisfaction through the implementation of
referral related sales and retention strategies. The service profit chain identifies
direct and strong relationships between profit, customer satisfaction, employee
satisfaction and capability (Heskett et al., 1997: 17-38). In the present context,
sales performance substitutes profitability as a target variable.
28 2 Retail. markctin& CODCCptJ and lCICarch model
,
Headquarters-l evel
,
Outlet-Leve l
To successfully address the research aim and to determine the success factors
contributing to the relationship between RM. attitude and sales performance, the
applied attitude concept takes into account the typically Rlevant sub-items:
loyalty, commitment and autonomy.
In scientific research, the attitude and satisfilction concepts are intensively
discussed with particular consideration of their similarities and differences. Atti-
tudes are generally defined as an individual's acquired and lasting wj1lingncss to
react to certain objects positively or negatively (Fishbein and Ajzen, 1972: 488).
Employee satisfaction relates to the overall feeling and expectations about a job
or its different aspects (Petty et al., 2005; Spector, 1997; Togill et al., 2004).
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