Navigating the treacherous waters of retail marketing requires precision, foresight, and a deep understanding of consumer behavior. The slightest error in marketing can lead to substantial financial repercussions and diminished brand value. We are going to discuss the common marketing mistakes that ensnare many Companies/Brands and provides strategic insights on how to avoid these pitfalls by harnessing the foundational principles of effective marketing.

In the dynamic world of retailing, where consumer expectations and market conditions evolve rapidly, businesses must remain agile and informed. Many Companies/Brands falter not from a lack of effort, but from a failure to adapt their marketing strategies to the changing landscape. Missteps in understanding customer demographics, product placement, and pricing strategies can swiftly transform a profitable venture into a struggling enterprise. This expanded introduction emphasizes the importance of continual learning and adaptation in the fast-paced retail environment, setting the stage for a deeper exploration of specific marketing errors and corrective strategies.

The Decline of Discount Department Stores

In 2022, sales figures for discount department stores in the United States were telling. The industry saw revenues of approximately $101.8 billion, a slight decline from $102.2 billion the year before. This downward trajectory has been consistent since the early 2000s, with an average annual decrease of 1.5% from 2017 to 2022. These statistics not only highlight the challenges facing discount retailers but also underscore the critical need for robust, mistake-proof marketing strategies designed to stem the tide of declining sales.

In 2023, sales of discount department stores in the United States reached over 102 billion U.S. dollars, slightly down from 103.7 billion recorded a year earlier. Overall, sales of these type of stores have shown a downward trend since 2001.

  • What was the market size of the Discount Department Stores industry in the US in 2023?

    The market size, measured by revenue, of the Discount Department Stores industry was $104.5bn in 2023.

  • What was the growth rate of the Discount Department Stores industry in the US in 2023?

    The market size of the Discount Department Stores industry declined -4.8% in 2023.

  • Has the Discount Department Stores industry in the US grown or declined over the past 5 years?

    The market size of the Discount Department Stores industry in the US has declined 2.6% per year on average between 2018 and 2023.

More information available at Discount Department Stores in the US (IBIS World).

Marketing Mistakes to Avoid

The Four P’s of Marketing

Understanding and effectively implementing the Four P’s—Product, Place, Promotion, and Price—is crucial to any marketing strategy’s success, particularly in the retail sector.

  • Product/Service

    Figuring out what Features & Benefits to include, Quality level, Packaging, Branding and more. All Products provide services, and all Services use Products physical and human. Developing New Product is not done in a vacuum but in Partnerships with your Distribution Channel, and Alliances which usually is the first mistake when ignored & excluded from the process.

  • Place

    Place is the Geographic area you cover along with Distribution system you put in place to reach end consumer.

    A Business needs to decide on the type of distribution channel it will use, such as wholesalers, distributors, physical stores, and online stores, that will help them reach their end customer most effectively.

    Ensuring that products are available where and when customers want them is crucial. Same applies to Services.

  • Promotion

    Promotion encompasses all the activities of what we refer to as IMC (Integrated Marketing Communication). This entails the following: advertising, sales promotions, trade shows, personal selling, direct selling, and public relations.

    Effective promotion strategies can help build brand recognition, generate interest, and drive sales. All above are essential to support your Distribution Channel.

  • Price

    Price is the most important component of the marketing mix. It involves determining how much customers will pay for the product or service. Of course, this Price is based on the Quality being offered and competition in the marketplace.

Expanding on the 4P’s Mistakes

Discount department stores usually carry excess inventory companies failed to sell, and discontinued items being dumped in the market by the brand/company.

Discount department stores buy products from brands/companies at a fraction of their price List.

Let’s take closer look at the mistakes:

  • First P: Product: Strategic distribution ensures that products are available in the right places at the right times, thereby maximizing the potential for sales.Developing a New Product is not done in a vacuum but usually in partnership with your distribution channel, and alliances. Unfortunately, companies in lots of cases ignore them, tend to create that product based on their assumptions, thus the first mistake.

    When Companies introduce products that consumers do not like or want, do not value, then consumers refuse to buy them: They end up in discount stores.

  • Second P: Place: The ‘Place’ component of marketing refers to having a strategic approach to selling locations and distribution channels.Companies may not define a clear target market, where/when/how to reach them, do not Train their sales team properly (or at all), or fail to devise a proper selling process for them.

    When products are imposed on the sales force, they do not promote them properly and they end up in discount stores.

  • Third P: Promotion: Poor promotion characterized by unclear messaging, inadequate advertising, and ineffective sales tactics—often results in low customer engagement and poor sales.When companies lack a proper promotion plan, and have a poor messaging campaign in place, they fail to convince consumers to buy their products— Their products end up in discount stores.
  • Fourth P: Price: Pricing, Positioning & Branding work together.
    Positioning! Do we really need it? The Brand name will sell the Product!!! Another mistake.
    The company may have over-priced their Product and the customer finds it expensive.
    They end up in Discount Stores.
    The role of Price is to pay for the cost of the Product/Service, cost of Place, Cost of Promotion and cost of Price which is a profit.

Effective promotional strategies are essential for any business but are particularly critical Companies/Brands, where the perception of lower quality can be a significant barrier.

An effective promotional plan should include:

  • Targeted Advertising: Utilize demographic data to tailor advertisements that resonate with the specific needs and preferences of the target audience.
  • Social Media Engagement: Leverage social media platforms to build a community around the brand and engage with customers in real-time.
  • Email Marketing: Develop personalized email campaigns that offer exclusive discounts and insights into new stock and special offers.
  • In-Store Promotions: Organize events and promotions in-store to increase foot traffic and enhance the shopping experience.

Luck is not a strategy and that is why we have this big discount stores industry that carry.

Mistakes of Marketing:

  • The Product was not appealing for the consumer to buy.
  • The sales people could not sell it to the Distribution Channel/Place.
  • The Promotion strategy and messaging failed to convince the consumer to buy the Product/Service.
  • The Price was too high and the consumer did not buy the Product/Service.
  • Very Simple: They end up in Discount Stores

Real-Life Example: Tesco in the U.S.:Great example of how to mess up all the 4P’s

Tesco is one of the largest retailers in the world. In 2021, the Tesco Group generated $66 billion USD in revenue. It currently operates 4,673 stores across the globe. Almost 4,000 of those stores are located in the United Kingdom, which is Tesco’s primary market. Based in Hertfordshire in southern England, Tesco “is the leading supermarket brand in the United Kingdom, consistently ranking highest in terms of grocery market share.” Tesco also operates successful stores across many European and Asian markets. In 2007, Tesco expanded in the United States under the brand, Fresh & Easy. At its peak, the company operated 208 stores in the market; however, due to its small store formats, skewed customer research, poor store locations, and food packaging concerns, the company was forced to exit the market in 2013 when it sold its remaining stores. In total, Tesco suffered losses of $1.6 billion USD as a result of its failed entry into the U.S. market.

Small Grocery Store Format: Product/Price Problem

Tesco’s Fresh & Easy stores confused many American shoppers because the stores were much smaller than the traditional American grocery store. The typical Fresh & Easy store was around 3,000 square feet, which is less than one-third the size of an average American grocery, which is usually around 10,000 square feet. The stores were designed to make shopping easier and more convenient for the consumer. In short, they were built for daily shoppers. This daily shopper model, which is common in Europe, did not resonate with the typical American grocery shopper, who typically shops on a weekly basis. Tesco’s smaller stores had less variety which also frustrated the American consumer, who prefers to buy everything at a single store.
Skewed U.S. Market Research

The stores emphasized pre-prepared and ready-made meals, which did not resonate with the average consumer. Because Americans typically shop on a weekly basis, they are often buying items in bulk, which means ready-made items are less appealing. Tesco completed “detailed market research including visiting shoppers at home to see what they bought and asking people to keep a food diary to observe what they consumed.” In their research, Tesco primarily talked to consumers in California. The company did not build a robust representative sample of the wider American grocery shopper. This oversight likely contributed to Tesco’s misguided decision to purchase small store formats with less variety and ready-made meals.

Poor Store Locations: Place Problem

In its initial property deals, Tesco acquired store locations that “were essentially on the wrong side of the road.” Many Tesco store locations were located on the in-bound side of the road, which made it extremely difficult for people to stop on the way home from work as they left their jobs in the city. People would see the stores on the way into work when they were not looking to shop. Analysts say Tesco should have prioritized stores on the out-bound side of the road, so customers could quickly grab something for dinner on the way home from work. These poorly located stores severely hurt foot traffic in stores, which contributed to decreased sales in the U.S. market.

Food Packaging Concerns: Product/Service Problem

In some ways, Tesco’s Fresh & Easy grocery stores were ahead of their time. Fresh & Easy stores fully embraced self-checkout. At the time, “self-pay checkouts for groceries were confusing for Americans so used to service.” The self-checkouts required products in the store to have a barcode clearly displayed. This meant that Tesco products were often individually wrapped in plastic for easy checkout. This frustrated American consumers, who are accustomed to touch and feel items like produce and fruit. The plastic wrapping undercut Tesco’s environmental and sustainability stance in the U.S. market. Despite its Fresh & Easy name, “it was hard to get quality fresh food there – especially fruit and vegetables.”

Tesco spent conducted 2 years for market research prior to entry and yet Tesco ignored all the valuable data they collected.

Avoiding Marketing Mistakes

For Companies/Brands, the integration of Product, Place, Promotion, and Price is not merely a marketing framework but a strategic imperative. Each component must be meticulously crafted and harmoniously integrated to forge a robust marketing strategy that avoids common pitfalls and promotes sustained business success. It is through this comprehensive approach that Companies/Brands can transform challenges into opportunities, capitalizing on their unique position in the market to attract and retain cost-conscious consumers.

By adhering to these foundational marketing principles, Companies/Brands can enhance their market presence, increase sales, and avoid the dreaded discount bin. Furthermore, in an era where consumer loyalty is hard-won, the consistent application of these principles ensures that Companies/Brands do not just survive but thrive. Businesses that proactively address these areas with creativity and precision are the ones that build lasting relationships with their customers, turning occasional shoppers into lifelong patrons.