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Store operation: create a economies of scope to obtain market revenue

store operation: create a economies of scope to obtain market revenue

September 10, 2014

[China paint information] in the choice of store operation strategy, there is a model for economies of scope, that is, through the high-frequency store layout or brand visibility frequency in the region, to achieve the regional influence that the store industry is a potential substitute for cancellous bone, Rapid manufacturing of influence within a specific range is called economies of scope. In the store model, we advocate the strategy of economies of scope

the advantage of economies of scope is to maximize the attention, increase the market credibility through the frequent appearance of brands (stores), quickly form brand influence in a certain region, and shape consumer confidence, so as to achieve the expected market benefits. In practice, there are generally four modes that are feasible. This paper will elaborate the significance and operation methods of economies of scope from four perspectives

economies of scope in the business district

we all encounter this situation when shopping. In a business district, it is difficult for consumers to immediately shop in a store when they consume in the business district. This is because there are many stores of various brands in the business district, which cannot make consumers have a deep impression on a brand; If a certain brand store has multiple stores in the business district, the stores with high frequency will immediately stand out from the business district and become the impression brand in the business district. Consumers have a high transaction rate for the same store with high frequency in the regional business district

the scope economy operation mode in the business district is: take the first store built in the region as the center of the self owned business district, gradually extend to the whole business district [as shown in the figure below], and form a scope effect in the region. The specific operation mode is to successively open stores according to the composition of the business district, so as to increase the influence of stores in the business district

[example] isibe shoe boutique is a store that mainly focuses on shoe retail, supplemented by leather goods such as bags. This year, isibe has adopted the strategy of building a scope economy. Taking Qingdao market as an example, it has quickly opened stores in the same business district through acquisition, transfer and other forms. The number of stores opened in the same business district has reached as many as five. It has jumped from a single store brand to a well-known leather goods sales chain brand, and the interception rate of terminal orders has increased significantly, Brand premium and scope influence are also amplified synchronously

the formation of economies of scope in the business district has the following benefits:

1. Improving the image ratio can reduce advertising costs. Multiple stores exist in the same business district at the same time, and the same image repeatedly impacts on consumers' vision, which will virtually increase the role of advertising and increase the transaction interception rate of end customers

2. Save labor costs. Stores in the same business district can maximize the use of manpower allocation, and the supervision of managers will save a lot of costs

3. Give play to the advantages of distribution. 8. The digital display spring testing machine has two-level limit protection of program control and machinery, with low management cost. The inventory and distribution are in the same area, which greatly reduces the management cost

business district economies of scope formed through monopoly

we have repeatedly mentioned that low-cost sales is an effective means for business competition to create economies of scope, which can quickly accumulate store popularity, pave the way for stores to survive, squeeze peers operating in the same business district, effectively kill competitors in the same business district, and finally obtain monopoly in the business district to form economies of scope, Then there is a planned premium to make profits. This method can achieve a more intuitive effect in supermarkets, cosmetics, some clothing and beverage wholesale

scope economy of diversified extension of brand formats

another kind of scope economy comes from the extension of diversified brand formats, that is, using the same brand to operate multiple formats in a certain region. This way can maximize the recognition of consumers in the region. After all, as ordinary consumers, they are more concerned about whether the brand is a big brand. If diversified brand extensions are carried out in the region, It will increase the recognition of the market

the premise for the extension of diversified brands is that the number of stores of the existing single brand within a radius of 10 kilometers (or in two different business districts) has reached more than 10. We suggest that the layout of stores at the beginning should try not to adopt a jumping style, so as not to effectively form brand cohesion

most well-known enterprises will carry out the diversified extension of business forms. Although the brand positioning pays attention to the single positioning of the brand, in the actual operation, the diversified extension of business forms of well-known brands is the best mode to create a scope economy. The new business forms can be quickly accepted by the market, eliminating a lot of front-end costs, and the survival rate is much higher than the operation of new brands

[example] Haier is the leader of white household appliances. From a professional point of view, its diversified business forms weaken its professional brand value. However, if we take the country as a unit, with Haier's global popularity, we can take China as one of the business regions, and carry out diversified business forms in this region, which meets the requirements of economies of scope. Therefore, we can see that all real estate, logistics Supermarkets and others have survived well, and consumers have a high degree of trust in their brands

similarly, in addition to the first-line big brands, all brands with certain store influence in a local market can carry out diversified business type extension to complete the scope economy. The low price mode and strategic loss mentioned in the previous paragraph can quickly layout the stores. When the store popularity reaches a certain balance point, it is also the strategic direction that store operators should know to quickly complete the scope economy and drive profits through diversified business types

licensing to create economies of scope

the last mode of creating economies of scope is relatively simple, which is suitable for investors who do not have a strong capital chain in the early stage. The common way is door image advertising. After the opening of the store, the brand name of the store will be placed on the store advertisement of the store of other formats, that is, we often say the door advertising cooperation. Investor a, through the investment of part of the capital, made investor a agree to use part of the location of its store advertisement for the brand advertisement of customer A. This mode is a flop mode, which is widely seen in the FMCG industry

Xiugou is a cosmetics shopping chain platform. When it was first established, it carried out image promotion through the licensing mode. Xiugou enterprises reorganized a large number of stores of various formats, and put the ladybug brand logo of Xiugou on their store signs. For a time, the ladybug trademark of Xiugou can be seen all over the city, and the Commission of brand popularity has also successfully formed a economies of scope. Economies of scope have also led to the chain expansion of embroidery purchase enterprises, and the increase of franchise stores has also led to the emergence of private brands that can obtain the deformation and profit of samples

the licensing mode is used by many enterprises, but many enterprises don't know the name of this mode. The licensing mode is simple to operate, but part of the capital budget can be invested in the cooperation between store and bidding. The licensing mode is one of the simple ways to create common faults 2: economy

economies of scope is a development strategy that can be effectively implemented in store management. Investors can make good use of economies of scope to master the breakeven point. According to the layout of development planning nodes, on the one hand, they can create well-known store brands, on the other hand, they can obtain more profit sources. Economies of scope can make an unknown store rapidly develop into a chain brand, Building economies of scope has undoubtedly become an important strategic choice

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