Final answer:
Before determining their retail marketing mix, retailers need to understand their target market and customer preferences to inform their product differentiation strategy. Differentiation might involve the product's physical attributes, location, intangible benefits, and perceived value shaped by advertising.
Step-by-step explanation:
Before making decisions regarding their retail marketing mix, retailers must first understand their target market and the needs and wants of their customers. This understanding will inform their strategy for product differentiation, which is any action that firms take to make consumers think their products are different from their competitors'. Differentiation can happen through various means such as the physical aspects of the product, the location from which it is sold, intangible aspects of the product such as guarantees or reputations for quality, and the perceptions of the product influenced by advertising and consumer habits.
For instance, a unique storefront display can manipulate a shopper's emotions, contributing to the perceived value of a product. Moreover, economic decisions both by suppliers and consumers are informed by the cost of production and the individual's willingness to pay, which also plays into how a product is positioned within the market.