1 Chapter 17 Retail and Business-to-Business Advertising

2 Chapter Learning Objectives Discuss retail advertising fundamentals. Summarize the media options for retailers. Explain business-to-business advertising objectives. Identify the various media used in business advertising.

3 Retail Advertising Used by merchants to sell products and service directly to consumers. Accounts for nearly half of all the money spent on advertising. Retailers sell through a physical facility.

4 Sell a Variety of Products Encourage Store Traffic Deliver Sales Messages Store Image Establish a Brand Local Retail Advertising Retail Advertising is Often Called Local Advertising Because the Target Market Often is Local. Retail Advertising Should Perform Several Functions:

5 Retail Advertising is Usually Targeted at People Living In the Store’s Local Community. Retail Advertising is Usually Targeted at People Living In the Store’s Local Community. Consumer Brand Advertising Supports Only the Sponsor’s Brands; Retail Advertising May Support Several Brands. Consumer Brand Advertising Supports Only the Sponsor’s Brands; Retail Advertising May Support Several Brands. Retail Advertising Directed at the Local Community Has An Inherent Urgency. Retail Advertising Directed at the Local Community Has An Inherent Urgency. Local Retail Advertising is Customized to Reflect the Local Store. Local Retail Advertising is Customized to Reflect the Local Store. Differences Between Local Retailing & National Brand Advertising

6 To Build and Maintain Store Traffic, a Retailer Must Meet Four Objectives: Build Store Awareness Convince Consumers That the Store’s Items Satisfy Needs Convince Consumers That the Store’s Items Satisfy Needs Create Consumer Desire to Shop At This Store Create Consumer Desire to Shop At This Store Create Consumer Understanding

7 Station Break Go to the Benetton Web site at Examine how the company deals with controversial and culturally sensitive issues. How does this help them sell clothing? If you were a local distributor (retail store) that carried Benetton products, how would the Benetton ads or policies affect your sales? Use this company as an illustration of how truly different national product advertisers can be from their local counterparts. Discuss.

8 Structure of Co-op Funds Structure of Co-op Funds Cooperative Advertising Cooperative Advertising Manufacturer Reimburses Retailer for Ad Expenses Manufacturer Reimburses Retailer for Ad Expenses Based on a % of Sales To Retailer Based on a % of Sales To Retailer Sometimes Called Ad Allowances Sometimes Called Ad Allowances Suppliers of Co-op Can Fund Activity in Two Ways Suppliers of Co-op Can Fund Activity in Two Ways Varies From Month to Month Varies From Month to Month Accrual Fund Accrual Fund Cooperative Advertising

9 Nonstore Retailing Occurs When the Exchange Between the Manufacturer or Retailer and the Consumer Takes Place Outside the Traditional Retail Store. Reasons For Growth: Consumers Are No Longer Inclined to Spend Hours Shopping Consumers Are No Longer Inclined to Spend Hours Shopping Improvements in Quality and Selection Improvements in Warranties Nonstore Retailing Improvements in Mailing Lists That Target Consumers Improvements in Mailing Lists That Target Consumers

10 Rapidly Growing Industry Rapidly Growing Industry Purchase: Computer Products, Travel, Entertainment, Apparel, Gifts, etc. Purchase: Computer Products, Travel, Entertainment, Apparel, Gifts, etc. E-Commerce is the Selling of Goods and Services (Commerce) Through the Internet. Online Retailing and E-Commerce May Use Other Media to Advertise Their Products or Services. May Use Other Media to Advertise Their Products or Services. Attractive to Those Who Value Convenience and Don’t Have Much Time. Attractive to Those Who Value Convenience and Don’t Have Much Time.

11 Institutional and Product Retail Advertising Institutional Retail Sells the retail store as an enjoyable place to shop. Helps a store to establish its image. Loyalty programs fall under this category. Product Retail Presents specific merchandise for sale and urges customers to come to the store immediately to buy. Creates a store’s reputation through its merchandise.

12 Station Break Go to the following Web sites: and Which site seems to offer the most in the way of information and incentives to purchase? Are sales advertised? If so, on which sites? Which sites seem to match the image of the retail themselves? Discuss how your judgments were made. What improvements could be made to these sites to make them more competitive and attractive?

13 Trends Affecting Retail Advertising Consolidation Increased Use of Free-Standing Inserts Consolidation Increased Use of Free-Standing Inserts Demographic Time Stress, Aging Population, Geomarketing, Market Fragmentation Demographic Time Stress, Aging Population, Geomarketing, Market Fragmentation Heightened Competition Markets Will Continue to Decrease in Size as Competitors Segment Them. Heightened Competition Markets Will Continue to Decrease in Size as Competitors Segment Them.

14 Image or Price Price is a Factor In Image. Some Products Are Difficult to Differentiate (gas). Price Can Help Consumers to Comparison Shop. Image or Price Price is a Factor In Image. Some Products Are Difficult to Differentiate (gas). Price Can Help Consumers to Comparison Shop. Executing Retail Ads Main Objective is To Attract Customers. Mention Store Location & Phone. May Save Money By Using Stock Artwork. Executing Retail Ads Main Objective is To Attract Customers. Mention Store Location & Phone. May Save Money By Using Stock Artwork. Who Works on The Creative? In-house Staff Media Ad Agencies Freelancers Who Works on The Creative? In-house Staff Media Ad Agencies Freelancers Creating the Retail Ad

15 Buying and Selling Local Media Most rapidly changing area in retail advertising is the buying and selling of local media time and space. Media competition has increased significantly. Budgets are tighter. All large markets have at least one local magazine that offers high-quality, four-color ads. New selling tactics are called for. Local Retail Media Strategy Local retailers generally prefer reach over frequency. Successful retailers use media that minimize waste, such as direct mail.

16 Magazines Direct Response Online Media Shoppers & Preprints Shoppers & Preprints Directories Broadcast Media Specialty Media Alternatives Newspapers Local Retailers Are Interested Only in Local Media and Usually Select One of the Following:

17 Organizations Buy Products or Services in Business Markets. Advertising Directed at People in Business Who Buy or Specify Products for Business Use. Business-to-Business Advertising & Marketing Organizations Buy Goods or Services to Support (1) Production Requirements, (2) Business Needs.

18 Types of Business Markets and Products Purchased (Fig. 17.1)

19 Market Concentration Market Concentration Decision Makers Decision Makers Business-to-Business Advertising Differs From the Creation of Consumer Advertising Business-to-Business Advertising Differs From the Creation of Consumer Advertising Strategic Orientation Strategic Orientation Business Versus Consumer Marketing

20 Purchasing Objectives

21 Creating Company Awareness Helps to Contact Those That Can’t Be Reached by Salespeople Supporting Distributors and Resellers Helps to Answer Common Questions Business-to-Business Advertising Objectives Increasing Overall Selling Efficiency Also Helps to:

22 Select the Strongest Benefit Dramatize the Most Important Benefit Visual Should be Relevant Layout Should Have a Sense of Balance and Flow Offer Should be Clear Creating Business-to- Business Ads

23 Business-to-Business Advertising Media Media Choices Available for Business- to- Business Advertisers Business & Trade Publications Directory Advertising Direct Marketing Consumer Media The Web Competitive Advantage

24 Does Business Advertising Sell? Many question the effectiveness of business-to- business advertising. Studies show that: This form of advertising does create sales. Increased advertising results in increased sales. Paid to advertise to both dealers and end users when the product was sold through dealers. Increased frequency leads to higher sales and profits. It takes 4-6 months to see gains. Use of color made a dramatic difference. Ad campaign is often effective long after it ends. Awareness and attitudes are affected favorably.

25 More Accountability Is Required Ad Programs and Staff Are Being Pared Down Trends in Business-to- Business Advertising Advertising Must Support Customer Sales And Choices Becoming More People Oriented