Retail Communication Mix Chapter 16 Retail Communication Mix McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Questions What is a brand? How can retailers build brand equity for their stores and merchandise? What are the primary methods retailers use to communicate with their customers? Why do retailers need to have an integrated marketing communication program? What steps are involved in developing a communication program? How do retailers establish a communication budget?

What is the Purpose of the Retailer’s Communication program? Informs customers about the retailer as well the merchandise and services it offers Plays a role in developing customer loyalty

Effects of the Communication Program Long-term Build image (brand equity) of the retailer Differentiate from competition Short-term Increase Traffic Increase Sales

What is a Brand? Distinguishing name or symbol, such as a logo, that identifies the products or services offered by a seller and differentiates those products and services from those offered by competitors The McGraw-Hill Companies, Inc./John Flournoy, photographer The McGraw-Hill Companies, Inc./Bob Coyle, photographer

Why are Brands Valuable? Value to Retailers Attract Customers Build Loyalty Higher Prices Leading to Higher Gross Margin Value to Customers Simplifies Buying Process Reduces Time and Effort Searching for Information About Merchandise/Retailer Provides social and psychological benefits

How to Build Strong Retail Brands Build brand awareness The ability of a potential customer to recognize or recall the retailer’s brand Desire top of mind awareness Build positive brand associations Anything linked to or connected with the brand name in a consumers’ memory Consistently reinforce Consistently communicate the same message to customers over time and across all elements of the communication program and the retail mix

McDonald’s Brand Associations Golden Arches Fast Food Big Mac McDonald’s French Fries Ronald McDonald Clean

Wal-Mart Associations

Integrated Marketing Communications A program that integrates all of the communication elements to deliver a comprehensive, consistent message

Integrated Marketing Communications Present a Consistent Brand Image through all Communications with Customers Sales Promotion Advertising Web Site Personal Selling Publicity The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Communication Methods Advertising Sales Promotion Store Web Site Personal Selling E-mail program M-Commerce Direct Mail Publicity Special Events and Sponsorships Specialty Items and Collateral Materials

Advertising Any paid form of nonpersonal communication through the mass media about a good, service, or idea by an identified sponsor. Examples – newspaper, magazine, radio , TV, billboards, yellow pages, internet, and in store advertising

Sales Promotion Short-term incentives used to encourage customers to visit a store or purchase merchandise during a specific period of time. Examples - coupons, contests, sweepstakes, premiums, free samples, in store demonstrations Boxes of KrustyO’s cereal at a New York 7-Eleven stores, temporarily converted into a Kwik-E Mart, to promote the Simpson Movie. Jack Star/PhotoLink/Getty Images

Publicity News carried by the media about a firm at no charge to the organization for media space. Newspaper article TV coverage Macy’s Thanksgiving Day Parade

Direct Mail Refers to any brochure, catalog, advertisement, or other printed material delivered directly to the consumer through the mail Use of data collected through POS terminals Use of list brokers

Personal Selling Direct face to face communication between sellers and potential buyers

Steps in Developing a Retail Communication Program Establish Communication Objectives Determine the Communication Budget Determine Communication Strategies and Tactics Implement and Evaluate the Plan

Setting Objectives Definition Specific goals related to the retail communication mix’s effect on the customer’s decision-making process. Examples Create awareness of store Create knowledge of store offerings Correct misconceptions, improve customer attitudes Remind customers of store Criteria Clearly defined target market Degree of changed desired Time frame

Communication Objectives & Stages in the Consumers Decision-Making Process

Communication Budget Methods Percent of sales Affordable Competitive Parity Objective and Task

Objective and Task Method Establish Objectives (create awareness of new product among 20 percent of target market) Establish Objectives (create awareness of new product among 20 percent of target market) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.) Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.) Relation to text This slide relates to material on pp. 224-225 and Figure 7-19 of the text. Summary Overview This slide outlines the three steps of the objective and task method of budgeting. This method reflects a bottom-up approach to budgeting and involves the following steps: Establishing objectives – specific communication objectives to be achieved are established Determine specific tasks – determine the specific tasks needed to accomplish the communication objectives. May include advertising in various media, developing programs involving sales promotions and/or other elements of the promotional mix. Estimate costs associated with tasks – determining what it will cost to perform the specific tasks that must be performed to achieve the objectives. Monitor – performance should be monitored and evaluated in light of the budget appropriated. Reevaluate objectives – once specific objectives have been attained, monies may be better spent on new goals. Use of this slide This slide can be used to discuss the objective and task method of setting the advertising and promotion budget. The main advantage of using this approach is that the budget is driven by the objectives to be attained rather than some predetermined amount management is willing to spend. A disadvantage of this method is the difficulty in determining which tasks will be required and the costs associated with each. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin