Retail Communication Mix

Questions

■ What can retailers build brand equity for their stores and their private-label merchandise?

■ How are retailers using new approaches to communicate with their customers?

■ What are the strengths and weaknesses of the different methods for communicating with 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?■ How can retailers use the different elements in a communication mix

to alter customers’ decision-making processes?

Objectives of Communication Program

Long-term• Build Brand (retailer’s name) Image• Create Customer Loyalty

Short-term • Increase Traffic • Increase Sales

Brands

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

Value of Brand Image

Value to Retailers (Brand Equity)■ Attract Customers■ Build Loyalty■ Higher Prices Leading to

Higher Gross Margin■ Reduced Promotional Expenses■ Facilitates Entry into New Markets

Value to Customers■ Promises Consistent Quality■ Simplifies Buying Process■ Reduces Time and Effort

Searching for Information About Merchandise/Retailer

Building Brand Equity

Brand Equity

Create a High Level of Brand Awareness

Create Emotional Connections

Consistent Reinforceme

nt

DevelopFavorableAssociations

Benefits of High Brand Awareness

Aided RecallTop Mind

Awareness

Stimulates Visits

to Retailer

Creating Brand Awareness

Top-of-mindBrand

Awareness

Memorable Name

Repeated Exposure

Symbols Event Sponsors

hip

Retailers Develop Associations with their Brand Name

Fashionable Products – Lifestyle, Pantaloons

Price/quality – Big Bazaar, KB Fair Price

Brand associations: anything linked to or connected with the brand name in a

consumer’s memory

Brand name is a set of associations that are usually organized around some meaningful

themes

McDonald’s Brand Associations

McDonald’s

Aalo Tikki

Burger

Reasonably Price

Fast Food

French Fries

Clean

Ronald McDona

ld

Consistent Reinforcement

The retailer’s brand image is developed and maintained through the retailer’s communication mix

Retail Communication Mix

Consistent Reinforcement through Integrated Marketing Communication Program

Integrated Marketing Communication Program

■ A program that integrates all of the communication elements to deliver a comprehensive, consistent message.

■ Providing a consistent image can be challenging for multichannel retailers – Need to consider the needs of all channels early in the planning of its communication program.

Integrated Marketing Communications

Present a Consistent Brand Image through all Communications with Customers

• Store Design

• Advertising

• Web Site

• Magalog (combination of a magazine and a catalogue)

Brand Extensions

■ Coke Coke to Diet Coke

■ Dove Dove cream bar to Dove shampoo

■ Parle Parle G to Parle G Atta

Communication Methods

Paid Impersonal Communications

■ Advertising

■ Sales promotions – Special events, In-store demonstrations

■ Games and contests

■ Coupons

■ Store atmosphere

■ Website

■ Community building

Store Atmosphere

The combination of the store’s physical characteristics (architecture, layout, signs and displays, colors, lighting, temperature, sounds, smells) together create an image in the customers’ mind

Mediacart

A shopping cart that delivers point-of-decision advertising

■ Informs the customer about special deals as the customer passes them in the aisle

■ Each video screen is embedded with an chip that interacts with chips installed on store shelves

■ Records shopping habits, how shoppers travel through the store, etc.

Community Building

Retailers’ Community Building Websites

It offer opportunities for customers with similar interests to learn about products and services that support their hobbies and share information with others

Paid Personal Communication

■ Retail salespeople are primary vehicle for providing paid personal communication to customers.

Personal selling – salespeople satisfy needs through face to face exchange of information

■ Email – retailers inform customers of new merchandise, receipt of order or when order has been shipped

■ Direct Mail■ M-Commerce (mobile commerce)

Unpaid Impersonal Communication

Publicity is communication through significant unpaid presentations about the retailer, usually a news story, in impersonal media. Effective medium for creating awareness, interest and credibility.

Little controlPublicity can be highly credible if it is well thought – out. It is extremely cheap also. A feature in a paper, magazine sometimes seem more credible to readers than ads BUT it is restricted by editorial decisions by the media source used• Newspaper• TV coverage

PR

The Gap, Emporio Armani, and Apple are among several retailers selling red products, a portion of the proceeds go to Product RED, a charity to wipe out AIDS in Africa

Unpaid Personal Communication

■ Word-of-mouth Can be favorable Can be detrimental Effective medium for creating interest and desire for

any brand and it is available at no very cheap cost.

■ Social Shopping A communication strategy in which consumers use

Internet to engage in the shopping process by exchanging preferences, thoughts, and opinions

Product/service reviews

Comparison of Communication Methods

Steps in Developing a Retail Communication Program

Planning the Retail Communication Program

Setting Objectives

■ Communication objectives:

Specific goals related to the retail communication mix’s effect on the customer’s decision-making process

Long-term: ex) creating or altering a retailer’s brand image

Short-term: ex) increasing store traffic

Retail and Vendor Communication Programs

Vendor

• Long-term objectives

• Product focused

• National

• Specific product

Retailer

• Short-term objectives

• Category focused

• Local

• Assortment of

merchandise

Setting the Communication Budget

• Marginal analysis

• Objective and task

• Rules of thumb

Affordable

Percent of sales

Competitive parity

Advertising Sales

Sales Advertising

Setting the Communication Budget

■ Marginal Analysis Method

Based on the economic principle that firms should increase communication expenditures as long as each additional dollar spent generates more than a dollar of additional contribution

Very hard to use because managers don’t know the relationship between communication expenses and sales

Objective-and-Task Method

■ Determines the budget required to undertake specific tasks to accomplish communication objectives

Illustration of Objective and Task Method for Setting a Communication Budget

Financial Implications of Increasing the Communication Budget

Rule of Thumb Methods

Affordable Budgeting Method – sets communication budget by determining what money is available after operating costs and profits are budgeted.

Drawback: The affordable method assumes that the communication expenses don’t stimulate sales and profits.

Percentage of Sales Method – communication budget is set as a fixed percentage of forecasted sales.

Drawback: This method assumes the same percentage used in the past, or by competitors, is still appropriate for the retailer.

Rule of Thumb Methods

Competitive Parity Method – this communication budget is set so that the retailer’s share of communication expenses equals its share of the market.

Drawback: This method (like the others) does not allow the retailer to exploit the unique opportunities or problems they confront in a market.

Allocation of the Promotional Budget

■ The retailer decides how much of its budget to allocate to specific communication elements, merchandise categories, geographic regions, or long- and short-term objectives

■ Budget allocation decision is more important budget amount decision

High-assay principle: The retailer allocate the budget to areas that will yield the greatest return

Thank You, All!