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16-1
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?
16-2
Objectives of Communication Program
Short-termIncrease TrafficIncrease Sales
Long-termBuild Brand (retailer’s name) ImageCreate Customer Loyalty
16-3
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
The McGraw-Hill Companies, Inc./Bob Coyle, photographerThe McGraw-Hill Companies, Inc./John Flournoy, photographer
16-4
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
Gap GapKids
Value to Customers■ Promises Consistent
Quality■ Simplifies Buying Process■ Reduces Time and Effort
Searching for Information About Merchandise/Retailer
16-5
Building Brand Equity
Brand Equity
Create a High Level of Brand Awareness
Create Emotional Connections
Consistent Reinforceme
nt
DevelopFavorableAssociations
16-6
The McGraw-Hill Companies, Inc./Lars Niki, photographer
Tar-Zhay
16-7
16-8
Apple
16-9
Benefits of High Brand Awareness
Aided Recall
Top Mind Awareness
Stimulates Visits to Retailer
16-10
Creating Brand Awareness
Top-of-mindBrand Awareness
Memorable
Name
Repeated Exposure
SymbolsEvent
Sponsorship
Best Buy
Home Depot Starbuck’s
Macy’s
16-11
Retailers Develop Associations with their Brand Name
Merchandise Category – Office Depot – office supplies
Price/quality – Neiman Marcus –, high fashion merchandise
Specific attribute or benefit – 7-Eleven – convenience
Lifestyle or activity – Electronic Boutique – computer games
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
16-12
McDonald’s Brand Associations
McDonald’s
Big Mac
Golden ArchesFast
Food
French Fries
Clean
Ronald McDonald
16-13
L.L. Bean
16-14
L.L. Bean’s Brand Associations
L.L. Bean
Friendly
New England
Practical
Expertise
Outdoors
Honest
16-15
Wal-Mart Associations
16-16
Target Associations
16-17
Consistent Reinforcement
The retailer’s brand image is developed and maintained through the retailer’s communication mix
Retail Communication Mix
16-18
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
16-19
Integrated Marketing Communications
Present a Consistent Brand Image through all Communications with Customers
• Store Design
• Advertising
• Web Site
• Magalog
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
16-20
Brand Extensions
■ Gap GapKids and Old Navy■ Talbots Talbuts Mens■ Sears Sears Auto Centers and the Great Indoors■ Pottery Barn Pottery Barn Kids
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
16-21
Extending Brand Name to a New Concept
Pluses■ Develop Awareness and
Image Quickly■ Less Costs Needed to
Promote Extension
Minuses■ Associations Might Not
Be Compatible with Extension
Limited Victoria’s Secret
Abercrombie & Fitch Hollister
16-22
Communication Methods
16-23
Paid Impersonal Communications
■ Advertising■ Sales promotions – Special events, In-store demonstrations■ Games, sweepstakes and contests■ Coupons■ Store atmosphere■ Website■ Community building
Jack Star/PhotoLink/Getty Images
Boxes of KrustyO’s cereal at a New York 7-Eleven stores, temporarily converted into a
Kwik-E Mart, to promote the Simpson Movie.
16-24
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
16-25
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 RFID chip that interacts with chips installed on store shelves
■ Records shopping habits, dwell times, how shoppers travel through the store
16-26
Community Building
Retailers’ Community Building Websites
offer opportunities for customers with similar interests to learn about products and services that support their hobbies and share information with others
16-27
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)
16-28
Unpaid Impersonal Communication
Publicity is communication through significant unpaid presentations about the retailer, usually a news story, in impersonal media.
• Newspaper• TV coverage• Macy’s Thanksgiving Day Parade
16-29
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
16-30
Unpaid Personal Communication
■ Word-of-mouth Can be favorable Can be detrimental
■ 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
16-31
Social Shopping
16-32
Comparison of Communication Methods
16-33
Steps in Developing a Retail Communication Program
Planning the Retail Communication Program
16-34
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
16-35
Communication Objectives & Stages in the Consumers Decision-Making Process
16-36
Retail and Vendor Communication Programs
Vendor
• Long-term
objectives
• Product
focused
• National
• Specific
product
Retailer
• Short-term
objectives
• Category
focused
• Local
• Assortment of
merchandise
16-37
Setting the Communication Budget
• Marginal analysis
• Objective and task
• Rules of thumb
Affordable
Percent of sales
Competitive parity
Advertising
Sales
Sales
Advertising
16-38
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
16-39
Marginal Analysis for Setting Communication Budget
16-40
Objective-and-Task Method
■ Determines the budget required to undertake specific tasks to accomplish communication objectives
16-41
Illustration of Objective and Task Method for Setting a Communication Budget
16-42
Financial Implications of Increasing the Communication Budget
16-43
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.
16-44
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.
16-45
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