• Under the competitive parity method, the
communication budget is set so that the retailer’s
share of communication expenses equals its share of
market.
d. Relative Advantages and Problems with Rule-of-Thumb
Methods
• When retailers use these methods, they typically cut
“unnecessary” communication expenses if sales fall
below the forecast rather than increasing
communication expenses to increase sales.
• None of these methods allow retailers to exploit the
unique opportunities or problems they confront in the
market.
C. Allocate the Promotional Budget
• After determining the size of the communication 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.
• Allocation decisions, like budget-setting decisions, should
use the principles of marginal analysis. The retailer should
allocate the budget to areas that will yield the greatest
return. This principle for allocating a budget is sometimes
referred to as the high-assay principle.
See PPT 14–30
D. Implement and Evaluate Communication Programs—Three
Illustrations
• The final stage in developing a retail communication
program is its implementation and evaluation.
1. Advertising Campaign
• A specialty import cheese shop decided to concentrate its
limited budget on a specific segment and use very creative
copy and distinctive artwork in its advertising.
Review the communication
program developed by the cheese
shop in the text and how the
retailer evaluated the
effectiveness of the campaign.
2. Facebook Marketing Campaign
• To develop and evaluate a Facebook campaign, the
following steps would take place: (1) establish objectives
(who is the shop targeting?), (2) develop the budget
(Facebook allows advertisers to set a daily budget), (3)
How is developing a Facebook
campaign similar to developing a
traditional advertising campaign?
How is it different?
3. Google AdWords Campaign
• Google AdWords is a search engine marketing tool offered
by Google that allows advertisers to show up in the ad
section of the search results page based on the keywords
potential customers use.
V. Summary
• In the past decade or so, retailers have embraced several
new media elements. The online elements include
websites, e-mail, mobile, and social media. Examples of the
social media elements embraced by retailers are YouTube,
Facebook, blogs, and Twitter.
• Retailers communicate with customers using a variety of
traditional media elements. These include mass media
advertising, sales promotions, in-store marketing/design
elements, personal selling, and public relations.
ANSWERS TO SELECTED “GET OUT AND DO ITS”
2. Go to the home page for Interbrand (http://interbrand.com/best-brands/best-global-
brands/2016/) and select the Top 100 Global Brands. On the basis of this ranking, list the top
20 global retail brands. In two or three paragraphs, describe what makes a strong retail
brand. How were brand equity and financial performance used to measure brand value for
these retailers?
3. Retailers and manufacturers deliver coupons through the Internet in addition to delivering
them by mail or as inserts. Go to retailmenot.com for coupons offered over the Internet. How
does this coupon distribution system compare with the other two distribution systems?
Students should consider push vs. pull communication; reaching a wide target audience;
4. Trader Joe’s is a gourmet grocery store offering items such as health foods, organic
produce, and nutritional supplements. Go to www.traderjoes.com and see how the firm uses
its Internet site to promote its retail stores and merchandise. Why does this retailer include
recipes and a seasonal guide on its website? Does the information provided on the web page
reinforce the store’s upscale grocery image? Explain why or why not.
The website serves as a newsletter to increase store awareness, describe new products
and seasonal merchandise, and provide health information. All of this information is
5. Go to the social media site for a retailer that you have shopped at during the last few
weeks. How was social media used as an element in the retailer’s communication program?
What audience is being reached with social media? Is the social media message consistent or
inconsistent with other communication elements? Is this a strong or weak strategy? Please
explain.
Students’ responses here will vary. The population using social medial is growing, but
they do need access to recent technology. Some will say that social media should be
6. Go to the home page for Target’s Pressroom at http://corporate.target.com. How does this
retailer use public relations to communicate with investors and customers? Is this an
effective communication tool for this retailer? Provide support for your response.
Target includes information about new stores, corporate information, merchandise,
7. Go to www.facebook.com/business to see how to build pages, ads, and sponsored stories,
as well as how to take advantage of mobile applications. What are some of the steps that
Facebook suggests a person consider when marketing using ads?
Facebook works with companies to help them build successful campaigns through its
platform. Facebook uses a four-step strategy to help businesses achieve success. The steps
include:
ANSWERS TO DISCUSSION QUESTIONS AND PROBLEMS
1. What are the positive and negative aspects of direct marketing from the customer’s
perspective?
Positives
– Can be delivered many ways
– Can identify and track consumers and their responses
– Understand customers’ purchases better
2. What types of sales promotions have been successful with you as a consumer? Which ones
have not been successful? Explain your responses.
Students’ answers will vary. Most students will likely not respond to traditional ROP
3. What factors should be considered in dividing up the advertising budget among a store’s
different merchandise areas? Which of the following should receive the highest
advertising budget: staple, fashion, or seasonal merchandise? Why?
The basic principle that should be considered in allocating the advertising budget across
merchandise categories is the marginal return — the greatest bang per buck. The question
that needs to be answered is: Which category will generate the most sales and profits from
an additional dollar of advertising?
4. Outline some elements in a communication program that can be used to achieve the
following objectives:
(a) Increase store loyalty by 20 percent.
(b) Build awareness of the store by 10 percent.
(c) Develop an image as a low-price retailer.
How would you determine whether the communication program met each of these
objectives?
Objective
Approach for Achieving
Objective
Increase store loyalty
by 20%.
Frequent-shopper program
where customers earn
points for making more
purchases.
Build awareness of the
store by 10%.
Install a large sign in front
of store.
Hold an event that
generates publicity.
Radio or billboard
advertising emphasizing
the name and location of
the store.
Use social media and
guerilla marketing
strategies to generate
excitement about the
brand.
Develop an image as a
low-price retailer.
Undertake image
advertising on TV or in
magazines .
5. A retailer plans to open a new store near a university. It will specialize in collegiate
merchandise such as apparel, accessories, and school supplies. Consider the pros and cons
of each of the following media: TV, radio, city newspaper, university newspaper, local
magazine, website, blog and sponsoring an event for this retailer to capture the university
market.
While student responses will vary, some possible ideas are: The new retailer may want to
use newspapers to reach this market. Student newspapers usually have a high student
6. Why do some online retailers include editorials and customer reviews along with product
information on their websites? Explain how this may influence the consumer’s buying
behavior.
Many retailers offer websites to foster community building efforts. They offer an
opportunity for customers with similar interests to learn about products and services that
support their hobbies and share information with others. The community helps to reinforce
the retailer’s image.
7. Assume you work for a large consumer-packaged goods firm that has learned its latest line
of snack foods is selling very slowly in retail stores. Recommend a strategy for listening to
what consumers are saying on blogs, review sites, and the firm’s website. Describe how
your strategy might provide insights into consumers’ sentiments about the new product
line.
Customers are more willing to offer reviews on a product online when the context is
seemingly anonymous. This is a great opportunity for firms to learn the “real” reason why
customers are buying or not buying a product. One strategy for dealing with this is to
8. As an intern for Dunkin’ Donuts, you have been asked to develop a social media campaign
for a new glazed muffin. The objective of the campaign is to increase awareness and trial of
the new line of muffins. How would you go about putting together such a campaign?
Students’ answers will vary. There are several ways to increase awareness and trial of the
new muffin. Some suggestions include:
1) Free samples- One tried and true way of selling a new food product is to offer free
samples. This allows people to taste the product and decide if they want to buy an entire
muffin.
CONNECT ACTIVITIES FOR CHAPTER 14
Activity Title
Activity Type(s)
Topic(s)
Learning Objective(s)
Berton’s Burgers-
Rebuilding a Brand
Case Analysis
Communication
Programs to Build
Brand Images and
Customer Loyalty
14-3 List the steps
involved in
developing a
communication
program.