Marketing Chapter 15 Homework One Way Analyze The Impact Brands Consumer

Chapter 15 – Retail Communication Mix

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CHAPTER 15

RETAIL COMMUNICATION MIX

ANNOTATED OUTLINE

INSTRUCTOR NOTES

Introduction

• The communication program informs

customers about the retailer as well as the

merchandise and services it offers and plays

a role in developing repeat visits and

customer loyalty.

• Retailers frequently use communication

programs to realize the short-term objective

of increasing sales during a specified time

period. Retailers often have sales during

which some or all merchandise is priced at a

discount for a short time.

II. Methods for Communicating with

Customers/ Traditional Media Elements

See PPT 15-5

A. Paid Impersonal Communications

• Advertising, sales promotions, store

atmosphere, and websites are examples of

Ask students to describe the different paid,

personal communication they have received

from retailers. Which form of paid, personal

Chapter 15 – Retail Communication Mix

paid impersonal communications.

communication is most effective for

communicating information about a sale?

Information about the quality of

merchandising carried in the store? Why?

1. Advertising

See PPT 15-6 and 15-7

2. Sales Promotion

• Sales promotions are paid impersonal

communication activities that offer extra

value and incentives to customers to visit a

store and/or purchase merchandise during a

specific period of time.

• Some retailers use in-store demonstrations

and offer free samples of merchandise to

build excitement in the store and stimulate

purchases.

• Although sales promotions are effective at

generating short-term interest among

customers, they are not very useful for

building long-term loyalty.

See PPT 15-8 and 15-9

Ask students how they respond to sales

promotions? Do sales promotions generate

excitement? Do they expect certain retailers to

engage in more sales promotion activities than

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3. Store Atmosphere

• The store itself provides paid impersonal

communications to its customers. Store

mind.

4. Web Site

• Retailers use their websites to build their

brand image; inform customers of store

locations, special events, and the

availability of merchandise in local

stores; and sell merchandise and

services.

5. Community Building

• Many retailers offer Web sites devoted

B. Paid Personal Communications

• Paid forms of personal communication are

growing as new technologies emerge. All of

the personal communication techniques

described below can be tailored to

individual customers through face-to-face

exchange or CRM systems.

1. Retail Salespeople

Communicating through salespeople is much

more expensive than communicating through

Chapter 15 – Retail Communication Mix

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face-to-face exchanges of information.

2. Email

• E-mail is another paid personal

communication vehicle that sends

See PPT 15-14

Compare Email communication with Direct Mail.

3. Direct Mail

• Direct mail refers to any brochure,

catalog, advertisement, or other printed

material delivered directly to the

consumer.

• Although relatively expensive on a per

customer basis because of printing and

mail costs, along with a relatively low

response rate, directly mail is

extensively used by many retailers

because many consumers respond

favorably to these personal messages.

See PPT 15-14

4. M-Commerce

• As both technology and consumers

become more sophisticated, retailers are

See PPT 15-13

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C. Unpaid Impersonal Communications

• The primary method for getting unpaid

impersonal communication is publicity.

Ask students to describe some instances of

retailers communicating through publicity.

Publicity is cheap. Why don’t retailers rely

D. Unpaid Personal Communications

• Finally, retailers communicate with their

customers at no cost through word of

mouth (communication between people

about a retailer).

• Many retailers encourage customers to post

reviews of products they have bought or

used. Research has shown this technique to

increase customer loyalty, providing a

competitive advantage for sites that use

them.

Ask students if they have communicated with

other students about retail stores. Why did

they talk about the retailer? What did they

E. Strengths and Weaknesses of

Communication Methods

• Communications methods can be compared

in terms of control, flexibility, credibility,

and cost.

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• Retailers have very little control over the

content or timing of publicity and word-of-

mouth communications.

2. Flexibility

• Personal selling is the most flexible

communication method because salespeople

can talk with each customer, discover their

specific needs, and develop unique

presentations for them.

Ask students which form is the most flexible in

terms of tailoring the message to the specific

customer.

3. Credibility

Ask students which form of communications

4. Cost

• Publicity and word of mouth are classified

as unpaid communication methods, but

retailers do incur costs to stimulate them. .

Ask students if word-of-mouth and publicity

are really free?

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offerings and prices. Personal selling and

sales promotion are most effective at

persuading customers to purchase

II. Using Communication Programs to Develop

Brand Images and Build Customer Loyalty

• A brand is a 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 the

offerings of competitors.

See PPT 15-16

A. Value of Brand Image

• Brands provide value to both customers and

retailers.

• The value that brand image offers retailers is

referred to as brand equity. Strong brand

names can affect the customers’ decision-

making process, motivate repeat visits and

purchases, and build brand loyalty.

• In addition, strong brand names enable

retailers to charge higher prices and lower

their marketing costs.

See PPT 15-17

Ask students how brands help them make

decisions about products and retailers. One way

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• A strong brand image enables retailers to

increase their margins. When retailers have

high customer loyalty, they can engage in

B. Building Brand Equity

• The activities that a retailer needs to

undertake to build the brand equity for its

firm or its private-label merchandise are (1)

create a high level of brand awareness, (2)

develop favorable associations with the

brand name, and (3) consistently reinforce

the image of the brand.

See PPT 15-18

1. Brand Awareness

• Brand awareness is the ability of a

potential customer to recognize or recall

• Aided recall is when consumers indicate

they know the brand when the name is

presented to them.

See PPT 15-19

For a hypothetical positioning diagram for

Chapter 15 – Retail Communication Mix

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customers through advertising, locations,

and sponsorships; and using memorable

symbols.

associations evoked by each retailer.

2. Associations

• Brand associations are anything linked

to or connected with the brand name in a

consumers’ memory.

3. Consistent Reinforcement

• The retailer’s brand image is developed

and maintained through the retailer’s

communication program as well as other

elements of the communication mix,

such as merchandise assortment and

pricing, the design of its stores and

website, and the customer service it

offers.

See PPT 15-20

Chapter 15 – Retail Communication Mix

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• Retailers need to develop an integrated

marketing communication program –

a program that integrates all of the

C. Extending the Brand Name

• Retailers can leverage their brand names

to support their growth strategies.

• There are pluses and minuses to

extending a brand name to a new

• These issues also arise as a retailer

expands internationally. Associations

with the retailer’s brands that are valued

in one country may not be valued in

another.

To illustrate the pluses and minuses of extending

III. Planning The Retail Communication

Program

Chapter 15 – Retail Communication Mix

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• The four steps in developing and

implementing the retail promotion program

See PPT 15-20

Review steps in developing a communication

retailer’s brand image. Other communication

A. Establish Objectives

• Retailers establish objectives for promoting

a program to provide (1) direction for people

implementing the program and (2) a basis

for evaluating its effectiveness.

See PPT 15-22

Discuss the goals for a communications

program.

1. Communication Objectives

• Retailers often use communications

objectives rather than sales objectives to

plan and evaluate their communication

programs.

• Even though vendors and retailers have

different goals, they frequently work

together to develop mutually beneficial

outcomes.

Review the communication objectives. Ask

students what communication problem is

suggested by this pattern. What would a

pattern look like if customers had little

knowledge of the store? If customer only

Describe the differences between the objectives

and nature of the communications programs

developed by retailers and vendors.

B. Determine The Communication Budget

• The second step in developing a retail

See PPT 15-23

Reviews the methods for setting a budget and

illustrate the difference in the logic between

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promotion program is determining a budget.

• The economically correct method for setting

the promotion budget is marginal analysis.

marginal analysis and the rules of thumb

methods.

1. Marginal Analysis Method

• Marginal analysis is based on the economic

principle that firms should increase

promotion expenditures so long as each

See PPT 15-24

Ask students where the estimates come from.

Indicate they are judgments that the manager

2. Objective-and-Task Method

• The objective-and-task method determines

the budget required to undertake specific

tasks for accomplishing communication

objectives.

See PPT 15-25

As in the marginal analysis, the relationship

between the expenditures and the objective

realized is based on the manager’s judgment.

3. Rule-of-thumb Methods

• In the previous two methods the

communication budget is set by estimating

communication activities’ effects on the

firm’s future sales or communication

objectives.

See PPT 15-27

Ask students why the marginal analysis and

objective-and-task methods are more

appropriate than the rules of thumb for

setting advertising budgets? If the rules of

thumb are not good methods, why do retailers

use them so frequently?

a. Affordable Method

• When using the affordable budgeting

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method, retailers first forecast their sales

and expenses excluding communication

expenses during the budgeting period. The

difference between the forecast sales and

expenses plus desired profit is then budgeted

for the communication mix.

b. Percentage-of-sales Method

• The percentage-of-sales method sets the

communication budget as a fixed percentage

of forecast sales. Retailers use this method

to determine the promotion budget by

forecasting sales during the budget period

and using a predetermined percentage to set

the budget.

The typical advertising expenditures for food

stores are 1.4% of sales. Ask students whether

they would expect the typical expenditures for

an everyday low pricing supermarket to be

above or below 1.4%. Why? What about a

convenience store?

c. Competitive Parity Method

• Under the competitive parity method, the

communication budget is set so that the

retailer’s share of communication expenses

equals its share of market.

C. Allocation of the Promotional Budget

• After determining the size of the

communication budget, the retailer decides

how much of its budget to allocate to

See PPT 15-30