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Chapter 15 - Retail Communication Mix
15-1
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
Chapter 15 - Retail Communication Mix
15-3
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
15-4
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
Chapter 15 - Retail Communication Mix
15-5
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.
Chapter 15 - Retail Communication Mix
15-6
• 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?
Chapter 15 - Retail Communication Mix
15-7
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
Chapter 15 - Retail Communication Mix
15-8
• 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
15-9
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
15-10
• 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
15-11
• The four steps in developing and
implementing the retail promotion program
See PPT 15-20
Review steps in developing a 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
Chapter 15 - Retail Communication Mix
15-12
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
Chapter 15 - Retail Communication Mix
15-13
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
