Podcast
Questions and Answers
What are some objectives of Point-of-Purchase (POP) promotional displays?
Attract attention, remind customers of a need, link to other forms of promotion, differentiate store's image, attract more custom
What are some benefits of Integrated Marketing Communications (IMC)?
Direct marketing is used to __________ prospective customers.
contact
Billboards are always permanent painted sites.
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What are the differences between retailer and manufacturer advertising strategies?
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What is the Push Strategy in promotion?
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Sales promotions typically accompany the product being sold.
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Sales promotions are used as a temporary offer to stimulate ________.
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Match the following steps in the Relationship Marketing Scheme:
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What is loyalty defined as in attitudinal terms, incorporating consumer preferences and disposition toward brands?
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According to Hart et al. (1999), what are some reasons for setting up loyalty schemes?
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Latent Loyalty occurs when a customer will buy from a retailer on every occasion.
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Churn is the rate at which customers are lost to ____________ each year.
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Match the following loyalty scheme benefits with their descriptions:
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What is the main objective of Retail Promotion?
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What are the components of SMARRTT objectives?
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Retailers communicate to their customers through the store atmosphere, products and services, promotional literature, and __________.
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Objective-and-Task budget approach is based on the communication objectives set by the retailer.
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Match the Promotional Budget Approaches with their descriptions:
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Study Notes
Retail Communication and Promotion
- Retail Promotion is the mix of communication activities carried out by retailers to influence their target audience and increase sales, loyalty, and store visits.
- Retailers communicate with customers through various means, including store atmosphere, products, services, promotional literature, advertising, and other promotional activities.
Setting Objectives
- Promotional objectives should be specific, measurable, achievable, realistic, relevant, targeted, and timed (SMARRTT).
- Objectives should be clearly defined to ensure effective promotion and monitoring of results.
- Mix strategies can include creating awareness, informing, educating, creating purchase action, improving loyalty, and changing customer perceptions.
Promotional Budget Approaches
- There are four common approaches to setting a promotional budget:
- Objective-and-task approach: budget is determined by communication objectives.
- Affordable method: budget is based on forecasted sales and company costs.
- Percentage of sales method: budget is set as a percentage of forecasted sales.
- Competitive parity method: budget is set based on market share and competitors' expenditure.
Communication Effects
- Promotional campaigns aim to create awareness, build a positive image, and increase demand.
- Effective communication can lead to increased demand, improved brand awareness, and a more price inelastic demand curve.
Advertising
- Advertising is often described as above-the-line promotion, with other forms of promotion being termed below-the-line.
- Above-the-line (ATL) advertising focuses on mass media promotion to reach a large audience.
- Below-the-line (BTL) advertising targets a specific audience through alternative mediums.
- Types of advertising include:
- Product advertising: promotes specific products or merchandise.
- Markdown event advertising: creates excitement about special offers or sales.
- Institutional advertising: promotes the store or shopping mall as a pleasing place to shop.
- Co-operative advertising: involves joint advertising schemes between retailers and manufacturers.
- Retail promotion in relation to manufacturers: retailers focus on short-term objectives, while manufacturers focus on building brand image.
Push Versus Pull Promotion Strategy
- A push strategy involves promoting the store or channel to push the consumer to buy.
- A pull strategy involves targeting the consumer to induce them to buy the retailer's merchandise or services.
- Retailers may use a balance of both strategies or enter third-party agreements to share promotion costs.
Sales Promotion
- Sales promotion involves offering incentives to induce a desired result from potential customers.
- Sales promotion campaigns add value to the product and are typically used as temporary offers.
- Evaluating sales promotion involves considering the cost of the promotion, increase in sales and profit, and secondary effects on demand.
Relationship Marketing and Loyalty Schemes
- Relationship marketing aims to build customer loyalty and retention, leading to increased sales and profits.
- Retailers use loyalty schemes to reward customers and build long-term relationships.
- The growth of retail relationship marketing schemes involves using data to identify valuable customers and create personalized marketing strategies.
Lifetime Value Analysis
- Lifetime value analysis involves calculating the total worth of a customer to the organization over a period of time.
- LTV analysis helps retailers make decisions on customer acquisition, targeting, and allocation of marketing budgets.
- LTV information can be used to improve segmentation, media strategies, and selection policies for customer marketing programs.### Relationship Marketing and Loyalty Schemes
- Aims to create a long-term, mutually beneficial relationship between the retailer and the customer
- Identifies and targets high-value customers
- Offers personalized promotions and rewards to encourage loyalty and retention
- Uses customer data to create targeted marketing campaigns and improve customer experiences
Design and Implementation of a Relationship Marketing Scheme
- 7 steps: acquisition, customer profiling, database analysis, improvement of retail offer, communication, temptation, and retention
- Customer profiling involves collecting personal information to understand customer behavior and preferences
- Database analysis helps identify customer habits and lifetime value
- Improvement of retail offer involves making changes to the store or product to meet customer needs
- Communication involves building a relationship with customers through targeted messages
- Temptation involves offering special deals and promotions to encourage repeat business
- Retention involves building loyalty and retaining customers over time
Defining Loyalty
- Two approaches to defining loyalty: behavioral and attitudinal
- Behavioral loyalty involves repeat purchases and measured by frequency of purchases
- Attitudinal loyalty involves customer preferences and disposition towards a brand
- Loyalty is a state of mind that predisposes an individual to a particular retailer
Hierarchy of Loyalty
- True loyalty: dominant retailer used for a specific retail need
- Latent loyalty: customer feels loyal but will not always purchase from the same retailer
- Spurious loyalty: customer is loyal due to inertia or lack of differences between retailers
- No loyalty: customer has no preference for a particular retailer
Churn Triad
- Churn triad: customer, competitor, and retailer interact to create a competitive environment
- Churn: rate at which customers are lost to competitors each year
- Reducing churn involves creating switching costs and offering rewards and benefits
Benefits of Loyalty Schemes
- Accurate tracking of customer purchasing habits
- Repeat purchases through targeted incentives
- Acquisition of new customers through word-of-mouth and referrals
- Increased customer loyalty and retention
- Customers willing to pay higher prices for a better experience
Loyalty Cards
- Loyalty cards: card-based loyalty programs using magnetic strip or smart cards
- Magnetic strip cards: inexpensive, identify purchaser, and capture transaction data
- Smart cards: more expensive, store data, and can be shared between companies
Personal Selling
- Personal selling: face-to-face or telephone contact between seller and buyer
- Important in situations where trust is key, such as purchases of high-value or complex products
- Trained staff are essential for successful personal selling
Public Relations
- Public relations: non-personal communication that changes opinion or achieves coverage in a mass medium
- Benefits of good PR: perceived impartiality, credibility, cost-effectiveness, and generation of sales
Other Important Promotional Tools
- Visual merchandising: in-store presentation and exhibition of merchandise to stimulate sales
- Point-of-purchase promotional displays: special displays to attract attention and encourage sales
- Direct marketing: direct contact with customers to encourage sales and build loyalty
- Billboard/poster sites: permanent or changeable advertisements in public areas
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Description
Assess your understanding of retail communication and promotion, including promotional objectives, budget approaches, communication effects, and advertising.
