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Questions and Answers
What are some objectives of Point-of-Purchase (POP) promotional displays?
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)?
What are some benefits of Integrated Marketing Communications (IMC)?
Direct marketing is used to __________ prospective customers.
Direct marketing is used to __________ prospective customers.
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Billboards are always permanent painted sites.
Billboards are always permanent painted sites.
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What are the differences between retailer and manufacturer advertising strategies?
What are the differences between retailer and manufacturer advertising strategies?
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What is the Push Strategy in promotion?
What is the Push Strategy in promotion?
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Sales promotions typically accompany the product being sold.
Sales promotions typically accompany the product being sold.
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Sales promotions are used as a temporary offer to stimulate ________.
Sales promotions are used as a temporary offer to stimulate ________.
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Match the following steps in the Relationship Marketing Scheme:
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?
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?
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.
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.
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:
Match the following loyalty scheme benefits with their descriptions:
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What is the main objective of Retail Promotion?
What is the main objective of Retail Promotion?
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What are the components of SMARRTT objectives?
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 __________.
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.
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:
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.
