Retail Communication Mix Chapter 15 PDF

CHA PTE R 15 Retail Communication Mix CHAPTER 15 McGraw-Hill/Irwin...

CHA PTE R 15 Retail Communication Mix CHAPTER 15 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.  Chapter objectives 1. To analyze integrated marketing communication program. 2. To classify methods of communication 3. Measure effectiveness of communication methods. 4. Assessing the way communication methods develop brand images 5. Planning the retail communication program. 15-2 1. Integrated Marketing Communications ( IMC) Integrate a variety of communication elements (offline and online channels) to deliver a comprehensive, consistent message to all customers over time, across all elements of a retail mix and across all delivery channels. Providing a consistent image can be challenging for multichannel retailers – Need to consider the needs of all channels early in the planning of its communication program 15-3 1. Integrated Marketing communications ( IMC) 15-4 2. Classifications of communication methods 15-5 2. Classifications of communication methods A. Paid Impersonal (passive) communication 1. Advertising Entails the placement of announcements and persuasive messages purchased by retailers and other organizations that seek to inform and/or persuade members of a particular target market or audience about their products, services, organizations, or ideas. 15-6  2. Classifications of communication methods Paid Impersonal (passive) communication 1. Advertising Newspapers Radio Magazines Television 15-7 2. Classifications of communication methods A. Paid Impersonal (passive) communication 2.Sales Promotion Advantages- offer extra value and incentives to customers to visit a store or purchase merchandise during a specific period of time. To evaluate a trade promotion, the retailer considers: Realized margin from the promotion Cost of the additional inventory carried Potential increase in sales Potential loss Additional sales 15-8 2. Classifications of communication methods A. Paid Impersonal (passive) communication 2. Sales Promotion Disadvantages Although sales promotions are effective at generating short- term interest among customers, they are not very useful for building long-term loyalty. 15-9 2. Classifications of communication methods A. Paid Impersonal (passive) communication 3. Websites Retailers use their websites to build their brand image; info customers of store locations, special events, and availability of merchandise in local stores; and merchandise and services. 15-10 B. Paid personal (interactive) communication/traditional methods 1. Personal Selling A communication process in which sales associates help customers satisfy their needs through face-to-face exchanges of information. 15-11 B. Paid personal (interactive) communication/traditional methods 2. Mobile marketing Mobile marketing is marketing through wireless handheld devices, such as cellular telephones, and m-commerce or mobile commerce involves completing a transaction via the cell phone. 15-12 B. Paid personal (interactive) communication/traditional methods 3. E-mail E-mail is another paid personal communication vehicle that sends messages over the Internet. Retailers use e-mail to inform customers of new merchandise, confirm the receipt of an order, and indicate when an order has been shipped. 15-13 C. Unpaid impersonal communication Public Relations “publicity” (PR) Managing communications and relationships to achieve various objectives Building and maintaining a positive image of the retailer Handling unfavorable stories or events Maintaining positive relationships with the media In many cases, public relations viewed as generating “free” media attention and general goodwill. 15-14 D. Unpaid personal communication Word of mouth “Social Media” 15-15 D. Unpaid personal communication Word of mouth “Social Media” A relative new form of WOM communications is called social shopping, where consumers use the Internet to shop by engaging with other product users, family and friends on product reviews, preferences and opinions. 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. 15-16 3. Measuring effectiveness of communication methods Communications methods can be compared in terms of control, flexibility, credibility, suitability and cost. 15-17 3. Measure effectiveness of communication methods. Point of comparison Paid communication Unpaid communication methods methods Methods of Paid Impersonal Unpaid Impersonal communication communication methods communication Advertisement Publicity Sales promotion Websites Unpaid personal communication Paid personal communication methods Social media (Word of mouths”WOM”) Personal selling E-mail Mobile commerce Control More control as retailers Less control over timing of determines content and publicity and WOM timing of message. communication. 15-18  Paid communication Unpaid communication methods methods Flexibility High flexibility particularly Low flexibility personal selling Credibility Less credibility-paid More credibility as such communication source methods are communicated through independent sources Cost More Costly Less cost but retailers incur costs to stimulate them Suitability Adv-------build awareness. Publicity and WOM----- build store image Websites ---convey information about retailers offerings and prices. Personal selling and sales promotion--------persuade customers to purchase merchandise 15-19 4. Using communication methods to develop brand images Brands Distinguishing name, term, or symbol, such as a logo, that identifies the products or services offered by a seller and differentiates those products and services from those offered by competitors. The McGraw-Hill Companies, Inc./John Flournoy, photographer The McGraw-Hill Companies, Inc./Bob Coyle, photographer 15-20 4. Using communication methods to develop brand images A. Value of Brand Image Value to Retailers (Brand Value to Customers Equity) Promises consistent quality Attract customers Simplifies buying process Build loyalty Reduces time and effort searching for Higher prices leading to information about a product/retailer higher gross margin Reduced promotional expenses Facilitates entry into new markets 15-21 4. Using communication methods to develop brand images B. Building Brand Equity Create a High Level of Brand Awareness Brand Equity Develop Consistent Favorable Reinforcement Associations 15-22  4. Using communication methods to develop brand images (brand equity) Benefits of High Brand Awareness Aided Recall Stimulates Top of Mind Visits to Awareness Retailer 15-23  4. Using communication methods to develop brand images (brand equity) Creating Brand Awareness Memorable Repeated Best Buy Name Exposure Top-of-mind Home Depot Starbuck’s Brand Awareness Event Symbols Macy’s Sponsorship 15-24 4. Building brand Equity (brand associations) Brand associations are anything (tangible/intangible) linked to or connected with the brand name in a consumers' memory. Some common associations (tangible) that retailers develop with their brand name are (1) merchandise category, (2) price/quality, (3) specific attribute or benefit, and (4) lifestyle or activity. Emotional (Intangible aspects): trust, satisfaction, reputation, shopping experience, strong brand image,… 15-25 4. Building brand Equity (Consistent Reinforcement) Retailers need to be consistent in portraying the same message to customers over time and across all elements of its retail mix. Retailers need to develop an integrated marketing communication program – a program that integrates all of the communication elements to deliver a comprehensive, consistent message. Without this coordination, communication methods might work at cross-purposes. 15-26  5. Planning the Retail Communication Program 15-27 5. Planning the Retail Communication Program A. Establish Objectives Communication objectives: Specific goals related to the retail communication mix’s effect on the customer’s decision-making process Long-term: ex. creating or altering a retailer’s brand image Short-term: ex. increasing store traffic 15-28 5. Planning the Retail Communication Program B.Determine the Communication Budget 1) Marginal Analysis Method Based on the economic principle that firms should increase communication expenditures as long as each additional dollar spent generates more than a dollar of additional contribution. Very hard to use because managers don’t know the relationship between communication expenses and sales. 15-29 5. Planning the Retail Communication Program B.Determine the Communication Budget (Marginal analysis Method) 15-30 5. Planning the Retail Communication Program B.Determine the Communication Budget (Marginal analysis Method) Financial Implications of Increasing the Communication Budget 15-31  5. Planning the Retail Communication Program B.Determine the Communication Budget 2) Objective-and-Task Method Determines the budget required to undertake specific tasks to accomplish communication objectives 15-32 5. Planning the Retail Communication Program B.Determine the Communication Budget 3. Rule of Thumb Methods-depends on past sales 3/a) Percentage of Sales Method – communication budget is set as a fixed percentage of forecasted sales. Drawback: This method assumes the same percentage used in the past, or by competitors, is still appropriate for the retailer. 15-33 5. Planning the Retail Communication Program B.Determine the Communication Budget 3. Rule of Thumb Methods 3/b) Competitive Parity Method – this communication budget is set so that the retailer’s share of communication expenses equals its share of the market. Drawback: This method (like the others) does not allow the retailer to exploit the unique opportunities or problems they confront in a market. 15-34 5. Planning the Retail Communication Program C. Allocate the Promotional 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 Budget allocation decision is more important than budget amount decision. High-assay principle: The retailer allocates the budget to areas that will yield the greatest return. 15-35