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Questions

What can retailers build brand equity for their stores and their
private-label merchandise?
How are retailers using new approaches to communicate with their
customers?
What are the strengths and weaknesses of the different methods for
communicating with customers?
Why do retailers need to have an integrated marketing
communication program?
What steps are involved in developing a communication program?
How do retailers establish a communication budget?
How can retailers use the different elements in a communication mix
to alter customers decision-making processes?

16-1

Objectives of Communication Program


Long-term
Build Brand (retailers name) Image
Create Customer Loyalty

Short-term
Increase Traffic
Increase Sales

16-2

Brands
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 those
offered by competitors

The McGraw-Hill Companies, Inc./John Flournoy, photographer The McGraw-Hill Companies, Inc./Bob Coyle, photographer

16-3

Value of Brand Image

Brands
Value to Retailers (Brand Equity)

Value to Customers

Attract Customers
Build Loyalty
Higher Prices Leading to
Higher Gross Margin
Reduced Promotional Expenses
Facilitates Entry into New Markets
Gap GapKids

Promises Consistent
Quality
Simplifies Buying Process
Reduces Time and Effort
Searching for Information
About Merchandise/Retailer

16-4

Building Brand Equity


Create a High
Level of
Brand
Awareness

Develop
Favorable
Associations
Brand
Equity

Consistent
Reinforceme
nt

Create Emotional
Connections
16-5

Tar-Zhay

The McGraw-Hill Companies, Inc./Lars Niki, photographer

16-6

16-7

Apple

16-8

Benefits of High Brand Awareness

Aided Recall
Top Mind Awareness

Stimulate
s Visits to
Retailer

16-9

Creating Brand Awareness

Memorable
Name

Home Depot

Symbols

Best Buy

Top-of-mind
Brand Awareness

Macys

Repeated
Exposure

Starbucks

Event
Sponsorshi
p
16-10

Retailers Develop Associations


with their Brand Name
Brand name is a set of associations that are usually organized
around some meaningful themes
Brand associations: anything linked to or connected with the
brand name in a consumers memory

Merchandise Category Office Depot office supplies


Price/quality Neiman Marcus , high fashion merchandise
Specific attribute or benefit 7-Eleven convenience
Lifestyle or activity Electronic Boutique computer games
16-11

McDonalds Brand Associations

Fast
Food

French
Fries

Golde
n
Arches

Big Mac

McDonald
s

Clea
n

Ronald
McDonal
d
16-12

L.L. Bean

16-13

L.L. Beans Brand Associations

Practic
al

New
Englan
d

Friendly

L.L. Bean
Expertis
e

Honest
Outdoor
s
16-14

Wal-Mart Associations

16-15

Target Associations

16-16

Consistent Reinforcement
The retailers brand image is developed and maintained
through the retailers communication mix
Retail Communication Mix

16-17

Consistent Reinforcement through Integrated


Marketing Communication Program
Integrated Marketing Communication Program
A program that integrates all of the
communication elements to deliver a
comprehensive, consistent message
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

16-18

Integrated Marketing Communications


Present a Consistent Brand Image through all Communications
with Customers

Store
Design
Advertising
Web Site
Magalog
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

16-19

Brand Extensions

Gap GapKids and Old Navy


Talbots Talbuts Mens
Sears Sears Auto Centers and the Great Indoors
Pottery Barn Pottery Barn Kids

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

16-20

Extending Brand Name to a New Concept

Pluses
Develop Awareness and
Image Quickly
Less Costs Needed to
Promote Extension

Minuses
Associations Might Not
Be Compatible with
Extension

Limited Victorias Secret


Abercrombie & Fitch Hollister
16-21

Communication Methods

16-22

Paid Impersonal Communications

Advertising
Sales promotions Special events, In-store demonstrations
Games, sweepstakes and contests
Coupons
Boxes of KrustyOs cereal at a New York 7Store atmosphere
Eleven stores, temporarily converted into a
Website
Kwik-E Mart, to promote the Simpson Movie.
Community building

Jack Star/PhotoLink/Getty Images

16-23

Store Atmosphere

The combination of the stores


physical characteristics
(architecture, layout, signs and
displays, colors, lighting,
temperature, sounds, smells)
together create an image in the
customers mind

16-24

Mediacart
A shopping cart that delivers
point-of-decision
advertising
Informs the customer
about special deals as the
customer passes them in
the aisle
Each video screen is
embedded with an RFID
chip that interacts with
chips installed on store
shelves
Records shopping habits,
dwell times, how shoppers
travel through the store

16-25

Community Building
Retailers Community Building
Websites
offer opportunities for
customers with similar
interests to learn about
products and services that
support their hobbies and
share information with
others

16-26

Paid Personal Communication


Retail salespeople are primary vehicle for
providing paid personal communication to
customers.

Personal selling salespeople satisfy needs through


face to face exchange of information

Email retailers inform customers of new


merchandise, receipt of order or when order has
been shipped
Direct Mail
M-Commerce (mobile commerce)

16-27

Unpaid Impersonal Communication


Publicity is communication through significant
unpaid presentations about the retailer, usually a
news story, in impersonal media.
Newspaper
TV coverage
Macys Thanksgiving Day Parade

16-28

PR
The Gap, Emporio Armani, and Apple are
among several retailers selling red
products, a portion of the proceeds go to
Product RED, a charity to wipe out AIDS in
Africa

16-29

Unpaid Personal Communication


Word-of-mouth
Can be favorable
Can be detrimental

Social Shopping

A communication strategy in which consumers use


Internet to engage in the shopping process by
exchanging preferences, thoughts, and opinions
Product/service reviews
16-30

Social Shopping

16-31

Comparison of
Communication Methods

16-32

Planning the Retail Communication Program


Steps in Developing a Retail Communication Program

16-33

Setting Objectives
Communication objectives:

Specific goals related to the retail communication


mixs effect on the customers decision-making
process
Long-term: ex) creating or altering a retailers brand
image
Short-term: ex) increasing store traffic

16-34

Communication Objectives & Stages in


the Consumers Decision-Making Process

16-35

Retail and Vendor


Communication Programs
Vendor

Long-term

Retailer

objectives

Short-term
objectives

Product focused

Category focused

National

Local

Specific product

Assortment of
merchandise
16-36

Setting the Communication Budget

Marginal analysis

Advertising

Objective and task

Sales

Rules of thumb

Affordable

Sales

Percent of sales

Advertising

Competitive parity

16-37

Setting the Communication Budget


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 dont know the
relationship between communication expenses and
sales

16-38

Marginal Analysis for Setting


Communication Budget

16-39

Objective-and-Task Method
Determines the budget required to undertake
specific tasks to accomplish communication
objectives

16-40

Illustration of Objective and Task


Method for Setting a Communication Budget

16-41

Financial Implications of
Increasing the Communication Budget

16-42

Rule of Thumb Methods

Affordable Budgeting Method


sets communication budget
by determining what money is
available after operating costs
and profits are budgeted.

Percentage of Sales Method


communication budget is set as a
fixed percentage of forecasted sales.

Drawback: The affordable


method assumes that the
communication expenses
dont stimulate sales and
profits.

Drawback: This method assumes


the same percentage used in the
past, or by competitors, is still
appropriate for the retailer.

16-43

Rule of Thumb Methods

Competitive Parity Method this communication budget is set so


that the retailers 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.

16-44

Allocation of 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
budget amount decision
High-assay principle: The retailer allocate the
budget to areas that will yield the greatest return

16-45