Retail Environment

Promotional strategies

Target markets
Existing New

Existing

Market Penetration

Market Expansion

Retail formats
New Format Development Diversication (unrelated/related

Growth Strategies

A market penetration growth strategies is a growth opportunity directed toward existing customers using the retailers present retailing format. For attracting more customers or get current ones to visit the retailer more often or to buy the new merchandise. Market penetration approaches include opening more stores in the target market and/or keep existing ones open for a longer hours. - Involve displaying merchandise to increase impulse purchases and - training salespeople to cross sale. cross selling means that sales associates in one department attempts to sell complementary merchandise from other departments. E.g. Blu-ray player + a cable for that. Market Expansion growth strategy involves using the retailers existing retail format in new market segments. Retail format development growth strategy - is an opportunity in which a retailer develops a new retail format - a format with a different retail mix - for the same target market. Diversication growth opportunity - is one in which a retailer introduces a new retail format directed toward a market segment thats not currently served by the retailer. Diversication opportunities are either related or unrelated. Related versus unrelated diversication - in a related diversication growth opportunity, the retailers present target market or retail format shares something in common with the new opportunity. This commonality might entail purchasing from the same vendor, operating in a similar locations, using the same distribution or management information system, or advertising in the same newspapers to similar target markets. In contrast, an unrelated diversication growth opportunity has a little commonality between the retailers present business and the new growth opportunity. E.g. retail into wholesale. For a vertical integrator for example a manufacturing marketing activities would be very different from those of a retailer.

Brand Equity - the value of the brand image

A brand is a distinguishing name or symbol, such as logo, that identies the products or services offered by a seller and differentiates those products and services from the offerings of a competitor. In a retailer context, the name of the retailer is the brand that indicates to consumer the type of merchandise and services offered by that retailer. Brands provide value to both customers and retailers. The value that a brand image offers retailers is referred to as a brand equity. Strong brand names can affect the customers decision-making process, motivate repeat visits and purchases, and build loyalty. In addition, strong brand names enable retailers to charge higher prices and lower their marketing costs. Customer loyalty to brands arises from heightened awareness of the brand and emotional ties to it. In addition, some customers identify and and have strong emotional relationships with some brands. High brand awareness and strong emotional connections reduce the incentives of customers to switch to competing retailers. A strong brand image also enables retailers to increase their margins. When retailers have high customer loyalty, they can engage in premium pricing and reduce their reliance on price promotions to attract customers. Brands with weaker images are forced to offer low prices and frequent sales to maintain their market share. Finally, retailers with strong brand image and names can leverage their brands to introduce new retail concepts with only a limited amount of marketing effort. Strong brand creates a strategic advantage that is very difcult for competitors to duplicate.

Building brand equity

(1) Create a high level of brand awareness Brand awareness refers to a customers ability to recognize or recall that the brand name is a particular type of retailer or product/service. Thus, the brand awareness is the strength of the link between the brand name and the type of merchandise or services in the minds of customers. Aided-recall occurs when customers indicate they know the brand when the name is presented to them. Top-of-mind awareness is the highest level of awareness, occurs when customers mention a specic brand name rst when they are asked about the type of retailer, a merchandise category, or a type of service. Retailers build top-of-mind awareness by having memorable names; repeatedly exposing their names to customers through advertising, locations (e.g. zara) and sponsorships (Macys Thanksgiving Day); and using memorable symbols (e.g. apple). (2) Develop favorable associations with the brand name Building awareness is only one step in developing brand equity; but the value of the brand is largely based on the associations that customers make with the brand name. Brand associations are anything linked to or connected with the brands name in a consumers memory. These strong associations inuence consumer buying behavior. (a) merchandise category - the most common associations is to link the retailer to a category of merchandise. (b) price quality - some retailers such as Saks want to be associated with offering unique, high-fashion merchandise. Other retailers, like Walmart, want associations and good value. (c) specic attribute or benet - a retailer can link its stores to attributes, such as added value. (d) lifestyle or activity - some retailers associate their names with a specic lifestyle or activity (e.g. sports etc). (3) Consistently reinforce the image of the brand. Retailers need to develop IMC - a program that integrates all the communication elements to deliver a comprehensive, consistent message to all customers over time, across all elements of their retail mix, and across all delivery channels.

Extending the brand name

Retailers can leverage their brand names to support the growth strategies. There are both pluses and minuses to extending a brand name to a new concept. (a) an important benet of extending the brand name is that minimal communication expenses are needed to create awareness and a brand image for the new concept. Customers will quickly transfer their awareness and a brand image for the new concept. However, in come cases, the retailer might not want to have the original brands associations connected to a new concept. (b) These issues also arise as a retailer expands internationally. Associations with the retailers brands that are valued in one country may not be valued in another.

Methods communicating with customers

Interactive

Direct Marketing (e.g. mobile marketing) Online Marketing (e.g. website, blogs, social media)

Personal selling Sales promotions (e.g. contest, sweepstakes, special events, in-store demonstrations, pop-up stores)

Online

Ofine

Direct Marketing (e.g. e-mail)

Advertising Sales Promotions (e.g. coupons) Public Relations Direct Marketing (e.g. mail, catalogs)

Passive

Methods communicating with customers - Direct Marketing

For any communication campaign to succeed, the rm must deliver the right message to the right audience through the right media, with the ultimate goal of proting from long-term relationships rather than just short-term transactions. Reaching the right audience is becoming more difcult, however, the media environment grows more complicated. Direct Marketing - is a marketing that communicates directly with target customers to generate response or transaction. Traditional direct marketing includes mail and catalogues sent via mail; today it also includes internet enabled methods such as e-mail or mobile marketing, - Increase use of customer database, through the use of credit and debit cards, store-specic credit and loyalty cards, online shopping, is an advantage for direct marketing. - Direct Mail - includes any brochure, catalog, advertisement or other printed marketing material delivered directly to the consumer through the mail or a private delivery company. The direct mail piece can go to all customers, to a subset of the customers according to their previous purchases, or even on a personalized basis to individual customers. Although is relatively expensive on a per-customer basis. - E-mail - is a direct marketing communication vehicle that involves sending messages over the Internet. E-mail can be personalized. However, when the same message delivered to all recipients, it more looks like advertising. Retailers use e-mails to inform customers of new merchandise and special promotions, conrm receipt of an order, and indicate when an order was shipped. - Mobile Marketing - is a marketing through wireless devices, such as cellular telephones and m-commerce or mobile commerce involves completing the transaction via the cell phone.

Methods communicating with customers - Online Marketing

Websites - retailers are increasing their emphasis on communicating with customers through their websites. 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. Many retailers also encourage customers to post reviews of products (e.g. Amazon) they have bought or rate the quality of the product. Research has shown that these online product reviews increase customer loyalty and provide a competitive advantage for sites that offer them. Blogs - a blog (weblog) contains periodic posts on a common web page. A well perceived blog can communicate trends, announce special events, and create word-of-mouth which is a communication between people about a retailer. Blogs connect customers by forming a community, allow the company to respond directly to customers comments and facilitate long-term relationships between customers and the company. Nowadays, blogs are becoming more interactive, as the communication between bloggers and customers has increased. Social Media - is media content distributed through social interactions. Three major online facilitators of social media are Youtube, Facebook and Twitter. Online social media enable consumers to review, communicate about and aggregate information about products, prices and promotions. Communities that share thoughts and info about the retailer. Proactive dialogue between customer and retailer. Engaging with customer = strong relationships. However, social media eliminates boundaries, often exposing companies to customers true thoughts and behaviors. (a) Youtube - users upload, share and view videos. This medium gives retailers a chance to express themselves in a different way that they have before.Youtube also provides the effective medium for hosting contests and posting instructional videos. (b) Facebook - this social media platform with more than 400 millions active users gives companies a forum to interact with fans. Fan or business pages (c) Twitter - microblogging site, in which users are limited to 140 character messages, is also a platform to facilitate communication using social media. Twitter is actively used by both small and large retailers. Small retailers with limited marketing budgets love the response they can induce by sending a promotional message immediately.

Sales Promotions
Sales promotions - are special incentives or excitement - building programs that encourage customers to purchase a particular product or service; they are typically used in conjunction with other advertising or personal selling programs. Like personal selling and telemarketing, sales promotions are a form of ofine interactive communication. Promotion
Coupons

Description
Offer a discount on the price of specic items when theyre purchased Provide another form of discounts for consumers off the nal selling price. Offers an item for free or at a bargain price to reward some type of behavior, such as buying, sampling or testing Offer potential customers the opportunity to try a product or service before they make a buying decision Point-of-purchase displays are merchandise displays located at the point of purchase, such as the checkout counter in a supermarket.
Is a sales promotion program comprising a number of sales promotion techniques built around a seasonal, cultural, sporting, musical events

Advantages
Stimulate demand Allow for direct tracing or sales Stimulate demand Increase value perception Build Goodwill Increase perception of value

Disadvantages
Have low redemption rates Have high cost Are easily copied by competitors May just advance future sales Consumers buy for premium, not product. Have to be carefully managed

Rebates

Premiums (prize and awards)

Samples

Encourage trial Offer direct involvement

Have high cost to the rm

POP Displays

Provide high visibility Encourage brand trial

Can be difcult to get a good location in the store. Can be costly to the rm. Can be costly Can distract customers from purchasing during the event Have high cost Must high store personnel May take sales away from other company-owned stores

Special Events

Generate excitement and trafc

Pop-up Stores

Temporary storefronts that exist for only a limited time and generally focus on a new product or limited group of products offered by a retailer.

Generate customer interest Open up new markets and market segments

Personal Selling

Personal selling is a communication process in which sales associates help customers satisfy their needs through face-toface exchanges of information. It is a form of ofine/interactive communication. The cost of communicating directly with a potential customer is quite high compared with other forms of promotion, but it is simply the best and most efcient way to sell certain products and services. Sales people simplify the buying process.

Advertising
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. Traditional advertising has been passive and ofine (e.g. ads on TV, in magazines, and in newspapers). However, recently there has been a growth in online advertising. Newspapers - the growth in retail newspaper advertising has slowed recently as retailers have begun using other media. In addition to displaying ads with their editorial content, newspapers distribute freestanding inserts. A freestanding inserts (FSI) also called a preprint, is an advertisement printed at the retailers expense and distributed as an insert in newspaper. Because of local distribution, they are effective at targeting specic retail markets. Newspapers also offer a quick response. NP effectively convey a lot of detailed info. Because of the poor reproduction quality, np are not good for showing the merchand. The life of newspaper ad is short because it is discarded after reading. Finally, the cost of developing newspaper ads is relatively low. Magazines - retailers tend to use this medium for image ads as the reproduction quality is high. A major disadvantage of magazine ads is that the timing is difcult to coordinate with special events and sales. Television - tv commercials can be placed on a national network or local stations. A local TV commercial is called a spot. Retailers typically use TV for image advertising, to take advantage of high production quality and the opportunity to communicate through both visual images and sound. TV ads can also demonstrate product usage. The broadcast time on TV is usually very expensive, Radio - the message can be targeted to a very specic audience and segment of the market. the cost of developing and broadcasting radio commercials is relatively low. Disadvantage: limitation in attention to a message. Co-op Programs - co-op advertising is a promotional program undertaken by a vendor and a retailer working together. In addition to lowering costs, co-op advertising enables a retailer to associate its name with well-known national brands and use attractive artwork created by the national brands.

Public Relations

Pr involves managing communications and relationships to achieve various objectives, such as building and maintaining a positive image of the retailer, handling or heading off unfavorable stories or events, and maintaining positive relationships with the media. In many cases, public relations activities support other promotional efforts, by generating free media attention and general goodwill. Another very popular PR tool is an event sponsorship that occurs when corporations support various activities (nancially or otherwise) usually in the cultural or sports or entertainment sectors. When retailers and vendors use product placement they pay to have their product included in nontraditional situations, such as in a scene in a movie or TV program.

Planning the retail communication program

Steps in developing a Retail Communication Program Establish objectives (sales goals + communication objectives) Determine budget (marginal analysis + objective and task + rules of thumb) Allocate budget Implement and evaluate programs

Establish objectives (sales goals + communication objectives) Retailers establish objectives for their communication programs to provide (1) Direction for people implementing the program (2) A basis for evaluating its effectiveness Main objectives: generate short and long term objectives Communication objectives: are specic goals related to the retail communication mixs effect on the customers decision-making process. - To effectively implement and evaluate a communication program, its objectives must be clearly stated in quantitative terms. The target audience for the communication mix needs to be dened, along with the degree of change expected and the time period during which the change will be realized. The communication objectives and approaches used by vendors and retailers differ and the differences can lead to conicts. - Long-term versus short-term goals. most communications by vendors are directed toward building a long-term image of their products. In contrast, retailer communications typically are used to announce promotions and special sales that generate shortterm revenues. - Products versus location. when vendors advertise their branded products, they arent concerned about where customers buy them as long as they buy their brands. In contrast, retailers arent concerned about what brands customers buy as long as they buy in their stores - Breadth of Merchandise. Typically, because vendors have a relatively small number of products to promote, they can devote a lot of attention to developing consistent communication programs for each brand they make. Retailers have to develop communication programs that promote a much wider range of products.

Determine budget (marginal analysis + objective and task + rules of thumb)

The economically correct method of setting the communication budget is marginal analysis. Also used in allocation decisions, e.g. location, allocation of merchandise, the stafng of stores, and the oor and space devoted to merchandise categories. Marginal Analysis Method - is based on the economical principal that rm should increase communication expenditures as long as each additional dollar spent generates more than a dollar of additional contribution. Objective and task method - determines the budget required to undertake specic tasks to accomplish communication objectives. To use this method, the retailer rst establishes a set of communication objectives and then determines the necessary tasks and their costs. Rule-of thumb method - use past sales and communication activities to determine the present communication budget. - Affordable Budgeting Method - retailers rst forecast their sales and expenses, excluding communication expenses. The difference between the forecast sales and expenses plus the desired prot is then budgeted for the communication mix. Cons: it assumes that communication expenses dont stimulate sales and prots. - Percentage of sales Method - sets the communication budget as a xed percentage of forecast sales. Retailers use this method to determine the commun. budget by forecasting sales during a budget period and then applying a predetermined percentage to set a budget. The problem is that it assumes that the same percentage used in the past, or used by competitors, is appropriate for the future. - Competitive Parity Method - the communication budget is that the retailers share of its communication expenses equals its share of the market.

Allocate the promotional budget

In this step, the retailer decides how much of the budget to allocate to specic communication elements, merchandise categories, geographic regions, or long- and short-term objectives. Allocation decisions are more important than the decisions about the amount to spend on communication. The equal allocation principle is the easiest way, however that wont maximize prots because it ignores the possibility that communication programs might be more effective for some merchandise categories or for some regions than for others. High-assay principle - the retailer should allocate the budget to areas that will yield the greatest return.