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