Chapter 11 Advertising and Promotion

The Retail Promotion Mix What is promotion?

The Retail Promotion Mix What is promotion? A means that retailers use to bring traffic into their stores, and includes… Advertising, Sales promotion, Publicity, and Personal selling.

1. Advertising Definition: Key points: Paid, non-personal communication through various media by business firms, and individuals who are in some way identified in the advertising message and who hope to inform and/or persuade members of a particular audience Key points: Performed by retailers (profit or nonprofit) The retailer is identified within the message Designed to persuade or inform Includes, but not limited to: Communication of products, services, institutions, and/or ideas

2. Sales Promotion Definition: Key points: Involves the use of media and non-media marketing pressure applied for a pre-determined, limited period of time at the level of consumer, retailer or wholesaler in order to stimulate trial, increase consumer demand, or improve product availability Key points: Uses both media and non-media Runs for a limited, and pre-determined, period of time Directed at the “customer” (final customer, retailer, wholesaler) Has one of three end-goals Stimulate trial, increase existing purchases, or expand availability

3. Publicity Definition: Key points: Non-paid-for communications of information about the company or product, generally in some media form Key points: Non-paid-for communication Does not mean that no money has been spent Provides some form of information about a company or product Examples: Macy’s parade Del Frisco’s Double Eagle Steakhouse

4. Personal Selling Definition: But why is this considered promotion? Selling that involves a face-to-face interaction with the customer But why is this considered promotion?

4. Personal Selling Definition: But why is this considered promotion? Selling that involves a face-to-face interaction with the customer But why is this considered promotion? Rationale: It provides a service to the customer Ease in information gathering Such service enhances one’s value proposition Value propositions are the reasons customers shop a store What is the goal of a promotion – traffic

Integrated Effort Promotion decisions relate to and must be integrated with other management decisions, such as: Location Merchandise Credit Cash flow Building and fixtures Price Customer service

Promotion in the Supply Chain Three major differences in the way retailers and manufacturers use promotion: Consider which, the retailer or manufacturer, highlights each in their promotions: Product image versus availability Specific product benefits versus price Focused image versus cluttered ads

Promotional Objectives Long-term objectives Institutional advertising Promoting and selling the store itself rather than the merchandise in the store. Short-term objectives Promotional advertising Promoting the product availability and price to increase short-term performance Two major goals: Increased patronage from existing customers Attraction of new customers

Steps in Planning for a Retail Advertising Campaign Select advertising objectives Budget for the campaign Design the message Select media to use Schedule ads Evaluate results

Selecting Advertising Objectives Advertising objectives are informed by one’s promotional objectives Advertising objectives are very idiosyncratic, but should never include “to increase sales”. Why? Generally though, all chosen objectives must be: Aimed at a specific market segment Measurable Stated in terms of a specific time frame Would this example be okay or poor? Why? “increase the level of awareness by 30% over the next 6 months”

Budgeting for a “Retailer-Only” Campaign Three general approaches: Affordable Method Allocates all the money that the retailer can afford for advertising in any given period. Percentage-of-Sales Method Targets a specific percentage of forecasted sales to be used for advertising ---------------------- Task and Objective Method*

Designing the Message Creative ads should seek to accomplish 3 goals: Attract attention and retain attention. Achieve the objective of the advertising strategy. Avoid errors, especially legal ones Some approaches used attract & hold attention include: Lifestyle Fantasy Humorous Slice of life Mood or image

Selecting Among Media Alternatives Media Type Advantages Disadvantages Newspaper Advertising Most newspapers are local. Requires a low level of technical skill. Short interval between the time copy is written and when the ad appears. Exposure to an issue of a newspaper does not mean the consumer read or even saw the retailer’s ad. The life of any single issue of a newspaper is short. Typical person spends relatively little time with each issue. Poor reproduction quality.

Selecting Among Media Alternatives Media Type Advantages Disadvantages Local and Cable Television Advertising Is a means of reaching the elusive full-price shopper. Is a great image builder. Can be a powerful tool for generating higher sales. Is expensive, and may use up the total ad budget of a local retailer. Competition is high for the viewer’s attention. Radio advertising It can target messages to select groups. Offers a lot of flexibility. Radio commercials, especially the uncreative ones, are not saved or referred to again like print media ads. Lack of innovation; is nonvisual.

Selecting Among Media Alternatives Media Type Advantages Disadvantages Magazine Advertising Has a better reproduction quality and a longer life span per issue. The long lead time required prevents advertising with price appeals or any urgency in its messages. Direct Mail The retailer can precisely target its message to a particular group. Can generally be easily measured, thus providing important feedback. Is relatively expensive per contact or message delivered. The ability to reach the target market depends totally on the quality of the mailing list. High exposure to spam mails.

Media Selection Coverage The theoretical maximum number of consumers in the retailer’s target market that can be reached by a medium and not the number actually reached. Reach Actual total number of target customers who come into contact with an advertising message. Cumulative reach Reach that is achieved over a period of time. Frequency The average number of times each person who is reached is exposed to an advertisement during a given time period.

Media Selection (cont.) Cost per thousand method (CPM) A technique used to evaluate advertisements in different media based on cost. The cost per thousand is the cost of the advertisement divided by the number of people viewing it, which is then multiplied by 1,000. Cost per thousand— target market (CPM-TM) Technique used to evaluate advertisements in different media based on cost. The cost per thousand per target market is the cost of the advertisement divided by the number of people in the target market viewing it, which is then multiplied by 1,000. Impact How strong an impression an advertisement makes and how well it ultimately leads to a purchase.

General Guidelines for Scheduling One’s Advertising Ads should… Appear on, or slightly proceed, the days when customers are most likely to purchase. Be concentrated around the times when people receive their payroll checks. Be concentrated during periods of high seasonal demand if the retailer has limited advertising funds. Appear during the time of day/week when the lowest CPM will be obtained. Spaced so that a greater amount of time exists between the advertisement and the purchase time, when a product class has a high level of habitual purchasing

Evaluating Advertising’s Results Most ineffective advertising is due to: Messages or sales getting discounted. Advertising not appealing, not giving customers all the information they need, or not directed at the proper target market. Advertising dollars spread too thinly. Poor internal communications. Too many last-minute changes in the advertising copy. Retailer used a medium that reached too many people not in the target market.

Types of Sales Promotion

Publicity Management When publicity is formally managed, it should be integrated with other elements of the promotion mix. Major advantages of publicity It’s perceived as more objective and credible Likely to appeal to a mass audience. Major disadvantages of publicity It’s difficult to control and time Rumors are just one event that is beyond one’s control and can be highly damaging. Must be prepared for such events if at al possible.

What You Should Have Learned… Chapter’s Learning Objectives The four basic components of the retailer’s promotional mix and their relationship with other decision areas. The differences between a retailer’s long-term and short-term promotional objectives. The six steps involved in developing a retailer’s advertising campaign. How retailers manage their sales promotion & publicity.