Promotion The final “right”

Six “rights” of merchandising Refers to the planning required to get the: Right product To the right place At the right time In the right quantity At the right price With the right promotions This is a definition that I came across in one of my fashion marketing textbooks, and I realized that albeit unintentionally, we had really followed the structure of this definition throughout this course. Right product- we started the semester by addressing the different merchandise retailers need to carry to satisfy the needs of their target market. This will vary from retailer to retailer, but depends on the image and needs of consumers. One element to consider is quality. Quality is another subject we have mentioned throughout the semester. While this remains a concept that is difficult to describe, consumers tend to relate price with quality. In addition, as buyers, we are not always seeking the best quality of goods, but the best quality of goods available for our price range. Right place- this is an element that is rather straightforward. In our case, the correct place is our retail stores. Exact allocation depends on factors such as climate and city size. (department and chain stores) Right time- again, we need to get merchandise in stores when customers want it. This means when it is in fashion, or in season. We also have to consider the product life cycle- some retailers prefer to buy in the introduction stage, some in early rise or maturity, but no retailer wants goods that are in decline- it is too difficult to unload them. Right quantity- we just finished talking about this element, and again, much of this depends on the situation. Right price – Again, we just wrapped up this element, there are many methods of setting price, many considerations to take into account, and different strategies to motivate customer to buy. The final element of the merchandise mix, promotion, is also used to motivate customers to buy. The various elements of promotion will be our topic for the remainder of the semester.

Promotion The element of the marketing mix that involves communicating with our customers Retail promotion includes any communication by a retailer that informs, persuades, and/or reminds the target market about any aspect of the firm If this is the definition of promotion, why is this important to a retail buyer? Answer: Even the best, most useful products will be a flop if nobody knows it exists. Retailers are often evaluated based on the sales of the goods they purchase. Promotion is an element that can help boost sales and motivate customers to buy. What is the retail buyers role in promotion? Answer: it depends on the retailer. In a large retail organization, as mentioned, the buyer’s role is very specialized. His or her input into the promotion process may be limited to submitting a request for advertising and specifying items to be featured (who better for this job? The buyer sees the merchandise first-hand, understands its quality and features, knows the markup that can be achieved, and the quantities the retailer has purchased or agreed to purchase.) In a smaller retail situation, the buyer’s role is less specialized. Not only will he or she decide what items to featuring promotions, he or she may be directly responsible for choosing the type of promotions to engage in, and contacting the media to be used, arranging terms and payments and negotiating with salespeople.

Elements of the Retail promotional Mix Advertising Public Relations and Publicity Personal Selling Sales Promotions Visual merchandising

Advertising Paid, non-personal communication transmitted through out-of-store mass media by an identified sponsor There are four elements of this definition that merit clarification: Paid form – this differentiates it from publicity, an element of public relations, where there is no payment for the media space or time Non-personal presentation – a standard message is delivered to the entire audience and it cannot be adapted to individual consumers. (we often refer to word of mouth advertising, and this is a technically incorrect definition) Out-of-store mass media- to be impersonal, advertising uses a mass media. This may include media such as television, radio, newspapers, magazines, internet and out of home advertising. What it doesn’t include is your in-store signage. We classify that as in-store advertising. Identified sponsor – the organization’s name is divulged, unlike publicity. We, as consumers, clearly know who is attempting to appeal to us.

Differences between retailer and manufacturing advertising strategies Geographically concentrated target market Less able to utilize national media Advertising stresses immediacy Advertising stresses prices Ads display many products Media rates tend to be lower for retailers Retailers tend to have a more geographically concentrated target market. In most cases, we are unwilling to drive very far to visit a retail store, so retailers do not invest in advertising where they do not have stores. Case in point- when I worked for a local retailer, they would advertise in York papers, but not Lancaster. It is too expensive to go after customers that are not likely to visit your location. For a long time, AC Moore would only advertise in the Community Courier. Now that they have opened a York store, they have advertised in the York Sunday paper. The flip side of this geographically concentrated market is that retailers can’t typically use national media. What retailers do you see advertising on television and in magazines? Advertising stresses immediacy- while national advertising, or brand advertising stresses and image and tries to build long-term goodwill, most retail advertising focuses on bringing customers into their stores within the week, or within a few days. Advertising stresses prices- again, while national advertisers focus on building brand image and positioning, retailers are much more inclined to include pricing in their advertising. Ads display many products- if you look at an ad from a retailer, you are likely to see many manufacturers and types of products featured. Manufacturers tend to focus on the attributes of a single product. Retailers want to appeal to as many target customers as possible. Media rates tend to be lower for retailers- I’m not exactly sure why this is, but this is a major contributing factor as to why many manufacturers are willing to engage in cooperative advertising- or sharing the cost of advertising (manufacturer agrees to pay a portion of the advertising costs in exchange for having his or her products featured).

Typical retail advertising objectives Boost short term sales Increase customer traffic Developing/ reinforcing a store image Informing customers about goods and services or customer attributes Easing the job of sales personnel Develop demand for private brands

Retail advertising advantages A large audience is attracted Low CPM A number of alternative media are available; retailer can match a medium to the target market Control over message content, graphics, timing, and size, so a standardized message in a chosen format can be delivered to the target audience. In print media, a message can be studied and restudied by the target market. Editorial content often surrounds an ad, possibly increasing its credibility or the probability it will be read. Self-service or reduced-service operations are possible. Because of the non-personal nature of advertising, it reaches a large number of people. In addition, when referring to the print media, this number is further enhanced by pass-along readership. CPM stands for cost per thousand. This is one of those economies of scale things. The more people see your ad, the more people you can spread your costs out over. This is why magazines tout how many people read them- it appeals to advertisers Control over content- unlike publicity, the advertiser dictates what is run and depicted. Print media- we can refer back to the ad for clarification Editorial content- if you read magazines like Vogue or Lucky, they will often run ads about home or personal accessories. Retailers that carry these items will often select to locate their ads near these articles- if you’re interested, you’ll pause at these pages and thereby, pause at these ads. Self service/reduced service- this becomes possible because customers are already aware and informed about goods

Retailer advertising disadvantages Standardized messages= no flexibility Some media require large investments Media may reach large geographic areas, leading to waste Long lead time of some media High throwaway rate of some media Brief/small commercials= little detail Because we are sending a standard message, we cannot tailor it to individual customers, so advertising cannot focus on the needs of individual consumers. What is the one exception? Internet, because of its interactive nature, can be much more tailored to each viewer. The flip side of this is that it is difficult to reach individual customers. Some media may require large investments- some types of advertising are very expensive to produce and run. This makes them prohibitive to small retailers. (television, especially is expensive. While airtime is becoming less expensive due to specialized channels and smaller audiences, quality commercials are still fairly expensive to produce) Large geographic areas- for example, a small supermarket may find that only 40% of its audience resides in its trade area. Therefore, they have spent money to reach people that do not have any interest in their product. Long lead time- this is especially true of magazines and television- you can’t purchase ad time today and have it run tomorrow. This makes it difficult to advertise fad items and to respond to current events. Throwaway rate- newspapers and their FSIs, direct mail- never even read A thirty second ad or a small newspaper ad cannot contain many details, so retailers are limited as to what they can present

Media What different mediums do retailers use for advertising?

Newspapers Daily Weekly Shopper papers Daily newspapers reach a single community or entire metro area and are often used by large retailers. Weekly newspapers reach a single community or metro area – these often appeal to retailers of all sizes. Shopper papers- reach most households in one community, these are often used by neighborhood retailers and service businesses.

Newspapers Newspapers represent the most preferred medium for retailers, largely because of their reduced costs and short lead time. Newspapers are accessible to retailers of different sizes, and can be tailored to meet current situations Advantages Market coverage Short lead time Reasonable costs Flexibility Longevity Graphics Editorial association Disadvantages Possible waste- circulation larger than necessary Black and white format Appeal to fewer senses than TV Retailers are the top newspaper advertisers and so, to maintain this dominance, many newspapers have revamped their graphics, and started to publish ads in color. FSI (free standing inserts) are those ads that are, as the name implies, inserted into the paper. Typically these are run on Sundays and around the holidays. They offer the advantages of being printed on higher quality paper, and with better photo reproduction, but with no editorial content surrounding them, they may be more likely to be discarded.

Telephone Directory “The yellow pages” Suitable for all types of goods and service-oriented retailers Retailers and individuals get their name and phone number listed in the white pages free of charge. The upside of this is that customers who know the retailer by name can look them up as such, and not be exposed to the names of competitors. The yellow pages are the advertising element of the phone book, and are organized by type of business. Retailers have to pay to have their name here Advantages Reach the customer when they are ready to make a purchase Long life ( a year or more) Disadvantages Retailer awareness may not be stimulated Long lead time Difficulty differentiating from competitors

Direct mail Send ads to customers by mail or private delivery firms Advantages Target audience Tailored format Controlled costs Quick feedback Tie-ins (with bills) Disadvantages Throwaway rate Poor image to some people Low response rate Outdated mailing lists

Radio Suitable for reaching the market area surrounding the retailer Suitable if market segments can be identified

Television advertising Reach a definable market area surrounding the station Retailers of goods and services with wide appeal Although expenditures for television advertising are on the rise, it lags behind newspapers in retail promotion expenditures Advantages Dramatic effects Large market coverage Creativity Program affiliation (for sponsors) Disadvantages High minimum costs Audience waste Need for brevity and repetition (can’t refer back, unlikely to remember with just one exposure) Limited availability of popular times for non-sponsors Cable television- cable television is becoming extremely popular for many advertisers. Because of the specificity of channels available, retailers can closely target the audience they want to reach, reducing waste and more strongly appealing to their intended audience

The internet Reaches a global audience Appropriate for all goods and services retailers The internet- retailers use the internet to provide information about store locations, to describe the product carried, let people order from catalogs, etc. They have two opportunities to reach consumers: electronic search engines and advertising on the web pages of other retailers. Retailers also operate their own sites. Advantages: global audience at limited cost Disadvantages: clutter and lack of interest (attention)

Transit advertising Used in areas with mass transit systems Used by retailers near transit routes, especially those appealing to consumers Using transit advertising, ads are displayed in buses, trains, and taxis. Advantages Captive audience Mass market High level of repetitiveness Geographically defined market Disadvantages Clutter Distracted audience Lack of availability in small areas Restricted travel paths Graffiti

Magazines

Magazines Used by retailers with a national or regional presence Exceptional for image advertising Magazines- these used to be used exclusively by national manufacturers. Today, this is changing because many magazines produce regional advertising, advertising different retailers in different editions. Magazine usage is increasing for three reasons The rise in retail chains The creation of regional and local editions The use by non-store firms Advantages Tailoring to specific markets Creative options Editorial associations Longevity of messages- we can revisit ads and they are likely to be passed along Color reproduction Disadvantages Long lead time Less consumer urgency Waste

Circulars and flyers Distributed in parking lots or to consumer homes Single neighborhood Restaurants, dry cleaners, service stations Advantages Target audience Los costs Flexibility Speed Disadvantages Throwaways Poor image Clutter Flyers are used by smaller firms, circulars are used by larger ones

Types of Advertising Retailers can be classified by content and payment method Pioneer ads Competitive ads Reminder ads Institutional ads Payment method Pay own way Vertical cooperative advertising Horizontal cooperative advertising Pioneer ads- have awareness as a goal and offer information –usually new firms or locations Competitive ads- have persuasion as a goal Reminder ads- geared toward loyal customers and stress the attributes that have made the retailer successful Institutional ads- strive to keep retailers names in the public eye without emphasizing the sale of goods ore services. These are often used to create a feeling of goodwill toward an organization- tell people what you are doing to be a good corporate citizen. Payment method- as mentioned, advertising rates are often lower for retailers than for national brand advertisers. Retailers may choose to pay their own way or to participate in vertical cooperative advertising agreements or horizontal cooperative advertising agreements. Vertical cooperative advertising agreements- a retailer and manufacturer or wholesaler share an ad. Responsibilities are specified contractually, and retailers are typically not reimbursed until after the ads run Advantages- reduced ad costs, assistance in preparing ads, greater market coverage, and less planning time Disadvantages- less control, flexibility, and distinctiveness Horizontal cooperative advertising – two or more retailers share an ad. This is often used by small, non-competing retailers, retailers in the same shopping center, and franchises of a given firm. While most advantages and disadvantages are the same as in vertical cooperative advertising, there are two additional benefits Bargaining power of retailers in dealing with the media Synergy of multiple retailers working together

Planning cooperative advertising strategies What ads qualify, in terms of merchandise and special requirements? What percentage of advertising is paid by each party When an ads be run? In what media? Are there special provisions regarding message content? What documentation is required for reimbursement? These questions should be considered in negotiation, and will typically be addressed in contractual form. Also of interest: How does each party benefit? Do cooperative ads obscure the image of individual retailers? While these may not be specified in the contract, retailers need to consider them when entering into a contractual agreement with other firms. Advertising that damages the reputation or image of a retailer or does not benefit the retailer should not be entered into.

Public Relations Any communication that fosters a favorable image for the retailer among its publics Publics include: consumers, investors, government, channel members, employees, and the general public

Publicity A specific type of public relations A non-personal form of public relations whereby messages are transmitted through mass media, the time or space provided by the media is not paid for, and there is no paid sponsor The basic distinction between advertising and publicity is that publicity is not paid. As a result, publicity is not as readily controllable. A story about a new store opening may not appear at all, appear after the fact, or not appear in the form desired. To consumers, publicity is more credible and valuable than ads. Public relations is important to firms of all sizes. Large firms can spend a lot of money generating publicity through events such as the Macy’s Thanksgiving Day parade, but small retailers can generate attention for themselves on a limited budget- book signings, school sports teams, donating goods and services to charities.

Public relations objectives Increase awareness of the retailer and its strategy Maintain/improve cp