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Chapter 17 Retail and Business-to-Business Advertising 1 Chapter Learning Objectives Discuss retail advertising fundamentals. Summarize the media options for retailers. Explain business-to-business advertising objectives. Identify the various media used in business advertising. 2 Retail Advertising Retail Advertising Used by merchants to sell products and service directly to consumers. Accounts for nearly half of all the money spent on advertising. Retailers sell through a physical facility. 3 Local Retail Advertising Retail Advertising is Often Called Local Advertising Because the Target Market Often is Local. Sell a Variety of Products Retail Advertising Should Perform Several Functions: Encourage Store Traffic Deliver Sales Messages Store Image Establish a Brand 4 Differences Between Local Retailing & National Brand Advertising Retail Advertising is Usually Targeted at People Living In the Store’s Local Community. Consumer Brand Advertising Supports Only the Sponsor’s Brands; Retail Advertising May Support Several Brands. Retail Advertising Directed at the Local Community Has An Inherent Urgency. Local Retail Advertising is Customized to Reflect the Local Store. 5 Differences Between Local Retailing & National Brand Advertising To Build and Maintain Store Traffic, a Retailer Must Meet Four Objectives: Build Store Awareness Create Consumer Understanding Convince Consumers That the Store’s Items Satisfy Needs Create Consumer Desire to Shop At This Store 6 Station Break Go to the Benetton Web site at www.benetton.com. Examine how the company deals with controversial and culturally sensitive issues. How does this help them sell clothing? If you were a local distributor (retail store) that carried Benetton products, how would the Benetton ads or policies affect your sales? Use this company as an illustration of how truly different national product advertisers can be from their local counterparts. Discuss. 7 Cooperative Advertising Cooperative Advertising Manufacturer Reimburses Retailer for Ad Expenses Based on a % of Sales To Retailer Sometimes Called Ad Allowances Structure of Co-op Funds Suppliers of Co-op Can Fund Activity in Two Ways Varies From Month to Month Accrual Fund 8 Nonstore Retailing Nonstore Retailing Occurs When the Exchange Between the Manufacturer or Retailer and the Consumer Takes Place Outside the Traditional Retail Store. Reasons For Growth: Consumers Are No Longer Inclined to Spend Hours Shopping Improvements in Quality and Selection Improvements in Warranties Improvements in Mailing Lists That Target Consumers 9 Online Retailing and E-Commerce E-Commerce is the Selling of Goods and Services (Commerce) Through the Internet. Rapidly Growing Industry Purchase: Computer Products, Travel, Entertainment, Apparel, Gifts, etc. Attractive to Those Who Value Convenience and Don’t Have Much Time. May Use Other Media to Advertise Their Products or Services. 10 Institutional and Product Retail Advertising Institutional Retail Sells the retail store as an enjoyable place to shop. Helps a store to establish its image. Loyalty programs fall under this category. Product Retail Presents specific merchandise for sale and urges customers to come to the store immediately to buy. Creates a store’s reputation through its merchandise. 11 Station Break Go to the following Web sites: www.foleys.com, www.may.com, www.macys.com, www.dillards.com, and www.gap.com. Which site seems to offer the most in the way of information and incentives to purchase? Are sales advertised? If so, on which sites? Which sites seem to match the image of the retail themselves? Discuss how your judgments were made. What improvements could be made to these sites to make them more competitive and attractive? 12 Trends Affecting Retail Advertising Consolidation Increased Use of Free-Standing Inserts Demographic Time Stress, Aging Population, Geomarketing, Market Fragmentation Heightened Competition Markets Will Continue to Decrease in Size as Competitors Segment Them. 13 Creating the Retail Ad Image or Price Price is a Factor In Image. Some Products Are Difficult to Differentiate (gas). Price Can Help Consumers to Comparison Shop. Executing Retail Ads Who Works on The Creative? Main Objective is To Attract Customers. In-house Staff Mention Store Location & Phone. Ad Agencies Media Freelancers May Save Money By Using Stock Artwork. 14 Buying and Selling Local Media Most rapidly changing area in retail advertising is the buying and selling of local media time and space. Media competition has increased significantly. Budgets are tighter. All large markets have at least one local magazine that offers high-quality, four-color ads. New selling tactics are called for. Local Retail Media Strategy Local retailers generally prefer reach over frequency. Successful retailers use media that minimize waste, such as direct mail. 15 Media Alternatives Specialty Newspapers Local Retailers Are Interested Only in Local Media and Usually Select One of the Following: Online Media Direct Response Directories Shoppers & Preprints Magazines Broadcast Media 16 Business-to-Business Advertising & Marketing Organizations Buy Products or Services in Business Markets. Advertising Directed at People in Business Who Buy or Specify Products for Business Use. Organizations Buy Goods or Services to Support (1) Production Requirements, (2) Business Needs. 17 Types of Business Markets and Products Purchased (Fig. 17.1) 18 Business Versus Consumer Marketing Business-to-Business Advertising Differs From the Creation of Consumer Advertising Market Concentration Decision Makers Strategic Orientation 19 Purchasing Objectives Purchasing Objectives Price Service Quality Assurance of Supply 20 Business-to-Business Advertising Objectives Creating Company Awareness Supporting Distributors and Resellers Increasing Overall Selling Efficiency Helps to Contact Those That Can’t Be Reached by Salespeople Also Helps to: Helps to Answer Common Questions 21 Creating Business-toBusiness Ads Select the Strongest Benefit Dramatize the Most Important Benefit Visual Should be Relevant Layout Should Have a Sense of Balance and Flow Offer Should be Clear 22 Business-to-Business Advertising Media Media Choices Available for Competitive BusinessAdvantage toBusiness Advertisers Business & Trade Publications Directory Advertising Direct Marketing The Web Consumer Media 23 Does Business Advertising Sell? Many question the effectiveness of business-tobusiness advertising. Studies show that: This form of advertising does create sales. Increased advertising results in increased sales. Paid to advertise to both dealers and end users when the product was sold through dealers. Increased frequency leads to higher sales and profits. It takes 4-6 months to see gains. Use of color made a dramatic difference. Ad campaign is often effective long after it ends. Awareness and attitudes are affected favorably. 24 Trends in Business-toBusiness Advertising More Accountability Is Required Ad Programs and Staff Are Being Pared Down Becoming More People Oriented Advertising Must Support Customer Sales And Choices 25