Download Advertising and Promotion

Chapter 11
Advertising and Promotion
Learning Objectives
Name the four basic components of the retailer’s
promotional mix and discuss their relationship
with other decisions.
Describe the differences between a retailer’s longterm and short-term promotional objectives.
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Learning Objectives
List the six steps involved in developing a
retailer’s advertising campaign.
Explain how retailers manage their sales
promotion and publicity.
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The Retail Promotion Mix
Promotion - A means that retailers use to bring
traffic into their stores, and it includes advertising,
sales promotion, publicity, and personal selling.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 1
Types of Promotion
Advertising
Paid, nonpersonal communication through various media by
business firms, nonprofit organizations, and individuals who are
in some way identified in the advertising message and who hope
to inform or persuade members of a particular audience;
includes communication of products, services, institutions, and
ideas.
Sales
promotion
Involves the use of media and nonmedia marketing pressure
applied for a predetermined, limited period of time at the level of
consumer, retailer, or wholesaler in order to stimulate trial,
increase consumer demand, or improve product availability.
Publicity
Non-paid-for communications of information about the company
or product, generally in some media form.
Personal
selling
Face-to-face interaction with the consumer with the goal of
selling the consumer merchandise or services.
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LO 1
Types of Promotion
Promotion decisions relate to and must be
integrated with management decisions such as:
Location
Merchandise
Credit
Cash flow
Building and fixtures
Price
Customer service
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LO 1
Types of Promotion
Primary trading area - Geographic area where
the retailer can serve customers in terms of
convenience and accessibility better than the
competition.
Secondary trading area - Geographic area where
the retailer can still be competitive despite a
competitor having some locational advantage.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 1
Types of Promotion
Basic promotional guidelines:
Try to utilize only promotions that are consistent with
and will enhance your store image.
Review the success or failure of each promotion to
help in developing better future promotions.
Wherever possible, test new promotions before
making a major investment by using them on a
broader scale.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 1
Types of Promotion
Basic promotional guidelines:
Use appeals that are of interest to your target market
and that are realistic to obtain.
Make sure your objectives are measurable and
obtainable.
Develop total promotional campaigns, not just ads.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 1
Types of Promotion
Basic promotional guidelines:
The lower the rent, the higher the promotional
expenses generally needed.
New stores need higher promotional budgets than
established stores.
Stores in out-of-the-way locations require higher
promotional budgets than stores with heavy traffic.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 1
Promotion in the Supply Chain
Three major differences in the way retailers and
manufacturers use promotion:
Product image versus availability
Specific product benefits versus price
Focused image versus cluttered ads
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 1
Promotional Objectives
Long-term objectives
Institutional advertising - Retailer attempts to gain
long term benefits by promoting and selling the store
itself rather than the merchandise in the store.
Short-term objectives
Promotional advertising - Retailer attempts to
increase short-term performance by using product
availability or price as a selling point.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 2
Exhibit 11.1 - Possible Promotion
Objectives in Retailing
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LO 2
Steps in Planning a Retail Advertising
Campaign
Selecting advertising objectives
Budgeting for the campaign
Designing the message
Selecting the media to use
Scheduling of ads
Evaluating the results
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Selecting Advertising Objectives
Factors to be considered before choosing the
objectives:
Age of the store
Its location
Merchandise lines being sold
Its competition
The size of its trading area
What support is available from suppliers
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Selecting Advertising Objectives
The specific objectives that advertising can
accomplish are many and varied; some common
objectives include
Make consumers in your trading area aware that you
offer the lowest prices.
Make newcomers to your trading area aware of your
existence.
Make customers aware of your large stock selection.
Inform customers of your product offering.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Selecting Advertising Objectives
Increase store traffic at the beginning of an important
holiday shopping season.
Increase traffic during slow sales periods.
Move old merchandise at the end of a selling season.
Strengthen your store’s image or reputation.
Make consumers think of you first when a need for
your products occurs, especially if your products are
not commonly purchased.
Retain your current customers.
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LO 3
Budgeting for the Campaign
Retailer-only campaigns
Affordable method - All the money a retailer can
afford to spend on advertising in a given time
period becomes the advertising budget.
Advertising does not stimulate sales or profits but
rather is supported by sales and profits.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Budgeting for the Campaign
Retailer-only campaigns
Percentage-of-sales method - The retailer targets
a specific percentage of forecasted sales as the
advertising budget.
The amount of sales becomes the factor that influences
the advertising outlay.
It gives more money to departments that are already
successful and fails to give money to departments that could
be successful with a little extra money.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Budgeting for the Campaign
Retailer-only campaigns
Task-and-objective method - The retailer establishes
its advertising objectives and then determines the
advertising tasks that need to be performed to achieve
those objectives.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Budgeting for the Campaign
Co-op campaigns
Vertical cooperative advertising - The retailer and
other channel members share the advertising budget.
Usually the manufacturer subsidizes some of the retailer’s
advertising that features the manufacturer’s brands.
Horizontal cooperative advertising - Two or more
retailers band together to share the cost of advertising
usually in the form of a joint promotion of an event or
sale that would benefit both parties.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Designing the Message
Retail ads must accomplish three goals:
Attract attention and retain attention.
Achieve the objective of the advertising strategy.
Avoid errors, especially legal ones.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Designing the Message
Common approaches that retailers use to gain
repeated viewing use the following genres:
Lifestyle
Fantasy
Humorous
Slice of life
Mood or image
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
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.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Media Alternatives
Media Type Advantages
Disadvantages
Local and
Is a means of reaching the
Cable
elusive fullprice shopper.
Television
Is a great image builder.
Advertising 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.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Media Alternatives
Media Type Advantages
Disadvantages
Magazine
Has a better reproduction
 The long lead time required
Advertising
quality and a longer life span
prevents advertising with price
per issue.
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.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Media Alternatives
Internet
Provide information on demand to customers.
Provides a platform for a retailer to employ a
relatively low-cost, integrated marketingcommunications mix.
Miscellaneous media
Yellow pages, outdoor advertising, transit advertising,
electronic information terminals, and shopping guides.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
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.
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.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Media Selection
Cost per thousand—
target market (CPMTM)
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.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Scheduling of Advertising
Ads should appear on or right before the days
when customers are most likely to purchase.
Advertising should be concentrated around the
times when people receive their payroll checks.
If the retailer has limited advertising funds, then it
should concentrate its advertising during periods
of highest demand.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Scheduling of Advertising
The retailer should time its ads to appear during
the time of day or day of week when the best
CPM-TM will be obtained.
The higher the degree of habitual purchasing of a
product class, the more the advertising should
precede the purchase time.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Evaluating the Results
Advertising effectiveness - Extent to which the
advertising has produced the result desired.
Advertising efficiency - Whether the advertising
result was achieved with the minimum financial
expenditure.
The effectiveness or efficiency of advertising can
be assessed on a subjective basis.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Evaluating the 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.
Retailer not considering all media options.
Too many last-minute changes in the advertising copy.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 3
Management of Sales Promotions and
Publicity
Role of sales promotion
Type of sales promotion
Evaluating sales promotions
Publicity management
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LO 4
Exhibit 11.5 - Types of Sales Promotion
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LO 4
Types of Sales Promotion
Premiums
Extra items offered to the customer when purchasing
promoted products.
Contests and
sweepstakes
Customers have a chance of winning a special prize based
on entering a contest in which the entrant competes with
others, or a sweepstakes in which all entrants have an equal
chance of winning a prize.
Loyalty programs
Form of sales promotion program in which buyers are
rewarded with special rewards, which other shoppers are
not offered, for purchasing often from the retailer.
Coupons
Sales promotion tool in which the shopper is offered a price
discount on a specific item if the retailer is presented with
the appropriate coupon at time of purchase.
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LO 4
Types of Sales Promotion
In-store displays
Promotional fixtures of displays that seek to generate traffic,
highlight individual items, and encourage impulse buying.
Register racks
Racks placed near the checkout to encourage impluse
buying.
Endcaps
Display of products placed at the end of an aisle in a store.
Demonstrations
and sampling
In-store presentations with the intent of reducing the
consumer’s perceived risk of purchasing a product.
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LO 4
Exhibit 11.6 - What Sales Promotion
Can and Cannot Achieve
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LO 4
Publicity Management
When publicity is formally managed, it should be
integrated with other elements of the promotion
mix.
The major advantage of publicity is that it is
objective and credible and appeals to a mass
audience.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LO 4