Download Ch 11 - 8th Ed - Stu.. - Harbert College of Business

Dunne, Lusch, & Carver
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…
1. Advertising,
2. Sales promotion,
3. Publicity, and
4. Personal selling.
1. Advertising
• Definition:
• 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:
1.
2.
3.
4.
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:
• 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:
1. Uses both media and non-media
2. Runs for a limited, and pre-determined, period of time
3. Directed at the “customer” (final customer, retailer,
wholesaler)
4. Has one of three end-goals
•
Stimulate trial, increase existing purchases, or expand availability
3. Publicity
• Definition:
• Non-paid-for communications of information about the
company or product, generally in some media form
• Key points:
1. Non-paid-for communication
•
Does not mean that no money has been spent
2. Provides some form of information about a company
or product
•
Examples:
1.
2.
Macy’s parade
Del Frisco’s Double Eagle Steakhouse
4. Personal Selling
• Definition:
• Selling that involves a face-to-face interaction with the
customer
• But why is this considered promotion?
4. Personal Selling
• Definition:
• Selling that involves a face-to-face interaction with the
customer
• But why is this considered promotion?
•
Rationale:
1.
It provides a service to the customer
•
Ease in information gathering
2.
Such service enhances one’s value proposition
3.
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:
1. Location
2. Merchandise
3. Credit
4. Cash flow
5. Building and fixtures
6. Price
7. 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:
1. Product image versus availability
2. Specific product benefits versus price
3. 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:
1. Increased patronage from existing customers
2. Attraction of new customers
Steps in Planning for a
Retail Advertising Campaign
1. Select advertising objectives
2. Budget for the campaign
3. Design the message
4. Select media to use
5. Schedule ads
6. 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:
1. Aimed at a specific market segment
2. Measurable
3. 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:
1. Affordable Method
•
Allocates all the money that the retailer can afford for
advertising in any given period.
2. Percentage-of-Sales Method
•
Targets a specific percentage of forecasted sales to be
used for advertising
---------------------3. Task and Objective Method*
Designing the Message
• Creative ads should seek to accomplish 3 goals:
1. Attract attention and retain attention.
2. Achieve the objective of the advertising strategy.
3. 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
Newspaper
Advertising
Most newspapers are local. Exposure to an issue of a
newspaper does not mean the
Requires a low level of
consumer read or even saw the
technical skill.
retailer’s ad.
Short interval between the
The life of any single issue of a
time copy is written and
newspaper is short.
when the ad appears.
Typical person spends relatively
little time with each issue.
Poor reproduction quality.
Disadvantages
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
 The long lead time required
quality and a longer life span
prevents advertising with price
appeals or any urgency in its
per issue.
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…
1. Appear on, or slightly proceed, the days when customers
are most likely to purchase.
2. Be concentrated around the times when people receive
their payroll checks.
3. Be concentrated during periods of high seasonal demand if
the retailer has limited advertising funds.
4. Appear during the time of day/week when the lowest CPM
will be obtained.
5. 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:
1. Messages or sales getting discounted.
2. Advertising not appealing, not giving customers all the
information they need, or not directed at the proper target
market.
3. Advertising dollars spread too thinly.
4. Poor internal communications.
5. Too many last-minute changes in the advertising copy.
6. 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
1. The four basic components of the retailer’s
promotional mix and their relationship with
other decision areas.
2. The differences between a retailer’s long-term
and short-term promotional objectives.
3. The six steps involved in developing a retailer’s
advertising campaign.
4. How retailers manage their sales promotion &
publicity.