communicating with the customer: retail advertising and promotions

By Dr. Mini Mathur & Dr. Hemant C Trivedi

RETAIL ADVERTISING AND PROMOTIONS

COMMUNICATING WITH THE CUSTOMER:

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RETAIL SUPPORT Communication & Promotion

INDIA RETAIL REPORT 2009 407

achieved, long term objectives would not be fulfilled. Long term objective is to create loyal customers and thus help in making a retail brand.

Using mass media to promote its brand for a retailer is not a feasible option in the hyper competitive and media fragmented market. The store provides a most captive audience accentuating the need for and use of in-store communications.

RETAIL COMMUNICATION MIXThe communication mix can

be intended to achieve a variety of objectives for the retailer. Communication objectives include predominantly getting a pie of both the share of mind and share of wallet from the customers, which includes, building a brand image of the retailer in the customer’s mind, increasing sales and store traffic, providing information about the retailer’s location and offering, and announcing special activities.

Retailers communicate with customers through advertising,

Once within the store, in-store tools like visual merchandising, display, layout, atmospherics, etc, turn their walk-ins

into serious shoppers so as to ring the cash registers of the retailers.

Out of store communications and in-store communications is a continuous process, of which out-of-store communications fulfill short term objectives and in-store communications aim to achieve long-term goals, but unless short term objective of making a sale happen in the current day or week is not

Retailers and manufacturers compete amongst themselves to get a piece of customers’ wallet. Communication from the manufacturers creates an impact till outside the store and thus creates a strong brand preference even before a shopper visits the store (Ko Floor, 2007). After the shopper enters the store it is the retailer who tries to influence his buying decision. Retailers use out of store communications tools like press advertising, TV commercials, hoardings, inserts, etc, with the prime objective of attracting the customer and thus increasing their footfalls.

sales promotions, websites, store atmosphere, publicity, personal selling, e-mail, and word of mouth. These elements in the communication mix must be coordinated so that customers have a clear, distinct image of the retailer and won’t be confused by conflicting information.

A major chunk of a retailer’s communication budget is typically spent on advertising and sales promotions. A wide assortment of media can be used for advertising. Each medium has its pros and cons. Newspaper advertising is effective for announcing sales, whereas TV ads are useful for brand building. Sales promotions are typically used to achieve short-term objectives, such as increasing store traffic over a weekend. Most sales promotions are supported in part by promotions offered to the retailer by its vendors. Publicity and word of mouth are typically low-cost communications, but they are very difficult for retailers to control. (Levy & Weitz, Retailing Management, 5/e, Pearson Education)


INDIA RETAIL REPORT 2009408

Retail Communications mix includes out of store and in-store tools and both are equally important to communicate with the customers. Objective of retail communications is three fold: one, to increase walk-ins, second to increase conversions so as to improve spending of the shopper in the store and thirdly to retain loyal customers. Each tool fulfills a particular objective. For majority of retailers, the store itself provides a medium to communicate. Ko Floor in his book, ‘Branding a Store’, describes the store as the face and voice of a retail brand. All the customer touch points with the retailer should be communicating the same message in terms of price, range, convenience and shopping experience. This makes up the positioning mix, which determines the content of communication. The visual and verbal identity of the store reflects its brand personality.

Store traffic can be created through

advertising, which includes hoardings, press, TV, out-of-home, cinema, radio, internet, and direct communications, as mailers, sms, mobile alerts, etc, and store exteriors. This brings a retailer into the consideration set of customers in terms of, from where do they buy a given category of product. Direct marketing offers opportunity to focus on a specific target group.

While on one hand a good location provides a special advantage to pull customers, on the other hand, it increases the visibility and accessibility of the store and thus a striking exterior showcasing the offerings of the store would increase the traffic within the store.

Once the customers are in the store, it means they have already incurred a considerable amount on transition cost and investment of their time and effort. It then becomes easy for the in-store communications to make them spend

more. Even a well laid out store with good stocks would enthuse them to buy more. The comfort and convenience within the store would make them come again and again and would turn them into loyal customers. Employees on the floor represent the retail brand in the store and it is with them that loyal customers form a bond. Some stores offer personalized services to their loyal customers and focus the direct marketing communications on them. Loyal customers reduce expenditure on communications as they spread positive word of mouth.

COMMUNICATION FROM MANUFACTURERS VERSUS RETAILERS

The primary objectives in either case are different. Manufacturers aim at strong brand preference for their products while retailers’ objective is to get the shoppers in their stores. Stores serve as an important medium to communicate for share of mind versus wallet. For e.g., Zara, the Spanish retailer, emphasises on good location and store design and spends only 3% of its sales on advertising. The store itself communicates the positioning and brand personality. Indian retailers like Big Bazaar, Pantaloons, Subhiksha spend a lot on TV commercial and press. While retailers influence at only few touch points like browsing and buying, manufacturers advertise for awareness, usage, recall, repurchase, and reference. Manufacturers are looking at proper placement of their product on the shelf so that customers easily find them and buy them. As it is considered ‘eye level is buy level’ all brands want to be at that level on the shelf. Effective merchandising and POP provide a platform for the manufacturers to influence shoppers at the last mile, or ‘centimeter’ should we say! The product should be available and visible to drive sales for the brand. There has to be a continuity of in-store communications and communications through other

Comparison of retail communication tools Communication tool

Brand Positioning Brand PersonalityContent Look and feel

Advertising Customer proposition; product, price, convenience, store experience

Creative concept; tone and style

Direct Marketing Communication

Tailor –made customer proposition Creative concept; tone and style

Store design Location, size, layout, convenience Materials, colours, shapes, lightingVisual merchandising

Product density, method of presentation, number of displays, information on in-store signage and graphics

Multi-sensory communication; sight, sound, smell, taste, touch

Employees Role of employees; kind of contact with customers, expertise

Behavior of employees; availability, appearance, friendliness, eagerness

Source: Ko Floor in “Branding A Store, How to build successful retail brands in a changing marketplace”; Kogan Page, 2007. Table: Translation of brand positioning and personality into content and look and feel of the communication




channels. For e.g. Boots, a major pharma retailer spends over 30% of marketing spends on POP.

POINT OF PURCHASE: POPS UP THE SALE

Point of Purchase or ‘POP’ as it is popularly called is a form of below the line promotional activity that many retailers resort to and get maximum benefit out of it. POP is defined as any form of advertising, promotion, signage or communication within the retail environment that is intended to influence or assist the customer in browsing, locating, and buying a product or a service. POP is a three dimensional space or environment in which a shopper makes the final decision on a product purchase. About 75% of the purchase decisions are made on the floor and POP influences them to the maximum. It stops the shoppers passing by and involves them in the buying process. POP as a communication medium is destined to grow in retailing as it is a dynamic medium, action oriented and measurable. Mr. Harish Bijoor said in POP Asia 2006, “Advertising is massification, while POP is demassification”. We would like to add that good POP is ‘Classi-fication’ – hyphen, pun intended.

PROMOTIONS:Sales Promotions form an integral

part of communication mix in retailing. Retailers generally use price related promotions, such as ‘buy one, get one free’, discounts, and sale to increase walk-ins and conversions at the floor level. Customers gain monetary

benefits and thus it helps in attracting new customers along with retaining loyal customers.

RETAIL ADVERTISING BY MEDIAThe retail boom is no news. An

interesting spin-off development is that of the advertising industry, which is probably the second biggest beneficiary of the retail boom - falling just behind the realtors and, of course, the consumers.

Adex India a division of TAM media offers exhaustive data on media exposure by retailers. An analysis of the available data provides sound insights and understanding of the communications and advertising strategy by retail brands and independent retailers.

VOLUME GROWTHWhile print media advertising by

retailers has shown a growth of 4 % in 2007 over the previous year, a growth of 8 % is observed for TV media figures in the same years. Though TV is a more expensive medium, retailers have shown a preference for the media over print as indicated by the 4% difference in the growth rates. The figures indicate a high level of confidence on the part of retailers for business growth and market response. The over all economic growth has been positive for last two to three years and especially for retail the rates of business growth are high. Yet comparing the overall growth in TV advertising by all advertisers to the tune of 31 % in the corresponding period the 8% growth in the retail TV spends is a much smaller growth. Again in the overall advertising chart, retail industry

contributes only one per cent of ad volumes on TV.

QUARTERLY SHARESConsidering retailers’ advertising

behavior over four quarters of the year it is observed that for both the years of 2006 and 2007 advertising expenditure has increased in the second half of the year compared to the first half. In both TV and print media retailers have spent as much as 25% more in the second half of the year. This is easily explained by the fact that the second half of the year accounts for the maximum number and most important festivals across the country. The change is manifest in the print media strongly compared to TV indicating use of TV media over the year for brand building and image while the sharper curve for print media in the second half shows the use of the media for seasonal promotions and special offers. While the ad spends were subdued in 2006 the festival ad-spend of the fourth quarter in 2007 both for print and TV media show a sharper rise indicative of the very positive temperament both of the economy and also the retail sector.

Although TV is a more expensive medium, retailers have shown a preference for the

media over print as indicated by the 4% difference in the growth rates.



SEGMENT SHARETV advertising is dominated by

independent retailers like Pantaloons, Vishal, Subhiksha, Vijay Sales, EMart, Trent etc with an 84 % share, and16 % expenditure by Display Retail Shops running small independent display retailing businesses. Retail Categories representing product category brands at local level, accounted for a meager 0.2% share in TV advertising. This is easily explained by the huge national advertising budgets by the brands themselves reducing the retailers’ need and share of TV advertising except in some cases in the local cable TV networks, which is a highly unorganised media. Print media also has a dominance of the independent retailers with a 51% share, the remaining distributed between Display Retail Shops 21% and Retail Categories 28%. Independent retailers with much deeper pockets depend largely on TV as a medium to get their messages across. Retail Categories and Display Retail Shops favour print media over TV with Retail Categories having miniscule presence on TV. The high cost of TV

advertising and the relatively localised operations make them shun the medium and prefer print. The huge dominance of print media advertising compared to the other two media options is indicative of the strategic and operational goals retailers expect to achieve through advertising spend.

PRINT TOP 10With five of the top 10 advertisers

in the retail sector being automobile retailers, Pantaloons Retail India Ltd as an Independent Retailer is on the top position in 2007 with 8% share. The remaining four players each have a 2% share. Top 10 players in print media accounted for 27% of the over all retail sector advertising. Balance 73 % of Print media is shared by a large number of small retail advertisers for obvious reasons. Not only that print medium is economical compared to broadcast, advertisement creative and production costs are also very low favoring the small retailers be it a Retail Display Shop or a Retail Category. And in both cases the need is to address the local audience.

Media-wise Advertisement Expenditure by Independent RetailersAdvertiser Spends

(In Crores)TV (%) Radio (%) Print (%)

Pantaloon Retail India Ltd 192 9 5 86Vishal Retail Ltd 31 0 5 95Subhiksha Trading Service Ltd 19 80 14 6Vijay Sales 17 0 1 99Emart India Ltd 15 1 4 95Trent Ltd 15 0 4 96Essar Telecom Retail Ltd 15 9 4 88RPG 13 0 7 93Reliance Retail Ltd 12 0 12 88Shopper’s Stop Ltd 12 28 3 69Kala Zone Silk Mills Surat 10 100 0 0UniverCell 10 7 0 93Infi niti Retail Ltd 9 0 8 92Lifestyle 8 15 23 62Just In Vogue 8 0 1 99Hot Spot 8 0 1 99Aditya Birla Retail Ltd 8 0 34 66Kalamandir Shop 6 21 15 64Kalyan Silk Sarees 6 8 0 92Globus 6 0 2 98Source: MAP 3.0, Period: Jan-July 2008

TV TOP 10Not many retailers were spending on

TV earlier. This is because the message is short lived and cannot be repeated as it turns out to be a costlier medium for retailers who are anyways operating under thin margins. Ranking of the top 10 advertisers from the retail sector on the TV medium indicates Subhiksha




Trading Services Ltd ranking number 1 in 2007, a jump from 27th rank in 2006 replacing Chennai based Saravana Stores that dropped to 2nd position in 2007, while Pantaloons Retail India Ltd maintained its 3rd position. Pathys at number 2 in 2006 dropped to 4th in 2007. Another major change was Univer Cell moving from 104th position in 2006 to 8th in 2007. Kala Zone Silk Mills Surat is the only Display Retail Shop to figure in the top 10 list of advertisers on TV. So far as the most prolific advertisers are concerned, it was observed that the top five retailers accounted for 33 per cent of ad volumes – and all five are from value/lifestyle and clothing segments. Two of them are South-based. The most remarkable fact is that retailers dominate TV media advertising in south by presence for maximum time covering 56% of advertising volumes.

REGIONAL SHARESSurprisingly, retailers have the

smallest presence on TV in northern region with a 3% share, with 16% and 22 % shared by East and National coverage. It is the outstanding 56 % share in the Southern region on TV that speaks volumes for Ad Spend capacity in South India. In print too south leads with a 45 % share of the media, followed by 32 % in West, 15 % in North and 6 % in East. Only 1 % retail advertising is seen at the national level. The way South

India has been leading the organised and large format retailing the region no wonder leads in media spends also.

CHANNEL PREFERENCEThe channel genres preferred

by retailers are mainly the General Entertainment Channels (GEC) wherein the maximum contribution is seen by regional GECs, as nearly half of the advertising volumes come to GECs. GECs have the largest audience comprising of the housewives who are the main shoppers for household needs at supermarkets and discount stores. Apart from GEC and news channels,

high advertising by independent retailers on music channels is also observed. The essence of retail advertising being to get the target audience to move from the attention to interest and desire stages quickly in to the action stage there by converting to a buyer/customer from a shopper. The music channel usage also makes sense in the light of the large young Indian population that has now come into the economic activity spectrum in industries like KPO and BPO and other Information Technology related businesses earning much larger packages than their counterparts a decade ago.

SALES PROMOTION ADVERTISING IN PRINT MEDIA

With a growth of 7 % in Sales promotional advertising in 2007 over 2006, nearly 60% of advertisements of big retailers were for sales promotions during Jan-May’07. Within sales promotions, maximum usage of price and multiple promotions is observed. The lion’s share of 35 % is for discount promotions followed by 29 % of multiple promotions and 19 % of Add-on promotions. Top 3 retailers found to be largely using sales promotion advertising were Kalyan Silk Sarees, Pantaloons Retail India and E Mart India.

Top Advertiser of Retail sector in Print during 2007Advertisers % SharePantaloon Retail India Ltd 8%Maruti Suzuki Ltd 4%Tata Motors Ltd 3%Six Magnum 2%Emart India Ltd 2%Hyundai Motor India Ltd 2%Vishal Retail Ltd 2%Toyota Kirloskar Motor Ltd 2%Bajaj Auto 2%Kalyan Silk Sarees 2%

Source: AdEx India (A Division of TAM Media Research)Note: Figures are based on Col+ Cm

Positioning of Top advertisers of Retail Sector in 2007Top Advertiser Rank

in 2007Rank

in 2006Subhiksha Trading Service Ltd

1 27

Saravana Stores 2 1Pantaloon Retail India Ltd 3 3Pothys 4 2Jayachandran Textiles & Gold 5 4Kala Zone Silk Mills Surat 6 6The Chennai Silks Group 7 7UniverCell 4 104Kalanjali Store 9 12Vasanth & Co 10 8Source: AdEx India (A Division of TAM Media Research)Note: Figures are based on Col+ Cm



RETAIL ADVERTISING IN THE CURRENT YEAR

Advertising expenditure data is available for the period of January to July 2008 for various brands and product categories from TAM Media Research. Analyzing some of the ad-spends offers good insights into retailers mid set for promotions and communication. The nature of the media and their capabilities are used to the fullest extent by the retailers to achieve the lowest cost per thousand and the highest effectiveness in terms of ad rupee investment turning into profitable exchanges. The media mix strategies employed by retail advertisers offer the best learning to a student of return on marketing investments. Retailers in their advertising strategies utilise each media by putting it to best use understanding the characteristics of the medium and the customer response to communications from different media following the philosophy of source effect.

ADVERTISING BY FASHION RETAILERS

Pantaloon Retail India Ltd leads the fashion retail advertising in 2008 for the period January – July 2008; with 60 % to 80 % of total ad spend of major independent retailers in all the three media – TV, Radio and Print – with Rs.89,07,95,000 expenditure on TV, Rs 22,31,80,000 on Radio

and Rs.292,97,30,000 on print advertisements. The higher spend on print media is also indicative of the need for high quality multicolor print advertisements so essential to bring out the beauty of the fabric and garments. Radio as a medium while not neglected by fashion retailers is found to be sparingly used. Radio has the limitation of audio communications only which makes it difficult to eulogise the look and feel factor so important for fashion retailing. Fashion shopping happens at two different levels – the impulse purchase of fads even before they turn into fashion and the elaborate high involvement shopping of the fashionably formal wardrobe of the upwardly mobile and fashion sensitive customer.

ADVERTISING BY DURABLE BRANDS

For the period January – July 2008 the three media advertisement expenditure for durable brands stands at a total of Rs.96,49,49,000 on TV, Rs.2,59,51,000 on Radio and Rs.135,24,04,000 on Print. The large spend on Print media is indicate of the retail support advertising strategy by the brands at the local level to get sales from their own company show rooms and the multi-brand retail outlets. Samsung closely followed by LG with Rs 586380000 and Rs 573033000 respectively has a not very close third in Sony with Rs 437529000 spent on advertisement across media. Radio as a medium is almost totally neglected by the brands for their communications

Pantaloon Retail leads fashion retail advertising in 2008 for the period January-July 2008; with 60 % to 80 % of total ad spend of

major independent retailers in all the three media.




and promotions. Durables are a high involvement purchase decision item and hence require a larger and stronger brand building effort. Print media with a longer life span is found to be most suitable for brand building. TV as an audio-visual medium offers highly effective communications option serving as a high fidelity communications since it is understood that ‘seeing is believing’. TV advertisements also help achieve message recall and retention through high impact communications addressing two important human senses at the same time.

GEMS AND JEWELRY ADVERTISING

D’damas Jewellery India Pvt Ltd with an ad-spend of Rs.65,48,14,000 leads major brands with Titan Industries Ltd and The Diamond Trading Company with Rs.32,46,77,000 and Rs.31,02,22,000 taking distant second and third places respectively. Except for D’Damas Jewelry India Pvt Ltd no other brand spends on Radio advertising. The radio advertisement expenditure is not a large proportion of even their over all budget. Product characteristics and communication needs in jewelry retailing make it essential to offer communications addressing multiple senses at the same time. If fashion retailing is both impulse and high involvement at the same time, jewelry

retailing is even more so necessitating higher convincing capability of the communications since per purchase ticket size goes considerably higher.

SUPERMARKETSIn the format category of

supermarkets till date Subhiksha is leading with a lion’s share in advertisement to the tune of Rs. 567305000 for January to July 2008 period. Other major players are Sarvana Stores, Reliance Retail and Vishal Megamarts. Underutilization of radio as a medium is very evident in case of supermarket based retailing where reminder advertising plays the most important role. Product differentiation is low or non existent calling for reminding again and again of your retail brand presence in the market such that a shopper when thinks of any household need immediately recalls your supermarket brand, this could be best achieved through interspersed messages on the radio media through out the day, week upon week. Smart message creativity combined with judicious media planning would stretch every rupee spent on the radio medium offering both short term gains in shopper visits and long term brand building for customer retention.

RETAIL AS A MEDIAWith organised retail gaining size,

contribution of organised retail in India is often discussed with figures of as 5% to 6%. The footfalls generated by the organised retailers in ambient environs offers brand owners a captive audience that is just ready to convert from a languishing window shopper to an active buyer. The point of purchase medium now offers new opportunities to the brand owner to talk to his customer just at the time when the decision is about to be made.

Some of the very good options for advertising offered by retailers within the retail space are the following:

DISPLAY:Brand specific window displays,

special kiosks, gondolas and standees offer powerful medium to communicate with the passing customer. Adding appropriate lighting and suitable music adds to the impact of the communication. Audio technology has now developed to an extent where sound can be controlled in open spaces or shared spaces similar to using spot light and floods to illuminate product in special light effects. Even a poster display of the latest advertising idea goes a long way with the captive audience and viewer-ship is guaranteed enhancing the repetition lead message retention and recall.

EVENTSRetail spaces are designed for

offering the atriums and other spaces for conduct of events. Events are a craze in the mall based urban culture. But it works both ways and hence, a balancing of the pitch and frequency of events is very important to obtain the desired response from the potential customer. Events closely linked with sampling and trials generate point of contact where otherwise none could



exist. A blending of types of events that go well with the tenant mix and merchandise mix is essential for the success of events as a promotional tool. Wrongly timed and loudly implemented events in fact gets customers out of the shops rather than getting them involved in products and shopping.

SPACE ON HIRE (SOH)Space on Hire (SOH) is the latest

trend catching up with retailers with large format retailing. Though the costs are high, brands are willing to pay premium prices to get the right place inside the store or mall to put across his message. Within the store various spaces are available to carry messages offering a three dimensional use of retail space. Designers are now

building-in specific spaces within the retail space with the aim to offer it for promotion and communication rather than product retailing. Store exteriors especially in case of large format retailing offer a definite viewer ship due to the large foot falls that they attract day in day out. Putting a hoarding on top of a Big Bazaar thus becomes so more sensible than putting it at a cross roads or even a busy highway. Brand marketers will have to consider the retail space as a strategic option along with the list of media when they start budgeting the next campaign whether it be a repositioning, new slaunch or just a new creative campaign. Though may seem minuscule in monetary terms currently the media is growing and shall soon become one of the mainstays within retail advertising or retail based advertising.

IN-STORE AUDIO-VISUAL COMMUNICATIONS

Numbers of retailers have shown great innovation by installing TV sets at strategic locations within the store. In the clutter, hustle and bustle of the crowded stores a well placed and drafted message may attract the right customer. That too when facilitated by the dual sense address of both audio and visual senses offers great recall at the place of shopping. Interesting programming with interspersed messages can lead

the shopper to lend an ear without feeling offended or intruded upon. More bold retailers have started appointing retail jockeys, similar to radio jockeys that conduct entertainment and retail communications programs within the store environment. The concept offers the same real life excitement as watching a drama being enacted as against watching a film.

LOYALTY BASED PROMOTIONSThis is win-win advertising or

promotional medium as it refines your reach to the exact nature of customers that you seek. Some retailers have a very organised loyalty program running. Though very costly to employ and implement if one can data mine accurately and negotiate hard, loyalty based promotions offer some of the best returns in the long run. Retailers don’t look at loyalty based promotions as value adds to their base promotion or communication strategy but rather use it as a revenue opportunity. Though this is a limited view of the option either way one can obtain great results out of a well thought through and implemented loyalty based promotional program.

KIOSK CAFESOne of the latest media being added

to the retailers and brand marketers arsenal is the kiosk internet cafes. Set up within a large format retail establishment like a mall or a large shopping centre or a public place the kiosk operator offers free internet surfing to shoppers. As the potential shopper surfs the net or checks and responds to emails advertising messages in a non intruding manner stream through on the screen offering information on special offers and schemes that may be on offer within the premises or at neighbourhood retail establishments. ■

Events in malls work both ways and

hence, a balancing of the pitch and

frequency of events is very important to

obtain the desired response from the

potential customer.


communicating with the customer: retail advertising and promotions

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