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16-1QuestionsWhat can retailers build brand equity for their stores and their private-label merchandise?How are retailers using new approaches to communicate with their customers?What are the strengths and weaknesses of the different methods for communicating with customers? Why do retailers need to have an integrated marketing communication program?What steps are involved in developing a communication program?How do retailers establish a communication budget?How can retailers use the different elements in a communication mix to alter customers decision-making processes?1 16-2Objectives of Communication ProgramShort-termIncrease TrafficIncrease SalesLong-termBuild Brand (retailers name) ImageCreate Customer Loyalty

2 16-3Brands Distinguishing name or symbol, such as a logo, that identifies the products or services offered by a seller and differentiates those products and services from those offered by competitorsThe McGraw-Hill Companies, Inc./Bob Coyle, photographer

The McGraw-Hill Companies, Inc./John Flournoy, photographer

3 16-4Value of Brand ImageValue to Retailers (Brand Equity)Attract CustomersBuild LoyaltyHigher Prices Leading toHigher Gross MarginReduced Promotional ExpensesFacilitates Entry into New MarketsGap GapKidsValue to CustomersPromises Consistent QualitySimplifies Buying ProcessReduces Time and Effort Searching for Information About Merchandise/RetailerBrands4 16-5Building Brand EquityBrand EquityCreate a High Level of Brand AwarenessCreate Emotional ConnectionsConsistent Reinforcement DevelopFavorableAssociations5 16-6

The McGraw-Hill Companies, Inc./Lars Niki, photographer

Tar-Zhay6 16-7

7 16-8Apple

8 16-9Benefits of High Brand AwarenessAided RecallTop Mind AwarenessStimulates Visits to Retailer9 16-10Creating Brand AwarenessTop-of-mindBrand Awareness Memorable NameRepeated ExposureSymbolsEvent SponsorshipBest BuyHome DepotStarbucksMacys10 16-11Retailers Develop Associations with their Brand NameMerchandise Category Office Depot office supplies

Price/quality Neiman Marcus , high fashion merchandise

Specific attribute or benefit 7-Eleven convenience

Lifestyle or activity Electronic Boutique computer gamesBrand associations: anything linked to or connected with the brand name in a consumers memoryBrand name is a set of associations that are usually organized around some meaningful themes11 16-12McDonalds Brand AssociationsMcDonaldsBig MacGolden ArchesFast FoodFrench FriesCleanRonald McDonald12 16-13L.L. Bean

13 16-14L.L. Beans Brand AssociationsL.L. BeanFriendlyNew EnglandPracticalExpertiseOutdoorsHonest14 16-15Wal-Mart Associations

15 16-16Target Associations

16 16-17Consistent ReinforcementThe retailers brand image is developed and maintained through the retailers communication mix

Retail Communication Mix17 16-18Consistent Reinforcement through Integrated Marketing Communication ProgramIntegrated Marketing Communication ProgramA program that integrates all of the communication elements to deliver a comprehensive, consistent messageProviding a consistent image can be challenging for multichannel retailers Need to consider the needs of all channels early in the planning of its communication program

18 16-19 Integrated Marketing CommunicationsPresent a Consistent Brand Image through all Communications with Customers Store DesignAdvertisingWeb SiteMagalog

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

19 16-20Brand ExtensionsGap GapKids and Old NavyTalbots Talbuts MensSears Sears Auto Centers and the Great IndoorsPottery Barn Pottery Barn Kids

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

20 16-21Extending Brand Name to a New ConceptPlusesDevelop Awareness and Image QuicklyLess Costs Needed to Promote ExtensionMinusesAssociations Might Not Be Compatible with ExtensionLimited Victorias Secret Abercrombie & Fitch Hollister21 16-22Communication Methods

22 16-23Paid Impersonal CommunicationsAdvertisingSales promotions Special events, In-store demonstrationsGames, sweepstakes and contestsCouponsStore atmosphereWebsiteCommunity building

Jack Star/PhotoLink/Getty Images

Boxes of KrustyOs cereal at a New York 7-Eleven stores, temporarily converted into a Kwik-E Mart, to promote the Simpson Movie.23 16-24Store AtmosphereThe combination of the stores physical characteristics (architecture, layout, signs and displays, colors, lighting, temperature, sounds, smells) together create an image in the customers mind

24 16-25MediacartA shopping cart that delivers point-of-decision advertisingInforms the customer about special deals as the customer passes them in the aisleEach video screen is embedded with an RFID chip that interacts with chips installed on store shelvesRecords shopping habits, dwell times, how shoppers travel through the store

25 16-26Community Building

Retailers Community Building Websitesoffer opportunities for customers with similar interests to learn about products and services that support their hobbies and share information with others26 16-27Paid Personal CommunicationRetail salespeople are primary vehicle for providing paid personal communication to customers.Personal selling salespeople satisfy needs through face to face exchange of informationEmail retailers inform customers of new merchandise, receipt of order or when order has been shippedDirect MailM-Commerce (mobile commerce)

27 16-28Unpaid Impersonal CommunicationPublicity is communication through significant unpaid presentations about the retailer, usually a news story, in impersonal media.

Newspaper TV coverage Macys Thanksgiving Day Parade

28 16-29PR

The Gap, Emporio Armani, and Apple are among several retailers selling red products, a portion of the proceeds go to Product RED, a charity to wipe out AIDS in Africa29 16-30Unpaid Personal CommunicationWord-of-mouth Can be favorable Can be detrimental

Social ShoppingA communication strategy in which consumers use Internet to engage in the shopping process by exchanging preferences, thoughts, and opinionsProduct/service reviews

30 16-31Social Shopping

31 16-32Comparison of Communication Methods

32 16-33Steps in Developing a Retail Communication Program Planning the Retail Communication Program

33 16-34Setting ObjectivesCommunication objectives:Specific goals related to the retail communication mixs effect on the customers decision-making processLong-term: ex) creating or altering a retailers brand imageShort-term: ex) increasing store traffic34 16-35Communication Objectives & Stages in the Consumers Decision-Making Process

35 16-36Retail and Vendor Communication ProgramsVendor Long-term objectives Product focused National Specific productRetailer Short-term objectives Category focused Local Assortment of merchandise36 16-37Setting the Communication Budget Marginal analysis Objective and task Rules of thumb Affordable Percent of sales Competitive parityAdvertisingSales

Sales Advertising37 16-38Setting the Communication BudgetMarginal Analysis MethodBased on the economic principle that firms should increase communication expenditures as long as each additional dollar spent generates more than a dollar of additional contributionVery hard to use because managers dont know the relationship between communication expenses and sales

38 16-39Marginal Analysis for Setting Communication Budget

39 16-40Objective-and-Task MethodDetermines the budget required to undertake specific tasks to accomplish communication objectives

40 16-41Illustration of Objective and Task Method for Setting a Communication Budget

41 16-42Financial Implications of Increasing the Communication Budget

42 16-43Rule of Thumb MethodsAffordable Budgeting Method sets communication budget by determining what money is available after operating costs and profits are budgeted.

Drawback: The affordable method assumes that the communication expenses dont stimulate sales and profits.Percentage of Sales Method communication budget is set as a fixed percentage of forecasted sales.

Drawback: This method assumes the same percentage used in the past, or by competitors, is still appropriate for the retailer.43 16-44Rule of Thumb MethodsCompetitive Parity Method this communication budget is set so that the retailers share of communication expenses equals its share of the market.

Drawback: This method (like the others) does not allow the retailer to exploit the unique opportunities or problems they confront in a market.44 16-45Allocation of the Promotional BudgetThe retailer decides how much of its budget to allocate to specific communication elements, merchandise categories, geographic regions, or long- and short-term objectivesBudget allocation decision is more important budget amount decision

High-assay principle: The retailer allocate the budget to areas that will yield the greatest return 45