Chapter 11 Advertising and Promotioncontent.ctcd.edu/courses/mrkg1302/m12/ebooks/mrkg1302_ch... ·...

Chapter 11

Advertising and Promotion

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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 long-

term and short-term promotional objectives.


Learning Objectives

List the six steps involved in developing a

retailer’s advertising campaign.

Explain how retailers manage their sales

promotion and publicity.


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.

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.

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

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.

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.

LO 1


Types of Promotion


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.

LO 1


Types of Promotion


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.

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

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.

LO 2


Exhibit 11.1 - Possible Promotion

Objectives in Retailing

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

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

LO 3



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.

LO 3



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.

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.

LO 3




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.

LO 3




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.

LO 3



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.

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.

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

LO 3


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.

Media Alternatives

LO 3



Local and

Cable

Television

Advertising

Is a means of reaching the

elusive fullprice 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.

Media Alternatives

LO 3



Magazine

Advertising

Has a better reproduction

quality and a longer life span

per issue.

The long lead time required

prevents advertising with price

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.

Media Alternatives

LO 3


Media Alternatives

Internet

Provide information on demand to customers.

Provides a platform for a retailer to employ a

relatively low-cost, integrated marketing-

communications mix.

Miscellaneous media

Yellow pages, outdoor advertising, transit advertising,

electronic information terminals, and shopping guides.

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.

LO 3


Media Selection

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.

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.

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.

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.

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.

LO 3


Management of Sales Promotions and

Publicity

Role of sales promotion

Type of sales promotion

Evaluating sales promotions

Publicity management

LO 4


Exhibit 11.5 - Types of Sales Promotion

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.

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.

LO 4


Exhibit 11.6 - What Sales Promotion

Can and Cannot Achieve

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.

LO 4

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