Chapter 11 Advertising and Promotion Chapter 11 Advertising and Promotion.

Chapter 11

Advertising and Promotion

Chapter 11

Advertising and Promotion

The Retail Promotion MixThe Retail Promotion Mix

PromotionPromotion

is a means that retailers use to bring is a means that retailers use to bring traffic into their stores, and it includes traffic into their stores, and it includes advertising, sales promotion, publicity, advertising, sales promotion, publicity,

and personal selling.and personal selling.

Promotion in the ChannelPromotion in the Channel

Major differences in the way retailers and Major differences in the way retailers and manufacturers use promotion: manufacturers use promotion:

1. Product image versus availability1. Product image versus availability

2. Specific product benefits versus price2. Specific product benefits versus price

3. Focused image versus cluttered ads3. Focused image versus cluttered ads

Promotional Mix ElementsPromotional Mix Elements

Personal SellingPersonal Selling

Steps in the Steps in the Buying ProcessBuying Process

Steps in the Steps in the Selling ProcessSelling Process

Approach the Customer

Collect Information

Present/demonstrate product & overcome reservations

Make (Close) the Sale

Build Relationships for Future Sales

Problem Recognition

Information Search

Alternative Evaluation

Alternative Choice

Postpurchase Evaluation

Customer ReservationsCustomer ReservationsTiming:

I haven’t made up my mind

Store:I don’t know

about the return policy

Merchandise:I don’t think this

is made well

Location:I can’t find it

Salesperson:I don’t like

him

Price:This is too expensive

Nonverbal Signals that a Nonverbal Signals that a Customer is Ready to BuyCustomer is Ready to Buy

Resisting a salesperson’s attempt to move the Resisting a salesperson’s attempt to move the product out of the wayproduct out of the way

Intently studying or reexamining the merchandise Intently studying or reexamining the merchandise from various anglesfrom various angles

Smiling or appearing excited when looking at the Smiling or appearing excited when looking at the itemitem

Handling or using the product for a second or third Handling or using the product for a second or third timetime

Moving to a more work-oriented spaceMoving to a more work-oriented space

Verbal Signals that a Verbal Signals that a Customer is Ready to BuyCustomer is Ready to Buy

““I guess the blue paint goes better with my I guess the blue paint goes better with my wallpaper than the gray paint.”wallpaper than the gray paint.”

““Can you alter the pants?”Can you alter the pants?” ““Did you say this has a one year guarantee?”Did you say this has a one year guarantee?” ““Do you have this desk in a darker wood?”Do you have this desk in a darker wood?” ““I’ve always wanted a food processor.”I’ve always wanted a food processor.”

Building Relationships for Building Relationships for Future SalesFuture Sales

Reaffirming the Customer’s JudgmentReaffirming the Customer’s Judgment Ensuring Proper Use of the MerchandiseEnsuring Proper Use of the Merchandise Handling Customer ComplaintsHandling Customer Complaints Remembering the Customer between VisitsRemembering the Customer between Visits Providing Above-and-Beyond ServiceProviding Above-and-Beyond Service Building Special RelationshipsBuilding Special Relationships


Personal SellingPersonal Selling AdvertisingAdvertising

Daily

News

Advertising Expenditures as a Advertising Expenditures as a Percentage of Sales for Some RetailersPercentage of Sales for Some Retailers

Ad DollarsAd Dollars

Line of TradeLine of Trade As Percentage of SalesAs Percentage of Sales

Building materials & hardwareBuilding materials & hardware

Home Depot, Inc.Home Depot, Inc. 0.50.5

Lowe’sLowe’s 0.60.6

Payless CashwaysPayless Cashways 1.21.2

Department StoresDepartment Stores

DillardsDillards 4.44.4

May Department StoreMay Department Store 3.83.8

JCPenney Co.JCPenney Co. 3.33.3

Sears Roebuck & Co.Sears Roebuck & Co. 4.44.4




Family clothing storesFamily clothing stores

Abercrombie & FitchAbercrombie & Fitch 3.53.5

American Eagle Outfitters, IncAmerican Eagle Outfitters, Inc 3.13.1

Grocery storesGrocery stores

AlbertsonsAlbertsons 1.51.5

Great Atlantic & Pacific Tea CoGreat Atlantic & Pacific Tea Co 1.41.4

Kroger CoKroger Co 1.11.1

Pathmark Stores IncPathmark Stores Inc 0.50.5

Publix Super Markets IncPublix Super Markets Inc 1.11.1


Ad DollarsAd DollarsLine of TradeLine of Trade As Percentage of SalesAs Percentage of SalesGrocery storesGrocery stores

Safeway IncSafeway Inc 1.41.4Winn-Dixie Stores IncWinn-Dixie Stores Inc 1.21.2

Variety storesVariety storesDollar GeneralDollar General 5.35.3Dollar Tree Stores IncDollar Tree Stores Inc 10.1 10.1Family Dollar StoresFamily Dollar Stores 0.40.4Kmart CorpKmart Corp 1.51.5Target CorpTarget Corp 2.32.3Wal-Mart StoresWal-Mart Stores 0.50.5




Women’s clothing storesWomen’s clothing stores

Charming ShoppesCharming Shoppes 2.52.5

Dress Barn IncDress Barn Inc 1.31.3

Limited IncLimited Inc 7.67.6

Talbots IncTalbots Inc 6.26.2

Factors in Allocating Advertising Dollars

HIGH ADVERTISING ALLOCATION•High Gross Margin Percentage•High Advertising Elasticity of Demand•Dominant or Potentially Dominant Market Share in Department or Merchandise Line•Good Backup Resources (Space, Inventory, Accounts Receivable, People)•Willingness to Allocate Enough to Achieve “Critical Mass”

LOW ADVERTISING ALLOCATIONS

•Low Gross Margin Percentage•Low Advertising Elasticity of Demand•Low Market Share and Limited Potential for Being Dominant Market Share Department or Line•Poor Backup Resource (Space, Inventory, Accounts Receivable, People)•Unwillingness to Allocate Enough to Achieve “Critical Mass”

Exhibit 11.1

Possible Promotion Objectives in Retailing

Improve Long-Run Performance

Improve Short-Run Performance

Store Image and Positioning

Public Service

Attract New

Customers

Increase Patronage of

Existing Customers

From Existing Trade Area

Expand Trade Area

Advertising Objectives Used by

Retailers Make consumers in your trading area aware that you offer the lowest prices...

Wal-Mart’s “ Always Low Prices”

Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.

Make customers aware of your large stock selection...

Nordstrom promising the shopper a free shirt if they are “out of stock” on the

basic sizes.


Retailers


Increase traffic during slow sales periods...

Subway Sandwiches Shop’s “Two-for-One Tuesdays”


Retailers


Move old merchandise at the end of of a selling season...

The “after-Christmas clearance sales”

that all retailers use.


Retailers


Strengthen your store’s image or reputation...

Neiman-Marcus’s famous Christmas catalog that generates news stories around the world when the catalog

is mailed to customers.


Retailers


Identify your store with the nationally advertised brands that it sells...

Dillard’s

featuring Tommy Hilfiger clothing in their ads


Retailers


Reposition the image of your store in the minds of consumers...

“Softer side of Sears”


Retailers


Cultivate new customers...

Any of the one-day discounts that a customer gets for opening a charge account with the retailer.


Retailers


Make consumers think of you first when a need for your products occurs, especially if they are not commonly purchased...

1-800-FLOWERS or

“For a hole in your roof or a whole new roof - Frederick Roofing”


Retailers


Retain your present customers...

7-Eleven’s

“Frequent Fill-Up” gasoline program


Retailers


Biggest Retail AdvertisersBiggest Retail Advertisers

$0 $100 $200 $300 $400 $500 $600 $700

McDonald's

Sears, Roebuck & Co.

Federated

Home Depot

Kmart

Wal-Mart

Target

JC Penney

Best Buy

Circuit City

Wendy's

Lowe's

Dillard's

Ad Spending in 2001 (millions)Source: Advertising Age


Personal SellingPersonal Selling AdvertisingAdvertising PublicityPublicity

Publicity is often used to communicate Publicity is often used to communicate with audiences beyond the target market. with audiences beyond the target market.

Favorable publicity can build employee Favorable publicity can build employee morale and help improve employee morale and help improve employee performance. Just like customers, performance. Just like customers, employees place more credibility on employees place more credibility on information provided by news media information provided by news media than on information generated by the than on information generated by the retailer.retailer.

Publicity ToolsPublicity Tools

Press ReleasesPress Releases Press ConferencesPress Conferences Feature ArticlesFeature Articles By-Lined ArticlesBy-Lined Articles SpeechesSpeeches Movies and Video PlacementsMovies and Video Placements Letters to the EditorLetters to the Editor


Personal SellingPersonal Selling AdvertisingAdvertising PublicityPublicity Sales PromotionSales Promotion

Bank 1 One

Book Store 555-5555

Bank 1 One

Exhibit 11.4

Types of Sales Promotions

Sales Promotions

Sole Sponsored Joint Sponsored

Exhibit 11.4

Sole Sponsored

PremiumsContest and Sweepstakes

Frequent - Buyer

Programs


Exhibit 11.4

Joint Sponsored

CouponsIn-Store Displays

Demonstrations and Sampling


Coupons in retailer ads 90%

Cents-off 90%

In-store coupons 88%

Refunds 85%

Electronic, in-store displays 83%

Samples of established products 78%

Premiums 75%

Sweepstakes 70%

Value Redeemed

Greater than $50 84%

$25.00 - 49.99 51%

$15.00 - 24.99 18%

$ 5.00 - 14.99 10%

$ 2.00 - 4.99 6%

Less than $2.00 2%

Percentage of Rebates Redeemed by Dollar Value

CONSUMER ELECTRONICS 79%

ASSEMBLED FURNITURE 77%

WOMEN’S CLOTHING 74%

MEN’S CLOTHING 69%

BOY’S & GIRL’S CLOTHING 58%

INFANT’S & TODDLER’S CLOTHING 57%


Chapter 11 Advertising and Promotion Chapter 11 Advertising and Promotion.

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Transcript of Chapter 11 Advertising and Promotion Chapter 11 Advertising and Promotion.