Retail Store Promotion

• Have you ever shopped in a store that was dull and boring?

• You may not even recall the name of the shop because it was simply that uninteresting.

– As a retailer, you don't want your store to become one of those lackluster shopping experiences.

– A great way to avoid becoming mundane is by strategically planning promotional events for your retail store

• The Retail Promotion Mix

• Promotional Objectives

• Planning a Retail Advertising Campaign

• Management of Sales Promotion and Publicity

The Retail Promotion Mix

• Retailers need promotion to bring traffic into their stores, move this traffic to the various selling areas, and to entice the traffic into purchasing merchandise

• Components of promotion – Types of Retail Promotion– Total Systems Approach– Promotion in the Supply Chain

Types of Retail PromotionThere are four types of promotion:Advertising - paid, non-personal communication through various media by

business firms, who are in some way identified in the advertising message and who hope to inform and/or persuade members of a particular audience (includes communication of products, services, institutions, and ideas).

Sales promotions- involve the use of media and non-media marketingpressure 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.

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.

Total Systems Approach

Retailer's promotional efforts must be planned and implemented in the context of the retailer's overall strategy

– Promotion decisions– The retailer that systematically integrates its

promotional programs– Promotion in the Supply Chain

Promotion decisions

- A retailer's promotional efforts must be planned and implemented in the context of the retailer's overall strategy.

1. Promotion decisions relate to, and must be integrated with, the othermanagement decisions, such as:

a. There is a maximum distance consumers will travel to visit a retail store.b. Retailers need high levels of store traffic to keep their merchandise turning

over.c. A retailer's credit customers are more store loyal and purchase in larger

quantities.d. A retailer confronted with a temporary cash flow problem can use promotion to

increase short-term cash flow.e. A retailer's promotion strategy must be reinforced by its building and fixture

decisions.f. Promotion provides customers with more information.

Integrated Promotional Programs

Systematically integrated promotional programs with other retail decision areas will be better able to achieve high performance results. Some guidelines are:- Try to utilize promotions that are consistent with or will enhanceyour store image.- Review the success or failure of each promotion to aid in developingfuture promotions.- Whenever possible, test new promotions before making majorinvestments or implementing them on the entire marketplace.- Use appeals that are of interest to your target market and that arerealistic to obtain.- Make sure your objectives are measurable.- Make sure your objectives are obtainable.- Develop total promotional campaigns, not just ads.- The lower the rent, the higher the promotional expenses generallyneeded.- New stores need higher promotional budgets than established stores.- Stores in out-of-the-way locations require higher promotionalbudgets than stores with heavy traffic.

Promotion in the Supply Chain

Manufacturers also invest in promotion-quick turn over, speedy cash flow, enhance customer loyalty

There are three major differences

Product image versus availability

Specific product benefits versus price

Focused image versus cluttered ads

• The promotional activities of the retailer's supply chain partners may conflict with the retailer's goals and create a lack of promotional harmony:- Differing perceptions as to the future of the economy, projected

market activities, and other pertinent concerns may lead to supplier-retailer conflict and

conflicting promotional activities.- Supply chain members may feel that the retailer's promotionalcampaign is a mistake.- Suppliers and retailers may experience conflict over the desire toproject differing images (i.e. high-quality, high-price status symbol image

vs. price leader).

II. Promotional Objectives

Should be a natural outgrowth of the retailer's operations management plans. As such, all promotion objectives should ultimately seek to improve the retailer's financial performance

Long term

short term

Interdependence

Long-Term Objectives

Institutional advertising is an attempt by the retailer to gain long-term benefits by selling the store itself rather than the merchandise in it. Retailers using institutional ads generally seek to establish two long-term promotion objectives

1. Create a Positive Store Image - Establish or reinforce the store’s image the retailer wants to convey.

2. Public Service Promotion - Persuade the consumer to perceive the retailer as a good citizen in the community.

Short-Term Objectives

Promotional advertising attempts to bolster short-term performance by using product availability or price as a selling point.

The two most common promotional objectives are:1. Increased Patronage from Existing Customers -

promotional efforts directed at current customers as a means of encouraging them to make more purchases at the given retailer.

2. Attraction of New Customers - increase the number of customers that are attracted to the store.

(1) Attract new customers from existing trading area.(2) Attract customers from outside the existing trading area.(3) Attract customers just moving into the retailer's market.

Interdependence

Short- and long-term promotion objectives are not mutually exclusive; steps taken to achieve either objective will have an effect on the immediate, as well as the distant, financial future of the retailer.

III. Planning a Retail Advertising Campaign

• Planning a Retail Advertising Campaign – development of a retailer's advertising campaign is a six-step process:

• A. Selecting advertising objectives• B. Budgeting for the campaign• C. Designing the message• D. Selecting The Correct Media Alternatives• E. Scheduling of Advertising• F. Advertising Results

Selecting advertising objectives• The advertising objectives should flow from the retailer's

promotional objectives, but should be more specific because advertising itself is a specific element of the promotion mix.

• The objectives should be chosen after the retailer considers several unique factors:

a. Age of storeb. Store locationc. Types of goods soldd. Level of competitione. Market area sizef. Supplier support

A. Selecting advertising objectives

The specific objectives that advertising can accomplish are many and varied,and the objective(s) employed depend on the target market the retailer is seeking

to reach. Examples of common objectives used by retailers include:a. Make consumers aware that you offer low pricesb. Make newcomers aware of your existencec. Make customers aware of your large stock selectiond. Inform a specific target market of your product offeringe. Increase traffic during slow sales periodsf. Move old merchandise at the end of a selling seasong. Strengthen your store's image or reputationh. Make consumers think of you first when a need for your productsarise, especially if they are not commonly purchasedi. Retain your present customers3. Regardless of the objective chosen, advertising must be aimed at a specificmarket segment and outcomes must be measurable over a given time period.

B. Budgeting for the campaign

When developing a budget, the retailer should first determine who is going to pay for the campaign (i.e., will the retailer be the sole sponsor or will it get co-op support from other retailers and/or the manufacturer).

• Retailer-Only Campaigns –

• A retailer generally uses one of the following• methods to determine the amount of money to be spent on an advertising campaign:• a. Affordable Method - Allocating all the money that the retailer can• afford• (1) This may lead to an inadequate appropriation or to a budget• that is not related to actual needs.• (2) The logic of this approach suggests that advertising does not• stimulate sales or profits, but rather is supported by sales and profits.• (3) Most small retailers have little choice but to use this• approach.• b. Percentage-of-Sales - Targeting a specific percentage of forecasted• sales to be used for advertising.• (1) The percentage of sales is frequently determined by industry• data or the retailer's past experience, and it provides a controlled, generally affordable• amount to be spent on advertising.• (2) Some limitations of the percentage-of-sales method are:• (a) It bases advertising on sales, ignoring the fact that• sales are derived from advertising• (b) It doesn't reflect the retailer's advertising goals• (c) It gives money to successful departments and not to• areas where a little extra money could do some good• c. Task and Objective Method - Here the retailer establishes its• advertising objectives and then determines the advertising tasks that need to be performed to• achieve those objectives. Associated with each task is an estimate of the cost of performing• the task. When all of these costs are totaled, the retailer has its advertising budget. While the• task and objective method for developing an advertising budget is the best of the three• methods from a theoretical and managerial control perspective, many retailers choose not to• adopt this method.

• - Co-Op Campaigns• Sometimes manufacturers and other retailers may pay• part or all of the costs for the retailer's advertising campaign.• a. Vertical Cooperative Advertising - The retailer and other channel• members, such as a manufacturer, share the expense of

advertising. This is not always a• good deal for retailers, especially if the retailer could get a better

rate of return by spending• the money on a different product.• b. Horizontal Cooperative Advertising - Two or more retailers• collaborate to divide advertising costs. Provides more bargaining

pow

C. Designing the message

• - Since creative messages can't be developed without knowing which media will be used to carry the message, the next step in developing an advertising campaign is to design a creative message and select the media that will enable the retailer to reach its objectives.

Designing the message• 1. Creative decisions are especially important for retailers since their• advertising messages usually seek an immediate reaction by the consumer and have a short• life span.• 2. Creative retail ads should seek to accomplish three goals:• a. Attract attention and retain attention• b. Achieve the objective of the advertising strategy• c. Avoid having any errors, especially legal ones• 3. Some of the common approaches that retailers use to gain repeated viewing• include:• a. Lifestyle - Shows how the retailer's products fit in with the• consumer's lifestyle.• b. Fantasy - Creates a fantasy for the consumer that is built around the• retailer's products.• c. Humorous - Here the ad campaign is built around humor that relates• to using the retailer's products.• d. Slice-of-life - Here the retailer depicts the consumer in everyday• settings using the retailer's products.• e. Mood/Image - Builds a mood around using the retailer's products.• 4. Finally, the ad should be pre-tested by consumer groups and legal experts for• errors

D. Selecting The Correct Media Alternatives

• The retailer has many media alternatives from which to select.• 1. Types of media available

» Newspaper Advertising» Television Advertising» Radio Advertising –» Magazine Advertising» Direct Mail» Internet» Miscellaneous Media

• 2. Media Selection– the retailer must first determine the following for each

medium:» Coverage» Reach» Cumulative Reach» Cost Per Thousand Method (CPM)» Cost per Thousand - Target Market (CPM-TM)» Impact

E. Scheduling of Advertising

• Retailers should consider the following points when• planning the timing of advertisements:• 1. Ads should appear on, or slightly proceed, the days when customers are

most• likely to purchase.• 2. Advertising should be concentrated around the times when people

receive• their payroll checks.• 3. If the retailer has limited advertising funds, it should concentrate its• advertising during periods of highest seasonal demand.• 4. Schedule ads to appear during the time of day/week when the lowest

CPM• will be obtained.• 5. If a product class has a high level of habitual purchasing, a greater

amount of• time should be allowed between the advertisement and the purchase time.

F. Advertising Results• 1. Advertising Effectiveness - the extent to which the advertising has produced• the desired result.• 2. Advertising Efficiency - the extent to which the advertising result was• achieved with the minimum effort or dollars expended.• 3. Ineffective Advertising - Often due to one of the following errors:• a. Retailer may be bombarding the consumer with too many messages• and sales.• b. The advertising may not be creative or appealing.• c. The advertisement may not give the customers all the information• they need.• d. The advertising dollars may have been spread too thin over too many• departments or merchandise lines.• e. Poor internal communication among salesclerks, cashiers, stock• clerks, and management.• f. The advertisement may not have been directed at the proper target• market.• g. Retailer did not consider all media options.• h. Retailer made too many last minute corrections in the advertising• copy, increasing the cost of the ad.• i. Retailer took co-op dollars just because they were "free".• j. Retailer used a medium that reached too many people not in the• target market.

IV.Management of Sales Promotion and Publicity

• A. Sales Promotion - Consumers will change their shopping habits and brand

• preferences to take advantage of sales promotions, especially those that offer something special, different, or exciting.

Role of Sales Promotions

• a. Sales promotions can benefit the retailer by being used on short notice to differentiate itself from the competition.

• b. Sales promotion expenditures are often quite substantial, but not well tracked by retailers.

• c. Sales promotion activities should be consistent and reinforce the retailer's overall promotion objectives; – sales promotions are often employed as a means of

improving the retailer's short-term performance

Types of Sales Promotion Retailers generally break sales promotions into two categories:a. Sole-Sponsored sales promotions - Here the retailer has complete control

over the promotion, but is also completely responsible for the costs. While there may be some overlap in the sponsorship of these promotions, retailers generally consider these sales promotions to be sole sponsored:

(1) Premiums are extra items offered to the customer when purchasing a promoted product.(2) Contests and sweepstakes are designed to create an interest in the retailer's product and encourage both repeat purchases and brand switching.(3) Loyalty programs enable the retailer to combine a promotion with their database system to solidify their relationship with the customer.

b. Jointly Sponsored Sales Promotions - Jointly sponsored sales promotions offer retailers the advantage of using OPM - "Other People's Money." Retailers generally consider these promotions to be jointly sponsored:(1) Coupons offer the retail customer a discount on the price of a specific item.(2) In-store displays are promotional fixtures of displays that seek to generate traffic, highlight individual items, and encourage impulse buying.(3) Demonstrations and sampling, which are in-store presentations, are intended to reduce the consumer's perceived risk of purchasing a product.

Evaluating Sales Promotions

Sales promotions should be evaluated in

terms of their sales and profit-generating capability.– A simple method is to use is: monitor and

compare weekly unit volume before, during, and after the promotion

B. Publicity Management

Theoretically, publicity is defined as non-paid-for communications of information about the company or products. However, there are real costs associated with having a good publicity department that plants the commercially significant news.

1. The advantages of publicity are that it is objective and credible, while appealing to a mass audience.

2. The disadvantage is that publicity is difficult to control and time.

3. Retailers can experience bad publicity in the form of events, such as rumors, which are beyond its control. Thus, they should be prepared for such events.