Retail Management

Retail Management Module 14: Introduction to Retailing

Integrated Marketing Communications and Promotions

Customer Communication • What is required for effective communication • Grab attention, provide information which will develop interest, help consumers understand benefits, and evaluate options, and offer a reason to act now • Consumers are driven by their individual wants and needs • Coca-Cola example: • Why does it advertise? To educate, or to make consumers aware? What do the commercials convey? What are specific messages in the commercial?

Integrated Marketing Communications • Optimizes communication of firm’s message by harnessing and leveraging their benefits • Media proliferation, audience fragmentation, globalization of markets, etc. were no longer relevant • Holistic planning process that focuses on integrating messages across disciplines, media, timing • Active vs. passive • Active: visiting brand’s website, following on social media • Passive: hearing advertisements on radio or on television • Unifies and coordinates organizations to promote consistent message

Media Elements Traditional media (one-direction communication): • Television • Radio • Billboards • Print New media (two-way communication): • E-mail marketing • Social media • Internet search

Budget Calculations • Rating, reach, frequency, response rate, etc. • Common terms used: traffic, engagement, efficiency • Cost per sale = (total marketing spend / total units sold) • $400,000 / 1,200,000 = $.33 per sale • Cost per incremental sale = total marketing spend / total units sold – baseline sales • $400,000 / (1,200,000 total – 6,000,000 baseline) = $.67 • Return on marketing investment = [(incremental revenue x contribution margin) – marketing spend] / marketing spend • [$2,400,000 x 25%) - $400000] / $400,000 = $200,000 / $400,000 = 50%

Communication Programs

Brand Equity • Intrinsic value a brand has, given consumers’ awareness of and affinity for it • How a brand represents itself and value publicly, and Brand Image • Studied from two perspectives: cognitive psychology and information economics • Important for marketers because relative strength of brand governs how manufactures market the brand • Difficult to quantify • Quantitative includes numerical values but fails to capture prestige

Marketing Communication Program (SMART) • Keep three things in mind: • How can we maximize coverage, given budgets? What channels will be the most effective? How will we assess campaign performance? • Maximize coverage: finite limit to what organizations can and should invest in their marketing activity • Being present in every channel may lead to diminishing returns • If marketer messages on website, Facebook, etc., then it pays for banner ads, billboards, & print ads

Marketing Communication Program (SMART) cont. • Examine customer journey to understand how consumers shop product and how channels function to deliver • If product/service is complex or highly visual: consider how best to share details with your target • Need to determine how best to measure effectiveness of campaign (messaging, channels, impact) • Advertising can be useful, if brand equity has been impaired • SMART (specific, measurable, achievable, relevant, time)

Integrated Marketing Communications Mix

Advertising in Retail • Marketing & promotion help facilitate exchange: provide information and context to help better understand • Advertising is necessary to communicate differences in assortment, pricing, & other tactics (Wal-Mart vs. Target) • In-store promotion reinforces differentiation, showing consumers how assortment pricing, signage solve issues • Manufacturers and brands are desperate to grab consumer’s attention to encourage action/transaction • Product packaging can be updated to offer: • Seasonal graphics, specialty sizes, bonus packs, trial packs, special/variety packs

Advertising in Retail (cont.) • Shelving and shelf location can be used Number of ways for brands to breakthrough to customers: • Floor graphics • Vinyl graphics customized for images/messages • Displays • End caps • Side caps • Shoppable pallets • Displays

Sales Promotions in Retail Common retail sales promotions: • Price discounts • Buy one, get one • Price multiples • Rebates • Coupons • Bonus packs • Trial packs • Variety is limited by creativity of marketer • Advantages to each, dependent upon context Bonus, trial packs: encourage trial • Price multiples, BOGO: expand consumption • Rebates: track information • Coupons: encourage trial

Direct Marketing in Retail • New Media: interactive and decentralized, two-way communication • Internet search, social media, e-mail, direct mail, telemarketing • Easier to see potential advantages of new media channels • Understanding that firms are able to track customer activity on digital platforms • Customer relationship management tools help firms segment customers by behavior • Goal should be to quickly try to recapture the lost sales • Direct marketing gives retailers several tools

Online Media and Retail • Very easy to conflate online activity with e-commerce, thinking of the web as a place to transact • Important to step back from e-commerce and evaluate online search as tool that helps consumers interact • Digital marketing is used to connect sellers with potential buyers • Requires web development, optimization, and maintenance • Firms bid on key words to ensure that when searches are made, their website appears among search results • Not all online activity takes place on media assets (some on independent sites or blogs

Social Media and Retail Why social media is a powerful element • Consumers opt-in to engage with firm, brand, or products • Communicate level of interest that cannot be determined through traditional media • Firm, brand, or products can optimize message for channel • Communicates in natural way with consumers and customers • Social media allows for two-way communication • Gives consumer a platform with which to engage the firm or brand directly

Other Media Elements • Throughout the course, you’ve been introduced to a number of promotional tools and how marketers might use them as part of IMC • Shouldn’t infer that those are the only tools considered • Examples shared are illustrative of how traditional and new media can be leveraged inside and outside • To communicate firm, brand, and product messages • Want to select best channels for campaign given budget, strategy, and competitive environment

Quick Review Emergence of technology, social media, and mobile devices has led to significant changes in how consumers shopEmergence of omni-channelResulting proliferation and fragmentation means that advertising and promotional, activity must be integratedBenefit is that it creates multiplier effectMust ensure that all messaging is consistent and customized

Retail Management