Advertising and Promotion

Advertising and Promotion
0
Learning Objectives
Name the four basic components of the retailers

promotion mix and discuss their relationship with
other decisions.
Describe the differences between a retailers long-term
and short-term promotional objectives.
List the six steps involved in developing a retailers
advertising campaign.
Explain how retailers manage their sales promotion
and publicity.
1
The Retail Promotion Mix
LO 1
Promotion
is a means that retailers use to bring traffic into their
stores, and it includes advertising, sales promotion,
publicity, and personal selling.
2
The Retail Promotion Mix
LO 1
Types of Promotion
Promotion in the Supply Chain
3
Types of Promotion
LO 1
The four basic components of the retailers
promotional mix:
Advertising
is 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.
4
Types of Promotion
LO 1
Sales Promotion involves the use of media and non-
media marketing pressure applied for a predetermined,
limited period of time as the level of consumer, retailer,
or wholesaler in order to stimulate trial, increase
consumer demand, or improve product availability.
Publicity is non-paid-for communications of
information about the company or product, generally
in some media form.
5
Types of Promotion
LO 1
Personal Selling involves a face-to-face interaction
with the consumer with the goal of selling the
consumer merchandise or service.
6
Types of Promotion
LO 1
Promotional decisions relate to and most be integrated
with other management decisions, such as location,
merchandise, credit, cash flow, building and fixtures,
price, and customer service.
Primary Trading Area is the geographical area where
the retailer can serve customers, in terms of
convenience and accessibility, better than the
competition.
Secondary Trading Area is the geographic area where
the retailer can still be competitive despite a
competitor having some locational advantage.
7
Promotion in the Supply Chain
LO 1
Major differences in the way retailers and
manufacturers use promotion:
Product image versus availability.
Specific product benefits versus price.
Focused image versus cluttered ads.
8
Promotional Objectives
LO 2
Long-Term Objectives
Short-Term Objectives
Interdependence
9
Long-Term Objectives
LO 2
Institutional Advertising
is a type of advertising in which the retailer attempts to
gain long-term benefits by promoting and selling the
store itself rather than the merchandise in the store.
Creating a positive store image.
Public service promotion.
10
Positive Store Image
LO 2
Dee Lincoln, cofounder
of Del Friscos Double
Eagle Steakhouse, paid
a record $80,000 for a
1,309-pound Main-Anjou
Cross-breed at Denvers
National Western Stock
Show to introduce her
new store and to
generate a positive store
image.
11
Corporate Citizenship
LO 2
Wal-Mart sponsors a
variety of community
and public service
programs, which help to
promote its role as a
good corporate citizen.
12
Possible Promotion Objectives in Retailing
LO 2: Exhibit 11.1
Improve Long-Run Improve Short-Run

Performance Performance
Store Image Public Increase

Attract
and Positioning Service Patronage of
New
Existing
Customers
Customers
From Existing Expand

Trade Area Trade Area
13
Short-Term Objectives
LO 2
Promotional advertising
is a type of advertising in which the retailer attempts to
increase short-term performance by using product
availability or price as a selling point.
Increased patronage form existing customers.
Attraction of new customers.
14
Interdependence
LO 2
Although promotion objectives can be established to
improve either long- or short-term financial
performance, programs designed to achieve either
objective will benefit as well.
15
Steps in Planning a Retail Advertising Campaign
LO 3
Selecting Advertising Objectives
Budgeting for the Campaign
Designing the Message
Selecting the Media to Use
Scheduling the Ads
Evaluating the Results
16
LO 3
Factors unique to retailing that should be considered
when determining objectives:
Age of the store
Store location
Type of merchandise sold
The competition
The size of trading area
Supplier support
17
LO 3
Make consumers in your trading area

aware that you offer the lowest prices...
Wal-Marts
Always Low Prices
18
LO 3
Make newcomers in your trading area

aware of your existence...
The welcome wagon coupons given to

new residents of the area.
19
LO 3
Make customers aware of your

large stock selection...
Nordstroms promising the shopper a

free shirt if the retailer is out of stock
on the basic sizes.
20
LO 3
Making a specific target market aware of your

product offering...
JCPenneys At least part of you is

comfortable campaign
21
LO 3
Increase traffic during slow sales

periods...
Subway Sandwiches Shops Two-for-One

Tuesdays
22
LO 3
Move old merchandise at the end

of of a selling season...
The after-Christmas clearance sales

that many retailers use.
23
LO 3
Strengthen your stores image or reputation...
Neiman Marcuss famous

Christmas catalog that
generates news stories
around the world when
the catalog is mailed to
customers.
24
LO 3
Identify your store with the nationally advertised
brands that it sells...
Dillards
featuring Tommy Hilfiger clothing in their
ads
25
LO 3
Reposition the image of your store

in the minds of consumers...
Holiday Inns On the Way campaign
26
LO 3
Cultivate new customers...
Any of the one-day discounts that a

customer gets for opening a charge
account with the retailer.
27
LO 3
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
28
LO 3
Retain your present customers...
Any of the airlines frequent-flyer

programs, or supermarkets use of a
loyalty card
29
LO 3
Get customers who previously shopped at
your store, but no longer do, to return to your
store...
The JCPenney I Love Your Style

campaign
30
Budgeting for the Campaign:
Retailer-Only Campaigns
LO 3
Affordable method is a technique for budgeting
advertising in which all the money a retailer can afford
to spend on advertising in a given time period
becomes the advertising budget.
Percentage-of-sales method is a technique for
budgeting advertising in which the retailer targets a
specific percentage of forecasted sales as the
advertising budget.
31
LO 3
Task-and-objective method
is a technique for budgeting in which the retailer
establishes its advertising objectives and then
determines the advertising tasks that need to be
performed to achieve those objectives.
32
Advertising as a Percentage of Sales
LO 3: Exhibit 11.2
33
Advertising as a Percentage of Sales
LO 3: Exhibit 11.2
Source: From Advertising Ratios& Budgets, published by Schonfeld & Associates,

2003. Used with permission.
34
Task and Objective Method
of Advertising Budget Development
LO 3: Exhibit 11.3
Objective and Task Estimated Cost
Objective 1: Increase traffic during dull periods.
Task A: 15 full-page newspaper advertisements

to be spread over these dates:
February 2 - 16; June 8 - 23; October 4 - 18 $22,500
Task B: 240, 30-second radio spots split on two stations

and spread over these dates:
February 2 - 16; June 8 - 23; October 4 - 18 4,320
35
LO 3: Exhibit 11.3
Objective 2: Attract new customers from newcomers

to the community
Task A: 2,000 direct-mail letters greeting new residents
to the community $1,000
Task B: 2,000 direct-mail letters inviting new arrivals in

the community to stop in to visit the store and fill
out a credit application 1,000
Task C: Yellow-Page advertising 1,900
36
LO 3: Exhibit 11.3
Objective and Task Estimate d Cost
Objective 3: Build stores reputation.
Task A: weekly 15-second institutional ads on

the 10PM television news every Saturday
and Sunday $20,800
Task B: one half-page newspaper ad per month in

the home living section of the local newspaper 9,500
37
LO 3: Exhibit 11.3
Objective 4: Increase shopper traffic in shopping center.
Task A: cooperate with other retailers in the shopping

center in sponsoring transit advertising on buses
and cabs $3,000
Task B: participate in Midnight Madness Sale with other

retailers in the shopping center by taking out
2 full-page newspaper ads--one in mid-March
and the other in mid-July 3,000
38
LO 3: Exhibit 11.3
Objective 5: Clear out end-of-month, slow-moving merchandise.
Task A: run a full-page newspaper ad on the last

Thursday of every month $18,000
Task B: run 3, 30-second television spots on the last

Thursday of every month 14,000
Total advertising budget $99,020
39
Factors in Allocating Advertising Dollars
LO 3
HIGH ADVERTISING LOW ADVERTISING
ALLOCATION ALLOCATIONS
High Gross Margin Percentage Low Gross Margin Percentage
High Advertising Elasticity of Low Advertising Elasticity of
Demand Demand
Dominant or Potentially Low Market Share and Limited
Dominant Market Share in Potential for Being Dominant
Department or Merchandise Line Market Share Department or
Good Backup Resources Line
(Space, Inventory, Accounts Poor Backup Resource (Space,
Receivable, People) Inventory, Accounts Receivable,
Willingness to Allocate Enough People)
to Achieve Critical Mass Unwillingness to Allocate
Enough to Achieve Critical
Mass
40
Co-Op Campaigns
LO 3
Vertical Cooperative Advertising occurs when the
retailer and other channel members (usually
manufacturers) share the advertising budget. Usually
the manufacturer subsidizes some of the retailers
advertising that features the manufacturers brands.
Horizontal Cooperative Advertising occurs when 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.
41
Designing the Message
LO 3
Creative messages cannot be developed without
knowing which media will be used to carry out the
message to the target market.
Some Common Approaches:
Lifestyle
Fantasy
Humorous
Slice-of-life
Mood/Image
42
Media Alternatives
LO 3
Mass Media aimed at total markets:
Newspapers
Television
Specific market media forms:
Radio
Magazines
Direct mail
Internet
43
Media Alternatives
LO 3
Miscellaneous Media
Yellow Pages
Outdoor advertising
Transit advertising
Electronic information terminals
Specialty firms
Shopping guides
44
Media Alternatives
LO 3
Creative Ads should seek to:
Attract attention and retain attention.

Achieve the objective of the advertising strategy.
Avoid errors, especially legal ones.
45
Media Alternatives
LO 3
Monster.coms parody of a popular Nike ad helped
increased its web site traffic from 1.5 million unique
visitors per month to more than 2.5 million.
46
Media Selection
LO 3
Coverage is the theoretical maximum number of
consumers in the retailers target market that can be
reached by a medium and not the number actually
reached.
Reach is the actual total number of target customers
who come in contact with an advertising message.
Cumulative Reach is the reach that is achieved over a
period of time.
47
Media Selection
LO 3
Frequency is 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) is 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.
48
Media Selection
LO 3
Cost Per Thousand Target Market (CPM-TM) is a
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 refers to how strong an impression an
advertisement makes and how well it ultimately leads
to a purchase.
49
Scheduling of Advertising
LO 3
Ads should appear on, or slightly precede, the days when
customers are most likely to purchase.
Advertising should be concentrated around times when people
receive their payroll checks.
If the retailer has limited funds, it should concentrate its
advertising during periods of highest demand.
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.
50
LO 3
Advertising Effectiveness is the extent to which the
advertising has produced the result desired.
Advertising Efficiency is concerned with whether the
advertising result was achieved with minimum
financial expenditure.
51
LO 3
Most, but not all, ineffective advertising is due to one
of ten errors:
Bombarding the customer with so many messages and
sales that any single message or sale tends to be
discounted.
The advertising was not creative or appealing.
The advertising didnt give all the needed information.
Advertising dollars were spread too thinly over too
many departments or merchandise lines.
52
LO 3
Poor internal communication among salesclerks, cashiers, stock
clerks, and management.
Advertisement not directed at the proper target market.
Retailer did not consider all media options.
Too many last-minute changes in the advertising copy.
Retailer took co-op dollars just because they were free and
therefore presumably a good deal.
Used a medium that reached too many people not in the target
market.
53
Question to Ponder
Should a retailer change its advertising campaign

every year so that consumers do not get bored with it?
54
Does this Ad Discriminate?
LO 3
Consider the following ad that may be very similar to one in your
local paper this morning.
For Sale
A Spacious, Lovely House With a View. It has a
beautiful view overlooking Buffalo Lake, spacious
master bedroom, walk-in closets, and childrens rooms
at the opposite end, complete with maids/nannys
quarters. Theres even a family room/den downstairs.
Its perfect for newlyweds or for young couples, since
its located in a peaceful residential community, within
walking distance to private schools and the beach.
55
Lawyers Declaration of Independence
LO 3
A LAWYERS REWRITE OF
A DECLARATION OF
INDEPENDENCE
By the Representatives of the United
States of America
In General Congress Assembled
Are you sure that everyone

was there that day?
56
LO 3
When in the Course of human of Events, it becomes
necessary for one People to dissolve the Political Bands
which have connected them with another, and to assume
among the Powers of the Earth, the separate and equal
Station to which the Laws of Nature and of Nature's God
entitle them, a decent Respect to the Opinions of Mankind
requires that they should declare the causes which impel
them to the Separation.
Where are these laws published?
No copies are on file with the FTC
57
LO 3
We hold these truths to be self-evident,
and that all Men are created equal that
they are endowed by their Creator with
certain unalienable Rights, that among
these are Life, Liberty and the Pursuit of
This isHappiness
an expressed
-- warrant.
Change copy to state it is not guaranteed.
58
LO 3
We hold these truths to be self-evident, and that all Men

are created equal that they are endowed by their
Creator with certain unalienable Rights, that among
these are Life, Liberty and the Pursuit of Happiness --
That to secure these Rights, Governments are
instituted among Men, deriving their just Powers from
the Consent of the Governed,
What that whenever
other rights anywe
are form
ready
of Government becomes destructive of these
to disclose later?
59
LO 3
All is too general a term.
Qualify
Prudence, indeed, will dictate that Governments long
established should not be changed for light and
transient Causes; and accordingly all Experience hath
shown, that Mankind are more disposed to suffer, which
Evils are sufferable, than to right themselves by
abolishing the Forms to which they are
accustomed.
60
LO 3
Jefferson, arent you getting a

little carried away?
But when a Long Train of Abuses and Usurpations

pursuing invariably the same Object, evinces a Design
to reduce them under absolute Despotism, it is their
Right, it is their Duty, to throw off such Government, and
to provide new Guards for their future Security.
61
LO 3
Will he sign a release?
The History of the present King of Great Britain is a

History of repeated injuries and Usurpations, all having
in direct Object the Establishment of an absolute
Tyranny over these States.
62
LO 3
Arent you confusing your opinions

with facts?
To prove this, let Facts be submitted to a candid World
63
Management of Sales Promotions and Publicity
LO 4
Role of Sales Promotion
Types of Sales Promotion
Evaluating Sales Promotions
Publicity Management
64
Types of Sales Promotions
LO 4
Sole-Sponsored Sales Promotions are sales promotions that the
expense to the retailer may or may not be shared with others.
Premiums are extra items offered to the customer when
purchasing promoted products.
Contests and Sweepstakes are sales promotion techniques in
which 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 are a from of sales promotion program in which
buyers are rewarded with special rewards, which other shoppers
are not offered, for purchasing often from the retailer.
65
Types of Sales Promotion
LO 4: Exhibit 11.5
Sales Promotions
Sole Sponsored Joint Sponsored
Contest and Frequent -

Premiums Sweepstakes Buyer
Programs
In-Store Demonstrations
Coupons
Displays and Sampling
66
LO 4
Jointly Sponsored Sales Promotions offers retailer the
advantage of using other peoples money (OPM).
Coupons are a sales promotion toll 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.
In-Store Displays are promotional fixtures of displays
that seek to generate traffic, highlight individual items,
and encourage impulse buying.
Demonstrations and Sampling are in-store
presentations with the intent of reducing the
consumers perceived risk of purchasing a product.
67
LO 4
Jointly Sponsored Sales Promotions:
Best Buy coordinates promotional efforts with

manufacturers to provide consumers price savings
through rebates.
Pizza Huts premium offer of a 6 song custom made
CD stimulated sales of its New Yorker Pizza when first
introduced.
68
Eight Most Popular Types of
Joint-Sponsored Sales Promotions
LO 4
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%
69
Percentage of Rebates
Redeemed by Dollar Value
LO 4
Value Redeemed
Greater than $50 88%
$25.00 - 49.99 48%
$15.00 - 24.99 18%
$ 5.00 - 14.99 11%
$ 2.00 - 4.99 5%
Less than $2.00 1%
70
Evaluating Sales Promotions: What Sales
Promotions Can and Cannot Achieve
LO 4: Exhibit 11.6
Tasks That Sales Promotion Can Accomplish:
Get consumers to try a new product
Stimulate the sales of products
Neutralize competitive advertising and sales
promotions
Encourage repeat usage by current users
Reinforce advertising
71
Evaluating Sales Promotions: What Sales
Promotions Can and Cannot Achieve
LO 4: Exhibit 11.6
Tasks That Sales Promotion Cannot Achieve:
Change the basic non-acceptance of an undesired
product
Compensate for a poorly trained sales force
Give consumers a compelling reason to continue
purchasing a product over the long run
Permanently stop an established products declining
sales trend
72
Publicity Management
LO 4
When publicity is formally managed, it should be
integrated with other elements of the promotion mix.
Advantages of publicity:
Objective
Credible
Appeals to a mass audience
Disadvantages of publicity:
Difficult to control and time
73
Additional Slides
74
Retail Promotion Mix
LO 1
Sales
Advertising Promotion
Publicity Personal
Selling
75
Promotional Objectives
LO 2
Interdependence
Short-term Long-term
Objectives Objectives
76
LO 3
Affordable
method
Percentage- Task-and-
of-sales objective
method method
77
Designing Creative Ads
LO 3
Attract attention
And retain
attention
Achieve the
Avoid having
objective of
any errors,
the
especially
advertising
legal
strategy
ones
78
79

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Advertising and Promotion

Name the four basic components of the retailers

Improve Long-Run Improve Short-Run

Store Image Public Increase

From Existing Expand

Make consumers in your trading area

Make newcomers in your trading area

The welcome wagon coupons given to

Make customers aware of your

Nordstroms promising the shopper a

Making a specific target market aware of your

JCPenneys At least part of you is

Increase traffic during slow sales

Subway Sandwiches Shops Two-for-One

Move old merchandise at the end

The after-Christmas clearance sales

Strengthen your stores image or reputation...

Neiman Marcuss famous

Reposition the image of your store

Holiday Inns On the Way campaign

Any of the one-day discounts that a

Make consumers think of you first when

Retain your present customers...

Any of the airlines frequent-flyer

The JCPenney I Love Your Style

Source: From Advertising Ratios& Budgets, published by Schonfeld & Associates,

Objective 1: Increase traffic during dull periods.

Task A: 15 full-page newspaper advertisements

Task B: 240, 30-second radio spots split on two stations

Objective 2: Attract new customers from newcomers

Task B: 2,000 direct-mail letters inviting new arrivals in

Objective 3: Build stores reputation.

Task A: weekly 15-second institutional ads on

Task B: one half-page newspaper ad per month in

Objective 4: Increase shopper traffic in shopping center.

Task A: cooperate with other retailers in the shopping

Task B: participate in Midnight Madness Sale with other

Objective 5: Clear out end-of-month, slow-moving merchandise.

Task A: run a full-page newspaper ad on the last

Task B: run 3, 30-second television spots on the last

Total advertising budget $99,020

Attract attention and retain attention.

Should a retailer change its advertising campaign

Are you sure that everyone

We hold these truths to be self-evident, and that all Men

Jefferson, arent you getting a

But when a Long Train of Abuses and Usurpations

The History of the present King of Great Britain is a

Arent you confusing your opinions

To prove this, let Facts be submitted to a candid World

Sole Sponsored Joint Sponsored

Contest and Frequent -

Best Buy coordinates promotional efforts with

Appeals to a mass audience

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