Chapter 11 Advertising and Promotion Retailing, 6 th Edition. Copyright ©2008 by South-Western, a...

Chapter 11

Advertising and Promotion

Retailing, 6th Edition. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved.

Learning Objectives

1. Name the four basic components of the retailer’s promotion mix and discuss their relationship with other decisions.

2. Describe the differences between a retailer’s long-term and short-term promotional objectives.

3. List the six steps involved in developing a retailer’s advertising campaign.

4. Explain how retailers manage their sales promotion and publicity.

LO 1

The Retail Promotion Mix

Types of Promotion

Promotion in the Supply Chain

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.

LO 1


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.

LO 1


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.

LO 1


Publicity:

Is non-paid-for communications of information about the company or product, generally in some media form.

LO 1


Personal selling:

Involves a face-to-face interaction with the consumer with the goal of selling consumer merchandise or services.

LO 1


Primary trading area:

Is the geographic area where the retailer can serve customers, in terms of convenience and accessibility, better than the competition.

LO 1


Secondary trading area:

Is the geographic area where the retailer can still be competitive despite a competitor having some locational advantage.

LO 1

Promotional Objectives

Long-Term Objectives

Short-Term Objectives

Interdependence

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.

LO 2

Possible Promotion Objectives in Retailing

LO 2Exhibit 11.1


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.

LO 2

Steps in Planning a Retail Advertising Campaign

Selecting Advertising Objectives

Budgeting for the Campaign

Designing the Message

Media Alternatives

Media Selection

Scheduling of Advertising

Evaluating the Results

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.

LO 3


Percentage-of-sales method:

Is a technique for budgeting in which the retailer targets a specific percentage of forecasted sales as the advertising budget.

LO 3

Advertising as Percentage of Sales by Line of Trade

LO 3Exhibit 11.2


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.

LO 3

Task and Objective Method: Advertising Budget Development

LO 3Exhibit 11.3

Advertising Expenditures as Percentage of Sales: Some Leading Retailers

LO 3Exhibit 11.4 – 1st 3 Categories

Advertising Expenditures as Percentage of Sales: Some Leading Retailers

LO 3Exhibit 11.4 – 2nd 3 Categories


Vertical cooperative advertising:

Occurs when the retailer and other channel members (usually manufacturers) share the advertising budget. Usually the manufacturer subsidizes some of the retailer’s advertising that features the manufacturer’s brands.

LO 3


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.

LO 3

Media Alternatives

Newspaper Advertising

Television Advertising

Radio Advertising

Magazine Advertising

Direct Mail

Internet

Miscellaneous Media

LO 3


Coverage:

Is 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.

LO 3


Reach:

Is the actual total number of target customers who come into contact with an advertising message.

LO 3


Cumulative reach:

Is the reach that is achieved over a period of time.

LO 3


Frequency:

Is the average number of times each person who is reached is exposed to an advertisement during a given time period.

LO 3


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.

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.

LO 3


Impact:

Refers to how strong an impression an advertisement makes and how well it ultimately leads to a purchase.

LO 3


Advertising effectiveness:

Is the extent to which the advertising has produced the result desired.

LO 3


Advertising efficiency:

Is concerned with whether the advertising result was achieved with the minimum financial expenditure.

LO 3

Management of Sales Promotions and Publicity

Role of Sales Promotion

Type of Sales Promotion

Evaluating Sales Promotions

Publicity Management

LO 4

Types of Sales Promotion

LO 4Exhibit 11.5


Premiums:

Are extra items offered to the customer when purchasing promoted products.

LO 4


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.

LO 4


Loyalty programs:

Are a 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.

LO 4


Coupons:

Are a 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


In-store displays:

Are promotional fixtures of displays that seek to generate traffic, highlight individual items, and encourage impulse buying.

LO 4


Demonstrations and sampling:

Are in-store presentations with the intent of reducing the consumer’s perceived risk of purchasing a product.

LO 4

What Sales Promotion Can and Cannot Achieve

LO 4Exhibit 11.6

Positive Store Image

Dee Lincoln, cofounder of Del Frisco’s Double Eagle Steakhouse, paid a record $80,000 for a 1,309-pound Main-Anjou Cross-breed at Denver’s National Western Stock Show to introduce her new store and to generate a positive store image.

LO 2

Corporate Citizenship

Wal-Mart sponsors a variety of community and public service programs, which help to promote its role as a good corporate citizen.

LO 2

Does this Ad Discriminate?

Consider the following ad that may be very similar to one in your local paper this morning.

For SaleA Spacious, Lovely House With a View. It has a beautiful view overlooking Buffalo Lake, spacious master bedroom, walk-in closets, and children’s rooms at the opposite end, complete with maid’s/nanny’s quarters. There’s even a family room/den downstairs. It’s perfect for newlyweds or for young couples, since it’s located in a peaceful residential community, within walking distance to private schools and the beach.

LO 3

Lawyer’s Declaration of Independence

A LAWYER’S 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?

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

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 --This is an expressed warrant.

Change copy to state it is not guaranteed.

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, that whenever any form of Government becomes destructive of theseWhat other rights are we readyto disclose later?

LO 3


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.

All is too general a term.Qualify

LO 3


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.

Jefferson, aren’t you getting a little carried away?

LO 3


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.

Will he sign a release?

LO 3


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

Aren’t you confusing “your opinions” with ‘facts?”

LO 3

Additional Slides

Retail Promotion Mix

LO 1

AdvertisingSalesPromotion

Publicity PersonalSelling


LO 2

Interdependence

Short-termObjectives

Long-termObjectives

Budgeting for the Campaign: Retailer-Only Campaigns

LO 3

Task-and-objectivemethod

Percentage-of-salesmethod

Affordablemethod

Designing Creative Ads

LO 3

Avoid having any errors, Especially legal ones

Achieve the objective of the advertising strategy

Attract attentionAnd retain attention

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