16 retail communication mix

Retail Communication Mix
Dr. Parveen Nagpal

Retail Communication
• The retail communication program informs the customers about the
retailer as well as the merchandise/services that he offers.
• It helps to develop repeat visits and enhances customer loyalty
• It has short term and long term effects on retailers business
• The communication program can be used to create and maintain a
strong differentiation for the retailer and his brands
• Effective communication mix enhances retail image and is an important
source of strategic advantage
• It also complements the retailers CRM program

Communications Program to Develop Brand Image and Brand Loyalty
• Brand is a distinguishing name or symbol such as a logo that identifies the
products or services offered by the seller and differentiates those products
and services from the offerings of the competitors.
• Brand provides value to both customers and retailers
• It gives a unique identity
• It conveys information to consumers about the nature of the shopping
experience - the retailers mix - they will encounter when patronizing a
retailer
• It enhances customer satisfaction with the merchandise/services they buy.

• Brand Equity refers to the perceived value of a company or product based
on its reputation among customers and consumers as well as its assets
beyond mere revenue.
• The most important components of brand equity are:
Brand Recognition
Brand Awareness
Customer Experience
Customer Preference
Customer Retention
Perceived Quality
USP

The activities that a retailer needs to undertake to build brand equity for its
firm or its private-label merchandise are
(1) Create a high level of brand awareness
(2) Develop favorable associations with the brand name
(3) Consistently reinforce the image of the brand.

(1) Brand Awareness is the ability of a potential customer to recognize or
recall that the brand name is a type of retailer or product/service
• It is the strength of the link between the brand name and the type of
merchandise /service in the minds of the customers
• Aided recall: consumers indicate that they know the brand when the name
is presented to them
• Top-of-Mind (TOM) Awareness: occurs when the consumer mentions a
specific brand name first when they are asked about the type of
retailer/merchandise category/type of service. E.g. Bisleri
• Retailers build TOM awareness by having memorable names, repeatedly
exposing the name through advertisement and having memorable symbols
• Sponsorship of well publicized events can provide exposure and increase
awareness

(2) Brand Associations
• Building awareness is only one step in developing brand equity, but the
value of the brand is largely based on the associations that customers make
with the brand name.
• Brand associations are anything linked to or connected with the brand name
in a consumer’s memory. For example, some of the associations that
consumers might have with Apple are its innovative products, such as the
iPhone, iPod, and Mac computers, as well as its easy-to-use computer
interface and innovative stores.
• These strong associations influence consumer buying behavior

Some common associations that retailers develop with their brand name are
as follows:
1. Merchandise Category: The most common association is to link the
retailer to a category of merchandise. E.g. Office Depot would like to have
consumers associate its name with office supplies.
2. Price/ Quality: Some retailers want to be associated with offering unique,
high-fashion merchandise. Other retailers want associations with low
prices and good value.
3. Specific Attribute or Benefit: A retailer can link its stores to attributes
with providing convenience or connection with offering a high level of
customer service.
4. Lifestyle or Activity: Some retailers associate their name with a specific
lifestyle or activity.

(3) Brand Image
• The brand image consists of a set of associations that are usually organized
around some meaningful themes.
• Thus, the associations that a consumer might have about McDonald’s might
be organized into groups such as kids, service, and type of food.

Integrated Marketing Communication Program
Retailers need to develop an integrated marketing communication program -
a program that integrates all the communication elements to deliver a
comprehensive, consistent message to all customers over time, across all
elements of their retail mix, and across all delivery channels.
Without this coordination, the communication methods might work at cross-
purposes.
For example, the retailer’s televised advertising campaign might attempt to
build an image of exceptional customer service, but the firm’s sales
promotions might all emphasize low prices.
If communication methods are not used consistently, customers may become
confused about the retailer’s image and therefore not patronize the store.

Extending the Brand Name
Retailers can leverage their brand names to support the growth strategies.
E.g. IKEA used its strong brand image to enter the U.S. home furnishing retail
market successfully
In other cases, retailers have pursued growth opportunities using a new and
unrelated brand name.
There are pros and cons to extending a brand name to a new concept.
An important benefit of extending the brand name is that minimal
communication expenses are needed to create awareness and a brand image
for the new concept.
Customers will quickly transfer their awareness and associations about the
original concept to the new concept.
However, in some cases, the retailer might not want to have the original
brand’s associations connected with the new concept.

Extending the Brand Name
These issues also arise as a retailer expands internationally.
Associations with the retailer’s brands that are valued in one country may not
be valued in another.
Retailers communicate with customers using a mix of methods, such as
advertising, sales promotion, publicity, e-mail, blogs, and social media like
Twitter, Facebook, and YouTube

Methods of Communicating with Customers
For any communications campaign to succeed, the firm must deliver the right
message to the right audience through the right media, with the ultimate
goal of profiting from long-term customer relationships rather than just
short-term transactions.
Reaching the right audience is becoming more difficult, however, as the
media environment grows more complicated
No single type of media is necessarily better than another.
The goal of a retail communication strategy is to use the media in conjunction
so that the sum exceeds the total of the individual media types.
However, advances in technology have led to a variety of new, along with the
traditional, media options for consumers, all of which vie for consumers’
attention.

Print media have also grown and become more specialized.
This proliferation of media has led many retailers to shift their promotional
dollars from advertising to direct marketing, use of Internet sites, and other
forms of promotion in search of the best way to deliver messages to their
target audiences.

The elements can be viewed on two axes:
Passive and Interactive (from the consumer’s perspective)
Offline and Online.
As the number of communication elements have expanded, so have the ways
in which retailers can communicate with their customers. So, for instance,
direct marketing appears in three of the four boxes.
Firms have also expanded their use of traditional media (e.g., advertising,
public relations, and sales promotions) from pure offline to a combination of
offline and online

Direct Marketing
It is marketing that communicates directly with target customers to generate
a response or transaction.
It contains a variety of traditional and new forms of marketing
communication initiatives and is represented in three of the four quadrants in
the diagram.
Traditional direct marketing includes mail and catalogs sent through the mail;
today it also includes Internet-enabled methods such as e-mail and mobile
marketing.
Direct marketing retailers try to carefully target their customers so that they
will be more receptive to their messages.

Direct Mail
Direct mail includes any brochure, catalog, advertisement, or other printed
marketing material delivered directly to the consumer through the mail or a
private delivery company.
Retailers have communicated with their customers through the mail for as
long as the mail has existed.
The direct mail piece can go to all customers, to a subset of the customers
according to their previous purchases, or even on a personalized basis to
individual customers.
Although relatively expensive on a per-customer basis (because of printing,
mail costs, and a relatively low response rate), direct mail is still extensively
used by many retailers because people respond favorably to personal
messages.

E-mail
E-mail is a direct marketing communication vehicle that involves sending
messages over the Internet.
E-mail, like other forms of electronic communications (e.g., Web sites, m-
commerce), can be personalized to the specific consumer and thus is similar
to communications delivered by salespeople.
However, when the same message is delivered electronically to all recipients,
electronic communications more closely resemble advertising.
Retailers use e-mail to inform customers of new merchandise and special
promotions, confirm the receipt of an order, and indicate when an order has
been shipped.

Mobile Marketing
Mobile marketing is marketing through wireless handheld devices, such as
cellular telephones, and m-commerce or mobile commerce involves
completing a transaction via the cell phone.
Smartphones offer a kind of mobile computer with the ability to obtain sports
scores, weather, music, videos, and text messages, as well as to purchase
merchandise.
Retailers’ success with mobile marketing rests on integrating marketing
communications with fun, useful apps that are consistent with these
consumer attitudes toward mobile devices.
In response, firms are steadily improving customers’ potential experience
with their mobile interfaces by creating applications for consumers.

Online Marketing – The online media vehicles with which customers can
interact include Web sites, blogs, and social media.
• Web Sites
Retailers are increasing their emphasis on communicating with customers
through their Web sites.
They use their Web sites to build their brand images; inform customers of store
locations, special events, and the availability of merchandise in local stores;
and sell merchandise and services.
Some retailers provide services that help garner customer loyalty and indirectly
increase sales, others devote areas of their Web sites to community building
and offer opportunities for customers with similar interests to learn about
products and services and to share information with others.
Visitors to these Web sites can also post questions seeking information.

• Blogs
A blog (Weblog) contains periodic posts on a common Web page, that can
communicate trends, announce special events, and create word-of-mouth,
which is communication between people about a retailer.
Blogs connect customers by forming a community, allow the company to
respond directly to customers’ comments, and facilitate long-term
relationships between customers and the company.
Blogs are supposed to be transparent and contain authors’ honest
observations, which can help customers determine their trust and loyalty
levels.
Nowadays, blogs are becoming more interactive as the communication
between bloggers and customers has increased.
Retailers utilize blogs as part of the communication strategy.

• Social Media
It is media content distributed through social interactions.
Three major online facilitators of social media are YouTube, Facebook, and
Twitter.
As another online vehicle for word-of-mouth communications, online social
media enable consumers to review, communicate about, and aggregate
information about products, prices, and promotions.
This type of social media also allows users to interact among themselves
(e.g., form a community).
Such online communities enable users to provide other like-minded
consumers and retailers with their thoughts and evaluations about a retailer’s
products or services.

Retailers are using social media to engage their customers in a proactive
dialogue.
When a retailer provides content in a social media Web site, people often begin
sharing and commenting on it.
The retailer then must monitor the feedback and respond if necessary—
especially if the commentary is negative.
When a retailer finds an unhappy customer, it should recognize the event as a
prime customer service opportunity, engage the consumer, and attempt to
remedy the situation.
By proactively engaging with its customers, a retailer can build stronger
relationships.
Furthermore, retailers can help cultivate their images through social media that
depict them in a certain way, adding a human element that otherwise might not
exist.

Sales Promotion
Sales promotions are special incentives or excitement-building programs that
encourage consumers to purchase a particular product or service; they are
typically used in conjunction with other advertising or personal selling
programs.
Like personal selling and telemarketing, sales promotions are a form of
offline/ interactive communication.
Many sales promotions, like free samples or point-of-purchase (POP) displays,
attempt to build short-term sales, whereas others, like loyalty programs,
contests, and sweepstakes, have become integral components of retailers’
long-term customer relationship management (CRM) programs, which they
use to build customer loyalty.

Tools Used in Sales Promotion
• Coupons
Coupons offer a discount on the price of specific items when they are
purchased.
They are issued by manufacturers and retailers in newspapers, on products,
on the shelf, at the cash register, over the Internet, and through the mail.
Retailers use coupons because they are thought to induce customers to try
products for the first time, convert first-time users to regular users,
encourage large purchases, increase usage, and protect market share against
competition.
Some retailers have linked coupons directly to their loyalty programs

• Rebates
Rebates provide another form of discounts for consumers off the final selling
price.
In this case, however, the manufacturer, instead of the retailer, issues the
refund as a portion of the purchase price returned to the buyer in the form of
cash.
Retailers generally welcome rebates from vendors because they generate
sales in the same way that coupons do but the retailers incur no handling
costs.
Many products, such as consumer electronics, offer rebates that may lower
the price of the item significantly.

• Premiums
A premium offers an item for free or at a bargain price to reward some type
of behavior, such as buying, sampling, or testing.
Such rewards build goodwill among consumers, who often perceive high
value in them.
Premiums can be distributed in a variety of ways:
They can be included in the product packaging, such as the toys inside cereal
boxes; placed visibly on the package or delivered in the mail, such as the free-
perfume offers Victoria’s Secret mails to customers.

• Samples
Samples offer potential customers the opportunity to try a product or service
before they make a buying decision.
Distributing samples is one of the most costly sales promotion tools but also
one of the most effective.
Quick-service restaurants and grocery stores frequently utilize sampling.
• Point-of-Purchase Displays
They are merchandise displays located at the point of purchase, such as at the
checkout counter in a supermarket.
Retailers have long recognized that the most valuable real estate in the store is
at the POP.
Customers see products like a magazine or a candy bar while they are waiting
to pay for their items and impulsively purchase them.

• Special Events
A special event is a sales promotion program comprising a number of sales
promotion techniques built around a seasonal, cultural, sporting, musical, or
some other event.
Special events can generate excitement and traffic to the store.
E.g. Car dealerships can have rallies or shows of new or vintage models.
• Pop-Up Stores
Pop-up stores are temporary storefronts that exist for only a limited time and
generally focus on a new product or limited group of products offered by a
retailer.
They are also used by some retailers during the holiday season to increase
exposure and convenience shopping for their customers without having to
invest in a long-term lease.

Personal Selling
Personal selling is a communication process in which sales associates help
customers satisfy their needs through face-to-face exchanges of information.
It is a form of offline/interactive communication
The cost of communicating directly with a potential customer is quite high
compared with other forms of promotion, but it is simply the best and most
efficient way to sell certain products and services.
Customers can buy many products and services without the help of a
salesperson, but salespeople simplify the buying process by providing
information and services that save customers time and effort.
In many cases, sales representatives add significant value, which makes the
added expense of employing them worthwhile.

Advertising
Advertising entails the placement of announcements and persuasive messages
purchased by retailers and other organizations that seek to inform and/or
persuade members of a particular target market or audience about their
products, services, organizations, or ideas.
Traditionally, advertising has been passive and offline (e.g., ads on TV, in
magazines, and in newspapers)
However, recently there has been a growth in online advertising.

Public Relations
Public relations (PR) involves managing communications and relationships to
achieve various objectives, such as building and maintaining a positive image
of the retailer, handling or heading off unfavorable stories or events, and
maintaining positive relationships with the media.
In many cases, public relations activities support other promotional efforts by
generating “free” media attention and general goodwill.

Planning the Retail Communication Program
The steps involved in developing and implementing a retail communication
program are:
1. Establish Objectives
2. Determine Budget
3. Allocate Budget
4. Implement and Evaluate the Program

1. Establish Objectives
Retailers establish objectives for their communication programs to provide:
• Direction for people implementing the program
• A basis for evaluating its effectiveness.
Some communication programs can have a long-term objective, such as
creating or altering a retailer’s brand image.
Other communication programs focus on improving short-term performance,
such as increasing store traffic on a specific weekend.
Communication objectives are specific goals related to the communication
mix`s effects on customers decision making process.
To effectively implement and evaluate a communications program, the
objectives must be clearly stated in quantitative terms.

The communication mix needs to be defined, along with the degree of
change expected and the time period over which the change will be realized
E.g. Communication objective for a supermarket can be to increase from a
45% to 55% within 3 months the percentage of customers having a favorable
attitude towards the store.
Here the objective is clear and measurable, indicates the task the program
should address.
People who implement this program know what they are supposed to
accomplish.

The communication objectives and approaches used by vendors and retailers
differ, and the differences can lead to conflicts:
• Long-term versus Short-term Goals: Most communications by vendors are
directed toward building a long-term image of their products. In contrast, retailer
communications are used to announce promotions and special sales that
generate short-term revenues.
• Product versus Location: When vendors advertise their branded products, they
aren’t concerned about where customers buy them as long as they buy their
brands. In contrast, retailers aren’t concerned about what brands customers buy
as long as they buy them in their stores.
• Breadth of Merchandise. Typically, because vendors have a relatively small
number of products to promote, they can devote a lot of attention to developing
consistent communication programs for each brand they make. Retailers have to
develop communication programs that promote a much wider range of products.

2. Determine Communication Budget
The second step in developing a retail communication program is to
determine a budget.
The economically correct method for setting the communication budget is
Marginal Analysis.
Even though retailers usually do not have enough information to perform a
complete marginal analysis, the method shows managers how they should
approach budget-setting programs.
The marginal analysis method for setting a communication budget is the
approach that retailers should use when making all of their resource
allocation decisions, including the number of locations in a geographic area,
allocation of merchandise to stores, staffing of stores and the floor and shelf
space devoted to merchandise categories.

Objective-and-Task Method
This method determines the budget required to undertake specific tasks to
accomplish communication objectives.
To use this method, the retailer first establishes a set of communication
objectives and then determines the necessary tasks and their costs.
The total of all costs incurred to undertake the tasks is the communication
budget.
Rule-of-Thumb Method
The previous two methods set the communication budget by estimating
communication activities’ effects on the firm’s future sales or communication
objectives. The rule-of-thumb method uses the opposite logic.
They use past sales and communication activities to determine the present
communication budget.

Methods used:
- Affordable Budgeting Method: Retailers set the communication budget by
determining what money is available after operating costs and profits are
subtracted. The major problem with the affordable method is that it
assumes that communication expenses don’t stimulate sales and profit
- Percentage of Sale Method: sets the communication budget as a fixed
percentage of forecast sales. Retailers use this method to determine the
communication budget by forecasting sales during the budget period and
then applying a predetermined percentage to set the budget. The problem
with the percentage-of-sales method is that it assumes that the same
percentage used in the past, or used by competitors, is appropriate for the
future.

- Competitive Parity Method: Here the communication budget is set so that
the retailer’s share of its communication expenses equals its share of the
market. To use the competitive parity method, the owner manager would
first estimate the total amount spent on communication by all sporting
goods retailers in town.

3. Allocate Budget
After determining the size of the communication budget, the third step in the
communication planning process is to allocate the budget.
In this step, the retailer decides how much of its budget to allocate to specific
communication elements, merchandise categories, geographic regions, or
long and short-term objectives.
Allocation decisions, like budget-setting decisions, should use the principles
of marginal analysis. The retailer should allocate the budget to areas that will
yield the greatest return. This approach for allocating a budget is sometimes
referred to as the high – assay principle.
4. Implement and Evaluate the Program
The final stage in developing a retail communication program is its
implementation and evaluation.

Retail Information System (RIS) & Retail Research
• Retail research is a method of systematically gathering, analyzing, storing,
utilizing valuable retail information and data
• It facilitates the process of finding solutions to problems
• Retail managers need to be informed with sufficient information to make
decisions possible (Information - A meaningful body of facts organized based on
atopic. It is a result of analysis of raw data)
• RIS can be used by store groups, vendors, internal buyers, planners etc.
• Data used in retail research is from customers, marketplace, retail environment,
employees and competitors. (Data - News facts and figures which are
unorganized)
• A Retail Information System anticipates the information needs of retail managers;
collects, organizes and stores relevant data on a continuous basis; directs the
flow of information to the proper decision makers
• RIS can be used by store groups, vendors, internal buyers, planners etc.

Retail Information System (RIS) & Retail Research
• Retail research helps to understand current shopping patterns, size of
market segment, means to satisfy this segment.
• While developing the product mix, the retailer identifies the focus
groups among the target segments and understand their preferences
to serve them better.
• The broad areas in which the data is to be collected by retailer is
defined and specified, using one or more methods:
Questionnaire
In-depth Interview
Observation etc.

Advantages of Retail Information System
• Development of an effective RIS helps to ensure that the system is
fully integrated into the overall retail management plan
• Effective RIS allows for continuous data updation
• RIS is necessary in order to be competitive in todays retail environment
• Retailers can use RIS to access data regarding which items have the
highest turnover rates and where EOQ items have to be ordered

References
1. Michael Levy & Barton A Weitz, “Retailing Management”, 8th Edition, Tata
Mc Graw Hill.
2. Gibson G. Vedamani, “Retail Management”, 4th Edition

16 retail communication mix

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16 retail communication mix