The document discusses planning a retail communication program. It involves setting objectives to build brand equity or increase sales. A retailer must determine a budget using methods like marginal analysis, objectives and tasks, or rules of thumb. The budget is then allocated among communication elements, categories, regions, and objectives based on their potential return. The goal is an integrated marketing program with consistent branding across all channels and communications.

1. Chapter 16
Retail Communication Mix
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Merchandise Management
Managing Buying
Merchandise Merchandise
Assortments
Chapter 12 Chapter 14
Retail
Communication
Mix
Chapter 16
Merchandise Retail
Planning Pricing
Systems
Chapter 15
Chapter 13
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3. Questions
■ What can retailers build brand equity for their stores and their
private-label merchandise?
■ How are retailers using new approaches to communicate with their
customers?
■ What are the strengths and weaknesses of the different methods for
communicating with customers?
■ Why do retailers need to have an integrated marketing
communication program?
■ What steps are involved in developing a communication program?
■ How do retailers establish a communication budget?
■ How can retailers use the different elements in a communication mix
to alter customers’ decision-making processes?
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4. Objectives of Communication Program
Long-term Short-term
Build Brand (retailer’s name) Image Increase Traffic
Create Customer Loyalty Increase Sales
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5. Brands
Distinguishing name or symbol, such as a logo, that
identifies the products or services offered by a seller and
differentiates those products and services from those
offered by competitors
The McGraw-Hill Companies, Inc./John Flournoy, photographer The McGraw-Hill Companies, Inc./Bob Coyle, photographer
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6. Value of Brand Image
Value to Retailers (Brand Equity) Value to Customers
■ Attract Customers ■ Promises Consistent
■ Build Loyalty Quality
■ Higher Prices Leading to ■ Simplifies Buying Process
Higher Gross Margin ■ Reduces Time and Effort
■ Reduced Promotional Expenses Searching for Information
■ Facilitates Entry into New Markets About Merchandise/Retailer
Gap  GapKids
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7. Building Brand Equity
Create a High Develop
Level of Brand Favorable
Awareness Associations
Brand
Equity
Consistent Create Emotional
Reinforcement Connections
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8. Tar-Zhay
The McGraw-Hill Companies, Inc./Lars Niki, photographer
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9. 16-9

10. Apple
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11. Benefits of High Brand Awareness
Aided Recall Stimulates
Visits to
Top Mind Awareness Retailer
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12. Creating Brand Awareness
Memorable Repeated
Name Exposure
Best Buy
Top-of-mind Starbuck’s
Home Depot
Brand Awareness
Event
Symbols Macy’s Sponsorship
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13. Retailers Develop Associations
with their Brand Name
Brand name is a set of associations that are usually organized
around some meaningful themes
Brand associations: anything linked to or connected with the
brand name in a consumer’s memory
Merchandise Category – Office Depot – office supplies
Price/quality – Neiman Marcus –, high fashion merchandise
Specific attribute or benefit – 7-Eleven – convenience
Lifestyle or activity – Electronic Boutique – computer games
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14. McDonald’s Brand Associations
Golden
Arches
Fast
Big Mac
Food
McDonald’s
French
Fries Ronald
McDonald
Clean
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15. L.L. Bean
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16. L.L. Bean’s Brand Associations
New
England
Practical Friendly
L.L. Bean
Expertise Honest
Outdoors
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17. Wal-Mart Associations
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18. Target Associations
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19. Consistent Reinforcement
The retailer’s brand image is developed and maintained
through the retailer’s communication mix
Retail Communication Mix
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20. Consistent Reinforcement through Integrated
Marketing Communication Program
Integrated Marketing Communication Program
■ A program that integrates all of the
communication elements to deliver a
comprehensive, consistent message
■ Providing a consistent image can be challenging
for multichannel retailers – Need to consider the
needs of all channels early in the planning of its
communication program
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21. Integrated Marketing Communications
Present a Consistent Brand Image through all Communications
with Customers
•Store Design
•Advertising
•Web Site
•Magalog
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
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22. Brand Extensions
■ Gap  GapKids and Old Navy
■ Talbots  Talbuts Mens
■ Sears  Sears Auto Centers and the Great Indoors
■ Pottery Barn  Pottery Barn Kids
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
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23. Extending Brand Name to a New Concept
Pluses Minuses
■ Develop Awareness and ■ Associations Might Not
Image Quickly Be Compatible with
■ Less Costs Needed to Extension
Promote Extension
Limited  Victoria’s Secret
Abercrombie & Fitch  Hollister
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24. Communication Methods
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25. Paid Impersonal Communications
■ Advertising
■ Sales promotions – Special events, In-store demonstrations
■ Games, sweepstakes and contests
■ Coupons
Boxes of KrustyO’s cereal at a New York 7-
■ Store atmosphere Eleven stores, temporarily converted into a
■ Website Kwik-E Mart, to promote the Simpson Movie.
■ Community building
Jack Star/PhotoLink/Getty Images
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26. Store Atmosphere
The combination of the store’s
physical characteristics
(architecture, layout, signs and
displays, colors, lighting,
temperature, sounds, smells)
together create an image in the
customers’ mind
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27. Mediacart
A shopping cart that delivers
point-of-decision
advertising
■ Informs the customer
about special deals as the
customer passes them in
the aisle
■ Each video screen is
embedded with an RFID
chip that interacts with
chips installed on store
shelves
■ Records shopping habits,
dwell times, how shoppers
travel through the store
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28. Community Building
Retailers’ Community Building
Websites
offer opportunities for
customers with similar
interests to learn about
products and services that
support their hobbies and
share information with
others
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29. Paid Personal Communication
■ Retail salespeople are primary vehicle for
providing paid personal communication to
customers.
 Personal selling – salespeople satisfy needs through
face to face exchange of information
■ Email – retailers inform customers of new
merchandise, receipt of order or when order has
been shipped
■ Direct Mail
■ M-Commerce (mobile commerce)
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30. Unpaid Impersonal Communication
Publicity is communication through significant
unpaid presentations about the retailer, usually a
news story, in impersonal media.
• Newspaper
• TV coverage
• Macy’s Thanksgiving Day Parade
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31. PR
The Gap, Emporio Armani, and Apple are
among several retailers selling red
products, a portion of the proceeds go to
Product RED, a charity to wipe out AIDS in
Africa
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32. Unpaid Personal Communication
■ Word-of-mouth
Can be favorable
Can be detrimental
■ Social Shopping
 A communication strategy in which consumers use
Internet to engage in the shopping process by
exchanging preferences, thoughts, and opinions
 Product/service reviews
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33. Social Shopping
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34. Comparison of
Communication Methods
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35. Planning the Retail Communication Program
Steps in Developing a Retail Communication Program
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36. Setting Objectives
■ Communication objectives:

Specific goals related to the retail communication
mix’s effect on the customer’s decision-making
process
 Long-term: ex) creating or altering a retailer’s brand
image
 Short-term: ex) increasing store traffic
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37. Communication Objectives & Stages in
the Consumers Decision-Making Process
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38. Retail and Vendor
Communication Programs
Vendor Retailer
• Long-term objectives • Short-term objectives
• Product focused • Category focused
• National • Local
• Specific product • Assortment of
merchandise
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39. Setting the Communication Budget
• Marginal analysis Advertising Sales
• Objective and task
• Rules of thumb Sales Advertising
- Affordable
- Percent of sales
- Competitive parity
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40. Setting the Communication Budget
■ Marginal Analysis Method

Based on the economic principle that firms should
increase communication expenditures as long as
each additional dollar spent generates more than a
dollar of additional contribution
 Very hard to use because managers don’t know the
relationship between communication expenses and
sales
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41. Marginal Analysis for Setting
Communication Budget
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42. Objective-and-Task Method
■ Determines the budget required to undertake
specific tasks to accomplish communication
objectives
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43. Illustration of Objective and Task
Method for Setting a Communication Budget
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44. Financial Implications of
Increasing the Communication Budget
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45. Rule of Thumb Methods
Affordable Budgeting Method Percentage of Sales Method –
– sets communication budget communication budget is set as a
by determining what money is fixed percentage of forecasted sales.
available after operating costs
and profits are budgeted.
Drawback: The affordable Drawback: This method assumes
method assumes that the the same percentage used in the
communication expenses past, or by competitors, is still
don’t stimulate sales and appropriate for the retailer.
profits.
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46. Rule of Thumb Methods
Competitive Parity Method – this communication budget is set so
that the retailer’s share of communication expenses equals its
share of the market.
Drawback: This method (like the others) does not allow the retailer
to exploit the unique opportunities or problems they confront in a
market.
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47. Allocation of the Promotional Budget
■ The retailer decides how much of its budget to
allocate to specific communication elements,
merchandise categories, geographic regions, or
long- and short-term objectives
■ Budget allocation decision is more important
budget amount decision
High-assay principle: The retailer allocate the
budget to areas that will yield the greatest return
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