Chapter 19: Promotional Strategy

Retail Promotion

• Definition: Any communication by a retailer that informs, persuades, and/or reminds the target market about any aspect of that firm.

Elements of the Promotional Mix

• Advertising
• Public Relations
• Personal Selling
• Sales Promotion
• Digital Marketing

Advertising

• Definition: Paid, nonpersonal communication transmitted through out-of-store mass media by an identified sponsor.
• Key Aspects:
  • Paid Form: Distinguishes advertising from free publicity.
  • Nonpersonal Presentation: Standard message for entire audience; no individual adaptation.
  • Out-of-store Mass Media: Includes newspapers, radio, TV, web, and social media.
  • Identified Sponsor: The company's name is clearly disclosed.

Advertising Objectives for Retailers

• Retailers select one or more goals for their advertising strategy based on:
  • Increasing Short-term Sales
  • Increasing Customer Traffic
  • Reinforcing Retail Image
  • Informing Customers
  • Easing Sales Personnel's Job
  • Developing Demand for Private Brands

Advertising Advantages

• Large Audience: Attracts attention from a wide group.
• Pass Along Readership: e.g., magazines shared after reading.
• Cost Efficiency: Low cost per contact; media selection based on audience preferences.
  • Example: TV ads for Baby Boomers; social media for Gen Z.
• Message Control: Standardized content ensures consistency.
• Multiple Views Possible: e.g., rechecking ads in magazines.
• Credibility through Surrounding Content: Editorial context can enhance ad believability.

Advertising Disadvantages

• Standardized Messages: Lack flexibility to adapt for individual needs.
• Cost Issues: High investments required, e.g., Super Bowl ad costs.
• Long Lead Times: Some media require advance planning.
• Waste: High throwaway rate; detailed info may be limited.

Advertising Mediums

• Legacy Media: Newspapers, magazines, radio, TV, outdoor media.
• Digital Media:
  • Pay Per Click: Google ads, display ads.
  • Affiliate Marketing: Links from bloggers to e-commerce sites.
  • Native Advertising: Sponsored posts by influencers.

Types of Advertising by Content

• Pioneer Ads: Raise awareness; common for new products.
• Competitive Ads: Persuade against competitors; promote benefits.
• Reminder Ads: Target loyal customers.
• Institutional Ads: Maintain a retailer's public image; can include public service messages.

Types by Payment Method

• Paid Advertising: Full budget control by retailer.
• Consignment Ads: Shared costs and decision making.
• Cooperative Advertising: Manufacturer-retailer joint ads.

Public Relations

• Definition: Communication to foster a favorable image for the retailer, can be paid or unpaid.
• Publicity: Free nonpersonal messages that do not identify a commercial sponsor.

Publicity vs. Advertising

• Cost: Publicity is free; advertising is paid.
• Control: More control over advertising content and placement.
• Credibility: Publicity often seen as more trustworthy.

Public Relations Objectives

• Raise awareness and improve company image.
• Show innovation and commitment to quality of life.
• Minimize promotion costs with effective message delivery.

Personal Selling

• Definition: Oral communication with prospective customers aimed at making a sale.
• Objectives: Persuade, stimulate impulse buys, complete transactions, and improve satisfaction.

Personal Selling Advantages

• Customization: Tailored messages for each customer.
• Attention: High engagement due to in-store presence.
• Feedback: Immediate responses can help close sales.

Personal Selling Disadvantages

• Costly: High operational costs (salary, commission).
• Limited Reach: Fewer customers can be served simultaneously.

Types of Sales Positions

• Order-taker: Basic sales functions; reactive.
• Order-getter: Proactively selling; builds customer base.

Sales Promotion

• Definition: Paid communication activities aimed at stimulating consumer purchases.
• Types: Point-of-purchase displays, contests, coupons, referrals.

Sales Promotion Objectives

• Increase short-term sales and customer loyalty.
• Complement other promotional tools.

Sales Promotion Advantages

• Eye-catching and distinctive.
• Additional customer value.
• Draws traffic and increases impulse buying.

Sales Promotion Disadvantages

• Can damage retailer image.
• Difficulty in termination, e.g., loyalty programs.

Digital Marketing

• Definition: Marketing using electronic devices and the internet to connect with customers.
• Types: SEO, content marketing, social media marketing, email marketing.

Planning a Retail Promotional Strategy

1. Determine promotional objectives.
2. Establish overall promotional budget.
3. Select promotional mix.
4. Implement the promotional mix.
5. Review and revise the promotional plan.

Procedures for Setting a Promotional Budget

• All-you-can-afford method: Generally weak, prioritizes other strategic expenditures.
• Incremental method: Based on past budgets, easier but may not tie to goals.
• Competitive parity method: Adjusts budgets in response to competitors.
• Percentage-of-sales method: Ties budget to sales performance.
• Objective-and-task method: Best practice, links spending to specific objectives but can be complex.

Selecting the Promotional Mix

• Combination of various promotional tools selected to reinforce each other.
• Hierarchy of Effects: Sequence from awareness to purchase, influencing mix decisions at each stage.

Metrics for Promotional Strategy

• Reach: Number of distinct individuals exposed.
• Frequency: Average exposure rate for individuals.