1. MKTG 1058:
DISTRIBUTION
CHANNELS
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2. Distribution Channels MKTG 1058
LECTURE NINE
Advertising and
Promotion
(Dunne Chapter Eleven)
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3. Learning Objectives for Chapter 11 (Dunne):
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.
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4. The Retail Promotion Mix
• Promotion
is a means that retailers use to bring traffic
into their stores, and it includes advertising,
sales promotion, publicity, and personal
selling.
The term “promotions” implies one of
moving forward. Moving forward from the
customer’s perspective is to move the
customer closer to the sale
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5. Promotions in Retailing
This is usually the more popular and
interesting topic
Promotions is about communications and
connecting with customers
From the retailing perspective, you must
understand the special roles that promotions
play in the context of the entire distribution
channel
Remember the promotions strategy used by
retailers will be different from that of the
manufacturer
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6. Challenges of promotions in retailing
Retailers are sometimes resource constrained (small)
and therefore may not be able to use all the tools of
promotions (such as advertising)
Retailers promotions need to coordinate with (and in
some cases controlled by) the manufacturers
promotions
Retailers often use short term sales promotions to
build sales and create excitement
You need to understand the concepts of “PUSH” and
“PULL” strategies
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7. Types of Promotion
• The four basic components of the retailer’s
promotional mix:
• Advertising
is paid, non-personal 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.
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8. Types of Promotion
• 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.
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9. Types of Promotion
• Personal Selling involves a face-to-face
interaction with the consumer with the goal of
selling the consumer merchandise or service.
At the retail level, personal selling is a
key promotions tool since there is direct
customer contact and communications
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10. Promotions in a ‘wider context”
Promotions must be
considered in the context
of the total retailing mix
(marketing mix)
How does promotions
integrate with other
elements of the retail
marketing mix?
How does it complement
and add value?
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11. Types of Promotion
• 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.
• Think of the promotional implications of the
other elements of the mix such as store image,
retail staff, visual merchandising and so forth
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12. Where is promotions impacted?
• 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.
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13. Promotions coverage
Promotions by retailers tend to cover short
term periods – weekends or sales in order to
catch the traffic at the right time
Promotions tend to be local rather than
national
But bear in mind that Singapore is a small
market; therefore no difference between
local and national
But in some forms of direct marketing or
broadsheets, you can target at specific
locations
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14. Total Systems Approach
Key Point: retailers often do not undertake
promotional campaigns on their own
These must be integrated with those of the other
members of the supply chain such as the
manufacturers and distributors/wholesalers
This means that the promotional campaigns of the
retailer should be integrated with those of the
suppliers and the manufacturer
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15. What is involved in integration and coordination of promotions
What is involved in integration and coordination of promotions
within the channel?
within the channel?
Coordination of campaigns - planning
Scheduling and timing (example new product
launches)
Using the right mix of tools
Pull versus push strategies
Consistency of message and image
Building brand equity
Question: whose brand takes priority- manufacturer
or retailers brands?
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16. Push vs. Pull Promotion Strategy
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17. Integrated Effort - A retailer's promotion efforts must be
Integrated Effort - A retailer's promotion efforts must be
planned and implemented in the context of the retailer's
planned and implemented in the context of the retailer's
total strategy.
total strategy.
Promotion decisions relate to and must be
integrated with other management decisions, such
as:
There is a maximum distance consumers will travel to
visit a retail store. Thus a retailer's location will help
determine to whom to promote. Retailers should direct
their promotion dollars first toward households in their
primary trading area (the area where the retailer can
serve customers in terms of convenience and
accessibility better than the competition) and then to
secondary trading areas (areas where a retailer is still
competitive despite a competitor having some location-
related advantage
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18. Retail Promotions
Retailers need high levels of store traffic to keep
their merchandise rapidly turning over. Promotion
helps build traffic.
A retailer's credit customers are more store loyal
and purchase in larger quantities. Thus, customers
are excellent targets for increased promotional
efforts.
A retailer confronted with a temporary cash flow
problem can use promotion to increase short-term
cash flow.
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19. Retail Promotions
A retailer's promotion strategy must be reinforced
by its building and fixture decisions. Promotional
creativity and style should coincide with building
and fixture creativity and style. If the ads are
exciting and appealing to a particular target market,
so should the building and fixtures.
Promotion provides customers with more
information. That information will help them make
better purchase decisions, because risk is reduced.
Therefore, promotion can actually be viewed as a
major component of customer service.
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20. Retail Promotions
The retailer that systematically integrates its promotional
programs with other retail decision areas will be better able to
achieve high performance results. Some guidelines are:
Try to utilize only promotions that are consistent with and will
enhance your store image.
Review the success or failure of each promotion to help in
developing better future promotions.
Wherever possible, test new promotions before making a major
investment in using them on a broader scale.
Use appeals that are of interest to your target market and that are
realistic to obtain.
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21. Make sure your objectives are obtainable.
Develop total promotional campaigns, not just ads.
The lower the rent, the higher the promotional expenses
generally needed.
New stores need higher promotional budgets than established
stores.
Stores in out-of-the way locations require higher promotional
budgets than stores with heavy traffic
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22. Promotion in the Supply Chain
Major differences in the way retailers and
manufacturers use promotion:
•Product image versus availability.
•Specific product benefits versus price.
•Focused image versus cluttered ads.
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23. Product Image versus availability
The manufacturer's primary goal is to create a
positive image for the product itself and
differentiate it from competing products.
Retailers are primarily interested in announcing
to their customers that they have the product
available for purchase at a convenient
location(s).
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24. Specific product benefits versus price
Manufacturer generally don't care where
customers make their purchases, just so they buy
their product. Retailers don't care which brand the
customer purchases; they just want the customer
to make the purchase in their store. Thus, in
addition to availability, retailers feature the
product's price in their ads.
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25. Focused image versus cluttered ads
In comparison to manufacturers, most retailers
carry a larger variety and breath of products,
while manufacturers produce a greater depth
than most retailers carry. Thus, retail ads, which
are usually geared towards short-term results,
tend to be more cluttered with many different
products as opposed to the manufacturer's ad,
which focuses on a single product theme.
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26. However, the promotional activities of the retailer's
However, the promotional activities of the retailer's
supply chain partners may sometimes conflict with the
supply chain partners may sometimes conflict with the
retailer's causing a lack of promotional harmony:
retailer's causing a lack of promotional harmony:
Differing perceptions as to the future of the economy,
projected market activities and other pertinent concerns may
lead to supplier-retailer conflict and contradictory promotional
activities.
Supply chain members feel that the chain's promotional
campaign is a mistake.
Suppliers and retailers may experience conflict over the desire
to project differing images (i.e. high-quality, high-price status
symbol image vs. price leader).
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27. Possible Objectives for Promotions
Exhibit 11.1
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28. Promotional Objectives
•Long-Term Objectives
•Short-Term Objectives
•Interdependence
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29. Long term objectives
Institutional advertising is an attempt by the retailer
to gain long-term benefits by selling the store itself
rather than the merchandise in it. Retailers using
institutional ads generally seek to establish two long-
term promotion objectives:
1. Create a Positive Store Image - Establish or
reinforce the store’s image the retailer wants to
convey.
2. Public Service Promotion - Persuade the
consumer to perceive the retailer as a good citizen in
the community
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30. Corporate Citizenship
Wal-Mart sponsors a variety
of community and public
service programs, which help
to promote its role as a good
corporate citizen.
Many local Singapore retailers sometimes
do promotions that could be tied up to
supporting local charities or community
projects
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31. Short term objectives:
Promotional advertising attempts to bolster short-term
performance by using product availability or price as a selling
point. The two most common promotional objectives are:
1. Increased Patronage from Existing Customers - promotional
efforts directed at current customers as a means of
encouraging them to make more purchases at the given
retailer.
2. Attraction of New Customers - increase the number of
customers that are attracted to the store.
(1) Attract new customers from existing trading area.
(2) Attract customers from outside the existing trading area.
(3) Attract customers just moving into the retailer's market
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32. Interdependence
•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.
What is the link between long and
short term objectives? Do retailers
focus more on the long or short term
objectives? Why?
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33. Interdependence- some questions
Linkage: short term objectives sometimes
conflict with or damage longer term objectives
Too many sales promotional activities tend to
damage the retailer’s brand equity
Many small retailers tend to be reactive when
planning promotions- mainly to counter local
competitive retail promotions. Not able to build
their brand equity over the longer term
Lack of promotions planning- failure to link
short term promotions to long term objectives
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34. Advertising Characteristics
Advantages Disadvantages
Attracts a large audience Standardized messages lack
flexibility
Gains pass along readership (for
print) Some media require large
investments
Low cost per contact
Geographic flexibility limited
Many alternatives available
Some media require long lead time
Control over message content;
message can be standardized Some media have high throwaway
rate
Message study possible
Some media limit the ability to
Editorial content surrounds ad provide detailed information
Self-service operations possible
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35. Steps in Planning a Retail Advertising Campaign
•Selecting Advertising Objectives
•Budgeting for the Campaign
•Designing the Message
•Selecting the Media to Use
•Scheduling the Ads
•Evaluating the Results
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36. Advertising Objectives
The specific objectives that advertising can accomplish are
many and varied, and the objective(s) employed depend on
the target market the retailer is seeking to reach. Examples
of common objectives used by retailers include:
•Make consumers aware that you offer low prices
•Make newcomers aware of your existence
•Make customers aware of your large stock
selection
•Inform a specific target market of your product
offering
•Increase traffic during slow sales periods
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37. Advertising Objectives (cont’d)
Move old merchandise at the end of a selling season
Strengthen your store's image or reputation
Make consumers think of you first when a need for
your products arise, especially if they are not
commonly purchased
Retain your present customers
Regardless of the objective chosen, advertising must
be aimed at a specific market segment and outcomes
must be measurable over a given time period.
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38. Advertising Objectives
for Retailers
Lifting short-term sales
Increasing customer traffic
Developing and/or reinforcing a retail image
Informing customers about goods and services
and/or company attributes
Easing the job for sales personnel
Developing demand for private brands
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39. Selecting Advertising Objectives
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
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40. Selecting Advertising Objectives
Make consumers in your trading
area
aware that you offer the lowest
prices...
Wal-Mart’s
“ Always Low Prices”
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41. Selecting Advertising Objectives
Make newcomers in your trading
area
aware of your existence...
Sending promotions flyers to new
residents of the area to welcome
them to the store
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42. Selecting Advertising Objectives
Make customers aware of your
large stock selection...
A retailer could promise the shopper a
free shirt if it is “out of stock” on the
basic sizes.
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43. Selecting Advertising Objectives
Making a specific target market
aware of your product offering...
A ladies apparel retailer promotes a
specific line of larger sized clothes for
the “fuller woman”
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44. Selecting Advertising Objectives
Increase traffic during slow sales
periods...
Subway Sandwiches Shop’s “Two-for-One
Tuesdays”
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45. Selecting Advertising Objectives
Move old merchandise at the end
of of a selling season...
The “after-Christmas clearance sales”
that many retailers use.
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46. Selecting Advertising Objectives
Strengthen your store’s image or
reputation...
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47. Selecting Advertising Objectives
Identify your store with the nationally
advertised brands that it sells...
Best Denki featuring the latest range of
Hitachi’s Hi-Definition Plasma TVs
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48. Selecting Advertising Objectives
Reposition the image of your store
in the minds of consumers...
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49. Selecting Advertising Objectives
Cultivate new customers...
Getting new customers to apply for a bank card
that has a tie up with the retailer.
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50. Selecting Advertising Objectives
Make consumers think of you first when
a need for your products occurs,
especially if they are not commonly
purchased...
Example???
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51. Selecting Advertising Objectives
Retain your present customers...
Any of the airline’s frequent-flyer
programs, or supermarkets’ use of a
loyalty card
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52. Selecting Advertising Objectives
Get customers who previously
shopped at your store, but no
longer do, to return to your store...
Example??
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53. Budgeting for the Campaign:
Retailer-Only Campaigns
• 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.
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54. Affordable Method
Affordable Method - Allocating all the money
that the retailer can afford
(1) This may lead to an inadequate
appropriation or to a budget that is not related
to actual needs.
(2) The logic of this approach suggests that
advertising does not stimulate sales or profits,
but rather is supported by sales and profits.
(3) Most small retailers have little choice but
to use this approach.
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55. Percentage of Sales Method:
Percentage-of-Sales - Targeting a specific percentage of
forecasted sales to be used for advertising.
(1) The percentage of sales is frequently determined by
industry data or the retailer's past experience, and it
provides a controlled, generally affordable amount to be
spent on advertising.
(2) Some limitations of the percentage-of-sales method
are:
(a) It bases advertising on sales, ignoring the fact
that sales are derived from advertising
(b) It doesn't reflect the retailer's advertising
goals
(c) It gives money to successful departments and
not to areas where a little extra money could do some good
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56. Advertising as Percentage of Sales by Line of Trade
Advertising as Percentage of Sales by Line of Trade
Exhibit 11.2
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57. Budgeting for the Campaign:
Retailer-Only Campaigns
• 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.
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58. Task and Objective Methods:
•Here the retailer establishes its advertising objectives
and then determines the advertising tasks that need to
be performed to achieve those objectives.
•Associated with each task is an estimate of the cost of
performing the task.
•When all of these costs are totaled, the retailer has its
advertising budget.
• While the task and objective method for developing
an advertising budget is the best of the three methods
from a theoretical and managerial control perspective,
many retailers choose not to adopt this method
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59. Task and Objective Method
of Advertising Budget Development
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
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60. Task and Objective Method
of Advertising Budget Development
Exhibit 11.3
Objective and Task Estimated Cost
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
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61. Task and Objective Method
of Advertising Budget Development
Exhibit 11.3
Objective and Task Estimated Cost
Objective 3: Build store’s 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
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62. Task and Objective Method
of Advertising Budget Development
Exhibit 11.3
Objective and Task Estimated Cost
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
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63. Task and Objective Method
of Advertising Budget Development
Exhibit 11.3
Objective and Task Estimated Cost
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
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64. Task and Objective Method:
Task and Objective Method:
Advertising Budget Development
Advertising Budget Development Exhibit 11.3
(consolidated table)
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65. Advertising Expenditures as Percentage of Sales:
Advertising Expenditures as Percentage of Sales:
Some Leading Retailers
Some Leading Retailers
Exhibit 11.4 – 1st 3 Categories
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66. Advertising Expenditures as Percentage of Sales:
Advertising Expenditures as Percentage of Sales:
Some Leading Retailers
Some Leading Retailers
Exhibit 11.4 – 2nd 3 Categories
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67. Factors in Allocating Advertising Dollars
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”
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68. Co-Op Campaigns
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.
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.
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69. Planning a Cooperative Strategy
What ads qualify, in terms of merchandise and special
requirements?
What percentage of advertising is paid by each party?
When can ads be run? In what media?
Are there special provisions regarding message
content?
What documentation is required for reimbursement?
How does each party benefit?
Do cooperative ads obscure the image of individual
retailers?
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70. Designing the Message
Creative messages cannot be developed without knowing
which media will be used to carry out the message to the
target market.
Creative decisions are especially important for retailers
since their advertising messages usually are seeking an
immediate reaction by the consumer and have a short life
span.
Creative retail ads should seek to accomplish three goals:
Attract attention and retain attention
Achieve the objective of the advertising strategy
Avoid having any errors, especially legal ones
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71. Common Approaches
Lifestyle - Shows how the retailer's products fit in
with the consumer's lifestyle.
Fantasy - Creates a fantasy for the consumer that is
built around the retailer's products.
Humorous - Here the ad campaign is built around
humor that relates to using the retailer's products.
Slice-of-life - Here the retailer depicts the consumer
in everyday settings using the retailer's products.
Mood/Image - Builds a mood around using the
retailer's products
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72. Media Alternatives
• Mass Media aimed at total markets:
Newspapers
Television
• Specific market media forms:
Radio
Magazines
Direct mail
Internet
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73. Newspapers
Most frequently used medium in retailing. Many of the
large retailers such as Courts or IKEA use newspapers
to deliver their own centrally produced inserts.
Advantages
(a) Most newspapers are local; most retailers appeal to
a local trading area.
(b) Low technical skill is needed to create newspaper
advertisements.
(c) Lead time needed for placing newspaper ads is
short.
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74. Newspapers
Disadvantages
(a) Consumer does not necessarily see or read a retailer's
ad in the newspaper.
(b) Life of any single issue of a newspaper is short.
(c) Consumer spends relatively little time with each issue
and each item within an issue of the newspaper.
(d) Newspapers have poor reproduction quality.
(e) Newspapers have broad appeal; retailers with small
target markets may be wasting advertising dollars by
placing newspaper ads.
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75. Television
Television Advertising - With the widespread
development of cable television, which has made
television attractive to small, local retailers,
television advertising can be a powerful tool for
generating higher sales.
Advantages
(a) Very effective in creating an image
(b) Pictures retain their effects on consumer
memory and evaluations to a greater extent than
verbal messages.
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76. Television
Disadvantages
(a) The television ads are very expensive.
(b) Television stations often reach well beyond
the trading area of small or medium size
retailers, leading to wasted advertising dollars.
(c) Competition is high for the television
viewer's attention.
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77. Radio Advertising
Advantages
(a) Can target messages to select groups.
(b) Can develop distinctive and appealing
messages through the use of volume sound
variations.
(c) Endorsement of a retailer by a radio
announcer who has developed a loyal
audience can strengthen the impact.
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78. Radio Advertising
Disadvantages
(a) Radio commercials are very fleeting.
(b) It is frequently listened to during work hours or
while driving to and from work (a period called drive
time) and tends, over time, to become part of the
background environment.
(c) Impossible to demonstrate or show the advertised
merchandise.
(d) Radio signals usually cover an area much larger
than the retailer's target market and may lead to the
ineffective use of some of the retailer's advertising
dollars.
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79. Magazines
While not used by local retailers, many national chains
are now allocating part of their budgets to magazines.
Advantages
(a) Better reproduction quality.
(b) Longer life span per issue.
(c) Consumers spend more time, per issue, with a
magazine than with a newspaper.
(d) Featured articles can put consumers in the mood
for a particular product class
The major disadvantage is that long lead-time
requirements prevent price appeal advertising.
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80. Direct Mail
With direct mail, the retailer can precisely
target its message as long as a good mailing
list of the target population is available.
Advantages
(a) Retailers can specifically target their
messages at a particular group.
(b) It provides a means of personal contact.
(c) Results are easily measured.
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81. Direct Mail
Disadvantages
(a) Cost is relatively expensive per contact or
message delivered.
(b) Contact with the target market is
completely dependent upon the quality of the
mailing list.
(c) Targeted consumer may receive direct mail
piece but leave it unopened or unexamined.
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82. Internet
Projections indicate that there will be huge users over
the next few years.
Advantages - In essence, the Internet provides a
platform for a retailer to employ a relatively low cost
integrated marketing communications mix thus
increasing shareholder value by enhancing the
retailer's image through providing customers with a
variety of highly specialized information.
Disadvantages – Internet penetration may not be high
in certain markets and in some Asian countries. Even
with PC ownership, not a large proportion of
customers have high propensity to shop on the Web
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83. Media Alternatives
• Miscellaneous Media
Yellow Pages
Outdoor advertising
Transit advertising
Electronic information terminals
Specialty firms
Shopping guides
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84. Advertising Media Comparison Chart
Advertising Media Comparison Chart
Medium Market Coverage Particular Suitability
Daily Papers Single community or entire All larger retailers
metro area; local editions may
be available
Weekly Papers Single community usually; may Retailers with a strictly local
be a metro area market
Shopper Papers Most households in one Neighborhood retailers and
community; chain shoppers service businesses
can cover a metro area
Phone Directories Geographic area or All types of goods and service-
occupational field served by the oriented retailers
directory
Direct Mail Controlled by the retailer New and expanding firms,
those using coupons or special
offers, mail order
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85. Advertising Media Comparison Chart
Advertising Media Comparison Chart
Medium Market Coverage Particular Suitability
Radio Definable market area Retailers focusing on
surrounding the station identifiable segments
TV Definable market area Retailers of goods and services
surrounding the station with wide appeal
World Wide Web Global All types of goods and service-
oriented retailers
Transit Urban or metro community Retailers near transit routes,
served by transit system especially those appealing to
commuters
Outdoor Entire metro area or single Amusement and tourist-
neighborhood oriented retailers, well-known
firms
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86. Advertising Media Comparison Chart
Advertising Media Comparison Chart
Medium Market Coverage Particular Suitability
Local Magazines Entire metro area or region, Restaurants, entertainment-
zoned editions sometimes oriented firms, specialty shops,
available mail-order firms
Flyers/Circulars Single neighborhood Restaurants, dry cleaners,
service stations, and other
neighborhood firms
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87. Media Selection
• 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.
• 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.
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88. Media Selection
• 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.
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89. Media Selection
• 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.
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90. Scheduling of Advertising
• 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.
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91. Scheduling of Advertising
• 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.
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92. Evaluating the Results
•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.
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93. Evaluating the Results
• 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 didn’t give all the needed information.
• Advertising dollars were spread too thinly over too
many departments or merchandise lines.
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94. Evaluating the Results
• 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.
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95. Sales Promotion
Encompasses the paid communication
activities other than advertising, public
relations, and personal selling that stimulate
consumer purchases and dealer effectiveness
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96. Management of Sales Promotions and Publicity
•Role of Sales Promotion
•Types of Sales Promotion
•Evaluating Sales Promotions
•Publicity Management
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97. Sales Promotion - Consumers will change
their shopping habits and brand
preferences to take advantage of sales
promotions, especially those that offer
something special, different, or exciting.
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98. Sales Promotions Objectives
for Retailers
Increasing short-term sales volume
Maintaining customer loyalty
Emphasizing novelty
Complementing other promotion tools
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99. Sales Promotion Characteristics
Advantages Disadvantages
Eye-catching appeal Difficult to terminate
Distinctive themes and tools Possible damage to retailer’s
image
Additional value for
customer More stress on frivolous
selling points
Draws customer traffic
Short-term effects only
Maintains customer loyalty
Used as a supplement
Increases impulse
purchases
Fun for customers
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100. Role of Sales Promotions
Sales promotions can benefit the retailer by
being used on short notice to differentiate
itself from the competition.
Sales promotion expenditures are often quite
substantial, but not well tracked by retailers.
Sales promotion activities should be
consistent and reinforce the retailer's overall
promotion objectives; sales promotions are
often employed as a means of improving the
retailer's short-term performance.
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101. Types of Sales Promotion
Exhibit 11.5
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102. Types of Sales Promotions
• 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.
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103. Types of Sales Promotions
• 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.
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104. Types of Sales Promotions
Jointly Sponsored Sales Promotions offers retailer the
advantage of using “other people’s 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
consumer’s perceived risk of purchasing a product.
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105. Types of Sales Promotions
• Jointly Sponsored Sales Promotions:
• Best Denki coordinates promotional efforts
with manufacturers to provide consumers
price savings through rebates.
Other examples?
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106. Evaluating Sales Promotions: What Sales
Promotions Can and Cannot Achieve
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
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107. Evaluating Sales Promotions: What Sales
Promotions Can and Cannot Achieve
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 product’s
declining sales trend
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108. Public Relations
Public Relations – Any communication that fosters a
favorable image for the retailer
Nonpersonal or personal
Paid or nonpaid
Sponsor-controlled or not
Publicity – Any nonpersonal form of public relations
whereby messages are transmitted through mass media,
the time or space provided by the media is not paid for,
and there is no identified commercial sponsor
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109. Publicity Management
When publicity is formally managed, it should
be integrated with other elements of the
promotion mix.
Advantages of publicity:
Note: do not
Objective confuse Publicity
with Public
Credible Relations
Appeals to a mass audience
Disadvantages of publicity:
Difficult to control and time
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110. Public Relations Characteristics
Advantages Disadvantages
Image can be presented Some retailers do not
or enhanced believe in spending on
image-related
More credible source communication
No costs for message’s Little control over publicity
time or space message
Mass audience addressed More suitable for short run
Carryover effects possible Costs for PR staff,
planning activities, and
People pay more attention events
than to clearly identified
ads
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111. Public Relations Objectives
for Retailers
Increase awareness of the retailer and its strategy
mix
Maintain or improve the company image
Show the retailer as a contributor to the public’s
quality of life
Demonstrate innovativeness
Present a favorable message in a highly believable
manner
Minimize total promotion costs
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112. Publicity and Retailing
“Publicity is prayed for; advertising is paid for”
Many small retailers could leverage the power
of publicity- but many don’t know how
If retailers could get a newsworthy story or
publicity, they could get lots of mileage from
the local press
Example- restaurants promoting their
special menus and dishes for a write up in
the weekend press
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113. Past Year Examination Questions
Chapter Eleven: Advertising
and Promotion
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114. October 2006
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115. May 2006
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116. May 2006
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