Communication Methods

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Communication Methods
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Paid Impersonal Communications

• Advertising
• Sales promotions Special events, In-store
  demonstrations
• Games, sweepstakes and contests
• Coupons
• Store atmosphere
• Website
• Community building

Boxes of KrustyOs cereal at a New York 7-Eleven
stores, temporarily converted into a Kwik-E Mart,
to promote the Simpson Movie.
Jack Star/PhotoLink/Getty Images
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Store Atmosphere

• The combination of the stores physical
  characteristics (architecture, layout, signs and
  displays, colors, lighting, temperature, sounds,
  smells) together create an image in the
  customers mind

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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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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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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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Unpaid Impersonal Communication

• Publicity is communication through significant
  unpaid presentations about the retailer, usually
  a news story, in impersonal media.
• Newspaper
• TV coverage
• Macys Thanksgiving Day Parade

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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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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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Social Shopping
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Comparison of Communication Methods
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Steps in Developing a Retail Communication Program
Planning the Retail Communication Program
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Setting Objectives

• Communication objectives
• Specific goals related to the retail
  communication mixs effect on the customers
  decision-making process
• Long-term ex) creating or altering a retailers
  brand image
• Short-term ex) increasing store traffic

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Communication Objectives Stages in the
Consumers Decision-Making Process
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Retail and Vendor Communication Programs
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Setting the Communication Budget
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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 dont know the
  relationship between communication expenses and
  sales

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Marginal Analysis for Setting Communication
Budget
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Objective-and-Task Method

• Determines the budget required to undertake
  specific tasks to accomplish communication
  objectives

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Illustration of Objective and Task Method for
Setting a Communication Budget
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Financial Implications of Increasing the
Communication Budget
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Rule of Thumb Methods
Affordable Budgeting Method sets communication
budget by determining what money is available
after operating costs and profits are
budgeted. Drawback The affordable method
assumes that the communication expenses dont
stimulate sales and profits.
Percentage of Sales Method communication budget
is set as a fixed percentage of forecasted
sales. Drawback This method assumes the same
percentage used in the past, or by competitors,
is still appropriate for the retailer.
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Rule of Thumb Methods
Competitive Parity Method this communication
budget is set so that the retailers 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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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