PROMOTIONAL STRATEGY

Objectives

•To explore the scope of retail promotion

•To study the elements of retail promotion: advertising, public relations, personal selling, and sales promotion

•To discuss the strategic aspects of retail promotion: objectives, budgeting, the mix of forms, implementing the mix, and reviewing and revising the plan

Elements of the Promotional Mix

•Advertising

—- Paid, nonpersonal communication transmitted through out-of-store mass media by an identified sponsor

—- Key aspects

•Paid form

•Non-personal presentation

•Out-of-store mass media

•Identified sponsor

Advantages

üAttracts a large audience

üGains pass along readership (for print)

üLow cost per contact

üMany alternatives available

üControl over message content; message can be standardized

üMessage study possible

üEditorial content surrounds ad

üSelf-service operations possible

Disadvantages

ÒStandardized messages lack flexibility

ÒSome media require large investments

ÒGeographic flexibility limited

ÒSome media require long lead time

ÒSome media have high throwaway rate

ÒSome media limit the ability to provide detailed information

Types of Advertising

•Public Relations

Communication that fosters a favorable image for the retailer

•Nonpersonal or personal

•Paid or nonpaid

•Sponsor-controlled or not

•Publicity – Nonpersonal form of public relations whereby messages are

transmitted by mass media.  The time or space provided by the media is not

paid for, and there is no identified commercial sponsor

Advantages

üImage can be presented or enhanced

üMore credible source

üNo costs for message’s time or space

üMass audience addressed

üCarryover effects possible

üPeople pay more attention than to clearly identified ads

Disadvantages

ÒSome retailers do not believe in spending on image-related communication

ÒLittle control over publicity message

ÒMore suitable for short run

ÒCosts for PR staff, planning activities and events

•Personal Selling

- Oral communication with one or more prospective customers for the purpose of making a

sale

•Persuade customers to buy

•Stimulate sales of impulse items or products related to customers’ basic purchases

•Complete customer transactions

•Feed information back to company decision makers

•Provide proper levels of customer service

•Improve and maintain customer satisfaction

•Create awareness of items also marketed through the Web, mail, and telemarketing

Advantages

üMessage can be adapted

üMany ways to meet customer needs

üHigh attention span

üLess waste

üBetter response

üImmediate feedback

Disadvantages

ÒLimited number of customers at one time

ÒHigh costs

ÒDoesn’t get customer in store

ÒSelf-service discouraged

ÒNegative attitudes toward salespeople

Typical Personal Selling Functions

•Sales Promotion

 Encompasses the paid communication activities other than advertising, public relations, and personal selling that stimulate consumer purchases and dealer effectiveness

Types of Sales Promotions

•Displays

•Contests

•Sweepstakes

•Coupons

•Frequent shopper programs

•Prizes

•Samples

•Demonstrations

•Referral gifts

 Advantages

üEye-catching appeal

üDistinctive themes

üAdded customer value

üDraws customer traffic

üMaintains loyalty

üIncreases impulse purchases

üFun for customers

Disadvantages

ÒDifficult to terminate

ÒPossible damage to retailer’s image

ÒMore stress on frivolous selling points

ÒShort-term effects only

ÒUsed as a supplement

PRICING IN RETAILING

                                                        Objectives

•To describe the role of pricing in a retail strategy and to show that pricing decisions must be made in an integrated and adaptive manner

•To examine the impact that consumers, government, manufacturers, wholesalers and other suppliers, current/potential competitors have on pricing decisions

•To present a framework for developing a retail price strategy: objectives, broad policy, basic strategy, implementation, and adjustments

Pricing Options for Retailers

•Discount orientation

•At-the-market orientation

•Upscale orientation

Factors Affecting Retail Price Strategy

Price Elasticity of Demand

•The sensitivity of customers to price changes in terms of the quantities they will buy:

•Elastic – Small percentage changes in price lead to substantial percentage changes in the number of units bought.

•Inelastic – Large percentage changes in price lead to small percentage changes in the number of units bought.

Market Segments by Price Sensitivity

•Economic consumers

•Status-oriented consumers

•Assortment-oriented consumers

•Convenience-oriented consumers

Competition and Retail Pricing

•Market pricing – Retailers often price similarly to each other and have less control over price because consumers can easily shop around.

•Administered pricing – Firms seek to attract consumers on the basis of distinctive retailing mixes.

Pros and Cons of Everyday Low Pricing

Pros:

•Reduced advertising expense

•More predictable sales levels

•Fewer peaks and ebbs of sales distribution

Cons:

•Decreased excitement

•Potentially less store traffic due to specials

•Less “cherry-picking” by consumers who only purchase specials

STORE LAYOUT AND DESIGN

Boredom & the Store Environment 

•Time Poverty

As consumers’ lives become increasingly time starved, customers are often entering retail stores with a negative feeling/emotion because they would rather be doing something else than shopping.

•Dissatisfaction with Shopping

Whether due to larger amounts of category management, cookie-cutter retailers, more time spent working, or changes in demographics.

Elements of the Store Environment

Store Planning

•“The better it is, the less you notice it as a customer”

Fundamentally concerned with the allocation of space and how it is used.

•Floor Plan

A schematic that shows where merchandise and customer service departments are located, how customers circulate through the store, and how much space is dedicated to each department.

Types of Space

•Back room

- Receiving areas for shipments & stockroom

•Office & other functional areas

- Break & training rooms, offices, and bathrooms

•Aisles, service areas, and other non-selling space

- Dressing rooms, service desks, etc.

•Walls

•Sales floor

Space Allocation Planning

•Requires the retailer to first analyze the profitability and productivity of various merchandise lines.

•On average 20% of a retailer’s merchandise is either obsolete or unwanted by the retailer’s customer base.

•Any productivity metric chosen must relate some performance variable (e.g., sales, GM, etc.) to the amount of space used in the store.

CUSTOMER SERVICES AND RETAIL SELLING

Learning Objectives

ØExplain why customer service is so important in retailing.

ØDescribe the various customer services that a retailer can offer.

ØExplain how a retailer should determine which services to offer.

Customer Service

ØHigh-quality service - A service that meets or exceeds customers’ expectations.

ØA way in which retailers provide the high-quality service expected and reduce customer defections is through relationship retailing programs.

ØRelationship retailing programs - The activities designed to attract, retain, and enhance long-term relationships with customers.

ØRetailers can develop long-term relationships with their customers by offering:

- financial benefits

- social benefits

Three Basic Tasks of Retailing

ØIt consists of all those activities performed by the retailer that influence:

- the ease with which a potential customer can shop or learnabout the store’s offering.

- the ease with which a transaction can be completed once the customer attempts to make a purchase.

- the customer’s satisfaction with the transaction.

ØTransient customer - An individual who is dissatisfied with the level of customer service offered at a store or stores and is seeking an alternative store with the level of customer service that he or she thinks is appropriate.

- Gives another store the opportunity to convert them

- What are some of the stores you know which actively work to avoid losing customers – and how do they do it?

ØPretransaction services - Provided to the customer prior to entering the store.

- Convenient hours – Examples of those which don’t?

- Information aids – such as?

ØTransaction services - Provided to customers when they are in the store shopping and transacting business.

- Credit

- Layaway

- Gift wrapping and packaging

- Check cashing

- Gift cards

Factors to Consider When Determining Customer Services to Offer

Retail Sales Management

ØTypes of retail selling

-Retailers that concentrate on the sale of shopping goods want their salespeople to both get and take orders.

- In lines of retail trade where predominantly convenience goods are sold, the role of the salesperson is that of an order taker.

- It is generally true that retailers with high margins and high levels of customer service place more emphasis on order getting; those with low margins and a low customer service policy tend to emphasize order taking.

ØSalesperson selection

= Hiring criteria

= Predictors

- Demographics

- Personality

- Knowledge and intelligence

- Experience

ØSalesperson training

ØRetailer’s policies

ØMerchandise

ØCustomer types

ØCustomer choice criteria

ØNo active product choice criteria

ØInadequate or vague choice criteria

ØChoice criteria in conflict

ØExplicit choice criteria

Evaluation of salespeople

CHAPTER 6

There are three types of location such as isolated store, planned shopping center and unplanned business district.

There are advantages and disadvantages for having isolated stores. For advantages, there are no direct competition, low rental costs, flexibility, good for convenience stores and others .There is also disadvantages for having isolated sore such as difficulty attracting customers, travel distance, high advertising expenses and some others.

For planned shopping centers as well, there is advantages for is well-rounded assortments, strong suburban population, one-stop and family shopping and transportation access. For disadvantages, it was limited flexibility, higher rental and stiff competition.

Pros of ownership versus leasing is freedom over concern with lease renewal o though lease renewal negotiations with property owner, ability to write off depreciation, possible capital appreciation from increased value of real estate and control over property maintenance.

Cons of ownership versus leasing is difficulty in securing locations in neighborhood, community and regional shopping centers, asses tied up in real estate could be used for retail expansion, inventory, store renovation and real estate activity can divert attention away from  retail activities.

Six terms of occupancy considerations were ownership versus leasing, type of lease, operations and maintenance costs, taxes, zoning restrictions and voluntary regulations.

As the conclusion, chapter 6 is similar with chapter 5 which is focused on location and site selection. It will help retailers to emphasis site selection as important thing to open a store.

Chapter 5: Site location

the objective of this chapter :

•To thoroughly examine the types of locations available to a retailer: isolated stores, unplanned business

districts, and planned shopping centers

•To note the decisions necessary in choosing a general retail location

•To describe the concept of one-hundred percent location

Three Types of Locations

• Isolated Store
• Planned Shopping Center
• Unplanned Business District

Isolated Stores

Advantages

•No direct competition

•Low rental costs

•Flexibility

•Good for convenience stores

•High visibility

•Adaptable facilities

•Easy parking

•Excellent for store that generates own traffic

Disadvantages

•Difficulty attracting customers

•Travel distance

•Lack of cumulative attraction for customers

•High advertising expenses

•No cost sharing for promotions

•Possibly restrictive zoning laws

Planned Shopping Centers

Advantages

•Well-rounded assortments

•Strong suburban population

•One-stop, family shopping

•Cost sharing of promotions

•Transportation access

•Pedestrian traffic

Disadvantages

•Limited flexibility

•Higher rent

•Restricted product offerings in lease

•Competition

•Requirements for association memberships

•Domination by anchor stores

•Impact of store closings on affinities

Types of Leases

• Straight
• Maintenance-Increase Recoupment
• Net
• Graduated
• Percentage