WEEK 4: ADVERTISING AND PROMOTION

LEARNING OBJECTIVES:
LO1: WHAT ARE THE FOUR BASIC COMPONENTS OF THE RETAILERS PROMOTION MIX?
LO2: PROMOTIONAL OBJECTIVES
LO3: What six steps are involved in developing a retail advertising campaign?
LO4: How do retailers manage their sales promotion and publicity?

LO1: WHAT ARE THE FOUR BASIC COMPONENTS OF THE RETAILERS PROMOTION MIX?
As a retailer we depend on our customers come and buy merchandise from our store. Common
merchandise like the household needs or staple food are the most what our customers come for. In
order to increase sales we need to advertise and promote (in-store promotion) to lure even more
customers not only to buy what they come to our store for but also to generate impulse buying.
Customers are vulnerable to promotion, hence it is a good strategy by promoting other merchandises
that will mover the traffic from one area of sales to the other promoted merchandise area.
To do so, promotion has four basic components (promotional mix), they are advertising, sales
promotions, publicity, and personal selling. Hence promotion is defined as a means that retailers use to
bring traffic into their stores, and it includes advertising, sales promotion, publicity, and personal selling.
1. Advertising is paid, nonpersonal 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 or particular audiences; includes
communication or products, services, institutions, and ideas. In other words we can simply say
advertising is a way to aware people of what we have. Commonly used media by retailers are
internet, newspapers, radio, television, and printed circulars.
2. Sales promotions involves the use of media and non-media marketing pressure applied for a
predetermined, limited period of time at the level of the customer, retailer or wholesaler in
order to stimulate trial, increase customer demand, or improve product availability. The most
popular sales promotions tools in retailing are premiums, frequent-buyer programs, coupons,
in-store displays, contests and sweepstakes, product demonstrations, sampling and social
media.
3. Publicity is non-paid-for communication of information about the company or product, generally
in some media form.
4. Personal selling involves a face-to-face interaction with the consumer with the goal of selling the
consumer merchandise or services.
LO2: PROMOTIONAL OBJECTIVES
Promotional objectives can be established to help improve both long- and short- term financial
performance.

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 longterm promotional objectives: creating a positive store image by differencing from competitors and
public service by customer perceived the retailer as a good citizen within the community.
SHORT-TERM OBJECTIVES
Promotional advertising, on the hand, attempts to bolster short-term performance by using product
availability or price as a selling point. The two most common objectives of this type of promotion are
increasing patronage from existing customers and attracting new customers.
1. Advertising
OBJECTIVES:

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

ADVANTAGES
Disadvantages
A large audience is attracted
Standardized messages lack flexibility
The cost per viewer, reader, or
Some media require large investments
listener are low
Media may reach large geographic
A number of alternative media are
areas, and for retailers, this may be
available
wasteful
The retailer has control over message
Some media require a long lead time
content, graphics, timing and size
for placing ads
In print media, a message can be
Some media have a throwaway rate.
studied and restudied by the target
Circulars may be discarded without
market
being read
Self-service operations are possible
A 30-second TV commercial or small
since customer becomes aware of a
newspaper ad does not have many
retailer and its offerings.
details

TYPES
Advertisements can be classified by content and payment method. Content includes pioneer
ads, competitive ads, reminder ads, and institutional ads. Payment method includes full
payment by retailer and cooperative advertising.

Pioneer ads have awareness as a goal and offer information. Competitor ads have persuasion as
a goal. Reminder ads are geared to loyal customers and stress the attributes that have made the
retailers successful. Institutional ads strive to keep retailers names before the public without
emphasizing the sale of goods or services.
2. Sales promotions
OBJECTIVES
Increasing short-term sales volume
Maintaining customer loyalty
Emphasizing novelty
Complementing other promotion tools
ADVANTAGES
DISADVANTAGES
It often has eye-catching appeal
It may be hard to determine certain
promotions without adverse customer
Themes and tools can be distinctive
reactions
The customer may receive something
The retailers image may be hurt if
of value, such as coupons or free
trite promotions are used
merchandise
Frivolous selling points may be
It helps draw customer traffic and
stressed rather than the retailers
maintain loyalty to the retailer
product assortment, prices, customer
Impulse purchases are increased
services, and other factors.
Customers can have fun, particularly
Many sales promotions have only
with contests and demonstrations
short-term effects.
It should be used mostly as a
supplement to other promotional
forms

TYPES
TYPES OF SALES PROMOTION
Point-of-purchase

Contests

Sweepstakes
Coupons

Frequent shopper programs

DESCRIPTION
Window, floor, and counter displays that allow a retailer to
remind customers and stimulate impulse purchases.
Sometimes, the display are supplied by manufacturers
Customers compete for prizes by completing a contest (game)
such as a crossword puzzle, a slogan, or a football lottery.
Winning is at least partially based on a correct answer (skill)
Similar to a contest, except that participants merely fill out
application forms and the winner is picked at random (chance).
Retailers advertise special discounts for customers who
redeem advertised coupons. Customers clip coupons from
media of POP displays, and redeem them with the retailer
Customers are given points or discount based on the dollar
amounts of their purchases. The points are accumulated to
acquire goods or services

Prizes

Similar to frequent shopper programs, except that the retailer

gives prizes immediately, such as glasses, silverware, and
others
Samples
Free tastes or smells or items are given to customers
Demonstrations
Products are shown cleaning up floors, mixing foods, and so on
Referral gifts
Presents or gifts are given to current customers when they
bring in new customers
Matchbooks, pens, calendars, Items that contain the retailers name are given to customers.
shopping bags, etc.
Special events
Include fashion shows, autograph sessions with book authors,
art exhibits, and holiday activities

3. Publicity
OBJECTIVES
Increase awareness of the retailer and its strategy mix
Maintain or improve the company image
Show the retailer as a contributor to the publics quality of life
Demonstrate innovativeness
Present a favorable message in a highly believable manner
Minimize total promotion costs
ADVANTAGES
DISADVANTAGES
An image can be presented or
Some retailers do not believe in
enhanced
spending any funds on image-related
communication
A more credible source presents the
message
There is little control over a publicity
message and its timing, placement,
There are no costs for the messages
and coverage by a given medium
time or space
It may be more suitable for short-run,
A mass audience is addressed
than long-run planning
People pay more attention to news
Although there are no media costs for
stories than to clearly identified ads
publicity, there are costs for a public
relations staff, planning activities, and
the activities themselves

TYPES
Publicity can be planned or unplanned and image enhancing or image detracting.
With planned publicity, a retailer outlines its activities in advance, strives to have media report
on them, and anticipates certain coverage. Community services, such as donations and special
sales; parades on holidays; the introduction of hot goods and services; and a new store
opening are activities a retailer hopes will gain media coverage.

TV and newspaper reporters may anonymously visit restaurants and other retailers to rate their
performance and quality. An employee strike, a fire, and so forth are an unexpected publicity.
4. Personal selling
OBJECTIVES
Persuade
Stimulate sales of impulse items or products related to customers basic purchases
Complete customer transactions
Feedback information 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
Disadvantages
A salesperson can adapt a message to
Only a limited number of customers
the needs of the individual customer
can be handled at a given time
A salesperson can be flexible in
The costs of interacting with each
offering ways to address customer
customer can be high
needs
Customers are not initially lured into a
The attention span of the customer is
store through personal selling
higher than with advertising
Self-service may be discouraged
There is less waste; most people who
Some customers may view salespeople
walk into a store are potential
as unhelpful and as too aggressive
customers
Customers respond more often selling
than to ads
Immediate feedback is provided

TYPES
Most sales positions involve either order taking or order getting. An order-taking salesperson
performs routine clerical and sales function such as displays, stocking shelves, answering simple
questions, and ringing up sales. And order-getting salesperson is actively involved with
informing and persuading customers, and in closing sales.
LO3: What six steps are involved in developing a retail advertising campaign?
Developing a retail-advertising campaign is a six-step process:
(1) Selecting advertising objectives, the advertising objectives should flow from the
retailers promotion objectives and should consider several factors that are unique to
retailing such as the stores age and location, the merchandise sold, the competition,
size of the market, and level of supplier support

(2) Budgeting for the campaign, when developing a budget, retailers must decide whether
they can get a better return on their money with co-op dollars or by total sponsorship of
advertising. Sometimes, manufacturers and other retailers may pay part or all of the
costs for the retailers advertising campaign.
(3) Designing the message, retailers must develop a creative retail ad that accomplishes
three goals: attracts and retains attention, achieves objective, and avoid errors. Before
publishing any ad, the retailer should test it with both consumer groups and legal
experts for errors.
(4) Selecting the media to use, a variety of media alternatives, primarily newspapers,
television, radio, magazines, direct mail, and the Internet.
(5) Scheduling the ads, while there is no single right time to run an ad, conventional wisdom
suggests that the ads should (1) appear on or slightly precede the days when customers
are most likely to purchase, (2) be concentrated around the times when people receive
their payroll checks, (3) be concentrated during periods of highest demand, (4) be timed
to appear during the time of day or day of week, and (5) precede the purchase time,
especially for habitual purchased products.
(6) Evaluating the results, can be assessed in terms of efficiency and effectiveness.
Effectiveness is the extent to which advertising has produced the result desired.
Efficiency is concerned with whether the result was achieved with minimum cost.
LO4: How do retailers manage their sales promotion and publicity?
Sales promotion tools are excellent demand generators. It is categorized into two: sole sponsored and
joint sponsored. Sole sponsored involves premiums, contests and sweepstakes, and Loyalty Program
(frequent-buyer programs). Whereas joint sponsored includes coupons, in-store displays, and
demonstrations and sampling.
When publicity is formally managed, it should be integrated with other elements of the promotion mix
that reinforce the stores image.
CASE STUDY
1. CAN GAP REGAIN ITS ADVERTISING LUSTER?
Industry analysts, once strong supporters of Gaps advertising efforts, are now much more critical: Gap,
the brand that was named after the generation gap and built its business targeting baby boomers, is
suffering its own mid-life crisis. Gap (www.gap.com) admits that 2001 was its difficult year ever as an
$877 million profit in 2000 turned into an $8 million loss in 2001. By mid-2002, Gap was witnessing the
26th consecutive month of declines in same-store sales.
When asked what went wrong, Anita Borzyszkowska, head of Gaps European public relations, stated:
We lost focus on our core brand, our core operation, and key items. We ignore the fundamentals and
we got too swept up on trends. The Gap brand is about simple, classic, confident clothing for everyday
wear and we didnt deliver on that. Other observers agree that Gap erred when it moved away from its

basic product lines to more high-fashion products: Gap has lost its edge. It has not delivered the
desirable basics we associate with its brand or the right fashions when it tried to make its lines more
fashion-driven. Youre either right or wrong when you go with fashion lines and Gap has been wrong.
Despite the concern over its product choices, many experts point out that Gaps problems can also be
attributed to its ineffective advertising. For example, in late 2001, a Prudential Securities retailing
analyst said Gaps advertising was ineffective and noted that its advertising was one reason he had
downgraded Gap stock from a hold to sell rating. In February 2002, Gap fired Modernista ad agency
after only 16 months. Analysts were relieved in March 2002, when Gap hired a new agency to run its
account. This agency was led by Trey Laird, a former creative at Donna Karan. It also brought back Lisa
Prisco, a freelance creative director who directed some of Gaps best ads, including Khakis Groove.
In the past, Gaps ads mostly produced in-house were viewed as a big part of its overall strategy.
Many of the ads had a music/dance video style and a distinctive tone and look. Under Modernista, the
ads shifted to include celebrity performance by such singers as Alanis Morissette, Sheryl Crow, and Seal.
Will Gaps ads get back on target? One advertising expert says, I suspect it [Gap] will try to keep the
underlying tone of the messages that have worked well for it in the past. They suggest the warmth that
Gap is all about. I think the key issue is what they showcase the clothes they pick, the artists they work
with, and the music. He suggests that Gaps U.S. heritage and global presence may work against it with
young European and other foreign consumers who may not respond well to standardized advertising.
Although Gap spent a great deal of effort on its 2002 advertisement campaign, the campaign was not
viewed positively by advertising critics. The creative director of a New York agency, for example,
described the campaign as lacking: The goal is obviously to give the brand a kind of inside buzz. But
when you are the Starbucks of clothing, it is impossible to have cachet.
QUESTIONS
1. What should the role of advertising be in Gaps overall promotional mix? Explain your answer.
2. What would you recommend for Gap advertising to get back on track?
3. Describe the pros and cons of Gaps using a standardized global promotional program.
4. Comment on the statement, But when you are the Starbucks of clothing, it is impossible to
have cachet.
2. BEST BUY USES PROMOTIONS TO PUMP UP SALES
Best Buy (www.bestbuy.com) is a 500-store technology and entertainment retailer. Its promotion
planning and implementation are conducted on two level: through a 92-person corporate Strategic
Marketing Group and regionally. Each Best Buy region has a marketing manager with a specific budget
for local programs.
The chain develops and aims its promotional programs at various target markets. The young fun target
market represents Best Buys core customer; this group consists of young, tech-savvy shoppers.
According to Best Buys senior vice-president for strategic marketing, This is the target consumer that

often doesnt watch TV spots or read circulars. Until recently, promotion was underutilized. But we now
know we need to reach this crowd. Best Buy also targets these segments: digital home (married
couples with children), technojock (active single males who are music and sports enthusiasts), and
traditional entertainment (casual users).
One of the difficulties Best Buy faces in planning its promotional strategy is the diversity of its product
line. Best Buy sells a wide variety of technology and entertainment products that include audio/visual
products, cordless phones, cameras, computers and peripherals, movies, music, and major appliances.
Although some of the products are very technical, Best Buy does not want to alienate the nontechnical
customer who wants to purchase an inexpensive cordless phone. Thus, Best Buys promotional message
needs to be consistent, relevant, and not too heavy handed while expressing the diverse inventory
that exists under the Best Buy banner. We have a signal brand that represents a lot of things to different
people. We need to create programs that represent all that.
A recent Best Buy campaign used a Fun Zone 53-foot-long truck that toured various destinations. The
Fun Zone showed how technology is invading everyday life. Among the products demonstrated were
refrigerators with built-in Wen Browsers, high-definition home theater systems, and a gaming area with
space-age chairs. The truck visited baseball stadiums, tourist areas (such as the Santa Monica pier), and
the New York City Marathon. At some locations, as many as 5,000 people visited daily.
Another campaign had a back-to-school theme. In mid-August, shoppers with school identification cards
received gift bags filled with coffee mugs, compilation CDs, popcorn, batteries, and other goodies.
Students who charged their purchases with Discover cards were also entered to win one of four $25,000
scholarships. About 500,000 students entered.
Best Buy is a big believer of cross-promotions; its music and home video departments most heavily use
this strategy. One observer remarked that Best Buy develops promotions that work for everybody
involved. One recent holiday cross-promotion consisted of two parts. The first part was at a time when
Best Buy was the only retailer selling a particular U2 DVD. The first 500 people in each store on a given
Saturday were given samplers containing unreleased songs. On the same day the samplers were given
out, Best Buy started another promotional offer entitling customers to buy an NSync bobble-head toy
for $9.99 with a $25 minimum purchase. Supplementing this offer was a sweepstakes of five trips for
two to an NSync concert and a backstage visit.
QUESTIONS
1. Evaluate Best Buys overall promotion strategy.
2. What different promotion appeals would you use to reach young fun, digital home,
technojock, and traditional entertainment customers? Assume you are promoting a 20inch flat screen television with built-in stereo speakers.
3. How would you assess the effectiveness of Best Buys Fun Zone truck?
4. Describe potential cross-promotion for Best Buy that could be aimed at the college student
market.