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Retail advertising and sales promotionPromotion Promotion refers
to any activity that is primarily intended to create demand and
awareness for the product and for the company. Different types of
promotions are: Advertising Publicity Personal selling Sales
promotion
AdvertisingAdvertising is any paid form of non-personal
presentation and promotion of ideas, goods or services by an
identified sponsor. The advertisements are resorted to for creating
awareness of the product, demand creation, corporate image etc.
Advertising moves the buyer towards the stores whereas the sales
promotion moves the product towards the buyer.
Publicity(Non-paid form of advertising) Publicity refers to the
news item which is generally not paid for, whereas the
advertisements are paid for. A news item regarding collaboration
between Wal-Mart and Bharti. A news item about Vivek completing 25
years is publicity.
Personal SellingWhile the advertising is a non-personal selling,
the personal selling is a face-to-face presentation of goods and
services to the prospective buyers. The salesman approaches,
convinces and overcomes the objections and then sells the
product.
Sales PromotionA direct inducement that offers extra value or
incentive for the products, sales force, ultimate customers or the
distributors with the primary objective of creating an immediate
sale.
It is a short term incentive to encourage purchase or sale of a
product or service.Sales promotionSales promotion activities are
those that are undertaken by the seller other than advertising and
personal selling. Some examples are: Product demonstrations, window
display of goods, participation in fairs, exhibitions, exchange
offers etc.
Sales promotion is defined as those selling activities that
supplement both personal selling and advertising and coordinate and
help them to make effective sales efforts, such as displays, shows,
expositions demonstrations and other non-recurrent activities.
Merits of promotionHelps to create awareness among the potential
customers of the stores and serves as a reminder media for the
existing customers. Serves as a medium to reach the market.Helps in
building a good image for the stores.Continuous promotion builds
brand loyalty.Able to demonstrate the superiority of one store over
the other
Criticism against the promotionIt makes people to buy things
that they do not really need.It makes them buy things that they can
not really afford to pay. Because of catchy promotional efforts,
they tempt people to buy goods with financial assistance.People
tend to spend their money rather than save and invest. 4. All
promotions cost money and ultimately it is the customer who has to
pay for all this. 5. Some companies have started to feel that even
if their product quality is not good, they will be able to market
the same effectively by extensive promotional efforts. As a result
of such thinking, customers may receive goods of sub-standard
quality.
Free samplesFree samples are given to the customers so that they
would definitely use the product and If satisfied, would become a
regular customer for the product. These samples are distributed by
the dealers or by the manufacturers. Some samples are distributed
by sticking them to the newspapers or magazines. Detergent powders,
shampoo, etc are items normally given like this.
Offering samples is quite expensive. Not only the cost of the
product is involved but also the cost of distribution. Also if the
final product is not of the same quality as the free sample, it may
create customer resentment.Price cut by the manufacturesA price cut
in the printed price list is announced for a small period of time
in order to boost the sales .
Many experts feel that this is not very desirable as this may
affect the dealer morale as they will get reduced commission. Also
the brand value may be affected. The customers also may start
feeling that the company was making undue profits earlier.Money
refund offerThe retail chain Pizza corner supplies the pizza free
if the delivery is not made within 40 minutes.Gifts to
customersGifts are directly offered to the customers with the
purchase of an item. Examples are: Buyers of Kellogg corn flakes
get a bowl as the gift. Buyers of Cinthol soap may get some small
biscuit packets. These things attract the customers even though the
value of the gift item is small.
Off-season discountsManufacturers of air conditioners offer
their products with good discounts during the winter months. This
is because the natural demand during the period is low and they are
creating demands.All the textile companies offer discounts after
all the festival seasons are over. The months of October, November
and January are festival months with festivals like Pooja,
Deepavali, Christmas, new year and Pongal. The stores find that the
demand drops after this season and in order to keep their stores
selling, they have to resort to these.
Festival discountsDuring festival season also, the stores offer
attractive schemes in order to counter the competition.CouponsThe
coupon are given to the customers against purchases and can be used
for subsequent purchases. The consumers will receive a certain
price reduction as stated in the coupon. Some Pizza companies
distribute leaflets and they contain discount coupons which can be
used later.
It is not easy to calculate the effectiveness of the scheme as
we do not know how many would have bought the product without the
benefit. However the sales with the previous month without the
scheme can be compared. Also coupons do not spoil the normal prices
for the product.Exchange offerThe customers can return their old
used item and a certain price will be fixed for the old item and
the same will be deducted from the price of the new item.Dealers of
TV manufacturers like Sony, Samsung, Onida, LG etc are resorting to
this regularly. All car dealers of leading companies like, Maruti,
Ford, OM, Tatas advertise that the customers can trade-in their old
cars for the newer ones. Many other customer durables dealers (
Fridge, air conditioners, music systems) resort to this.Free
delivery and installationSome dealers do not charge fortransporting
the goods to the households if they are within certain distance.
They also do not charge for installation. Computer dealers, TV
dealers etc do this.
Lucky drawThe buyers are given a coupon which they should fill
and drop in a box in the dealers place. At a pre-determined time
and place, a lucky draw will be conducted and the winner will get
attractive prizes. In some cases like industrial exhibitions, the
visitors are asked to drop their visiting cards and a lucky draw is
conducted. This also helps the sellers to get database.Slogan
contestCustomers are given a coupon where they should also write a
slogan for the product or the company. Best slogans are selected
and rewarded.
Retail advertisingAdvertisement does not only provide the
information about the product and services and availability at
various retail locations but also provides an important link in the
retail segment between the retailer and the customer.
Benefits of retail advertisingIt helps in creating awareness
about its existence, price, different retail locations etc.It
educates the customer about the new products and services and their
diverse use.
It conveys details of sales promotion currently available at
retail stores.It also highlights the superiority of the products /
retail stores
Types of Advertisements for CustomersConsumer-oriented or
Persuasive AdvertisingIt surrounds our daily lives and provides
stimulus to purchase various products or services. It helps in
maintaining a regular demand and attracts a lot of attention and
preference of the customers. The major objectives consumer-oriented
advertising are as follows:-Information to customers about new
products.Holding consumer patronage against intensified campaign by
rivals .Teaching customers about the usage of the product.Promoting
a contest or a premium offer.Establishing a new trade
character.Informative advertisementsPurchases of durable products
are generally erratic and often too expensive to buy, so the buyer
requires elaborate information about them. Hence, the retailer and
the manufacturer spend a huge amount on informative
advertising.Institutional or Corporate AdvertisingIts main motive
is to build a corporate image. In corporate advertising an attempt
is made to highlight the achievements and objectives of the retail
organization. The institutional advertising campaigns have the
following objectives:Creating the corporate image.Building up
retailer prestige.Emphasizing the services and facilities provided
by the outlet.Increasing consumer friendliness and goodwill towards
the retail organization.Financial AdvertisingIt refers to
advertisements by various financial institutions like Standard
Chartered Bank, ICICI, etc. They provide information about the
investment opportunities and the risks and benefits associated with
them.Advertising BudgetA well-designed retail advertising campaign
requires proper budgetary allocation for advertising. The
appropriation of advertising budget must be determined with direct
reference to advertising objectives.Four widely used methods for
determining the expenditure on a retail campaign are:- Affordable
method. Percentage-of-sales Method. Objective and Task Method.
Competitive-parity Method.Affordable MethodMany small retailers use
this method in which they set the budget at a reasonable level-
that which they can afford.Percentage-of-sales MethodIn this method
the retailer budgets the advertising expenditure in terms of a
specific percentage of forecasted sales.Objectives and Task
MethodIn this method a retailer establishes the advertising
objectives and then defines the tasks required to achieve them
after estimating the cost of performing those tasks. When all the
costs are totaled the retailer has his advertising budget ready. In
short, this method begins with the retailers advertising objectives
and then it determines the cost to achieve these
objectives.Competitive-parity MethodIn this method the retailer
allocates the advertising budget at a level at which the
competitors spend for the same kind of time periods and
campaigns.The two major types of advertising campaigns relevant to
the retail sector are: Vertical Co-operative advertising.
Horizontal co-operative advertising.Vertical Co-operative
advertising This type is planned when the retailers and other
channel members (usually manufacturers) share the advertising
budget in a pre-determined way. In many instances the cost is
shared equally. If Lanson Toyota advertises about the Toyota cars
and its showrooms in Chennai, the cost is shared as 50% each
between the dealer (Lanson Toyota) and the manufacturer (Toyota
Kirloskar Motors). Here we can understand that the manufacturer
subsidizes some of the retailers advertising budget if it features
the manufacturers brand.
Samsung may have a special sales promotion for their LCD TV and
the retailer Vivek may advertise under the co-op budget and half
the cost of the ad will be borne by the manufacturer i.e Samsung.
In the case of FMCG products that are sold by several outlets,
large and small, manufacturer extensively support the mom-and-pop
stores and the independent retailer since they lack the financial
resources and also the professional expertise. In addition to
lowering the costs, co-op advertising enables the small retailer to
associate his name with the well-known national brands and use
attractive ad copy developed by the national brand
Co-op advertising has drawbacks also. Suppliers want prominence
to be given to their products in the ad whereas the retailers want
prominence for their retail stores in the ad. This creates a clash
of interest.
Ads developed by the suppliers or manufacturers will have the
names of all the retailers and so the retailer will feel that there
is no focus on his store.
Horizontal co-operative advertisingThis type is launched when
two or more retailers come together and advertise together thereby
sharing the cost of advertising of a particular product. There are
about four retail dealers for Hyundai cars in Banglore. Sometimes
all of them advertise together about certain sales promotion
undertaken.
Various media available for retail advertising
In the past, retailers used newspaper advertisements
extensively. Newspapers also distribute free-standing leaflets
which are inserted into the newspapers. Newspapers offer
opportunities to small retailers by developing different editions
for different localities. The Hindu,on Sundays, has different
supplements to different parts of the Banglore city even though the
main newspaper is common for all.
The cost of developing newspaper ads are lower as compared to
for other media as it can be developed by less experienced
persons.
Retail ads in magazines which are weekly or fortnightly is done
by major retailers like Big Bazaar, Croma, Reliance Fresh etc
Direct Mail is also used by retailers. RMKV, a leading textile
retailer sends communication to their clients through mail. The
addresses are collected by them at the time of the customers visit
to their showroom or through the contests conducted by them
Television commercials can be used by the retailers. Retailers use
TV for building image for their stores. Television ads can also
demonstrate the product usage. In addition to the high production
costs, broadcast time is also very expensive. FM Radio is a major
medium today. With increasing popularity, it is very suitable for
retailers because of its relatively low cost, low cost of
production etc. Internet and outdoor bill boards are also used to
promote retail stores and their merchandise.