CH19 Retail Promotional Strategies

Question 1

retail promotion (p. 463)

Answer 1

• Includes any communication by a retailer that informs, persuades, and/or reminds the target market about ay aspect of that firm

Question 2

advertising (p. 463)

Answer 2

• Paid, nonpersonal communication transmitted through out-of-store mass media by an identified sponsor
• Key points: paid, non-personal presentation, out-of-store mass media, identified sponsor

Question 3

cooperative advertising (p. 465)

Answer 3

• When the costs of retail advertising are sometimes shared by 2 or more manufacturers or wholesalers and their retailers; media rates tend to be lower for retailers

Question 4

vertical cooperative advertising agreement (p. 469)

Answer 4

• A manufacturer and a retailer, or a wholesaler and a retailer share an ad
  Advantages to a retailer: reduced ad costs, assistance in prepping ads, greater market coverage, and less planning time
  Disadvantages to a retailer: less control, flexibility, and distinctiveness

Question 5

horizontal cooperative advertising agreement (p. 469)

Answer 5

• 2 or more retailers share an ad
• Most often used by noncompeting retailers (eg. independent hardware stores, retailers in a shopping center, and franchisees of a firm
• Advantages and disadvantages are similar to those of a vertical cooperative advertising agreement

Questions to consider:
- What ads qualify, in terms of merch and special requirements?
- What percentage of advertising is paid by each party?
- When can ads be run? In what media?

Question 6

public relations (p. 470)

Answer 6

• Any communication that fosters a favourable image for the retailer among its public (consumer, investors, government, channel members, employees, and the general public)
• Can be personal, impersonal, paid, non paid, sponsor controlled, or not sponsored controlled

Question 7

publicity (p. 470)

Answer 7

• any nonpersonal form of PR 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

Question 8

personal selling (p. 471)

Answer 8

• Involves oral communication with one or more prospective customers for the purpose of making a sale
• Retail salespeople include anyone who interacts face-to-face (or via the phone) with the shopper in a way that encourages that shopper to make a purchase

Question 9

order-taking salesperson (p. 472)
(hint: think kimmy or co lieu)

Answer 9

• Performes routine clerical and sales functions–setting up displays, stocking shelves, answering simple questions, and ringing up sales
• In stores that are strong in self-service but also have some personnel on the floor
• Eg. the pharmacy but on the floor

Question 10

order-getting salesperson (p. 472)

Answer 10

• Is actively involved with informing and persuading customer and in closing sales, true “Sales” employee
• usually for high-priced or complex items, eg. real-estate, autos, consumer electronics
• Are more skilled and better paid that order takers

Question 11

PMs (promotional or push monies) (p. 472)

Answer 11

• When a manufacturer helps fund personal selling for retail salespeople selling its brand
• Eg. when a manufacturer provides financial incentives or discounts to retailers to encourage them to stock, promote, and sell their products
• Could be disliked by retailers if their existing customers like a brand that does not give the retailer PMs

Question 12

canned sales presentation (p. 474)

Answer 12

• A memorized, repetitive speech given to all customers interested in a particular item
• Works best if shoppers require little assistance and sales force turnover is high

Question 13

need-satisfaction approach (p. 474)

Answer 13

• Based on the principle that each customer has different wants; this, a sales presentation should be geared to the demands of the individual customer

Question 14

sales promotion (p. 474)

Answer 14

• The paid communication activities other than advertising, PR, and personal selling that stimulate consumer purchases and dealer effectiveness
• Purpose = to build sales (short term), and reach sales goals through constant promotional pushes (long term)

Question 15

word of mouth (WOM) (p. 480)

Answer 15

• When 1 consumer talks to others–in person, on the phone, by email, through social media, or in some other format
• Negative WOM is never good for a business

Question 16

all-you-can-afford method (p. 480)

Answer 16

• A retailer first allots funds for each element of the retail strategy mix except promotion (place, price, and product), any remaining funds go to promotion.
• Weak strategy as it relies on promotion for sales of a product

Question 17

incremental method (p. 480)
Relies on prior promotion budgets to allocate funds. A percentage is either added or subtracted from one year’s budget to determine the budget for next year
Useful for small retailers; provides a reference pointthe budget is adjusted based on the firm’s feelings about past successes and future trends
Easy to apply, and the budget is rarely tied to specific goals, rather “gut feelings” are generally used

Answer 17

• Relies on prior promotion budgets to allocate funds. A percentage is either added or subtracted from one year’s budget to determine the budget for next year
• Useful for small retailers; provides a reference point the budget is adjusted based on the firm’s feelings about past successes and future trends
• Easy to apply, and the budget is rarely tied to specific goals, rather “gut feelings” are generally used

Question 18

competitive parity method (p. 480)

Answer 18

• A retailer’s promotion budget is raised or lowered based on competitors’ actions; if the leading retailer raises its budget, other retailers in the area may follow
• Often used by both small and large firms, uses a comparison point and is market-oriented and conservative

Question 19

percentage-of-sales method (p. 481)

Answer 19

• A retailer ties its promotion budget to revenue, a promotion-to-sales ratio is developed
• This process uses sales as a base, is adaptable, and correlates promotion and sales, there is no relation to goals (for an established firm, sales growth may not require increased promotion)

Question 20

objective-and-task method (p. 481)

Answer 20

• A retailer clearly defines its promotion goals and prepares a budget to satisfy them
• Eg. goal: have 7-% of the people in its trading area know a retailer’s name by the end of a one-month promotion campaign (up from 50%)

Question 21

hierarchy of effects (p. 481)

Answer 21

• Steps taking consumers from awareness, to knowledge, liking, preference, conviction, to purchase

Question 22

reach (p. 484)

Answer 22

The number of distinct people exposed to a retailer’s promotion efforts in a specific period

Question 23

frequency (p. 484)

Answer 23

• The average number of times each person reached is exposed to a retailer’s promotion efforts in a specific period
• Extensive media coverage = ads reache manu people but with relatively low frequency
• Intensive media coverage = ads are placed in selected media and repeated frequently

Question 24

massed promotion effort (p. 484)

Answer 24

• Toy retailers, that promote seasonally
• eg. black friday day

Question 25

distributed promotion effort (p. 484)

Answer 25

Fast food restaurants, that promote throughout the year