Marketing Weeks 8 and 9

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ADM2320

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Marketing

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Feb 20, 2024

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Marketing Weeks 8 and 9 Chapter 13 – Retailing and Multichannel Marketing Retailing - Refers to the set of business activities that add value to products and services sold to consumers for their personal or family use; it includes products bought at stores, or through catalogues, kiosks, and over the internet, as well as services such as fast-food restaurants, airlines and hotels o Sits at end of supply chain o Where marketing meets the consumer o Plays a key role in fulfilling customer expectations o Adds value to both consumers and brands (manufacturers) Changing Retail Landscape in Canada - The internet, social media and mobile devices have triggered massive changes in retailing in Canada over the last 20 years - Shopping behavior has also changed in fundamental ways (online vs. in-store shopping) - It’s now omnichannel shopping: consumers want seamless, consistent experience across all shopping channels – online, in-store, social media, apps, kiosks, or via mobile devices - Growth of omnichannel shopping has led to decline in physical stores and shopping malls – many retailers have either closed or reduced their footprint - Numerous small retailers have gone online using e-commerce platforms such as Shopify to grow their businesses - Major retailers are boosting their online operations (Walmart, Best Buy, Target, Loblaws) - Online stores have begun to open physical stores - Rapid integration of online and physical operations shows that claims about the death of physical stores and malls maybe premature but changes in retailing is expected to continue - Meeting changing consumer expectations and preferences, and a company’s efforts to remain competitive and profitable - Consumers want convenience and experience - Increasing integration of technologies (for example, cameras in stores), artificial intelligence and big data analytics to gain consumer insight - It seems that these trends are about to become even more intensified as a result of COVID-19 pandemic, which has hastened consumers use of technologies in virtually all aspects of their lives, especially shopping - Retailers have also ramped up their efforts to integrate online and in-store operations to create a seamless, consistent customer experience - The pandemic has also led to many brands around the world to significantly scale back their physical footprints and increase their online presence - Whether these impacts will be short-lived or permanent is unclear, but it may be safe to think that retailing as we know it today will not be the same over the next 5-10 years

General Criteria Classifying Retailers 1. Product lines (specialty, general merchandise) 2. Form of ownership (chain, independent) 3. Shopping effort required by customers (convenience, shopping, specialty) 4. Location of retail transactions (store, non-store, internet) 5. Service-levels provided to customers (self-service, limited or full-service)  Classification schema is not mutually exclusive because some retailers may be classified into multiple categories o Example: Home Depot or Best Buy are chain stores, offering limited service (shopping effort), and are category killers (product lines) Classifying Retailers - Food retailers o Conventional supermarket (Sobeys, Safeway) o Big box retailer (Costco, Walmart) o Convenience store (7 Eleven) - General merchandise retailers o Discount store: a broad variety, limited service, low prices (Walmart, Giant Tiger) o Specialty store: limited number of complementary merchandises in a relatively small store (Payless Shoes, Estee Lauder, Sephora) o Category specialists: a narrow variety but a deep assortment of merchandise (Paderno, Chapters/Indigo) o Department store: broad variety, deep assortment, some customer service, organized into separate departments (Simons, Hudson’s Bay) o Category Killer: extensive assortment in a particular category – makes it difficult for other retailers to compete (Home Depot) o Drugstore: specialty store, health and personal grooming products, pharmaceuticals (Shoppers Drug Mart, Jean Coutu) o Off-price retailers: inconsistent assortment of merchandise, low prices (Winners, Home Sense, Designer Depot) o Extreme-value retailers: general merchandise discount store (Dollarama) o Services retailer: primarily sell services rather than merchandise (Jiffy Lube, FirstChoice Haircuts) - Why is classification important? o Manufacturers needs to understand the general characteristics of different types of retailers so they can determine the best channel for their products Retailer Marketing Decisions 1. Retail segmentation, targeting, positioning and store differentiation 2. Retail mix – 4 P’s a. Product assortment and service levels b. Pricing c. Promotion

i. Cooperative advertising: an agreement between a manufacturer and a retailer in which the manufacturer agrees to defray some advertising costs d. Distribution (location) Creating a Retail Mix Strategy Using the 4 P’s - Product/service strategy: product assortment and services mix – both of these should differentiate the retailer and meet customer expectations o General merchandise or targeted merchandise o Example: Victoria’s Secret o Service level (self-service, limited or full-service) o INNOVATION  Smart shopping carts  Artificial intelligence – Lowesbot, Sephora’s Color & lip IQ  Use of drones for delivery - Pricing strategy: when to use sales and other promotion tactics – impact margins, customer satisfaction and loyalty o High margins, low volume (specialty stores) o Low margins, high volume (mass merchandise and discount stores) - Promotion strategy: decide on the combination of advertising, personal selling, sales promotion, public relations, direct and social media marketing - Place strategy: store atmospherics: influence consumers experience and buying behavior – every aspect must be carefully orchestrated (music, lighting, décor, layout, product presentation, smell, colors, employee dress code) o Location (shopping center, power center) o Share of wallet: the percentage of the customers purchases made from a particular retailer  All relate to retail strategy The Wheel of Retailing

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Benefits of Omnichannel: Physical Stores - Browsing - Touching and feeling - Personal service - Cash and credit - Entertainment and social interaction - Instant gratification - Risk reduction Benefits of Omnichannel: Internet - Deeper and broader selection - Personalization - Gain insights into consumer shopping behavior - Increase customer loyalty and satisfaction - Expand market presence Overarching Retail Strategies - Put customer at the center of the strategy - Practice personalized marketing - Present products as customer solution - Align channels to customer chopping journey - Influence customer to carry your dialogue - Establish customer-focused, cost-effective operations - Deepen the integration of technology, data and analytics to develop timely, innovative strategies Class Discussion – March 18 1. What major trends and developments are retailers facing? How do these developments impact their competitive strategies? 2. Explain what is meant by the concept omnichannel retailing . 3. Discuss the characteristics by which retail stores are classified. Why are these classifications important? 4. What are some of the major trends you observe that may affect the future of retailing? Discuss in detail. 5. Do you think the wheel of retailing provide an adequate basis for understanding innovation in retailing? 6. Explain what is meant by the retailing mix and describe how the retailing mix may help retailers gain competitive advantage. - Giving competitive advantage o Cutting price but still providing good quality 7. Explain how the overarching retail strategies discussed in the recorded presentation can help companies gain competitive advantage and grow their businesses. - Last slide

Chapter 15 – Promotions Parts 1 & 2 Promotion - Focuses on the ability of companies to communicate their value to consumers clearly and persuasively - Promotion comprises of a mix of communication tools, all of which must be carefully coordinated in order to convey a clear, consistent and compelling message about their unique value proposition Integrated Marketing Communications (IMC) - IMC is the promotion dimension of the 4 P’s - IMC uses the following communication tools: o Advertising o Personal selling o Sales promotion o Public relations o Direct marketing o Digital media - All done in combination to create a clear, consistent and compelling message Communicating with Consumers: The Communication Process - Senders/companies  transmitters (encode message)  media channels  receivers/consumers (decode) - Feedback is then sent back to the senders/companies - During this process, there is consistent noise from the environment Promotion Mix Tools - Advertising (broadcast, print, online, mobile, outdoors) - Personal selling (sales presentation, trade shows, incentive programs) - Sales promotion (coupons, discounts, rebates) - Public relations (press releases, videos, sponsorships, events) - Direct marketing (direct mail, catalogues, flyers) - Digital media (online, mobile, social media, email) - Key: all done in combination to create a clear, consistent and compelling message Developments in Marketing Communications - New trends in ways that marketers and consumers communicate and use media: o Greater use of online, social and mobile means of communication o Greater use of web and streaming services for news, shows, sports, etc. which tend to be advertising-free o Increasing sue of mobile devices enable always-on digital communications between consumers and brands (e.g., location-based marketing)

o Marketers have shifted large portions of their promotions budget to online and digital media o Marketing communications tend to be more targeted focusing on micro-markets and a stronger focus on customer relationships o Greater emphasis by marketers on “digital-first” to build brands where they launch their brands online via social, mobile media often using new techniques (e.g., online influencers) - Overall, marketers these days focus on content marketing rather than push marketing through traditional channels - Content marketing: strategic marketing approach focusing on creating and distributing valuable, relevant, and consistent content in order to attract and retain a clearly defined audience and to profit from this audience 7 Steps in Planning an IMC or Ad Campaign 1. Identify target audience – who are you targeting? 2. Set objectives – what do you want to achieve? a. All marketing communications aim to achieve certain objectives: to inform, persuade, and remind customers b. Other specific objectives include generating enquiries, increasing awareness of the product or brand, or prompting trial, and increasing sales, market share or customer loyalty c. Push strategy: a promotion strategy that uses the sales force or trade promotions to push the product through the channel d. Pull strategy: a promotion strategy that spends a lot on consumer advertising and promotion to get consumers to “pull” the product through the channel e. Other considerations that influence objective are: i. The nature of the market (business vs. consumer) ii. Nature of the product (simple vs. complex) iii. Stage of the product in PLC 3. Determine the budget – how much money are you willing to spend? 4. Determine and convey the message – value proposition

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a. Unique selling proposition i. Differentiate a product by communicating its unique benefits and attributes ii. Often becomes the common theme or slogan of the entire campaign 5. Evaluate and select media a. Media panning: evaluating and selecting media b. Media mix: combination of media and frequency c. Media buy: purchasing airtime or print pages 6. Create the communication – appeal? Design element? a. The type of medium determines the execution style b. Creativity plays a major role in the execution stage c. Creativity should not overshadow the message d. The execution style must match medium and objectives 7. Assess impact: metrics a. Pretesting: performed before the ad campaign is implemented b. Tracking: monitoring key indicators while campaign is running (e.g., daily or weekly sales volume) c. Post-testing: evaluates the campaigns impact after its implementation The Appeal - A rational appeal helps consumers makes purchase decisions by appealing to their sense of reasoning and logic o Offering facts and strong arguments built around relevant issues that encourage consumers to evaluate the brand favorably based on the key benefits it provides - Emotional appeal taps into consumers emotions to get their attention or to get them to act (buy, share, remember, etc.) o Targets a wide variety of emotions including fear, sex, happiness, excitement, anger, humor, and so on Choosing the Right Medium (GOOD MC QUESTIONS FOR FINAL EXAM) Determine Advertising Schedule - Continuous

- Pulsing - Flighting Results: Measuring IMC Success - Gross rating points: reach multiplied by frequency - Frequency: number of times audience is exposed to ad X - Reach: percentage of target population exposed to ad - Web tracking: site traffic, clicks, conversations, cost per thousand, cost per click Class Discussion – March 22 1. Briefly describe the marketing communications process. Identify and explain possible sources of noise at each stage of this process. 2. Bernard’s, a local furniture company, targets college students with apartments and households of young people purchasing their first furniture items. If you worked for Bernard’s, what type of media would you use for your advertising campaign? Justify your answer. What type of advertising schedule - continuous, pulsing, or flighting – would you recommend? Why? 3. Explain what is meant by emotional appeal in advertising. Give one example of an adv that uses emotional appeal. Describe the emotions being targeted or used in the ad. 4. How can marketers use the five promotional tools to deliver a clear and consistent message to consumers? 5. Research the following terms for their meanings and definitions: Google Analytics Facebook Insight, Click Through Rate, Bounce Rate, Hits, Page Views, Visitors, Conversion Rate, Abandonment Rate. How can they be used to assess marketing promotions campaigns? 6. Explain the meanings of GRP & CPM. How are they calculated and interpreted? 7. McDonald’s spends millions of dollars on advertising. Discuss how it can assess the impact of its advertising by using marketing metrics.

Marketing Weeks 8 and 9

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