Course Code: BRL – 002
Course Title: Retail Marketing and Communication
Assignment Code: BRL–002/TMA/2014-15
Coverage: All Blocks
Maximum Marks: 100
Attempt all the questions
(A) Short Type Questions
1. What are the stages of consumer decision making and its impact on retail strategies? Specify with examples.
Solution:
There are 5 steps in a consumer decision making process a need or a want is recognized, search process, comparison, product or service selection, and evaluation of decision.
Problem Recognition
Most decision making starts with some sort of problem. The consumer develops a need or a want that they want to be satisfied. The consumer feel like something is missing and needs to address it to get back to feeling normal. If you can determine when your target demographic develops these needs or wants, it would be an ideal time to advertise to them. For example, they ran out of toothpaste and now they need to go to the store and get more.
Search Process
Most of us are not experts on everything around us. In the searching phase we research for products or services that can satisfy our needs or wants. Search Engines have become our primary research tool for answers. It is an instant and easy way to find out what you are looking for.
Also don’t forget about actual human beings. Our friends and families all have had many different experiences and can offer us recommendations. In most cases recommendations from actual people instead of a search engines are preferred. You have more of a trust factor with people close to you then a computer program.
You also may have had past experiences that assist you in solving your problem. You may have had a life experience in the past that helps you make the correct purchase decision. You could also just know what decision to make just by picking up things over the years and knowing how to solve them.
In this stage you are also beginning your risk management. You might make a pro’s vs. con’s diagram to help make your decision. People often don’t want to regret making a decision so extra time being put into managing risk may be worth it. People also remember bad experiences over good ones, take that into account.
Evaluating Alternatives
Once the consumer has determined what will satisfy their want or need they will begin to begin to seek out the best deal. This may be based on price, quality, or other factors that are important for them. Customers read many reviews and compare prices, ultimately choosing the one that satisfies most of their parameters.
Selection Stage
After tallying up all the criteria for the decision the customers now decide on what they will purchase and where. They have already taking risk into account and are definite on what they want to purchase. They may have had prior experience with this exact decision or maybe they succumbed to advertising about this product or service and want to give it a try.
Evaluation of Decision
Once the purchase has been made, does it satisfy the need or want? Is it above or below your expectations? The goal for every marketer is not for a one-time customer but a repeating lifetime customer. One bad experience of buyer’s remorse and your brand perception could be tarnished forever. On the other hand, one superb experience can lead to a brand loyal customer who may even become a brand evangelist for you.
An example of consumer decision making Process
Nothing like a real example to better understand the five stages of the consumer decision making Process. Maybe this situation sounds familiar to you.
Stage 1 – Need recognition: It’s Sunday night. You’re hungry (internal physiological stimuli) and there is nothing in the fridge. You will order food (statement of need).
Stage 2 – Information search: You already have ordered to the Indian restaurant in your street last month (internal information). A friend recommended a pizzeria in your neighborhood (external information from environment). And this morning you’ve found a flyer for a sushi restaurant in your mailbox (external information from advertising).
Stage 3 – Alternative evaluation: You have a bad opinion of the Indian restaurant since you’ve been sick the last time (inept set). The pizzeria is both recommended by your friend and also happens to be a well-known brand (positive perception – evoked set). As for the sushi restaurant, it got good reviews on Trip advisor (positive perception – evoked set).
Stage 4 – Purchase decision: After evaluating the possibilities, you’ve decided to choose the well-known pizza delivery chain. In addition, a new episode of your favorite TV show is broadcasted tonight on TV.
Stage 5 – Post-purchase behavior: The pizza was good (positive review). But you know there was too many calories and you regret a little bit (mixed feelings about yourself). The next time you will choose the sushi restaurant. There is less fat in sushi than pizza (next purchase behavior)!
2. Define personal selling. Explain the importance of personal selling from the point of view of customers and manufacturers.
Solution:
Personal Selling:
Personal selling is selling technique involved between person to person and between the prospective buyer and seller.
Personal selling consists of human contact and direct communication rather than impersonal mass communication.
Personal selling involves developing customers relationship, discovering & communicating customer needs, matching the appropriate products with these needs.
Personal selling is the most significant promotional tool in terms of number of people employed.
Personal selling is so important because the sales person is the catalyst that making reaction in the Marketing activities.
Eg: Business Firms, factories, Retailers, Banks, Hotels, Personal Computers, Laptops For Institutes, Audio Visual Equipments etc…
Methods of Personal Selling:
a) Retail selling :-
Selling to ultimate consumer.
b) Field Selling :-
Business to business selling that take place in the prospective customer’s place of business.
c) Telemarketing :-
Using the Telephone as the primary means of communicating with prospective customers & Telemarketers often used computers for order taking.
d) Inside Selling :-
Business to business selling in the Sales person’s place of business.
Characteristics of Personal Selling:
a) PERSONAL SELLING IS FLEXIBLE.
b) PERSONAL SELLING BUILDS RELATIONSHIPS.
c) PERSONAL SELLING PRODUCES IMMEDIATE RESPONSE.
Personal Selling Process:
Importance of personal Selling
Personal selling is an important element of promotion mix and an effective promotional tool. Personal Selling offers the following compensation.
(i) It is a flexible tool: Personal selling involves individual and personal communication as compared to the mass and impersonal communication of advertising and sales promotion. Therefore, personal selling is most flexible in operation. A salesman can tailor his sales presentation to fit the needs, motives and attitudes of individual customers can observe the customer’s reaction to a particular sales approach and thus make necessary adjustments right on the spot. Face-to-face contact with customers is the most effective means of communication and persuasion.
(ii) It involves minimum wasted effort: In personal selling, a salesman can select the target market and concentrate on the prospective customers. He need not communicate with the people who are not the real prospects. Therefore, personal selling involves minimum wastage of effort.
(iii) It results in actual sale : Advertising and sales promotion techniques can only attract attention and arouse desire. By themselves they cannot create actual sale. Personal selling in most cases leads to actual sale. A salesman can find prospective buyers, demonstrate the product, explain its operation, and convince customers to buy it, install it at the customer’s place and provide after-sale service. No other method of promotion can perform all these functions. Therefore, personal selling does the entire job of selling. Personal Selling is a complete promotional technique of keeping customers satisfied.
(iv) It provides feedback: Personal selling involves two-way flow of communication between the buyer and the seller. It is a useful method of understanding the needs and behavior customers. It provides knowledge about the tastes, habits and attitudes of the prospective customers.
(v) It complements advertising : In most situations, there is a need for explaining the quality uses and price of the product. Salesmen can persuade the prospective customers to buy a product. Advertising attracts customers but their doubts and questions about the product are answered by salesmen. In this way personal selling supports advertising. Salesmen educational the consumers about new products and about new uses of existing products.
(vi) It educates customers : Salesmanship is not simply a tool of convincing people to buy certain products. It assists customers in satisfying their wants. A salesman provides: information, education and guidance to customers. He handles their complaints and assists them in getting value for their money. He can clear their doubts on the spot.
(vii) It assists the society: Salesmen help to increase aggregate sales and production in the country thereby increasing employment opportunities. They help to maintain equilibrium between demand and supply.
3. Explain the different types of sales presentations.
Solution:
There are 5 types of Sales Presentations:
Webinar
Webinar sales presentations are conducted via the Internet. Webinars let those who choose to view the sales presentation watch it on their computer. To access the webinar sales presentation, viewers can either be invited to join a webinar via email or, depending on the type of webinar, they may need to download software that allows them to participate. Webinar sales presentations allow the salesperson to include graphics such as charts and tables to express ideas. These sales presentations are popular because they let you communicate your message to potential clients without traveling.
Teleconference and Video-conference
With the high cost of travel, teleconference sales presentations are a good way to keep costs down. A teleconference sales presentation is done over the phone and can include several people. Sometimes it can get confusing, trying to identify who is talking without being able to put a face with a voice, so usually just one salesperson participates in the teleconference. Videoconferencing, such as via Skype, are helpful in cases in which several people need to see one another face to face but a seminar is not feasible.
Seminar
Seminar sales presentations are held in an auditorium or other large venue. These sales presentations are routinely held to enable you to make your sales pitch to as many people as possible. Usually, the salesperson will stand on a stage or platform giving reasons why listeners should buy his or her product or service. Oftentimes these presentations are scripted and memorized, but sometimes they involve audience participation, allowing attendees to ask questions or somehow be involved in the presentation.
Customized Problem Solving
In a customized problem-solving sales presentation, the salesperson addresses a problem the potential client has, or might have, and offers a solution that could be provided by his or her product or service. This type of sales presentation is done face to face. Often, the salesperson will use a real-life example to demonstrate how the product or service can help the client.
Team
Team sales presentations are those that are performed by more than one person. It can involve any of the previously mentioned forms of sales presentations; however it usually is done in a face-to-face setting. Team sales presentations are usually done when the product or service is complicated or large. Sometimes it takes a few salespeople to get the point across.
4. What is sales promotion? How does it help in product promotion?
Solution:
Sales Promotion:
Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers or sales-force to stimulate the immediate sales.
Sales promotion describes promotional methods using special short term techniques.
Whereas advertising gives a reason to buy, Sales promotion gives an incentive to buy It is part of the Marketing spend of all companies and these days Sales promotion spends in many companies exceed that of the ad spends.
Following point of the Sales promotion helps in product promotion:
Internal reasons:
- Top management is more conducive to spending on promotions
- Line managers under greater pressure to achieve targets
- Justification of expenditure is easy
External reasons:
- Increase in number of brands
- Consumer is more price savvy
- Greater pressure from trade to liquidate stocks
- Add effectiveness declining owing to rising costs, media clutter and legal constraints
5. What are the various services which a retail store can provide to a customer?
Solution:
The set of activities and programs undertaken by retailer to make the shopping experience more rewarding for their customers. These activities increase the value customers receive from the merchandise and service they purchase.
Services Provided by the Retailers:
Strategic Advantage through Customer Service:
■ Good service keeps customers returning to a retailer and generates positive word-of-mouth communication, which attracts new customers
■ The challenge of providing consistent high-quality service offers an opportunity for a retailers to develop a sustainable competitive advantage
6. What is in-store promotion? Explain with examples.
Solution:
In-Store Promotion:
In-store promotion is a marketing strategy that is meant to bring people into the store and to purchase specific items that are part of the in-store promotion. These strategies most often come directly from manufacturers, or they may be offered by the store itself. The idea is to generate additional revenue due to the extra sales of the products involved, or even to induce a brand switch when offered by the manufacturer. Stores most often use such strategies to drive traffic into the store, to eliminate too much stock, or to create additional revenues when sales are slumping. Often, however, the main emphasis comes from brand manufacturers attempting to create brand awareness, while building brand equity in-store.
Driving the effort of in-store promotion, many tactics are utilized to entice people to buy the product itself or to buy into the brand. Signs, banners, coupons, TV screens and other in-store brand mediums are often displayed in an attempt to draw attention to the brand message and induce preference for the brand. Shoppers are often inundated with the messages throughout the shopping experience. Product displays are another common form of in-store promotion, which are usually placed prominently in the middle or end of an aisle, showcasing the product while minimizing distraction. Oftentimes, such displays are found as the front of the store near cash registers as well, in an attempt to leave a lasting impression as customers prepare to exit the store.
Demonstration of products is another popular form of in-store promotion that enables shoppers to see a product in action or experience the product first-hand. Product demonstrators will usually introduce shoppers to the product first so that the focus is on the product itself. Depending on the reaction of the customer, the product demonstrator will introduce the promotion offered on the product or may simply thank the customer for trying the product. Using such tactics gives the brand owner more control over brand perceptions, while focusing brand switching efforts directly on consumers most open to switching. Training product demonstrators to tailor the brand message to the customer concerns and specifications is often an important emphasis of this approach.
Furthermore, in-store promotion is designed to take advantage of people’s tendency to purchase products impulsively. Most often, consumers purchase the majority of their products unplanned, and effective in-store promotion is often cited as the reason for this phenomenon. Not everybody is swayed; however, as evidence mounts that with the prevalence and over-saturation of in-store promotions, brand messages may actually be diluted, rending them potentially ineffective. Still, when stores and manufactures work together to manage the message, results often demonstrate an increase in sales, even if the message does not always induce changes in brand loyalty.
Images of in-store Promotions:
7. Discuss the basic factors that should be kept in mind before designing any promotional strategy.
Solution:
Four promotional strategy factors that retailers should consider when designing promotion plans:
1. Define promotion strategy and principles given objectives and targets
2. Support promotion principles with analytics
3. Educate the organization and draft a promotion plan
4. Track promotion success
1. Define promotion strategy and principles given objectives and targets
Promotions can successfully drive desired behaviors and meet varying objectives for each target customer segment. For example, the objective of promotions may be to drive value and volume for one customer segment but penetration and purchase frequency for another (see Figure 1). Before planning any promotion activity, a retailer should first define how objectives vary by customer segment, keeping in mind product category (shirts, pants, etc.), channel (i.e. Factory, Retail, Web) and time of season (e.g. opening, mid-season, sale). At the end of the day, the type of promotion used to increase basket size of infrequent customers will look very different from the promotion used to minimize cannibalization risk but maintain the brand image for loyal customers.
Figure 1: Defining promotion objectives by segment – example
Mapping promotion strategic objectives to customer segments
Once objectives are defined, promotion principles should be established to guide the design of a promotion plan. The principles should document goals and decision factors, including:
Seasonal goals:
Drive purchase volume in the middle of the season; drive turnover at the end of the season
Channel goals:
Promote turnover in factory stores with deeper discounts
Depth factors:
Maximum discount allowed is 40% – going deeper does not lead to incremental unit lift
Frequency factors:
Limit number of promotions to 2 per season to prevent shoppers from adjusting their purchase habits to wait for future discounts
Vehicle factors:
Implement a minimum purchase requirement on all promotions within retail stores to drive basket sizes
2. Support promotion principles with analytics
The best promotion principles are supported by analytics. Analytics not only ensure a retailer is using the most effective promotion type, but also help with change management and building internal buy-in of the promotion objectives across the organization. Common sources of analytics include:
• Historical data analysis
• Management level or store associate surveys
• Customer research
• In-store market tests
How does a retailer know which source will work best for their given situation? There is a tradeoff between the level of sophistication and resource requirements behind each source. However, a best-in-class approach will utilize historical data analysis and incorporate in-store market tests.
For historical data analysis to be worthwhile, a retailer must first ensure that all promotions are tracked systematically and that unit sales and price points can be tied back to specific promotions. Once a systematic tracking process is in place, historical data analysis can provide insight into the right depth, frequency and vehicle to use, building a foundation to support promotion principles.
3. Educate the organization and draft a promotion plan
Once the principles and analytics are in place, a retailer should institutionalize smart pricing and promotional planning through internal education and a comprehensive plan. The most effective promotions for each target segment and product category should be communicated across the organization. By combining the strategy, principles and analytics, retailers can build a proper pricing and promotion plan, outlining the promotion tactics (i.e. the type of promotion, depth, frequency and time of season) and communication methods for each category and channel by customer segment. Frequent checkins (e.g. weekly meetings) between the owners of different marketing and promotion initiatives can avoid too frequent price communication with customers and prevent promotion fatigue.
Figure:2 Promotion plan – example
Promotion plan by week
4. Track promotion success
Retailers should establish procedures for tracking effectiveness of the promotion plan and have contingency plans in place as needed. Commonly tracked KPIs include week-over-week unit sales comparisons, incremental revenue, margins, store traffic, etc. However, a best-in-class measure of promotion effectiveness will also consider the impact of the promotion on other product categories (both unrelated and complementary) not directly included in the promotion. By looking at the effect a promotion had on an overall portfolio, a retailer can ensure that a promotion is successfully achieving objectives and use the leanings to influence future promotion plans.
By applying these four promotion steps, retailers can effectively design their promotional strategies to attract customers in today’s challenging competitive environment while maintaining long-run profitability. An effective promotion strategy is especially important for retailers today, considering the importance customers place on promotions and affordable prices when making apparel purchase decisions. By understanding their customer segments and providing a clear structure and communication for promotions, retailers can rise above the clutter and strengthen their business with healthier, more sustainable margins.
(B) Essay Type Questions
8. What is in-store promotion and how do retailers communicate promotion? Also discuss the objectives of such promotional communication? (15)
Solution:
In-Store Promotion:
In-store promotion is a marketing strategy that is meant to bring people into the store and to purchase specific items that are part of the in-store promotion. These strategies most often come directly from manufacturers, or they may be offered by the store itself. The idea is to generate additional revenue due to the extra sales of the products involved, or even to induce a brand switch when offered by the manufacturer. Stores most often use such strategies to drive traffic into the store, to eliminate too much stock, or to create additional revenues when sales are slumping. Often, however, the main emphasis comes from brand manufacturers attempting to create brand awareness, while building brand equity in-store.
Driving the effort of in-store promotion, many tactics are utilized to entice people to buy the product itself or to buy into the brand. Signs, banners, coupons, TV screens and other in-store brand mediums are often displayed in an attempt to draw attention to the brand message and induce preference for the brand. Shoppers are often inundated with the messages throughout the shopping experience. Product displays are another common form of in-store promotion, which are usually placed prominently in the middle or end of an aisle, showcasing the product while minimizing distraction. Oftentimes, such displays are found as the front of the store near cash registers as well, in an attempt to leave a lasting impression as customers prepare to exit the store.
Small companies use promotional strategies to achieve many objectives. These objectives may be short- or long-term in nature. Marketing and advertising directors or managers are usually responsible for implementing company promotional strategies. They may use distribution tactics to push products at retail stores, or pull tactics aimed at drawing consumer to their outlets. Whatever the case, promotions can include in-store promotions, direct mail, billboards, trade shows and even advertising.
Dispensing Product Information
One promotional strategy objective is dispensing product information. Small companies often distribute brochures, catalogs, sales letters, videos and other information to market their products. They also use in-store videos or instructions to demonstrate more complicated products such as computer software, vehicles or educational courses, for example. Businesses also distribute promotional materials with their websites so people can view literature or online videos at their leisure. Consumers need information to assess various products and make purchase decisions. Advertisers use product information to educate consumers on various product features and benefits.
Increasing Customer Traffic
Some promotions are used to generate more customer traffic. For example, fast food restaurants often feature certain meals at reduced prices. These meals may be advertised in commercials to drive people into the fast food restaurants for lunch or dinner. Businesses may also reward regular customers with frequency card or loyalty programs. These promotions are designed to increase customer visits by rewarding them according to their expenditures. For example, a barber shop may offer customers a free haircut on the seventh visit. A company typically earns a large percentage of its sales from repeat business.
Building Brand Awareness
Small companies usually implement promotional strategies to increase brand awareness. Brand awareness is the percentage of people who recognize a brand from a specific company, according to marketing expert Dave Dolak. It is a metric that is relative to other competitive companies. In other words, companies strive to build brand awareness so their products are chosen over other brands. Brand awareness usually increases over time through repeat advertising and other key promotions.
Increasing Sales and Profits
Companies primarily promote their products to drive sales and profits. They may use product sales, coupons and “bogo” or buy-one/get one free offers to increase sales short-term. But they will need to emphasize product quality and customer service in their messages to increase long-term sales and profits. Businesses usually have specific attributes or core competencies that set themselves apart from competitors. To be successful, the images marketers wish to portray must be commensurate with actual company operations.
9. In what ways the knowledge of consumer behavior is essential for the success of retail strategies and also discusses the factors that influence consumer behavior in retail banking.
Solution:
See the book for the answer for this question.