Exam #4 study guideChapter 15 Affordable budgeting method• Sets communication budget by determining what money is available after operating costs and profits are budgeted.• Drawback: the affordable method assumes that the communication expenses don’t stimulate sales and profitsBrand• Distinguishing name or symbol, such as a logo, that identifies the products or services offered by a seller and differentiates those products and services from those offered by competitorsBrand associations• Images and symbols associated with a brand or a brand benefit• Formed on the following basis:o Customers contact with the organization and its employeeso Advertisementso Word of mouth publicityo Price at which the brand is soldo Celebrity/big entity associationo Quality of the producto Products and schemes offered by competitorso Product class/category to which the brand belongso POP (point of purchase) displays• Example:o Nike swooshBrand awareness• Memorable name• Repeated exposure• Even sponsorship• Symbols • Benefitso Aided recall top mind awarenesso Stimulates visits to retailerBrand image• The current view of the customers about a brand. • Can be defined as a unique bundle of associations within the minds of target customers. • It signifies what the brand presently stands for. • It is a set of beliefs held about a specific brand• Value of brand imageo To retailers (brand equity) Attract customers Build loyalty Higher prices leading to higher gross margin Reduced promotional expenses Facilitates entry into new markets• GapGap Kidso To customers Promises consistent quality  Simplifies buying process4/23/13 Reduces time and effort searching for information about merchandise/retailerBrand equity• Create a high level of brand awareness• Develop favorable associations• Create emotional connections• Consistent reinforcementBrand Extensions• GapGap Kids and Old Navy• Abercrombie & FitchHollister and Gilly Hicks• SearsSears Auto Centers and the Great Indoors• Pottery Barn Pottery Barn KidsBrand loyalty• A scenario where the consumer fears purchasing and consuming product from another brand which he does not trust. • It is measured through methods like word of mouth publicity, repetitive buying, price sensitivity, commitment, brand trust, customer satisfaction, etc. • Brand loyalty is the extent to which a consumer constantly buys the same brand within a product category.Break even analysis• An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. • Break-even analysis calculates what is known as a margin of safety, the amount that revenues exceed the break-even point. • This is the amount that revenues can fall while still staying above the break-even point.Competitive parity method• This communication budget is set so that the retailer’s share of communication expenses equals its share of the market• Drawback: this method (like others) doesn’t allow the retailer to exploit the unique opportunities or problems they confront in a marketAdvertising• Newspapers• Magazines• Television• Radio• Cooperative advertisingo A cost-effective way for manufacturers, retailers or distributors to reach their target markets. o Although co-op advertising policies differ from manufacturer to manufacturer, most will pay a portion of the advertising costs and supply the retailer with photos or graphics to use in the ad (or sometimes the entire ad itself), whether for print, radio or television.o An example might be when a soft-drink manufacturer and a local grocery store split the cost of advertising the manufacturer's soft drinks; both the manufacturer and the store benefit from increased store traffic and its associated sales.Forms of Communication• Newspapers• Magazines• Televisiono Most expensive form of communication• Radio• Cooperative advertisingo A cost-effective way for manufacturers, retailers or distributors to reach their target markets. 4/23/13o Although co-op advertising policies differ from manufacturer to manufacturer, most will pay a portion of the advertising costs and supply the retailer with photos or graphics to use in the ad (or sometimes the entire ad itself), whether for print, radio or television.o An example might be when a soft-drink manufacturer and a local grocery store split the cost of advertising the manufacturer's soft drinks; both the manufacturer and the store benefit from increased store traffic and its associated sales.Integrated marketing communication program• A program that integrates all of the communication elements to deliver a comprehensive, consistent message• Providing a consistent image can be challenging for multichannel retailers—need to consider the needs of all channels early in the planning of its communication• Present a consistent brand image through all communications with customerso Store designo Advertisingo Web siteo magalogMarginal analysis• Based on the economic principle that firms should increase communication expenditures as long as each additional dollar spent generates more than a dollar of additional contribution• Very hard to use because managers don’t know the relationship between communication expenses and salesMethods of Communication • Interactive & onlineo Direct marketing (e.g., mobile marketing)o Online marketing (e.g., web site, blogs, social media)• Online & passiveo Direct marketing (e.g., e-mail)• Offline & passiveo Advertisingo Sales promotions (e.g., coupons)o Public relationso Direct marketing (e.g., mail, catalogs)• Interactive & offlineo Personal sellingo Sales promotions (e.g., contests, sweepstakes, special events, in-store demonstrations, pop-up stores) Mobile marketing• Marketing through wireless handheld devices, such as cellular telephones, and m-commerce or mobile commerce involves completing a transaction via the cell phone• Oline/interactiveObjective and Task method• Determines the budget required to undertake specific tasks to accomplish communication objectives• Communication objectiveso Specific goals related to the retail communication mix’s effect on the customer’s decision-making processo Long-term: ex. Creating or altering a retailer’s brand imageo Short-term: ex. Increasing store trafficPercentage-of-sales method• Communication budget is set as a fixed percentage of forecasted sales•