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Brittany Altman Final Study Guide cte 3806 Affordable budgeting method one of the rule of thumb methods Sets communication budget by determining what money is available after operating costs and profits are budgeted The difference between the forecast sales and expenses plus the desired profit is then budgeted for the communication mix Drawback the affordable method assumes that the communication expenses don t stimulate sales and profits Brand Distinguishing name or symbol such as logo that identifies the products or services offered by a seller and differentiates those products and services from the offerings of competitors Indicates to consumers the type of merchandise services offered by the retailer brand associations anything linked to or connected with the brand name in a consumer s memory Ex associations consumers have about Apple are its innovative products such as o iPhone iPod and Mac computers brand awareness refers to a potential customer s ability to recognize or recall that the brand name is a particular type of retailer or product service The strength of the link between the brand name and the type of merchandise or service in the minds of customers Brand image consists of a set of associations that are usually organized around some meaningful themes Ex associations a consumer has about McDonald s might be organized into groups such as kids service and type of food Brand image is present through communication with customers via store design advertising website o Ex Abercrombie and Fitch has a consistent brand image in stores on their website and in their advertisements Brand loyalty indicates customers like and the consistently buy a specific brand in a product category They are reluctant to switch to other brands if their favorite brand isn t available Break even analysis determines on the basis of consideration of fixed and variable costs how much merchandise needs to be sold to achieve a break even zero profit The formula for calculating the sale quantity needed to break even is o Total fixed costs actual unite sales price unit variable cost Cooperative advertising co op advertising a promotional program undertaken by a vendor and a retailer working together The vendor pays for part of the retailer s advertising but dictates some conditions Ex Best Buy might pay for only half of its expenses for ads including Sony digital TVs This lowers costs enables retailers to associate its name with well known national Drawbacks brands and use attractive artwork created by national brands interested in featuring their store s name and location vendors want their ads to feature their products whereas retailers are more o Ads by vendors are often used by several retailers o Vendor may restrict advertising to a time when retailer s sales are depressed Communication objectives specific goals related to the retail communication mix s effect on the customer s decision making process Integrated marketing communication programs a program that integrates all of the communication elements to deliver a comprehensive consistent message to all customers over time across all elements of their retail mix and across all delivery channels 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 programs Ex Talbot s strives to give all of its stores the residential feel of the company s first store which was a 17th century Massachusetts home The overall ambiance and red door in particular are ever present in its catalogs and website as well Marginal 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 sales Methods of communication these include Marginal analysis method Objective and task method Rule of thumb methods Affordable budgeting methods Percentage of sales method Competitive party method Mobile Marketing marketing through wireless handheld devices such as cell phones m commerce or mobile commerce involves completing a transaction via the cell phone Objective and task method Determines the budget required to undertake specific tasks to accomplish communication objective The retailer first establishes a set of communication objectives and then determines the necessary takes and their costs The total of all costs incurred to undertake the tasks is the communication budget Percentage of sales method communication budget is set as a fixed percentage of forecasted sales Retailers use this method to determine the communication budged by forecasting sales Drawback during the budget period then applying a predetermined percentage to set the budget this method assumes the same percentage used in the past or by competitors is still appropriate for retailers Pop up store temporary storefront that exist for only a limited time and generally focus on a new product or limited group of products offered by a retailer Ex Gucci opened pop up stores named Gucci Icon Temporary Stores feature limited edition products Premiums offers an item for free or at a bargain price to reward some type of behavior such as buying sampling or testing Premiums build goodwill among consumers who often perceive high value in them Can be distributed in many ways toys inside cereal boxes coupon for free milk on a box of cheerios things handed out in the store things delivered in the mail o Ex free panties from Victoria s secret Public Relations Managing communications and relationships to achieve various objectives Building and maintaining a positive image of the retailer Handling or heading off unfavorable stories or events Maintaining positive relationships with the media o In many cases PR activities support other promotional efforts by generating free media attention and general goodwill o Ex Wal Mart s PR department has set up a war room to respond quickly to attacks or adverse news o Ex positive PR occurs when celebrities wear designer gowns Social Media media content distributed through social interactions 3 major online facilitators are YouTube Facebook and Twitter Allows customers to review communicate about and aggregate information about products prices and promotions Special event a sales promotion program comprising a number of sales promotion techniques built around a

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FSU CTE 3806 - Affordable budgeting method

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