Exam 4 study guide 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 profits 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 competitors Chapter 15 Affordable budgeting method Brand Brand 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 employees o Advertisements o Word of mouth publicity o Price at which the brand is sold o Celebrity big entity association o Quality of the product o Products and schemes offered by competitors o Product class category to which the brand belongs o POP point of purchase displays Example o Nike swoosh Brand awareness Memorable name Repeated exposure Even sponsorship Symbols Benefits o Aided recall top mind awareness o Stimulates visits to retailer Brand 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 image o 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 Kids o To customers Promises consistent quality Simplifies buying process 1 21 23 Reduces time and effort searching for information about merchandise retailer Brand equity Create a high level of brand awareness Develop favorable associations Create emotional connections Consistent reinforcement Brand 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 Kids Brand 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 market Advertising Newspapers Magazines Television Radio Cooperative advertising o 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 Television o Most expensive form of communication Radio Cooperative advertising 1 21 23 o A cost effective way for manufacturers retailers or distributors to reach their target markets o Store design o Advertising o Web site o magalog Marginal analysis Methods of Communication Interactive online 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 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 customers 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 o Direct marketing e g mobile marketing o Online marketing e g web site blogs social media Online passive Offline passive o Direct marketing e g e mail o Advertising o Sales promotions e g coupons o Public relations o Direct marketing e g mail catalogs Interactive offline o Personal selling o Sales promotions e g contests sweepstakes special events in store demonstrations pop up stores Marketing through wireless handheld devices such as cellular telephones and m commerce or mobile commerce involves completing a transaction via the cell phone Mobile marketing Oline interactive Objective and Task method Determines the budget required to undertake specific tasks to accomplish communication objectives Communication objectives o Specific goals related to the retail communication mix s effect on the customer s decision making process o Long term ex Creating or altering a retailer s brand image o Short term ex Increasing store traffic Communication budget is set as a fixed percentage of forecasted sales Percentage of sales method Drawback Pop up store 1 21 23 o Assumes the same percentage used in the past or by competitors is still appropriate for the retailer Temporary retail spaces that sell merchandise of any kind A promotional item that can be received for a small fee when redeeming proofs of purchase that