Retail Marketing Management

Module 5 ± Store Layout and Retail Promotion Prof. Ashish J Shah profajshah-bnsb@yahoo.com 97400 98952

Module 5 Agenda
‡ Store layout
± Space planning

‡ Merchandising presentation techniques
± Atmospherics

‡ ‡ ‡ ‡

Role of retail communication Planning retail communication Retail advertising programme Frequent shopper loyalty programme

Food For Thought

‡ Lagging indicators ‡ Miller's Law ‡ Nepotism ‡ Brain drain ‡ Cross-training
MPBIM - MBA, Managerial Communication, Ashish J Shah

Store Layout, Design
‡ Store design objectives
1. Implement the retailer¶s strategy
‡ Stores may have designs and layouts to suit merchandise being sold e.g. Sports stores may have layouts that have mini golf areas, mountaineering walls

2. 3. 4. 5.

Influence customer buying behaviour Provide flexibility Control design and maintenance costs Meet legal requirements ± e.g. People with disabilities need to be provided access

Store Layout, Design
Store Design
‡ Layouts
± ± ± Grid layout: parallel aisles, checkouts at exits Racetrack layout e.g. IKEA Free-form layout/boutique layout e.g. Weekender Uses of visual communications: » Location of merchandise in store » Category signage » Promotional signage » POS » Lifestyle images e.g. Metro has large size posters on its bay ends

‡

Signage and Graphics
±

Store Layout, Design
‡ Suggestions for effectively using signage:
± Coordinate signs and graphics with the store¶s image ± Inform customers ± Use signs and graphics as props (supports) ± Keep signs and graphics fresh ± Limit the text on signs ± Use appropriate typefaces (e.g. Font size, style, colour) on signs

Store Layout, Design
± Digital signage

‡ Feature areas
± Freestanding displays ± fixtures or mannequins ± Cash wraps/point-of-purchase (POP) counters; impulse purchases encouraged ± End caps ± Promotional aisle/area ± Walls ± Windows

Store Layout, Design
‡ Space management
± Space allocated to merchandise categories is based on:
‡ ‡ ‡ ‡ Space productivity Inventory turnover Impact on store sales Display considerations

± Location of merchandise categories and design elements
‡ Demand/destination merchandise ± people have decided to buy this prior to entering the store ‡ Decompression zone ± people acclimatised to store atmosphere in this zone

Store Layout, Design
‡ Impulse merchandise ‡ Special merchandise ‡ Adjacencies ± complementary products e. g. School shoes and shoe polish

± Location of merchandise within a category:
‡ Plannograms

Merchandising presentation techniques
‡ Visual merchandising
± Fixtures
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ The straight rack A rounder/bulk fixture/capacity fixture Four-way fixture Gondolas Idea-oriented presentation Style/item presentation Colour presentation Price lining ± used often where limited price points on offer

± Presentation techniques

Merchandising presentation techniques
‡ Vertical merchandising ± merchandise displayed based on how one would read a newspaper ‡ Tonnage merchandising ± large quantities displayed ‡ Frontal presentation ± as much as possible of the merchandise is exposed to customers

‡ Atmospherics ± refers to the design of the store environment through visual communications, music, aromas
± ± ± ± ± ± ± Lighting Highlighting merchandise Mood creation Downplay features Colour Music Scent

Role of retail communication
‡ Customer
± Attract customer attention ± Ascertain customer requirements through their responses ± Ensure customer loyalty through positive and confidence-building messages

‡ Within the retail organisation
± Keep your employees informed and updated (marketing ± promotions), especially on the shopfloor ± Ensure there is seamless communication between top management and floor staff

Role of retail communication
‡ Using communication programmes to develop brand images and build customer loyalty
± Value of brand image ± Building brand equity ± involves:
‡ Creating a high level of brand awareness
± Aided recall ± customer recognises brand when a hint about the brand is presented to them ± Top-of-mind awareness e.g. Starbucks

Role of retail communication
‡ Developing favourable associations with the brand name
± Common associations that retailers develop with their brand name are: » Through the merchandise category » Through price/quality » Through specific attribute or benefit » Through lifestyle or activity ‡ Consistently reinforcing the image of the brand Integrated marketing communications instead of unique communication programmes could be useful e.g. Tesco, The Co-operative Group support the Fair Trade concept

Role of retail communication
± Extending the brand name
‡ Retailers may use the same brand name e.g. IKEA or may chose a different brand name for a new concept e.g. Food Bazaar, e-zone, Big Bazaar

± Methods of communicating with customers
‡ Paid impersonal communications
± Advertising ± Sales promotions » Contests » Coupons » Store atmosphere » Web site

Role of retail communication
‡ Paid personal communications Personal selling Email ‡ Unpaid impersonal communications Publicity ‡ Unpaid personal communications Strengths and weaknesses of communication methods ‡ Control ‡ Flexibility ‡ Credibility ‡ Cost

Planning retail communication
‡ Planning the retail communication programme
± Setting communication objectives
‡ Communication objectives? ‡ Communication objectives and approaches used by vendors and retailers differs causing conflicts such as:
± ± ± ± Long-term versus short-term goals Product-versus location e.g. Wal-Mart Geographic and demographic coverage Breadth of merchandise

‡ Co-promotions ± win-win situation for vendor and retailer

Planning retail communication
± Setting the communication budget
‡ Marginal analysis method
± communication expenditure should be increased as long as each rupee spent generates more than a rupee of additional contribution (see exhibit 16 ± 5)

‡ Objective-and-task method
± determines budget required to undertake specific tasks to accomplish communication objectives ± Sum total of all costs required to complete tasks is the communication budget (see exhibit 16 ± 6 )

‡ Rule-of-thumb methods
± Impact of communication activities expenditure on future of firm estimated ± Past sales and communication activities used to determine communication budget

Planning retail communication
± Affordable budgeting method: » balance of money that remains after desired profits and all other expenses becomes the communication budget ± Percentage-of-sales method: » Sets the communication budget as a fixed percentage of forecast sales ± Competitive-parity method: » Communication budget set so that retailer¶s share of communication budget equals its market share

± Allocating the communication budget
‡ Management say ‡ High-assay principle: proportionate budgets to products/brands depending on returns achieved

Planning retail communication
‡ Planning, implementing and evaluating communication programmes
1. Advertising campaign (see tables) 2. Sales promotion opportunity ± to evaluate a trade promotion, the retailer considers:
i. Realised promotion margin from the promotion ii. Cost of additional inventory carried due to buying more than the normal amount iii. Potential increase n sales from the promoted merchandise

Planning retail communication
i. Potential loss suffered when customer switch to promoted merchandise from more profitable private-label brands ii. Additional sales made to customers attracted to the store by the promotion

3. Special promotion using a CRM/Campaign Management Tool

Retail advertising programme
± Developing the advertising message
‡ Tips for developing local ads ± Discussion

± Assistance in advertising
‡ Cooperative advertising ‡ Agencies ‡ Media companies

± Choosing the most effective media
‡ Newspapers ± Free-standing insert (FSI)/preprint

Retail advertising programme
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Magazines Direct mail Television Radio Internet Outdoor billboards Shopping guides Yellow pages Coverage Reach Cost Impact

± Considerations in selecting media

± Determining advertising frequency and timing?

Frequent shopper loyalty programme
‡ Loyalty? ‡ The CRM process (see exhibit 11-1) ‡ Tesco ± considered to be most successful loyalty programme in the UK ‡ Nectar ± alliance amongst retailers ‡ Loyalty is not just about points an coupons, but also about offering ad-on services in the store e. g. assistance with locating products in a large store

Assignment 3
‡ Compare the customer loyalty programmes operated by Reliance Retail and Future Group (Big Bazaar) in India with respect to their value formats of Reliance Fresh and Big Bazaar/Food Bazaar. ‡ You may also choose to compare similar formats in other categories such as footwear, clothing (Westside and Reliance Trends) instead of FMCG, though this is optional. In any case, only two similar formats of different retailers are to be compared and assessed. ‡ Use factors such as loyalty cards, in-store services, ad-on services, etc. that you have studied on the Retail Management course to make assumptions and draw informed conclusions

Assignment 3
‡ Use your knowledge of CRM systems that you have studied in other management subjects as well to complete the assignment. ‡ Conclude with a comparative table using weighted average calculations indicating the points you award to each of the above. In your conclusion also mention what could the retailer with lower points (as per your table) do to improve its customer loyalty programme ‡ Recommended Retail textbook: Retailing Management by Levy, Pandit

Individual Presentation
‡ Analyse IKEA as a retailer presenting the following points on about 5 to 8 slides:
± What is unique about IKEA as a retailer and at the management level? ± Comment on IKEA¶s merchandising and visual display practices? ± What is unique about IKEA¶s store layouts? ± Comment on IKEA¶s customer loyalty programme. ± What is your observation on IKEA¶s USA expansion success? ± Conclude by commenting on µshould IKEA enter India now¶? If yes, then why? If not, then when and why?

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