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The Retail communication mix

by V S RAMA RAO on AUGUST 2, 2010

Communication is an integral part of the retailers marketing strategy. Primarily, communication is used to inform the customers about the retailer, the merchandise and the services. It also serves as a tool for building the store image. Retail communication has moved on from the time when the retailer alone communicated with the consumers. Today, consumers can communicate or reach the organizations. Examples of this include toll free numbers, which retailers provide for customer complaints and queries. Another example is the section called Contact Us on the websites of many companies. It is believed that every brand contact delivers an impression that can strengthen or weaken the customer view of the company. The retailer can use various platforms / channels for communication. The most common tools are: 1) Advertising 2) Sales Promotion 3) Public Relations 4) Personal Selling 5) Direct Marketing The tools are illustrated in Figure below Retail Communication Mix >> Sales promotion>> Advertising >> Direct marketing>> Personal Selling >> Public Relations Let us now examine each of these tools in detail:

Advertising can be defined as any paid form of nonpersonal presentation and communication through mass media. It is popularly believed that one of the main aims of advertising is to sell to a wide mix of consumers and also to induce repeat purchases. However, a retailer may use advertising to achieve any of the following objectives: 1) Creating awareness about a product or store 2) Communicate information in order to create a specific image in the customers mind in terms of the store merchandise price quality benefits etc. 3) Create a desire to want a product. 4) To communicate the stores policy on various issues. 5) Help to identify the store with nationally advertised brands. 6) Help in repositioning the store in the mind of the consumer. 7) To increase sales of specific categories or to generate short term cash flow by way of a sale, bargain days, midnight madness etc. 8) Help reinforce the retailers corporate identity. The retailers for advertising may use any one or a combination oft the following mediums: 1) Press advertisements 2) Posters and leaflets, brochures booklets 3) Point of purchase displays 4) Advertising can also be done through mediums like radio, television, outdoor hoardings and the internet. Determining the Advertising / Promotional budget While there is no definite formula for determining the advertising or the overall promotion budget the following

are the main methods that may be employed to determine the advertising budget. The percentage of Sales method: This is perhaps the most commonly used method for determining the budget. Here, the budget is a fixed percentage of sales. The biggest advantage of this method is that it is simple to apply and it allows he retailer to set an affordable limit on promotional activity. This method however, takes little consideration of the market conditions of any special advertising needs. The Competitive Parity Method Here the budget is based on the estimated amount spent by the competition. There is risk that it could be based on wrong information and again there is little consideration for market conditions or growth opportunities. The research approach or the Task and objective Method The budget is determines on the basis of a study of the best forms of advertising media and the costs of each. The retailer formulates advertising goals and then defines the tasks necessary to accomplish these goals. Next, the management determines the cost for each task and adds up the total to arrive at the required budget. Here, he advertising expenses are linked to the retailers objectives and the effectiveness of some forms of advertising can be measured and compared to costs.

The incremental Method The budget is simply based on the previous expenditure. What can be afforded? The budget allocated for advertising or for promotion is based on the basis of the money that can be allocated by the retailer for this purpose. While determining which method s to be adopted, a retailer needs to take into consideration the market that the firm is operating in , its current market position and how important advertising is in that market.
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Everyone in retail, particularly those in retail management, knows that communication

Between Head Offices, Regional Offices, Stores and, even, within the Store, can be difficult at best. Yet it is critical that we master it. The smooth and constant flow of clear and concise communication, upward and downward, is what makes great retail organizations .work

Excellent communication makes the difference between flawless execution of directives and mediocre execution. It makes the difference between a productive workforce and a workforce that really cant seem to get things done. Well informed management teams and associates are the ones who make the service profit chain work. In its most simplified state, satisfied, productive employees will in turn satisfy the customers, thereby helping the organization retain customers. Basically, great employees make satisfied .customers and satisfied customers make profit

And we cant overlook the impact communication has on morale; on the company culture. This is, of course, difficult to measure just by the very nature of it. But, rest assured, badly managed communication efforts are responsible for so many failings in retail that you .must give it the attention it deserves

Case in point: A large grocery store chain makes a decision to reduce costs by changing a long time practice at store level. The long time practice, in this case, is that age old courteous practice of bagging groceries for the customer. The Head Office management decides to make this change despite the feedback they receive from the store personnel. Unhappy with the change, but implementing it haphazardly anyway, some Store Managers find themselves being approached by unhappy customers and, without any understanding of how to handle these customers, they simply go for the easy way out. The Store Manager I am referring to in this particular case told the customer, who was objecting, that Head Office wants to reduce wages by having fewer cashiers available to attend to customers. This Manager went on to say that he thinks his Head Office is wrong and that he knows they are losing customers but nobody at Head Office cares about that .so hes just doing what he has to

Hmmm. How very nice for the customer. Not only can she no longer expect to have her groceries bagged (at a regular, full price grocery store) but the Manager does not support the change and is in the habit of bad mouthing his company. On top of that, the cashier who was involved in the situation that gave rise to the question in the first place, was reprimanded because he didnt quote company policy correctly. I wonder why? Perhaps he did not know it perhaps it was not clear. As much as we at DMSRetail deplore the practice of quoting company policy, if it is done it should at least be correct. Obviously the culture in that company is poor, to be kind. I wonder how many other problems they have. This only addresses their customer service practices. What about their health and ?safety practices or their practices pertaining to food freshness

Clearly, this new anti-customer practice was not communicated properly. You may wonder what they could have done differently and there are many answers to that question; it would depend on how they actually did communicate it. The bottom line is it didnt work and customers are unhappy and dissatisfied. So are the employees. So much for the service-profit chain. And we all know what that means. If enough of these .communication disasters take place, the company will be no longer

Now lets look at the importance of communication from another angle. Lets think about the company who has communication figured out. In this company, all employees know what is expected of them. They know how to handle customer issues without quoting the dreaded policy manual. They represent their company with pride and say nothing uncomplimentary while talking to customers. This is not to say they do not pushback to

management when they feel something is not right but they do it privately so as to remain one united company; preserving one great reputation. The lines of communication are always open in this company and everyone has plenty of opportunity .to learn and to participate

There are many options available to retailers who want to ensure regular, quality, twoway communication takes place between Head Office, Regional Offices and Stores. One of the best ways is to hold regular meetings- face to face, or on-line. Before you roll your eyes and say oh yes, lets have more meetings please understand that I am advocating meetings with clear purpose and intention. So, have more meetings either in person or through the use of technology. With a large number of business units (stores) spread over large geographic areas, it is often difficult to get everyone together more than maybe .once or twice a year and not all retailers can even do that

But these days it is so easy and convenient to meet with people weekly, or even daily if thats what is necessary. Technology has solved this huge issue for retailers. For sales meetings, for new product introductions, for changes in policies and procedures, for training on just about anything, you can use meeting technologies that are simple to use, economical and convenient. They do not require people to leave their workplace. Share .information regularly and you will reap the rewards

Achieving excellence in communication is so critical that finding the very best way to make sure that everyone in the organization has the opportunity to hear, and be heard, is something that warrants serious attention. Take advantage of the options available to .you

Getting value out of real time customer information Today, retailers spend an excessive amount of time and money collecting, analyzing and trying to utilize customer data by turning it into information and knowledge that is actionable Loyalty programs have allowed retailers to collect and analyze vast quantities of data on .purchases by individuals. E-retailing has added to the avalanche of data While this information is essential to understanding changing customer needs and expectations, it's important that the systems you use to gather this information are .efficient and cost-effective We provide IT advisory services to help managers of retail and consumer companies select new technologies that will enable them to gather and evaluate critical customer .information, assess customer requirements and develop customer plans and strategies

The Lost Customer Relationships in the Indian Retail Industry

Recently I visited a supermarket, after my shopping when I was about to pay my bill, the cashier offered me their membership at nominal joining price and showed me a few benefits for enrolled members. The same incident is repeating at every retail outlet. Every retailer is trying to tie the customer by issuing a membership at a nominal price and showing them a few benefits. Same is the case with Loyalty programs, instead of building true customer loyalty these loyalty programs are becoming sales campaigns which only aim at increasing revenue from customer. With so many programs and memberships customers are treating these as sales pitches rather than relation enhancement/building programs. Companies are forgetting the basics of building relationships and are actually trying to tie customer to their outlets through memberships and Loyalty programs. .Customers are humans and not mindless creatures to stay still if tied to something

One decade back before the emergence of organized retail sector, Indian retail market was dominated by Kirana* shops, where the shopkeeper/owner was a part of the same community where the customers lived. These Kirana merchants knew the preferences, interests, needs, wants, any events in the customer family, any emergencies, financial issues, etc of the customers. This is more than 360 degree view of a customer; this helped the Kirana merchant to sell the right product to right customer and even give credit at times, if required. Since they know the customers personally Kirana shopkeepers could give customers credit based on their financial abilities and based on the need and situation of the customer. They rendered a helping hand during emergencies and thus gained customer trust and loyalty. Before the advent of organized retail such a strong bond existed between customers and retailers in Indian retail market, but as the organized retail is increasing its presence, these bonds are loosening and artificial relationships are being built where customer loyalty, customer trust, etc are either superficial or doesnt exist. What is happening now

is that companies are trying to do everything artificially, build artificial relationship with customer by enrolling them as members, artificial loyalty by enrolling customer for a loyalty program, and so on. The fact is that the customer still doesnt trust the retailer since for the customer there is no real relationship! How many customers are willing to share their personal information with the retailers? Companies think about building customer relationships, but talk about experience, satisfaction, delight and so on, but forget the foremost thing which is customer trust. Your customer service might be excellent, customer might be happy, but if customer feels that he/she is paying more for a nominal product packaged with excellent service the trust is broken. Retailers are totally different from manufacturers, manufactures can sell more products if they build good brand image and have good retailers in their distribution chain, but retailers cannot sell if they dont build good relationships. Though a retail chain might have a great brand value, if the relationship quotient is low, then they fail miserably. Terms like Brand Loyalty etc have very minimal controlling effect when .we talk about retailers. There are several big brands which failed miserably in retail business The emergence of Social CRM might help in building customer relationships if properly leveraged to build trust rather than considering them as tools to gain customer information. If companies continue with the latter perception, soon the customer relationships die as Social CRM sites can spread the negative image of companies as fast as they can spread the positive image! This approach will not build the trust factor and which will in turn lead to customer playing safe and not revealing their personal details. Hence companies should try to be a part of the communities and build trust in the customers. Loyalty should be from both sides, dont expect customer loyalty if you are not loyal to the customer. This holds true for retailers globally, what is your opinion and any inputs on how ?retailers can leverage on Social CRM