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Introduction

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

This course explores how retailers make use of marketing to identify and communicate with their customers.

The course begins by creating a definition of retailing before exploring the importance of marketing with a retail context. The final part looks at how retailers might use marketing communications to interact and communicate with their customers.

As consumers, visiting retail stores is often part of daily life. We visit different kinds of stores and consume various goods and services that are essential to fulfil our needs. We interact and trade with shops of varying shapes and sizes, which offer different shopping experiences. Consider, for example, where you buy your groceries and where you get your hair cut.

This OpenLearn course is an adapted extract from the Open University course B122 An introduction to retail management and marketing.

Learning outcomes

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

After studying this course, you should be able to:

define retailing
understand what marketing means to business executives and academics
understand the ways that retailers use marketing tools and techniques to interact with their customers.

1 A definition of retailing

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Figure 1

As a consumer we all have our own experiences of buying the goods and services we need for our everyday consumption. Additionally, we have our own opinions of the different types of retailers we encounter while shopping. Activity 1 asks you to draw on your own shopping experiences to come up with your definition of retailing and Activity 2 asks you to determine whether there are differences between the retailers with which you shop. In Section 1 of this course we will explore the following:

creating a definition of retailing
retail product ranges
visiting a retail store.

1.1 Creating a definition of retailing

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Take a look at the images below. These are examples of three very different types of retailers. Hopefully these images will help you to think about your own shopping encounters and then write a brief statement explaining what a retailer does for its customers:

Figure 2 Zara – a multinational chain of fashion stores, Wood Shop – a small independent shop selling locally made merchandise, Galeries Lafayette – a chain of French department stores.

Activity 1: Defining retailing

Allow 15 minutes for this activity

Purpose: to get you to start thinking about retail.

Task: What do retailers do?

Answer

Retailers sell goods and services to individuals who buy them for their own personal use. Such retailers can range from your local convenience store to major supermarkets (like Tesco, Asda or Sainsbury’s) where you might do your weekly shop. Retailers select ranges of products in order to meet their customers’ needs.

1.2 Retail product ranges

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

From a retailer’s viewpoint, it is important to understand why customers visit a particular high street store or online shop, as their motivations and needs have implications for the products a retailer sells and the levels of service to provide. There is a wide range of retailers to choose from when we go shopping and Table 1 provides a list of some common retail product categories and sub-categories.

Table 1: Retail product categories (some examples in the United Kingdom)

Category	Sub-category
Alcohol	Wines, beers, spirits
Books and stationery	Printing, cards, paper, pens, writing materials
Chemists and drugstores	Beauty products, toiletries, cosmetics
Clothing	Baby wear and nursery goods, children’s wear, ladies’ wear, menswear, knitwear, fashion accessories, work wear, school wear, maternity wear, lingerie, leather wear, sports wear, bridal wear
DIY goods	Wallpaper, paint, hardware, ironmongery, doors
Electrical goods	Computer hardware, computer software, white goods, brown goods, audio-visual
Finance	Banking, insurance, credit, building societies
Footwear	Children’s, ladies’ and men's shoes, sports shoes, shoe repair
Foodstuffs and consumables	Grocery, butchers and poultry, bakery, fishmongers, greengrocers, confectionery, health foods, organic foods, delicatessen
Furniture and carpets	Curtains, sofas, soft furnishings
Garden products	Flowers, plants, gardening equipment
Household and textiles	China, household linens, pictures and frames, lighting, drapers, glassware, bedding
Music and film	Records, DVDs, CDs, musical instruments
Rentals	Television, films, games
Sports equipment	Camping and outdoor goods, leisure goods, bicycles and cycle accessories
Restaurants and take-away food	Traditional foods, international foods, snacks

(Source: adapted from Hemming Information Services, 2006, p. 585)

1.2.1 Different product choices

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

We started by creating a definition of retailing, now let's explore the different product choices we might be offered by certain retailers and think about how this experience adds to our definition of retailing.

Activity 2: Going shopping

Allow 60 minutes for this activity

Purpose: to explore product categories we can use to group retailers and their competitors.

Task: Visit the six retail websites that we direct you to below and then suggest how our definition matches up against our selected retailers and see what we might be able to add to our definition.

Retail websites

ASOS.com [Tip: hold Ctrl and click a link to open it in a new tab.]
B&Q
Dell UK
eBay
Great Universal (now K&Co.)
M&Co. Ltd.

Answer

ASOS.com is an online retailer and since 2000 this company has developed into the UK’s largest independent online fashion and footwear retailer, again selling to individual customers.
B&Q is a retailer that sells to individual shoppers but also has trade desks serving businesses, e.g. plumbers and electricians in many of its 330 stores in the UK.
Dell UK is a computer manufacturer that sells products to individuals, small- and medium-sized enterprises (SMEs), public sector organisations and large corporate businesses. Originally, Dell sold its personal computers in bulk to retailers, who then sold to individuals. However, Dell decided that retailers did not provide sufficient customer service support, so they started to sell direct to consumers in the early 1990s. Therefore, Dell UK operates as a manufacturer, a wholesaler and a retailer.
eBay is a website that acts as a gateway or portal to access online auctions and shopping websites. eBay shops sell to whoever wins an auction or agrees to make a purchase of a product offered on a ‘buy now’ basis. In essence, eBay is a portal (gateway) to retailers but enables individuals to sell to individuals.
Great Universal/K&Co. is a retailer that does not operate from high street stores. The company is a leading home shopping retailer that sells to individuals through catalogues and a website. You might be interested to know that over five million individual customers shop with Great Universal/K&Co. each year.
M&Co is a retailer that operates over 300 traditional high street stores throughout the UK, selling fashion items to individuals.

We can add to our definition so that we now have a broader understanding of the scope of retailing:

Although traditionally retailers were businesses that supplied individuals, some retailers are expanding the types of customers they serve and selling to other businesses. Furthermore, retailers sell their goods in different ways, or formats, and the internet is creating opportunities for further changes to retailing.

Before we move on to explore the role of marketing it's time for a trip to the shops. You should already be starting to think about retailers from a different viewpoint than that of a shopper.

1.3 Visit a retail store

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

How much time you allocate to Activity 3 is largely dependent on when and where you choose to visit a store. Gathering the information you need to complete the activity should take around 15 minutes.

Retail businesses vary in shape and size. This same variety is also found in the extent of activities involved in managing stores. There are many tasks to fulfil if you are to run a retail operation successfully. In a small store, many of these tasks may be carried out by an individual but in a large organisation tasks will be divided to ensure smooth and efficient running of the business. Activity 3 encourages you to consider different aspects of retail operations and highlights linkages between various functions of a retail operation and how a retailer might be affected by environmental forces (e.g. an economic downturn can result in a reduced advertising budget, changes in the law can affect employment, planning regulations can influence store openings/closures and so on).

Figure 3

Activity 3: Visit to a supermarket

Allow 15 minutes for this activity

Task

Purpose: to observe logistics, marketing and customer service issues affecting a supermarket.

Task: Visit a supermarket of your choice (the size of the store does not matter, nor does the location) and work your way through tasks A–D below.

Task A

Go to the fresh fruit and vegetables section and note down where in the world examples of the following products were grown:

apples
potatoes
tomatoes.

Answer

Did you find that the fresh fruit and vegetables came from different parts of the world? The results from my supermarket trip were as follows:

apples – grown in France
potatoes – grown in the UK
tomatoes – grown in Spain.

What we are interested in is how these products got to the supermarket shelves. The buying department/office will select product ranges and negotiate terms with suppliers. Products will be selected to meet the needs of the customers.

Task B

Note down an example of fresh produce which is out of stock but do not worry if you cannot find anything that is out of stock.

Answer

I found several products out of stock – bananas, strawberries and parsnips.

The delivery and logistics teams responsible for distributing goods from suppliers to the shop floor will be involved in getting the products to your supermarket shelves in the right quantities and at the right time.

Task C

Write down the details of the promotional offers that catch your eye as you walk around the store.

Answer

The promotional offer that caught my eye was the price discounts on shelves giving 25 per cent off certain product lines. There was also a competition for a holiday being advertised. Your attention might have been ‘grabbed’ by a range of different in-store promotional techniques such as:

bonus packs
contests and competitions
discount offers
free gifts
in-store events – tasting/testing
money-off coupons
opportunities to save
sale items.

Equally, you might have been attracted to evocative advertising posters bringing your awareness to certain features of a particular product.

Task D

As you leave, see how long the queues are at the checkout.

Answer

There was no queue at the checkout when I went to the store, but it was mid-afternoon on a very wet day. Tesco, Sainsbury’s and many other leading supermarket retailers make customer service promises, indeed, at Sainsbury’s, there should be no more than three people waiting in a queue at any one time. To achieve this requires vigilant monitoring of customer flows and careful management of the staff.

This activity has illustrated some of the main functions of a retail operation including:

buying and merchandising of products
human resource management – managing the in-store staff who process your order through the tills or help you at the self-service checkouts
logistics and distribution – the processes that get the goods to your store
marketing – the in-store promotional techniques used to encourage you to make a purchase.

You now should have begun to see retailers differently. You know more about the different sectors a retailer might operate in terms of product ranges and the next step is to examine the elements that make up the trading environment where retailers operate. From a retailer’s point of view it is important to understand the trading environment in order to take advantage of opportunities and avoid threats, which can affect short-term and long-term success.

What have you learnt about defining retailing?

You have developed a working definition of retailing, begun to identify some of the complex issues retailers consider such as which product activity sector to operate in and what types of customers to serve. Additionally, you have visited a store and begun to think about some of the issues associated with running a retail operation.

In the next section we are going to think about the meaning and importance of marketing to retailers.

2 What is retail marketing?

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

The concept of retailing can be traced back deep into history and the development of human civilisations. However, until about half a century ago, retailers were at the end of the supply chain and their key function was to sell products offered by manufacturers. Retailers had some influence on the products made but much emphasis was placed on pushing (selling) manufactured goods. But a new approach to business emerged which laid the founding principles of marketing. These principles brought about a new way of looking at business development which revolutionised modern business practices.

To date, through successful adoption and application of marketing, detailed knowledge and understanding of the customer and careful management and planning of retail operations, retailers have shifted the power and control in the supply chain from the manufacturer towards the retailer. In this section we are going to learn about different views of the role and importance of marketing in retail. The purpose of the following series of activities is to develop your understanding of the elements of the marketing mix and examine how retailers apply the mix. It is important that you check your understanding of the meaning of the term ‘marketing’ before you proceed. The next activity will help you do that.

Activity 4: Marketing in practice

Allow 30 minutes for this activity

Purpose: to develop your understanding of the scope of marketing in modern businesses.

Task: Watch the following film and with the help of the discussions it presents, write a short description (of 100 words) explaining what marketing means to a modern business. Here you will meet marketing experts; Cheryl Calverley, Brand Manager for Birdseye Peas, Kieran Monahan, Chief Executive of Next Door Communication Agency, and David Jobber, Professor of Marketing at Bradford University. They discuss the meaning of marketing from different business perspectives.

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DR FIONA ELLIS-CHADWICK: Tell me how does marketing work in a large organization like Birds Eye?

CHERYL CALVERLY: I think for most large organisations, particularly manufacturing organisations, marketing is the centre point. It’s the hub of the organisation, it’s where the strategic decisions are made, and its what you build your future growth plans on. So a marketer’s responsibility is vast. It touches all aspects of business. I think Birds Eye, like most fast consumer businesses, relies on its marketers to start with a consumer insight to then build the business around, and its that that then allows you to develop a long term plan, an NPD road map, retailing strategy, a pricing strategy and everything from there.

KIERON MONAHAN: If you don’t have a communication strategy you’re not going to be clear to your own staff what it is your company and your brand are trying to do and achieve out there in the world with your business partners like retailers and also with the consumers. So if you as a company can’t be clear with yourselves on what you’re trying to achieve then you’ve got no chance of achieving what you need to with consumers and your retail partners.

CHERYL CALVERLY: Everyone gets involved to some extent and I genuinely mean everyone because every decision you make in marketing has a complete flow through impact. If I decide, you know, we should do big packs of peas that has an impact on me, my supply chain, my finance manager, it has an impact on the sales guys who’ve got to find a place in store for it, It has an impact as far as our agriculture managers who have to tell the growers to grow more peas in advance for next year for the big packs. So everyone gets involved. The decision making is led by marketing with support of everyone else.

KIERON MONAHAN: The most important one is, not how to communicate with people but what is the business problem you are trying to solve with communications? It is utterly pointless trying to plan communications if you’re not all absolutely crystal clear on what business problem you’re trying to solve. If you’re not then, there’s no point in going into planning. Sometimes, people say brand awareness on our brands is very low for example; spontaneous awareness or prompted awareness is very low on our brand. What we always say to clients is ‘ok that is a problem for your brand, what we want to know is what’s happening with your business? What’s happening with your revenue? What’s happening with the volumes of your products? Do you find that you’ve got people who have been buying your brands for years and then suddenly stop buying it? Do you need to attract new people to your brand?’ It’s those fundamentals... who are you targeting and why aren’t they currently buying what you sell?

DAVID JOBBER: I think marketing is absolutely essential to business success and the reason for that is marketing focuses on the customer and business success is very dependent on understanding customers, their motivations and their needs. Business is about attracting and retaining customers so if you don’t attract and retain customers there is no business.

CHERYL CALVERLY: We start with a consumer rationale, so we start actually talking to the consumer about a new product or an evolutionary product and asking them what they would want to pay for this and you don’t take that as an absolute because although they are very price aware when they’re in store, they are not very price aware when they’re out of store. If you ask the consumer what would you pay for a bag of peas they’ll struggle to tell you they’ll say oh three pounds, two pounds, not sure, and the you get them into store and suddenly they’re all like wait that one’s a bit dearer than that one and they have a very accurate pricing model, so we do a bit of work with consumers what would you assume to pay for this? We do a bit of market modelling so we do online research where we will put the same proposition online and price it at different prices and see what the purchase intent is for people at different price levels, you can then do a bit of a matrix so ok this many people will buy it at what price are we going to get the best return. So that’s the kind of in store pricing, we don’t control pricing our retailers control pricing so we recommend a price and the other bit of the model of course is what’s it going to cost us to make it and we have a margin ambition as a business if we know it’s going to cost X and we have a margin ambition of Y then that’s kind of what we need to price it to the retailer at and you put those two things together and you think is this going to work or not.

DR FIONA ELLIS-CHADWICK: So we need to have a really good understanding of not only the product we’re selling, the services and customers but we need to understand the market and competitive market as well, all of this before we can do any serious planning of which sort of communication tools we’re going to use.

KIERON MONAHAN: Yes certainly communication is all about influencing people’s behaviour and it’s not, you know, a dark art or selling your grandmother it’s about putting an argument to people and saying this is what we’ve got, this is what we think it’s for and if you like it then hopefully you’ll go buy some.

DAVID JOBBER: The marketing environment consists of 2 parts the macro environment and the micro environment. The macro environment consists of political forces, economic forces, ecological forces, social and technological forces and these are broad forces that affect all companies. The micro environment is a little bit closer to home. The micro environment consists of such things as customers, competitors and distributors. It’s vitally important that companies keep a track of what’s going on in the marketing environment and the reason for that is because out of the marketing environment comes opportunities companies can take advantage of and threats they try to nullify if at all possible.

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Answer

As you have seen from the film, it does not matter what area of business you are working in, marketing is at the heart of business activities. For this reason, it is important to have a sound understanding of how marketing can help to shape planning and management decisions. You may also have noticed that there is a strong link between the retail environment and marketing. Please note, sometimes the meaning of marketing is confused and considered to consist largely of just promotions and advertising. The reality is that in market-orientated businesses, marketing is at the heart of every business activity and consequently influences all business decisions and actions, not just its promotional activities.

2.1 The retail marketing mix

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Marketing is an underlying philosophy that guides business activities, but how does a retailer do marketing? A retailer must engage in planning, research and analysis before implementing a marketing strategy. At the core of any retail marketing plan is the mix consisting of the four Ps (Product, Price, Place and Promotion) of marketing. The following images show retail examples of each of the elements of the mix and the next activity describes each element of the mix further.

Figure 4

Activity 5: Reading about the mix

Allow 30 minutes for this activity

Purpose: this task will help you explore the elements of the marketing mix and develop your understanding of how the mix applies to retailing.

Task: The marketing mix is often called the four Ps and it represents four discreet areas of business planning and marketing decision-making. The four Ps are: Product, Price, Place and Promotion. Find out what is involved and how these concepts relate to retail management by reading the following extracts in Box 1. Then make some notes on what each element of the mix means to the retailer.

Box 1: The four Ps of the marketing mix

Product

In general marketing terms, the product decision involves deciding what goods or services should be offered for sale to a particular group of customers. An important aspect of this element of the mix is new product development. As technology and tastes change, products become out of date and inferior to those of the competition, so companies must update products with features that customers value or completely replace the product. Market leadership can change as new products are developed that give greater benefits than old ones. For example, the Sony Walkman was the market leader in portable music players. Following its launch, the Apple iPod soon outsold the Walkman as it offered the advantages of being able to download music and hold thousands of songs on a much smaller device. From the first iPod, Apple has developed a product range to cater for diverse customer needs.

Product decisions also involve choices regarding brand names, guarantees, packaging and the services that should accompany the product offering. Guarantees can be an important component of the product offering. For example, the operators of the AVE, Spain’s high-speed train, capable of travelling at 300 kmph, are so confident of its performance that they guarantee to give customers a full refund of their fare if they are more than five minutes late.

From a retail marketing perspective, the product element of the mix is very important. Retailers provide stores full of products to suit every consumer’s needs. Some retailers fill their shelves with extensive product ranges (this can be seen here in the image of an extensive range of hair care products) whilst others offer more limited choices of products (as you can see in the image of an exclusive range of jewellery products). The range of products a retailer sells is called the assortment and this defines the nature of the business and its position in the marketplace. By looking at the following two pictures, you can begin to get a feel for the difference in the type of retail operations that might be selling these products.

Figure 5

According to many retailers, the product is the most important element of the retail mix. Selecting what to sell, making the right purchasing decisions, organising stock management and arranging how to display product ranges is so fundamentally important to retail management. However, considered by many retailers to be of equal importance is price.

Price

Price is a key element of the marketing mix because it represents, on a unit basis, what the company receives for the product or service that is being marketed. It is the only element of the marketing mix that creates revenue, while all of the other elements represent costs. For example, expenditure on product design (product), advertising and salespeople (promotion) and transportation and distribution (place) all cost money. Marketers therefore need to be very clear about pricing objectives, methods and the factors that influence price setting. They must also take into account the necessity of discounting and giving allowances in some transactions. These requirements can influence the level of list price chosen, perhaps with an element of negotiation margin built in. Payment periods and credit terms also affect the real price received in any transaction. These kinds of decisions can affect the perceived value of a product.

Because price affects the value that customers perceive they get from buying a product, it can be an important element in their purchase decision. Some companies attempt to position themselves as offering lower prices than their rivals. For example, supermarkets such as Asda (Walmart) in the UK, Aldi in Germany, Netto in Denmark and Super de Boer in the Netherlands employ a low-price positioning strategy.

Another strategy is to launch a low-price version of an existing product targeted at price-sensitive consumers. For example, Apple launched the Mac mini, a basic version of the Macintosh computer. With this low-priced machine Apple believes it can tempt people who have bought an iPod (and become fans of the company) to ditch their Windows-based PCs and switch to the Mac mini.

Many factors affect retail pricing policies. Choosing products and setting prices is an important part of retail management and the next element of the mix, place, focuses on where to sell the product assortment.

Figure 6 Low price strategy

Place

Place considerations involve decisions concerning the distribution channels to be used and their management, the locations of outlets, methods of transportation and inventory levels to be held. The objective is to ensure that products and services are available in the proper quantities, at the right time and place.

Distribution channels consist of organisations such as retailers or wholesalers through which goods pass on their way to customers. Producers need to manage their relationships with these organisations well because they may provide the only cost-effective access to the marketplace. They also need to be aware of new methods of distribution that can create a competitive advantage. For example, Dell revolutionised the distribution of computers by selling direct to customers rather than using traditional computer outlets.

Increasingly, music is distributed by downloading from the internet rather than being bought at music shops. Consequently, place is another important part of the mix that influences retail management decision making.

The final element of the mix we are going to consider here is promotion.

Promotion

Retailers constantly communicate with their customers using a variety of methods and approaches. Retail promotions involve the management of elements of the promotional mix, which include advertising, sales promotions, digital and direct marketing, personal selling, sponsorship and public relations.

By these means the target audience is made aware of the existence of a product or service and the benefits (both economic and psychological) it confers on customers. Each element of the promotional mix has its own set of strengths and weaknesses. Advertising, for example, has the property of being able to reach wide audiences very quickly.

Procter & Gamble used advertising to reach the emerging market of 290 million Russian consumers. It ran a 12-minute commercial on Russian television as its first promotional venture in order to introduce the company and its range of products. Advertising can be a powerful tool in a recession. While its competitors cut back on advertising expenditure during the Great Depression of 1929, Procter & Gamble increased its spend. The company dominated radio advertising, bringing market leadership during the 1930s and the creation of the platform that has led to its continuing success to the present day.

Digital marketing via the internet is increasingly important as a promotional tool. A great advantage of the internet is its global reach – companies can now easily extend the reach of their communications to consumers worldwide by creating a website. The internet has also proven to be a powerful communication tool, sometimes replacing traditional media.

Many retailers now sell through the internet, either exclusively or in conjunction with a network of stores and/or paper-based catalogues. The internet brings opportunities for retailers to sell to and communicate with their customers through one highly interactive and flexible channel. In the final part of this course, you will learn about how retailers use marketing communications to engage the interest of their target customers. But before we do this have a go at the following activity.

Source: adapted from Jobber (2010) pp. 17–20

Activity 6: Applying the retail marketing mix

Allow 30 minutes for this activity

Purpose: to consider use of the marketing mix in a real organisation.

Task: Imagine you are the Retail Marketing Manager for the National Trust and it is your job to determine how the marketing mix will be applied across the shops, cafés and restaurants the organisation operates around the UK. Reflect on the following question and write a short answer in 100–150 words explaining your reasoning: How does your understanding of the four Ps help you to assist the management of the shops, cafés and restaurants to make decisions that meet the needs of their customers?

Answer

Applying the four Ps of the marketing mix should enable you to:

select suitable product ranges to sell in the gift shops and decide on the content of the menus in the cafés and restaurants
set appropriate pricing strategies for shops, cafés and restaurants
create promotional campaigns to communicate with customers
develop appropriate locations for gift shops, cafés and restaurants, and organise logistics.

However, while the traditional marketing mix makes provision for planning decisions associated with the product, price, place and promotion the levels of service provided by a retailer are not covered by the four Ps, e.g. does a café operate using self-service or full-service? The four elements of the mix potentially leave us with some unanswered questions, e.g. who are the people involved in serving the customers in the shops and food outlets? How are the interiors of the shops and food outlets decorated and designed? What are the processes involved in serving the customers?

It is important to be aware that the four Ps marketing mix has often been criticised for being too over-simplified in dealing with marketing management issues (Booms and Bitner, 1981). The reality is that where appropriate, the marketing mix can be extended to include people, processes and physical evidence. There is also an argument that some elements may be covered by two or more of the categories. For instance, when L’Oreal launches a new product the in-store sales promotion campaign and the people involved might be discussed under product and/or promotion or both. The key is not to rely on the four Ps as a catchall for planning marketing solutions but to be aware of them as a guide to key areas of marketing that need to be included in retail management planning. Successful management of the marketing mix is achieved through a focus on delivering customer satisfaction and applying the mix appropriately.

What have you learnt about the retail marketing mix?

You have identified and considered the four elements that make up the marketing mix: product, price, place and promotion. You should also have begun to think about the scope and extent to which the four Ps are involved in shaping and informing management decision making in retailing. In Activity 6, you should have noted that retail managers can use the mix as a guide but they should be aware of the need to consider all aspects of the trading situation when planning marketing implementations.

3 Marketing communications in retailing

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

For a retailer, it is important to understand how to promote products and communicate with customers as this affects overall success. In the retail industry, promotion is frequently called marketing communications and this is the term we will use for the rest of this section. The following activities aim to give you insight into the meaning of the term ‘marketing communications’ and identify the key considerations of marketing communications plans.

3.1 Marketing communications in practice

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Under the banner of marketing communications (in practical terms) retailers have to decide what messages they wish to send to their customers and how to convey the message. There are three key areas to consider when planning marketing communication activities:

the message
the media
the communication tools.

The following image illustrates these three areas of consideration: the message, the communication tool (advertising), the media (outdoor).

We are going to explore each of these elements in turn but before doing this we need to consider the basic model of communication.

Figure 7

3.2 The linear model of communication

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

All businesses need to engage the attention of their customers and marketing communications are the mechanism that facilitates this process. Retailers plan communication campaigns seeking to inform, persuade, build relationships and create interest from specific target customers.

In its simplest form, communication is a two-way exchange between two parties.

Figure 8

The linear communication model

Figure 9 The linear model of communication. Source: Fill (2009) p. 42 based on Schramm (1955) and Shannon and Weaver (1962).

According to Fill (2009, p. 42, quoting Theodorson and Theodorson, 1969) this is a linear model that emphasises the ‘transmission of information, ideas, attitudes, or emotion from one person to another, primarily through symbols’. The model and its components are straightforward but it is the quality of the linkages between the various elements in the process that determine whether a communication event will be successful.

In other words, does the message sender (source) use the right language and images (encoding) to create a message, which can be interpreted (decoded) by the message recipient (receiver)? Successful messages need to be heard over and above interruptions (noise) and ultimately the realms of understanding of the message sender and the message receiver should overlap.

Retail marketing communications rely, to a large extent, on these principles of communication being successfully implemented.

Activity 7: What is noise?

Allow 15 minutes for this activity

Purpose: to consider how communication messages can be interrupted.

Noise is a factor that interferes with the communication process. Noise distorts the message and means you may only receive part of the story. There is always a potential for noise to interfere with the communication process. Therefore, marketing communications management should aim to produce communications which keep noise levels to a minimum.

Let’s identify some types of noises that could interrupt the delivery of a communication message.

Task: Listen to the following podcasts, identify each sound and then explain how each of the noises might interrupt the communication process, while you are watching a television advert.

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Coughing.

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Female:

In our school.

Male:

Well, how, how many have you got in your school then?

Female:

Well they’re varying from about, I don’t know 30. I think the worse case er next year we’re looking at may be 38.

Male:

38?

Female:

Yeah.

Male:

That’s ridiculous.

Female:

Yeah I know.

Male:

How come you’ve got 38? You’re stupid.

Female 2:

Excuse me do you mind turning it down please I’m trying to listen to something.

Female:

Oh sorry about that.

Male:

Sorry.

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Vacuum cleaner.

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Telephone ringing.

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Traffic noise from a busy road.

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Actual sounds:

the telephone ringing distracts your attention, causes a break in concentration and may require you to move away to another location to have a more private conversation
the noise of passing traffic, a vacuum cleaner or people coughing can all distract your attention, interfere with your hearing of the message or stop you receiving the whole of the message in the television advert
people talking and asking questions can distract your attention. Competing messages from individuals can lead to commercial messages being screened out completely.

Activity 8: Other types of noise

Allow 15 minutes for this activity

Purpose: to identify different types of noise.

Task: Now look at the images of other types of distractions. Again, explain how the interruption might affect the communication process.

Figure 10

Answer

Picture 1 this is a physical disturbance which can block out part of the message. The individual looking at the message is likely to only see part of the message.

Picture 2 this is an example of a physical and a cognitive disturbance. A pet physically distracts the message recipient but the recipient will also begin thinking about the distraction.

Picture 3 this is an example of cognitive noise. The message recipient does not understand the message. The language is difficult for the message recipient to understand and therefore they are not able to decode the message completely. In other words, the realms of understanding in this situation do not overlap sufficiently.

It is important to note that noise can be created by physical factors, like actual sounds and individual behaviour, but also cognitive factors. Cognitive distractions tend to be abstract and are things that interfere with our perceptions and interpretations of messages. A cognitive distraction might occur if the encoding of the message was inappropriate so the receiver found the message difficult to understand, e.g. a message that is garbled or uses language that is too complex. Retailers need to ensure when they send communication messages that the target for the message has the greatest opportunity to receive the message. This can be achieved by tailoring the message and careful planning of when and how the message will be received and the media that will carry the message.

3.3 The message

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Getting heard over the noise in the world of communications is a key challenge in the communication industry. Creative advertising and communication agencies specialise in developing messages that the target audience can hear (receive), in other words, messages that cut through the noise. The message(s) a company sends to its customers is critically important to the success of a business. In retailing, communication messages help to position the retailer as a ‘brand’ in the minds of customers and highlight the difference between products and brands and the significance of branding in retailing. Now we are interested in how companies create brand messages, which ultimately define what a company stands for and how it is positioned in the minds of its customers.

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Building a brand

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DR FIONA ELLIS-CHADWICK: How do retailers go about developing brands?

ADAM DEVEY SMITH: There’s a number of ways, firstly if a retailers well known in the market, are they establishing a new brand with their brand endorsing it, so typically the hierarchy of branding, monolithic, endorsed and branded. So if you have an existing company and you want to have a new collection, fine you can endorse it with your own, immediately you have like a sister relation, where someone says “well I know you, if this is owned by you this brand” there’s a natural halo effect. Sometimes that isn’t the case, sometimes a client says “I want to invent something completely new” and the key is understanding what the personality traits of a, of that brand is. The biggest question that we ask the team here, when they say “well I’m creating this new brand” we go “what is a brand then, what actually are you talking about when you say a brand” and we, we always respond, “a brand is just a promise” so when someone says “seize a product” or goes into an environment or gets introduced to a new service, the brand name that’s attached to that, is just a promise of quality or performance, that’s all it is, and it can be executed in any different myriad of ways.

GILES ENGLISH: Myself and my brother started Bremont about 8 years ago, and it came from basically a love of watches, and my father was a big watch collector and also background in aviation, hence aviation watches. So it was a, as young kids we grew up with aviation, flying planes, with my father and workshops. He was an obsessive creator of things and restoring old clocks and then we took this sort of passion, a step further and after my father died, he was in a plane crash with my brother, we thought sod it, let’s go and do it and we sent up Bremont and took about 5 years before we sold our first watch, just creating our collection through a little workshop in Switzerland and it’s been an exciting time since we did launch.

ADRIAN MARONNEAU: Well we are very lucky that Selfridges is an extremely successful environment to work in, and the ____ which we’re sitting in at the moment which was created in 2011 is pretty much seen as one of the biggest retail spaces for watches in Europe, so a lot of the brands are obviously very keen to be in there because it gives them great visibility. On top of that obviously it’s a very exciting environment you know we’ve got to think that 20 million people walk through the store on a yearly basis. So what you’ve got to have is a very varied offer, literally you know sometimes London is a bit of a window to the world, so your customer is actually worldwide. You know, although Selfridges is a quite essentially a British department store and you’ve got to cater for this, you know the Chinese customers are very important nowadays as well, and you’ve got to be ready for them just like you’ve got to be ready for middle eastern customers, for European customers coming to visit as well. So sometimes brands will approach us wanting to be launching to Selfridges, sometimes we’re approaching brands. It really much you know, depends on the level of recognisation that the brand has got worldwide you know, the interest for us is to create the best offer there is and we really pride our self in saying that you know, come to Selfridges, everything is there, and the best is on display. You know, it’s always, any sort of stock offer that you will have, it’s always a moving beast you know, what you’ve got now which is perfect, in six months time might not be, so we try to actually change the brand mix, pretty much every six months. It’s very important to keep it fresh for customers because we’ve got a lot of them coming back and we need to make sure that they see things different every time they come back and visit us.

ADAM DEVEY SMITH: We always have a statement that’s says, comedians don’t introduce them self and say “hi I’m a comedian” they tell a joke, and by telling a joke, you go ah you’re a comedian. And that’s the key with brand personality. One is understand exactly what your personality is, and the second thing which is as important, is understanding how you communicate that brand personality. So there’s two things, there’s a brand image and brand essence. The second thing is brand communication. We’ve developed a thing called brand mapping and brand mapping is a way of not getting lost, that’s why we call it brand mapping. And what we do is we take all of the personality traits we’ve developed, which are kind of a spoken language, and we develop words, and then we attribute, images, colour, music, sound, behaviour, the way people say hello, or is it hi, or is it how you doing, and all of those things are clues into what is put is, is what this brand personality is about. So that’s what you do first, create this brand map.

LISA BLACKLER: I think it’s very important to have a strong brand, I can’t think of very many market places that aren’t already crowded in one way or another, there’s nothing new under the sun. So brand is how consumers decide what they are going to buy. It’s absolutely vital for small businesses to have a marketing plan, if you don’t know who your target market is, if you don’t understand what you’re brand is about, what you’ll find is that you’re like an explorer without a compass, you’ll get where you’re going eventually but you’ll waste a lot of time and effort going in the wrong direction some of the time, but the key, I believe, fundamentally to marketing is saying the right thing to the right person and if you can get those messages right, if you can understand what it is that is going to switch those customers on to what you’re offering then you’re a long way ahead of a lot of other people. Targeting comes in by understanding that you are very unlikely to be able to sell to everybody and to appeal to everybody, but if you select one group and people and tailor you’re offering around what they, what they warm to, then you’ve got a better chance of selling to that group of people than you have to try to sell to everybody. It’s like selecting which part of the ocean you’re going to fish in, you haven’t got a big enough net to fish the whole of the pacific ocean, but if you choose one small part of it, you’ve got a chance of feeding you’re family.

TANIQUA BENNETT: What I studied was about brands, brand positioning, understanding how they should relate to their consumers and launching new brands as well. A lot of that study took place with big companies like Alberto Culver, Procter and Gamble. So all of the heavy weights in the industry so I think that, even though it wasn’t actually business, it was definitely about getting a cosmetic brand or skin care brand and positioning it correctly in the relevant markets. The launch of the brands wasn’t really, we didn’t really go out and say okay let’s sit down and consult other people about how we can launch the brand, it was really an opportunity that came up to reposition the brand so that it can get into the multiple market retailers, so we just took it, approached it internally, this is what we needed to do, did a lot of brainstorming, repositioned, did the planning for the repositioning of the brand and then presented it to store groups.

ADAM DEVEY SMITH: First thing is who you’re talking to and it can be, oh anything from how do you communicate on the mobile phone to, do you do press launch through media on TV, do you do it through the local paper, a lot of it is budget driven, so are you going to test launch this initially in a kind of small way, so you may try a new, new collection just by rebranding, so maybe a new identity but not a new design of product, you just try to refresh the collection. You might do a dummy store, if you do a dummy store you wouldn’t do a national campaign obviously because it’s in one shop but you may do a local campaign just to drive some interest to see what happens and test some feedback. If you’re not doing that and you’re going for the full thing which has its own risk but sometimes even if you’re gonna go for it. You’d look across media when you get a media planner my advice would always be get an advertising agency because their better than media planning, retail, branding, design, it’s a different thing. As soon as you move into “well I’m going to go into above the line communication” then get an advertising agency in and the way we manage it with them, the way we help them articulate that is we go through a process and it’s called 1000 promises, you start with someone that says “what are you about” and someone says “okay I understand that” that is your brand promise. You give me your value, I’m, I dunno, healthy. One brand promise is every time you come into my shop, all this food that I’m going to sell you will be really healthy and will be really good for you, okay, the gesture is, everyone in the company, in every department needs to do something that helps deliver that brand value.

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From this film, you should have developed an understanding of the relationship between the brand and the message and how marketing communications are used to communicate the message to specific target audiences.

3.4 The marketing communication mix

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Retailers should consider the range of communication tools that they can mix to communicate their marketing and branding messages. Advertising, sales promotion, public relations, digital marketing, direct marketing and personal selling are examples of important marketing communication tools widely used in the retail industry and other industry sectors.

Figure 11 The communication mix and the interrelations between media tools and audiences. Source: Fill (2009), p. 14.

Figure 11 indicates an interrelationship between the target customers, the tools and the media. This is because the tools a retailer might choose to target a particular audience will affect the media used to carry the message. It is important to note that deciding on the tools and media involves a complicated set of decisions. Indeed Davies (2001) suggested there are over 2,000 different combinations of interlinked decisions to consider that could affect marketing communication planning.

In order to make such choices, retailers need to select a blend of tools and media that will reach the target audience.

Each tool in the communication mix has different characteristics, which affect how they are used in conjunction with the media and communication messages.

According to Fill (2009) four important characteristics can help guide your choice of which communication tool to use for delivering particular marketing communication messages. The four characteristics are:

Communication potential – focuses on the ability of the communication tool to deliver a personal message, its audience reach and the level of interaction offered.
Credibility – refers to how the communication tool is perceived by the target audience.
Cost – includes considerations about how much of the communication budget is required to use a particular tool, ratios of cost per contact and the size of investment required to use the particular communication tool.
Control – the ability to reach specific target audiences and flexibility to adapt to changes in the communication setting.

The characteristics of each of the communication tools affect how and where they are used, based on the level of:

Communication potential, e.g. television advertising is good at visually informing target consumers of key features and benefits, whereas sales promotions are a call to action, to encourage consumers to make a purchase for example.
Credibility required (tools are perceived and valued differently by the target audience, e.g. public relations score high whereas advertising scores low).
Cost which is a major consideration and the communication budget will influence the choice of communication tools.
Control that is required. (In other words is the message that the target audience receives the same as the one the transmitter intended to send?)

What have you learnt about marketing communications in retailing?

In this section, you have been introduced to some of the key areas of marketing communications – the message, the media and the communication tools. You have considered the basics of the communication model that underpins the development of marketing communication messages. You have also explored what it takes to develop a communication message, how to use communications to build a brand and the characteristics of the different media that might carry marketing communications. In addition, you have identified a range of communication tools which make up the marketing communication mix.

Conclusion

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

In this course we have explored the meaning of the terms retailing, marketing and marketing communications. We have also considered the importance of the marketing mix and identified the different communication tools that a retailer might use to interact and communicate with their target customers. You have been introduced to a few theoretical concepts and ideas, which have been illustrated using real world examples and cases in retailing.

You have been introduced to some of the key areas of marketing communications – the message, the media and the communication tools. You have considered the basics of the communication model that underpins the development of marketing communication messages. You have also explored what it takes to develop a communication message, how to use communications to build a brand and the characteristics of the different media that might carry marketing communications. In addition, you have identified a range of communication tools which make up the marketing communication mix.

The course has also aimed to introduce the importance of marketing and communication from a retail perspective.

References

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Booms, B. H. and Bitner, M. J. (1981) ‘Marketing strategies and organizational structures for service firms’, in Donnelly, J. H and George, W. R (eds) Marketing of Sciences, Chicago, American Marketing Association, pp. 47–51.

Davies, M. (2001) ‘Adaptive AHP: a review of marketing applications with extensions’, European Journal of Marketing, vol. 35, no. 7/8, pp. 872–94.

Fill, C. (2009) Communications; Interactivity, communities and content, New Jersey, Prentice Hall.

Jobber, D. (2010) Principles and Practice of Marketing (6th edn), London, McGraw-Hill.

Acknowledgements

The Open University — Thu, 25 Jul 2013 23:00:00 GMT

Except for third party materials and otherwise stated (see terms and conditions), this content is made available under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 Licence.

The material acknowledged below is Proprietary and used under licence (not subject to Creative Commons Licence). Grateful acknowledgement is made to the following sources for permission to reproduce material in this free course:

Cover image Sodanie Chea in Flickr made available under Creative Commons Attribution 2.0 Licence.

Every effort has been made to contact copyright owners. If any have been inadvertently overlooked, the publishers will be pleased to make the necessary arrangements at the first opportunity.

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