Retail: Sales & Marketing¹

Retail: Sales & Marketing

Retail operations may generate billions of annual dollars in sales, but data indicates that sales and marketing expenses are taking a huge bite of the profits. ZenithOptimedia, a leading global media service agency, reports that American retailers spent more than $17 billion in advertising last year, with placements in both print and electronic media.

All the same, Internet technology is rapidly transforming the industry's advertising and marketing strategies. Even shoppers that like to touch, smell and try on potential purchases are checking out the Web before they head for the nearest malls.

The National Retail Federation has found that 70 percent of American adults currently consult the Internet before hitting neighborhood venues for products and services - a 10 percent increase over October 2003 numbers. RetailWire, an online industry news analysis and discussion forum, reports that 68 percent of all shoppers now move back and forth between Internet shopping sites, physical stores and catalogs.

What's more, customers expect the level of service and delivery from all parts of the operation - virtual or actual. To this end, upscale vendors such as Neiman Marcus, Saks Fifth Avenue, Chico's and William Sonoma routinely offer higher-end merchandise on their Web pages, as well as in their stores.

With the Internet clearly a catalyst for change, retailers with smaller, independent operations are scrambling to stay competitive without breaking their advertising budgets.

A recent study, underwritten by the National Retail Federation Foundation and several partnering organizations, offers recommendations from various industry insiders, along with case studies of successful independents across the nation. Those interviewed suggest that smaller retail businesses CAN employ stratagems larger corporations already use effectively.

A Marketing Primer

  • Let High-Tech Gadgets Do The Work. Customer Relationship Management (CRM)technology, for instance, allows the retailer to not only collect data, but to generate and mail individualized postcards, letters or coupons pitching the right product to the right consumer. With hundreds of options out there, a good many pay-as-you-go systems start as low as $65 dollars per month. Costs for ready-to-use software range from around $200 to $5,000, and up.
  • Know Your Target Market. A purveyor of guns and ammunition likely would not choose to advertise in a women's interest magazine, nor would he (or she) donate t-shirts to a softball game sponsored by an anti-gun group. He would do better rather, advertising in sportsmen's magazines or on similar Web sites, rather than waste ad dollars appealing to the wrong audience. Yes, this example is simplistic, but it does underscore what marketing experts advise - stick with the outlet best suited to the product.
  • Consider Non-Traditional Outlets. According to marketing pros, the costs of network television, radio and print promotions continue to escalate. In fact, a California-based small business development center came up with the following averages: Based on a 12-week contract, a 2- by 2-inch newspaper add runs $1,300 per week; television - $200,000 for one 30-second prime-time commercial; radio - $90 to $120 per week on a rotator basis; and magazines - $1,200 to $5,000 per month or per issue, depending on ad size and demographics.

    On the other hand, an Internet banner ad on selected Web sites can cost as little as $200 to $1,200 per year. Other potential bargains are e-mail newsletters and promotions, direct mail, cable TV channels and custom publishing.

  • Make Friends With the Neighbors. Retail establishments of every size are attracting new customers - and getting free publicity in the process - by sponsoring events such as in-house demonstrations, concerts, children's functions art shows and classes. One major hardware chain, for instance, offers weekend how-to workshops on carpentry projects, painting techniques and dozens of other subjects for do-it-yourselfers; a pet store provides free obedience classes (and treats) to canine customers; and a cosmetics store gives free make-up applications to teens every Saturday morning.
  • Team Up With Other Professionals. Cross-Promotional Marketing allows retailers and other businesses to strategically target the same market without directly competing with one another. The beauty of this technique is that it provides low- cost growth opportunities for any enterprise, regardless of the type goods or services.

    An example: With purchases of $50 or more, a ladies' boutique distributes "free manicure" coupons to redeem at a local spa. In turn, with 60-minute massage, the salon presents a $20-off certificate for the boutique. As partners in a cross- promotion, these vendors are reaching far more potential customers at much lower costs. In addition, prospects are introduced to each business through vendors they already use and respect.

  • Develop Media Partnerships. It's no secret that small retail operations frequently have super-tight marketing budgets. Even so, successful independents can lower advertising costs by negotiating special agreements with electronic and print media providers, such as committing to a 12-month contract in exchange for a reduced price per spot. Others have found that co- sponsoring charitable fundraisers (5K races, galas, cook-offs and fashion shows, to name a few) with local radio, television and newspapers draws attention to their businesses AND helps others, too.