Editorial by Ted Mininni, President, Design Force, Inc. (www.designforceinc.com)
The ultimate goal of corporate marketing departments is to connect with and cultivate meaningful relationships with consumers. It takes time to build brand relationships, and executive management must commit to this for the long term.
Retailers that sacrifice long-term relationship building for short-term top-line growth are short-changing their businesses and customers.
Consumer-directed campaigns (AKA sales promotions) drive traffic and sales in specific retail locations. While necessary, the transactional, sales-oriented promotional plan should be only one component of a balanced consumer campaign strategy.
The ultimate goal of consumer campaigns should be relationship building because that is what creates brand loyalty and equity over time.
Relationship-Building Promotions
There are four evolutionary phases in promotional brand building: Brand Initiation, Brand Involvement, Brand Affinity and Brand Devotion.
Every consumer relationship begins with Brand Initiation. This involves reaching out to the appropriate, targeted consumer demographics with the right message.
Brand involvement requires more extensive campaigning, gets more personal with the consumer, and explains product or service features/benefits in detail. By creating promotions that uncover what I refer to as the product's "Enjoyment Assets," positive consumer experiences with brands lead to emotional connections to those brands.
Brand affinity is the third phase of relationship building. Here, the relationship between product and brand has deepened. Smart marketers work actively on strengthening the relationships they have with existing customers, even as they seek new ones via transactional campaigns.
Brand devotion is very difficult to obtain; even harder to sustain. If products/services continue to deliver the brand promise, with unfailingly positive or enjoyable experiences, they cement emotional bonds with the customer. When corporate brands support worthwhile causes, charities, or tie into cultural icons like The Nature Conservancy, Disney, or the NFL, they create devotion among legions of fans.
The Home Depot illustrates my points. In spite of its giant corporate size, the retailer - 1900 stores and $70 billion in sales in 2004 - has an easy-to-shop format and neighborhood appeal. Knowledgeable salespeople inform DIYers with ease, elevating the customer experience.
John Costello, former EVP of merchandising and marketing, explained how the retail giant's research led to building stronger relationships with its customers, acknowledging in recent interviews that even though the retailer knew 50 percent of its transactions were with women, the company was still marketing itself far more aggressively to men.
Since women initiate home renovation projects in large numbers, in-store "Do-It-Herself" classes, initiated in 2004, specifically targeted women. In a little over a year, 200,000 women signed up for these classes; a whopping 97 percent claimed they would attend more! By publicizing the workshops in local media and on its web site, The Home Depot has enabled women to easily sign up and give feedback on their experiences.
Additionally, The Home Depot has sponsored Kids' Workshops. The company's sponsorship of NASCAR is more than a sponsorship opportunity; The Home Depot also offers interactive activities and contests for kids at the racing sites.
In order to better educate customers: in-store kiosks are filled with product spec sheets and brochures explaining features/benefits of appliances, tractors and other category products. The corporate web site offers customers information online for every appliance category, making it easy for customers to research in advance of purchasing. This saves time for salespeople and customers alike.
When it comes to building customer relationships, The Home Depot has gone beyond offering special discounts and everyday low pricing. By mining customer data and engaging in meaningful marketing research, The Home Depot should continue to pioneer consumer promotional campaigns like these to build long-term brand loyalty and equity. And that is where the real profits of retail lie.
Moderator's Comment: Do you believe many, perhaps even most, retailers are sacrificing their ability to build equity for their brand by focusing on short-term sales promotions? Which retailers have done the best job of finding the right mix between sales promotion and brand building? Which retailers have done the best job of continuing to build their brand even while engaging in sales promotions? - George Anderson - Moderator