Is your store successfully targeting your market with “BBs”—brand budgeting—or are you shooting blanks?
A number of jewelers surveyed by JCK say their storebrand strategy (if they have one) has little or no effect on their operational budget. For most, the only effect is deciding how much of gross sales to allot to advertising.
That’s simplistic, say experts, and can be detrimental to the goal of impressing your store brand on your market and attracting customers. Everything in a store’s budget should be viewed through the prism of its brand image.
“The budget is very important in establishing and supporting your brand,” says Frank Proctor, co-founder of The Luxury Brand Group, a marketing and brand consultant to jewelry industry companies. “All parts of the budget are relevant, because each line item has an effect on your overall brand strategy.”
“A proper financial analysis of how and where to spend your money depends on who you’ve identified as your primary customers, the core group at which you aim your marketing, inventory, and brand promise [that is, what your store strands for],” says veteran jewelry store chain executive Robert Bridel, now a consultant specializing in jewelry trade brands and marketing. “How you budget to reach them depends on who they are. For example, if they’re in the professional executive level with high incomes, support the Rotary, charities they support, and publications they read [with ads].”
Budgeting by definition means carefully planned spending. However, too tight a grip on a store’s purse strings can strangle presentation of its brand image. “Budget is always important, but we try not to be penny wise and pound foolish,” notes Jan Fergerson, of Ford, Gitting & Kane in Rome, Ga. Randall Pipkorn, of the Gold Shop in Bisbee, Ariz., agrees. “Spend money where it will give the best return,” he says.
Since advertising is vital to presenting a store brand to the community, jewelers should know how much to allocate to it. A rule of thumb, suggests Proctor, is 3 to 5 percent of gross retail sales, 8 to 10 percent for a new store. “But if you’re trying to build up your store brand in your community, you probably have to increase your overall marketing budget, putting more dollars into promotional things like store events, postcards, and point-of-sale materials,” he adds.
Spend those budgeted dollars in a 60/40 allocation, says Krueger. “Since your store- brand image is a major component of your marketing effort, 60 percent of your ad budget should go to it, positioning you as the consumer’s resource of choice. Tell why you’re different from other jewelers, over and over, in different creative ways, so you’re at the top of consumers’ minds in your market.”
He continues, “The other 40 percent of your ad dollars should be budgeted for promotional uses, like a ladies’ night out, a trunk show, a product sale, or promoting a specific category.”
Among budget considerations to look at in light of your store brand image and strategy are these:
• Ad channels. “Everyone wants to broaden their advertising to reach more people. That’s the biggest mistake a small business can make,” says Krueger. “Instead of more people, talk to the right people—the likely target customers. Narrow the marketing scope from everyone in town to a special group on whom you spend all budgeted marketing and merchandising dollars.”
Consider, too, where and how you spend budgeted ad dollars for your store brand, says Mark Rood, president of TOMA Research, which tracks local market awareness of businesses, including jewelers. “A jeweler needs to be in well-used focal points,” he says. “Use the more traditional media, with ads in newspapers, billboards, TV, or radio. These might be more expensive than others, but they’re worth it.” Fisher Jewelers in Erie, Pa., allots 15 percent of its budget to promote its store brand (which is focused on diamonds). “We look for radio and TV stations and programs targeted to adults aged 25 to 54,” says owner Herb Rubinfield.
And, reminds Rood, “Budgeted advertising to position the store is part of the store’s overhead, like utility bills, and should be spent regularly, not just when the owner wants or stopped when business is good.”
• Merchandise. This is a major factor in budgeting, says Proctor. “You need a unique product selection, so part of your budgeting is looking at the product mix, if you want to set yourself apart.”
• Presentation. What Bridel calls product delivery collaterals—packaging, boxes, bags, and related items—need special attention in the budget. Parks Diamond Jewelry, Texarkana, Texas, for example, specifically allots 1 percent of its marketing dollars to packaging and the other 4 percent for advertising.
Don’t skimp. “A cheap, flimsy box will leave a negative impression, while quality packaging is worth the cost,” says Randall Pipkorn. “People should invest in quality,” agrees branding expert Alina Wheeler. “In selling a necklace, its presentation in the gift box is an important part of the experience of buying it or receiving it as a gift. Don’t put it in a cheap bag.”
Consider, too, how much to budget for miscellaneous items that help market your store brand. These include private-label giveaways such as jewelry cleaners.
• Employees. “Your staff plays a huge, huge part in your brand identity,” says Wheeler, and must be seriously considered in budgeting, not only for salaries but also for training. “For instance, if your brand is very dependent on your staff’s knowledge, then everyone you hire needs to be trained thoroughly, and that affects training times, materials, and trainers,” Krueger says.
• Store Appearance. If your brand is dependent on your store’s appearance, that affects budgeting. “Do its aesthetics convey your brand image,” asks Proctor. “If you want more upscale consumers, does your store name and logo say one thing, and the store’s interior another? Do your signage, carpeting, walls, and cases need to be painted, cleaned, or upgraded? All are important expenses.”
“Business owners should think about the customers’ experience of walking into and shopping in the store,” says Wheeler. “How comfortable is it? How good is the lighting, the wall décor? Is there music?”
“All things important to promoting your store’s brand image are important in budgeting,” says Krueger. “If you’re committed to building your store brand and brand identity—that point of difference separating you from other retailers, especially where there is heavy competition—your budget considerations must support that.”