Effective Promotional Mix for Shopping Mall Groups
Andrew G. Parsons, University of Auckland
Abstract
A common complaint about shopping centres is the ‘sameness’ of them. The replicated retail
mix in malls is turning customers seeking variety away. Despite this, shopping mall groups
are increasingly using group branding as the basis for promotional activities, emphasising the
security for the customer of knowing that they will receive the same level of mix no matter
which ‘branch’ is shopped at. This is similar to the strategies of many chain stores,
particularly fast food chains. However, in both the retailers’ cases and that of the shopping
malls, localised promotional activities are still utilised. This research examines the
effectiveness of group promotional activities versus localised activities, with the premise that
the level of local market dominance will impact on the effectiveness. The two traditional key
performance indicators for malls (traffic and sales) are used to measure the effectiveness, with
proportion of gross leasable area in the market used as a proxy for dominance. Findings
suggest that market dominance and promotional type have significant effects on sales and
traffic. Managerial implications are offered, as well as suggestions for future research
extending the study to retail groups.
Introduction and Background
Shopping malls are increasingly using promotional activities to differentiate the mall from
competitors through image / brand communication, to increase traffic (visits) and to stimulate
merchandise purchases (LeHew and Fairhurst, 2000), in an increasingly competitive
environment characterised by over capacity and declining customers (Shim and Eastlick,
1998; LeHew and Fairhurst, 2000). Owner/management groups that have a portfolio of malls
have recognised a need to market themselves effectively (Kirkup and Rafiq, 1999) given that
the store mix and product offerings of many regional shopping malls are very similar (Burns
and Warren, 1995; Wakefield and Baker, 1998). However, the changing consumer base is
creating a need to better understand the requirements of a heterogeneous market composed of
numerous diverse segments (e.g. Levy and Weitz, 2001, Dunne, Lusch and Griffith, 2002;
Solomon, 2002) making the use of mass market promotions more difficult.
Mall groups have increasingly used group-wide promotional activities that offer a generic
base that is replicated across the group, with tailoring normally restricted to institutional
variations (e.g. location, contacts, opening hours). As such they take a mass-marketing
approach, usually attempting to appeal to either a broad market base (usually demographic or
lifestyle-based, or a common (in each centre’s catchment) specific target market for a limited
period (such as parents and children during school holidays). These promotional activities
tend to be either institutional advertising, or two of Alexander and Muhlebach’s (1992) four
mall promotional types – price-based and entertainment-based. The first (price-based) are
commonly group-wide sales, gift-with-purchase, or discounts once a minimum purchase level
is reached. The levels of price reductions or rewards are consistent across the group. There is
a dearth of research on the effectiveness of price-based promotions in malls, but the general
retail literature implies that such activities are effective in encouraging visits (e.g. Folkes and
Wheat, 1995; Smith and Sinha, 2000) and in increasing sales (e.g. Kendrick, 1998).
Entertainment promotions commonly occur during school holidays and involve a ‘touring
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package’ that each mall in the group will have access to (so whilst the same entertainment
may not be on in each mall on a given day, over the holiday period each mall will have
offered the entertainment variations), and are designed to create a degree of excitement above
the usual quality of the shopping experience (Wakefield and Baker, 1998).
Group marketing / promotions managers thus have an annual calendar of events in which
malls belonging to the group will participate. The local centre manager / marketing manager
will then have gaps that can be filled with local promotional activities. Whilst such activities
can include price and entertainment-based promotions, budget constraints often mean that the
other two types identified by Alexander and Muhlebach (1992) are employed – educational
activities and school / community activities. Kirkup and Rafiq (1999) see these as public
relations oriented, long-term tools, positioning malls as integral parts of the community,
rather than short-term sales or traffic drivers, though the potential is there for them to
contribute to the performance of the mall.
It is not clear, however, whether the group price and entertainment promotions are any more
or less effective than similar local promotions that are targeted more specifically at the local
population. Store choice literature would suggest though that in situations where there is
saturation (e.g. Guy, 1996) or at least alternatives within reasonable travelling distance (e.g.
Burns and Warren, 1995) that shoppers will travel to their preferred centre rather than the
nearest, whereas the generic approach of group promotional activities infers that because each
mall offers the same level of mix, it would be rational to shop at the nearest, or most
convenient. Furthermore, the literature on mass marketing versus target marketing would
suggest that combinations may in fact adversely affect the group, making business stronger
where activities were focused, but less strong where they were not (Freeman, 1992; Cahill,
1997). In contrast to this however, some research has suggested that localised activities still
need to make use of mass-marketing media, possibly in order to be seen as equal to the ‘big
players’ (e.g. Slater, 1990; Holstius and Kaynak, 1995).
Aim of Study
The aim of this research is examine the effectiveness of promotional activities when the
shopper is faced with malls promoting themselves both as part of a generic group, and as a
local entity. It is postulated that the level of market dominance will impact upon this
effectiveness in that the presence of multiple malls in the group will strengthen the perception
of similarity (Burns and Warren, 1995) and thus enhance the group promotional activities’
effectiveness, whilst at the same time suppress individuality and thus diminish the
effectiveness of the local identity creating promotional activities of Kirkup and Rafiq (1999).
Methodology
Weekly sales and traffic figures were obtained for eight malls owned and managed by a single
entity that was branding the centres in line with the definition of group promotional activities
given in the introduction, similar to those undertaken by Groupe Leçon (2002). These are the
key performance indicators (K.P.I.) for malls largely because they, at least in part, determine
the rents for retail tenants which are the primary source of income for the mall owner /
manager. The catchment area for each mall was established from secondary research provided
by the mall management, and the number and size (based on gross leasable area (GLA) – a
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standard measure for shopping malls) of competitors established from public records. Each
mall was similar in format, with one or two supermarket anchors and one or two department
store anchors, approximately 60-70% fashion oriented specialty stores (dominated by chainstore operations), and at least one food court. Mall size varied but as the relative measure of
the proportion of GLA for the market area was being utilised, this was not important to the
study.
The group malls were then classified on whether they were sole representatives of the group
in the catchment area, and the proportion of GLA the group held in the catchment area. This
combined position is referred to as ‘market position’ in the results. For the purposes of this
research, GLA was restricted to malls, so excluded town centres; power centres etc… so that
it was computationally simpler to account for competitive activity during the research period,
and the data collection required was manageable. Dominance level was classified as under
25%, 25% to 50%, or over 50% of GLA, with the levels based on observed natural groups.
The K.P.I. data was then classified on whether the corresponding activity was group
promotional activity or local promotional activity (or no activity as was the case for short
periods for some malls). Ten weeks of group promotional activity and ten weeks of local
promotional activity were then drawn for the data for comparison using the General Linear
Model procedure (for analysis of variance). The data therefore was analysed as follows:
The dependent variable was either sales or traffic levels.
Treatment (factor) one was the promotional type – group or local.
Treatment (factor) two was the market dominance level.
Combinations were then compared using t-tests (see Table 1). Mean sales and mean traffic
counts were also calculated for each combination (interaction) and examined for direction. An
α of 0.05 was used in all tests.
Findings
The analysis of variance showed that the main effects of promotional type and market
position were significant for sales (F = 96.49, p=0.00, and F = 7.87, p=0.00, respectively), but
only market position was significant for traffic (F = 4.45, p=0.01). For both sales and traffic,
the interactions were significant (F = 10.47, p=0.00, and F = 8.21, p=0.00, respectively).
Table 1: T-Tests of Combinations for Promotional Type
Mall Position
Sole, under 25% GLA
Sole, under 25% GLA
Sole, 25% - 50% GLA
Sole, 25% - 50% GLA
Multiple, 25% - 50% GLA
Multiple, 25% - 50% GLA
Multiple, over 50% GLA
Multiple, over 50% GLA
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Promotional
Type
Group
Local
Group
Local
Group
Local
Group
Local
t (sig) SALES
t (sig) TRAFFIC
0.52 (0.62)
-1.79 (0.11)
9.74 (0.00)
2.09 (0.07)
4.47 (0.00)
-3.22 (0.01)
5.63 (0.00)
1.54 (0.16)
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The results from Table 1, when examined with the direction of the comparable means, show
the following: (note in each situation, Mall A is the mall examined that belongs to the group)
•
•
•
•
When Mall A has no other group members present in the catchment area, and Mall
A has less than 25% of GLA, there is no difference for sales or traffic given the
promotional types.
When Mall A has no other group members present in the catchment area, and Mall
A has between 25% and 50% of GLA, group promotional activities are
significantly more effective for generating sales. There is no difference for traffic.
When Mall A has other group members present in the catchment area, and the
group accounts for between 25% and 50% of GLA, group promotional activities
are significantly more effective for generating sales, and local promotional
activities are significantly more effective for generating traffic.
When Mall A has other group members present in the catchment area, and the
group accounts for over 50% of GLA, group promotional activities are
significantly more effective for generating sales. There is no difference for traffic.
Discussion and Conclusions
This exploratory study suggests a number of clear implications for management that need to
be further investigated by more general research. There is a clear argument presented that for
groups of malls that are branded as similar, group promotional activity is much more
important in generating sales than individual malls’ local promotional activities. From a
resource allocation perspective, this would suggest that budgets should shift away from local
control and activities to more group undertakings. However, this should be tempered with the
perspective given by Kirkup and Rafiq (1999). Malls engaging in local community or school
activities have longer term returns associated, and this may be reflected in the finding that
when multiple alternatives from within the group are available to the shopper, it is the local
promotional activities that have a significant effect on traffic.
There is also the need to consider the age and corresponding awareness of the mall for each
catchment, and perhaps more importantly the type of promotional activity normally associated
with the mall, as these factors may impact upon the effectiveness of promotional types. A
possible relationship may be that change in promotional type may revitalise customer interest,
beyond that identified by this study.
Another important inference from this study is that when a group member is isolated from the
group in the marketplace, and under dominant competitive pressure, group promotional
activity is no better or worse than local promotional activities in generating either sales or
traffic. Thus, if it is logistically difficult or more expensive to include the mall in the group
activities, omission will not hurt it. This study does not have that scenario included though,
and the findings of Freeman (1992) and Cahill (1997) that where activities are not included
the business is weakened, may be applicable. It may also be more cost effective to simply use
the group advertising to gain the mass-marketing media advantages (Slater, 1990; Holstius
and Kaynak, 1995).
An important implication is whether this study can be generalised to other group applications.
Fast food chains belong to one such retail category that follows a very similar strategy to that
of the branded malls, as do many franchise operations. This research is exploratory in that it is
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limited to only certain combinations of market position and promotional activity (which were
available from the data), and does not explicitly take into consideration the group versus local
activities of competitors in the marketplace. Nevertheless, the study does highlight the need to
examine this issue in a more general approach, particularly its applicability to other retail
sectors.
Finally, the study suggests that management can explore ways to take advantage of market
position through the use of group and local promotional activities. By doing so, it is apparent
that both sales and traffic can be significantly enhanced
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