Mod 1

LEARNING OBJECTIVES

To understand the marketing process and the role of advertising and promotion in an organization’s integrated marketing program.

To understand the concept of target marketing in an integrated marketing communications program.

To recognize the role of market segmentation and its use in an integrated marketing communications program.

To understand the use of positioning and repositioning strategies.

To know the various decision areas under each element of the marketing mix and how they influence and interact with advertising and promotional strategy.

LO1

LO2

LO3

LO4

LO5

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One would think that a cohort that consists of 80  million persons with a spending power of $172 billion would be the ideal target mar- ket for American companies. Yet the millennials generation—those born between 1982 and 2000 and also known as gen Y—is proving to be one of the most difficult of any segment for market- ers to reach in decades. Marketers have referred to this group as “the cheapest ever,” “stingy,” and/ or “disinterested”—among other not so endearing terms—when describing their buying behaviors. It seems they just don’t want to buy. At the same time, the cohort is just too large in size and has too much buying power to ignore: They are expected to spend over $10 trillion in their lifetimes. As a result, a number of companies, rather than ignoring them, are attempting to better understand them in an attempt to develop marketing programs that might attract their interest.

Unfortunately, millennials are not that easily understood. Maybe they don’t buy because much of their life has been spent in a bad economy. Jobs have been hard to come by, salaries are not increasing, and housing is expensive. As a result, many (even after graduating from college) live at home with their parents, take mass transit, carpool, or walk to work and don’t have a lot of dispos- able income. Perhaps they suffer from information overload, as almost all of them are socially con- nected, the vast majority multitask frequently, and they are the most educated, mobile, and tech- savvy generation in history. Or maybe what they are interested in purchasing is different from previous generations—travel spending has increased over recent years, while new car purchases have been less than expected. Many would prefer to pay for enhanced cell phone services rather than make a car payment. There is no doubt that their media habits are more complex, making it easier to reach them but harder to get their attention. Or maybe

the media contribute to their consumer behaviors by making it easier to communicate with others, sharing many things such as product evaluations in their discussions.

Since World War II, the U.S. economy has been driven by automobile and home sales. Now it seems that millennials are not interested in either—at least when it comes to buying. Rather, they have become a “sharing economy” in which everything from clothing to homes to automobiles is shared rather than purchased. Companies like car2go and Zipcar—the world’s largest car-sharing company with over 700,000 members—are grow- ing at a rapid pace. So fast, in fact, that Avis (the car rental conglomerate) purchased Zipcar for $500  million in 2013. Also expanding is Airbnb, a place for travelers to share bedrooms and other household accommodations, and there has been a proliferation of websites for selling one’s no longer used clothing.

One company trying to understand millennials is General Motors (GM). GM’s research has shown that new vehicle purchases in the 21- to 34-year- old age group are down 35 percent from 1985. The percentage of teens and twenty-somethings with driver’s licenses has also decreased. While some of this can be attributed to the economy, all of it cannot. Because of their high connectivity and educational status (higher-educated persons tend to have greater buying power) GM believes that millennials still provide strong market poten- tial, but automakers just haven’t figured them out yet. Rather than impose the values of the older generations, GM is trying to adapt by reaching them on their own terms. Chevrolet has partnered with RelayRides, a company that allows members to rent out their vehicles to other users. GM has also introduced a number of new “concept cars” designed specifically for millennials by emphasiz- ing higher gas mileage and high-tech features,

The Role of IMC in the Marketing Process 2

REACHING MILLENNIALS—A TRUE MARKETING CHALLENGE

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42 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

while downplaying horsepower and torque attri- butes. The key to capturing millennials according to 31-year-old John McFarland—GM’s “youth emis- sary,” is to “give them exactly what they want and nothing more.” Dodge is trying exactly that with its new Dodge Dart. After poor introductory sales, Dodge has established an online promotion that “combines crowdsourcing and pizzazz with mil- lennial appeal” in which one can register to buy a Dart and have friends sponsor the components they want in the car.

Another seeking to do business with gen Y is Wawanesa, an insurance company that has been around since 1896 but is far less known than com- petitors like State Farm, Allstate, and GEICO. Wawanesa recently discovered that millennials don’t want to take the time to complete insurance forms the traditional way—on paper. (Allstate apparently found this out earlier, which led to the founding of E surance.) To respond to this threat, Wawanesa increased its web presence, offering online quotes and allowing customers to pay bills and even file claims online. In addition, the company increased its marketing efforts targeted to this cohort. GEICO now advertises a mobile app to allow access to one’s insurance account.

Offering a strong online presence is not the only strategy that must be undertaken to reach millennials, however. As noted by Erin Mulligan Nelson in Advertising Age magazine, if companies think all they have to do to reach this cohort is to employ social media, they are going to miss the mark. Nelson contends that to reach millen- nials, marketers must employ media that provide

content about the brand—blogs, websites, and applications—even strangers providing testimoni- als. Millenials want to be informed, and want to be heard, often valuing their mobile phones over other tangible good items. If successful, compa- nies will also find them to be highly loyal, and willing to tell others of their product and service experiences. Emma Bazilian, reporting on a study of 1,000 consumers between the ages of 18 and 34, agrees that social media may be the best way to reach millennials, but also believes that traditional media are still important. The study conducted by MPA and GfK MRI found that while Facebook is the most used social site, 93 percent of those surveyed said they read magazines and that contests and coupons are also a big influence on their purchase decisions, as is word of mouth—particularly from their friends.

So while millennials may be different, maybe the ways in which we reach them may not be as complicated as it seems to be. Only time will tell.

Sources: Dale Buss, “Dodge Dart Lowers Barrier to Entry for Millennials with Online Registry,” www.BrandChannel. com , January 21, 2013; Andrew Martin, “Car Sharing Catches on as Zipcar Sells to Avis,” www.nytimes.com , January 2, 2013, pp. 1–5; Sheila Shayon, “Campbell’s Go Soup Targets Millennials, Still ‘Mmm Mmm Good,’” www.brandchannel. com , August 29, 2012; Erin Mulligan Nelson, “Millennials Want to Party with Your Brand but on Their Own Terms,” www.advertisingage.com , August 2, 2012; Emma Bazilian, “Study: Millennials Engage with Magazines via Social Media,” www.adweek.com , August 23, 2012, p. 1; Jordan Weissmann, “How Do You Sell a Car to a Millennial?” www. theatlantic.com , April 4, 2012, pp. 1–10.

Marketers know that to be successful they most understand their buyers and

potential buyers and develop specific strategies to best reach them. These include

the identification of market opportunities, market segmentation, target marketing and

positioning, and marketing program development. As can be seen in the lead-in to

this chapter, this is often a challenging task.

In this chapter, we take a closer look at how marketing strategies influence the

role of promotion and how promotional decisions must be coordinated with other

areas of the marketing mix. In turn, all elements of the marketing mix must be

consistent in a strategic plan that results in an integrated marketing communications

program. We use the model in Figure 2–1 as a framework for analyzing how promo-

tion fits into an organization’s marketing strategy and programs.

This model consists of four major components: the organization’s marketing strat-

egy and analysis, the target marketing process, the marketing planning program

development (which includes the promotional mix), and the target market. As the

model shows, the marketing process begins with the development of a marketing

strategy and analysis in which the company decides the product or service areas and

particular markets where it wants to compete. The company must then coordinate

the various elements of the marketing mix into a cohesive marketing program that

will reach the target market effectively. Note that a firm’s promotion program is

directed not only to the final buyer but also to the channel or “trade” members that

distribute its products to the ultimate consumer. These channel members must be

YTC 02–01

Marketing to Millennials youtube.com/10ebelch

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 43

convinced there is a demand for the company’s products so they will carry them and

will aggressively merchandise and promote them to consumers. Promotions play an

important role in the marketing program for building and maintaining demand not

only among final consumers but among the trade as well.

As noted in Chapter 1, all elements of the marketing mix—price, product, distri-

bution, and promotions—must be integrated to provide consistency and maximum

communications impact. Development of a marketing plan is instrumental in achiev-

ing this goal.

As Figure 2–1 shows, development of a marketing program requires an in-depth

analysis of the market. This analysis may make extensive use of marketing research

as an input into the planning process. This input, in turn, provides the basis for the

development of marketing strategies in regard to product, pricing, distribution, and

promotion decisions. Each of these steps requires a detailed analysis, since this plan

serves as the road map to follow in achieving marketing goals. Once the detailed

market analysis has been completed and marketing objectives have been established,

each element in the marketing mix must contribute to a comprehensive integrated

marketing program. Of course, the promotional program element (the focus of this

text) must be combined with all other program elements in such a way as to achieve

maximum impact.

MARKETING STRATEGY AND ANALYSIS

Any organization that wants to exchange its products or services in the marketplace

successfully should have a strategic marketing plan to guide the allocation of its resources. A strategic marketing plan usually evolves from an organization’s overall

corporate strategy and serves as a guide for specific marketing programs and policies.

LO 02-1

FIGURE 2–1

Marketing and Promotions Process Model

Marketing Strategy and

Analysis Target Marketing

Process Marketing Planning

Program Development Target Market

Promotion to trade

Purchase

Promotion to final buyer

Opportunity analysis

Identifying markets

Market segmentation

Selecting a target market

Positioning through

marketing strategies

Competitive analysis

Target marketing

Product decisions

Pricing decisions

Channel-of- distribution decisions

Promotional decisions • Advertising • Direct marketing • Interactive marketing • Sales promotion • Publicity and public relations • Personal selling

Ultimate consumer • Consumers • Businesses

Resellers

Digital/ interactive

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44 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

As we noted earlier, marketing strategy is based on a situation analysis—a detailed

assessment of the current marketing conditions facing the company, its product lines,

or its individual brands. From this situation analysis, a firm develops an understand-

ing of the market and the various opportunities it offers, the competition, and the

market segments or target markets the company wishes to pursue. We examine each step of the marketing strategy and planning in this chapter.

Opportunity Analysis A careful analysis of the marketplace should lead to alternative market opportuni-

ties for existing product lines in current or new markets, new products for current

markets, or new products for new markets. Market opportunities are areas where there are favorable demand trends, where the company believes customer needs

and opportunities are not being satisfied, and where it can compete effectively. The

Manischewitz company—you may have heard the ad slogan “Man-O-Manischewitz!

What a wine!”—a marketer of kosher foods, has revived its decades-old slogan to

take advantage of a new marketing opportunity. Based on research that showed

that four out of five buyers of kosher foods are not traditional Jewish consumers,

Manischewitz has increased its marketing efforts in an attempt to capture more

of the mainstream market. Knowing that there has been an increase in interest in

ethnic foods and health consciousness and that, as a result of the recession, more

consumers are eating meals at home, the company hopes to reach more consum-

ers ( Exhibit  2–1 ). The company’s new IMC program includes a multimillion-dollar

advertising budget, web programs, in-store promotions, a “Cook Off,” and public

relations activities designed to promote its kosher food line. 1

A company usually identifies market opportunities by carefully examining the

marketplace and noting demand trends and competition in various market segments.

A market can rarely be viewed as one large homogeneous group of customers;

rather, it consists of many heterogeneous groups, or segments. In recent years, many

companies have recognized the importance of tailoring their marketing to meet the

needs and demand trends of different market segments.

For example, different market segments in the per-

sonal computer (PC) industry include the home, govern-

ment, education, science, and business markets. These

segments can be even further divided. The business

market consists of both small companies and large cor-

porations; the education market can range from elemen-

tary schools to colleges and universities. A company

that is marketing its products in the auto industry must

decide in which particular market segment or segments

it wishes to compete. This decision depends on the

amount and nature of competition the brand will face

in a particular market. Many auto companies are now

competing in the hybrid car market, offering a variety

of models ( Exhibit 2–2 ). A competitive analysis is an

important part of marketing strategy development and

warrants further consideration.

Competitive Analysis In developing the firm’s marketing strategies and plans

for its products and services, the manager must carefully

analyze the competition to be faced in the marketplace.

This may range from direct brand competition (which

can also include its own brands) to more indirect forms

of competition, such as product substitutes. For example,

growth in the bottled water market has led numerous

EXHIBIT 2–1

Manischewitz sees the mainstream market as an opportunity

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 45

companies to compete in this area

and offer different product varieties

( Exhibit 2–3 ).

At a more general level, marketers

must recognize they are competing for

the consumer’s discretionary income, so

they must understand the various ways

potential customers choose to spend

their money. The impact of the world-

wide economic downturn has made

manufacturers of luxury goods brands

rethink their marketing strategies. Sales

of luxury products fell in 2008 and again

in 2009. However, by 2012 the market

rebounded with growth expected to be

in the 6 to 7 percent range. 2

An important aspect of marketing strategy development is the search for a

competitive advantage , something special a firm does or has that gives it an edge over competitors. Ways to achieve a competitive advantage include having

quality products that command a premium price, providing superior customer ser-

vice, having the lowest production costs and lower prices, and dominating channels

of distribution. Competitive advantage can also be achieved through advertising

that creates and maintains product differentiation and brand equity, an example of

which was the long-running advertising campaign for Michelin tires, which stressed

security as well as performance. The strong brand images of Apple, Campbell’s

Soup, Nike, BMW, and McDonald’s give them a competitive advantage in their

respective markets.

Recently, there has been concern that some marketers have not been spending

enough money on advertising to allow leading brands to sustain their competitive

edge. Advertising proponents have been calling for companies to protect their brand

equity and franchises by investing more money in advertising instead of costly trade

promotions. Some companies, recognizing the important competitive advantage

strong brands provide, have been increasing their investments in them. Campbell

Soup Company introduced a new advertising campaign in an attempt to revitalize its

80-year-old V8 vegetable juice brand. Replicating the highly successful campaign of

the 1970s in which people got bopped on the head with the catchphrase “I could’ve

had a V8,” and stressing the brand’s health aspects while extending the product line,

Campbell’s saw double-digit sales gains in 2011 3 ( Exhibit 2–4 ).

Competitors’ marketing programs have a major impact on a firm’s marketing strat-

egy, so they must be analyzed and monitored. The reactions of competitors to a com-

pany’s marketing and promotional strategy are also very important. Competitors may

cut price, increase promotional spending, develop new brands, or attack one another

EXHIBIT 2–2

Many car companies now compete in the hybrid market

EXHIBIT 2–3 Sobe offers a variety of enhanced waters

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46 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

through comparative advertising ( Exhibit 2–5 ). One of the more intense

competitive rivalries is the battle between Coca-Cola and Pepsi. A

number of other intense competitive rivalries exist in the marketplace,

including Hertz and Avis, Ford and GM, and Apple and Samsung.

A final aspect of competition is the growing number of foreign com-

panies penetrating the U.S. market and taking business from domestic

firms. In products ranging from beer to cars to electronics, imports are

becoming an increasingly strong form of competition with which U.S.

firms must contend. As we now compete in a global economy, U.S.

companies must not only defend their domestic markets but also learn

how to compete effectively in the international marketplace.

Target Market Selection After evaluating the opportunities presented by various market segments,

including a detailed competitive analysis, the company may select one,

or more, as a target market. This target market becomes the focus of

the firm’s marketing effort, and goals and objectives are set according

to where the company wants to be and what it hopes to accomplish in

this market. As noted in Chapter 1, these goals and objectives are set in

terms of specific performance variables such as sales, market share, and

profitability. The selection of the target market (or markets) in which

the firm will compete is an important part of its marketing strategy

and has direct implications for its advertising and promotional efforts.

Recall from our discussion of the integrated marketing communications planning

program that the situation analysis is conducted at the beginning of the promotional

planning process. Specific objectives—both marketing and communications—are

derived from the situation analysis, and the promotional-mix strategies are devel-

oped to achieve these objectives. Marketers rarely go after the entire market with

one product, brand, or service offering. Rather, they pursue a number of different

strategies, breaking the market into segments and targeting one or more of these

segments for marketing and promotional efforts. This means different objectives may

be established, different budgets may be used, and the promotional-mix strategies

may vary, depending on the market approach used.

THE TARGET MARKETING PROCESS

Because few, if any, products can satisfy the needs of all

consumers, companies often develop different marketing

strategies to satisfy different consumer needs. The process

by which marketers do this (presented in Figure 2–2 ) is

referred to as target marketing and involves four basic steps: identifying markets with unfulfilled needs, segment-

ing the market, targeting specific segments, and positioning

one’s product or service through marketing strategies.

Identifying Markets When employing a target marketing strategy, the marketer

identifies the specific needs of groups of people (or seg-

ments), selects one or more of these segments as a target, and

develops marketing programs directed to each. This approach

has found increased applicability in marketing for a number

of reasons, including changes in the market (consumers are

becoming much more diverse in their needs, attitudes, and

LO 02-2

EXHIBIT 2–5

Competitors sometimes position themselves through comparative ads

EXHIBIT 2–4

V8 revitalizes its image

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 47

lifestyles); increased use of segmentation by competitors; and the fact that more

managers are trained in segmentation and realize the advantages associated with this

strategy. Perhaps the best explanation, however, comes back to the basic premise

that you must understand as much as possible about consumers to design marketing

programs that meet their needs most effectively.

Target market identification isolates consumers with similar lifestyles, needs, and the

like, and increases our knowledge of their specific requirements. The more marketers

can establish this common ground with consumers, the more effective they will be in

addressing these requirements in their communications programs and informing and/or

persuading potential consumers that the product or service offering will meet their needs.

Let’s use the beer industry as an example. Years ago, beer was just beer, with little

differentiation, many local distributors, and few truly national brands. The industry

began consolidating; many brands were assumed by the larger brewers or ceased to

exist. As the number of competitors decreased, competition among the major brewers

increased. To compete more effectively, brewers began to look at different tastes, life-

styles, and so on, of beer drinkers and used this information in their marketing strate-

gies. This process resulted in the identification of many market segments, each of

which corresponds to different customers’ needs, lifestyles, and other characteristics.

As you can see in Figure 2–3 , the beer market now consists of 10 segments with

numerous offerings available to each. 4 Most large brewers have product offerings in each

segment, competing with each other as well as smaller craft microbreweries ( Exhibit 2–6 ).

Each appeals to a different set of needs. Taste is certainly one; others include image,

cost, and the size of one’s waistline. A variety of other reasons for purchasing are also

operating, including the consumer’s social class, lifestyle, and economic status.

Marketers competing in nearly all product and service categories are constantly

searching for ways to segment their markets in an attempt to better satisfy customers’

needs. The remainder of this section discusses ways to approach this task.

Market Segmentation

It is not possible to develop marketing strategies for every consumer. Rather, the

marketer attempts to identify broad classes of buyers who have the same needs and

LO 02-3

FIGURE 2–2

The Target Marketing Process

Identifying markets with

unfulfilled needs

Determining market

segmentation

Selecting a market

to target

Positioning through marketing

strategies

Imports

Domestic specialties/drafts

Super premium

Premium regular

Light

Ice

Malt alternatives

Malt liquor

Popular regular

All others

Source: Ted Goldammer, The Brewer’s Handbook, 2nd ed. Apex Publishers, 2012.

FIGURE 2–3

The U.S. Beer Market

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48 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

will respond similarly to marketing actions. Market segmentation is dividing a market into distinct groups that (1) have common needs and (2) will respond simi-

larly to a marketing action.

The more marketers segment the market, the more precise is their understanding

of it. But the more the market becomes divided, the fewer consumers there are in

each segment. Thus, a key decision is, How far should one go in the segmentation

process? Where does the process stop? As you can see by the strategy taken in the

beer industry, it can go far!

In planning the promotional effort, managers consider whether the target segment

is substantial enough to support individualized strategies. More specifically, they

consider whether this group is accessible. Can it be reached with a communications

program? For example, you will see in Chapter 10 that in some instances there are

no media that can efficiently be used to reach some targeted groups. Or the pro-

motions manager may identify a number of segments but be unable to develop the

required programs to reach them. The firm may have insufficient funds to develop

the required advertising campaign, inadequate sales staff to cover all areas, or other

promotional deficiencies. After determining that a segmentation strategy is in order,

the marketer must establish the basis on which it will address the market. The fol-

lowing section discusses some of the bases for segmenting markets and demonstrates

examples of advertising and promotions applications.

Bases for Segmentation As shown in Figure 2–4 , several methods are avail- able for segmenting markets. Marketers may use one of the segmentation variables or

a combination of approaches. Consider the market segmentation strategy that might be

employed to market snow skis. The consumer’s lifestyle—active, fun-loving, enjoys

outdoor sports—is certainly important. But so are other factors, such as age (partici-

pation in downhill skiing drops off significantly at about age 30) and income (have

you seen the price of a lift ticket lately?), as well as marital status. Let us review the

bases for segmentation and examine some promotional strategies employed in each.

Geographic Segmentation In the geographic segmentation approach, markets are divided into different geographic units. These units may include nations, states,

EXHIBIT 2–6

MillerCoors offers a variety of beers

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 49

FIGURE 2–4 Some Bases for Market Segmentation

Main Dimension Segmentation Variables Typical Breakdowns

Customer Characteristics

Geographic Region Northeast; Midwest; South; West; etc.

City size Under 10,000; 10,000–24,999; 25,000–49,999; 50,000–99,999; 100,000–249,999; 250,000–499,999;

500,000–999,999; 1,000,000 or more

Metropolitan area Metropolitan statistical area (MSA)

Density Urban; suburban; small town; rural

Demographic Gender Male; female

Age Under 6 yrs; 6–11 yrs; 12–17 yrs; 18–24 yrs; 25–34 yrs; 35–44 yrs; 45–54 yrs; 55–64 yrs; 65–74 yrs; 75 yrs plus

Race African American; Asian; Hispanic; White/Caucasian; etc.

Life stage Infant; preschool; child; youth; collegiate; adult; senior

Birth era Baby boomer (1946–1964); generation X (1965–1976); baby boomlet/generation Y (1977–present)

Household size 1; 2; 3–4; 5 or more

Residence tenure Own home; rent home

Marital status Never married; married; separated; divorced; widowed

Socioeconomic Income <$15,000; $15,000–$24,999; $25,000–$34,999; $35,000– $49,999; $50,000–$74,999; $75,000–$99,999; $100,000 1 

Education Some high school or less; high school graduate (or GED); etc.

Occupation Managerial and professional specialty; technical, sales and administrative support; service; farming, forestry, and fishing

Psychographic Personality Gregarious; compulsive; introverted; aggressive; ambitious

Values (VALS) Actualizers; fulfilleds; achievers; experiencers; believers; strivers; makers; strugglers

Lifestyle (Claritas) Settled in; white picket fence; and 46 other household segments

Buying Situations

Outlet type In-store Department; specialty; outlet; convenience; supermarket; superstore/mass merchandiser; catalog

Direct Mail order/catalog; door-to-door; direct response; Internet

Benefits sought Product features Situation specific; general

Needs Quality; service; price/value; financing; warranty; etc.

Usage Usage rate Light user; medium user; heavy user

User status Nonuser; ex-user; prospect; first-time user; regular user

Awareness and intentions Product knowledge Unaware; aware; informed; interested; intending to buy; purchaser; rejection

Behavior Involvement Minimum effort; comparison; special effort

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50 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

counties, or even neighborhoods. Consumers often have different buying habits

depending on where they reside. Regional differences may exist in regard to food,

drinks, attitudes toward foreign products, and the like. For example, many companies

consider California a very different market from the rest of the United States and

have developed specific marketing programs targeted to the consumers in that state.

Other companies have developed programs targeted at specific regions. Exhibit  2–7

shows an ad for Cheerwine, just one of the regional soft drink “cult brands”—

along with Jackson Hole Huckleberry (Wyoming), Vernors (Michingan), and Moxie

(New England)—that have found success by marketing in regional areas (in this case,

the South). One company—Olde Brooklyn Beverage Company—even went so far as

to promote a brand based on a specific section of New York City, differentiating it

from bigger brands by promoting the product’s “Brooklyn Attitude.”

Demographic Segmentation Dividing the market on the basis of demographic variables such as age, sex, family size, education, income, and social class is called

demographic segmentation . Secret deodorant and the Lady Schick shaver are products that have met with a great deal of success by using the demographic variable

of sex as a basis for segmentation. iVillage, a website targeting women, may be one of

the most successful websites on the Internet ( Exhibit 2–8 ). It is interesting to note that

the top 10 websites for women are further segmented by age, lifestyle, and so forth.

Although market segmentation on the basis of demographics may seem obvious,

companies discover that they need to focus more attention on a specific demo-

graphic group. For example, IKEA—noting that more than 70 percent of its shop-

pers are women—has enhanced its store environment to be more “women friendly,”

as have Home Depot and Walmart. Dell Computers and Verizon (among others)

have discovered that this may not be as easy as it seems, as recent efforts by both

companies have achieved less than favorable results. 5, 6 As seen in the lead-in to this

chapter, companies are also finding it difficult to reach the millennial age segment.

A number of companies have begun to focus more attention on the baby boomer

EXHIBIT 2–7

Cheerwine is more popular in a specific geographic region

EXHIBIT 2–8

iVillage’s website is targeted at women

YTC 02–02

The Cheerwine story youtube.com/10ebelch

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 51

market—those 76 million Americans born between 1946

and 1964. Given their huge spending power, this age

segment has become more attractive to a number of

companies including travel agencies and pharmaceuti-

cal companies among others. Recognizing their need for

retirement planning, Wachovia has increased its market-

ing efforts to this segment. 7 AARP, The Magazine, is targeted to the 43 percent of the population who are

50 1 , and has over 37  million readers 8 (Exhibit 2–9).

This number is expected to constitute 45 percent of the

U.S. population by 2015. 9 IMC Perspective 2–1 shows

how other companies have marketed to this segment.

Other products that have successfully employed demo-

graphic segmentation include Dove (sex), Doan’s Pills (age),

Coca-Cola (race), Mercedes-Benz, Lexus, and BMW cars

(income), and Banquet prepackaged dinners (family size).

While demographics may still be the most common

method of segmenting markets, it is important to recog-

nize that other factors may be the underlying basis for

homogeneity and/or consumer behavior. The astute mar-

keter will identify additional bases for segmenting and

will recognize the limitations of demographics. As noted

by media strategist Jamie Beckland, many marketers

are relying less on demographics and more on psycho-

graphic profiling. 10

Psychographic Segmentation Dividing the market on the basis of personality, lifecycles, and/or lifestyles is referred to as psychographic segmentation . While there is some disagreement as to whether personality is a useful basis for segmenta-

tion, lifestyle factors have been used effectively. Many consider lifestyle the most

effective criterion for segmentation.

The determination of lifestyles is usually based on an analysis of the activities, inter-

ests, and opinions (AIOs) of consumers. These lifestyles are then correlated with the

consumers’ product, brand, and/or media usage. For many products and/or services, life-

styles may be the best discriminator between use and nonuse, accounting for differences

in food, clothing, and car selections, among numerous other consumer behaviors. 11

Psychographic segmentation has been increasingly more popular with the advent

of the values and lifestyles (VALS) program. Although marketers employed lifestyle

segmentation long before VALS and although a number of alternatives—for exam-

ple, PRIZM—are available, VALS remains one of the more popular options. VALS

2 divides Americans into eight lifestyle segments that exhibit distinctive attitudes,

behaviors, and decision-making patterns. VALS is also available for the Japan and

UK markets (both have six lifestyle segments). 12 The VALS 2 system is an excellent

predictor of consumer behaviors, and a number of companies now employ lifestyle

segmentation to position brands, determine value propositions, and select media.

Another form of psychographic analysis relies on the use of multiple data-

bases including social profile data (available through almost all social networks),

behavioral data (tracking users through their online behaviors), and lifecycle data

(stage of the consumer’s lifecycle, e.g., buying diapers, graduating high school,

etc.). Amazon.com has successfully used this strategy for some time, and others are now starting to see the advantages offered over traditional demographic profiling. 13

Behavioristic Segmentation Dividing consumers into groups according to their usage, loyalties, or buying responses to a product is behavioristic segmentation . For example, product or brand usage, degree of use (heavy vs. light), and/or brand

loyalty are combined with demographic and/or psychographic criteria to develop

profiles of market segments. In the case of usage, the marketer assumes that

EXHIBIT 2–9

AARP The Magazine targets the 50 1  segment

YTC 02–03

AARP Life @501 youtube.com/10ebelch

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52 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

IMC Perspective 2–1   > > > As Hispanic Market Grows, So Do Problems for Marketers

How important is the U.S. Hispanic market to marketers? Consider these facts: (1) Hispanics constitute 17 percent of the U.S population, numbering over 50 million; (2) they con- trol well over $1 trillion in buying power; (3) the Hispanic food market more than doubled between 2005 and 2010 and will constitute over 25 percent of the total retail food market by 2015; (4) by 2020 Hispanics will constitute 20 per- cent of the total U.S. population; and (5) they are younger than the rest of the U.S. general population. That’s the good news. There is no doubt that Hispanics constitute an attrac- tive market segment, and will for years to come.

Now for the bad news. Due to the diversity of this group, marketers are finding it extremely difficult to mar- ket to them. Their shopping behaviors differ markedly from the general population as they tend to be more careful, deliberate, and knowledgeable about products, spending more time considering the options. Latinos differ in other ways as well. Hispanics have a higher than average poverty level, are more likely to be bilingual, and are more likely to live in urban areas. At the same time they are consid- ered to be more “tech savvy” than the general population, with 45 percent owning smartphones (versus 34 percent for the general market) and are more likely to compare prices via mobile devices—but less likely to download coupons or apps or use QR codes. Unlike their general market counterparts, Latinos rarely do one-stop shopping for convenience and to save time, preferring to shop until they feel they get the best deal. They also like to shop close to home, preferring to deal with friends, family, and peers when they buy. While they were once considered to be fiercely brand loyal, this is no longer the case. Most importantly, the value to the family is first and foremost in the Latino purchase decision.

Given this diversity (and there are more differences than discussed here), what does the marketer need to do

to reach this lucrative segment of the population? Nestlé has found success by reaching out to Latina moms with an integrated bilingual strategy. The campaign “Echale Agua a Tu Vida” (“Put Water in Your Life”) for its Pure Life brand of water underscores the importance of healthy hydration and active lifestyles for the moms and their families. Among other tactics, Nestlé has teamed up with the U.S. Soccer Foundation, offering free soccer instruction and interactive and educational clinics for kids 5 to 12 in a number of cities in the United States. (Soccer is clearly the sport of choice to Hispanics.) Nestlé has employed TV personality Cristina Saralegui to be its spokesperson and has devoted a website to inspire moms to be healthier by incorporating water into their daily routines.

Dunkin’ Donuts has also launched a campaign targeted specifically to this segment. The theme of this campaign “Que estas tomando?” (“What are you drinking?”) also uses an integrated strategy employing Hispanic television, radio, social media, public relations, and in-store promotions as well as a Spanish-language website. The primary goal of the campaign, says John Castello, chief global marketing and innovation officer at Dunkin’ Brands, is to “reflect the importance and the loyalty of our Hispanic consumers.” For the first time ever the longtime tagline “America Moves with Dunkin’ ” will also appear in Spanish (“America se Mueve con Dunkin’ ”).

Old Navy has taken a different approach through its introduction of a six-part online mini-novela series empha- sizing fashion. “Estilos Robados” (“Stolen Styles”) was cre- ated and produced by Telemundo, which is also responsible for the marketing of the series. Each episode ends with a showing of a variety of Old Navy clothes with their price tags and a 25 percent coupon, though Old Navy is never mentioned in the script. Ads promoting the show appear on Telemundo’s TV network, website, and mobile sites, as well as on Old Navy’s Spanish YouTube channel and on outdoor billboards in heavily Hispanic areas. Thousands of flyers have been distributed to promote the series in Old Navy stores and ads appear in numerous print magazines that reach a large Hispanic audience. And, of course, there are postings on Facebook.

Companies have clearly discovered the value and impor- tance of the Hispanic market. The companies here seem to have developed strategies to reach this market as well.

Sources: Laura Wood, “Marketing to US Hispanics—Social, Demographic, Economic and Cultural Intricacies,” Business Wire, July 19, 2012; Terry Mangano, “As Hispanic Population Grows, So Too Do Challenges for Marketers—5 Insights,” Promo (online), January 23, 2012; Karlene Lukovitz, “Dunkin’ Launches Multi-Platform Hispanic Campaign,” Marketing Daily, March 29, 2012; Allison Cerra, “Nestlé Pure Life Centers ‘Echale Agua a Tu Vida’ Campaign around Latina Moms,” www.drugstorenews.com , August 16, 2011;———“In Hispanic Effort, Old Navy Backs Online Mini-Novela “Stolen Styles,” www.adage.com , October 17, 2011.

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 53

nonpurchasers of a brand or product who have the same characteristics as purchas-

ers hold greater potential for adoption than nonusers with different characteristics.

As you will see in Chapter 15, many companies target consumers through social

media like Facebook based on behavioristic segmentation.

Degree of use relates to the fact that a few consumers may buy a disproportionate

amount of many products or brands. Industrial marketers refer to the 80–20 rule , meaning 20 percent of their buyers account for 80 percent of their sales volume.

Again, when the characteristics of these users are identified, targeting them allows for

a much greater concentration of efforts and less wasted time and money. The same

heavy-half strategy is possible in the consumer market as well. The majority of pur-

chases of many products (e.g., soaps and detergents, shampoos, cake mixes, beer, dog

food, colas, bourbon, and toilet tissue—yes, toilet tissue!) are accounted for by a small

proportion of the population. Perhaps you can think of some additional examples.

Benefit Segmentation In purchasing products, consumers are generally trying to satisfy specific needs and/or wants. They are looking for products that provide

specific benefits to satisfy these needs. The grouping of consumers on the basis of

attributes sought in a product is known as benefit segmentation and is widely used ( Exhibit 2–10 ).

Consider the purchase of a wristwatch. While you might buy a watch for particu-

lar benefits such as accuracy, water resistance, or stylishness, others may seek a dif-

ferent set of benefits. Watches are commonly given as gifts for birthdays, Christmas,

and graduation. Certainly some of the same benefits are considered in the purchase

of a gift, but the benefits the purchaser derives are different from those the user will

obtain. Ads that portray watches as good gifts stress different criteria to consider

in the purchase decision. The next time you see an ad or commercial for a watch,

think about the basic appeal and the benefits it offers.

The Process of Segmenting a Market The segmentation process devel- ops over time and is an integral part of the situation analysis. It is in this stage that

marketers attempt to determine as much as they can about the market: What needs are

not being fulfilled? What benefits are being sought? What characteristics distinguish

among the various groups seeking these products and services? A number of alterna-

tive segmentation strategies may be used. Each time a specific segment is identified,

additional information is gathered to help the marketer understand this group.

For example, once a specific segment is identified on the basis of benefits sought,

the marketer will examine psychographic characteristics and demographics to help

characterize this group and to further its understanding of this market.

Behavioristic segmentation criteria will also be examined. In the purchase

of ski boots, for example, specific benefits may be sought—flexibility or

stiffness—depending on the type of skiing the buyer does. All this informa-

tion will be combined to provide a complete profile of the skier.

A number of companies offer research services to help marketing

managers define their markets and develop strategies targeting them. The

VALS and PRIZM systems discussed earlier are just a few of the ser-

vices offered; others use demographic, socioeconomic, and geographic

data to cluster consumer households into distinct “microgeographic” seg-

ments. One of these companies, Nielsen Claritas, provides demographic

and psychographic profiles of geographic areas as small as census track,

block group, or zip code 1 4. Users of the system include Ace Hardware,

Walmart, and numerous others. (See Exhibit 2–11 .)

Selecting a Target Market The outcome of the segmentation analysis will reveal the market opportu-

nities available. The next phase in the target marketing process involves

EXHIBIT 2–10

AT&T offers a benefit to those who wish to have worldwide coverage on their cell phones

YTC 02–04

Old Navy Channel youtube.com/10ebelch

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54 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

two steps: (1) determining how many segments to enter and (2) determining which

segments offer the most potential.

Determining How Many Segments to Enter Three market coverage alternatives are available. Undifferentiated marketing involves ignoring segment differences and offering just one product or service to the entire market. For exam-

ple, when Henry Ford brought out the first assembly-line automobile, all potential

consumers were offered the same basic product: a black Ford. For many years,

Coca-Cola offered only one product version. While this standardized strategy saves

the company money, it does not allow the opportunity to offer different versions of

the product to different markets.

Differentiated marketing involves marketing in a number of segments, devel- oping separate marketing strategies for each. For example, the Marriott hotel chain

offers a variety of customer services for different travelers, including vacation, busi-

ness, long or short stay, and so forth.

The third alternative, concentrated marketing , is used when the firm selects one segment and attempts to capture a large share of this market. Volkswagen used

this strategy in the 1950s when it was the only major automobile company compet-

ing in the economy-car segment in the United States. While Volkswagen has now

assumed a more differentiated strategy, other companies have found the concentrated

EXHIBIT 2–11

Nielsen Claritas provides cluster profiles for marketers

04 Young Digerati

07 Money & Brains

16 Bohemian Mix

26 The Cosmopolitans

29 American Dreams

U1

URBAN UPTOWN

31 Urban Achievers

40 Close-In Couples

54 Multi-Culti Mosaic

U2

MIDTOWN MIX

59 Urban Elders

61 City Roots

65 Big City Blues

66 Low-Rise Living

U3

URBAN CORES

URBAN

01 Upper Crust

02 Blue Blood Estates

03 Movers & Shakers

06 Winner’s Circle

S1

ELITE SUBURBS

08 Executive Suites

14 New Empty Nests

15 Pools & Patios

17 Beltway Boomers

18 Kids & Cul-de-Sacs

19 Home Sweet Home

S2

THE AFFLUENTIALS

21 Gray Power

22 Young Influentials

30 Suburban Sprawl

36 Blue-Chip Blues

39 Domestic Duos

S3

MIDDLEBURBS

44 New Beginnings

46 Old Glories

49 American Classics

52 Suburban Pioneers

S4

INNER SUBURBS

SUBURBAN

10 Second City Elite

12 Brite Lites, Li’l City

13 Upward Bound

C1

SECOND CITY SOCIETY

24 Up-and-Comers

27 Middleburg

Managers

34 White Picket

Fences

35 Boomtown Singles

41 Sunset City Blues

C2

CITY CENTERS

47 City Startups

53 Mobility Blues

60 Park Bench Seniors

62 Hometown Retired

63 Family Thrifts

C3

MICRO-CITY BLUES

SECOND CITY

05 Country Squires

09 Big Fish, Small Pond

11 God’s Country

20 Fast-Track Families

25 Country Casuals

T1

LANDED GENTRY

23 Greenbelt Sports

28 Traditional Times

32 New Homesteaders

33 Big Sky Families

37 Mayberry-ville

T2

COUNTRY COMFORT

38 Simple Pleasures

42 Red, White & Blues

43 Heartlanders

45 Blue Highways

50 Kid Country, USA

51 Shotguns & Pickups

T3

MIDDLE AMERICA

48 Young & Rustic

55 Golden Ponds

56 Crossroads Villagers

57 Old Milltowns

58 Back Country Folks

64 Bedrock America

T4

RUSTIC LIVING

TOWN AND COUNTRY

HIGH

LOW

$

PRIZM Social Groups

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 55

strategy effective. For example, Rolls-Royce has focused its automo-

bile business exclusively on the high-income segment, while L’Oréal

competes in the cosmetics and beauty segment.

Determining Which Segments Offer Potential The second step in selecting a market involves determining the most

attractive segment. The firm must examine the sales potential of the

segment, the opportunities for growth, the competition, and its own

ability to compete. Then it must decide whether it can market to this

group. Stories abound of companies that have entered new markets

only to find their lack of resources or expertise would not allow them

to compete successfully. After selecting the segments to target and determining that

it can compete, the firm proceeds to the final step in Figure 2–2 : the market posi-

tioning phase.

Market Positioning Positioning has been defined as “the art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it

meaningfully apart from competition.” 14 As you can see, the position of the product,

service, or even store is the image that comes to mind and the attributes consumers

perceive as related to it. This communication occurs through the message itself,

which explains the benefits, as well as the media strategy employed to reach the

target group. Take a few moments to think about how some products are positioned

and how their positions are conveyed to you. For example, what comes to mind

when you hear the name Mercedes, Dr Pepper, or Apple? What about department

stores such as Neiman Marcus, Sears, and JCPenney? Now think of the ads for

each of these products and companies. Are their approaches different from their

competitors’? When and where are these ads shown? What is the message they are

trying to communicate?

Approaches to Positioning Positioning strategies generally focus on either the consumer or the competition. While both approaches involve the asso-

ciation of product benefits with consumer needs, the former does so by linking

the product with the benefits the consumer will derive or creating a favorable

brand image, as shown in Exhibit 2–12 . The latter approach posi-

tions the product by comparing it and the benefit it offers versus

the competition. Products like Scope Outlast mouthwash (positioning

itself as five times longer lasting than competitors) and Burt’s Bees

(positioned as a better value than its competitors) have employed this

strategy successfully ( Exhibit 2–13 ).

Many advertising practitioners consider market positioning the most

important factor in establishing a brand in the marketplace. David

Aaker and John Myers note that the term position has been used to indicate the brand’s or product’s image in the marketplace. 15 Jack Trout

and Al Ries suggest that this brand image must contrast with those of

competitors. They say, “In today’s marketplace, the competitors’ image

is just as important as your own. Sometimes more important.” 16 Trout

notes that a good branding strategy cannot exist without positioning.

He further states that branding is about the process of building a brand,

while positioning is about putting that brand in the mind of the con-

sumer. 17 Thus, positioning, as used in this text, relates to the image of the product and/or brand relative to competing products or brands. The

position of the product or brand is the key factor in communicating

the benefits it offers and differentiating it from the competition. Let us

now turn to strategies marketers use to position a product.

LO 02-4

EXHIBIT 2–12

Hilton uses positioning that focuses on the consumer

EXHIBIT 2–13

Positioning that focuses on the competition

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56 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

DEVELOPING A POSITIONING STRATEGY

A number of positioning strategies might be employed in developing

a promotional program. David Aaker and J. Gary Shansby discuss

six such strategies: positioning by product attributes, price/quality,

use, product class, users, and competitor. 18 Aaker and Myers add

one more approach, positioning by cultural symbols. 19

Positioning by Product Attributes and Benefits A com- mon approach to positioning is setting the brand apart from

competitors on the basis of the specific characteristics or ben-

efits offered. Sometimes a product may be positioned on more

than one product benefit. Marketers attempt to identify salient attributes (those that are important to consumers and are the basis for making a purchase decision). For example, when Apple

first introduced its computers, the key benefit stressed was ease

of use—an effective strategy, given the complexity of computers in the market at

that time. While Apple still maintains this position, it is innovative products that

comes to mind as well. More recently, there have been a number of new water

products that enhance hydration, help the body to exert physical power, increase

immunities, and so on. 5-hour ENERGY positions itself as a sugar-free energy

shot ( Exhibit 2–14 ).

Positioning by Price/Quality Marketers often use price/quality characteristics to position their brands. One way they do this is with ads that reflect the image

of a high-quality brand where cost, while not irrelevant, is considered secondary

to the quality benefits derived from using the brand. Premium brands positioned

at the high end of the market use this approach to positioning.

Another way to use price/quality characteristics for positioning is to focus on

the quality or value offered by the brand at a very competitive price. For example,

Kohl’s takes the position of a family-oriented speciality store offering good value

( Exhibit 2–15 ). Remember that although price is an important consideration, the prod-

uct quality must be comparable to, or even better than, competing

brands for the positioning strategy to be effective.

Positioning by Use or Application Another way to commu- nicate a specific image or position for a brand is to associate it

with a specific use or application. The Intuit ad shown in Exhibit

2–16 is specifically targeted to small business owners and/or

entrepreneurs.

While this strategy is often used to enter a market on the basis

of a particular use or application, it is also an effective way to

expand the usage of a product. For example, Arm & Hammer bak-

ing soda has been promoted for everything from baking to reliev-

ing heartburn to eliminating odors in carpets and refrigerators

( Exhibit  2–17 ).

Positioning by Product Class Often the competition for a prod- uct comes from outside the product class. For example, airlines

know that while they compete with other airlines, trains and buses

are also viable alternatives. Amtrak has positioned itself as an

alternative to airplanes, citing cost savings, enjoyment, and other

advantages. Dole fruit juices encourage consumers to “drink their

fruits,” claiming that 8 ounces of juice is the equivalent of two

fruits. V8 promotes drinking one’s vegetables ( Exhibit 2–18 ).

EXHIBIT 2–14 5–hour ENERGY positions the product as an energy shot

EXHIBIT 2–15

Kohl’s positions its brand as having good value for the right price

YTC 02–05

5–hour ENERGY Commercials youtube.com/10ebelch

YTC 02–06

Candies Commercials youtube.com/10ebelch

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 57

Rather than positioning against another brand, an

alternative strategy is to position oneself against

another product category. The California Avocado

Information Bureau launched a major IMC cam-

paign to more strongly position itself as a fruit (as

opposed to a vegetable). The print, radio, outdoor,

and online campaign took a humorous approach,

positioning the avocado as a “fun fruit,” while at

the same time demonstrating the healthy advan-

tages relative to other fruits and vegetables, and

providing numerous products for which it might

become an alternative, including cream cheese, but-

ter, and dips. Copy points for the ads are provided

by the bureau to retailers A Mountain High yogurt

ad positions the product as a substitute for other

baking ingredients.

Positioning by Product User Positioning a product by associating it with a particular user

or group of users is yet another approach. An

example would be the DC Shoes ad shown in

Exhibit 2–19 . This ad emphasizes identification

or association with a specific group, in this case,

skateboarders.

Positioning by Competitor Competitors may be as important to positioning strategy as a firm’s

own product or services. Advertisers used to think it was a cardinal sin to men-

tion a competitor in their advertising. However, in today’s market, an effective

positioning strategy for a product or brand may focus on specific competitors.

This approach is similar to positioning by product class, although in this case the

competition is within the same product category. Perhaps the best-known example

of this strategy was Avis, which positioned itself against the car-rental leader,

Hertz, by stating, “We’re number two, so we try harder.” The billboard shown

earlier ( Exhibit 2–5 ) is an example of positioning

a brand against the competition. When position-

ing by competitor, a marketer must often employ

another positioning strategy as well to differentiate

the brand.

Positioning by Cultural Symbols Aaker and Myers include an additional positioning strategy

in which cultural symbols are used to differentiate

brands. When it is associated with a meaningful

symbol, the brand is easily identifiable and dif-

ferentiated from others. Examples are the Jolly

Green Giant, the Keebler elves, Speedy Alka-

Seltzer, the Pillsbury Doughboy, the Wells Fargo

stagecoach, Ronald McDonald, Chiquita Banana,

and Mr. Peanut. Tony the Tiger (who has been used

by Kellogg’s for over 60 years—with a few minor

facelifts) clearly qualifies as a cultural symbol

( Exhibit 2–20 ). Each of these symbols has success-

fully differentiated the product it represents from

competitors’.

EXHIBIT 2–16

Intuit offers products specifically useful to small business owners

EXHIBIT 2–17

Arm & Hammer baking soda demonstrates numerous product uses

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58 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

Repositioning One final positioning strategy involves altering or changing a product’s or brand’s position. Repositioning a product usually occurs because of declining or stagnant sales or because of anticipated opportunities in other market

positions. Repositioning is often difficult to accomplish because of entrenched

perceptions about and attitudes toward the product or brand. IMC Perspective

2–2 discusses an interesting example of a long-established brand taking a new

direction.

After a sales slump that began in 2008, Gatorade—once the world’s most popu-

lar sports drink—changed its name to “G2,” reduced the size of its lightning bolt

trademark, and began to broaden its appeal to other markets ( Exhibit 2–21 ). As

noted by David Burwick, CEO of PepsiCo North America, “The functional dif-

ference is that we’re going from a brand that speaks to really elite athletes to a

brand that speaks for the athlete in everyone.” While the repositioning originally

had disappointing results, within a few years significant brand share gains were

achieved. 20,21

EXHIBIT 2–18

V8 positions itself as a drink that substitutes for vegetables

EXHIBIT 2–19 DC positions by product user—in this case, skateboarders

EXHIBIT 2–20

Tony the Tiger has become a cultural symbol

EXHIBIT 2–21

Gatorade has made changes to appeal to a broader market

YTC 02–07

DC Shoes Channel youtube.com/10ebelch

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IMC Perspective 2–2  >  >  > Repositioning: Sometimes It Works, Sometimes Not

What do MTV, JCPenney, and La-Z-Boy have in common? The answer? Each of these iconic brands has changed its image—or at least has attempted to change it—by repositioning.

MTV At the time there was nothing like it, and perhaps there never will be again. To some it is a shame that it’s gone, to oth- ers it’s a relief. Nevertheless, love it or hate it, one of the most powerful networks to ever hit cable television is now 30 years old. In the first week of February 2010, MTV formally changed its logo, dropping the part that said Music Television. In fact, the MTV of today is a reality TV channel, only occasionally airing something that has to do with music.

When MTV debuted in 1981, “the channel confirmed the concept of cable niche programming, reshaped music mar- keting, and became a symbol of youth culture,” notes Bryan Reesman of Billboard magazine. Showing little more than music videos and DJs, music lovers tuned in in droves. By the end of its first year, MTV had over 2.1 million subscrib- ing households. By its second year, the “I Want My MTV” ad campaign was in full force, featuring a number of rock stars, including Pete Townshend, Stevie Nicks, Mick Jagger, and David Bowie, among others. Michael Jackson premiered both “Beat It” and “Thriller” on MTV in 1983. MTV had taken off, and parents everywhere were becoming concerned with their children’s “addiction” to music videos.

By the mid-80s things started to change. A British sitcom was added to the programming, as was support for young comedians such as Chris Rock, Ben Stiller, and Jon Stewart. The network also started to engage in philanthropic events by airing 17 hours of the Live Aid concert, running safe sex commercials, and showing “Just Say No” antidrug spots. Eventually, MTV started running its own “Rock Against Drugs”—the first of many attempts to engage viewers with social programming. One of MTV’s most popular shows fea- turing new artists, Unplugged, debuted in the early 1990s. By the late 1990s numerous programs were added, with less time for rock videos. The number of antidrug and other social marketing programs also increased.

Throughout the early years of the 21st century, MTV contin- ued to broaden both its programming and its social involve- ment, launched new channels (there were 64 in 2011), and expanded internationally. The network had clearly begun to reposition itself as something other than just a music channel. Music stars like Madonna, Michael Jackson, and Britney Spears have been replaced by “Snooki” Polizzi from the reality show Jersey Shore and Heidi Montag from The Hills. As noted by Scott Collins, “MTV has evolved into a reality channel that occa- sionally runs programs that have to do with music.” But why?

David Howe, president of SyFy (which itself used to be the Sci-Fi Channel), says that MTV—like Sci-Fi—realized that being just music television was too limiting, and current view- ers didn’t relate to it as a music channel anymore. Instead,

the programming has changed MTV, as it no longer competes with VH1 and Fuse but competes with other reality programs more, and the logo is impor- tant in communicating that fact.

JCPenney Once again—as it did in 2010 and 2011—JCPenney announced that it was repositioning the brand in 2012, hoping that the third time will be the charm. With a new pricing strat- egy, thousands fewer employees, and yet another new logo, the retailer’s new president said that the store “is rede- fining the JCPenney brand to become a store for all Americans, by offering

an experience they cannot get anywhere else.” To do this, the number of sales promotions were drastically cut, replaced by an everyday low price policy. New partner- ships were established, including a Martha Stewart line of clothing, as well as an exclusive line with fashion designer Nanette Lepore. Ellen DeGeneres (once a JCPenny employee) was the new brand ambassador, in hopes that she will inject new life and excitement to the brand. The logo also has been changed for the third time in three years. All of these strategies were designed to help JCPenney hold on to its existing customers, and hope- fully attract even more. Unfortunately, the strategy did not work. At the time of this writing. Penneys removed its president and is seeking yet another positioning strategy.

La-Z-Boy JCPenney probably wishes it had La-Z-Boy’s problem. As noted by trade publication Brandweek, the strong brand recognition enjoyed by the furniture com- pany may actually be a liability. The problem is that while La-Z-Boy makes sofas, ottomans, love seats, and section- als, the brand has become synonymous with recliners, and the other stationary products don’t reap the benefits of the strong brand name. So La-Z-Boy hired Brooke Shields to be its new spokesperson, hoping that her celebrity status would gain attention for the new message that the company has an entire furniture line—not just reclin- ers. A series of five new commercials to be shown on A&E, Animal Planet, Bravo, and CNN (among others) will be accompanied by print ads in magazines that include Better Homes and Gardens, Good Housekeeping, and House Beautiful, and a strong public relations effort.

Sometimes repositioning is desirable to maintain success. Sometimes it is a requirement to stay afloat. It is always a dif- ficult strategy to implement.

Sources: Andrew Hampp, “Unplugged to Return to MTV, Courtesy Starburst,” Advertising Age, March 4, 2010; Scott Collins, “The Network Name Game,” Los Angeles Times, February 13, 2010, pp. D1,12; Bryan Reesman, “Timeline: Rewinding 25 Years of MTV History,” Billboard, September 2, 2008, pp. 36–45; Mark J. Miller, “JC Penney Re-Refreshes Brand—Third Time’s the Charm?” www. brandchannel.com , January 26, 2012, pp. 1–6; Stuart Elliott, “La-Z-Boy, Meet Brooke Shields,” The New York Times, November 29, 2010, pp. 1–5.

YTC 02–08

MTV Channel youtube.com/10ebelch

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60 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

Before leaving this section, you might stop to think for a moment about the posi-

tioning (and repositioning) strategies pursued by different companies. Any successful

product that comes to mind probably occupies a distinct market position.

DEVELOPING THE MARKETING PLANNING PROGRAM

The development of the marketing strategy and selection of a target market(s) tell

the marketing department which customers to focus on and what needs to attempt

to satisfy. The next stage of the marketing process involves combining the various

elements of the marketing mix into a cohesive, effective marketing program. Each

marketing-mix element is multidimensional and includes a number of decision areas.

Likewise, each must consider and contribute to the overall IMC program. We now

examine product, price, and distribution channels and how each influences and inter-

acts with the promotional program.

Product Decisions An organization exists because it has some product, service, or idea to offer con-

sumers, generally in exchange for money. This offering may come in the form of

a physical product (such as a soft drink, pair of jeans, or car), a service (banking,

airlines, or legal assistance), a cause (Special Olympics, American Cancer Society),

or even a person (a political candidate). The product is anything that can be marketed

and that, when used or supported, gives satisfaction to the individual.

A product is not just a physical object; it is a bundle of benefits or values that satisfies the needs of consumers. The needs may be purely functional, or

they may include social and psychological benefits. For example, the campaign

for Michelin tires stresses the quality built into Michelin tires (value) as well as

their performance and durability (function). The term product symbolism refers to what a product or brand means to consumers and what they experience in

purchasing and using it. 22 For many products, strong symbolic features and social

and psychological meaning may be more important than functional utility. 23 For

example, designer clothing such as Versace, Gucci, and Prada is often purchased

on the basis of its symbolic meaning and image, particularly by teenagers and

young adults. Advertising plays an important role in developing and maintaining

the image of these brands.

Product planning involves decisions not only about the item itself, such as

design and quality, but also about aspects such as service and warranties as well

as brand name and package design. Consumers look beyond the reality of the

product and its ingredients. The product’s quality, branding, packaging, and even

the company standing behind it all contribute to consumers’ perceptions. 24 In an

effective IMC program, advertising, branding, and packaging are all designed to

portray the product as more than just a bundle of attributes. All are coordinated

to present an image or positioning of the product that extends well beyond its

physical attributes.

Branding Branding is about building and maintaining a favorable identity and image of the company and/or its products or services in the mind of the consumer.

The goal of branding is to (1) build and maintain brand awareness and interest,

(2) develop and enhance attitudes toward the company, product, or service, and

(3) build and foster relationships between the consumer and the brand. The brand identity consists of the combination of the name, logo, symbols, design, packag- ing, and image of associations held by consumers. Think for a minute about the

LO 02-5

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 61

ads for Nike; the product benefits and attributes are usually not even

mentioned—yet information about the brand is communicated effectively.

One important role of advertising in respect to branding strategies

is creating and maintaining brand equity , which can be thought of as an intangible asset of added value or goodwill that results from the

favorable image, impressions of differentiation, and/or the strength of

consumer attachment to a company name, brand name, or trademark.

Brand equity allows a brand to earn greater sales volume and/or higher

margins than it could without the name, providing the company with

a competitive advantage. The strong equity position a company and/or

its brand enjoys is often reinforced through advertising. For example,

Rolex watches command a premium price because of their high quality

as well as the strong brand equity they have developed through advertis-

ing ( Exhibit 2–22 ).

Packaging Packaging is another aspect of product strategy that has become increasingly important. Traditionally, the package provided func-

tional benefits such as economy, protection, and storage. However, the

role and function of the package have changed because of the self-service

emphasis of many stores and the fact that more and more buying decisions

are made at the point of purchase. One study estimated that as many as two-thirds

of all purchases made in the supermarket are unplanned. The package is often the

consumer’s first exposure to the product, so it must make a favorable first impres-

sion. A typical supermarket has more than 30,000 items competing for attention.

Not only must a package attract and hold the consumer’s attention, but it must also

communicate information on how to use the product, divulge its composition and

content, and satisfy any legal requirements regarding disclosure. Moreover, many

firms design the package to carry a sales promotion message

such as a contest, sweepstakes, or premium offer.

Many companies view the package as an important way to

communicate with consumers and create an impression of the

brand in their minds. In other instances packages can extend

the brand by offering new uses ( Exhibit 2–23 ). Design fac-

tors such as size, shape, color, and lettering all contribute to

the appeal of a package and can be as important as a com-

mercial in determining what goes from the store shelf to the

consumer’s shopping cart. Many companies use packaging to

create a distinctive brand image and identity. The next time

you walk by a perfume counter, stop to look at the many

unique package designs (see Exhibit 2–24 ).

Price Decisions The price variable refers to what the consumer must give up to purchase a product or service. While price is discussed in

terms of the dollar amount exchanged for an item, the cost of

a product to the consumer includes time, mental activity, and

behavioral effort. 25 The marketing manager is usually con-

cerned with establishing a price level, developing pricing poli-

cies, and monitoring competitors’ and consumers’ reactions

to prices in the marketplace. A firm must consider a number

of factors in determining the price it charges for its product

or service, including costs, demand factors, competition, and

perceived value. From an IMC perspective, the price must be

EXHIBIT 2–22

Rolex creates strong brand equity through advertising

EXHIBIT 2–23

This ad for WD-40 shows just a few of the many uses for the product

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62 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

consistent with the perceptions of the product, as well as the commu-

nications strategy. Higher prices, of course, will communicate a higher

product quality, while lower prices reflect bargain or “value” perceptions.

A product positioned as highest quality but carrying a lower price than

competitors would only confuse consumers. In other words, the price, the

advertising, and the distribution channels must present one unified voice

speaking to the product’s positioning.

Relating Price to Advertising and Promotion Factors such as product quality, competition, and advertising all interact in deter-

mining what price a firm can and should charge. Studies have shown that

pricing and advertising strategies go together. High relative ad expendi-

tures should accompany premium prices, and low relative ad expenditures

should be tailored to low prices. These results obviously support the IMC

perspective that one voice must be conveyed. In a recent and compre-

hensive study, it was shown that exposure to television ads reduces con-

sumers’ tendencies to react to price changes. The study further showed

that heavy users of the product category were most likely to have their

sensitivities reduced. 26

Distribution Channel Decisions As consumers, we generally take for granted the role of marketing intermediaries

or channel members. If we want a six-pack of soda or a box of detergent, we can

buy it at a supermarket, a convenience store, or even a drugstore. Manufacturers

understand the value and importance of these intermediaries.

One of a marketer’s most important marketing decisions involves the way it

makes its products and services available for purchase. A firm can have an excel-

lent product at a great price, but it will be of little value unless it is available where

the customer wants it, when the customer wants it, and with the proper support and

service. Marketing channels , the place element of the marketing mix, are “sets of interdependent organizations involved in the process of making a product or service

available for use or consumption.” 27

The distribution strategy should take into consideration the communication

objectives and the impact that the channel strategy will have on the IMC program.

Stewart and colleagues discuss the need for “integrated channel management,” which

“reflects the blurring of the boundaries of the communications and distribution func-

tions.” 28 Consistent with the product and pricing decisions, where the product is

distributed will send a communications message. Does the fact that a product is sold

at Neiman Marcus or Saks convey a different message regarding its image than if it

were distributed at Kmart or Walmart? If you think about it for a moment, the mere

fact that the product is distributed in these channels communicates an image about

it in your mind. Stewart gives examples of how channel elements contribute to

communication—for example, grocery store displays, point-of-purchase merchandis-

ing, and shelf footage. The distribution channel in a well-integrated marketing pro-

gram serves as a form of reminder advertising. The consumer sees the brand name

and recalls the advertising. (Think about the last time you passed a McDonald’s.

Did it remind you of any of McDonald’s ads?)

A company can choose not to use any channel intermediaries but, rather, to sell to

its customers through direct channels . This type of channel arrangement is some- times used in the consumer market by firms using direct-selling programs, such as

Avon, Tupperware, and Mary Kay, or firms that use direct-response advertising, tele-

marketing, or the Internet to sell their products. Direct channels are also frequently

used by manufacturers of industrial products and services, which are often selling

expensive and complex products that require extensive negotiations and sales efforts,

as well as service and follow-up calls after the sale.

EXHIBIT 2–24

This packaging creates product image

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 63

Chapter 15 provides a discussion of the role of the Internet in an IMC program.

As will be seen, the Internet is relied upon by many companies as a direct channel

of distribution, since they offer products and services for sale on their websites.

Amazon.com and Barnesandnoble.com are just two of the many examples of such efforts.

Most consumer-product companies distribute through indirect channels , usually using a network of wholesalers (institutions that sell to other resellers) and/or retail-

ers (which sell primarily to the final consumer).

Developing Promotional Strategies: Push or Pull? Most of you are aware of advertising and other forms of promotion directed toward

ultimate consumers or business customers. We see these ads in the media and are

often part of the target audience for the promotions. In addition to developing a

consumer marketing mix, a company must have a program to motivate the chan-

nel members. Programs designed to persuade the trade to stock, merchandise, and

promote a manufacturer’s products are part of a promotional push strategy . The goal of this strategy is to push the product through the channels of distribution by

aggressively selling and promoting the item to the resellers, or trade.

Promotion to the trade includes all the elements of the promotional mix. Company

sales representatives call on resellers to explain the product, discuss the firm’s plans

for building demand among ultimate consumers, and describe special programs

being offered to the trade, such as introductory discounts, promotional allowances,

and cooperative ad programs. The company may use trade advertising to inter- est wholesalers and retailers and motivate them to purchase its products for resale

to their customers. Trade advertising usually appears in publications that serve the

particular industry.

A push strategy tries to convince resellers they can make a profit on a manufac-

turer’s product and to encourage them to order the merchandise and push it through

to their customers. An alternative strategy is a promotional pull strategy , spending money on advertising and sales promotion efforts directed toward the ultimate con-

sumer. The goal of a pull strategy is to create demand among consumers and encour-

age them to request the product from the retailer. Seeing the consumer demand,

retailers will order the product from wholesalers (if they are used), which in turn

will request it from the manufacturer. Thus, stimulating demand at the end-user level

pulls the product through the channels of distribution.

Whether to emphasize a push or a pull strategy depends on a number of factors,

including the company’s relations with the trade, its promotional budget, and demand

for the firm’s products. Companies that have favorable channel relationships may

prefer to use a push strategy and work closely with channel members to encourage

them to stock and promote their products. A firm with a limited promotional bud-

get may not have the funds for advertising and sales promotion that a pull strategy

requires and may find it more cost-effective to build distribution and demand by

working closely with resellers. When the demand outlook for a product is favorable

because it has unique benefits, is superior to competing brands, or is very popu-

lar among consumers, a pull strategy may be appropriate. Companies often use a

combination of push and pull strategies, with the emphasis changing as the product

moves through its life cycle.

THE ROLE OF ADVERTISING AND PROMOTION

As shown in the marketing model in Figure 2–1 , the marketing program includes

promotion both to the trade (channel members) and to the company’s ultimate cus-

tomers. Marketers use the various promotional-mix elements—advertising, sales pro-

motion, direct marketing, publicity/public relations, and personal selling—to inform

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64 Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS

consumers about their products, their prices, and places where the products are

available. Each promotional-mix variable helps marketers achieve their promotional

objectives, and all variables must work together to achieve an integrated marketing

communications program.

To this point, we have discussed the various elements of the marketing plan that

serves as the basis for the IMC program. The development and implementation of an

IMC program is based on a strong foundation that includes market analysis, target

marketing and positioning, and coordination of the various marketing-mix elements.

Throughout the following chapters of this text, we will explore the role of various

IMC elements in helping to achieve marketing objectives.

Promotion plays an important role in an organization’s efforts to

market its product, service, or ideas to its customers. Figure 2–1

shows a model for analyzing how promotions fit into a com-

pany’s marketing program. The model includes a marketing

strategy and analysis, target marketing, program development,

and the target market. The marketing process begins with a mar-

keting strategy that is based on a detailed situation analysis and

guides for target market selection and development of the firm’s

marketing program.

In the planning process, the situation analysis requires that

the marketing strategy be assumed. The promotional program

is developed with this strategy as a guide. One of the key deci-

sions to be made pertains to the target marketing process, which

includes identifying, segmenting, targeting, and positioning to

target markets. There are several bases for segmenting the mar-

ket and various ways to position a product.

Once the target marketing process has been completed, mar-

keting program decisions regarding product, price, distribution,

and promotions must be made. All of these must be coordi-

nated to provide an integrated marketing communications per-

spective, in which the positioning strategy is supported by one

voice. Thus all product strategies, pricing strategies, and distri-

bution choices must be made with the objective of contributing

to the overall image of the product or brand. Advertising and

promotion decisions, in turn, must be integrated with the other

marketing-mix decisions to accomplish this goal.

Summary

strategic marketing plan p. 43 market segments p. 44 market opportunities p. 44 competitive advantage p. 45 target marketing p. 46 market segmentation p. 48 geographic segmentation p. 48 demographic segmentation p. 50 psychographic segmentation p. 51 behavioristic segmentation p. 51

80–20 rule p. 53 benefit segmentation p. 53 undifferentiated marketing p. 54 differentiated marketing p. 54 concentrated marketing p. 54 positioning p. 55 salient attributes p. 56 repositioning p. 58 product symbolism p. 59 brand identity p. 59

brand equity p. 61 marketing channels p. 62 direct channels p. 62 indirect channels p. 63 promotional push strategy p. 63 trade advertising p. 63 promotional pull strategy p. 63

Key Terms

1. The lead-in to this chapter discussed the millennial generation. Discuss some of the ways that this market

segment is different from previous age cohorts. (LO3)

2. IMC Perspective 2–1 discusses the importance of the Hispanic market. What makes this subculture different,

and what must marketers do to successfully target them?

(LO2)

3. What is meant by repositioning? Discuss some com- panies that have successfully employed this strategy.

(LO4)

4. Many companies have maintained their same brand identity for years by keeping the same logos, packaging,

and so on, while others have made changes. Give exam-

ples of companies employing both of these strategies and

discuss their results. (LO5)

5. Some marketers feel that grouping consumers into age cohorts like millennials, baby boomers, and so forth,

results in unreliable generalizations and that such strate-

gies might not be successful. Give the pros and cons of

this argument. (LO2)

Discussion Questions

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Chapter 2 THE ROLE OF IMC IN THE MARKETING PROCESS 65

6. Discuss the role that integrated marketing com- munications plays in creating a brand image. How do

media contribute to the development of these images?

(LO1)

7. Choose a company and discuss how it communicates with its customers in different market segments. (LO4)

8. Discuss the strategy of market segmentation and some of the reasons marketers are employing such techniques.

Are there any ethical issues involved in this strategy?

(LO4)

9. Marketing strategies are placing more and more effort on target marketing. What is target marketing? Give exam-

ples of companies currently employing this strategy. (LO3)

10. Discuss the difference between demographic and psychographic segmentation. Give examples of compa-

nies employing each. (LO4)

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