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Integrated Advertising, Promotion, and Marketing Communications

Seventh Edition

Chapter 4

The IMC Planning

Process

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Learning Objectives (1 of 2)

4.1 What makes marketing research critical to the IMC planning process?

4.2 What categories are used to identify consumer target markets or market segments?

4.3 What categories are used to identify business-to-business market segments?

4.4 How do the various approaches to positioning influence the selection of target markets?

These are the objectives for Chapter 4.

Learning Objectives (2 of 2)

4.5 How do marketing communication objectives interact with the other elements of the IMC planning process?

4.6 How are communications budgets established?

4.7 What elements are considered in developing an IMC program?

Additional objectives for Chapter 4.

Motel 6

Interview with Stan Richards

Client of The Richards Group

24 years

Focus Group

Themes

Save money

Benefit of frugality

This opening vignette is the result of an interview with Stan Richards, founder of The Richards Group. Motel 6 has been a client for 24 years. Initial research involved a focus group. Individuals were asked what hotels they patronize. Motel 6 was not mentioned initially. Finally, somewhat embarrassed, a participant admitted to staying at Motel 6. He then talked about the money he saved. Soon all of the group members remarked about staying at Motel 6 and being frugal. Out of this focus group the campaign and branding idea for Motel 6 was born.

Chapter Overview

IMC planning process

Communications research

Target markets

Positioning strategies

Communication objectives

IMC components

The IMC planning process involves a number of steps and decisions. Planning begins with research, decisions about target markets, market segmentation, and positioning. Once these factors are investigated and decisions made, then communication objectives can be created. A budget is then appropriated. The last part of the planning process is to think about the IMC components and how they will work together to create synergy.

Figure 4.1 The IMC Planning Process

The IMC planning process begins with communications research. From this research, decisions about the target market and product positioning can be made. These are joint decisions because one decision affects the other. Next, communication objectives are formulated. From the objectives come the budget and a selection of the appropriate IMC components. Again, it is a mutual decision because the budget impacts which IMC components can be used and the selection of the IMC components affects the budget.

Communication Research

Understand customers purchase benefits

Product-specific research

Key selling points

Desirable features

Consumer-oriented research

Context of product use

Anthropological approach

Sociological analysis

Psychological motives

Target-market research

Identifies feasible market segments

The first step in IMC planning is conducting research. If an advertising agency is used, then it is the responsibility of the agency to conduct this research so they understand the customer. What are the key benefits customers derive from the product? Consumers buy benefits, not attributes, so it is important to think in those terms, i.e. what does this product do for customers, how does it help them? Product-specific research involves identifying the key selling points of a product and the desirable features. To develop an advertising campaign, the creative staff should understand the product. Customer-oriented research focuses on the users of the product and how, when, and why the product is used. Researchers can use approaches based in anthropology, sociology, and psychology. A common method used by agencies for customer-oriented research is the focus group. Target-market research utilizes the information gathered through product and customer research to determine the best target market for the brand, product, or particular campaign.

Tests to Determine if a Particular Market Segment is Viable

The individuals or businesses within the segment are homogeneous.

The market segment is different from the population as a whole and distinct from other market segments.

The market segment is large enough to be financially viable to target with a separate marketing campaign.

The market segment must be reachable through some type of media or marketing communications method.

To be a viable market segment, it must meet four criteria. First, the individuals or businesses within the segment should be homogeneous, that is they should be alike. Second, the market segment must differ from the general population and also be different than other market segments. Third, the market segment has to be large enough to be financially viable to support a separate marketing campaign. While some market segments meet the first two criteria, they are too small to support a different campaign. Based on the last criteria, the market segment must be reachable through some type of media or marketing communications method. There are some market segments in Africa and other parts of the world that meet the first three criteria, but not the fourth. There is no feasible way to reach them with a marketing message.

Figure 4.2 Methods of Segmenting Consumer Markets

Demographics

Psychographics

Generations

Geographic

Geodemographics

Benefits

Usage

Consumer markets can be segmented, or divided, along a number of dimensions. The most common is demographics because it is the easiest. Other methods used include psychographics, generations, geographic, geodemographics, benefits, and usage.

Gender Segments Based on Demographics

Gender-based products

Gender differences in communications

Female consumers

Control 66% of spending ($12 trillion)

Involved in purchasing high-priced electronics (96%)

Deal with financial advisors (90%)

Buy and sell stocks (80%)

Household’s primary accountant (70%)

Gender is a common demographic segmentation variable because there are significant differences between males and females and because it is easy to identify each market segment. Men and women purchase different products. They also use the same products, but in different ways. The way marketers communicate to the genders can vary. For instance, females now control about $12 trillion in spending, or 66%. They are involved in product purchases that in the past were dominated by males. For example, 90% of women are involved in purchasing high-priced electronics, 90% deal with financial advisors, 80% buy and sell stocks, and 70% are their household’s primary accountant.

Tips for Marketing to Women

Focus on how brand can improve life

Engage them with the brand

Focus on practical, not trivial

Tell a story that resonates

Provide details

Be positive

(Bonus slide, not in text) When marketing to women, a few tips should be observed. 1) The focus should be on how the brand can improve the woman’s life, not on what the brand can do. 2) It is important to engage the female with the brand and make her feel a part of the brand. 3) Focus on the practical, not on the trivial. Women want to know the facts and how a product can benefit them. 4) Tell a story that resonates. Women like stories, they like brands that create feelings and emotions among people. 5) Provide details. While it may seem unimportant, it is not. Women want all of the information so they can make good decisions. 6) Be positive. Negative selling doesn’t work.

Marketing to Mothers

Buyers of iPhones

Like media websites

Share photos/news

20% of online users

Largest web spenders

Online

Mobile devices

Mothers represent an attractive market. They are the fastest growing buyers of iPhones. They listen to Pandora and access other media sites more often and listen longer than the average consumer. They share news and photos on Facebook. They represent 20% of online users and a higher percentage of mobile users. They spend on the web either through mobile apps or directly online.

Marketing to Men

Shopping more

Focus on product performance

Prefer looking for specific information

Favor products that reflect status

Like well-known brands

Men are shopping more now for clothes, groceries, and other types of home supplies. Men tend to focus on a product’s performance more than its appearance. They do not like to browse; they prefer companies providing specific information about a product or brand. They prefer products that reflect status and demonstrate a wise purchase decision, which is why they tend to favor well-known brands, especially brands with status.

Age Segments Based on Demographics

Target specific age group

Combine with other demographic variables

Children attractive group

Age is another demographic variable that is easy to use for segmentation. Obviously, there is a huge difference in the products children use versus the products adults use. Differences are also present between someone 20 and someone 70. Few marketing messages resonate with all age groups. Therefore, focus on a specific age group. Age segmentation often works well when combined with another demographic variable, such as males ages 20 to 35, or females 18 to 40. One age group that is attractive to marketers is children. Children spend $30 billion a year themselves and influence another $500 billion. It is not just toys they influence. Children influence parents on the purchase of everything from food to cameras to furniture to vehicles.

Figure 4.3 Influence of Tweens

Influence/Opinion	Percent
Want instant gratification	56%
Want customized product	59%
Want what others have	41%
Sometimes visit online stores	31%
Shop online	28%
Influence on household purchases	Blank
Movies	55%
Food	29%
Personal care products	26%
Family vacation destination	27%
Technology	23%

Source: Based on Lucia Moses, “Tweens Have a Big Say in Household Spending,” Adweek, adweek.com, June 26, 2013.

Income

Closely related to education

Lower income – necessities

Higher income – luxuries

Ad directed to “exhausted affluent”

Other demographic segmentation variables include education and income. Each can be used alone, or combined with other demographic variables to create smaller, more homogeneous segments. This ad for Thomasville furniture is directed to a segment called the “exhausted affluent.” The exhausted affluent bridge the gap between the haves and the have nots. They desire style and quality, but not something overly fancy.

Ethnicity

Buying power - $2.5 trillion

Significant part of identity

Need to understand ethnic groups

Translation insufficient

Holistic approach

Ethnicity is an important demographic variable since minorities control $2.5 trillion in buying power. For many, ethnicity is a significant part of their identity. It is important to create advertising that understands each ethnic group. Translations of white ads is not sufficient. In recent years, advertising agencies have moved to a “holistic” approach. Rather than creating separate campaigns, they are designing a single campaign that incorporates insights from various ethnic groups.

Psychographic Segmentation

Describe consumers

AIO measures

Activities

Interests

Opinions

Combine with demographic profiles

Demographics are relatively easy to identify, but they do not fully explain consumer purchase behavior. Psychographics are an individual’s activities, interests, and opinions. They help marketers to understand why consumers buy what they buy. Psychographics are often combined with demographic profiles to provide a much richer description of a target segment.

VALS Psychographic Segmentation

Innovators – successful, sophisticated – upscale products

Thinkers – educated, conservative, practical – durability, value

Achievers – goal-oriented, conservative, career, and family

Experiencers – young, enthusiastic, impulsive, fashion, social

Believers – conservative, conventional, traditional

Strivers – trendy, fun-loving, peers important

Makers – self-sufficient, respect authority, not materialistic

Survivors – safety, security, focus on needs, price

A well-known measurement of psychographics is the VALS typology. Consumers are divided into 8 different segments based on their AIO measures (activities, interests, and opinions). This type of information helps marketers design more effective communication. For instance, reaching achievers requires ads that stress careers, families, goals, and a conservative lifestyle. On the other hand, reaching experiencers requires ads that convey youthfulness, enthusiasm, impulsiveness, fashion, and social acceptance.

Figure 4.4 Characteristics of Generation Segments

Name of Segment	Year of Birth	Characteristics
Millennials	1978-2002	Spend money on clothes, automobiles, college, televisions, and stereos. Ninety percent live at home or in a dorm or rent an apartment.
Generation X	1965-1977	Focus on family and children. Spend on food, housing, transportation, and personal services.
Younger Boomers	1954-1964	Focus on home and family. Spend on home mortgage, pets, toys, playground equipment, and large recreational items.
Older Boomers	1952-1953	Spend on upgrading homes, ensuring education and independence of their children, and luxury items, such as boats.
Seniors	Up to 1951	Most have fixed incomes. Spend heavily on health care and related medical items.

Source: Author-created from Dana-Nicoleta Lascu and Kenneth E. Clow, Marketing Principles (Cincinnati, OH: Textbook Media Press, 2012).

Markets can be segmented based on generations. This table shows the five major generation groups, when they were born, and the primary characteristics of each group. The idea behind generation segmentation is that people who grow up experiencing common events will become similar in their AIO measures. These groups often enjoy the same music, foods, and products.

Ad Targeted to Seniors

According to generation segmentation, seniors have a fixed income and spend heavily on health care and related medical items. This St. Francis Medical Center ad is targeted to seniors informing them that St. Francis is first in orthopedics and foremost in hip replacement.

Geodemographic Segmentation

Combines

Demographic census data

Geographic information

Psychographic information

PRIZM

66 market segments

Southside City

Towns and Gowns

Geodemographic segmentation combines demographic information, geographic information, and psychographic information. Geodemographic segmentation is beneficial for national firms conducting direct mail campaigns and for retailers in targeting customers in a geographic area around the store. The most well known geodemographic segmentation system is PRIZM. It consists of 62 different market segments. For every zip code in the United States, PRIZM identifies the market segments that reside there. For instance, in downtown Jackson, MS the two primary clusters are “Southside City” and “Towns and Gowns.” The Southside City cluster contains primarily young and elderly African-Americans, who are employed in low-paying blue-collar jobs, have lower education levels, rent apartments, and read sports and fashion magazines.

Benefit Segmentation

Fitness Industry

Winners

Dieters

Self-improvers

Benefit segmentation focuses on the advantages consumers receive from a product rather than the characteristics of the consumer. An excellent example of benefit segmentation is the fitness industry. People exercise for different reasons. The three most common benefit segments are winners, dieters, and self-improvers. The winners exercise because they like to exercise. It is a way of life for them. The dieters join a fitness center to lose weight, or maintain their weight. Self-improvers are there primarily because a physician told them to be there. They have experienced a medical problem and realize they must exercise to regain body functions or maintain their health.

Usage Segmentation

Usage or purchase history

Create clusters

Target specific clusters

Create marketing programs for each cluster

Measure growth and migration

Usage segmentation focuses on how consumers use a product or on their purchase history. Marketers can create clusters of heavy users, light users, or any other category of users. By dividing the market in terms of usage, companies can target a specific cluster creating a unique marketing approach. The message to a light user of a product will certainly be different than a heavy user of a product. One of the goals of targeting light or average users is to move them up into a higher group in terms of usage.

Figure 4.5 Methods of Segmenting B-to-B Markets

Industry (NAICS/SIC codes)

Size of business

Geographic location

Product usage

Customer value

Segmentation in business-to-business markets can be based on industry, size of businesses, geographic location, product usage, or customer value. Because most businesses have records of their business customers, segmentation is often easier than with consumers, at least in identifying customers. NAICS codes are one of the most popular methods of segmentation because the federal government has developed the code and there are lists of businesses within each code. Segmentation based on size is necessary when a firm wants to focus on small firms, medium-size firms, or even large firms. Industries often locate together, e.g. computers in the Silicon Valley in California. How firms use a product can be a method of segmentation and the value of customers. Many packaged goods manufacturers have a Wal-Mart team to service that account since it is so large and has such value.

Segmentation by Geographic Location

A business-to-business ad that can be targeted to a specific NAICS code.

This ad for Scott Powerline & Utility Equipment targets energy companies that maintain powerlines.

Product Positioning

Is the perception created in the consumer’s mind regarding the nature of the company and its products relative to the competition?

Positioning is created by factors such as product quality, price, distribution, image, and marketing communications.

Product positioning is the perception in consumers’ minds of the nature of a company and its products relative to competitors. It is important to recognize the two major points – in consumers’ minds and relative to the competition. Positioning is created by factors such as product quality, price, distribution, image, and marketing communications. Companies need to consider carefully where they are positioned in the market place and then develop ads to reinforce that image or move consumers to the image that is desired.

Figure 4.6 Product Positioning Approaches

Product Attributes

Competitors

Use or application

Price/quality

Product user

Product class

Cultural symbol

Effective positioning can be accomplished in seven different ways. Positioning by product attributes involves promoting a unique attribute that is superior or different from the competition. Using competitors to establish a position can be accomplished by contrasting the company’s brand against competing brands. Use or application involves creating a memorable set of uses for a product, or applications that allow it to stand out. Price/quality positioning can occur in two ways – by emphasizing value (low price) or by emphasizing high quality, with little mention of the higher price. The product user approach emphasizes who uses the product, such as educators for Apple computers. Positioning can be based on the product class, such as beverages, breakfast foods, or sports cars. The last approach is cultural symbol, which strives to connect the brand to some cultural symbol that is recognized and known by consumers.

Elements of Positioning

Never completely fixed

Applies to business-to-business also

International positioning important

Critical component of image and brand management

Product positioning is never fixed because consumers and society change. The same holds true for business products. In the international arena, product positioning is very challenging, but important. However, the position that is used in one country may not be appropriate for another country. Product positioning is a critical component of image and brand management because it is how consumers (or businesses) view the brand compared to competing brands.

Marketing Communications Objectives

An effective IMC planning process requires quality communications objectives. These objectives tie the organization’s context, target markets, and positioning approaches to the selection of budget figures and IMC components. Communication objectives also guide account executives and advertising creatives in designing the actual advertising campaign.

Figure 4.7 Communication Objectives

Develop brand awareness

Increase category demand

Change customer beliefs and attitudes

Enhance purchase actions

Encourage repeat purchases

Build customer traffic

Enhance firm image

Increase market share

Increase sales

Reinforce purchase decisions

This is a list of common communication objectives. Most IMC campaigns will emphasize one communication objective, but may accomplish other objectives in the process. There are some logical combinations, such as developing brand awareness and building customer traffic. Increasing market share would fit with increasing sales and encouraging repeat purchase actions. The key is to match the objective to the medium and the message.

Figure 4.8 Methods of Determining Marketing Communication Budgets

Percentage of sales

Meet-the-competition

“What we can afford”

Objective and task

Payout planning

Quantitative models

Companies have a number of ways of determining a communications budget. Setting budgets for large companies with multiple brands and products is often more challenging than with a small company that may sell only one brand or a few products.

Types of Budgets

Percentage of Sales

Sales of current year, or next year

Simple

Tends to work in the opposite direction

Does not meet special needs

Meet the competition

Seeks to prevent market share loss

Highly competitive markets

Dollars may not be spent efficiently

The percentage of sales method sets the communication budget as a certain percent of this year’s sales or next year’s sales forecast. It is simple to use, which makes it a popular choice. However, it works in the opposite direction of what may be needed. When sales increase, so does the budget. When sales decline, the budget is reduced. It should be just the reverse. It also does not allow for special needs that may rise. Meet-the-competition sets a budget approximately equal to competitors. This approach is used in highly competitive markets where you have to spend what the competition does to keep your brand in front of consumers. Spending the same as competitors does not guarantee success.

Figure 4.9 Ad Spending, Brand Recognition, and Market Share

Auto Insurer	Ad Spending (millions)	Brand Recognition	Market Share
Geico	$600	98%	8.2%
Progressive	$506	92%	7.5%
State Farm	$455	76%	18.6%
Allstate	$369	63%	10.5%
Farmers	$203	59%	6.4%

Source: Adapted from Gregory Bresiger, “It’s Ad Infinitum,” New York Post, May 1, 2011, nypost.com.

In terms of total marketing expenditures, approximately 41.1% is spent on some form of advertising. Consumer promotions account for 27.9% and trade promotions for 27.5%. These percentages will vary from industry to industry. It will also be different for products and services, and for consumer companies and B-to-B firms.

Types of Budgets (1 of 2)

What we can afford

Set after all other items budgeted

Do not view marketing as important

Objective and task

Budgets determined by objectives

Best method of budgeting

Used by 50% of firms

The “what we can afford” approach sets the communications budget after all of the other budges are set. Normally, with this approach, management does not see the importance of communications. The objective and task method sets the budget based on what it will cost to accomplish the communication and marketing objectives that have been established. Most marketers see this as the best method of budgeting. It is now being used by about half of all firms.

Types of Budgets (2 of 2)

Payout planning

Ratio—advertising to sales or market share

Larger percent at product launch

Lower percent when brand established

Based on threshold effect

Quantitative models

Computer simulations

Develop models based on historical data

Payout planning involves setting a budget based on a ratio to sales or market share. This method usually results in spending more money early in the process and then reducing the budget after the brand is established. Quantitative models use historical data to determine the relationship between sales and marketing and then budgets are set accordingly.

Communication Schedule

Pulsating schedule

Flighting schedule

Continuous schedule

Communication budgets can be scheduled in three different ways. A pulsating schedule involves advertising throughout the entire year with bursts of additional spending at select times, such as holidays. A flighting schedule allocates the budget only during peak times, with no other times during the year. The continuous schedule divides the budget equally throughout the entire year.

IMC Components

Traditional advertising

Trade promotions

Consumer promotions

Media spending

Alternative media spending

Business-to-business media spending

The last decision (in conjunction with the budget) is the selection of IMC components. Traditional advertising cannot be ignored in favor of newer, nontraditional methods. Companies have to think about how much is needed for trade promotions and consumer promotions. Then, there is the actual spending on media. Some companies will also have to consider business-to-business spending. It is not an easy task to determine which components will be the most effective. Not only is the budget a factor, but also the objectives.

Figure 4.10 Breakdown of Marketing Expenditures

Figure 4.11 Global Ad Spending by Media

Source: Based on Ingrid Lunden, “Nielsen: Old School TV Reigns Supreme at 58% of Ad Spend, Internet Display up 27% in Q2,” techcrunch.com, October 22, 2013

When examining global ad spend, television is still where most dollars go with 57.6%. Newspapers are second with 18.9%, followed by magazines at 10%. Although digital is only 4.3%, it is the fastest growing medium.

Figure 4.12 Successful Globally Integrated Marketing communications Tactics

Understand the international market

A borderless marketing plan

Thinking globally but acting locally

Local partnerships

Communication segmentation strategies

Market communication analysis

Solid communication objectives

Successful globally integrated marketing communications require paying attention to a number of factors. The company must understand the international market and cultures where it will be selling products. A borderless marketing plan works best, but in developing this type of plan, firms must allow individual countries to modify the marketing plan. The idea is to think globally, but act locally. Seeking local partnerships can be very advantageous, especially in developing communication segmentation strategies and conducting a market communication analysis. With this information, solid communication objectives can be established.

Integrated Campaigns in Action

Progressive Bank

mymktlab.com

Progressive Bank is a local bank that operates in a competitive market. French Creative developed a strong integrated communications campaign that involved multiple approaches and multiple media. This integrated campaign can be found at the Pearson instructor’s Resource Center at www.pearsonhighered.com. Other integrated campaigns can be found at the textbook authors’ website at www.clowbaack.net and through the authors’ blog at http://blogclowbaack.net.

Blog Exercises

Motel 6

Carnival Cruise Line

Segmentation and Positioning

The blog exercises for Chapter 4 include Motel 6, Carnival Cruise Line, and videos about segmentation and positioning. Links are embedded in the text for each.