Week6dq

Integrated Marketing Communications I. Strategic Goals of Marketing Communication • Marketers seek to communicate with target customers for the obvious goal of increased

sales and profits. A. Create Awareness • Marketing communications designed to create awareness are especially important for

new products and brands in order to stimulate trial purchases. • As an organization expands globally, creating awareness must be a critical goal of

marketing communications. B. Build Positive Images • When products or brands have distinct images in the minds of customers, the customers

better understand the value that is being offered. • A major way marketers create positive and distinct images is through marketing

communications. C. Identify Prospects • Identifying prospects is becoming an increasingly important goal of marketing

communication because modern technology makes information gathering much more practical, even in large consumer markets.

• Technology now enables marketers to stay very close to their customers. D. Build Channel Relationships • An important goal of marketing communications is to build a relationship with the

organization’s channel members. • When producers use marketing communications to generate awareness, they are also

helping the retailers who carry the product. • Producers may also arrange with retailers to distribute coupons, set up special displays,

or hold promotional events in their stores, all of which benefit retailers and wholesalers. • Retailers support manufacturers when they feature brands in their ads to attract buyers. • Cooperating in these marketing communication efforts can build stronger channel

relationships.

E. Retain Customers • Loyal customers are a major asset for every business. It costs far more to attract a new

customer than to retain an existing customer. • Marketing communications can support efforts to create value for existing customers. • They can serve as sources of information about product usage and new products being

developed. • They can also gather information from customers about what they value, as well as their

experiences using the products. II. The Promotion Mix • The promotion mix concept refers to the combination and types of nonpersonal and

personal communication the organization puts forth during a specified period. • There are five elements of the promotion mix, four of which are nonpersonal forms of

communication (advertising, sales promotion, public relations, and direct marketing), and one, personal selling, which is a personal form of communication. o Advertising is a paid form of nonpersonal communication about an organization, its

products, or its activities that is transmitted through a mass medium to a target audience.

o Sales promotion is an activity or material that offers customers, sales personnel, or resellers a direct inducement for purchasing a product.

o Public relations is a nonpersonal form of communication that seeks to influence the attitudes, feelings, and opinions of customers, noncustomers, stockholders, suppliers, employees, and political bodies about the organization.

o Direct marketing uses direct forms of communication with customers. Its objective is to generate orders, visits to retail outlets or requests for further information.

o Personal selling is face-to-face communication with potential buyers to inform them about and persuade them to buy an organization’s product.

III. Integrated Marketing Communications • In many organizations, elements of the promotion mix are often managed by specialists in

different parts of the organization or, in some cases, outside the organization when an advertising agency is used.

• The goal of integrated marketing communications is to develop marketing communications programs that coordinate and integrate all elements of promotion—advertising, sales promotion, personal selling, and publicity—so that the organization presents a consistent message.

• The concept of integrated marketing communication is illustrated in Figure 8.1. • It is generally agreed that potential buyers usually go through a process of:

o Awareness of the product or service o Comprehension of what it can do and its important features o Conviction that it has value for them o Ordering

• The goal of integrated marketing communication is an important one, and many believe it is critical for success in today’s crowded marketplace.

IV. Advertising: Planning and Strategy • Advertising seeks to promote the seller’s product by means of printed and electronic

media. • From a marketing management perspective, advertising is an important strategic device for

maintaining a competitive advantage in the marketplace. A. Objectives of Advertising • There are at least three different viewpoints about the contribution of advertising to the

economic health of the firm. • The generalist viewpoint is primarily concerned with sales, profits, return on

investment, and so forth. • At the other extreme, the specialist viewpoint is represented by advertising experts who

are primarily concerned with measuring the effects of specific ads or campaigns; here primary attention is given to organizations that offer services that measure different aspects of the effects of advertising such as the Nielsen Index, Starch Reports, Arbitron Index, and Simmons Reports.

• A middle view, one that might be classified as more of a marketing management approach, understands and appreciates the other two viewpoints but, in addition, sees advertising as a competitive weapon.

• Objectives for advertising can be assigned that focus on creating awareness, aiding comprehension, developing conviction, and encouraging ordering.

• In the long run and often in the short run, advertising is justified on the basis of the revenue it produces.

• Because most business firms do not have the data required to use the marginal analysis approach, they employ less-sophisticated decision-making models.

• The ultimate objective of the business advertiser is to make sales and profits. • Marketing managers must also be aware that advertising not only complements other

forms of communication but is subject to the law of diminishing returns.

V. Advertising Decisions • The marketing managers must make the following two key decisions:

o The first decision deals with determining the size of the advertising budget o The second deals with how the advertising budget should be allocated

• Many marketers have lost sight of the connection between advertising spending and market share. They practice the art of discounting: cutting ad budgets to fund price promotions or fatten quarterly earnings.

• Companies employing these tactics may benefit in the short term but may be at a severe competitive disadvantage in the long term.

A. The Expenditure Question • Most firms determine how much to spend on advertising by one of the following

methods. Percent of Sales • This is one of the most popular rule-of-thumb methods, and its appeal is found in its

simplicity. This approach is usually justified by the following arguments: o Advertising is needed to generate sales. o A number of cents (i.e., the percentage used) out of each dollar of sales should

be devoted to advertising in order to generate needed sales. o The percentage is easily adjusted and can be readily understood by other

executives. • The percent-of-sales approach is popular in retailing.

Per-Unit Expenditure • In per-unit expenditure, a fixed monetary amount is spent on advertising for each unit

of the product expected to be sold. • This method is popular with higher-priced merchandise, such as automobiles or

appliances. • Here the seller realizes that a reasonably competitive price must be established for

the product in question and therefore attempts to cost out the gross margin. • The basic problem with this method and the percentage-of-sales method is that they

view advertising as a function of sales, rather than sales as a function of advertising. All You Can Afford

• Here the advertising budget is established as a predetermined share of profits or financial resources.

• The availability of current revenues sets the upper limit of the ad budget. • The only advantage to this approach is that it sets reasonable limits on the

expenditures for advertising. • From the standpoint of sound marketing practice, this method is undesirable because

there is no necessary connection between liquidity and advertising opportunity. Competitive Parity • This approach is often used in conjunction with other approaches, such as the

percent-of-sales method. • The basic philosophy underlying this approach is that advertising is defensive. • From a strategy standpoint, this is a “followership” technique that assumes that the

other firms in the industry know what they are doing and have similar goals. • Competitive parity is not a preferred method, although some executives feel it is a

safe approach. The Research Approach • Here the advertising budget is argued for and presented on the basis of research

findings. • Although the research approach is generally more expensive than some other models,

it is a more rational approach to the expenditure decision. The Task Approach • Well-planned advertising programs usually make use of the task approach, which

initially formulates the advertising goals and defines the tasks to accomplish these goals.

• This approach is often in conjunction with the research approach. B. The Allocation Question • This question deals with the problem on deciding on the most effective way of spending

advertising dollars. • A general answer to the question is that management’s choice of strategies and

objectives determines the media and appeals to be used. • A successful ad campaign has two related tasks:

o Say the right things in the ads themselves

o Use the appropriate media in the right amounts at the right time to reach the target market

Message Strategy • The advertising process involves creating messages with words, ideas, sounds, and

other forms of audiovisual stimuli that are designed to affect consumer (or distributor) behavior.

• To be effective, the advertising message should meet two general criteria: o It should take into account the basic principles of communication. o It should be predicated upon a good theory of consumer motivation and

behavior. • The basic communication process involves three elements:

o The sender or source of the communication o The communication or message o The receiver or audience

• Advertising messages must be transmitted and carried by particular communication channels commonly known as advertising media.

• For many products and services, advertising is an influence that may affect the consumer’s decision to purchase a particular product or brand.

• The end goal of an advertisement and its associated campaign is to move the buyer to a decision to purchase the advertised brand.

• The planning of an advertising campaign and the creation of persuasive messages require a mixture of marketing skill and creative know-how.

• Some of the critical types of information an advertiser should have are as follows: o Who the firm’s customers and potential customers are. o How many such customers there are. o How much of the firm’s type and brand of product they are currently buying

and can reasonably be expected to buy in the short-term and long-term future. o Which individuals, other than customers and potential customers, influence

purchasing decisions. o Where they buy the firm’s brand of product. o When they buy, and frequency of purchase o Which competitive brands they buy and frequency of purchase. o How they use the product. o Why they buy particular types and brands of products.

Media Mix • Media selection is no easy task. Marketing Insight 8–5 presents a brief summary of

the advantages and disadvantages of some of the major advertising media. • In the advertising industry, a common measure of efficiency or productivity is cost

per thousand, or CPMs. This figure generally refers to the dollar cost of reaching 1,000 prospects, and its chief advantage lies in its simplicity and allowance for a common base of comparison between differing media types.

• The major disadvantage of the use of CPMs also relates to its simplicity. • Involving programs produce engaged respondents who demonstrate more favorable

responses to advertising messages. • Reach, in general, is the number of different targeted audience members exposed at

least once to the advertiser's message within a predetermined time frame. • Just as important as the number of different people exposed (reach) is the number of

times, on average, that they are exposed to an advertisement within a given time period. This rate of exposure is called average frequency.

• Because marketers all have budget constraints, they must decide whether to increase reach at the expense of average frequency or average frequency at the expense of reach.

• In essence, the marketer’s dilemma is to develop a media schedule that both: o Exposes a sufficient number of targeted customers (reach) to the firm’s product o Exposes them enough times (average frequency) to the product to produce the

desired effect. VI. Sales Promotion • Over the past two decades, the popularity of sales promotion has been increasing. • Two reasons for this increased popularity are undoubtedly the increased pressure on

management for short-term results and the emergence of new purchase tracking technology.

• Figure 8.2 presents some popular targets of sales promotion and the methods used. A. Push versus Pull Marketing • Push and pull marketing strategies comprise the two options available to marketers

interested in getting their product into the hands of customers. They are illustrated in Figure 8.3. o Push strategies involve aiming promotional efforts at distributors, retailers and

sales personnel to gain their cooperation in ordering, stocking, and accelerating the sales of a product.

o Pull strategies involve aiming promotional efforts directly at customers to encourage them to ask the retailer for the product.

B. Trade Sales Promotions • Trade promotions are those promotions aimed at distributors and retailers of products

who make up the distribution channel. The major objectives of trade promotions are to: o Convince retailers to carry the manufacturer’s products o Reduce the manufacturer's inventories and increase the distributor’s or retailer’s

inventories o Support advertising and consumer sales promotions o Encourage retailers either to give the product more favorable shelf space or to

place more emphasis on selling the product o Serve as a reward for past sales efforts

• Promotions built around price discounts and advertising or other allowances are likely to have higher distributor or retailer participation levels than other type promotions because a direct economic incentive is attached to the promotion.

C. Consumer Promotions • Consumer promotions can fulfill several distinct objectives for the manufacturer. • Some of the more commonly sought-after objectives include:

o Inducing the consumer to try the product o Rewarding the consumer for brand loyalty o Encouraging the consumer to trade up or purchase larger sizes of a product o Stimulating the consumer to make repeat purchases of the product o Reacting to competitor efforts o Reinforcing and serving as a complement to advertising and personal selling

efforts • Figure 8.4 presents a brief description of some of the most commonly used forms of

consumer promotion activities. D. What Sales Promotion Can and Can’t Do • Advocates of sales promotion often point to its growing popularity as a justification for

the argument that advertising is not needed; sales promotion itself will suffice. • Marketers should bear in mind that sales promotion is only one part of a well-

constructed integrated marketing communications program. • While sales promotion is proven to be effective in achieving the objectives listed in the

previous sections, there are several compelling reasons why it should not be used as the sole promotional tool.

• These reasons include sales promotion’s inability: o To generate long-term buyer commitment to a brand in many cases

o To change, except on a temporary basis, declining sales of a product o To convince buyers to purchase an otherwise unacceptable product o To make up for a lack of advertising or sales support for a product

• When the competition gets drawn into the promotion war, the effect can be a significant slowing of the sharp sales increases predicted by the initiator of the promotion.

• The dilemma marketers face is how to cut back on sales promotions without losing market share to competitors.

• In addition to developing pricing policies to cut back on short-term promotions, some consumer products companies are starting to institute frequency marketing programs in which they reward consumers for purchases of products or services over a sustained period of time.

VII. Public Relations • Public relations is a nonpersonal form of communication that tries to influence the overall

image of the organization and its products and services among its various stakeholder groups.

• The most popular and frequently used public relations tool is publicity. There are several forms of publicity: o News release o News conference o Sponsorship o Public service announcements

VIII. Direct Marketing • Direct marketing allows the organization to communicate with customers through direct

mail, e-mail, mobile marketing, catalogs, telemarketing, and direct response advertising. • The Internet has had a tremendous impact on every aspect of direct mail. • Direct marketing methods are certainly not new. What is new is the ability to design and

use them more efficiently and effectively because of the Internet and the ability to develop and compile comprehensive databases.

• Cellular technology such as a smartphone enable the customer to purchase wherever they happen to be. Marketing by way of these handheld devices has become known as mobile marketing.

• For the American consumer facing a “poverty of time,” direct marketing offers many benefits. In addition to saving time, consumers often save money, get better service, and enjoy increased privacy; many even find it entertaining.

• Direct marketing activities are often very effective in generating sales leads when a customer asks for more information about a product or service and can also increase store traffic when potential buyers are encouraged to visit a dealership or retail store.