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Marketing--IMCandPromotions.pptx

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Integrated Marketing Communications

\Promotion Decisions

Prepared for Alan Sandomir: Associate Professor

David Eccles School of Business, University of Utah

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Describe the nature of integrated marketing communications

Examine the process of communication

Understand the role and objectives of promotion

Explore the elements of the promotion mix

Examine the selection of promotion mix elements

Understand word-of-mouth communication and how it affects promotion

Understand product placement promotions

Examine criticism and defenses of promotion

Learning Objectives

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Coordination of promo mix--advertising, sales promotion, personal selling, public relations and other marketing efforts--to ensure maximum informational and persuasive impact on customers

IMC is increasingly accepted

Coordinate/manage promotional efforts

Synchronization of promotional elements

Use more precisely targeted promotional tools

Consistent message to customers

Use of database marketing

Protect consumer privacy

Integrated Marketing Communications

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Communications: A sharing of meaning through the transmission of information

Source: A person, group, or organization with a meaning it attempts to share with a receiver/audience

Receiver: The individual, group, or organization that decodes a coded message

An audience is two or more receivers

Coding process (Encoding):

Converting meaning into a series of

signs or symbols

Promotion and the Communication Process

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The Communication Process

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Communications channel: The medium of transmission that carries the coded message from the source to the receiver/audience

Decoding process: Converting signs and symbols into concepts and ideas

Noise: Anything that reduces a communication’s clarity and accuracy

Feedback: Receiver’s response to a decoded message

Channel capacity: The limit on the

volume of information a channel can

handle effectively; determined by the

least efficient component of the

communication process

Decoding the Message

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Many companies make blunders when marketing internationally.

What are the problems with these messages?

How did noise interfere with the reception of the message?

What could these companies have done differently to avoid costly and embarrassing communications mistakes?

Discussion Questions

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Communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an organization positively and to accept its products

Promotion’s goal is to stimulate product demand and build customer

relationships in short and long term

Most organizations expend a large

amount of resources on promotion

Promotion

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Information Flows are Important in Integrated Marketing Communications

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Objectives of Promotion

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Awareness is crucial to initiating the product adoption process for new products

For existing products, promotional efforts create increased awareness of brands, product features, image-related issues, or operational characteristics

Create Awareness—First Stage PLC

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Primary demand: Demand for a product category rather than a specific brand: PLC introduction

Pioneer promotion: Promotion that informs consumers about a new product: PLC introduction

A way to stimulate primary demand during the introductory stage of the product life cycle

Selective demand: Demand for a

specific brand: PLC growth/maturity

Stimulate Demand

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If customers stall in the evaluation stage, marketers can use methods to encourage product trial in order to move them to adoption

Trial techniques—especially growth/maturity

Free samples

Coupons

Test drives

Limited free-use offers

Contests

Games

Encourage Product Trial

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Some promotional efforts aim to locate and identify customers who are interested in the firm’s products and are most likely to buy—Behavioral Targeting: primary online tool

Techniques include

Direct-response information form

Toll-free number

Retargeting—Behavioral Targeting--Email

The organization should follow up

with prospects

Identify Prospects

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A major goal of marketing is to maintain long-term customer relationships

Keeping current customers is less costly than acquiring new customers

Retention techniques include

Frequent-user programs—Email communication

Special offers for existing customers

Online communications

Customer-only events

Sweepstakes

Retain Loyal Customers

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Southwest Airlines has become a model for customer loyalty

Click here to read Southwest’s annual report

How has Southwest achieved customer loyalty as many airlines fail?

Discussion Question

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Strong relationships with resellers are important to an organization’s ability to maintain a sustainable competitive advantage

Various promotional methods help achieve this goal

Resellers view promotion as a form of

support—Broker merchandising helps here

Share promotional expense—Newell and

Office Depot, 2017 and 2018

Special offers/buying allowances

Facilitate Reseller Support

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Promotional activities may aim to offset or lessen the effect of a competitor’s promotional and marketing programs

This type of promotional activity does not necessarily increase sales or market share, but it can frustrate competitors

A combative promotional objective is often used by firms in highly competitive consumer markets

Combat Competitive Promotional Efforts

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A business cannot operate at peak efficiency when sales fluctuate rapidly

Holidays

Seasonal products—Jiffy Lube suffers sales declines during mid-winter season

Promotional activities are often designed to stimulate sales during slumps—Jiffy Lube

increases sales promotions seasonally

Reduce Sales Fluctuations

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The Four Elements of the Promotion Mix

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A paid nonpersonal communication about an organization and its products transmitted to a target audience through mass media

Advertising is changing as mass media consumption habits are changing

The Internet and digital media aim at

smaller, more targeted audiences

Advertising is flexible and can reach

large or small audiences: Google

AdWords is highly variable

Advertising

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Advantages

Cost-efficient when it can reach a large number of people at a low cost per person—online-offline CPM often < $50

It lets the source repeat the message several times—high frequency discounts from media—the issue is frequency

Visibility gained from advertising can enhance a firm’s image, recognition, recall, share of voice, likeability, persuasiveness and conviction

Disadvantages

Absolute dollar outlay is high

Rarely provides rapid feedback except for Web Ads

Difficult to measure its effect on sales—except

for Web ads

Less persuasive than personal selling—though

frequency can be “persuasive”

Generally limited time exposure

Advantages and Disadvantages of Advertising

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A paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation

Advantages

A more specific form of advertising

Has a greater impact on consumers—can be very persuasive

Provides immediate feedback

Disadvantages

Expensive: Major Corporate >$250/call

Labor intensive

Time consuming

Personal Selling

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Kinesic: Body language; communicating through movement of the head, eyes, arms, hands, legs, or torso

Proximic: Communicating by varying the physical distance between two parties in face-to-face interactions

Tactile: Communication through

touching

Types of Interpersonal Communication

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A broad set of communication efforts used to create/maintain favorable relationships between an organization and its stakeholders

Publicity is a non-personal communication in a news-story form about an organization, its products, or both—nations use PR firms like Hill and Knowlton (Iraq Gulf War, 1991)

Is transmitted through a mass medium at no charge

Public relations should be viewed as

an ongoing program during crises

and good times

Public Relations

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Publicity

Annual reports

Brochures

Event sponsorships

Sponsorship of socially responsible programs

Press releases/Conferences/

Feature articles/Video news

releases/Product placement

Public Relations Tools

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A activity or material that acts as a direct inducement, offering adding value or incentive to resellers, salespeople, or customers—immediate and intermediate

Free samples

Games

Rebates

Sweepstakes

Contests

Premiums

Coupons

Bogos

Also—Trade Promotions—rebates, discounts

Sales Promotion--See Text Chapter

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What is PETA promoting in this advertisement?

Discussion Question

Courtesy of People for the Ethical Treatment of Animals.

PETA.org.

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Resources, objectives, and policies

Characteristics of the target market

Characteristics of the product

Cost and availability of promotional methods

Push and pull channel policies

Selecting Promotion Mix Elements

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The size of an organization’s promotional budget affects the number and intensity of promotional methods used

A company’s objectives and policies influence the types of promotions included

Different objectives will require

different promotional mixes

Promotional Resources, Objectives, and Policies

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Size

Often drives which promotional elements are chosen

Small target markets often rely on personal selling

Geographic distribution

Personal selling is feasible when customers are concentrated in a small area

Dispersed customers often best reached with advertising

Demographic characteristics

Age, income, education, etc. will affect

consumers’ media consumption patterns

and are important considerations when

developing the promotion mix

Characteristics of the Target Market

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Business products concentrate on

Personal selling—especially technical products

Sales promotion and trade advertising

Consumer products concentrate on

Convenience/Shopping goods = advertising

Durables and expensive products = personal selling

Both = public relations

Staufer: advertising and sales promotions

at B2C level; personal selling at B2B level

Product price and product use are

important factors

Characteristics of the Product

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Intensive distribution

Advertising, sales promotion

Selective distribution

Promotion mixes may vary

Exclusive distribution

Personal selling

Distribution Intensity of the Product

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National advertising/Sales promotion

Have higher expenses but low CPM

International promotion

Can be difficult because of lack of promotional channels

Personal selling

Is dependent on recruiting and

hiring qualified salespeople

Costs and Availability of Promotional Methods

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Push policy: Promoting a product to the next institution down the marketing channel

Pull policy: Promoting a product directly to consumers in order to develop strong consumer demand

Organizations may use both push

and pull policies at the same time

Push and Pull Channel Policies

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Comparison of Push and Pull Promotional Strategies

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Word-of-mouth (WOM) communication: Personal, informal exchanges of communication that customers share with one another about products, brands, and companies

Most customers are likely to be influenced by friends and family members when making purchases

Effective WOM communication is becoming increasingly important

Is most effective for new-to-market

and expensive products

The Importance of Word-of-Mouth Communication

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Buzz marketing: An attempt to incite publicity and public excitement surrounding a product through a creative event—mixed media

Viral marketing: A strategy to get consumers to share a marketer’s message, often through email or online video—especially You Tube, Twitter, and Facebook—in a way that spreads dramatically and quickly

The Importance of Word-of-Mouth Communication (continued)

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A form of advertising that strategically locates products or product promotions within entertainment media to reach a product’s target market—Ed Bernays

In-program product placements have become a successful method of reaching consumers

Has become more important as more consumers bypass advertisements

through DV-R, TiVo, Internet, Streaming--

especially during and post-pandemic

Increasing in popularity

internationally

Product Placement

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The Gap utilized product placement in the movie The Social Network

Can you think of other examples of product placement that you have seen?

Think About It

Collection

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Is promotion deceptive?

Some are, but not all promotion should be condemned

Laws, government regulation, and industry self-regulation have helped decrease deceptive promotion

Does promotion increase prices?

If promotion is working to stimulate demand, producing and marketing larger quantities can actually help reduce prices

Does promotion create needs?

Marketing does not create needs, but

makes consumers aware of needs they

already have

Criticisms and Defenses of Promotion

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Does promotion encourage materialism?

Marketers assert that values are instilled at home and promotion does not change people into materialistic consumers

Does promotion help customers without costing too much?

Promotions inform customers about a product’s uses, features, advantages, prices, or purchase locations

Should potentially harmful products be promoted?

Defenders argue that, as long as it is

legal to sell a product, promoting it

should also be allowed

Criticisms and Defenses of Promotion (continued)

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Key Concepts

Integrated marketing communications	Pioneer promotion
Communication	Selective demand
Source	Promotion mix
Receiver	Kinesic communication
Coding process	Proxemic communication
Communications channel	Tactile communication
Decoding process	Push policy
Noise	Pull policy
Feedback	Word-of-mouth communication
Channel capacity	Buzz marketing
Promotion	Viral marketing
Primary demand	Product placement

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