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UTS 24736 Marketing Communications

SPRING 2019

Subject Coordinator: Dr. Valeria Noguti

Lecture Week 4

Integrated Marketing Communications & Budgeting

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Subject Structure

Foundations

Managing Marketing

Communications

Marketing Communications

Mix

MC Strategy

Integrated MC and Budgeting

Creative Strategy

Media Strategy

Evaluation and Metrics

Introduction to MC

MC Industry

Buyers

#1: Advertising, sponsorship

#2: Direct marketing, personal selling, sale promotion, field and

experiential marketing, placement, exhibitions,

packaging, licensing

#3: Digital, PR

So what is IMC?

IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communications programs over time with consumers, customers, prospects, employees, associates, and other targeted relevant external and internal audiences. The goal is to generate both short-term financial returns and build long-term brand and shareholder value (Don Schultz)

What is good and what is bad about IMC?

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Integrated Marketing Communications

Major Marketing Communications Platforms Platform Components

Advertising Print and broadcast ads, Packaging, outer,, Packaging inserts, Cinema, Brochures and booklets, Posters and leaflets, Directories (e.g. yellow pages), Reprints of ads, Billboards, Display signs, Point-of-purchase displays, DVDs

Promotion Contests, games, sweepstakes, lotteries, Premiums and gifts, Sampling, Fairs and trade shows, Exhibits, Demonstrations, Coupons, Rebates, Low-interest Financing, Trade-in allowances, Continuity programs, Tie-ins (Cross-selling)

Events and experiences Sports, Entertainment festivals, Arts, Causes, Factory tours, Company museums, Street activities

Public Relations (PR) Press kits, Speeches, Seminars, Annual reports, Charitable donations, Publications, Community relations, Lobbying, Company magazine

Online and social media marketing

Websites, E-mail, Search ads, Display ads, Company blogs, Third-party chatrooms, forums, and blogs, Facebook, Twitter and other platform messages, YouTube channels and videos

Mobile marketing Text messages, Online marketing, Social media marketing, Apps

Direct / database marketing Catalogues, Mailings, Telemarketing, Electronic shopping, TV shopping

Personal selling Sales presentations, Sales meetings, Incentive programs, Samples, Fairs and trade shows

5(Keller 2016)

What is there to be integrated?

Not only this part

The Whole Marketing Mix Communicates…

Advantages vs Disadvantages of IMC

Short vs Long Term

• How much of your budget should you allocate to short vs long-term?

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60% long term 40% short term�

What does the graph mean?

Brand vs Activation Campaign effects

Source: Les Binet and Peter Field, The Long and The Short of It

To grow, brands need new customers (penetration)

Source: Les Binet and Peter Field, The Long and The Short of It

Overall, campaigns targeting new customers outperform those targeting existing customers. But both are necessary. Need to consider brand strategy and budget allocation

Why does the balance short and long term work?

Source: Les Binet and Peter Field, The Long and The Short of It

Where the effects are

Brand building vs Sales activation

Sales uplift: Brand building vs Sales activation

Trade-off Across Channels

Question…

• When an ad for a car airs on TV, would you expect to see significant increased online brand search?

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5 min

Multi-tasker Audiences: TV-to-online spill- over effects

Example of synergistic effects across media (Du, Xu, Wilbur, 2019): • Immediate Responses of Online Brand Search and Price Search to TV

Ads • TV ads for SUV brands in the US • Analysed +27,000 ad spots on national TV and +750,000 spots on

local TV

Multi-tasker Audiences: TV-to-online spill- over effects

• Results • National or local TV generate both brand search and price search spikes

immediately after the ad airs • Nearly all of immediate response occurs within 5 min

• Brand search peaks during the first min after ad airs, then dissipates quickly • Price search is spread more evenly over the 5 mins

• National ads lead to competitor-brand searches, not competitor-price searches • National ads more cost-effective at generating immediate brand searches

whereas local ads more cost-effective for price searches

What TV does

Online vs Offline: the Power of Synergy

• Online is on average 15-30% more efficient, but not across brands and multi-channel approach is best.

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return on interest

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协同�

Online costs have been increasing…

Variance is much higher for Online, TV is more predictable

Journeys and Communications Mix

(Batra and Keller 2016)

Cross-media strategies are more effective: Recent findings

• The highest campaign ROI comes from a combined multi-channel approach: combining offline and online is 50% more efficient than offline alone and more efficient than online alone. • Online media with a TV campaign drives ROI across all categories,

more so in high consideration categories: e.g. travel campaigns with TV + online reach on average 56% higher ROI than TV alone. • 4/10 marketers focus primarily on short-term as indicator of success

but on average 30% of the value of incremental transactions are generated after the campaign spend period.

Source: IAB “10 learnings from MeasureUp 2018”, Christian Manie (2019)

$$ Mass

Advertising

Limited $, targeted campaigns:

Direct Marketing; PR; merchandising, POP, Social media, paid search, SEO

$$: To generate engagement, done in stages: e.g. Advertising + Interaction

Focus on Conversion (call-to-action): uses mix of channels

No formal comms;

WOM; experience

Budgeting: What is “the line”?

Budgeting Techniques (from Chapter 9)

Budgeting Techniques (cont’d)

Budgeting – Marginal analysis Sales – Response Function

Theoretical basis to explain relationship between advertising spend & sales

Budgeting Sales – Response Function

What does this curve say?

Budgeting Sales – Response Function

• What does this curve say?

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-ad spend initially has little impact -after reaching a certain level(b), it starts having an effect - additional spend-> more little impact on sales - at c, incremental spend has little impact on sale �

What are the differences in these responses?

Model Concave-Downward S-shaped

Response to advertising investment (immediate or delayed?)

Involvement level (high or low?)

Product categories (durables or non-durables?)

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immediate delayed

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low. high

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non durable durable

Marginal analysis

Importance of Share of Voice (SOV)

Strategy to Gain Market Share by Increasing Ad Spend

Budgeting for Other Elements of the Marketing Communications Mix • Besides campaigns focusing on communicating about products and

brands, there is corporate advertising, direct marketing that need budgeting as well • Sales promotions can be more easily budgeted as their effects are

more quantifiable, especially as a company builds experience. Factors to consider include: • Redemption rate: how many coupons will be used, extra units will be sold,

samples demanded, price deals taken • What is the cost covered by the extra units sold?

• PR: staffing/agency costs are relatively fixed, no media costs, need to include production/event costs • Sales force: higher in B2B, fixed costs, take time to train, harder to

change quickly

Which budgeting methods are most used?

• 28% judgmental budgeting, 28% objective and task processes, 20% measurement-based, 15% sales, 9% competitive (West el al 2009) • But more precisely, companies use a combination of methods. A

popular one is heuristics (e.g. maximum advertising/sales ratio) with analytics (West et al 2014) • Budgeting largely depends on corporate culture, access to data,

personalities, industry, timing, risk, etc. • Usually there are many players involved: marketing,

finance/accounting, operations, R&D, corporate management, etc.

When would you increase your budget?

• Competition • Launching a new product • Product differentiation • Low observability of product qualities • Absence of strong price competition • Retailer-manufacturer opportunities or constraints

Lidl (Aldi competitor)

• Prior to 2014, perceived as cheap, without any value other than low price • In 2014, “Taste Test” national TV advertising showing people eating

appealing food and later revealing it was from Lidl • Added 2.2% market share over 4 years (they had gained 3.1 share

over the previous 20 years, mostly because they expanded number of stores) • Why did it grow?

How Lidl grew

Wrapping up

• Integrate Marketing Communications & Budgeting discussed • Next week: Creative Strategy • Week following the next: Guest speaker Katrina Jarratt - Creative

Director at TBWA J