Chapter 15

Chapter 15Chapter 15

Integrated Integrated Marketing Marketing

CommunicationsCommunications

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Chapter ObjectivesChapter Objectives1. Explain how integrated marketing communications relates

to the development of an optimal promotional mix.2. Describe the communication process and how it relates to

the AIDA concept.3. Explain how the promotional mix relates to the objectives

of promotion.4. Identify the different elements of the promotional mix and

explain how marketers develop an optimal promotional mix.

5. Describe the role of sponsorships and direct marketing in integrated marketing communications.

6. Contrast the two major alternative promotional strategies.7. Explain how marketers budget for and measure the

effectiveness of promotion.8. Discuss the value of marketing communications.

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Chapter OverviewChapter Overview

PromotionPromotion: function of informing, persuading, and influencing the consumer’s purchase decision

Marketing Marketing CommunicationsCommunications: transmission from a sender to a receiver of a message dealing with the buyer-seller relationship

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Integrated Marketing CommunicationsIntegrated Marketing Communications

Coordination of all promotional activities – media advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused promotional messageSuccess of any IMC program depends

critically on identifying the members of an audience and understanding what they want

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Importance of TeamworkImportance of TeamworkIMC requires a total strategy

including all marketing activities, not just promotion

Successful implementation of IMC requires that everyone involved in every aspect of promotion – public relations, advertising, personal selling, and sales promotion – function as a team

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Figure 15.2Figure 15.2Chrysler Crossfire: Using a Web Site and a

Toll-free Number in an IMC Campaign

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Role of Databases in Effective IMC Role of Databases in Effective IMC ProgramsProgramsWith the growth of the Internet, marketers

have been given the power to gather information faster and to organize it easier than ever before

By sharing this knowledge appropriately among all relative parties, a firm can lay the foundation for a successful IMC program

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The Communications ProcessThe Communications Process

An effective promotional message accomplishes three tasks:It gains the receiver’s attentionIt achieves understanding by both receiver

and senderIt stimulates the receiver’s needs and

suggests an appropriate method of satisfying them

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AIDA conceptAIDA concept (Attention-Interest-Desire-Action) – an explanation of the steps through which an individual reaches a purchase decision [Table on P.487]

Cheerios CouponSender – General Mills CheeriosEncoding – Marketing and Ad AgencyChannel – FSI, Coupon in Sunday PaperDecoding – Reader see and clips couponResponse – Cheerios purchased, coupon

redeemedFeedback – Detailed reports from News

America or ValassisNoise – Bad coupon design, wrong

newspapers, wrong markets, damaged FSI

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Global Difficulties with the Communication ProcessIn China: KFC’s slogan: “Finger lickin’ good”

came out as “Eat your fingers off”Also in China: Coca-Cola had thousands of

signs made using the translation: “Ke-kou-ke-la”Depending on the dialect this means . . .“Bite the wax tadpole,” or “Female horse stuffed with wax”

In Taiwan: Pepsi’s slogan, “Come alive with the Pepsi generation” came out as “Pepsi will bring your ancestors back from the dead”

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Objectives of PromotionObjectives of Promotion

Provide InformationProvide InformationInform the market

about the availability of a particular good or service

Disney WorldAd promoting a free video to provide Information for vacation planning

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Figure 15.3Figure 15.3Schick:

Offering Product Information and Benefits to Consumers

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Increase DemandIncrease DemandSome promotions

are aimed at increasing primary demand, the desire for a general product category

More promotions are aimed at increasing selective demand, the desire for a specific brand

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Differentiate the Differentiate the ProductProductHomogenous

demand for many products results when consumers regard the firm’s output as virtually identical to its competitors’– then, the firm has virtually no control over marketing variables

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Accentuate the Accentuate the Product’s ValueProduct’s ValuePromotion can

explain the greater ownership utility of a product to buyers, thereby accentuating its value and justifying a higher price

Johnson & JohnsonFirst Aid To Go!Accentuating a Product’s Value

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Stabilize SalesStabilize SalesFor the typical firm, sales

fluctuations may result from cyclical, seasonal, or irregular demand

Stabilizing these variations is often an objective of promotional strategy

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Elements of the Promotional MixElements of the Promotional Mix

Promotional mixPromotional mix: blend of personal selling and nonpersonal selling designed to achieve promotional objectivesPersonal sellingPersonal selling: interpersonal

promotional process involving a seller’s person-to-person presentation to a prospective buyer

Nonpersonal sellingNonpersonal selling includes: Advertising, Product placement, Sales promotion, Direct marketing, Public relations

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AdvertisingAdvertisingPaid, nonpersonal

communication through various media by a business firm, not-for-profit organization, or individual identified in the message with the hope of informing or persuading members of a particular audience

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Product PlacementProduct PlacementMarketer pays a motion picture or television

program owner a fee to display his or her product prominently in the film or show

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Sales PromotionSales PromotionMarketing activities

that stimulates consumer purchasing (includes: displays, trade shows, coupons, premiums, contests, product demonstrations, and various nonrecurrent selling efforts)

Trade promotion

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Direct MarketingDirect MarketingDirect communications other than

personal sales contact between buyer and seller, designed to generate sales, information requests, or store visits

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Public relationsPublic relations: firm’s communications and relationships with its various publics

PublicityPublicity: stimulation of demand for good, service, place, idea, person, or organization by unpaid placement of commercially significant news or favorable media presentations

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Guerilla MarketingGuerilla Marketing: Unconventional, innovative, and low-cost marketing techniques designed to get consumers’ attention in unusual ways.

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SponsorshipsSponsorships

Provision of funds for a sporting or cultural event in exchange for a direct association with the events or activity

SpendingSpending now $11 Billion yearAT&T: A

Sponsor of the PGA Tour

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Growth of SponsorshipsGrowth of SponsorshipsSponsorship has grown rapidly during the

past 30 yearsCorporate sponsorship spending has

increased faster than promotional outlays for advertising and sales promotion

How Sponsorship Differs from AdvertisingHow Sponsorship Differs from AdvertisingSponsor’s degree of controlNature of the messageAudience reactionAmbush marketing

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Assessing Sponsorship ResultsAssessing Sponsorship ResultsMarketers utilize some of the same

techniques to measure both advertising and sponsorship

The differences between the two promotional alternatives often necessitate some unique research techniques

Despite the impressive visibility of special events like soccer’s World Cup and football’s Super Bowl, the demands do not necessarily lead directly to increased sales or improved brand awareness

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Direct MarketingDirect Marketing Few promotional mix elements are growing as

rapidly as direct marketingRelated overall spending total $1.7 trillion

Direct Marketing Communication ChannelsDirect Marketing Communication Channels

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Direct Mail Direct Mail Marketers combine information from internal

and external databases, surveys, coupons, and rebates that require responses to provide information about consumer lifestyles, buying habits, and wants

CatalogsCatalogsOver 10,000 different consumer mail-order

catalogs and thousands more for business-to- business sales are mailed each year generating over $57 million in consumer sales and $36 million in B2B sales

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TelemarketingTelemarketing: promotional presentation involving the use of the telephone for outbound contacts by salespeople or inbound contacts initiated by customers who want to obtain information and place orders

Offering Toll-Free Telephone Numbers to Catalog Shoppers

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Direct Marketing via Broadcast ChannelsDirect Marketing via Broadcast ChannelsBroadcast direct marketing includes:Brief (30 to 90 and second) direct response

ads on television or radioHome shopping channels like:

Quality Value Channel (QVC)Home Shopping Network (HSN)

Infomercial: promotional presentation for a single product running 30 minutes or longer in a format that resembles a regular television program

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Electronic Direct Marketing ChannelsElectronic Direct Marketing ChannelsWeb advertising is an important

component of electronic direct marketingE-mail direct marketing is a natural and

easy extension of traditional direct mail marketing

Other Direct Marketing ChannelsOther Direct Marketing ChannelsPrint media is generally not as effective as

Web marketing or telemarketing for direct marketers

Magazine and newspaper ads with toll-free telephone numbers, kiosks, and other media are still useful in many situations

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Starbucks Starbucks EncoreEncoreStarbucks’

Direct-Response Print Ad

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Developing an Optimal Promotional MixDeveloping an Optimal Promotional Mix

Factors that influence the effectiveness of a promotional to mix:Nature of the marketNature of the productStage in the product life-cyclePriceFunds available for promotion

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Nature of the marketNature of the marketPersonal selling may prove effective with a market

composed of a limited number of buyersAdvertising is more effective when a market has large

numbers of potential customers scattered over sizable geographic areas

Personal selling often works better for intermediary target markets

Nature of the productNature of the productHighly standardized products with minimal servicing

requirements usually need less personal selling than custom products with complex features and/or frequent maintenance needs

Consumer products are more likely to rely heavily on advertising than are business products

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Sierra MistSierra Mist: Promotion focusing on the nature of the product

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Stage in the product life-cycleStage in the product life-cyclePromotional mix must be tailored to the products

stage in the product life-cycle In the introductory stage, there is a heavy emphasis

on personal selling to the to the intermediariesHowever, advertising and sales promotion help to

create awareness and stimulate initial purchases In the growth and maturity stages, advertising gains

relative importancePersonal selling efforts at marketing intermediaries to

expand distribution is continued In the maturity and early decline stages, firms

frequently reduce advertising and sales promotion expenditures

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PricePriceAdvertising dominates the promotional mix for low-

unit-value products due to the high personal contact costs of personal selling

Consumers a high-priced items like luxury cars expect lots of well-presented information via videocassettes, CDs, fancy brochures, and personal selling

Funds available for promotionFunds available for promotionA critical element in the promotional strategy is the

size of the promotional budgetWhile the cost-per-contact of a $2 million, 30-second

TV commercial during the Super Bowl is relatively low, such an expenditure exceeds the entire promotional budgets of many, if not most firms

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Figure 15.8Figure 15.8McDonald’s

Dollar menu: Promotion Based on Price

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Influencing Factors Personal Selling Advertising

Nature of the market Number of buyers Geographic concentration Type of customer

Limited number

Concentrated

Business purchaser

Large number

Dispersed

Ultimate consumer

Nature of the product Complexity Service requirements Type of good or service Use of trade-ins

Custom-made, complex

Considerable

Business

Trade-ins common

Standardized

Minimal

Consumer

Trade-ins uncommon

Stage in the product life cycle

Often emphasized at every stage; heavy emphasis in the introductory and early growth stages in acquainting marketing intermediaries and potential consumers with the new good or service

Often emphasized at every stage; heavy emphasis in the latter part of the growth stage, as well as the maturity and early decline stages, to persuade consumers to select specific brands

Price High unit value Low unit value

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Pulling and PushingPulling and PushingPromotional StrategiesPromotional Strategies

Pulling strategyPulling strategy: promotional effort by a seller to stimulate demand among final users, who will then exert pressure on the distribution channel to carry the good or service, pulling it though the marketing channel

Pushing strategyPushing strategy: promotional effort by a seller to members of the marketing channel intended to stimulate personal selling of the good or service, thereby pushing it through the marketing channel

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Budgeting for Promotional StrategyBudgeting for Promotional Strategy

Percentage-of-sales method

Fixed-sum-per-unit method

Meeting competition method

Task-objective method

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Method Description Example

Percentage-of-sales method

Promotional budget is set as a specified percentage of either past or forecasted sales.

“Last year we spent $10,500 on promotion and had sales of $420,000. Next year we expect sales to grow to $480,000, and we are allocating $12,000 for promotion.”

Fixed-sum-per-unit method

Promotional budget is set as a predetermined dollar amount for each unit sold or produced.

“Our forecast calls for sales of 14,000 units, and we allocate promotion at the rate of $65 per unit.”

Meeting competition method

Promotional budget is set to match competitor’s promotional outlays on either an absolute or relative basis.

“Promotional outlays average 4 percent of sales in our industry.”

Task-objective method

Once marketers determine their specific, promotional objectives, the amount (and type) of promotional spending needed to achieve them is determined.

“By the end of next year, we want 75 percent of the area high-school students to be aware of our new, highly automated fast-food prototype outlet. How many promotional dollars will it take, and how should they be spent?”

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Figure 15.9Figure 15.9Allocation of Promotional Budgets for consumer

Packaged Goods

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Measuring the Effectiveness of PromotionMeasuring the Effectiveness of Promotion

Two basic measurement tools:Direct sales results measures the

effectiveness of promotion by revealing the specific impact on sales revenues for each dollar of promotional spending

Indirect evaluation concentrates on quantifiable indicators of effectiveness like:Recall - how much members of the target

market remember about specific products or advertisements

Readership – size and composition of a message’s audience

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Measuring Online PromotionsMeasuring Online PromotionsEarly attempts at measuring online promotional

efforts involved counting hits and visitsIncorporating direct response and comparing

different promotions for effectivenessTwo major techniques for setting online

advertising rates:Cost per impression (CPM), technique that

related the cost of an ad to every thousand people who read it

Cost per response (click-throughs), which assumes that those who actually click on an ad want more information

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The Value of Marketing CommunicationsThe Value of Marketing Communications

Social ImportanceSocial ImportanceCriticisms of promotional messages as

tasteless and lacking any contribution to society sometimes ignore the fact that society provides no commonly accepted set of standards

The one generally accepted standard in a market society is freedom of choice for the consumer

Promotion has become an important factor in campaigns aimed at achieving socially oriented objectives like the elimination of drug abuse

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Promotional Message Addressing a Universal Social Concern

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Merck Vaccine Merck Vaccine DivisionDivisionThe Social

Importance of Marketing Communications

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Business ImportanceBusiness ImportancePromotional strategy has become

increasingly important to both small and large firms

Its effectiveness to encourage attitude changes, brand loyalty and increase sales is well-documented

Both business and nonbusiness enterprises recognize the importance of promotional efforts

Nonbusiness organizations using promotion include governments and religions

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Economic ImportanceEconomic ImportanceEffective promotion has allowed society to

derive benefits not otherwise availablePromotion increases the number of units

sold; the resulting economies of scale lower production costs and allows lower sales prices

Subsidizes the information contents of newspapers and the broadcast media

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End of Chapter FifteenEnd of Chapter Fifteen