Marketing communications

1. Marketing communications

2. Order of presentation • The 4Ps – a brief reminder • IMC: Integrated Marketing Communications • Advertising • How it works • Attention and comprehension • WOM: Word Of Mouth

3. The 4 Ps • The marketing mix is a combination of the 4 Ps • Product • Price • Promotion • Place • As stressed earlier, all of them should convey the same message • These are not independent decisions

4. 4 Ps: Product Product • Variety • Quality • Design • Brand name • Packaging • Etc • All of these should be consistent with the umbrella strategy

5. 4 Ps: Product Brand name: the importance • Harari and McDavid: experiment with teachers. • Different names to compositions supposedly written by fourth and fifth graders • Two popular names • David and Michael • To unpopular names • Hubert and Elmer • Each composition was given to a different group of elementary-school teachers to grade • Compositions bearing the names of David and Michael average a letter grade higher than the same compositions attributed to Elmer and Hubert Source: Ries and Trout 2001

6. 4 Ps The importance [2] Source: Ries and Trout 2001

7. 4 Ps: Product Brand name: how to choose • “Tells what the product’s major benefit is” • Heads & Shoulders shampoo • Intensive Care skin lotion • Slender diet drink • Close-Up toothpaste • DieHard (battery) • “A strong, generic-like, descriptive name will block your me-too competitors from muscling their way into your territory” • People and then Us • However, Time and then Newsweek • How about The Wall Street Journal? • But, what about Coca-Cola, Kodak and Xerox? • The incumbent advantage Source: Ries and Trout 2001

8. 4 Ps: Price Price • List price • Discounts • Payment period • Credit terms • etc

9. 4 Ps: Promotion Promotion • Sales promotion • Advertising (today) • WOM (today) • Salesforce (grassroots campaign) • Public relations (dealing with the media) • Direct marketing (GOTV)

10. 4 Ps: Place • The 4Ps • IMC • Advertising • How it works • Attention and comprehension • WOM: Word Of Mouth Place • Channels • Coverage • Locations • etc

11. IMC IMC – Integrated Marketing Communications: an example • 1993: Southwest new Baltimore hub • Need to familiarize with • No-frills, low-fares, high-frequency • The chairman gave the governor a flotation device • Calling it a “lifesaver” from high fares • Flew 49 elementary schoolchildren free to the Cleveland zoo • Before launching the $49 fare to Cleveland • Direct mail to frequent short-haul travelers • Offering a special promotion to join the FF program • Employees handing out fliers and peanuts • Promoting the airline’s low “just peanuts” fares • Only then advertising Source: Batra, Myers, Aaker 1995

12. IMC IMC: key idea • Advertising has various strengths and weaknesses and thus should be combined with the other elements of the communication mix • The strengths of one are used to offset the weakness of another • For example, ads are weak at inducing immediate action. Thus, combine with direct marketing or sales promotion Source: Batra, Myers, Aaker 1995

13. IMC Advantages and disadvantages of advertising • Advantages • Reaching mass audiences • Creating awareness • Cheap (per capita) • Can use complex visual and emotional devices • Disadvantages • Cannot convey complex information (sales people or direct mail) • Cannot “close” a deal (sales people or direct mail) • Bias (editorial endorsements, PR) Source: Batra, Myers, Aaker 1995

14. IMC • The 4Ps • IMC • Advertising • How it works • Attention and comprehension • WOM: Word Of Mouth Other tools in IMC • Direct marketing • Target small segments of consumers • Invoke action by • Building confidence • Providing information • Making it easy to order • Creating a sense of urgency • Sales promotion • Coupons, samples • Create trial purchases • Stimulate short-term sales • Public relations • News and editorial mentions • Events and sponsorships • Cause-related marketing Source: Batra, Myers, Aaker 1995

15. Advertising • Repetition • Involvement • ELM • Cognitive response How ad works? • Joe Isuzu • A huge success • No, a huge failure • Why? • Good recall, but not change in attitude Source: Batra, Myers, Aaker 1995 Source: Batra, Myers, Aaker 1995

16. Advertising: how it works Repetition works [1] • No information but still work. Why? • Mere exposure (Zajonc) • experiment with polygons • No recognition but preferred • Preconscious effect • Studies suggest that ad repetition may in some situation itself lead to preference, even if consumers don’t absorb information about product benefits • Top of the mind awareness (Ehrenberg and Tellis) • Existing consumers • Buy more frequently • Increase its proportion • Reminder advertising Source: Batra, Myers, Aaker 1995

17. Advertising: how it works Repetition works [2] • Familiarity (Krugman) • Thus liking • Uncertainty creates a tension which is undesirable. • Familiarity may create positive feelings of comfort, security, ownership, or intimacy • Signaling (Kirmani and Wright or Milgrom and Roberts) • Consumers perceive the amount of ads as an indication of brand quality • An equilibrium concept with • Experienced good • Unobserved quality • Ads are a way to “burn money” • Criticism? • Implications for managers: When is repetition useful?* • When you cannot provide information (Coke) • When consumers are not interested in information (low involvement) Source: Batra, Myers, Aaker 1995

18. Advertising: how it works Involvement • Degree of involvement • Risk, interest, knowledge and experience to think about the message, how far is the consumer from a purchasing decision • Low • Cognition (awareness) => behavioral => attitudinal • High • Cognitive (product features) => attitudinal = > behavioral • Implications for managers • High-involvement • Information about benefits • Print ads • Low-involvement • Awareness • TV ads Source: Batra, Myers, Aaker 1995

19. Advertising: how it works ELM – Elaboration likelihood model (Petty and Cacioppo) • The critical aspect is the depth or amount of information processing • Central route • Consciously and diligently consider the information • The attitude are changed or formed by careful consideration, thinking and integration of information • Peripheral route • Attitudes are changed or formed without active thinking • Persuasive impact occurs by associating the brand with positive or negative aspects or executional cues in the ads • Number of argument not their strength • Endorser seemed to be an expert • How the ad was made: music, video etc Source: Batra, Myers, Aaker 1995

20. Advertising: how it works ELM [2] • Attitudes resulting from central are strong and enduring, resistant to change and predict behavior better • Which route? • Motivation to process information • Information processing requires effort • Involvement (consumer) and information is relevant and important (ad) • Ability Source: Batra, Myers, Aaker 1995

21. Advertising: how it works ELM: an experiment • A booklet with ten printed ads for disposable razors • Manipulations: (1) gift and (2) availability, (3) strong and weak argument, (4) celebrity Source: Batra, Myers, Aaker 1995 Source: Batra, Myers, Aaker 1995

22. Advertising: how it works ELM: implications for managers • Ad medium • Broadcast media are more likely to lead to peripherally created attitude • Involvement or motivation • Knowledge level of the subjects • Comprehension • Either because of the ad, time, or the individual • Distraction • Emotion • Good mood => less energy for thinking • Need for cognition Source: Batra, Myers, Aaker 1995

23. Advertising: how it works Cognitive response model • High involvement: how do consumers learn? • Do not focus on learning information but rather on the process of thinking • What determines attitudes is the nature of thoughts that went through the consumer’s head as the ad was shown • Two types of thoughts • CA – Counterargument • SA – support argument Source: Batra, Myers, Aaker 1995

24. Advertising: how it works CA and SA: examples • SA (“I could use a product that could provide wither clothes”) • SA sardines Source: Batra, Myers, Aaker 1995

25. Advertising: how it works • The 4Ps • IMC • Advertising • How it works • Attention and comprehension • WOM: Word Of Mouth Cognitive response model: implications for managers • Repetition • The number of CAs fall and then rise with repetition, while SAs do the reverse • Discrepancy from the previously held position or belief • Don’t expect to have a hostile audience won over easily • Strength of the argument • Strong (weak) arguments generate SA (CA) • If you have nothing to say, sing it Source: Batra, Myers, Aaker 1995 Source: Batra, Myers, Aaker 1995

26. Advertising: attention and comprehension Attention and comprehension • Getting harder to get attention • Clutter • Thousands of ads per day • So many ads of the competing brands in the proximity of your ad • Consumers have more control • Remote control – zapping • Video – zipping • TiVo • Even if you win attention, your message might fail to be comprehended • Attention and comprehension represent a perceptual barrier through which many ads fail to pass Source: Batra, Myers, Aaker 1995

27. Advertising: attention and comprehension Combating clutter, zapping and zipping • Clutter • Beginning or end of the commercial break • Three dimensional pop-ups • Zapping • The first five second of a commercial are critical • Ads should be pleasurable and entertaining • Zipping • Use visual elements (such as brand logos or package shots) Source: Batra, Myers, Aaker 1995

28. Advertising: attract attention Ads that attract attention • Information of practical value • Information that support • Information that stimulates • Information that interests Source: Batra, Myers, Aaker 1995

29. Advertising: attract attention Information of practical value [1] • People need information for decision making, and ads that provides such information getting attention • Headlines that promise free, useful information such as “How to select the best refrigerator” Source: Batra, Myers, Aaker 1995

30. Advertising: attract attention Information of practical value [2] • Do not be afraid of long copy Source: Batra, Myers, Aaker 1995

31. Advertising: attract attention Information that supports: the consistency theories • Selective exposure: “I have been reading so much about cigarettes and cancer that I quite reading.” (Dick Gregory) • Dissonance theory: the existing of conflicting cognitive elements is discomforting and people try to reduce it • Ehrlich: 8 envelopes allegedly containing ads for different make of cars. Over 80 percent chose the ad for their own car • Managerial implications • Loyal costumers are more receptive • Combating selective exposure • Rewards, premiums, direct-mail using contests Source: Batra, Myers, Aaker 1995

32. Advertising: attract attention Information that stimulates: the complexity theories • Variety theory (Maddi): novelty, unexpectedness, change and complexity are pursued because they are inherently satisfying. People get bored and are motivated to reduce boredom by seeking stimuli that are novel, unusual and different. People are curious about the world around them • Consistency or complexity? • Both. It is a matter of the right level Source: Batra, Myers, Aaker 1995

33. Advertising: attract attention Complexity: Implications for ad characteristics • Size, Color, Vivid • Vivid: Concrete rather than abstract, imagery provoking, emotionally interesting, etc • Holbrook and Lehmann: ads rated as surprising, incongruous or funny were more likely to have been read • Ad wearout and pool-outs • Poolouts should be sufficiently distinct from each other • Helson: distinctiveness • We have a reference point and attention is created when an object deviates markedly from that point • Mandler: moderate inconsistencies Source: Batra, Myers, Aaker 1995

34. Advertising: attention versus comprehension Attention versus comprehension • The long-lasting struggle between creativity and effectiveness • The attention-getting approaches might “borrow interest” from the “real” material • The message might get lost in the process • Examples: sexually attractive models, humor, and endorsers Source: Batra, Myers, Aaker 1995

35. Advertising: comprehension (mis) comprehension • TV • Sixty thirty-second TV communications • 1979 • 2,700 consumers • Between 28 to 30 percent were miscomprehended (true-false questions) • Educational Foundation of the American Association of Advertising Agencies • Print ads • Fifty-four full-page magazine ads • 1982 • 1,350 consumers • 20 percent of the material was miscomprehended, and • 15 percent not understood • Example: is Crystal Pepsi like Pepsi? The ad said: “you’ve never seen a taste like this” Source: Batra, Myers, Aaker 1995

36. Advertising: comprehension Measuring comprehension • Two concerns: • Did the reader of the ad interpret it and comprehended it just the way the advertiser intended? • Did she go deeper and embellish the ad content in some way, using her own general knowledge about the way the world works? • If yes to the second question, then the ad is more effective (credibility, liked, etc) Source: Batra, Myers, Aaker 1995

37. Advertising: comprehension Gestalt • Gestalt: configuration, or whole, or pattern • The whole has a meaning distinct from its individual parts • Two concepts • The organized whole • Stimuli are perceived not as a set of elements but as a whole • A drive toward orderly configuration • A good gestalt is simple, familiar, regular, meaningful, consistent and complete Source: Batra, Myers, Aaker 1995

38. Advertising: comprehension An experiment • Asch asked respondents to describe a person that has the following list of characteristics: • Intelligent, skillful, industrious, warm, determined, practical, and cautious • The same list with “cold” instead of “warm” • The differences in the descriptions were striking. The “warm” person was perceived to be happier, better natured, more sociable, more altruistic, more humorous, and more imaginative • When he used “polite” versus “blunt” the differences were minor Source: Batra, Myers, Aaker 1995

39. Advertising: comprehension Implications from the experiment • The conclusions from the experiment • People strive to have a complete impression of an object • Thus, advertising copy does not have to tell the entire story • Stimuli are seen in interaction: The intelligence of a warm person is perceived differently from that of a cold person • An ad is perceived in the context of the entire campaign • Context: the first few traits formed a set or context for the rest • Advertiser should be concern about the first impressions Source: Batra, Myers, Aaker 1995

40. Advertising: comprehension Closure • The human mind is not above making minor or even major distortions of the stimuli to accomplish good Gestalt • Implications for marketing • Run a 30-second commercial several times and then a 5-second • Incomplete jingle • “You can take Salem out of the country but you can’t…” • Incomplete ads • Get the reader involved • Stimulate effort • Enhance learning • More accessible from the memory • More stable • Teasers Source: Batra, Myers, Aaker 1995

41. Advertising: comprehension Closure Source: Batra, Myers, Aaker 1995

42. Advertising: information or utility New approach: observe behavior • Most assume that ad intensity affect the utility • There are various problems with such an approach • Tautological • Black box • Ads distort taste and preferences • At the same time: the world today • Many new products • The attributes of veteran products continuously changing • …a lot of uncertainty • We need to study the information set • But, how can we know that the effect is through the information set and not via the utility function?

43. Advertising: information or utility Differences in knowledge level • If ads provide information, their effect should depend on the knowledge level • Case at hand: TV shows (specials versus regular) • Data: individual level data for one week

44. Advertising: information or utility TV: Individual data • A week in November 1995 • Nielsen people meter (NPM) • Five options: ABC, CBS, NBC, Fox, OUT • 15 minutes + prime time = 60 time slots Demographics: age and gender Household characteristics: income, urban, education, etc

45. Advertising: information or utility TV: the schedule • Cast demographics (Shachar and Emerson 2000) • gender, age, family status, and race • Show categories (Rust and Alpert 1984) • sitcoms, action drama, romantic drama, and others

46. Advertising: information or utility The effect is stronger for specials

47. Advertising: information or utility Deter consumption

48. Advertising: information or utility Improve matching [1]

49. Advertising: information or utility Improve matching [2] Implications for managers: targeting, targeting, targeting.

50. Advertising: information or utility However, still a direct effect • How can we explain it?* • Informative advertising reduces consumers' uncertainty about the attributes of the promoted product. Thus, if the consumers are risk-averse (dislike uncertainty), then their tendency to purchase a product increases with the number of ads they were exposed to.