Chapter 15

1. Chapter 15 Integrated Marketing Communications

2. Integrated Marketing Communications • Marketing Communications: transmission from a sender to a receiver of a message dealing with the buyer-seller relationship • Promotion: function of informing, persuading, and influencing the consumer’s purchase decision

3. informing persuading influencing Interest Desire Attention Action ICM & Promotional mix Needs awareness Evaluation of alternative purchase Post purchase evaluation adoption • Promotional mix: • Advertising • Personal selling • Sales promotion • Merchandising • Public relation and publicity • ICM - Coordination of all promotional activities to produce a unified customer-focused promotional message • team work – save money, time, effort Attention-Interest-Desire-Action

4. Success of any IMC program depends critically on identifying the members of an audience and understanding what they want • Role of Databases in Effective IMC Programs • Identifying the specific characteristic of the target market • Internet - power to gather information faster and to organize it easier than ever before • Survey & consumer research

5. The Communications Process • An effective promotional message accomplishes three tasks: • It gains the receiver’s attention • It achieves understanding by both receiver and sender • It stimulates the receiver’s needs and suggests an appropriate method of satisfying them • AIDA concept (Attention-Interest-Desire-Action) – an explanation of the steps through which an individual reaches a purchase

6. Sender—the person(s) attempting to deliver a message or idea. • Encoding processes —the verbal (words, sounds) and nonverbal (gestures, facial expression, posture) cues that the sender utilizes in dispatching the message. • Medium/Transmission device —all of the items that carry the message from the sender to the receiver. • Decoding —takes place when the receiver employs any set of his or her senses (hearing, seeing, feeling, etc.) in the attempt to capture the message. • Receiver —the intended audience for a message. • Response/Feedback —information the sender obtains from the receiver regarding the receiver’s perception or interpretation of a message. • Noise —anything that distorts or disrupts a message.

7. Elements in the Communication Process Promotional mix: -Advertising -Personal selling -Sales promotion -Merchandising -Public relation and publicity Personal media & Impersonal media Channels/ Own promotional messages Competitors promotional messages Receivers’ state of knowledge, perception,.. Other distortions 14 - 7

8. Global Difficulties with the Communication Process • In 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”

9. Objectives of Promotion • Provide Information • Inform the market about the availability of a particular good or service • Increase Demand • Some 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

10. Florida Orange Juice: A commercial to stimulate primary demand by identifying other reasons to consume the product

11. Objectives of Promotion • Differentiate the Product • Homogenous 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

12. Identify how two competitors, Visa and MasterCard, go about differentiating their similar products (debit cards) in these two ads.

13. Visa

14. MasterCard

15. Objectives of Promotion • Accentuate/emphasize the Product’s Value • Promotion 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

16. Objectives of Promotion • Stabilize Sales • For the typical firm, sales fluctuations may result from cyclical, seasonal, or irregular demand • Stabilizing these variations is often an objective of promotional strategy

17. Elements of the Promotional Mix • Promotional mix: blend of personal selling and nonpersonal selling designed to achieve promotional objectives • Personal selling: interpersonal promotional process (one to one) involving a seller’s person-to-person presentation to a prospective buyer • Most effective tool for building buyers’ preferences, convictions, and actions • Personal interaction allows for feedback and adjustments • Relationship-oriented • Buyers are more attentive • Most expensive (coverage) of the promotional tools • Nonpersonal selling : conducted without face to face interaction with the buyers • includes Advertising, Product placement, Sales promotion, Direct marketing, Public relations

18. Elements of the Promotional Mix • Advertising • Paid, 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 • Reaches large, geographically dispersed audiences, often with high frequency • Low cost per exposure, however overall costs are high • Consumers perceive advertised goods as more legitimate • -ve: Impersonal; one-way communication

19. Elements of the Promotional Mix • Product Placement • Marketer pays a motion picture or television program owner a fee to display his or her product prominently in the film or show

20. Elements of the Promotional Mix • Sales Promotion • Marketing activities that stimulates consumer purchasing (includes: displays, trade shows, coupons, premiums, contests, product demonstrations, and various nonrecurrent selling efforts) • Trade promotion – targeted at sales intermediaries • Attracts attention, offers strong purchase incentives, dramatizes offers, boosts sagging sales • Stimulates quick response • Short-lived • Not effective at building long-term brand preferences

21. Elements of the Promotional Mix • Direct Marketing • Direct communications other than personal sales contact between buyer and seller, designed to generate sales, information requests, or store visits • Direct marketers use a variety of media including catalogs, postcards, statement inserts, card packs, magazines and other mail • Direct marketing is attractive to many marketers, because in many cases its effectiveness can be measured directly. For example, if a marketer sends out one million solicitations by mail, and ten thousand customers can be tracked as having responded to the promotion, the marketer can say with some confidence that the campaign led directly to the responses.

22. Elements of the Promotional Mix • Public relations: firm’s communications and relationships with its various publics • Public relations is the art and science of managing communication between an organization and its key constituents to build, manage, and sustain its positive image • press release is a written statement distributed to the media • Lobby groups are established to influence government policy, corporate policy, or public opinion • others

23. Elements of the Promotional Mix • Publicity: Publicity is the spreading of information to gain public awareness in a product, service, candidate, etc. by unpaid placement of commercially significant news or favorable media presentations • publicity is the management of product- or brand-related communications between the firm and the general public. It is primarily an informative activity (as opposed to a persuasive one), but its ultimate goal is to promote products, services, or brands

24. Elements of the Promotional Mix • Guerilla Marketing: Unconventional, innovative, and low-cost marketing techniques designed to get consumers’ attention in unusual ways. • Such promotions are sometimes designed so that the target audience is left unaware they have been marketed to and may therefore be a form of undercover marketing (also called stealth marketing). • It should be based on human psychology instead of experience, judgment, and guesswork. • Instead of money, the primary investments of marketing should be time, energy, and imagination. "In order to sell a product or a service, a company must establish a relationship with the customer. It must build trust and rapport. It must understand the customer's needs, and it must provide a product that delivers the promised benefits." (The Guerrilla Marketing Handbook , Levinson)

25. NOTE • Please accustom yourself with the advantages and disadvantages of various promotional mix elements (text book pp 479)

26. Sponsorships • Provision of funds for an event or person in exchange for a direct association with the events, activity or person • a corporate entity may provide equipment for a famous athlete or sports team in exchange for brand recognition. • How Sponsorship Differs from Advertising • Sponsor’s degree of control – quantity and quality of market coverage (less): no control on event, nature of outcome,… • Nature of the message – delivered in association of activity with its own personality • Audience reaction – brand recognition rather than “pushing for sales”, more acceptable from consumer point of view

27. Ambush marketing - Ambush marketing occurs when a brand pays to become the official sponsor of an event and an other brand tries to connect itself to the same event, without paying the sponsorship fee and without breaking any laws. • At the 1998 World Cup, Nike sponsored a number of teams competing in the Cup despite Adidas being the official sponsor

28. Direct Marketing • Direct communications other than personal sales contact between buyer and seller • Direct Marketing Communication Channels

29. Developing an Optimal Promotional Mix • Factors that influence the effectiveness of a promotional to mix: • Nature of the market • Nature of the product • Stage in the product life-cycle • Price • Funds available for promotion

30. Nature of the market • Personal selling may prove effective with a market composed of a limited number of buyers • Advertising 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 product • Highly standardized productswith 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

31. Stage in the product life-cycle • Promotional 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 intermediaries • However, advertising and sales promotion help to create awareness and stimulate initial purchases • In the growth and maturity stages, advertising gains relative importance • Personal 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

32. Price • Advertising 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 promotion • A critical element in the promotional strategy is the size of the promotional budget • While 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

33. Pulling and PushingPromotional Strategies • Pulling strategy: consumer requests the product and "pulls" it through the delivery channel.. • create demand, consumer request product from retailers • Pushing 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

34. Night & Day 30 day contact lenses using a pull strategy by encouraging customers to ask their doctors.

35. Budgeting for Promotional Strategy • Percentage-of-sales method • Fixed-sum-per-unit method • Meeting competition method • Task-objective method

37. Measuring 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

38. The Value of Marketing Communications • Social Importance • Criticisms 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

39. Public Service Announcements (PSAs)

40. Business Importance • Promotional 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

41. Economic Importance • Effective promotion has allowed society to derive benefits not otherwise available • Promotion 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