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Chapter 6

Chapter 6. Integrated Marketing Communication Strategy and Management. In this chapter, you will learn about…. Integrated Marketing Communication (IMC) Strategy Framework Information Requirements in Purchase Decisions Reasonable Communication Objectives Developing an IMC Mix

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Chapter 6

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  1. Chapter 6 Integrated Marketing Communication Strategy and Management

  2. In this chapter, you will learn about… • Integrated Marketing Communication (IMC) Strategy Framework • Information Requirements in Purchase Decisions • Reasonable Communication Objectives • Developing an IMC Mix • Information Requirements of Buyers • Nature of the Offering • Target-Market Characteristics • Organizational Capacity • Push versus Pull Communication Strategies

  3. In this chapter, you will learn about… • Marketing Web Sites and Integrated Marketing Communications • Purpose of Marketing Web Sites • Leveraging Advertising and Personal Selling with Promotional Web Sites • Communication Mix Budgeting • Communication Budget Allocation • Evaluation and Control of the Communication Process

  4. What is Marketing Communication? Marketing communication is the process by which information about an organization and its offerings is disseminated to selected markets.

  5. Goal of Marketing Communication • Induce initial purchase • Create post purchase satisfaction

  6. Purpose of Marketing Communication • The availability of an offering • The unique benefits of the offering • The where and how of obtaining and using the offering Communication is necessary to inform buyers of the following:

  7. Advertising Personal Selling Sales Promotion Marketing Communication Mix Communications Mix

  8. Integrated Marketing Communications (IMC) The practice of blending different elements of the communication mix in mutually reinforcing ways.

  9. IMC Strategy Framework • What are the information requirements of target markets? • What are the objectives of the strategy? • Can some of the communication activities be combined? • What should the budget be and how should resources be allocated? • How should it be timed and scheduled? • How should it be evaluated?

  10. Unawareness Knowledge Preference Purchase Information Requirements in Purchase DecisionsPurchase Process Model

  11. Information Requirements in Purchase Decisions • Determine how buyers purchase a particular offering Roles played by individuals in the buying center/household • Define the role of information in the purchase process When, where, how, and what information is used for decision making • Determine the perception that consumers have of the organization and the offering Sources from which information is sought

  12. Reasonable Communication Objectives • Build primary demand Demand for the product or service class • Build selective demand Demand for a particular brand, product, or service Objectives differ depending on stage in product life-cycle:

  13. Reasonable Communication ObjectivesRequirements • Consistent Both among themselves and with other marketing elements • Quantifiable For measurement and control purposes • Attainable With an appropriate amount of effort and expenditure and within a specific time frame

  14. Developing an IMC MixFactors to be Considered • The information requirements of potential buyers • The nature of the offering • The nature of the target market • The capacity of the organization

  15. Developing an IMC MixInformation Requirements of Buyers • Advertising creates awareness • Salespeople provide information • Sales promotion, brochures, and catalogs provide descriptions and stimulate trial Analyze the relative value of the communication tools used at various stages in the purchase-decision process

  16. Developing an IMC Mix Nature of the Offering • Advertising is useful when an offering is not complex, is frequently purchased, is relatively inexpensive, or has benefits that differentiate it from competition • Personal selling is required when a product is relatively expensive or its benefits are not readily apparent • Sales promotion lends itself to nearly every offering type because of the wide variety of forms it can assume

  17. Developing an IMC MixTarget Market Characteristics • Advertising is effective for communicating an offering to a mass market that is geographically scattered • Direct marketing (e.g., Internet) can also be used to reach a geographically dispersed target market • Personal selling is useful when a small number of buyers live in close proximity and purchase large quantities

  18. MAKE vs. BUY Developing an IMC MixOrganizational Capacity • Perform the activity internally? • Company sales force • Fixed and variable costs • More control • Flexibility • Focused sales effort • Greater availability • Contract it out? • Independent sales representatives • Variable costs only • Acceptable control • Lower personnel costs • Greater flexibility • Increased sales effort

  19. Cost of company reps Cost of independent reps = 0.03X + $500,000 0.05X Developing an IMC MixOrganizational Capacity Commission paid to independent reps=5% Commission paid to company salespeople = 3% Salaryandadmin costsfor salespeople = $500,000 At what level X of sales would both options cost the same? Solving for X, we get $25 million for the level of sales at which both options will cost the same.

  20. Break-Even Chart for Comparing Independent Reps and Company Sales Force Company Sales Cost ($000) Independent Reps Selling Cost $3,000 $2,500 $2,000 ($1,250) Company Sales Force Selling Cost $1,000 $500 Company Sales ($ Millions) 0 5 10 15 20 25 30 35 40

  21. PUSH strategy Retailers and Wholesalers Retailers and Wholesalers PULL strategy Consumers Consumers Developing an IMC MixPush and Pull Strategies Producer

  22. Developing an IMC MixPush and Pull Strategies • An organization has easily identifiable buyers • The offering is complex • Buyers view the purchase as being risky • A product or service is early in its life cycle • The organization has limited funds for direct-to-consumer advertising Push strategy is typically used when…

  23. Developing an IMC MixIdentifying an Advertising Opportunity • There is a favorable primary demand for a product or service category • The product or service to be advertised can be significantly differentiated from its competitors • The product or service has hidden qualities or benefits that can be communicated through advertising • There are strong emotional buying motives involved, such as for health, beauty, or safety

  24. Marketing Web Sites and IMC Focus on turning an online browser into an online buyer. Successful transactional Web sites feature: • Well-known, branded products and services • Favorable shopping and buying experiences (e.g., Gap.com) Transactional Sites

  25. Marketing Web Sites and IMC Promotional Sites • Promote a company’s products and services and provide information on how items can be used and where they can be purchased • Can have games, contests, quizzes with electronic coupons and other gifts and prizes (e.g., Saturn.com)

  26. Marketing Web Sites and IMC Promotional Sites Can also be used to create a buzz (word of mouth behavior)

  27. Marketing Web Sites and IMC • Viral Sites • Encourages individuals to forward marketer-initiated messages to others via e-mail • Procter & Gamble’s Physique shampoo • People who referred 10 friends to the shampoo’s promotional web site received a gift • The promotion generated 2 million referrals!

  28. Leveraging Advertising and Personal Selling with Promotion Web Site • Communication mix • Early stages of the process-need recognition • Development of product specifications • Providing feedback on product/serviceperformance Promotional Web sites and the Internet/Web-enabled technology that supports them can leverage advertising and personal selling efforts Can play a cost-effective role in:

  29. Communication Mix Budgeting • Formula-based guidelines • Qualitatively-based guidelines Make the budget commensurate with the tasks required of the communication activities Establishing the size of a communication budget:

  30. Communication Mix BudgetingFormula-based Approaches Percentage of sales approach • Past sales or anticipated sales can be used for this approach Per unit method • Multiply per unit spending with expected sales volume • Mostly used by durable-goods manufacturers (e.g., appliance marketers)

  31. Communication Mix BudgetingQualitatively-based Approaches Competitive-party approach • Maintain a parity between company’s communication expenditures and those of its competitors All available funds • When introducing a new offering

  32. Communication Mix Budgeting Objective-task approach • Define the communication objectives • Identify the tasks needed to attain the objectives • Estimate the costs associated with the performance of these tasks This method is typically considered the best approach.

  33. Communication Mix Budgeting Advertising Budget Allocation • Television • Radio • Magazine • Newspaper • Billboard • Internet SIX media: Each medium consists of vehicles that have specific characteristics

  34. Communication Mix Budgeting Advertising Budget Allocation Media are mostly chosen based on: • Cost • Reach • Frequency • Audience characteristics Other considerations: • Purpose of the advertisement • Product needs • Editorial climate

  35. NC x FC x LC NS = TA Communication Mix Budgeting Sales Force Budget Allocation NS = number of sales people NC = number of customers (actual or potential) FC = necessary frequency of customer calls LC = length of average customer call, including travel time TA = average available selling time per salesperson (less administrative time)

  36. 2500 x 4 x 2 = 15 salespeople needed 1340 Communication Mix Budgeting Sales Force Budget Allocation Example No. of potential customers = 2500 No. of calls per customers per year = 4 Travel time per call = 2 hrs Number of working hours per year = 1340

  37. Evaluation and Control of the Communication Process • Continuous monitoring of the execution of any communication to ensure that communication objectives are being attained • Should incorporate some measure of sales or profits • Budgeting

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