CHAPTER FIFTEEN INTEGRATED MARKETING COMMUNICATIONS.

CHAPTER FIFTEENCHAPTER FIFTEENINTEGRATED MARKETING INTEGRATED MARKETING

COMMUNICATIONSCOMMUNICATIONS

Chapter OverviewChapter Overview

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

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

Integrated Marketing Integrated Marketing CommunicationsCommunications

Integrated marketing communications (IMC): Integrated marketing communications (IMC): Coordination of all promotional activities – Coordination of all promotional activities – media advertising, direct mail, personal selling, media advertising, direct mail, personal selling, sales promotion, and public relations – to sales promotion, and public relations – to produce a unified customer-focused promotional produce a unified customer-focused promotional messagemessage

Success of any IMC program depends critically Success of any IMC program depends critically on identifying the members of an audience and on identifying the members of an audience and understanding what they want understanding what they want

THE COMMUNICATIONS THE COMMUNICATIONS PROCESSPROCESS

Table 15.1: Relating Promotion to the Communications ProcessTable 15.1: Relating Promotion to the Communications Process

THE COMMUNICATIONS THE COMMUNICATIONS PROCESSPROCESS

An effective promotional message accomplishes An effective promotional message accomplishes three tasks:three tasks:– It gains the receiver’s attentionIt gains the receiver’s attention– It achieves understanding by both receiver and senderIt achieves understanding by both receiver and sender– It stimulates the receiver’s needs and suggests an It stimulates the receiver’s needs and suggests an

appropriate method of satisfying themappropriate method of satisfying them The above tasks are related to the The above tasks are related to the AIDA concept AIDA concept

((AAttention-ttention-IInterest-nterest-DDesire-esire-AAction) – an ction) – an explanation of the steps through which an explanation of the steps through which an individual reaches a purchase decisionindividual reaches a purchase decision

Global Difficulties With the Global Difficulties With the Communication ProcessCommunication Process

In China:In China: KFC’s slogan: “Finger lickin’ good” KFC’s slogan: “Finger lickin’ good” came out as “Eat your fingers off”came out as “Eat your fingers off”

Also in China:Also in China: Coca-Cola had thousands of Coca-Cola had thousands of signs made using the translation: “Ke-kou-ke-la”signs made using the translation: “Ke-kou-ke-la”– Depending on the dialect this means . . .Depending on the dialect this means . . .

““Bite the wax tadpole,” or Bite the wax tadpole,” or ““Female horse stuffed with wax”Female horse stuffed with wax”

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

Objectives of Objectives of PromotionPromotion

Traditional function of promotion was to Traditional function of promotion was to inform the market about the availability of inform the market about the availability of a particular good or servicea particular good or service

Marketers still direct large portions of Marketers still direct large portions of current promotional efforts at providing current promotional efforts at providing informationinformation

Provide Provide InformationInformation


Some promotions are aimed at increasing Some promotions are aimed at increasing primary demandprimary demand, the desire for a general , the desire for a general product categoryproduct category

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

Increase Increase DemandDemandIncrease Increase DemandDemand


Product differentiationProduct differentiation is a frequent objective is a frequent objective Homogenous demand for many products Homogenous demand for many products

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

Product differentiation permits more Product differentiation permits more flexibility in marketing strategyflexibility in marketing strategy

Differentiate Differentiate the Productthe Product


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

Accentuate Accentuate Product’s Product’s

ValueValue


For the typical firm, sales For the typical firm, sales fluctuations may result from fluctuations may result from cyclical, seasonal, or irregular cyclical, seasonal, or irregular demanddemand

Stabilizing these variations is Stabilizing these variations is often an objective of often an objective of promotional strategy promotional strategy

Stabilize Stabilize SalesSales

The Promotional MixThe Promotional Mix

Promotional mix: Promotional mix: blend blend of personal selling and of personal selling and nonpersonal selling nonpersonal selling (including advertising, (including advertising, sales promotion, direct sales promotion, direct marketing, and public marketing, and public relations) designed to relations) designed to achieve promotional achieve promotional objectivesobjectives

Personal Personal SellingSelling

Nonpersonal Nonpersonal SellingSelling

Nonpersonal SellingNonpersonal Selling

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

AdvertisingAdvertising


Sales promotion:Sales promotion: marketing activities other than marketing activities other than personal selling, advertising, and publicity that personal selling, advertising, and publicity that stimulates consumer purchasing and dealer stimulates consumer purchasing and dealer effectiveness (includes displays, trade shows, effectiveness (includes displays, trade shows, coupons, premiums, contests, product coupons, premiums, contests, product demonstrations, and various nonrecurrent selling demonstrations, and various nonrecurrent selling efforts)efforts)

Trade promotion:Trade promotion: sales promotions aimed at sales promotions aimed at marketing intermediaries rather than ultimate marketing intermediaries rather than ultimate consumersconsumers

Sales promotionSales promotion


Direct marketing:Direct marketing: direct direct communications other than personal communications other than personal sales contact between buyer and sales contact between buyer and seller, designed to generate sales, seller, designed to generate sales, information requests, or store visitsinformation requests, or store visits

Direct marketingDirect marketing


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

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

Public relationsPublic relations

Table 15.2: Relating Promotion to the Communications ProcessTable 15.2: Relating Promotion to the Communications Process

Personal Personal SellingSelling AdvertisingAdvertising

Sales Sales PromotionPromotion

Direct Direct MarketingMarketing

Public Public RelationsRelations

Permits Permits measurement of measurement of effectiveness.effectiveness.

Elicits an Elicits an immediate immediate response.response.

Tailors the Tailors the message to fit message to fit the customer.the customer.

Reaches a large Reaches a large group of potential group of potential consumers for a consumers for a relatively low relatively low price per price per exposure.exposure.

Allows strict Allows strict control over the control over the final message.final message.

Can be adapted to Can be adapted to either mass either mass audiences or audiences or specific audience specific audience segments.segments.

Produces an Produces an immediate immediate consumer consumer response.response.

Attracts attention Attracts attention and creates and creates product product awareness.awareness.

Allows easy Allows easy measurement of measurement of results.results.

Provides short-Provides short-term sales term sales increases.increases.

Generates an Generates an immediate immediate response.response.

Covers a wide Covers a wide audience with audience with targeted targeted advertising.advertising.

Allows Allows complete, complete, customized, customized, personal personal message.message.

Produces Produces measurable measurable results. results.

Creates a Creates a positive positive attitude toward attitude toward a product or a product or company.company.

Enhances Enhances credibility of a credibility of a product or product or company.company.

Table 15.2: Relating Promotion to theTable 15.2: Relating Promotion to the Communications Process Communications Process (Continued)(Continued)

Personal Personal SellingSelling AdvertisingAdvertising

Sales Sales PromotionPromotion

Direct Direct MarketingMarketing

Public Public RelationsRelations

Relies almost Relies almost exclusively upon exclusively upon the ability of the the ability of the salesperson.salesperson.

Involves high Involves high cost per contact.cost per contact.

Does not permit Does not permit totally accurate totally accurate measurement of measurement of results.results.

Usually cannot Usually cannot close sales.close sales.

Is nonpersonal Is nonpersonal in nature.in nature.

Is difficult to Is difficult to differentiate differentiate from from competitor’s competitor’s efforts.efforts.

Suffers from Suffers from image image problem.problem.

Involves a high Involves a high cost per reader.cost per reader.

Depends on Depends on quality and quality and accuracy of accuracy of mailing lists.mailing lists.

May annoy May annoy consumers.consumers.

May not May not permit permit accurate accurate measurement measurement of effect on of effect on sales.sales.

Involves much Involves much effort directed effort directed toward toward nonmarketing-nonmarketing-oriented goals.oriented goals.

DEVELOPING AN OPTIMAL DEVELOPING AN OPTIMAL PROMOTIONAL MIXPROMOTIONAL MIX

Factors that influence the Factors that influence the effectiveness of a effectiveness of a promotional to mix:promotional to mix:– Nature of the marketNature of the market

– Nature of the productNature of the product

– Stage in the product life-Stage in the product life-cyclecycle

– PricePrice

– Funds available for Funds available for promotionpromotion

Nature of ProductNature of Product

Stage in PLCStage in PLC

PricePrice

Funds AvailableFunds Available

Nature of MarketNature of Market

Table 15.3: Factors Influencing Choice of Promotional MixTable 15.3: Factors Influencing Choice of Promotional Mix

Personal SellingPersonal Selling AdvertisingAdvertisingNature of the marketNature of the market Number of buyers Number of buyers Geographic Geographic concentration concentration Type of customer Type of customer

Limited numberLimited number

ConcentratedConcentrated

Business purchaserBusiness purchaser

Large numberLarge number

DispersedDispersed

Ultimate consumerUltimate consumer

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

Custom-made, complexCustom-made, complex

ConsiderableConsiderable

BusinessBusiness

Trade-ins commonTrade-ins common

StandardizedStandardized

MinimalMinimal

ConsumerConsumer

Trade-ins uncommonTrade-ins uncommon

Stage in the product life Stage in the product life cyclecycle

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

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

PricePrice High unit valueHigh unit value Low unit valueLow unit value

PULLING AND PUSHING PULLING AND PUSHING PROMOTIONAL STRATEGIESPROMOTIONAL STRATEGIES

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

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

Table 15.4: Promotional Budget DeterminationTable 15.4: Promotional Budget DeterminationMethodMethod DescriptionDescription ExampleExample

Percentage-of-sales Percentage-of-sales methodmethod

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

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

Fixed-sum-per-unit Fixed-sum-per-unit methodmethod

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

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

Meeting competition Meeting competition methodmethod

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

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

Task-objective Task-objective methodmethod

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

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

MEASURING THE EFFECTIVENESS MEASURING THE EFFECTIVENESS OF PROMOTIONOF PROMOTION

Two basic measurement tools:Two basic measurement tools:– Direct sales resultsDirect sales results measures the effectiveness of measures the effectiveness of

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

– Indirect evaluationIndirect evaluation concentrates on quantifiable concentrates on quantifiable indicators of effectiveness like:indicators of effectiveness like:

Recall - Recall - how much members of the target market remember how much members of the target market remember about specific products or advertisementsabout specific products or advertisements

Readership – size and composition of a message’s audience Readership – size and composition of a message’s audience

CHAPTER FIFTEEN INTEGRATED MARKETING COMMUNICATIONS.

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