Fundamentals of Marketing, MAR1010                                         Week 7

Professor Weeks

Chapter 12

Integrated Marketing Communication:

Advertising, Sales Promotion, and Public Relations

•  Discuss the process and advantages of integrated marketing communications.

•  Define the five promotion tools and discuss the factors that must be considered in shaping the overall promotion mix.

•  Describe and discuss the major decisions involved in developing an advertising program.

•  Explain how sales promotion campaigns are developed and implemented.

•  Explain how companies use public relations to communicate with their publics.

Chapter Overview

This chapter discusses the importance of coordinating the company's marketing mix components and integrating all the messaging elements into one cohesive unit. A company's marketing communications mix consists of a specific blend of advertising, sales promotion, public relations, personal selling, and direct-marketing tools that the company uses to pursue its advertising and marketing objectives.

Customers don't distinguish between message sources the way marketers do. In the consumer's mind, advertising messages from different media and different promotional approaches all become part of a single message about the company. Conflicting messages from these different sources can result in confused company images and brand positions. The problem is that different communications usually come from different company sources. Under integrated marketing communications, the company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands.

Integrated marketing communications involves identifying the target audience and shaping a well-coordinated promotional program to elicit the desired audience response. Marketers are moving toward viewing communications as managing the customer relationship over time. Thus, the communications process should start with an audit of all the potential contacts target customers may have with the company and its brands.

The chapter covers each marketing communications and promotion tool in detail, ex-plaining how they are each used, their advantages and disadvantages, and how best to plan each communication as well as the overall process and communications mix. Also described are the factors that influence the marketer's choice of promotion tools.

Chapter Outline

•  Introduction

•  AFLAC's ads used to look just like every other insurance company's ads. In 1999, AFLAC began looking for a better way to build brand awareness and deliver its message to consumers.

•  The company wanted something different that would break through today's advertising clutter. Someone on the team pointed out that the name of the company sounded like a duck quack, and the rest is history.

•  The campaign was risky, but consumers loved the duck. The company's name recognition jumped from 13% to 91% in the two years after the start of the campaign. Four out of ten people in the United States not only recognize the name, they can identify AFLAC as a supplemental insurer.

•  Modern marketing calls for more than just developing a great product, pricing it attractively, and making it available to target customers. Companies must communicate with current and prospective customers. All of their communications efforts must be blended into a consistent and coordinated communications program.

•  The Marketing Communications Mix

•  A company's total marketing communications mix--also called its promotion mix--consists of the specific blend of advertising, sales promotion, public relations, personal selling, and direct-marketing tools that the company uses to pursue its advertising and marketing objectives. Definitions of the five major promotion tools follow:

•  Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

•  Sales promotions are short-term incentives to encourage the purchase or sale of a product or service.

•  Public relations involves building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

•  Personal selling is personal presentation by the firm's sales force for the purpose of making sales and building customer relation-ships.

•  Direct marketing establishes direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.

•  Communication goes beyond these specific promotion tools.

•  The product's design, its price, the shape and color of its package, and the stores that sell it--all communicate something to buyers.

•  Although the promotion mix is the company's primary communication activity, the entire marketing mix--promotion and product, price, and place--must be coordinated for the greatest communication impact.

Apply the concept:

Pick several brands of shampoo, one from the grocery store, one from a salon, and one from a health food store (if available). Discuss how each package design, the stores in which it is sold, its price, and so forth all communicate messages to the consumer. What are those messages?

Integrated Marketing Communications

•  During the past several decades, companies around the world have perfected the art of mass marketing.

•  However, as we move into the twenty-first century, marketing managers face some new marketing communications realities.

The Changing Communications Environment

•  Two major factors are changing the face of today's marketing communications.

•  As mass markets have fragmented, marketers are shifting away from mass marketing. They are developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micromarkets.

•  Vast improvements in information technology are speeding the movement toward segmented marketing. Today's information technology helps marketers to keep closer track of customer needs.

•  The shift from mass marketing to segmented marketing has had a dramatic impact on marketing communications. The shift toward one-to-one marketing is spawning a new generation of more specialized and highly targeted communications efforts.

•  Market fragmentation has resulted in media fragmentation. There has been an explosion of more focused media that better match today's targeting strategies.

Let's Discuss This

How many magazines do you subscribe to? What are their topics? Do you read a magazine that applies to your hobbies? To your demographic segment (age, ethnic group, income level)? To your lifestyle (working out, music interest, etc.)?

The Need for Integrated Marketing Communications

•  Customers don't distinguish between message sources the way marketers do. In the consumer's mind, advertising messages from different media and different promotional approaches all become part of a single message about the company. Conflicting messages from these different sources can result in confused company images and brand positions.

•  Companies often fail to integrate their various communications channels. Mass-media advertisements say one thing, a price promotion sends a different signal, a product label creates still another message, company sales literature says something altogether different, and the company's website seems out of sync with everything else.

•  The problem is that these communications often come from different company sources.

•  Under the concept of integrated marketing communications, the company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands. The concept is illustrated in Figure 12-1.

•  IMC calls for recognizing all contact points where the customer may encounter the company, its products, and its brands. Each brand contact will deliver a message--whether good, bad, or indifferent. The company must strive to deliver a consistent and positive message with each contact.

•  A View of the Communication Process

•  Integrated marketing communications involves identifying the target audience and shaping a well-coordinated promotional campaign to elicit the desired audience response.

•  Marketers are moving toward viewing communications as managing the customer relationship over time. Because customers differ, communications programs need to be developed for specific segments, niches, and even individuals.

•  The communications process should start with an audit of all potential contacts target customers may have with the company and its brands.

•  Setting the Overall Communication Mix

•  The concept of integrated marketing communications suggests that the company must blend the promotion tools carefully into a coordinated promotion mix.

•  The factors that influence the marketer's choice of promotion tools follow. Each promotion tool has unique characteristics and costs.

•  Advertising can reach masses of geographically dispersed buyers at a low cost per exposure, and it enables the seller to repeat a message many times.

•  Large-scale advertising says something positive about the seller's size, popularity, and success.

•  Consumers tend to view advertised products as more legitimate.

•  Advertising also has shortcomings. Although it reaches people quickly, advertising is impersonal. It can carry on only a one-way communication with the audience, and the audience does not feel that it has to pay attention or respond. It can be very costly.

•  Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers' preferences, convictions, and actions.

•  It involves personal interaction between two or more people, so each person can observe the other's needs and characteristics and make quick adjustments.

•  The effective salesperson keeps the customer's interests at heart in order to build a long-term relationship.

•  A sales force requires a longer-term commitment than does advertising. Personal selling is the company's most expen-sive promotion tool.

•  Sales promotion includes a wide assortment of tools. These tools attract consumer attention, offer strong incentives to purchase, and can be used to dramatize product offers and to boost sagging sales.

•  Public relations is very believable.

•  Public relations can reach many prospects who avoid salespeople and advertisement.

•  A well-thought-out public relations campaign used with other promotion mix elements can be very effective and economical.

•  Direct marketing is nonpublic. The message is normally directed to a specific person.

•  It is immediate and customized.

•  It is interactive.

•  Marketers can choose from two basic promotion mix strategies. See Figure 12-2.

•  A push strategy involves "pushing" the product through distribution channels to final consumers. The producer directs its marketing activities toward channel members to induce them to carry the product and to promote it to final consumers.

•  In a pull strategy, the producer directs its marketing activities toward final consumers to induce them to buy the product. Consumers will demand the product from channel members, who will in turn demand it from producers.

•  Companies consider many factors when designing their promotion mix strategies, including type of product/market and the product life-cycle stage.

•  Advertising

•  Advertising can be traced back to the very beginnings of recorded history.

•  Although advertising is used mostly by business firms, it is also used by a wide range of not-for-profit organizations, professionals, and social agencies that advertise their causes to various target publics.

•  Advertising is a good way to inform and persuade.

•  Marketing management must make four important decisions when developing advertising campaign. See Figure 12-3.

Setting Advertising Objectives

•  The first step is to set advertising objectives. These objectives should be based on past decisions about the target market, positioning, and marketing mix, which define the job that advertising must do in the total marketing program.

•  An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time.

•  Advertising objectives can be classified by primary purpose--whether the aim is to inform, persuade, or remind. Table 12-1 lists examples.

•  Informative advertising is used heavily when introducing a new product category. In this case, the objective is to build primary demand.

•  Persuasive advertising becomes more important as competition increases. Here, the company's objective is to build selective demand. Some persuasive advertising becomes comparative advertising, in which a company directly or indirectly compares its brand with one or more other brands.

•  Reminder advertising is important for mature products--it keeps consumers thinking about the product.

Setting the Advertising Budget

•  After determining its advertising objectives, the company next sets its advertising budget for each product.

•  There are four common methods used to set the total budget for advertising.

•  In the affordable method, the company sets the promotion budget at the level it thinks it can afford.

•  Small businesses often use this method.

•  This method of setting budgets completely ignores the ef-fects of promotion on sales.

•  It places advertising last among spending priorities.

•  It leads to an uncertain annual promotion budget.

•  In the percentage-of-sales method, the company sets the promotion budget at a certain percentage of current or forecasted sales.

•  There are advantages, because it is simple to use and helps management think about the relationships between pro-motion spending, selling price, and profit per unit.

•  But this method has little to justify it.

•  It wrongly views sales as the cause of promotion rather than as the result.

•  It is based on availability of funds rather than opportunities.

•  It may prevent increased spending that is sometimes needed to turn around falling sales.

•  Because the budget varies with year-to-year sales, long-range planning is difficult.

•  The method does not provide any basis for choosing a specific percentage, except what has been done in the past or what competitors are doing.

•  In the competitive-parity method, companies set their promotion budget to match competitors' outlays.

•  Competitors' budgets represent the collective wisdom of the industry. Spending what competitors spend helps pre-vent promotion wars.

•  But there are no grounds for believing that the competition has a better idea of what a company should be spending on promotion. And there is no evidence that budgets based on competitive parity really do prevent promotion wars.

•  The most logical budget-setting method is the objective-and-task method. Here, the company sets its promotion budget based on what it wants to accomplish with promotion.

•  This method entails defining specific promotion objectives, determining the tasks needed to achieve these objectives, and estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.

•  This method forces management to spell out its assumptions about the relationship between dollars spent and pro-motion results.

•  It is also the most difficult method to use.

Let's Discuss This

Compare and contrast what happens to an advertising budget when sales are slipping using each budget setting method described.

Developing Advertising Strategy

•  Advertising strategy consists of two major elements: creating advertising messages and selecting advertising media.

•  In the past, companies often viewed media planning secondary to the message-creation process. But media fragmentation, soaring media costs, and more-focused target marketing strategies have promoted the importance of the media-planning function. Good advertising messages are especially important in today's costly and cluttered advertising environment.

•  With the growth in cable and satellite TV, VCRs, and remote-control units, today's viewers have many more options.   They can avoid ads by watching commercial-free cable channels. They can "zap" commercials by pushing the fast-forward button during taped programs.

•  Many advertisers now see themselves as creating "advertainment"--ads that are both persuasive and entertaining.

•  The first step in creating effective advertising messages is to plan a message strategy--to decide what general message will be communicated to consumers.

•  Developing an effective message strategy begins with identifying customer benefits that can be used as advertising appeals. Ideally, advertising message strategy will follow directly from the company's broader positioning strategy.

•  The next step is to develop a compelling creative concept or "big idea" that will bring the message strategy to life in a distinctive and memorable way.

•  The creative concept will guide the choice of specific appeals to be used. Advertising appeals should have three characteristics: They should be meaningful, pointing out benefits that make the product more desirable or interesting to consumers; they should be believable; and they should be distinctive.

•  The advertiser now has to turn the big idea into an actual ad execution that will capture the target market's attention and interest. Any message can be presented in different execution styles

•  Slice of life: shows one or more "typical" people using the product in a normal setting.

•  Lifestyle: shows how a product fits in with a particular lifestyle.

•  Fantasy: creates a fantasy around the product or its use.

•  Mood or image: builds a mood or image around the product, such as beauty, love, or serenity.

•  Musical: shows one or more people or cartoon characters singing about the product.

•  Personality symbol: creates a character that represents the product.

•  Technical expertise: shows the company's expertise in making the product.

•  Scientific evidence: presents survey or scientific evidence that the brand is better or better liked than one or more other brands.

•  Testimonial evidence or endorsement: features a highly believable or likable source endorsing the product.

•  The advertiser must also choose a tone for the ad.

•  The advertiser must use memorable and attention-getting words in the ad.

•  Format elements make a difference in an ad's impact as well as its cost.

•  The illustration is the first thing the reader notices.

•  The headline must effectively entice the right people to read the copy.

•  The copy--the main block of text in the ad--must be simple but strong and convincing.

•  These three elements must work together effectively.

•  The major steps in media selection are deciding on reach, frequency, and impact; choosing among major media types; selecting specific media vehicles; and deciding on media timing.

•  Reach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time. Frequency is a measure of how many times the average person in the target market is exposed to the message. Media impact is the qualitative value of a message exposure through a given medium.

•  The media planner has to know the reach, frequency, and impact of each of the major media types. Table 12-2 summarizes the media types.

•  Media planners consider many factors when making their media choices.

•  The media habits of target consumers.

•  The nature of the product.

•  The different types of messages.

•  Cost is another major factor. Media impact and cost must be reexamined regularly.

•  The media planner must now choose the best media vehicles--specific media within each general media type.

•  Media planners must compute the cost per thousand persons reach by a vehicle.

•  The media planner must also consider the costs of producing ads for the different media.

•  In selecting media vehicles, the media planner must balance media cost measures against several media impact factors.

•  The advertiser must also decide how to schedule the advertising over the course of a year. The advertiser also has to choose the pattern of the ads.

•  Continuity means scheduling ads evenly within a given period.

•  Pulsing means scheduling ads unevenly over a given time period.

Let's Discuss This

How are ads scheduled for Chia Pets? How does J.C. Penney schedule its ads?

Evaluating Advertising

•  The advertising program should regularly evaluate both the communication effects and the sales effects of advertising.

•  Measuring the communication effects of an ad--copy testing--tells whether the ad is communicating well. Copy testing can be done before or after an ad is printed or broadcast.

•  The sales effects of advertising are often harder to measure than the communication effects. Sales are affected by many factors besides advertising, such as product features, price, and avail-ability.

Other Advertising Considerations

•  The company must address two additional questions. First, how will the company organize its advertising function? Second, how will the company adapt its advertising strategies and programs to the complexities of inter-national markets?

•  Different companies organize in different ways to handle adver-tising.

•  In small companies, advertising might be handled by some-one in the sales department.

•  Large companies set up advertising departments whose job it is to set the advertising budget, work with the ad agency, and handle advertising not done by the agency.

•  Advertising agencies employ specialists who can often perform advertising tasks better than can the company's own staff.

•  Most large advertising agencies have the staff and resources to handle all phases of an advertising campaign for its clients, from creating a marketing plan to developing ad campaigns and preparing, placing, and evaluating ads.

•  International advertisers face many complexities not encountered by domestic advertisers.

•  The most basic issue concerns the degree to which global advertising should be adapted to the unique characteristics of markets in various countries.

•  Standardization produces many benefits--lower advertising costs, greater global advertising coordi-nation, and a more consistent worldwide image.

•  There are also drawbacks. It ignores the facts that country markets differ greatly in their cultures, demographics, and economic conditions.

•  Global advertisers face several special problems.

•  Advertising media costs and availability differ vastly from country to country.

•  Countries also differ in the extent to which they regulate advertising practices.

•  Although advertisers may develop global strategies to guide their overall advertising efforts, specific advertising programs must usually be adapted to meet local cultures and customers, media characteristics, and advertising regulations.

•  Sales Promotion

•  Sales promotion consists of short-term incentives to encourage the purchase or sales of a product or service.

•  Whereas advertising and personal selling offer reasons to buy a product or service, sales promotion offers reasons to buy now.

Rapid Growth of Sales Promotion

•  Sales promotion tools are used by most organizations, including manufacturers, distributors, retailers, trade associations, and not-for-profit institutions.

•  They are targeted toward final buyers, retailers, and wholesalers; business customers; and members of the sales force.

•  Several factors have contributed to the rapid growth of sales promotions.

•  Inside the company, product managers face greater pressures to increase their current sales, and promotion is viewed as an effective short-run sales tool.

•  Externally, the company faces more competition and competing brands are less differentiated.

•  Advertising efficiency has declined because of rising costs, media clutter, and legal restraints.

•  Consumers have become more deal-oriented, and ever-larger retailers are demanding more deals from manufacturers.

•  The growing use of sales promotion has resulted in promotion clutter, similar to advertising clutter.

Sales Promotion Objectives

•  Sales promotion objectives vary widely.

•  Sellers may use consumer promotions to increase short-term sales or to help build long-term market share.

•  Objectives for trade promotions include getting retailers to carry new items and more inventory, getting them to advertise the product and give it more shelf space, and getting them to buy ahead.

•  For the sales force, objectives include getting more sales force support for current or new products or getting salespeople to sign up new accounts.

Major Sales Promotion Tools

•  Many tools can be used to accomplish sales promotion objectives.

•  The main consumer promotion tools include those following:

•  Samples are offers of a trial amount of a product. Sampling is the most effective, but most expensive, way to introduce a new product.

•  Coupons are certificates that give buyers savings when they purchase specified products.

•  Cash refund offers (or rebates) are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet. The consumer sends a "proof of purchase" to the manufacturer, who then refunds part of the purchase price by mail.

•  Price packs (also called cents-off deals) offer consumers savings off the regular price of a product. The reduced prices are marked by the producer directly on the label or package.

•  Premiums are goods offered either free or at low cost as an incentive to buy a product. A premium may come inside the package (in-pack), outside the package (on-pack), or through the mail.

•  Advertising specialties, also called promotional products, are useful articles imprinted with an advertiser's name that are given as gifts to consumers.

•  Patronage rewards are cash or other awards offered for the regular use of a certain company's products or services.

•  Point-of-purchase (POP) promotions include displays and demonstrations that take place at the point of purchase or sale.

•  Contests, sweepstakes, and games give consumers the chance to win something.

•  A contest calls for consumers to submit an entry to be judged by a panel that will select the best entries.

•  A game sweepstakes calls for consumers to submit their names for a drawing.

•  A game presents consumers with something every time they buy, which may or may not help them win a prize.

•  Manufacturers direct more sales promotion dollars toward retailers and wholesalers (78%) than to consumers (22%).

•  Trade promotion can persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers.

•  Manufacturers have several trade promotion tools.

•  Many of the tools used for consumer promotions, such as contests, premiums, and displays, can also be used as trade promotions.

•  A discount is off the list price on each case purchased during a stated period of time (also called a price-off, off-invoice, or off-list).

•  An allowance can be offered in return for the retailer's agreement to feature the manufacturer's products in some way.

•  An advertising allowance compensates retailers for advertising the product.

•  A display allowance compensates retailers for using special displays.

•  Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who buy a certain quantity or feature a certain flavor or size.

•  Manufacturers may offer push money--cash or gifts to dealers or their sales forces--to "push" the manufacturer's goods.

•  Manufacturers may give retailers free specialty advertising items that carry the company's name.

•  Business promotion tools are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.

•  Business promotion tools include many of the same tools used for consumer or trade promotion.

•  Many companies and trade associations organize conventions and trade shows to promote their products. Firms selling to the industry show their products at the trade show.

•  A sales contest is a contest for salespeople or dealers to motivate them to increase their sales performance over a given period.

Developing the Sales Promotion Program

•  The marketer must make several other decisions in order to define the full sales promotion program.

•  The marketer must decide on the size of the incentive.

•  The marketer must set conditions for participation.

•  The marketer must decide how to promote and distribute the pro-motion program itself.

•  The marketer must consider the length of the promotion, which is also important.

•  The marketer must also evaluate the program.

•  Consumer research would show the kinds of people who responded to the promotion and what they did after it ended.

•  Surveys can provide information on how many consumers recall the promotion, what they thought of it, how many took advantage of it, and how it affected their buying.

•  Sales promotions can also be evaluated through experiments that vary factors such as incentive value, length, and distribution method.

•  Public Relations

•  Public relations is building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

•  Public relations departments may perform any or all of the following functions:

•  Press relations or press agency.

•  Product publicity.

•  Public affairs.

•  Lobbying.

•  Investor relations.

•  Development.

•  Public relations is used to promote products, people, places, ideas, activities, organizations, and even nations

The Role an Impact of Public Relations

•  Public relations can have a strong impact on public awareness at a much lower cost than advertising can.

•  The company does not pay for the space or time in the media. Rather, it pays for a staff to develop and circulate information and to manage events.

•  Public relations is often described as a marketing stepchild because of its limited and scattered use.

Major Public Relations Tools

•  Public relations professionals use several tools.

•  One of the major tools is news. PR professionals find or create favorable news about the company and its products or people.

•  Speeches can also create product and company publicity.

•  Special events range from news conferences, press tours, grand openings, and fun events.

•  Many marketers are now designing buzz marketing campaigns that create excitement and generate favorable word-of-mouth commu-nication for their brands.

•  Mobile marketing, traveling promotional tours that bring the brand to consumers, has emerged as an effective way to build one-to-one relationships with targeted consumers.

•  Written materials including annual reports, brochures, articles, and company newsletters and magazines are often produced.

•  Audiovisual materials, such as films, are being used increasingly as communication tools.

•  Corporate identify materials, such as logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, and company cars and trucks, all become marketing materials.

•  Public service activities can improve public goodwill.

•  A company's website can be a good public relations vehicle.

•  As with other promotion tools, management should set PR objectives, choose the PR messages and vehicles, implement the PR plan, and evaluate the results.

•  The company's public relations should be blended smoothly with other promotion activities within the company's overall integrated marketing communications efforts.