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Chapter 12 Catch the Buzz: Promotional Strategy and Integrated Marketing Communication Chapter Objectives 1. Understand the communication model 2. Understand the role of integrated marketing communication 3. List and describe the tradition elements of the promotion mix 4. Contrast two major alternative promotional strategies: Advertising and Personal Selling 5. Cover Buzz Marketing -- alternatives to traditional media forms 6. Discuss the role of sponsorships 7. Discuss the ethical issues around promotion 12-2 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Figure 12.2 Communication Model 12-3 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall The Communication Model Elements of the model: 1. Source: Firm or person sending a message 2. Encoding: Transmitting an idea into a form of communication that conveys meaning 3. Message: Communication in physical form that goes from a sender to a receiver 4. Medium: Communication vehicle through which a message is transmitted 12-4 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall The Communication Model Elements of the model (cont.): 5. Receiver: Individual or organization that intercepts and interprets the message 6. Decoding: Process whereby a receiver assigns meaning to a message 7. Noise: Anything that interferes with effective communication 8. Feedback: Receiver’s reactions to the message 12-5 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall IMC Overview Integrated Marketing Communications (IMC): Coordination of all promotional activities – advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused promotional message 17-6 Importance of Teamwork to IMC Programs Successful implementation of IMC requires that everyone involved in every aspect of promotion – public relations, advertising, personal selling, direct mail and sales promotion – function as a team Beyond that, IMC requires a comprehensive strategy that includes all marketing activities, not just promotion Many companies have integrated by hiring a single company to execute all aspects of promotion 17-7 Figure 12.4 Steps to Develop an IMC Plan 12-8 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Developing the IMC Plan Step 1: Identify target audiences Step 2: Establish the communication objectives, which may include… – Create awareness – Inform the target market – Create desire – Encourage purchase and trial – Build loyalty 12-9 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Developing the IMC Plan Step 3: Determine and allocate the marketing communication budget – Determine the total promotion budget – Use one the following: • • • • 12-10 Top-down budgeting techniques Percentage-of-sales Competitive-parity Bottom-up budgeting techniques Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Developing the IMC Plan Step 4: Design the promotion mix – Which forms of promotion – Which types of media – Which media alternatives – Which executions 12-11 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Developing the IMC Plan Step 5: Evaluate the effectiveness of the communication program – Are communication objectives adequately translated into marketing communication that is reaching the right target market? – Some activities (sales promotions and direct marketing) are easier to evaluate than others (public relations and advertising) 12-12 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Effective Promotional Messages An effective promotional message should accomplish the following: 1. 2. 3. 4. It gains the receiver’s attention It is understood as intended It stimulates the receiver’s needs It suggests an appropriate method of satisfying the receiver’s needs Let’s put a couple of ads through this test: Video_Ch12\Budweiser1.mpg Video_Ch12\DAEWOOD2.MPG 17-13 Five Objectives of Promotion 1. Provide Information – Inform the market about the availability of a particular good or service 17-14 2. Increase Demand – Most promotions are aimed at increasing selective demand, the desire for a specific brand 17-15 3. Differentiate the Product When consumers regard the firm’s output as virtually identical to its competitors’, then the firm has virtually no control over marketing variables 17-16 See how two competitors, Visa and MasterCard, go about differentiating their products in these two ads. 17-17 4. Increase the Product’s Value – Promotion can explain the greater ownership utility of a product to buyers, thereby increasing its value to the consumer and justifying a higher price 17-18 5. 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 Q. Is the purpose of this ad primarily to provide information, increase demand, differentiate the product, accentuate the product’s value or stabilize sales? Q. What do you remember from this ad? 17-19 The Promotional Mix Promotional mix: blend of personal selling, advertising, sales promotion, direct marketing, and public relations designed to achieve promotional objectives 1. Advertising: Paid, nonpersonal communication through various media by a business firm, notfor-profit organization, or individual identified in the message with the hope of informing or persuading members of a particular audience 17-20 2. Sales Promotion: Marketing activities that stimulate immediate consumer purchasing (includes: displays, trade shows, coupons, premiums, contests, & product demonstrations) – Trade promotion: sales promotion aimed at marketing intermediaries rather than ultimate consumers 3. Personal selling: interpersonal promotional process involving a seller’s person-to-person presentation to a prospective buyer 17-21 4. Direct Marketing: Direct communications other than personal sales contact between buyer and seller, designed to generate sales, information requests, or store visits. 5. Public relations: Firm’s communications and relationships with its various publics 17-22 The Promotional Mix – The extent of the marketer’s control over different communication elements varies 12-23 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Comparison of the Five Promotional Elements Advantages Personal Selling Permits measurement of effectiveness. Can elicit an immediate response. Can tailor the message to fit the customer. Receive immediate feedback. 17-24 Sales Promotion Advertising Reaches a large group of potential consumers for a relatively low price per exposure. Allows strict control over the final message. Can be adapted to either mass audiences or specific audience segments. Rich Images. Direct Marketing Produces an Can generate immediate an immediate consumer response. response Covers a (usually sales). wide Attracts attention audience and creates with targeted product advertising. awareness and Allows excitement. complete, Allows relatively customized, easy personal measurement of message. results. Produces Can reach price- measurable sensitive results. customers. Public Relations Creates a positive attitude toward a product or company. Enhances credibility of a product or company. Low cost. Continued on next slide . . . Disadvantages Personal Selling Advertising Relies almost Does not exclusively permit totally upon the accurate ability of the measurement salesperson. of results. Involves high Usually cannot cost per close sales. contact. Expensive. Salespeople Often Lacks differ in credibility. ability and messages. 17-25 Sales Promotion Is nonpersonal in nature. Is difficult to differentiate from competitor’s efforts. Direct Marketing Public Relations Suffers Can not measure from image effect on sales. problem. Can’t guarantee Involves a the target will be high cost reached. per reader. Can be low quality and inaccurate mailing lists. May annoy consumers. Sponsorships Sponsorships- Provision of funds for a sporting or cultural event in exchange for a direct association with the events Integrates several promotional mix elements: advertising, sales promotion, and public relations Sponsorship Spending has more than tripled during the past 10 years to almost $10 Billion/year Nearly impossible to measure effectiveness 17-26 – AT&T: A Sponsor of the PGA Tour Q. Why do companies sponsor events and facilities outside of their HQ market? 17-27 Influencing Factors 1.Nature of the market Number of buyers Geographic concentration Type of customer Personal Selling Advertising Limited number Concentrated Business purchaser Large number Dispersed Ultimate consumer Custom-made, complex Considerable Standardized Minimal Business Trade-ins common Consumer Trade-ins uncommon 3.Stage in the product life cycle Heavy emphasis in the introductory and early growth stages in acquainting marketing intermediaries and potential consumers with the new good or service Often emphasized at every stage; heavy emphasis in the latter part of the growth stage, as well as the maturity and early decline stages, to persuade consumers to select specific brands 4.Price High unit value Low unit value 2.Nature of the product Complexity Service requirements Type of good or service Use of trade-ins 17-28 Pulling vs. Pushing Promotional Strategies Pulling strategy: Promotional effort by a seller to stimulate demand among consumers, who will then exert pressure on retailers to carry the product, pulling it though the marketing channel Pushing strategy: Promotional effort by a seller to retailers intended to stimulate personal selling of the good or service, thereby pushing it through the marketing channel Q. Can you think of some examples of promotions which use each of these strategies? 17-29 Colgate Total – Using a Pulling Strategy With Ads Like This Combined With a Pushing Strategy (30 Million Samples to Dental Practitioners) Created Strong Demand for This Improved Product 17-30 Buzz Appeals Buzz: – Word-of-mouth communication that consumers view as authentic Buzz marketing: – Using high-profile entertainment or news that gets people to talk about the brand Viral marketing: – Creating entertaining or informative messages to be passed along 12-31 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Buzz Appeals Word-of-mouth (WOM) marketing: – Activities that give people a reason to talk about the product Guerrilla marketing: – Activities that “ambush” consumers with promotional content in places they are not expecting to encounter this kind of activity 12-32 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Buzz Appeals Experiential marketing: – Marketing activities that attempt to give customers an opportunity to actually interact with a brand Consumer-generated media: – The on-line consumer-generated comments, opinions, and product-related stories available to other consumers through digital media (such as Twitter) 12-33 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall Ethical Issues in Buzz Marketing Ethical problems in buzz marketing can occur when: – Activities are designed to deceive consumers – Directing buzz marketing at children or teens – Stealth marketing activities deliberately deceive or lie on behalf of clients – Shilling – pretending to be a customer 12-34 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall The Ethics of Promotion Q. Is Promotion overall good for society or bad for society? 17-35 The Ethics of Promotion Pro’s Provides information to allow selection of the best product Boosts the economy by stimulating sales Provides entertainment Enables companies of all sizes to compete Opens up the world to companies Is an important factor in campaigns aimed at achieving socially oriented objectives like the elimination of drug abuse Increases the firm’s units sold, resulting in lower production costs & therefore lower sales prices 17-36 The Ethics of Promotion Con’s Exaggerated claims & lies Poor taste & offensiveness (sex and violence) Irritating repetition & intrusiveness Encourages usage of products some consider unethical – alcohol & tobacco usage and gambling Perpetuates stereotypes Plays on humans’ desires, like self-esteem, security, & acceptance Encourages people to believe that their needs and desires can be best satisfied by purchases Creates needs that didn’t previously exist 17-37