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Integrated Marketing Communications (KOM 5325) Hamisah Zaharah Hasan, PhD [email protected] 03-8946 8667 The course covers the functions of Integrated Marketing Communications discussing topics such as advertising, direct marketing, the Internet, interactive media, sales promotion, public relations, corporate advertising and direct selling; market environment which includes segmenting, targeting, positioning and consumer purchasing behavior; evaluation of a company’s marketing and promotional situation; Integrated Marketing Communications strategies and programs. Course Objectives: • • analyze the differences between the major marketing communication functions (C4); • evaluate a company’s marketing and promotional situation (P4); • • develop effective Integrated Marketing Communications strategies and programs (A4) and contribute to the planning and coordinating of group work (CS, LL) Course Evaluation Assignment 1 : Midterm exam : Group project : Final exam : 10 points 20 points 30 points 40 points Welcome to IMC • 1980s companies see the need for more strategic integration of their promotional tools • Process IMC involves coordinating the various elements & other marketing activities that communicate with a firm’s customers. e.g. use ads, sales promotion, corp. sponsorship, direct marketing, etc • Companies built profitable relationship with customers, stakeholders, stockholders. • Advertisers were not clear of advertising in the new millennium ….. • The industry realized its vulnerability to the outside world For many years, the promotional function in most companies was dominated by mass media ads. Companies relied primarily on their ads agencies for guidance in nearly all areas of marcom. In fact, most marketers did use additional promotional & marketing tools but, sales promotion & direct marketing agencies as well as package design firms were generally viewed as auxiliary services & often used on a per-project basis. PR agencies were used to manage the organization’s publicity, image & affairs with relevant publics on an ongoing basis but were not viewed as integral participants in the marcom process. • Many marketers manage its various marketing & promotional functions separately. Different budgets, views of market, goals & objectives. • They failed to recognize that the wide range of marketing & promotional tools must be coordinated to communicate effectively and present a consistent image to target audience …. A concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines e.g. general ads., direct response, sales promotion, and public relations …. and combines these disciplines to provide clarity, consistency and maximum communications impact ….. Belch & Belch,1999 The concept or philosophy of marketing that stresses bringing together all the variables of the marketing mix, all the media, all the actions with which a company reaches its publics, and integrating the company’s strategy & programs ….. IMC follows the concept of marketing that start with the consumer needs and wants and work back to the brand. Through the information from the database companies are able to find out about consumers. IMC is a practice of unifying communication tools from packaging ---- to sending consistent, persuasive message to target audience ….. The began asking their ad agencies to coordinate the use of a variety of promotional tools rather than relying primarily on media advertising. …. Some companies began looking beyond the traditional advertising agencies & use other types of promotional specialists to develop & implement various components of their promotional plans. ….. Using all forms of promotion …..Approach to planning marketing ….Promotion programs ….Coordinating communication functions IMC helps companies identify the most appropriate & effective methods to conduct customers & stakeholders. Significant marketing development Added value of integrating various communication functions Maximize return on investment Media VS INTERNET, VCD, DVD, MOBILE PHONE RADIO/TV/MAGAZINES/ NEWSPAPER AVOID DUPLICATION ---- integrate marcom activities NEW TECHNOLOGY NEW ENVIRONMENT --- new ways to reach consumers DIFFERENT CONSUMERS ----- sophisticated, demanding, EXPENSIVE TRADITIONAL MEDIA Why IMC? • Use major communication functions in concert (synergy) to provide clarity, consistency, and maximum communications impact • Synergy yields results greater than if each functional area had selected its own targets, chosen its own message strategy, and set its own media schedule and timing INTRODUCTION to PROMOTION and INTEGRATED MARKETING COMMUNICATIONS Relationship Between Promotion, the Promotional Mix, and Integrated Marketing Communications PROMOTION • Communication Process in Marketing • Used to Create a Favorable Predisposition Toward: – Brand of Product – Service – Idea – Person PROMOTIONAL MIX • Blend of Communications Tools and Activities Used by a Firm • Carries out the Promotion Process • Communicates Directly with Target Markets 1.2 INTEGRATED MARKETING COMMUNICATIONS (IMC) • Manages the Processes and Activities of Using Promotional Tools • Unified Way • Produces a Synergistic Communications Effect 1.3 • Promotion: • Process • Promotion Mix: • Tools • IMC: • Management of the Promotion Mix 1.4 The Promotional Mix ADVERTISING Paid Mass Media Attempt to Persuade Complex System of Strategic Planning and Creative Genius INTERNET ADVERTISING Electronic Mail (e-mail) Internet Relay Chat (IRC) Usenet World Wide Web (www) SALES PROMOTION Use of Incentives to Generate a Specific Short-Term Response ◦ Household Consumer ◦ Trade Buyer ◦ Business Buyer 1.5 ADVERTISING Example of Sales Promotion Example of Mass Media Advertising 1.6 Example of Sales Promotion 1.7 The Promotional Mix DIRECT MARKETING AND e-COMMERCE Distinguished From Other Primary Promotional Tools in 3 Ways ◦ Uses a Combination of Media ◦ Designed to Elicit a Direct Response ◦ Transactions Can Occur Anywhere E-Commerce is Another Form of Direct Marketing ◦ Business is Conducted Between Buyers and Sellers Using Electronic Exchange Media 1.8 shelf-talkers, signage, easel stands, bottle-neckers, price cards, hangtags, pop-ups SPONSORSHIP • Funding an Event • Creating an Event to Showcase a Firm’s Brand POINT-OF-PURCHASE • Materials Used in Retail Setting to Attract Shoppers’ to a Company’s Brand SUPPORTIVE COMMUNICATIONS • Used to Target Audiences Outside Mainstream Media or Electronic Communications 1.9 SUPPORTIVE COMMUNICATIONS Used to Target Audiences Outside Mainstream Media or Electronic Communications PUBLIC RELATIONS • Communication that can Foster Goodwill Between a Firm and its Many Constituent Groups PERSONAL SELLING • Presentation of Information about a Firm’s Products or Services by One Person to Another Person or to a Small Group of People 1.10 Personal Selling is the Most Important Variable in the Promotional Mix of Many Organizations 1.11 ROLE OF PROMOTION IN MARKETING STRATEGY • Must Have Marketing Strategy Decisions about Products (Brand) – Branding – Established Name, Term, Symbol or Design that Identifies for Consumers that a Product is being Offered by a Particular Seller and Clearly Distinguished the Product of that Seller from those Offered by Competitors 1.12 1.12 ROLE OF PROMOTION IN MARKETING STRATEGY • Role of Promotion in Marketing Strategy Affects 3 Key Aspects of Decision Making with Respect to Brands – Creating the Marketing Mix – Achieving Effective Market Segmentation, Product Differentiation, and Positioning – Enhancing Revenues and Profits 1.13 ROLE OF PROMOTION IN THE MARKETING MIX – Assumes a Wide Range of Responsibilities Related to: • Conception • Pricing • Distribution Brands – Product (Brand) 1.14 ROLE OF PROMOTION IN THE MARKETING MIX – Promotion Affects the Product Area of the Marketing Mix • Information and Persuasion • Introduction of New Brand or Brand Extensions • Building and Maintaining Brand Loyalty Among Consumers • Building and Maintaining Brand Loyalty Within the Trade 1.15 One Role for Promotion is to Help Introduce Brand Extensions Like this Extension of Jell-O into the Yogurt Market 1.16 ROLE OF PROMOTION IN THE MARKETING MIX – Price • Effects the Consumer Market • Effects the Trade Market – Distribution • Consumer Access to Brands • Securing Trade Distribution 1.17 • Promotion is Important in Helping to Execute These Strategies – Market Segmentation – Product Differentiation – Positioning • External • Internal 1.18 The Role of Promotion in Revenue and Profits Sales Occur ◦ Brand has Well-Conceived Marketing Mix ◦ Complete Marketing Mix ◦ Good Promotion Large-Scale Demand /Production Produces ◦ Cost to Produce Item is Reduced ◦ Known as Economies of Scale Brand Loyalty at Any Cost ◦ Firm Raises Prices ◦ Known as Inelasticity of Demand 1.19 Promotional Tools Help Increase Brand Loyalty 1.20 Integrated Marketing Communications • • • • • • FACTORS CONTRIBUTING TO IMC’s RISING PROMINENCE Fragmentation of Media Better Audience Assessment Through Database Technology Consumer Empowerment Increased Advertising Clutter Shifting Channel Power Desire of Greater Accountability 1.21 Promotion and IMC Help Cut Through the Clutter of Advertising 1.22 Participants in IMC Management Marketing Organization •Marketing Plan •Goal & Objectives •Customer/Prospect Databases Advertising Agency •Research •Creative Strategies •Production •Message Placement Specialized Promotion Organizations •Media Organizations •Event Management Firms •Web Site Designers •Sales Promotions Agencies •Direct Marketing Agencies •Public Relations Firms •P-O-P Agencies & Designers IMC Management Personal Selling Public Relations Advertising Sales Promotions P-O-P Internet Advertising Supportive Direct Marketing e-Commerce Sales Promotions 1.23 1.22 THE PROMOTION INDUSTRY: MARKETERS, AGENCIES, and MEDIA ORGANIZATIONS The Promotion Industry in Transition ALTERED BY SIX TRENDS • Information in Marketplace is an Interactive System between Marketers and Consumers • Proliferation of Cable TV, Direct-Marketing & Alternative New Media Causes Media Fragmentation • Growing Investment in Advertising Causes Media Clutter Growing Investment in Advertising Causes Media Clutter The Promotion Industry in Transition ALTERED BY SIX TRENDS • New Communications/Distributions Channels are Growing in Influence • Fragmentation of Marketing Budgets Resulting in Greater Portions of Budgets going to Trade & Consumer Promotions • Improved Information Systems Allow Retailers & Distributors more Control over Marketing & Promotional Decisions Structure of the Promotion Industry and Participants in the Process Marketers Manufacturers and service firms Resellers, retailers, wholesalers, and distributors Government and social organizations Advertising and Promotion Agencies Advertising agencies: Full-service agencies Creative boutiques Media-buying services Interactive agencies In-house agencies Promotion agencies: Direct marketing and database agencies E-Commerce agencies Event planning Design firms Public relations firms Sales staffing and training firms Agency services: Account services Marketing research Creative and production services Media planning research Agency compensation: Commission Markup charges Fee system Pay-for-results Marketing and advertising research firms External Facilitators Production facilitators Consultants Information intermediators Media Organizations And Trade Partners Media Organizations: Broadcast media Print media Interactive media Support media Media conglomerates Trade Partners: Wholesalers, distributors, retailers B-to-B trade communities Internet portals Target Audience(s) Household consumers Trade resellers Business and professional buyer Government and social organizations Structure of Promotion Industry MARKETERS • Manufacturing and Service Firms • Trade Resellers • Federal, State and Local Governments • Social Organizations – March of Dimes – Nature Conservancy – MAKNA Producer of Consumer products and services, etc… Organizations that that buy products to sell to consumers 2.5 2.5 The U.S. Government is a Marketer that Relies on Advertising 2.5 Structure of Promotion Industry (con’t) AGENCIES – Advertising Agencies • Full Service Agency • Creative Boutique • Interactive Agency • In-House Agency • Media-Buying Agency Grey Global Group, Omnicom Group Idea factories Visit http://www.ad4ever.com Gap, Calvin Klein, Revlon do their own inhouse work A German advertising agency with the colorful name "indigo:" AGENCIES Promotional Agencies Direct Marketing and Database Agencies Fulfillment Centers E-Commerce Agencies Sales Promotion Agencies Consumer Sales Promotion Trade Sales Promotion Event-Planning Agencies Design Firms Logo Design Public Relations Firms Sales, Staffing, Training & Assessment Firms Design Firms Help Marketers Develop Logo Designs that Last, Like this Pillsbury Logo 2.9 AGENCIES Agency Services Account Services Marketing Research Creative & Production Creative Services Production Services Media-Planning and Buying Administrative AGENCIES (con’t) –Agency Compensation •Commissions •Markup Charges •Fee System •Pay-for-Results Approaches to Determining the Advertising Appropriation All you can afford Pick all that is left after all other relevant allocations have been made. this approach is used by Small fishes (small companies with small budget) or may be by some other firms that are big when they are introducing the new product. This approach is merely an availability oriented budget and unsophisticated. Approaches to Determining the Advertising Appropriation Competitive Parity (Matching) Match or base their sales promotion budget to that of the major competitors. The logic attributed to this method is that the collective minds of the companies in the industry probably generate promotion budget that are close to optimal and any departure from the industry norms may lead to promotion war. Approaches to Determining the Advertising Appropriation Percent-of-Sales Used to determine the promotional budget of the company. So they more or less pull certain percentage of the sales made in a fixed period. E.g. last year or for several past years. This decision is more dependent on the current business scenario and current working of the company. It might be that the company may consider just last years sales figures under consideration as they may have made great sales. You may take one year or an average of several this depends on many condition in which the org functions. % Approaches to Determining the Advertising Appropriation Objective-and-Task Set the ultimate promotion objectives. That may relate to reach short term sales objectives . These objectives may even relate to introducing a new product, stimulate trial, increasing distribution, etc., within a specified period of time. Determine how much money would be required to fulfill each of these tasks in order to achieve the promotion objectives. If the cost happens to be greater that money available then the objectives should be refined or the funds are made available the contingency reserve or by reducing the budgets of the other promotional activities. • • • • • EXTERNAL FACILITATORS Marketing and Advertising Research Firms Consultants Production Facilitators Information Intermediator Trade Partners • • • • • EXTERNAL FACILITATORS Marketing and Advertising Research Firms Consultants Production Facilitators Information Intermediator Trade Partners Media Organizations and Trade Partners Available to Marketers Broadcast Media Interactive Media Print Media Support Media Media Conglomerates Wholesalers, Retailers, B2B Communities, Portals Media Organizations and Trade Partners Available to Marketers AUDIENCES • • • • Household Consumers Trade Resellers Business and Professional Buyers Government and Social Organizations