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Integrated Marketing
Communication
Strategy
LIVE SESSIOM
AIMA-ePGDM
Objectives
• Know the tools of the marketing
communications mix.
• Understand the process and advantages of
integrated marketing communications.
• Learn the steps in developing effective
marketing communications.
• Understand methods for setting promotional
budgets and the factors that affect the design
of the promotion mix.
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Definition
• Marketing Communications Mix
 The specific mix of advertising,
personal selling, sales promotion, and
public relations a company uses to
pursue its advertising and marketing
objectives.
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Integrated Marketing
Communications
• The Marketing Communications
Environment is Changing:
 Mass markets have fragmented, causing
marketers to shift away from mass
marketing

Media fragmentation is increasing as well
 Improvements in information technology
are facilitating segmentation
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Integrated Marketing
Communications
• The Need for Integrated Marketing
Communications
 Conflicting messages from different sources
or promotional approaches can confuse
company or brand images

The problem is particularly prevalent when
functional specialists handle individual forms of
marketing communications independently
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Integrated Marketing
Communications
• The Need for Integrated Marketing
Communications
 Traditional media such as newspapers,TVand
radio have lost its reach and frequency.
 The Web alone cannot be used to build brands;
brand awareness potential is limited
 Best bet is to wed traditional branding efforts with
the interactivity and service capabilities of online
communications
 Web efforts can enhance relationships
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Integrated Marketing
Communications
• Integrated Marketing Communications
 The concept under which a company
carefully integrates and coordinates its
many communications channels to deliver a
clear, consistent, and compelling message
about the organization and its products.
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The Communication
Process
• Communications efforts should be
viewed from the perspective of managing
customer relationships over time.
• The communication process begins with
an audit of all potential contacts.
• Effective communication requires
knowledge of how communication
works.
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The Communication
Process
Elements in the
Communication Process
• Sender
• Encoding
• Message
• Decoding
• Media
• Response
• Receiver
• Feedback
• Noise
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Developing Effective
Communication
• Step 1: Identifying the Target Audience
 Affects decisions related to what, how,
when, and where message will be said,
as well as who will say it
• Step 2: Determining Communication
Objectives
 Sense buyer readiness stages
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Developing Effective
Communication
Buyer-Readiness Stages
• Awareness
• Preference
• Knowledge
• Conviction
• Liking
• Purchase
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Developing Advertising
Strategy
•
Consists of two major elements:

Creating advertising messages

Selecting advertising media
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Developing Effective
Communication
• Step 3: Designing a Message
 AIDA framework guides message design
 Message content contains appeals or
themes designed to produce desired results


Rational appeals
Emotional appeals
– Love, pride, joy, humor, fear, guilt, shame

Moral appeals
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Developing Effective
Communication
• Step 3: Designing a Message
 Message Structure: Key decisions are required
with respect to three message structure issues:



Whether or not to draw a conclusion
One-sided vs. two-sided argument
Order of argument presentation
 Message Format: Design, layout, copy, color,
shape, movement, words, sounds, voice, body
language, dress, etc.
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The Message Strategy
•
Identify Customer Benefits
•
Develop Compelling Creative
Concept—the “Big Idea”
•
Advertising Appeals Should Be:
Meaningful, Believable, & Distinctive
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Message Execution
•
•
•
•
•
Slice of Life
Lifestyle
Fantasy
Mood or
Image
Musical
•
Personality Symbol
•
Technical Expertise
•
Scientific Evidence
•
Testimonial or
Endorsement
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Developing Effective
Communication
• Step 4: Choosing Media
 Personal communication channels
Includes face-to-face, phone, mail, and Internet
chat communications
 Word-of-mouth influence is often critical
 Buzz marketing cultivates opinion leaders

 Nonpersonal communication channels

Includes media, atmosphere, and events
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Selecting Advertising Media
•
Reach

•
Percentage of people exposed to ad
Frequency

•
Number of times a person is exposed to
ad
Media Impact

The qualitative value of a message
exposure through a given medium
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Developing Effective
Communication
• Step 5: Selecting the Message Source
 Highly credible sources are more persuasive
 A poor spokesperson can tarnish a brand
• Step 6: Collecting Feedback
 Recognition, recall, and behavioral measures
are assessed
 May suggest changes in product/promotion
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Deciding on Media Timing
•
Must decide how to schedule the
advertising over the course of a year.



•
Follow seasonal pattern
Oppose seasonal pattern
Same coverage all year
Choose the pattern of the ads


Continuity
Pulsing
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Setting the Promotional
Budget and Mix
• Setting the Total Promotional Budget
 Affordability Method

Budget is set at a level that a company can afford
 Percentage-of-Sales Method

Past or forecasted sales may be used
 Competitive-Parity Method

Budget matches competitors’ outlays
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Setting the Promotional
Budget and Mix
• Setting the Total Promotional Budget
 Objective-and-Task Method



Specific objectives are defined
Tasks required to achieve objectives are
determined
Costs of performing tasks are estimated, then
summed to create the promotional budget
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Setting the Promotional
Budget and Mix
• Setting the Overall Promotion Mix
 Determined by the nature of each
promotion tool and the selected
promotion mix strategy
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Evaluating Advertising
•
Measure the communication effects of
an ad—“Copy Testing”
•
Measure the sales effects of an ad

Is the ad increasing sales?
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Setting the Promotional
Budget and Mix
Promotion Tools
• Advertising
• Personal Selling
• Sales Promotion
• Public Relations
• Direct Marketing
• Reaches large, geographically
dispersed audiences, often with
high frequency
• Low cost per exposure, though
overall costs are high
• Consumers perceive advertised
goods as more legitimate
• Dramatizes company/brand
• Builds brand image; may
stimulate short-term sales
• Impersonal; one-way
communication
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Setting the Promotional
Budget and Mix
Promotion Tools
• Advertising
• Personal Selling
• Sales Promotion
• Public Relations
• Direct Marketing
• Most effective tool for building
buyers’ preferences,
convictions, and actions
• Personal interaction allows for
feedback and adjustments
• Relationship-oriented
• Buyers are more attentive
• Sales force represents a longterm commitment
• Most expensive of the
promotional tools
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Setting the Promotional
Budget and Mix
Promotion Tools
• Advertising
• Personal Selling
• Sales Promotion
• Public Relations
• Direct Marketing
• May be targeted at the trade
or ultimate consumer
• Makes use of a variety of
formats: premiums, coupons,
contests, etc.
• Attracts attention, offers strong
purchase incentives, dramatizes
offers, boosts sagging sales
• Stimulates quick response
• Short-lived
• Not effective at building longterm brand preferences
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Setting the Promotional
Budget and Mix
Promotion Tools
• Advertising
• Highly credible
• Many forms: news stories,
news features, events and
sponsorships, etc.
• Personal Selling
• Reaches many prospects missed
via other forms of promotion
• Sales Promotion
• Dramatizes company or
benefits
• Public Relations
• Direct Marketing
• Often the most underused
element in the promotional
mix
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Setting the Promotional
Budget and Mix
Promotion Tools
• Advertising
• Personal Selling
• Sales Promotion
• Public Relations
• Direct Marketing
• Many forms: Telephone
marketing, direct mail,
online marketing, etc.
• Four distinctive
characteristics:




Nonpublic
Immediate
Customized
Interactive
• Well-suited to highly
targeted marketing efforts
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Other Advertising
Considerations
•
Small Companies
•
Large Companies
•
Advertising Agency
•
International Issues
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Setting the Promotional
Budget and Mix
• Promotion Mix Strategies
 Push strategy: trade promotions and
personal selling efforts push the product
through the distribution channels.
 Pull strategy: producers use advertising and
consumer sales promotions to generate
strong consumer demand for products.
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Setting the Promotional
Budget and Mix
• Checklist: Integrating the Promotion Mix







Analyze trends (internal and external)
Audit communications spending
Identify all points of contact
Team up in communications planning
Make all communication elements compatible
Create performance measures
Appoint an IMC manager
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Socially Responsible
Communications
• Advertising and Sales Promotion
 Avoid false and deceptive advertising

Bait and switch advertising
 Trade promotions can not favor certain
customers over others
 Use advertising to promote socially
responsible programs and actions
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Socially Responsible
Communications
• Personal Selling
 Salespeople must follow the rules of “fair
competition”
 Three day cooling-off rule protects ultimate
consumers from high pressure tactics
 Business-to-business selling

Bribery, industrial espionage, and making false and
disparaging statements about a competitor are
forbidden
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Consumer Sales Promotion
Tools
•
Samples
•
Patronage Rewards
•
Coupons
•
•
Rebates
Point-of-Purchase
Promotions
•
Cents-off Deals
•
Contests
•
Premiums
•
Sweepstakes
•
Advertising
Specialties
•
Games
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Rest Stop: Reviewing the Concepts
•
•
•
Discuss the process and advantages of
integrated marketing communications.
Define the five promotion tools and
discuss factors that must be considered
in shaping the overall promotion mix.
Describe and discuss the major
decisions involved in developing an
advertising program.
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Rest Stop: Reviewing the Concepts
•
Explain how sales promotion
campaigns are developed and
implemented.
•
Explain how companies use public
relations to communicate with
their publics.
15 - 39
THE 3rd “P” IN MARKETING
Pricing Decisions
Setting Prices
TOPIC OBJECTIVES
• Stages of establishing prices
• Pricing objectives
• Pricing basis
• Pricing strategies
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Stages for Establishing
Prices
15 - 42
Factors Influencing Pricing
Internal Factors
External Factors
•Corporate & marketing objectives of the •Market characteristics (these relate to
firm
demand, customer and competition)
•The image sought by the firm through •Price elasticity of demand of the product
pricing
in particular
•The characteristics of the product
•Buying behaviour of the customers of the
product
•The stage of the product in its life cycle
•Bargaining power of major customers
•Use pattern and turnaround rate of the •Bargaining power of major suppliers
product
•Costs of manufacturing and marketing
•Competitors’ pricing strategies
•Extent of distinctiveness of the product •Government
and extent of differentiation practiced
pricing
controls/regulation
on
•Other elements of the marketing mix and •Other relevant legal aspects
their interaction with pricing
•Composition of the product line of the •Societal views
firm and whether buyers buy some of the
products as a bundle
•Understanding reached,
competitors/price cartels
if
any,
with
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Objectives Firms Seek in Pricing
The following are among the objectives firms seek in pricing. It is to be noted that a
given firm adopts a few out of this list of objective, not all of them.
•Profit maximization in the short term
•Target profit on the entire product line,
irrespective of profit level in individual
products.
•Profit optimisation in the long term
•Keeping competition out, or keeping it
under check
•A minimum return on investment
•Keeping parity with competition
•A minimum return on sales turnover
•Fast turnaround and early cash recovery
•Achieving a particular sales volume
•Stabilising the prices and margins in the
market
•Achieving a particular market share
•Providing the commodity/service at
prices affordable by the weaker sections
•Deeper penetration of the market
•Providing the commodities/services at
prices that will stimulate economic
development.
•Entering new markets
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1. Development of Pricing
Objectives
• Pricing objectives
 are goals that describe what a firm wants to
achieve through pricing.
 form the basis for decisions about other
stages of pricing.
 must be consistent with the firm’s overall
marketing objectives.
 can support the attainment of multiple
short-term and long-term goals.
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Development of Pricing
Objectives
Survival
Product
Quality
Status Quo
Profit
Pricing
Objective
s
Cash Flow
Return on
Investment
Market Share
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2. Assessment of the Target
Market’s Evaluation of Price
• The Importance of Price
 Type of product
 Type of target market
 The purchase situation
• Value Focus
 A combination of product’s price and quality
attributes
 Helps customers differentiate a product from
competing brands
 Guides marketers in their evaluation of the
importance of price to the consumer
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3. Evaluation of Competitors’ Prices
• Sources of Competitors’ Pricing Information
 Comparative Shoppers
 Persons who systematically collect data on
competitors’ prices
 Purchased Price Lists
 Developed by syndicated marketing research
services
• Importance of Knowing Competitors’ Prices
 Helps determine how important price will be to
customers
 Helps marketers in setting competitive prices for
their products
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4. Selection of a Basis for Pricing
• Dimensions of Pricing
 Cost, demand, and competition
• Bases for Pricing
 Type of product
 Market structure of the industry
 Brand’s market share relative to competing
brands
 Customer characteristics
15 - 50
Broad Categories of Pricing Methods
•Cost-based
pricing
•Demand based
pricing
•Competitionoriented pricing
•Product lineoriented pricing
•Tender pricing
•Affordabilitybased pricing
•Differentiated
pricing
15 - 51
Selection of a Basis for
Pricing (cont’d)
• Cost-Based Pricing
 Adding a Rupee amount or percentage to
the cost of the product
 Cost-Plus Pricing or Full cost Pricing
Adding a specified Rupee amount or
percentage to the seller’s cost
 Markup Pricing
Adding to the cost of the product a
predetermined percentage of that cost
15 - 52
Selection of a Basis for Pricing
• Demand-Based Pricing
 Customers pay a higher price when demand for a
product is strong and and a lower price when
demand is weak.
 Effectiveness depends on marketer’s ability to
estimate demand accurately.
• Competition-Based Pricing
 Pricing influenced primarily by competitors’ prices
 Importance increases when competing products are
relatively homogeneous
 May necessitate frequent price adjustments
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Selection of a Pricing Strategy
1. Differential Pricing
» Charging different prices to different buyers
for the same quality and quantity of product
Strategy
Action
Negotiated pricing
Establishing a final price through bargaining
Secondary-market
pricing
Setting one price for the primary market and a
different price for another market
Periodic discounting
Temporary reduction of prices on a patterned or
systematic basis
Random discounting
Temporary reduction of prices on an unsystematic basis
15 - 55
Selection of a Pricing Strategy
2. New Product Pricing
•
Price Skimming
 Charging the highest possible price that
buyers who desire the product will pay
•
Penetration Pricing
 Setting prices below those of competing
brands to penetrate a market and gain a
significant market share quickly
15 - 56
Selection of a Pricing Strategy
3. Product Line Pricing
Establishing and adjusting prices of multiple products
within a product line
Strategy
Action
Captive pricing
Pricing the basic product in a product line low
while pricing related items at a higher level
Premium pricing
Pricing the highest-quality or most versatile
products higher than other models in the product
line
Bait pricing
Pricing an item in the product line low with the
intention of selling a higher-priced item in the line
Price lining
Setting a limited number of prices for selected
groups or lines of merchandise
15 - 57
Selection of a Pricing Strategy
4. Psychological Pricing
attempts to influence a customer’s perception of
price to make a product’s price more attractive
Strategy
Action
Reference pricing
Pricing a product at a moderate level and
positioning it next to a more expensive
model or brand
Bundle pricing
Packaging together two or more complementary products and selling them for a
single price
Multiple-unit pricing
Packaging together two or more identical
products and selling them for a single price
Everyday low prices
(EDLP)
Setting a low price for products on a consistent basis
Strategy
Action
Odd-even pricing
Ending the price with certain numbers to
influence buyers’ perceptions of the price or
product
Customary pricing
Pricing on the basis of tradition
Prestige pricing
Setting prices at an artificially high level to
convey prestige or a quality image
15 - 59
Selection of a Pricing Strategy
5. Professional Pricing
 Fees set by people with great skill or experience in a
particular field
6. Promotional Pricing
 Price leaders
 Products priced below the usual markup, near cost, or
below cost
 Special-event pricing
 Advertised sales or price cutting linked to a holiday,
season, or event
 Comparison discounting
 Setting a price at a specific level and comparing it with
a higher price
15 - 60
Group Question
• Characterize the nature of Price in the market where
you will sell your product (i.e., price competitive, non
price competitive, elasticity of demand). Are there
other factors that will affect your pricing decisions,
such as - perceived customer interpretation and
response, legal and regulatory issues, competition,
etc..
• Using your product as the subject, answer the
following questions:
 What is your Pricing Objective (one or more of
seven)?
 What is your Basis for Pricing (one of three)?
 What is your Pricing Strategy (one of six)?
15 - 61
Contemporary
Issues in Marketing
Political Marketing
• Political marketing is the recent
trend in Indian politics.
• Political marketing is not limited to
just political advertising.
• Political broadcast and electoral
speeches are aimed for giving
political parties a positioning in
electoral market.
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The Product in Political
Marketing
• Product is a promise of good
government
• It might be the image of candidate,
or an ideology or style of good
governance which is differentiated,
positioned and the packaged as
15 - 64
Price in Political
Marketing
• Price is the fund raised by the
political party.
• Fund raising is mainly through
membership fee, donations etc.
• Fund raising strongly depend on
product concept.
15 - 65
Political Advertising
• It is the positioning stand
- eg. India Shining Campaign – 2004
by BJP or Jai Ho campaign by UPA.
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Social Marketing
15 - 67
Social awareness marketing involves
the analysis, planning, execution
and evaluation of programmes
designed to influence the voluntary
behaviour of target audience eg.
health promotion, road safety,
dowry, drugs, aids, senior citizen
15 - 68
• Social marketing do not necessarily
promote an organization but promote
a cause. So that human behaviour can
be directed, molded and changed.
Thereby associating a organisation with
a cause.
• If the cause is recalled, automatically
organization/brand is recalled.
• Jago India Campaign – by Tata Tea
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• Social marketing gets higher consumer
connect and brand recall as consumer
do not view this campaign as ad.
• The image of organization is enhanced
due association with social cause.
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Rural Marketing
• Rural marketing are tomorrows market
and marketers should know how to
penetrate, and harness their market.
• Rural market in India is undergoing a
socio-economic change.
• Information technology has helped the
penetration of market more.
• The self help group and access to easy
funds have made this market more
15 - 71
• Rural market is growing at a rate of
25% per annum.
• In general the literacy rate of rural
population has increased.
• Rural population is strongly guided by
reference group – primary health
workers, doctors, teachers, panchayat
members.
• Brand conscious has increased for
FMCG and durable products.
15 - 72
Campaign by Companies in
Rural India
• ITC e-chaupal – Internet Kiosk set up at
chaupal for giving information on crop
price, weather forecast, fertilizer, loans
etc
• Project Shakti from HLL – a self help
group (SHG) for promoting and selling
products.
• Mahindra and Mahindra’s Shubh labh
stores.
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Green Marketing
or
Ecological Marketing
15 - 74
• Green marketing refers to the process
of selling products or services based on
their environmental benefits.
• Organization are using it as new
marketing
tool
or
competitive
advantage.
• ISO 14020 is a guide to eco labels.
15 - 75