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CHAPTER 2 THEORETICAL REVIEW 2.1 Marketing Communications It is important to recognize that we are talking about marketing communications not just market communications. Marketing involves more parties than just those defined by market members. For marketing to be successful many people have to be involved in the communication process both within the organization and outside it. Over recent years marketing communications has become the favored term among academics and some practitioners to describe “all the promotional elements of the marketing mix which involve the communications between an organization and its target audiences on all matters that affect marketing performance.” (Kotler, 2011) Most prior research on the use of marketing information has studied antecedents of the use of information in new product strategy decisions. This study investigates factors that are related to the use of marketing information in the evaluation of marketing communications productivity. The information used in this context originates from a wide range of internal and external sources. Collected 10 11 survey data indicate that information quality, organization formalization, task complexity, market turbulence, rationality of decision style, and group involvement are all positively related to the use of information in assessing marketing communications productivity. Internal information (such as sales volume, profitability, and promotional expenditures) and external syndicated information (such as market share and market growth rates) are a major source of growth in the current information explosion. A greater understanding of the factors that enhance marketing information use in the following decision context is needed: 1. In the evaluation of marketing communications productivity; 2. When the information used includes a broad range of types of information, including internal and external/syndicated sources; and 3. When the degree of group involvement varies. These implications may include changes in an organization's structure, processes, and training that will enhance marketing information use, in turn improving decision-making and marketing productivity. Quality of information is related to its credibility, an important motivation for managers who tend to use more credible information sources and weigh them more heavily in decisions or judgments. 12 Marketing communications is 'promotion' from the marketing mix. The marketing communications mix is the marketer‟s bag of tools for communicating with customers and other stakeholders, consists of the specific blend of these tools (Kasper, Helsdingen, and Gabbott, 2006): Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service. Personal selling: Personal presentation by the firm‟s sales force for the purpose of making sales and building suctomer relationship. Public relation (PR): 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 rumore, stories, and events. Direct marketing: Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships. (Kerin and Peterson, 2007) said that development of an integrated marketing communication mix requires the assignment of relative weights to particular communication activities based on communication objectives. Although no established guidelines exist for designing an optimal communication mix, several factors that influence the mix need to be considered. These factors are: 13 The information requirements of potential buyers. The nature of the offering. The nature of the target markets. The capacity of the organization. The competitive marketplace is becoming more globalized, product life cycles are getting shorter, and competitive boundaries are blurring. The selling process is becoming more focused on relationship selling, selling teams are often necessary to fully address customer needs, people are spending more of their time on internal selling and to develop customer solutions and sales force success is increasingly measured in terms of productivity and profits as opposed to top line revenues. A sales force program is a tool for planning how the sales force will perform its role in achieving the firm‟s objectives. The sales program planning process begins by reviewing the firm‟s business and marketing strategies. Despite the availability of information such as sales, market share, and profit—the three most commonly used measures of marketing communications productivity (Mullich, 1996). A greater understanding of the factors that enhance marketing information use in the following decision context is needed: 1. In the evaluation of marketing communications productivity; 14 2. When the information used includes a broad range of types of information, including internal and external/syndicated sources; and 3. When the degree of group involvement varies. These implications may include changes in an organization's structure, processes, and training that will enhance marketing information use, in turn improving decision-making and marketing productivity. Quality of information is related to its credibility, an important motivation for managers who tend to use more credible information sources and weigh them more heavily in decisions or judgments. According to (Reed, 2004) this was followed, in the early part of the 20th century, by a variety of sales communication models. These early models of communication appeared at the time of the evolution of the mass market and mass communication (initially confined to print media). The underlying assumption of communication in this era was a stimulus-response concept commonly referred to as the „magic bullet‟ theory. It was believed that media messages could be implanted into an audience in a uniform manner and that the audience would then directly respond to the advertising message. It was also believed that consumers were rational decision makers actively seeking product information. Involvement is target audience specific as different individuals can purchase the same product with different levels of involvement. The level of involvement ranges from high involvement to low involvement. 15 Based on theoretical review marketing communication is a significant tool to justify marketing spends and link the increase in sales to marketing efforts directly, collection of marketing variables that are used by companies to achieve marketing goals. When trade promotions are used, they should be part of a supplier's integrated marketing communications strategy, complementing consumer promotions and advertising that has the goal of building lasting preferences for its brand. From all the explanation above, we can say that marketing communication mix is how the company introduces their product by considering about advertising, sales promotion, personal selling, Public Relations and direct marketing. 2.2 Marketing Process According to (Steward and Shashi 2005), marketing communications that identify shared goals directly or indirectly should facilitate the cognitive and affective transfer from the parent brand to the extension. It should be possible for marketing communication to reinforce, if not create, the linkages between a parent brand and its extension. When we applied the target marketing strategy, we have to identify the specific needs of group of people. Every company develops different marketing strategies to satisfy their customer. The process by which marketer do is referred to as target marketing and involves four basic steps: identifying market with unfulfilled 16 needs, segmenting the market, targeting specific segments, and positioning one‟s product or service through marketing strategies. 2.3 The Communication Process According to (Hawkins, Bulmer, Eagle, 2011) Integrated Marketing Communications (IMC) is a prominent marketing framework and literature shows that IMC principles are commonly and successfully, applied by business to improve their communications efforts with customers. According to (Holm, 2006) Communication remains as one of the most human of activities. Communication define as “a transactional process between two or more parties whereby meaning is exchanged through the intentional use of symbols”. According to (Belch, 2007), promotion has been defined as the coordination of all seller-initiated efforts to set up channels of information and persuasion in order to sell goods and services or promote an idea. The promotional planner must think about the process consumers will go through in responding to marketing communications. The response process for products or services for which consumer decision making is characterized by a high level of interest is often different from that for low-involvement or routine purchase 17 decisions. These differences will influence the promotional strategy. Communication objectives refer to what the firm seeks to accomplish with its promotional program. They are often stated in terms of the nature of the message to be communicated or what specific communication effects are to be achieved. 2.4 The Role of IMC in the Marketing Process According to (Hollensen, 2003) Integrated marketing communication (IMC) is the coordination of advertising, sales promotion, personal seling, public relations and sponsorship to reach customers with a powerful unified effects. According to (Holm, 2006) there are common tents that characterise IMC, these including: being customer-focused, communicating consistent messages using all forms of relevant media, building relationships with stakeholders, and achieving sustained behaviour change among the target audience Figure 2-1 shows, development of a marketing program requires an in-depth analysis of the market. The model includes a marketing strategy and analysis, target marketing, program development, and the target market. The marketing process begins with a marketing strategy that is based on a detailed situation analysis and guides for target market selection and development of the firm‟s marketing program. In the planning process, the situation analysis requires that the marketing strategy be assumed. The promotional program is developed with this strategy as a guide. 18 One of the key decisions to be made pertains to the target marketing process, which includes identifying, segmenting, targeting, and positioning to target markets. There are several bases for segmenting the market and various ways to position a product. Once the target marketing process has been completed, marketing program decisions regarding product, price, distribution, and promotions must be made. All of these must be coordinated to provide an integrated marketing communications perspective, in which the positioning strategy is supported by one voice. Thus all product strategies, pricing strategies, and distribution choices must be made with the objective of contributing to the overall image of the product or brand. Advertising and promotion decisions, in turn must be integrated with the other marketing-mix decisions to accomplish this goal. Source: George E. Belch and Michael A. Blech (2007), Advertising and Promotion: An Integrated Marketing Communication Perspective. Mc-GrawHill 19 Marketing plans can take several forms but generally include five basic elements: A detailed situation analysis that consists of an internal marketing audit and review and an external analysis of the market competition and environmental factors. Specific marketing objectives that provide direction, a time frame for marketing activities, and a mechanism for measuring performance. A marketing strategy and program that include selection of target market(s) and decisions and plans for the four elements of the marketing mix. A program for implementing the marketing strategy, including determining specific tasks to be performed and responsibilities. A process for monitoring and evaluating performance and providing feedback so that proper control can be maintained and any necessary changes can be made in the overall marketing strategy or tactics. 2.5 Analysis of the Communications Process According to (Holm, 2006), the primary goal of IMC is to affect the perception of value and behavior through directed communication. The development and diffucion of IMC is closely associated with fast technological advancement and of a rapidly globalizing and deregulations of markets and individualization of 20 comsumption patterns. This has emphasized the need to adjust objectives and strategies to changing marketing and communication realities. From this poitn of view, communication has to move from tactics to strategy. This stage of the promotional planning process examines how the company can effectively communicate with consumers in its target markets. The promotional planner must think about the process consumers will go through in responding to marketing communications. The response process for products or services for which consumer decision making is characterized by a high level of interest is often different from that for low-involvement or routine purchase decisions. These differences will influence the promotional strategy. Communication objectives refer to what the firm seeks to accomplish with its promotional program. They are often stated in terms of the nature of the message to be communicated or what specific communication effects are to be achieved. Communication objectives may include creating awareness or knowledge about a product and its attributes or benefits; creating an image; or developing favorable attitudes, preferences, or purchase intentions. Communication objectives should be the guiding force for development of the overall marketing communications strategy and of objectives for each promotional-mix area. The final stage of the promotional planning process is monitoring, evaluating, and controlling the promotional program. It is important to determine how well the 21 promotional program is meeting communications objectives and helping the firm accomplish its overall marketing goals and objectives. 2.6 SWOT Analysis According to (Belch, 2007), SWOT (strength, weakness, opportunities and threats) analysis is a technique specially designed to help identify suitable marketing strategies for company to follow. A SWOT analysis encompasses both the internal and external environments of the firms. Still from (Belch, 2007) Internally, the framework addresses a firm‟s strengths and weaknesses on key dimensions such as financial performance and resource; human resources; production facilities and capacity; market share; customer perceptions of product quality, price, and product availability; and organization communication. The assessment of the external environment includes information on the market (customer and competition), economic conditions, social trends, technology, and government regulation. 2.7 STP Marketing and the Evolution of Marketing Strategies According to (O‟Guinn and Semenik , 2009) the target segment is the subgroup (of the larger market) chosen as the focal point for the marketing program and advertising campaign. Markets are segmented; products are positioned. To pursue 22 the target segment, a firm organizes its marketing and advertising efforts around a coherent positioning strategy. Bases for segmentation refered to (Belch, 2007): - Geographic segmentation. These units may include nations, states, countries or even neighborhoods. - Demographic segmentation dividing the market on the basis of demographic variables such as age, sex, family size, education, income, and social class. - Psychographic segmentation dividing the market on the basis of personality and/or lifestyles. - Behavioristic segmentation dividing consumers into groups according to their usage, loyalties, or buying responses to a product. - Benefit segmentation. In purchasing products, consumers are generally trying to satisfy specific needs or wants. They are looking for products that provide specific benefits to satisfy these needs. Selecting a target market According to (Wood, 2004) the target marketing process involves determining how many segments to enter and determining which segments offer the most potential. 23 Positioning process According to (Wood, 2004) with positioning, use marketing to create a competitively distinctive position for the product in the minds of targeted customers.