Download IMC Chapter15

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Part Seven
Promotional Decisions
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Chapter 18
Integrated Marketing
Communications
Objectives
• Describe nature of integrated marketing
communications
• Examine process of communication
• Understand role/objective of promotion
• Explore elements of promotion mix
• Examine major methods of promotion
• Describe factors affecting choice of promotional
methods
• Understand word-of-mouth communication and how
it affects promotion
• Examine criticisms/defenses of promotion
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Goals
• Consistent message
• Coordinate/manage promotional efforts
• Synchronization of promotional elements
• Use more precisely targeted promotional tools
• Use of database marketing
• Protect consumer privacy
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Integrated Marketing
Communications (IMC)
• Coordination of promotion and other marketing efforts
for maximum information and persuasive impact.
• A major goal of integrated marketing communication is
to send a consistent message to customers.
• The concept of IMC has been increasingly accepted
for several reasons:
• 1- mass media advertising, a very popular promotional
method in the past, is used less frequently today
because its high cost and lower effectiveness in
reaching some target segments.
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Continue
• 2- marketers can now take advantage of more
precisely targeted promotional tools, such as
cable TV, direct mail, the internet, special
interest magazines, cell phones, and iPods.
• 3- database marketing is also allowing
marketers to more precisely target individual
customers.
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The Communication Process
• For communication to take place, both the sender and
receiver of information must share common ground. ]
• They must have common understanding of the symbols,
words, and pictures used to transmit information.
• Communication: a sharing of meaning through the
transmission of information.
• Communication begins with a source. A source is a
person, group, or organization with meaning to share
with audience.
• A receiver is the individual, group, or organization that
decodes a coded message, and an audience is two or
more receivers.
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Coding process
• To transmit meaning, a source must convert the
meaning into a series of signs or symbols representing
idea or concept. This is called the coding process or
encoding.
• When coding meaning into message, the source must
consider certain characteristics of the receiver or
audience.
• To share meaning, the source should use signs or
symbols familiar to the receiver or audience.
• Marketers should understand the importance of knowing
there target market and the language that they use.
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Examples of Translation
Problems
•
•
•
•
•
KFC experienced real problems when the phrase “finger lickin’
good” came out in Chinese as “eat your fingers off.”
General Motors' Chevrolet Nova vehicle translated in Spanish
in Central and South America as: "No va", "It Doesn't Go";
Pepsi’s "Come Alive with the Pepsi Generation" slogan
translated in Chinese: "Pepsi Brings Your Ancestors Back from
the Grave”;
Parker Pen's slogan "It won't leak in your pocket and embarrass
you" translated in Mexico: "It won't leak in your pocket and
make you pregnant.
Braniff Airlines launched a new leather first class seats ad
campaign (1977-78) in the Mexican market: "Fly in Leather"
meant "Fly Naked" (vuela en cuero);
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The Communication Process
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Coding a Meaning
• Communication channel - medium that carries
coded message
• Decoding process - converting signs and
symbols into concepts and ideas
• Noise - reduces communication’s clarity and
accuracy
• Feedback - receiver’s response to decoded
message
• Channel capacity - limit on volume of information
a channel can handle effectively
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Communication channel
• To share a coded meaning with the receiver or audience,
a source selects and uses a communication channel, the
medium of transmission that carries the coded message
form the source to the receiver or audience.
• when a source chooses an inappropriate communication
channel, several problems may arise: 1- the coded
message may reach some receivers, but the wrong ones.
• 2- coded message may reach intended receivers in
incomplete form because the intensity of the transmission
is weak.
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Decoding process.
• In the decoding process, signs or symbols are
converted into concepts and ideas.
• Seldom does a receiver decode exactly the same
meaning the source coded.
• When the result of decoding differs from what was
coded, noise exist. Noise is anything that reduces the
clarity and accuracy of the communication; it has
many sources and may affect any or all parts of the
communication process.
• Noise sometimes arises within the communication
channel itself . Noise may also occur when the source
uses unfamiliar signs or symbols.
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Decoding process.
• Noise may also originate in the receiver; a
receiver may be unaware of a coded message
when perceptual process blocked it.
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Feedback
• The receiver response to decoded message is feedback to the
source.
• During feedback, the receiver or audience is the source of
message directed toward the original source, which then
becomes a receiver.
• During face-to-face communication, such as occurs in
personal selling and product sampling, verbal and nonverbal
feedback can be immediate.
• When mass communication such as advertising is used,
feedback is often slow and difficult to recognize.
• It may take several years to see he effects of a promotion.
Feedback does exist in the mass media in the form of
measures of change in sales volume or consumers attitudes…
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Channel Capacity
• Each communication channel has a limit on the
volume of information it can handle effectively, this
limit called Channel Capacity.
• Channel capacity is determined by the least efficient
component of the communication process.
• Example: although a radio announcer can read
several hundred words a minute, a one minute
advertising message should not exceed 150 words
because most announcers cannot articulate words into
understandable message at a rate beyond 150 words
per minute.
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Promotion
-Communication to build and maintain relationships by
informing and persuading one or more audiences to view an
organization positively and accept its products.
-Marketers also indirectly facilitate favorable relationships by
focusing information about company activities and products
on interest groups, current and potential investors, regulatory
agencies, and society in general.
-For maximum benefit from promotional effort, marketers
strive for proper planning, implementation, coordination, and
control of communications.
-Because customers derive information and opinions form
many different sources, IMC planning also takes into account
informal methods of communication such as word of mouth
and other sources such as internet.
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Maximize Benefits
Promotional Efforts
• Proper planning
• Implementation
• Coordination
• Control of communication
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Information Flows In IMC
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Possible Objectives Of Promotion
Promotional objectives vary considerably form one
organization to another and within organization over
time.
Large firms with multiple promotional programs
operating simultaneously may have quite varied
objectives.
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Create Awareness
• For an organization introducing a new product or line
extension, making customers aware of the product is
crucial to initiating the product adoption process.
• To create awareness of its new spicy premium
chicken sandwich, for example, McDonald’s passed
out samples of the sandwich, coupons, T-shirt, and
iPod covers in 14 cities.
• Creating awareness is also important for existing
products. Promotional efforts may aim to increase
awareness of brands, product features, image issue
operational characteristics.
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Create Awareness
• Awareness is crucial to initiating product
adoption process
• Increase awareness of brands, product
features, image-related issues, or
operational characteristics
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Stimulate Demand
• When a organization is the first to introduce an
innovative products, it tries to stimulate primary
demand for a product category rather than for a
specific brand of products through pioneer promotion.
• Primary demand: demand for a product category
rather than for a specific brand.
• Pioneer promotion: promotion that informs consumers
about a new product. ( what is it. What it does, how it
can be used, and where it can be purchased)
• At what stage of the product life cycle we use pioneer
promotion?
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Stimulate Demand
• To build selective demand, demand for a specific
brand, a marketer employs promotional efforts that
point out the strengths and benefits of a specific
brand.
• Selective demand can be stimulated by :
• 1- differentiating the product.
• 2- increasing the number of product uses.
• 3- promoting them by advertising campaigns.
• 4- price discount, free samples, coupons, consumer
contests and games, and sweepstakes.
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Stimulate Demand
• Primary - demand for a product category
rather than a specific brand
– Pioneer promotion – informs consumers
about a new product
• Selective - demand for a specific brand
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Encourage Product Trial
• When attempting to move customers through the
product adoption process, a marketer may
successfully create awareness and interest but
customers may still during the evaluation stage.
• In this case certain types of promotion such as free
samples, coupons, test drive, or limited free use
offers, contests, and games are employed to
encourage product trial.
•
•
•
•
Encourage product trial may be an objective for:
1- a product that is first in a product category.
2- a new brand in an existing category.
3- an existing brand seeking customers.
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Encourage Product Trial
• 4- trial-inducing promotional efforts aim to make
product trial convenient and low risk for
potential customers.
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Encourage Product Trial
• Free samples
• Coupons
• Test drives
• Limited free-use offers
• Contests
• Games
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© Microsoft Power Point Clip Art
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Encouraging product
trial through a free offer
© Jeff Greenberg / PhotoEdit
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Identify Prospects
• Here, the aim is to identify customers who are
interested in the firm’s product and are more
likely to buy it.
• A marketer may use a magazine advertisement with
direct response information form, requesting the
reader to complete and mail the form to receive
additional information.
• Some advertisements used toll-free number.
• Here, we are talking about customers that have a high
interest in the product.
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Retain Loyal Customers
• Promotion effort directed at customer retention can
help organization control costs because the cost of
retaining customers are usually considerably lower
than those of acquiring new ones.
• To retain loyal customers, marketers use and
advertise loyalty program, and reinforcing
advertisement that assure current customers that they
have made the right brand choice and tells them how
to get the most satisfaction form the product.
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Retain Loyal Customers
• Cheaper than acquiring
new ones
• Frequent-user
programs
• Special offers
© Microsoft Power Point Clip Art
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Facilitate Reseller Support
• Reseller support is a two way street; producers want
to provide support to resellers to maintain working
relationships, and in turn they expect resellers to
support their products.
• To encourage wholesalers and retailers to increase
inventories of its products, a manufacturer may
provide them with special offers and buying
allowances.
• Strong relationships with resellers are important to a
firm’s ability to maintain a sustainable competitive
advantage. The use of various promotional methods
can help an organization achieve this goal.
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Combat Competitive
Promotional Efforts
• At time a marketer’s objective in using promotion is to
offset or lessen the effects of a competitor’s
promotional program.
• This type of promotional activity does not necessarily
increase the organization’s sales or market share, but
it may prevent a sales or market share loss.
• A combative promotional objective is used most often
by firms in extremely competitive consumer markets,
such as fast-food and automobile industries.
• Read the example at page 377.
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Combat Competitive
Promotional Efforts
• Does not increase sales or market share
• Prevents lose of sales and market share
• Used in extremely competitive consumer
markets
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Reduce Sales Fluctuations
• Demand for many products varies from one month to
another because of such factors as climate, holiday,
and seasons.
• A business cannot operate at peak efficiency when
sales fluctuate rapidly.
• Changes in sales volume translate into changes in
production, inventory levels, personnel needs, and
financial resources
• The aim is to reduce fluctuations by generating sales
during slow periods, so firms can use it resources
more efficiently.
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Reduce Sales Fluctuations
• Example: advertisement that promotes a price
reduction of lawn care equipment can increase sales
during fall and winter months.
• During peak period a marketer may refrain from
advertising to prevent stimulating sales to the point
where the firm can not handle all the demand.
• On occasion, an organization advertises that
customers can be better served by coming in on
certain days.
• Read the pizza example on page 378.
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Reduce Sales Fluctuations
• Minimize seasonal
variations in
–
–
–
–
–
Sales
Production
Inventory levels
Personnel needs
Financial resources
© Microsoft Power Point Clip Art
• Become more efficient
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Promotion Mix
A combination of promotional methods used
to promote a specific product:
1- advertising.
2- personal selling.
3- public relations.
4- sales promotion.
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Four Possible
Elements Of A Promotion Mix
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Advertising
• A paid nonpersonal communication about an
organization and its products transmitted to a target
audience through mass media, including television,
radio, the internet, newspapers, magazines, direct
mail, out door displays, and signs on mass transit
vehicles.
• Individual and organizations use advertising to
promote goods, services, ideas, issues, and people.
Being highly flexible, advertising focuses can reach an
extremely large target audience or focus on a small,
precisely defined segment.
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Advertising
• Advertising offer several benefits: 1- it is extremely cost
efficient when it reaches a vast number of people at low
cost per person. Read the Time magazine example. 2advertising also lets the source repeat the message
several times, advertising repetition has been found to
be especially effective for brand name extensions
beyond the original product category. 3- furthermore,
advertising a product in a certain way can add to the
product’s value, and the visibility an organization gains
form advertising can enhance its image. At times a firm
tries to enhance its own or its products image by
including celebrity endorsers in advertisement.
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Advertising
• Advertising has disadvantages as well : 1- even
though the cost per person reached may be
low, the absolute dollar outlay can be extremely
high, especially for commercials during popular
television shows. 2- advertising rarely provides
rapid feedback. Measuring its effect on sales is
difficult, and it is ordinarily less persuasive than
personal selling. 3-In most instances the time
available to communicate a message to
customers is limited to seconds.
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Personal Selling
A paid personal communication that seeks to inform
customers and persuade them to purchase products in an
exchange situation.
Personal selling has both advantages and limitations when
compared with advertising:
advertising is general communication aimed at relatively
large target audience, whereas personal selling involves
more specific communication directed at one or more
several individuals.
Reaching one person through personal selling costs
considerably more than through advertising, but personal
selling efforts have greater impact on customers.
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Personal Selling
• Personal selling also provides immediate feedback,
allowing marketers to adjust their messages to
improve communication.
• When a salesperson and a customer meet face to
face, they use several types of interpersonal
communication.
• The predominant communication form is language,
both spoken and written.
• Also, a salesperson and customer use Kinesic
communication, Proxemic communication, and Tactile
communication Page 504.
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Types Of Interpersonal
Communication
• Kinesic - movement of head, eyes, hands,
leg, or torso
• Proxemic - varying physical distance in
face-to-face
• Tactile - touching
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Personal Selling
vs. Advertising
• Specific communication aimed at
one/several individuals
• Higher cost
• Greater impact on customers
• Immediate feedback
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Public Relations
• Other stakeholders such as suppliers, employees,
shareholders, the media, in addition to customers are
important to an organization.
• To communicate with customers and stakeholders, a
company employs Public Relations.
• PR is a broad set of communications efforts used to
create and maintain favorable relationships between
an organization and with one or more stakeholders.
• Maintain positive relationships with stakeholders can
affect a firm’s current sales and profits, as well as its
long survival.
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Public Relations
• PR uses a variety of tools, including annual reports,
brochures, event sponsorship, and sponsorship of
socially responsible programs aimed at protecting the
environment or helping disadvantaged individuals.
• Publicity is another form of tools, which is a
component of public relations.
• Publicity is non-personal communication in news story
form about an organization or its products, or both,
transmitted through a mass media at no charge.
• A few examples of publicity-based public relations
tools are news releases, press conferences, and
feature articles.
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Public Relations
• Unpleasant situations and negative events, such as
product tampering or an environmental disaster, may
generate unfavorable public relations for an
organization.
• Read Wal-Mart example.
• To minimize the damaging effects of unfavorable
coverage, effective marketers have policies and
procedures in place to help manage any public
relations problems.
• All organizations should have an ongoing Public
Relations program. PR should not be viewed as set of
tools to be used only during crises.
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Public Relations
• Broad set of communication efforts used
to create/maintain favorable relationships
between organization and stakeholders
• Focuses on stakeholders other than
customers
• Affects short-term sales/profits and longterm survival
• Can be unfavorable
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PR Tools
•
•
•
•
•
Nonpersonal communication
Annual Reports
Brochures
Event Sponsorships
Sponsorship of Socially Responsible
Programs
• Press Release/Conference/Feature
Articles
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Sales Promotion
• Sales promotion is an activity or material that
acts as a direct inducement, offering added
value or incentive for the product, to reseller,
salespeople, or consumers.
• Example include, free samples, games,
rebates, sweepstakes, contests, premiums, and
coupons.
• Sales promotion should not be confused with
promotion, sales promotion is just one part of
the comprehensive area of promotion.
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Sales Promotion
• Generally, when companies employ advertising
or personal selling, they depend in these
activities continuously.
• A marketer’s use of sales promotion tend or be
irregular.
• Marketers frequently rely on sales promotion to
improve the effectiveness of other promotion
mix elements, especially advertising and
personal selling.
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Sales Promotion
• Acts as direct
inducement
• Offering added value
• Incentive
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• Examples
–
–
–
–
–
–
–
Free Samples
Games
Rebates
Sweepstakes
Contests
Premiums
Coupons
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Product Categories With
Greatest Use Of Coupons
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Selecting Promotion Mix
Elements
• Many firms that market multiple product lines use several
promotion mixes simultaneously.
• 1- promotional resources, objectives, and policies.
• The size of an organization’s promotional budget affects the
number and relative intensity of promotional methods
included in a promotion mix.
• When a company’s promotional budget is extremely limited,
the company may rely on personal selling because it is
easier to measure a salesperson’s contribution to sales than
to measure the sales effectiveness of advertising.
• Organizations with extensive promotional resources
generally include more elements in their promotion mix.
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Selecting Promotion Mix
Elements
• An organization's promotional objectives and policies also
influence the types of promotion selected.
• For example if a company aims to create mass awareness
of a new convenience good, its promotion mix probably
leans heavily toward advertising, sales promotion, and
possibly public relations.
• Whereas if a company want to educate consumers about
the feature of a durable good, its mix will combine a
moderate amount of advertising, possibly sales promotion
designed to attract customers to retail stores, and a great
deal of personal selling because this method is an efficient
way to inform customers about such products.
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Selecting Promotion Mix
Elements
• If a firm objective is to produce immediate sales
of nondurable services, the promotion mix will
probably stress advertising and sales
promotion.
• For example, dry cleaning and carpet cleaning
firms are more likely to use advertising with a
coupon or discount rather than personal selling.
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Selecting Promotion Mix
Elements
• 2- characteristics of the target market:
• Size, geographic distribution, and demographic
characteristics of an organization’s target market help
dictate the methods to include in product’s promotional
mix.
• If the size is limited, the promotion mix will probably
emphasize personal selling.
• Also, organizations selling to industrial markets and
firms marketing products through only a few
wholesalers frequently make personal selling the
major component of their promotional mix.
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Selecting Promotion Mix
Elements
• Advertising and sales promotion will be used more
heavily when a products market consists of millions of
customers because these methods reaches masses of
people at a low cost per person.
• Geographic distribution of a firm’s customers also
affects the choice of promotional method. Personal
selling is used when customers are concentrated in
small area
• Whereas advertising is used when customers are
numerous and dispersed across vast regions.
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Target Market Characteristics
• Help dictate methods included in
promotion mix
• Market size determines composition of mix
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Selecting Promotion Mix
Elements
• 3- characteristics of the product:
• Generally promotion mixes for business products
concentrate on personal selling, whereas advertising
plays a major role in promoting consumer goods.
• personal selling is used extensively for consumer
durables, whereas consumer convenience items are
promoted mainly through advertising and sales
promotion.
• Pubic relations appears in promotion mixes for both
business and consumer products.
• Marketers of highly seasonal products often emphasize
advertising, and sometimes sales promotion, why?
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Selecting Promotion Mix
Elements
• Products price also influence the composition of the
promotional mix.
• High priced products call for personal selling because
consumers associate greater risk with the purchase of
such products and usually wants information form
salesperson.
• For low priced convenience items, marketers use
advertising rather than personal selling
• Another consideration in creating an effective PM is
the stage of the PLC…read paragraph four at page
508.
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Product Life Cycle Stage
• Introduction = advertising
• Growth/Maturity
– Consumer = advertising
– Business = personal selling
and sales promotion
• Decline = reduction of
all promotional activities
© Microsoft Power Point Clip Art
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Product Characteristics
• Business products
– personal selling
– sales promotion
• Consumer products
– Convenience = advertising
– Durables = personal selling
• Both = public relations
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Selecting Promotion Mix
Elements
• Moreover, the intensity of market coverage is still
another factor affecting composition of the PM.
• When Intensive distribution is used, firms depend
strongly on advertising and sales promotion.
• When selective distribution is used promotion mixes vary
considerably.
• Items handled through exclusive distribution typically
require a significant amount of personal selling.
• Finally, product’s use also has some effects. Advertising
are used for promoting products such as laxatives,
feminine hygiene because many customers do not want
to talk with salespeople about these products.
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Distribution Intensity
• Intense = advertising, sales promotion
• Selective = vary
• Exclusive = personal selling
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Selecting Promotion Mix
Elements
• 4- costs and availability of promotional methods:
• National advertising and sales promotion require large
expenditures. The cost per person reached may be
quite small if the efforts succeed in reaching extremely
large audiences.
• In foreign countries some media may be unavailable
or advertising using these media may be illegal.
• Available media may not be open to certain types of
ads. For example, in some countries it is forbidden to
make brand comparisons on TV.
• Availability of qualified sales force.
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Costs And Availability
Of Promotional Methods
• National Advertising/Sales Promotion =
high expense but lower cost per individual
is lower
• Internationally = may have restricted
availability
• Unavailability of sales force = less
personal selling
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Selecting Promotion Mix
Elements
• 5- Push and Pull channel policies:
• With a push policy, the producer promotes the
product only to the next institution down the
marketing channel. Each channel member in
turn promotes to the next channel member.
• While the firm that use the pull policy promotes
directly to consumers to develop strong
consumer demand for its products. It does so
primarily through advertising and sales
promotion.
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Push vs. Pull
Promotional Strategies
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Push and Pull Channel Policies
• Push policy – promoting a product only to
the next institution down the marketing
channel
• Pull policy – promoting a product directly
to consumers to develop strong consumer
demand that pulls products through the
marketing channel
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Personal And Electronic
Word-Of- Mouth Communication
• Word-of-Mouth – personal informal exchanges
customers share with one another about products,
brands, and companies
• Effective marketers who understand the importance of
word-of-mouth communication attempt to identify
opinion leaders and encourage them to try their
products in the hope they will spread favorable word,
• Buzz marketing – an attempt to gain acceptance of
product by word-of-mouth
• Viral marketing – strategy to get Internet users to
share ads and promotions with their friends.
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Criticisms And
Defenses Of Promotion
•
•
•
•
•
Promotion deceptive?
Does promotion increase prices?
Does promotion create needs?
Does promotion encourage materialism?
Does promotion help customers without
costing too much?
• Should potentially harmful products be
promoted?
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