Download CHAPTER 9 (blend of the chapters 13+14+15 of the text book)

CHAPTER 9
(blend of the chapters 13+14+15 of the
text book)
Integrated Marketing
Communication Strategy
Objective: examining the steps in developing
effective marketing communication and how the
promotion budget and mix is determined.
Steps in Developing Effective
Communication
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It is not enough to develop a good product, price it
attractively and make it available to target customers.
Companies also must communicate with their
customers to market their products.
A company’s total marketing communication program
is called the promotion mix which consists of (1)
advertising, (2) personal selling, (3) sales promotion,
and (4) public relations.
In order to develop effective communications, the
company must;
1. Identify the target audience
2. Determine the response sought
3. Choose a message
4. Choose the media through which to send the
messages
5. Collect feedback
Identifying the Target Audience
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The target audience would be the potential buyers or
the current users of the product.
The target audience affects the communicator’s
decisions on;
 what will be said
 how will it be said
 when it will be said
 where it will be said
 who will say it
Determining the Response Sought
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Of course, the final response is purchase. Purchase is
the result of a long process of consumer decision
making. The marketing communicator need to know
where the target audience now stands, therefore, to
what stage it needs to be moved.
If the target market is totally unaware of the product,
knows only its name or knows ver little about it, the
communicator must first build awareness and
knowledge.
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If the target market knows the product, the
marketer must develop liking (feeling favorable
about the product), preference (prefering the
product over the other products), and conviction
(believing that the product is the best for them)
If the target market is convinced about the product,
the marketer must push the consumers to do the
purchase.
If the target market has started to forget the
product, the marketer must remind them again.
Choosing a Message
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The communicator must develop an effective
message in order to get the desired audience
response. Ideally the message should;
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get Attention
hold Interest
arouse Desire
obtain Action (known as the AIDA model)
In putting the message together, the marketing
communicator must decide (1) what to say (message
content) and (2) how to say it (message structure and
format).
Message Content
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The communicator must create an appeal or theme that
would produce the desired response. There are three
types of appeals;
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rational appeals; relate to the audience’s self-interest. They
show that the product will produce the desired benefits.
Messages include product’s quality, economy, value, or
performance. E.g. Mercedes “engineered like no other car in
the world”.
emotional appeals; attempt to stir up either negative (such as
fear, guilt, shame) or positive (such as love, humor, pride, joy)
emotions that can motivate purchase.
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E.g. Crest in its toothpaste ads “there are some things you
just can’t afford to gamble with”.
moral appeals; are directed to the audience’s sense of what
is right and proper.Messages include social issues such as
cleaner environment, equal rights for women, aid to the
needy...
Message Structure and Format
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The marketing communicator also needs a strong
structure and format for the message.
In a print ad, advertisers can use novelty, contrast, eyecatching pictures and headlines, distinctive formats,
message size and position, colour, shape and
movement.
In a radio ad, words, sounds, and voices.
On TV or in person, facial expressions, gestures, dress,
posture and hair style...
Choosing Media
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After the message is chosen, the communicator
must select channels of communication. There
are two broad types of communication
channels;
personal
nonpersonal
Personal Communication Channels
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In personal communication channels, two or more
people communicate directly (face to face, over the
telephone, or even through mail) with each other.
Personal communication channels are effective because
they allow for personal addressing and feedback.
Besides company salespeople, consumer buying guides
etc, neighbours, friends, family members,
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and associates may communicate with the target
buyers. This is known as word-of-mouth influence.
Personal communication is more important for
expensive, risky or highly visible products e.g.
automobiles for which consumers seek opinions of
knowledgeable people.
Companies can create opinion leaders (people whose
opinions are sought by others) to make them work
for the company by supplying those opinion leaders
with the product on attractive terms. Opinion
leaders would be radio personalities, heads of
organizations ….
Nonpersonal Communication Channels
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Nonpersonal communication channels are media that
carry messages without personal contact or feedback.
They include media, atmosphere and events.
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Media; include print media (newspaper, magazines, direct
mail); broadcast media (radio, television); and display media
(billboards, signs, posters)
Atmospheres; are designed environments to create and
reinforce buyer’s leaning toward purchasing a product. E.g.
lobby design of a hotel.
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Events; are staged occurrences that communicate
messages to target audiences. E.g. press conferences,
grand openings, shows, exhibitions, public tours, and
other events.
Such nonpersonal communications may first flow to
the opinion leaders and then from them to the
target audiences. That is why, most of the time,
mass communicators aim their messages directly at
opinion leaders.
The Message Source
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The message’s impact on the target market is
also affected by the message source.
Messages delivered by highly credible sources
are more persuasive. Many food companies aim
promotions at doctors, dentists… Marketers also
use well-known actors, cartoon characters
…Beyaz ads for Rinso ...
Collecting Feedback
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After sending the message, the communicator
must research its effect on the target audience.
This involves asking the target members their
opinion and behaviour about the message.
Setting the Total
Promotion Budget
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The marketer must decide how much to spend on
promotion.According to the type of industry, the
promotion spendings vary. E.g. 20-30%of the sales in
cosmetics, 2-3%in industrial machinery.
There are basically four methods to set the total budget
for advertising;
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affordable method
percentage-of-sales method
competitive-parity method
objective-and-task method
Affordable Method
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Setting the promotion budget at the level that
management thinks the company can afford.
Small companies project their total revenues, deduct
their operating expenses and capital outlays, and
then devote some of the remaining funds to
advertising.
This method places advertising last among expenses,
therefore, ignores the effects of promotion on sales.
This method may result in either over or under
spending for advertising.
Percentage-of-Sales Method
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Setting the promotion budget at a certain percentage of
current or forecasted sales or as a percentage of the
sales price.
The advantage of this method is that it helps
management think about the relationships between
promotion spending, selling price, and profit per unit.
The disadvantages are; (1) it wrongly views sales as the
cause of promotion rather than as the result, (2) it may
prevent increase in promotional
spending, when the sales are falling, (3) it does not
provide any basis for choosing a specific percentage,
except last year’s and competitors percentages.
Competitive-Parity Method
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Setting the promotion budget to match competitor’s
outlays. The company monitors competitor’s
advertising or industry averages.
The advantage of this method is that it mat prevent
promotional wars.
The disadvantages of this method are; (1) each
company has its own promotional needs, therefore, the
competitors’ spending may be misleading, (2) there is
no guarantee that this method will prevent promotion
wars.
Objective-and-Task Method
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Setting promotion budgets based on what the company
wants to accomplish with promotion.
This is the most logical budget setting where the
company (1) defines specific promotion objectives, (2)
determines the tasks needed to achieve these objectives,
(3) estimates the total costs of performing these tasks.
This is the most difficult method to use because it is
hard to understand which tasks will achieve
specific objectives. E.g. if Sony wants to create 95%
awareness for its new camera within 6 months, it is
difficult to decide what messages and promotions to
use and how much to spend.
Setting the Promotion Mix
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After the budget has been determined, the marketer
must decide which promotion tools to use - advertising,
personal selling, sales promotion, and public relations.
He must blend the promotion tools into a coordinated
promotion mix.
The following factors influence the marketer’s choice
of promotion tools;
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the nature of each promotion tool
promotion mix strategies
The Nature of
Each Promotion Tool
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Each promotion tool - advertising, personal
selling, sales promotion, and public relations has
unique characteristics and costs. Marketers must
understand theses characteristics in order to
select the proper tools.
Advertising
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Advertising is any paid form of nonpersonal
presentation and promotion of ideas, goods or services
by an identified sponsor.
Major media types are;
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newspapers
television
direct mail
radio
magazines
outdoor
Advantages
 low cost per contact
 ability to reach customers where and when
salespersons cannot
 great scope of creative versatility and dramatization
of messages
 ability to create images that salespersons cannot “institutional advertising” is a form of advertising
done to create a favourable image of an
organization.
 nonthreatening nature of nonpersonal presentation
 potential to repeat message several times
prestige and impressiveness of mass-media
advertising
Disadvantages
 inability to “close” sales
 advertising “clutter”
 customer’s ability to ignore advertising messages
 difficulty getting immediate response or action
 difficulty measuring advertising effectiveness
 relatively high “waste” factor
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Possible Advertising Objectives
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Advertising aims to (1) inform, (2) persuade, or (3)
remind.
Informative advertising;
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tells the market about a new product
informs the market of a price change
explains how the product works
describes available services
corrects false impressions
reduces consumer’s fears
builds a company image
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Persuasive advertising;
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builds brand preference
encourages switching to the brand of the company
persuades customers to purchase now or make a sales
call
Reminder advertising;
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keeps the product in customer’s mind during off-season
maintains the product’s top-of-mind awareness
remind consumers where to buy the product
Profiles of Major Media Types
Newspapers: reach many people but have limited
opportunity to reach market segments , have short
life time, do not have reproduction quality.
 Magazines: have many advantages over newspapers
like having high-quality reproduction, color
availability, prestige, audience selectivity, and long
life. However, cost more, prepared in a long time,
and reduce an advertiser’s ability to repeat ads.
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Radio: can reach an entire area, specific target
markets by matching the radio station and time
with the property’s target market. However, if
not repeated, they have shot life span.
 Television: television’s main advantage over radio
is that it combines sight with sound. TV
commercials can show friendly company staff.
Gets high attention, and remembered as a result.
Commercials can run many times daily and reach
many people, and can reach specific audiences by
selecting the correct TV shows. However, they
are very expensive.
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Outdoor Advertising: billboards along highways
or in and around large cities are used to remind
and attract potential guests about the product.
They must be bold, dynamic and graphic so that
passersby can get the message at a glance. They
have large circulation, broad reach and low cost
but have limited message length.
 Direct Mail: involves the mailing of the
advertising message in brochures, coupons or
other formats. It is especially used by clubs, and
banks for credit card holders and members. It
allows audience selectivity, can be personalized,
and easily measured but have high cost of
developing and mailing.
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Sales Promotion
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Sales promotions are short-term incentives to to
make an immediate purchase or sales of a
product or service.
Advertising offers reasons to buy a product or
service, sales promotion offers reasons to buy
now.
Advantages
 generating immediate purchase in a large extent
 ability to provide quick feedback
 ability to add excitement to a service or product
 flexible timing
 efficiency
Disadvantages
 short-term benefits
 ineffective in building long-term loyalty for
company or “brand”
 inability to be used on its own in the long term
without other promotional mix elements
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often misused for just short-term benefits
Profiles of Major Sales Promotions
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Consumer-Promotion Tools
Couponing: attract potential guests with a special
offer such as a free night’s lodging after a special
number of credits. They can be given out
personally, included in direct mail advertising or
printed in newspapers and magazines. They can
increase off-season business with other sales
promotions such as bonus offers or discounting.
 Product Sampling: introduces new products to
the guests, some are free, most effective to
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introduce a product but most expensive as well,
determines whether guests like a new product
and encourages them to order the item.
 Contests: give consumers a chance to win
something such as cash, trips, goods by luck or
through extra effort, can increase sales, should be
cost effective - increased sales should offset the
cost of contest promotions and prizes. E.g.
Coca-Cola New Year’s prize (a BMW) will be one
of the customers who sent the correct amount
of Coca-Cola lid.
 Packages: offer consumers savings off the regula
price of a product, have discount price to attract
new guests and increase sales. E.g. a
holiday package including lodging, transportation,
and food and beverage with a
reasonable
price.
 Premiums: they are given to guests who pay the
regular prices for certain products or services.
E.g. an upgraded room might be provided or free
movie tickets for the restaurant guests. Pizza
Hut’s free drinks when a large pizza is ordered.
Or when a customer buys one shampoo, he gets
the third one free.
 Gifts or Gift Certificates: free gifts or cash offers,
are used by chains or exclusive properties to
increase sales. E.g. key chains, T-Shirts…
Discounting: straight reduction from the list price
of a product during a stated period of time, are
used to attract more guests and increase total
sales. E.g. one dinner on the menu might be
reduced to 50%. Benetton reduces its prices by
20% during the low season.
 Bonus Offers: the consumer buys a product or
service at the regular price and then receives a
bonus, generally directed to the regular users, E.g.
guest buys three dinners at a regular price and the
fourth one becomes free. Or when the customer
uses his credit card, each time he gets credits, and
when he reaches a certain credit
point, he is entitled to get free gifts such as
toasters, hair dryers...
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Trade-Promotion Tools
Discounting: straight reduction from the list price
on purchases during a stated period of time,
encourages dealers to buy in quantity or to carry
a new item; dealers can use the discount for
immediate profit, for advertising, or for price
reductions to their customers.
 Allowance: promotional money paid by
manufacturers to retailers who agree to help
promote the manufacturer’s products in some
way. E.g. an advertising allowance compensates
retailers for advertising the
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product. A display allowance compensates them
for using special displays.
 Free goods or push money: cash or gifts to
dealers or their sales force to “push” the
manufacturer’s goods.
 Specialty advertising items: they carry the
company’s name, such as pens, pencils, calendars,
paperweights, memo pads, ashtrays...
Public Relations
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Building good relations with the company’s
various public’s by obtaining favourable
publicity, building up a good “corporate image”
and handling or heading off unfavourable
rumors, stories and events.
Advantages
 low cost
 effective because they are not seen as commercial
messages
 credibility
 prestige and impressiveness of mass-media coverage
 added excitement and dramatization
 maintenance of “public” presence
Disadvantage
 difficult to arrange consistently
 lack of control
Major Public Relations Tools
News: PR people find or create favorable news
about the company and its products or people.
Sometimes news stories occur naturally, and
sometimes the PR person suggests events or
activities (e.g. X conference, Miss World…) that
would create news.
 Speeches: company executives answer the questions
from the media or give talks at trade associations or
sales meetings.
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Special events: ranging from news conferences,
receptions, press tours (fam trips), grand
openings… to reach and interest target publics.
 Written materials: include press release, annual
reports, brochures, articles, company newsletters,
magazines… to reach and influence the target
markets.
 Audiovisual materials: such as films, video- and
audiocassettes…
 Corporate-identity materials: help to create a
corporate identity that the public immediately
recognizes such as logos, stationery, brochures,
signs, business forms, business cards, buildings,
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uniforms, company cars and trucks become
marketing tools when they are attractive,
distinctive, and memorable.
 Public-service activities: companies can also
improve their goodwill by contributing money
and time to public-service activities. E.g. giving
donations to street children.
Personal Selling
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Personal selling involves oral conversations. These
are held, either by telephone or face-to-face,
between salespersons and prospective customers.
The people who do the selling go by many names:
salespeople, sales representatives, account
executives, sales consultants, sales engineers, agents,
district managers, and marketing representatives.
The major roles of the sales force are (1)
representing the company to customers, (2)
representing customers to the company, (3)
producing customer satisfaction and company
profits.
Advantages
 ability to close sales
 ability to hold the customer’s attention
 immediate feedback and two-way communications
 presentations tailored to individual needs
 ability to target customers precisely
 ability to cultivate relationships
 ability to get immediate action
Disadvantages
 high cost per contact
 inability to reach some customers as effectively
The Changing Face of Marketing
Communications
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Two major factors are changing the face of today’s
marketing communications.
First, as mass markets have fragmented, companies
are shifting away from mass marketing. Now, they
are developing focused marketing programs
designed to build closer relationships with
customers in more narrowly defined micromarkets.
Second, the improvements in computer and
information technology helps marketers to reach
smaller customer segments more effectively.
Direct Marketing
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Direct marketing is the new way of marketing
communications. Here, the company markets through
various advertising media that interact directly with
consumers, generally encouraging the consumer to
make a direct response. In other words, direct
marketing consists of direct communications with
carefully targeted consumers to obtain an immediate
response.
There are four major forms of direct marketing are;
direct-mail and catalog marketing; involves
mailing of letters, ads, samples, foldouts… sent
to potential customers on mailing lists. The
mailing lists are developed from customer lists or
obtained from mailing-list houses. Catalog
marketing involves selling through catalogs that
are mailed to a select list customers or made
available in stores.
 telemarketing; using the telephone to sell directly
to consumers. Outbound telephone marketing is
used directly to consumers and businesses.
Inbound too-free 800 numbers are used to
receive orders from television and radio ads,
direct mail, or catalogs.
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television marketing; takes two major forms. The
first is direct-response advertising where
marketers air television spots, often 60 to 120
seconds long, that persuasively describe a product
and give customers a toll-free number for
ordering. Home shopping channels is another
form of television direct marketing which are
television programs or entire channels dedicated
to selling gods and services.
 online computer shopping: is conducted through
interactive online computer systems which link
consumers with sellers electronically. Consumers
use a home computer to hook into the system
through cable or telephone lines.
Promotion Mix Strategies
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Marketers can choose from two basic promotion mix
strategies;
 push promotion; a push strategy involves “pushing” the
product through distribution channels to final
consumers. Here, the producer directs its
promotional activities (primarily personal selling and
trade promotion) toward channel members to induce
them to carry the product and to promote it t final
consumers.
pull promotion; the producer directs its
promotional activities (advertising and consumer
promotion) toward final consumers to induce
them to buy the product. If the pull strategy is
effective, consumers then will demand the
product from channel members.
Companies generally use both of them in
combination.
Companies consider the following factors when
developing their promotion mix strategies;
 type of product/market
 the buyer-readiness stage
 the product life-cycle stage
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Type of Product/Market
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The importance of different promotion tools varies
between consumer and business markets.
Consumer goods companies;
 pull more
 spend more on advertising, then sales promotion,
personal selling, and public relations
Industrial goods companies;
 push more
 spend more on personal selling, then sales
promotion, advertising, public relations
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Generally, personal selling is used more heavily with
expensive and risky goods and in markets with fewer
and larger sellers.
Buyer-Readiness Stage
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The effects of the promotional tools vary for the
different buyer-readiness stages.
In the awareness and knowledge stages; advertising and
public relations play the major role rather than personal
selling.
In the customer liking, preference and conviction
stages; personal selling makes more sense.
In the purchase stage (closing the sale stage); sales calls
and sales promotions are most effective.
Product Life-Cycle Stage
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The effects of different promotion tools also vary with
stages of the product life cycle.
In the introduction stage; advertising and public
relations are good for producing high awareness and
sales promotion is useful in promoting early trial.
Personal selling must be used to get the trade to carry
the product.
In the growth stage; advertising and public relations
are still powerful but sales promotions can be reduced.
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In the mature stage; sales promotion again
becomes important relative to advertising.
Advertising is only needed to remind the consumers
of the product.
In the decline stage; advertising is kept to remind,
public relations may drop, salespeople give up, sales
promotions may still be used.