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McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved. THE COMMUNICATION PROCESS • Integrated Marketing Communications (IMC) – concept of designing marketing communications programs that coordinate all promotional activities – advertising, personal selling, sales promotion, public relations, and direct marketing – to provide a consistent message across all audiences Slide 18-6 THE COMMUNICATION PROCESS • Communication – process of conveying a message to others 1. Source – company or person who has information to convey 2. Message – information sent a source to a receiver in the communication process 3. Channel of communication – means of conveying the message (e.g., salesperson, advertising media, or public relations tools) Slide 18-6 THE COMMUNICATION PROCESS • Communication – process of conveying a message to others 4. Receivers – consumers who read, hear, or see the message sent by a source 5. Encoding – process of having sender transform an idea into a set of symbols 6. Decoding – reverse of encoding Slide 18-6 THE COMMUNICATION PROCESS • Feedback Feedback Loop Response – impact message had on receiver’s knowledge, attitudes, or behaviors Feedback – sender’s interpretation of the Response and indicates whether the massage was decoded and understood as intended • Noise – extraneous factors that can work against effective communication by distorting a message or the feedback received Slide 18-10 FIGURE 18-1 The communication process consists of six key elements 18-6 PROMOTION Promotion An effort by marketers to inform and remind people in the target market about products and to persuade them to participate in the exchange 18-7 PROMOTION • Promotional Mix – combination of one or more of the communication tools to: – Inform prospective buyers about the benefits of the product – Persuade them to try it – Remind them later about the benefits they enjoyed using the product Slide 18-6 PROMOTION I. Personal Selling (1) II. Non-Personal Selling Advertising (2) Sales Promotion (3) Public Relations (4) Slide 18-6 THE PROMOTIONAL ELEMENTS ADVERTISING Paid, non-personal communication through various media by organizations and individuals who are in some way identified in the advertising message Total advertising volume exceeds $231 billion yearly THE PROMOTIONAL ELEMENTS PERSONAL SELLING Face-to-Face presentation and promotion of products and services to help satisfy the needs of customers and prospects Plus searching out prospects and providing follow-up service Approximately 10% of total labor force is employed in personal selling Average cost of a single sales call to B2B buyer is about $400 THE PROMOTIONAL ELEMENTS SALES PROMOTION Promotional tool that simulates consumer purchasing and dealer interest by means of short-term activities Supplements personal selling, advertising, and public relations Examples: free samples, prizes, contests, and cents-off coupons THE PROMOTIONAL ELEMENTS PUBLIC RELATIONS Management function that evaluates public attitudes, identifies the policies and procedures of an individual or an organization with the public interest, and executes a program of action to earn public understanding and acceptance FIGURE 18-2 The five elements of the promotional mix 18-14 THE PROMOTIONAL ELEMENTS • Mass Selling – Advertising, sales promotion, and direct marketing • Customized Interaction – Personal selling Slide 18-14 THE PROMOTIONAL ELEMENTS • Advertising Paid Aspect Nonpersonal Component • Personal Selling – two-way flow Wasted Coverage reduced Slide 18-16 LO2 THE PROMOTIONAL ELEMENTS PERSONAL SELLING Personal Selling • Wasted Coverage • Advantages • Disadvantages 18-17 LO2 THE PROMOTIONAL ELEMENTS PUBLIC RELATIONS Public Relations • Publicity • Advantages • Disadvantages 18-18 THE PROMOTIONAL ELEMENTS • Public Relations Public Relations – communications management Publicity – non-personal indirectly paid • Sales Promotion – short-term inducement of value offered to arouse interest in buying – Used with advertising or personal selling • Direct Marketing Slide 18-18 LO2 THE PROMOTIONAL ELEMENTS SALES PROMOTION AND DIRECT MARKETING Sales Promotion • Advantages • Disadvantages Direct Marketing • Advantages • Disadvantages 18-20 LO3 IMC—DEVELOPING THE PROMOTIONAL MIX THE PRODUCT LIFE CYCLE Introduction Stage Growth Stage Maturity Stage Decline Stage 18-21 FIGURE 18-3 Promotional tools used over the product life cycle of Purina Dog Chow 18-22 IMC—DEVELOPING THE PROMOTIONAL MIX LO3 CHANNEL STRATEGIES Push Strategy Pull Strategy • Directed-to-Consumer 18-23 FIGURE 18-5 A comparison of push and pull promotional strategies 18-24 FIGURE 18-6 The promotion decision process includes planning, implementation, and evaluation 18-25 LO5 DIRECT MARKETING The Growth of Direct Marketing The Value of Direct Marketing • Direct Orders • Lead Generation • Traffic Generation 18-26 FIGURE 18-8 Business use and response rates of popular forms of direct marketing 18-27 Promotional Mix The promotional mix is the combination of one or more communication tools used to: (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product. 18-28 Integrated Marketing Communications (IMC) Integrated marketing communications (IMC) is the concept of designing marketing communications programs that coordinate all promotional activities— advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences. 18-29 Communication Communication is the process of conveying a message to others and requires six elements: a source, a message, a channel of communication, a receiver, and the processes of encoding and decoding. 18-30 Source A source is a company or person who has information to convey during the communication process. 18-31 Message A message consists of the information sent by a source to a receiver during the communication process. 18-32 Channel of Communication A channel of communication is the means (e.g., a salesperson, advertising media, or public relations tools) of conveying a message to a receiver during the communication process. 18-33 Receivers Receivers consists of consumers who read, hear, or see the message sent by a source during the communication process. 18-34 Encoding Encoding is the process of having the sender transform an idea into a set of symbols during the communication process. 18-35 Decoding Decoding is the process of having the receiver take a set of symbols, the message, and transform them back to an idea during the communication process. 18-36 Field of Experience Field of experience is a mutually shared understanding and knowledge that the a sender and receiver apply to a message so that it can be communicated effectively during the communication process. 18-37 Response A response, in the feedback loop, is the impact the message had on the receiver’s knowledge, attitudes, or behaviors during the communication process. 18-38 Feedback Feedback, in the feedback loop, is the sender’s interpretation of the response, which indicates whether a message was decoded and understood as intended during the communication process. 18-39 Noise Noise consists of extraneous factors that can work against effective communication by distorting a message or the feedback received during the communication process. 18-40 Advertising Advertising is any paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor. 18-41 Personal Selling Personal selling consists of the two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision. 18-42 Public Relations Public relations is a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services. 18-43 Publicity Publicity is a nonpersonal, indirectly paid presentation of an organization, good, or service. 18-44 Sales Promotion Sales promotion is a short-term inducement of value offered to arouse interest in buying a good or service. 18-45 Direct Marketing Direct marketing is a promotion alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet. 18-46 Push Strategy A push strategy involves directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. 18-47 Pull Strategy A pull strategy involves directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product. 18-48 Hierarchy of Effects The hierarchy of effects is the sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action (either trial or adoption of the product). The stages include awareness, interest, evaluation, trial, and adoption. 18-49 Percentage of Sales Budgeting Percentage of sales budgeting involves allocating funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold. 18-50 Competitive Parity Budgeting Competitive parity budgeting involves allocating funds to promotion by matching the competitor’s absolute level of spending or the proportion per point of market share. Also called matching competitors or share of market. 18-51 All-You-Can-Afford Budgeting All-you-can-afford budgeting involves allocating funds to promotion only after all other budget items are covered. 18-52 Objective and Task Budgeting Objective and task budgeting involves allocating funds to promotion whereby the company: (1) determines its promotion objectives; (2) outlines the tasks to accomplish these objectives; and (3) determines the promotion cost of performing these tasks. 18-53 Direct Orders Direct orders is the result of direct marketing offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction. 18-54 Lead Generation Lead generation is the result of a direct marketing offer designed to generate interest in a product or service and a request for additional information. 18-55 Traffic Generation Traffic generation is the outcome of a direct marketing offer designed to motivate people to visit a business. 18-56