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Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-1 CHAPTER FIFTEEN INTEGRATED MARKETING COMMUNICATIONS Text by Profs. Gene Boone & David Kurtz.

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Presentation on theme: "Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-1 CHAPTER FIFTEEN INTEGRATED MARKETING COMMUNICATIONS Text by Profs. Gene Boone & David Kurtz."— Presentation transcript:

1 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-1 CHAPTER FIFTEEN INTEGRATED MARKETING COMMUNICATIONS Text by Profs. Gene Boone & David Kurtz Multimedia Presentation by Prof. Milton Pressley The University of New Orleans

2 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-2 CHAPTER OBJECTIVES Relate the concept of integrated marketing communications to the development of the optimal promotional mix Explain the relationship of promotional strategy to the process of communication List the objectives of promotion Explain the concept of the promotional mix and its relationship to the marketing mix

3 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-3 CHAPTER OBJECTIVES Discuss the role of sponsorships and direct marketing in integrated marketing communications planning Identify the primary determinants of a promotional mix Contrast the two major alternative promotional strategies Compare to the primary methods of developing a promotional budget Defend promotion against common public criticisms

4 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-4 Promotion: function of informing, persuading, and influencing the consumers purchase decision Marketing Communications: transmission from a sender to a receiver of a message dealing with the buyer-seller relationship Chapter Overview

5 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-5 Integrated Marketing Communications Integrated marketing communications (IMC): Coordination of all promotional activities – media advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused promotional message Success of any IMC program depends critically on identifying the members of an audience and understanding what they want © PhotoDisc

6 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-6 Recognizing That Many Consumers Dislike the Face-to-Face Sales Tactics That Often Characterize Showroom Floors, GM Has, as Part of Its IMC Program, Streamlined the Car-buying Experience Here On Its WebSite Copyright © 2001 by Harcourt, Inc. All rights reserved.

7 15-7 Wheres The Tracker? Trackers IMC Program Included a Game for Chevrolet Tracker That Drew 1.3 Million Entries Online and Another 100,000 Offline Wheres The Tracker? Trackers IMC Program Included a Game for Chevrolet Tracker That Drew 1.3 Million Entries Online and Another 100,000 Offline Copyright © 2001 by Harcourt, Inc. All rights reserved.

8 15-8 Cheerios One of Many Different Ads in an IMC Campaign for Cheerios That Produced a Unified Customer-Focused Message Aimed at Cheerios Many Different Target Markets Copyright © 2001 by Harcourt, Inc. All rights reserved.

9 15-9 Figure 15.1: Joint Integrated Marketing Promotion by General Mills and Nintendo PlayStations

10 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-10 Importance of Teamwork IMC requires a total strategy including all marketing activities, not just promotion Successful implementation of IMC requires that everyone involved in every aspect of promotion – public relations, advertising, personal selling, and sales promotion – function as a team © PhotoDisc

11 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-11 Role of Databases in Effective IMC Programs With the growth of the Internet, marketers have been given the power to gather information faster and to organize it easier than ever before By sharing this knowledge appropriately among all relative parties, a firm can lay the foundation for a successful IMC program © PhotoDisc

12 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-12 Figure 15.2: Radio Shack – Using Database Information to Stock Retail Stores

13 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-13 Snyder Communications, an Illinois-Based Direct Sampler for Consumer-Products Companies, Uses a Database to Target Its Programs to Hispanic Households With Children Aged 6 – 12. Copyright © 2001 by Harcourt, Inc. All rights reserved.

14 15-14 Table 15.1: Relating Promotion to the Communications Process THE COMMUNICATIONS PROCESS

15 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-15 Figure 15.3: Calvin Klein: Kiosks Provide Instant Feedback for Fragrance Marketers

16 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-16 An effective promotional message accomplishes three tasks: It gains the receivers attention It achieves understanding by both receiver and sender It stimulates the receivers needs and suggests an appropriate method of satisfying them The above tasks are related to the AIDA concept (Attention-Interest-Desire-Action) – an explanation of the steps through which an individual reaches a purchase decision THE COMMUNICATIONS PROCESS

17 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-17 TUMS A Print Message Following the AIDA Concept TUMS A Print Message Following the AIDA Concept Copyright © 2001 by Harcourt, Inc. All rights reserved.

18 15-18 Global Difficulties With the Communication Process In China: KFCs slogan: Finger lickin good came out as Eat your fingers off Also in China: Coca-Cola had thousands of signs made using the translation: Ke-kou-ke-la Depending on the dialect this means... Bite the wax tadpole, or Female horse stuffed with wax In Taiwan: Pepsis slogan, Come alive with the Pepsi generation came out as Pepsi will bring your ancestors back from the dead Copyright © 2001 by Harcourt, Inc. All rights reserved.

19 Objectives of Traditional function of promotion was to inform the market about the availability of a particular good or service Marketers still direct large portions of current promotional efforts at providing information Provide Information PromotionPromotion © PhotoDisc

20 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-20 Figure 15.4: Haagen-Dazs – Providing Information to Consumers

21 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-21 Haagen-Dazs Also Provides Information to Consumers via Its WWW Site Copyright © 2001 by Harcourt, Inc. All rights reserved.

22 15-22 Walt Disney World Ad Promoting a Free Video to Provide Information for Vacation Planning Copyright © 2001 by Harcourt, Inc. All rights reserved.

23 Objectives of Some promotions are aimed at increasing primary demand, the desire for a general product category More promotions are aimed at increasing selective demand, the desire for a specific brand Provide Information Increase Demand PromotionPromotion © PhotoDisc

24 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-24 MindSpring Internet Services Increasing Selective Demand Copyright © 2001 by Harcourt, Inc. All rights reserved.

25 15-25 Nokia Cellular Phone Company Attempts to Convince Potential Buyers of Nokias Advantages Over Other Cellular Phones (Build Selective Demand) Via Its WWW Site Copyright © 2001 by Harcourt, Inc. All rights reserved.

26 Objectives of Product differentiation is a frequent objective Homogenous demand for many products results when consumers regard the firms output as virtually identical to its competitors– then, the firm has virtually no control over marketing variables Product differentiation permits more flexibility in marketing strategy Provide Information Increase Demand Differentiate the Product PromotionPromotion © PhotoDisc

27 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-27 Hefty OneZip Differentiating Its Product Hefty OneZip Differentiating Its Product Copyright © 2001 by Harcourt, Inc. All rights reserved.

28 15-28 Achie McPhee, Having Differentiated Its Party Supplies, Maintains a WWW Site as Part of Its IMC Efforts Copyright © 2001 by Harcourt, Inc. All rights reserved.

29 Objectives of Promotion can explain the greater ownership utility of a product to buyers, thereby accentuating its value and justifying a higher price Provide Information Increase Demand Differentiate the Product Accentuate Products Value PromotionPromotion © PhotoDisc

30 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-30 Johnson & Johnson First Aid To Go! Accentuating a Products Value Johnson & Johnson First Aid To Go! Accentuating a Products Value Copyright © 2001 by Harcourt, Inc. All rights reserved.

31 Objectives of For the typical firm, sales fluctuations may result from cyclical, seasonal, or irregular demand Stabilizing these variations is often an objective of promotional strategy Provide Information Increase Demand Differentiate the Product Accentuate Products Value Stabilize Sales PromotionPromotion © PhotoDisc

32 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-32 The Promotional Mix Promotional mix: blend of personal selling and nonpersonal selling (including advertising, sales promotion, direct marketing, and public relations) designed to achieve promotional objectives Personal Selling Nonpersonal Selling

33 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-33 The Promotional Mix Personal selling: interpersonal promotional process involving a sellers person-to-person presentation to a prospective buyer Personal Selling Nonpersonal Selling

34 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-34 The Promotional Mix Nonpersonal selling includes: Advertising Sales promotion Direct marketing Public relations Personal Selling Nonpersonal Selling

35 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-35 Nonpersonal Selling Advertising Advertising: paid, nonpersonal communication through various media by a business firm, not-for- profit organization, or individual identified in the message with the hope of informing or persuading members of a particular audience

36 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-36 Nonpersonal Selling Advertising Sales promotion: marketing activities other than personal selling, advertising, and publicity that stimulates consumer purchasing and dealer effectiveness (includes displays, trade shows, coupons, premiums, contests, product demonstrations, and various nonrecurrent selling efforts) Sales promotion

37 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-37 Figure 15.5: A Joint Promotion Using Licensing

38 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-38 Van de Kamps Breaded Fish Sticks Sales Promotion Designed to Stimulate Consumer Purchasing Van de Kamps Breaded Fish Sticks Sales Promotion Designed to Stimulate Consumer Purchasing Copyright © 2001 by Harcourt, Inc. All rights reserved.

39 15-39 Nonpersonal Selling Advertising Trade promotion: sales promotions aimed at marketing intermediaries rather than ultimate consumers Sales promotion

40 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-40 Nonpersonal Selling Advertising Direct marketing: direct communications other than personal sales contact between buyer and seller, designed to generate sales, information requests, or store visits Sales promotion Direct marketing

41 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-41 Nonpersonal Selling Advertising Public relations: firms communications and relationships with its various publics Publicity: stimulation of demand for good, service, place, idea, person, or organization by unpaid placement of commercially significant news or favorable media presentations Sales promotion Direct marketing Public relations

42 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-42 Table 15.2: Relating Promotion to the Communications Process Personal Selling Advertising Sales Promotion Direct Marketing Public Relations Permits measurement of effectiveness. Elicits an immediate response. Tailors the message to fit the customer. Reaches a large group of potential consumers for a relatively low price per exposure. Allows strict control over the final message. Can be adapted to either mass audiences or specific audience segments. Produces an immediate consumer response. Attracts attention and creates product awareness. Allows easy measurement of results. Provides short- term sales increases. Generates an immediate response. Covers a wide audience with targeted advertising. Allows complete, customized, personal message. Produces measurable results. Creates a positive attitude toward a product or company. Enhances credibility of a product or company. Advantages Continued on next slide...

43 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-43 Table 15.2: Relating Promotion to the Communications Process (Continued) Personal Selling Advertising Sales Promotion Direct Marketing Public Relations Relies almost exclusively upon the ability of the salesperson. Involves high cost per contact. Does not permit totally accurate measuremen t of results. Usually cannot close sales. Is nonpersona l in nature. Is difficult to differentiat e from competitor s efforts. Suffers from image problem. Involves a high cost per reader. Depends on quality and accuracy of mailing lists. May annoy consumers. May not permit accurate measureme nt of effect on sales. Involves much effort directed toward nonmarketi ng-oriented goals. Disadvantages

44 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-44 SPONSORSHIPSSPONSORSHIPS Sponsorship: provision of funds for a sporting or cultural event in exchange for a direct association with the events; in e- commerce, a long-term linkage between a Web site and a marketer Sponsor IBM is prominently featured on the Sydney 2000 Olympic WebSite

45 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-45 AT&T Digital One Rate AT&T: A Sponsor of the PGA Tour AT&T Digital One Rate AT&T: A Sponsor of the PGA Tour Copyright © 2001 by Harcourt, Inc. All rights reserved.

46 15-46 Figure 15.6: Sponsorship Spending (in Millions of Dollars) by North American Corporations Sponsorship Spending

47 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-47 Growth of Sponsorships Sponsorship has grown rapidly for the past 30 years During this period corporate sponsorship spending has increased faster than promotional outlays for advertising and sales promotion © PhotoDisc

48 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-48 How Sponsorship Differs From Advertising Differences include the: Sponsors degree of control vs. that of the advertisers Nature of the message Audience reaction Measurements of effectiveness © PhotoDisc

49 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-49 Assessing Sponsorship Results Marketers utilize some of the same techniques to measure both advertising and sponsorship However, the differences between the two promotional alternatives often necessitate some unique research techniques, as well Despite the impressive visibility of special events like soccers World Cup and footballs Super Bowl, the demands do not necessarily lead directly to increased sales © PhotoDisc

50 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-50 Figure 15.7: Steps in the Sponsorship Process Using Sponsorship in a Promotional Strategy

51 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-51 DIRECT MARKETING Few promotional mix elements are growing as rapidly as direct marketing Related overall spending total more than $162 billion Direct marketing accounts for 57 percent of total U.S. advertising expenditures © PhotoDisc

52 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-52 Figure 15.8: Direct Marketing Sales by Media Category

53 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-53 Direct Marketing Communications Channels Direct marketing uses many different media forms including: Telephone Direct mail Television Newspapers Magazines Radio Marketers often combine two or more media in one direct marketing program

54 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-54 Direct Mail Marketers combine information from internal and external databases, surveys, personalize coupons, and rebates that require responses to provide information about consumer lifestyles, buying habits, and wants As the information improves, direct-mail has become a viable channel for identifying a firms best prospects Direct mail is a critical tool in creating effective direct marketing campaigns © Milton Pressley

55 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-55 Figure 15.9: Targeted Direct Mail – Van Gogh Exhibition

56 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-56 CatalogsCatalogs A highly popular form of direct mail Over 10,000 different consumer mail-order catalogs and thousands more for business-to- business sales are mailed each year They typically generate over $57 million in consumer sales and $36 million in business-to- business sales Almost 45 percent of Americans still refuse to purchase from a catalog © Milton Pressley

57 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-57 TelemarketingTelemarketing Telemarketing: promotional presentation involving the use of the telephone for outbound contacts by salespeople or inbound contacts initiated by customers who want to obtain information and place orders © PhotoDisc

58 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-58 Figure 15.10: Offering Toll-Free Telephone Numbers to Catalog Shoppers

59 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-59 Direct Marketing Via a Broadcast Channels Broadcast direct marketing includes: Brief (30 to 90 and second) direct response ads on television or radio Home shopping channels like: Quality Value Channel (QVC) Home Shopping Network (HSN) Infomercial: promotional presentation for a single product running 30 minutes or longer in a format that resembles a regular television program

60 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-60 Time-Life Supports Its Broadcast Direct Marketing Efforts With This Direct Marketing Website Copyright © 2001 by Harcourt, Inc. All rights reserved.

61 15-61 Electronic Direct Marketing Channels Web advertising is an important component of electronic direct marketing E-mail direct marketing is a natural and easy extension of traditional direct mail marketing © PhotoDisc

62 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-62 Other Direct Marketing Channels Print media is generally not as effective as Web marketing or telemarketing for direct marketers Magazine and newspaper ads with toll- free telephone numbers, kiosks, and other media are still useful in many situations

63 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-63 peoplepc This Print Ad Supplements a Promotional Campaign That Is Primarily Based on Broadcast Advertising peoplepc This Print Ad Supplements a Promotional Campaign That Is Primarily Based on Broadcast Advertising Copyright © 2001 by Harcourt, Inc. All rights reserved.

64 15-64 Starbucks Encore Starbucks Direct- Response Print Ad Starbucks Encore Starbucks Direct- Response Print Ad Copyright © 2001 by Harcourt, Inc. All rights reserved.

65 Nature of Product Stage in PLC Price Funds Available Factors that influence the effectiveness of a promotional to mix: Nature of the market Nature of the product Stage in the product life-cycle Price Funds available for promotion Nature of Market DEVELOPING AN OPTIMAL PROMOTIONAL MIX

66 Copyright © 2001 by Harcourt, Inc. All rights reserved. Nature of Product Stage in PLC Price Funds Available Personal selling may prove effective with a market composed of a limited number of buyers Advertising is more effective when a market has large numbers of potential customers scattered over sizable geographic areas Personal selling often works better for intermediary target markets Nature of Market DEVELOPING AN OPTIMAL PROMOTIONAL MIX

67 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-67 Nescafe Is Targeting the Younger Coffeehouse Crowd With IMC Efforts Like Its Innovative Website Copyright © 2001 by Harcourt, Inc. All rights reserved.

68 Nature of Product Stage in PLC Price Funds Available Highly standardized products with minimal servicing requirements usually need less personal selling than custom products with complex features and/or frequent maintenance needs Consumer products are more likely to rely heavily on advertising than are business products Nature of Market DEVELOPING AN OPTIMAL PROMOTIONAL MIX

69 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-69 Curad Aqua-Protect Advertisement for a New Consumer Product to Create Awareness Copyright © 2001 by Harcourt, Inc. All rights reserved.

70 Nature of Product Stage in PLC Price Funds Available Promotional mix must be tailored to the products stage in the product life- cycle In the introductory stage, there is a heavy emphasis on personal selling to the to the intermediaries However, advertising and sales promotion help to create awareness and stimulate initial purchases Nature of Market DEVELOPING AN OPTIMAL PROMOTIONAL MIX

71 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-71 Figure 15.11: DVD Players Promotion for a New Product to Stimulate Demand

72 Copyright © 2001 by Harcourt, Inc. All rights reserved. Nature of Product Stage in PLC Price Funds Available In the growth and maturity stages, advertising gains relative importance Personal selling efforts at marketing intermediaries to expand distribution is continued In the maturity and early decline stages, firms frequently reduce advertising and sales promotion expenditures Nature of Market DEVELOPING AN OPTIMAL PROMOTIONAL MIX

73 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-73 Blockbuster, in the Maturity Stage of the PLC, Continually Revamps Its Promotions. This Web Page Advertises Up to 40% Off on DVDs for Fathers Day, One-Cent Shipping on Selected Items, and Other Special Offers Copyright © 2001 by Harcourt, Inc. All rights reserved.

74 Nature of Product Stage in PLC PricePrice Funds Available Advertising dominates the promotional mix for low- unit-value products due to the high personal contact costs of personal selling Consumers a high-priced items like luxury cars expect lots of well- presented information via videocassettes, CDs, fancy brochures, and personal selling Nature of Market DEVELOPING AN OPTIMAL PROMOTIONAL MIX

75 Copyright © 2001 by Harcourt, Inc. All rights reserved. Nature of Product Stage in PLC Price Funds Available A critical element in the promotional strategy is the size of the promotional budget While the cost-per-contact of a $2 million, 30-second TV commercial during the Super Bowl is relatively low, such an expenditure exceeds the entire promotional budgets of many, if not most firms Nature of Market DEVELOPING AN OPTIMAL PROMOTIONAL MIX

76 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-76 Table 15.3: Factors Influencing Choice of Promotional Mix Personal SellingAdvertising Nature of the market Number of buyers Geographic concentration Type of customer Limited number Concentrated Business purchaser Large number Dispersed Ultimate consumer Nature of the product Complexity Service requirements Type of good or service Use of trade-ins Custom-made, complex Considerable Business Trade-ins common Standardized Minimal Consumer Trade-ins uncommon Stage in the product life cycle Often emphasized at every stage; heavy emphasis in the introductory and early growth stages in acquainting marketing intermediaries and potential consumers with the new good or service Often emphasized at every stage; heavy emphasis in the latter part of the growth stage, as well as the maturity and early decline stages, to persuade consumers to select specific brands PriceHigh unit valueLow unit value

77 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-77 © PhotoDisc PULLING AND PUSHING PROMOTIONAL STRATEGIES Pulling strategy: promotional effort by a seller to stimulate demand among final users, who will then exert pressure on the distribution channel to carry the good or service, pulling it though the marketing channel Pushing strategy: promotional effort by a seller to members of the marketing channel intended to stimulate personal selling of the good or service, thereby pushing it through the marketing channel

78 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-78 Figure 15.12: Use of a Pulling Strategy by Home Depot

79 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-79 Colgate Total Using a Pulling Strategy With Ads Like This Combined With a Pushing Strategy (30 Million Samples to Dental Practitioners) Created Strong Demand for This Improved Product Copyright © 2001 by Harcourt, Inc. All rights reserved.

80 15-80 BUDGETING FOR PROMOTIONAL STRATEGY Percentage-of-sales method: allocating funds for promotion during a given time period based on a specified percentage of either past or forecasted sales Fixed-sum-per-unit method: allocating promotional expenditures as a predetermined dollar amount for each sales or production unit © PhotoDisc

81 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-81 BUDGETING FOR PROMOTIONAL STRATEGY Percentage-of-sales method: allocating promotional spending to match that of a competitor, either as an absolute amount or relative to the firms market shares Fixed-sum-per-unit method: allocating promotional spending by defining goals and then determining the amount of promotional spending needed to achieve them © PhotoDisc

82 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-82 Figure 15.13: Allocation of Promotional Budgets

83 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-83 Table 15.4: Promotional Budget Determination MethodDescriptionExample Percentage-of- sales method Promotional budget is set as a specified percentage of either past or forecasted sales. Last year we spent $10,500 on promotion and had sales of $420,000. Next year we expect sales to grow to $480,000, and we are allocating $12,000 for promotion. Fixed-sum-per- unit method Promotional budget is set as a predetermined dollar amount for each unit sold or produced. Our forecast calls for sales of 14,000 units, and we allocate promotion at the rate of $65 per unit. Meeting competition method Promotional budget is set to match competitors promotional outlays on either an absolute or relative basis. Promotional outlays average 4 percent of sales in our industry. Task-objective method Once marketers determine their specific, promotional objectives, the amount (and type) of promotional spending needed to achieve them is determined. By the end of next year, we want 75 percent of the area high-school students to be aware of our new, highly automated fast-food prototype outlet. How many promotional dollars will it take, and how should they be spent?

84 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-84 MEASURING THE EFFECTIVENESS OF PROMOTION Two basic measurement tools: Direct sales results measures the effectiveness of promotion by revealing the specific impact on sales revenues for each dollar of promotional spending Indirect evaluation concentrates on quantifiable indicators of effectiveness like: Recall - how much members of the target market remember about specific products or advertisements Readership – size and composition of a messages audience © PhotoDisc

85 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-85 Measuring Online Promotions Early attempts at measuring online promotional efforts involved: Counting hits, user requests for a file Counting visits, pages downloaded or read in one session © PhotoDisc

86 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-86 Measuring Online Promotions Two major techniques for setting online advertising rates: Cost per impression (CPM), technique that related the cost of an ad to every thousand people who read it Cost per response (click-throughs), which assumes that those who actually click on an ad want more information © PhotoDisc

87 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-87 Social Importance THE VALUE OF MARKETING COMMUNICATIONS Criticisms of promotional messages as tasteless and lacking any contribution to society sometimes ignore the fact that society provides no commonly accepted set of standards The one generally accepted standard in a market society is freedom of choice for the consumer

88 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-88 Social Importance THE VALUE OF MARKETING COMMUNICATIONS Promotion has become an important factor in campaigns aimed at achieving socially oriented objectives like the elimination of drug abuse What is important is how promotion is used rather than whether it is used

89 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-89 Figure 15.14: Promotional Message Addressing a Universal Social Concern

90 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-90 Merck Vaccine Division The Social Importance of Marketing Communications Merck Vaccine Division The Social Importance of Marketing Communications Copyright © 2001 by Harcourt, Inc. All rights reserved.

91 15-91 THE VALUE OF MARKETING COMMUNICATIONS Promotional strategy has become increasingly important to both small and large firms Its effectiveness to encourage attitude changes, brand loyalty and increase sales is well-documented Business Importance Social Importance

92 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-92 THE VALUE OF MARKETING COMMUNICATIONS Both business and nonbusiness enterprises recognize the importance of promotional efforts Nonbusiness organizations using promotion include governments and religions Business Importance Social Importance

93 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-93 Doritos IMC Strategy Also Includes Maintaining Its WebSite Copyright © 2001 by Harcourt, Inc. All rights reserved.

94 15-94 Economic Importance Business Importance THE VALUE OF MARKETING COMMUNICATIONS Effective promotion has allowed society to derive benefits not otherwise available Promotion increases the number of units sold; the resulting economies of scale lower production costs and allows lower sales prices Social Importance

95 Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-95 STRATEGIC IMPLICATIONS Its difficult to overstate the impact of the Internet on the promotional mix for 21 st Century firms Both small and large firms are on the Web Entrepreneurs have found a lucrative new launch pad for their enterprises Online companies must buy advertising – electronic and traditional Online and offline firms both spend about $50 to get each new customer IMC will continue to play an important role as the Internet brings the global community closer together © PhotoDisc


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