1. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Principles of Marketing Theocharis Katranis Lecture 9 Spring Semester 2013 1

2. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 2 Today’s Lecture 1. We will define the five promotion mix tools for communicating customer value. 2. We will discuss the changing communications landscape and the need for integrated marketing communications. 3. We will outline the communications process and the steps in developing effective marketing communications. 4. We will explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. 5. We will define the role of advertising in the promotion mix. 6. We will describe the major decisions involved in developing an advertising program. 7. We will define the role of public relations in the promotion mix and explain how companies use public relations to communicate with their publics.

3. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 The Promotion mix or (Marketing Communications Mix) Lecture 9 3 It is the specific blend of Promotion Tools that the company uses to persuasively communicate customer value and build customer relationships. Definition:

4. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 9 4 Promotion Mix Tools The Promotion mix or (Marketing Communications Mix) 1. Advertising 2. Sales Promotion 3. Personal Selling 4. Public Relations 5. Direct Marketing

5. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 9 5 The Promotion mix or (Marketing Communications Mix) 1. Advertising - Definition Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

6. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 9 6 The Promotion mix or (Marketing Communications Mix) 2. Sales Promotion - Definition Sales Promotion are short-term incentives to encourage the purchase or sale of a product or service.

7. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 9 7 The Promotion mix or (Marketing Communications Mix) 3. Personal Selling Personal Selling are Personal Presentations by the firm’s sales force for the purpose of making sales and building customer relationships.

8. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 9 8 The Promotion Mix or (Marketing Communications Mix) 4. Public Relations Public Relations is the action of building good relations with the company’s various publics by obtaining favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumors, stories, and events.

9. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 9 9 The Promotion Mix or (Marketing Communications Mix) 5. Direct Marketing Direct Marketing are direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships-the use of direct mail, the telephone, direct-response television, e-mail, the internet, and other tools to communicate directly with specific consumers.

10. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 10 Integrated Marketing Communications (IMC) Definition: It is the action of carefully integrating and coordinating the company’s many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.

11. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 11 Integrated Marketing Communications The New Marketing Communications Landscape 1. Consumers are better informed through Internet 2. Marketers are developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micromarkets. 3. The new communications technologies give companies exciting new media for interacting with targeted consumers. At the same time, they give consumers more control over the nature and timing of messages they choose to send and receive.

12. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 12 The NEED for Integrated Marketing Communications 1. Consumers today are bombarded by commercial messages from a broad range of sources. 2. Mass-media advertisements say one thing, while a price promotion sends different signal and a product label creates still another message. 3. Company sales literature says something altogether different and the company’s Web site seems out of Sync with everything else.

13. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 13 Integrated Marketing Communications

14. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 14 1. Identifying the target Audience 2. Determining the Communication Objectives Steps in Developing Effective Marketing Communication 3. Designing a Message 4. Choosing Media 5. Selecting the Message Source 6. Collecting Feedback

15. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 15 Steps in Developing Effective Marketing Communication 1. Identifying the target Audience The Audience may be current users or potential buyers. The Audience may be individuals, groups, special publics, or the general public. The Audience is affected from What, How, When, Where, and Who will say the message.

16. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 16 Steps in Developing Effective Marketing Communication 2. Determining the Communication Objectives Marketers must decide what response they seek from their targeted audience. The marketing communicator needs to know where the target audience now stands and to what stage it needs to be moved i.e. Knowledge, linking, preference, conviction and purchase.

17. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 17 Steps in Developing Effective Marketing Communication 3. Designing a Message Ideally, the Message should: 3.1 Get Attention 3.2 Hold Interest 3.3 Arouse Desire 3.4 Obtain Action AIDA MODEL

18. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 18 Steps in Developing Effective Marketing Communication 3. Designing a Message The Marketing Communicator must decide what to say (Message Content) and how to say it (Message Structure and Format)

19. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 19 Steps in Developing Effective Marketing Communication 3. Designing a Message Message Content – Three Types of Appeals 1. Rational 2. Emotional 3. Moral

20. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 20 Rational Appeal! This relates to the audience’s self-interest. They show that the product will produce the desired benefits. Steps in Developing Effective Marketing Communication Message Content – Three Types of Appeals 3. Designing a Message 1. Rational

21. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 21 Steps in Developing Effective Marketing Communication 3. Designing a Message Message Content – Three Types of Appeals 2. Emotional Emotional Appeal! It attempts to stir up either negative or positive emotions that can motivate purchase I.e. love, joy, and humor.

22. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 22 Steps in Developing Effective Marketing Communication 3. Designing a Message Message Content – Three Types of Appeals 3. Moral Moral Appeals! They are directed to the audience’s sense of what is “right” and “proper” i.e cleaner environment.

23. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 23 Steps in Developing Effective Marketing Communication 3. Designing a Message Message Structure Message Structure by Three Issues: - Drawing a conclusion or leave it to the audience? - Whether to present the strongest arguments first of last - Whether to present a one-sided argument or a two-sided argument.

24. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 24 Steps in Developing Effective Marketing Communication 3. Designing a Message – Message Format The communicator must decide on the headline, copy, illustration, and colour. If a Message is going to carried over the radio, The communicator must decide words, sounds and voices. If a Message is going to carried on TV, the presenters must plan their facial expressions, gestures, dress, posture and hairstyles. If the message is carried on the product or its package, the communicator has to watch texture, scent, colour, size and shape.

25. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 25 Steps in Developing Effective Marketing Communication 4. Choosing Media Two types of communication Channels 4.1 Personal 4.2 Nonpersonal

26. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 26 Steps in Developing Effective Marketing Communication 4. Choosing Media 4.1 Personal Communication Channels - Definition They are channels through which two or more people communicate directly with each other, including face to face, on the phone, through mail or e-mail, or even through an internet “chat”.

27. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 27 Steps in Developing Effective Marketing Communication 4. Choosing Media 4.2 Nonpersonal Communication Channels - Definition They are Media that carry messages without personal contact of feedback, including major media, atmospheres, and events i.e. newspapers, magazines, direct-mail, TV, Radio, billboards, signs, posters.

28. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 28 Steps in Developing Effective Marketing Communication 5. Selecting the Message Source Messages delivered by highly credible sources are more persuasive i.e. Food companies that promote to doctors, dentists and other health care providers to motivate these professionals to recommend their products to patients.

29. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 29 Steps in Developing Effective Marketing Communication 6. Collecting Feedback After sending the message, the communicator must research its effect on the target audience. This involves asking the target audience members whether they remember the message, how many times they saw it, what points they recall, how they felt about the message, and their past and present attitudes toward the product and the company.

30. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 30 Setting the Total Promotion Budget and Mix Usually companies spend: 1. 10% to 12% of sales for consumer packaged goods 2. 14% of sales for cosmetics 3. 1% of sales for industrial machinery products BUT within industry, both low and high spenders can be found.

31. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 31 The FOUR Methods used: 1. Affordable Method Setting the Total Promotion Budget and Mix 2. Percentage-of-Sales Method 3. Competitive-Parity Method 4. Objective-and-Task Method

32. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 32 Setting the Total Promotion Budget and Mix 1. Affordable Method - Definition It is the action of Setting the promotion budget at the level management thinks the company can afford.

33. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 33 Setting the Total Promotion Budget and Mix 2. Percentage-of-Sales Method It is the action of Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price.

34. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 34 Setting the Total Promotion Budget and Mix 3. Competitive-Parity Method It is the action of Setting the promotion budget to match competitors’ outlays.

35. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 35 Setting the Total Promotion Budget and Mix 4. Objective-and-Task Method It is the action of Developing the promotion budget by (1) defining specific objectives, (2) determining the tasks that must be performed to achieve these objectives, and (3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.

36. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 36 Setting the Total Promotion Budget and Mix Factors affecting the design of the Promotion Mix The nature of each Promotion Tool 1. Advertising Advertising can reach masses of geographically dispersed buyers at a low cost per exposure and enables the seller to repeat a message many times. Although Advertising reaches many people quickly, it is impersonal.

37. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 37 Setting the Total Promotion Budget and Mix Factors affecting the design of the Promotion Mix The nature of each Promotion Tool 2. Personal Selling Personal Selling involves personal interaction between two or more people, so each person can observe the other’s needs and characteristics and make quick adjustments. It also allows all kind of customer relationships to spring up business and personal friendships.

38. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 38 Setting the Total Promotion Budget and Mix Factors affecting the design of the Promotion Mix The nature of each Promotion Tool 3. Sales Promotion Sales Promotion includes a wide assortment of tools like coupons, contests, cents-off deals, premiums – all of which have many unique qualities. They attract consumer attention and offer strong incentives to purchase at a given time.

39. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 39 Setting the Total Promotion Budget and Mix Factors affecting the design of the Promotion Mix The nature of each Promotion Tool 4. Public Relations Public Relations – (News stories, features, sponsorships) – are very believable to readers. A well-thought-out Public Relations campaign used with other promotion mix elements can be very effective and economical.

40. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 40 Setting the Total Promotion Budget and Mix Factors affecting the design of the Promotion Mix Also - Type of product/market - The Product life-cycle stage (Product Development / Introduction / Growth / Maturity / Decline

41. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 41 Socially Responsible Marketing Communication Legal and Ethical issues Marketers must be aware of all legal and ethical issues when creating their communication strategies to their consumers. For example a diet bread cannot be advertised as having fewer calories simply because its slices are thinner.

42. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 42 Major Decisions in Advertising, and Public Relations

43. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 43 Major Decisions in Advertising, and Public Relations Advertising Objective - Definition It is a specific communication task to be accomplished with a specific target audience during a specific period of time.

44. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 44 Major Decisions in Advertising, and Public Relations Advertising Decisions – FOUR Steps 1. Setting Advertising Objectives 2. Setting the Advertising Budget 3. Developing Advertising Strategy 4. Evaluating Advertising Effectiveness and Return on Advertising Investment

45. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 45 Major Decisions in Advertising, and Public Relations

46. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 46 Major Decisions in Advertising, and Public Relations 2. Setting the Advertising Budget Advertising Budget is the money and other resources allocated to a product or company advertising program. New Products, typically, need large advertising budgets to build awareness and to gain customer trial. Mature brands usually require lower budgets as a ratio to sales. Whenever there is strong competition, heavily advertising is also needed.

47. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 47 Major Decisions in Advertising, and Public Relations 3. Developing Advertising Strategy Advertising Strategy is the strategy by which the company accomplishes its advertising objectives. It consists of two major elements: creating advertising messages and selecting advertising media.

48. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 48 Major Decisions in Advertising, and Public Relations 3. Developing Advertising Strategy 3.1 Creating Advertising Messages 3.2 Selecting Advertising Media

49. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 49 Major Decisions in Advertising, and Public Relations 3. Developing Advertising Strategy 3.1 Creating Advertising Messages Messages must be better planned, more imaginative, more entertaining and more rewarding to consumers. Message Strategy Statements tend to be plain, straightforward outlines of benefits and positioning points that the advertiser wants to stress.

50. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 50 Major Decisions in Advertising, and Public Relations 3. Developing Advertising Strategy 3.2 Selecting Advertising Media - Definition Advertising Media are the vehicles through which advertising messages are delivered to their intended audiences.

51. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 51 Major Decisions in Advertising, and Public Relations 3. Developing Advertising Strategy 3.2 Selecting Advertising Media Four Major Steps: 3.2.1 Deciding on reach, frequency and impact 3.2.2 Choosing among major media types – ( TV, Radio,Newspapers, The Internet, Direct Mail, Magazines, Outdoor) 3.2.3 Selecting specific media vehicles - (specific media within each general media type). 3.2.4 Deciding on media timing

52. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 52 Major Decisions in Advertising, and Public Relations

53. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 53 Major Decisions in Advertising, and Public Relations 4. Evaluating Advertising Effectiveness and Return on Advertising Investment Advertisers should regularly evaluate the communication effects of an ad or ad campaign to find out whether the ads and media are communicating the ad message well. Advertisers should also measure the sales and profit effects of advertising by comparing past sales and profits with past advertising expenditures.

54. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 54 Other Advertising Considerations 1. Most large companies use outside Advertising Agencies because they offer several advantages. They can create a marketing plan, develop ad campaigns and prepare, place and evaluate ads. Major Decisions in Advertising, and Public Relations Advertising Agency is a marketing services firm that assists companies in planning, preparing, implementing, and evaluating all or portions of their advertising programs.

55. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 55 Major Decisions in Advertising, and Public Relations Other Advertising Considerations 2. International Advertising Decisions Companies that need to develop International Advertising Decisions, usually select and cooperate with International Advertisers i.e. companies with experience and knowledge in advertising issues for every country they operate.

56. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 56 Public Relations Major Decisions in Advertising, and Public Relations Public Relations departments may perform any or all of the following Functions: 1. Press Relations or Press Agency 2. Product Publicity 3. Public Affairs 4. Lobbying 5. Investor Relations 6. Development

57. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 57 Major Decisions in Advertising, and Public Relations Public Relations - Functions 1. Press Relations or Press Agency It is the action of creating and placing newsworthy information in the news media to attract attention to a person, product, or service.

58. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 58 Major Decisions in Advertising, and Public Relations Public Relations - Functions 2. Product Publicity It is the action of Publicizing specific products.

59. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 59 Major Decisions in Advertising, and Public Relations Public Relations - Functions 3. Public Affairs It is the action of building and maintaining national or local community relations.

60. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 60 Major Decisions in Advertising, and Public Relations Public Relations - Functions 4. Lobbying It is the action of building and maintaining relations with legislators and government officials to influence legislation and regulation.

61. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 61 Major Decisions in Advertising, and Public Relations Public Relations - Functions 5. Investor Relations It is the action of Maintaining relationships with shareholders and others in the financial community.

62. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 62 Major Decisions in Advertising, and Public Relations Public Relations - Functions 6. Development It is the Public Relations with donors or members of nonprofit organizations to gain financial or volunteer support.

63. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 63 Major Decisions in Advertising, and Public Relations It is important to know that... Companies use public relations to build good relations with consumers, investors, the media and their communities.

64. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 64 Major Decisions in Advertising, and Public Relations The Role and Impact of Public Relations Public Relations can have a strong impact on public awareness at a much lower cost than advertising can. The company does not pay for the space or time in the media. The company pays for a staff to develop and circulate information and to manage events.

65. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 65 Major Decisions in Advertising, and Public Relations Major Public Relations Tools 1. Favourable News about the company its products and people 2. Speeches on sales, trade associations 3. Special Events i.e. press tours, grand openings 4. Written Materials i.e. brochures, articles 5. Audiovisual Materials i.e. DVD 6. Corporate Identity Materials i.e. Logos, business forms and cards, signs 7. Company’s participation in public service activities

66. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 9 66 1. We defined the five promotion mix tools for communicating customer value. 2. We discussed the changing communications landscape and the need for integrated marketing communications. 3. We outlined the communications process and the steps in developing effective marketing communications. 4. We explained the methods for setting the promotion budget and factors that affect the design of the promotion mix. 5. We defined the role of advertising in the promotion mix. 6. We described the major decisions involved in developing an advertising program. 7. We defined the role of public relations in the promotion mix and explained how companies use public relations to communicate with their publics. Summary - Lecture 9

67. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Chapters 14 and 15 Lecture 9 67 END of Lecture 9 Thank you for your attention