16 Integrated Marketing Communications Professor Close

Chapter 16 Integrated Marketing Communications Learning Outcomes LO 1 Discuss the role of promotion in the marketing mix LO 2 Discuss the elements of the promotional mix LO 3 Describe the communication process LO 4 Explain the goal and tasks of promotion

Chapter 16 Integrated Marketing Communications Learning Outcomes LO 5 Discuss the AIDA concept and its relationship to the promotional mix LO 6 Describe the factors that affect the promotional mix LO 7 Discuss the concept of integrated marketing communications

The Role of Promotion in the Marketing Mix Chapter 16 Integrated Marketing Communications The Role of Promotion in the Marketing Mix Discuss the role of promotion in the marketing mix

The Role of Promotion Promotional Strategy Chapter 16 Integrated Marketing Communications The Role of Promotion Promotional Strategy A plan for the optimal use of the elements of promotion: Advertising Public Relations Personal Selling Sales Promotion Notes: Few goods or services can survive in the marketplace without effective promotion.

Exhibit 16.1 Role of Promotion in the Marketing Mix Chapter 16 Integrated Marketing Communications Exhibit 16.1 Role of Promotion in the Marketing Mix Notes: As Exhibit 16.1 shows, the marketing manager determines the goals of the promotional strategy in light of the firm’s overall goals for the marketing mix. Using the overall goals, marketers combine the elements of the promotional strategy into a coordinated plan. This plan becomes an integral part of the marketing strategy for reaching the target market. The main function of promotional strategy is to convince target customers that the goods and services offered provide a competitive advantage over the competition.

Competitive Advantage Chapter 16 Integrated Marketing Communications Competitive Advantage Unique features Excellent service Low prices Rapid delivery High product quality Notes: The main function of a marketer’s promotional strategy is to convince the target market that the goods and services offered provide a competitive advantage. A competitive advantage is the set of unique features of a company and its products that are perceived as superior over the competition. These features are listed on this slide. Discussion/Team Activity: Discuss companies and products that demonstrate a competitive advantage based on the features shown above.

elements of the promotional mix Chapter 16 Integrated Marketing Communications The Promotional Mix Discuss the elements of the promotional mix

The Promotional Mix Promotional Mix Chapter 16 Integrated Marketing Communications The Promotional Mix Promotional Mix Combination of promotion tools used to reach the target market and fulfill the organization’s overall goals. Includes: Advertising Public Relations Personal Selling Sales Promotion Notes: Most promotional strategies use several components of promotion, which may include advertising, public relations, sales promotion, and personal selling to reach the target market. The more emphasis is placed on a particular promotional element, the more important that element is considered to be in the overall promotional mix. A discussion of each of the promotional mix elements follows.

The Promotional Mix Advertising Chapter 16 Integrated Marketing Communications The Promotional Mix Advertising Most commonly distributed by traditional media, though increasingly through non-traditional media, such as Web sites, e-mail, blogs, and interactive video kiosks in malls and supermarkets. Notes: Almost all companies use some form of advertising, ranging from a newspaper classified ad to a multimillion-dollar campaign.

Advertising Media Television Radio Newspapers Magazines Books Chapter 16 Integrated Marketing Communications Advertising Media Traditional Advertising Media Television Radio Newspapers Magazines Books Direct mail Billboards Transit cards New Advertising Media Notes: Media choices are plentiful and fragmented. In addition to the traditional advertising media, new methods are being used to reach consumers. Internet advertising is being increasingly used as a vital component of many companies’ promotion and marketing mixes. Discussion/Team Activity: Some consumers and lawmakers feel that consumer privacy is being violated with Internet advertising methods. Discuss this as a class. Internet Banner ads Viral marketing E- mail Interactive video

Advertising Advantages Disadvantages Reach large number of people Chapter 16 Integrated Marketing Communications Advertising Advantages Disadvantages Reach large number of people Low cost per contact Can be micro- targeted Total cost is high National reach is expensive for small companies Notes: Advertising has the advantage of being able to reach larger numbers of people, but it can also be microtargeted to small groups. Although the cost per contact in advertising is low, the total cost to advertise is typically very high, and can be restrictive of advertising on a national level.

Public Relations Public Relations Chapter 16 Integrated Marketing Communications Public Relations Public Relations Helps an organization communicate with customers, suppliers, stockholders, government officials, employees, and the community. Notes: Many organizations spend large amounts of money to build a positive public image. Public relations help an organization communicate with stockholders, customers, suppliers, government, employees, and the community.

The Function of Public Relations Chapter 16 Integrated Marketing Communications The Function of Public Relations Maintain a positive image Educate the public about the company’s objectives Introduce new products Support the sales effort Generate favorable publicity Notes: Public relations is used to maintain a positive image, as well as the functions shown on this slide. Nothing sells a product better than free publicity, but publicity should not be viewed as free. Preparing news releases, staging events, persuading media personnel to print or broadcast them costs money. Discussion/Team Activity: Discuss current examples of publicity regarding organizations.

Sales Promotion Sales Promotion Chapter 16 Integrated Marketing Communications Sales Promotion Sales Promotion Marketing activities—other than personal selling, advertising, and public relations—that stimulate consumer buying and dealer effectiveness. Notes: Sales promotion is generally a short-run tool used to stimulate immediate increases in demand. Sales promotion is used to improve the effectiveness of other ingredients in the promotion mix, especially advertising and personal selling.

Sales Promotion End Consumers Trade Customers Company Employees Chapter 16 Integrated Marketing Communications Sales Promotion Free samples Contests Premiums Trade Shows Vacation Giveaways Coupons End Consumers Trade Customers Notes: Sales promotion can be aimed at end consumers, trade customers, or a company’s employees. A major promotional campaign might use several of the tools shown on this slide, along with the other elements of the promotion mix. Discussion/Team Activity: Discuss a few recent product releases. What sales promotion techniques were used to complement the other components of the marketing mix? What techniques make sales promotion efforts effective on college campuses? Company Employees

Personal Selling Personal Selling Chapter 16 Integrated Marketing Communications Personal Selling Personal Selling Planned presentation to one or more prospective buyers for the purpose of making a sale. Notes: Personal selling is a purchase situation involving a personal, paid-for communication between two people in an attempt to influence each other. Both buyer and seller have specific objectives: the buyer may need to minimize cost or assure a quality product, while the salesperson may need to maximize revenue and profits.

Chapter 16 Integrated Marketing Communications Personal Selling Traditional Selling Attempts to persuade the buyer into a specific point of view. Win-lose outcome. Relationship Selling Long-term relationships, create a win-win outcome Notes: Traditional methods of personal selling include a planned presentation to one or more prospective buyers. The seller tries to persuade the buyer to accept a point of view or take action. Frequently, the traditional view of personal selling creates a win-lose outcome at the expense of the buyer. Relationship selling emphasizes a win-win outcome and the accomplishment of mutual objectives that benefit both buyer and salesperson in the long-term. The goal is a long-term, committed relationship based on trust and customer loyalty. Personal selling is increasingly dependent on the Internet to attract potential buyers seeking information.

Marketing Communication Chapter 16 Integrated Marketing Communications Marketing Communication Describe the communication process

Communication Communication is… Chapter 16 Integrated Marketing Communications Communication Communication is… the process by which meanings are exchanged or shared through a common set of symbols.

Marketing Communication Chapter 16 Integrated Marketing Communications Marketing Communication Categories of Communication Interpersonal Mass Notes: Communication can be divided into two major categories: Interpersonal communication is direct, face-to-face communication between two or more people. Mass communication refers to communicating a concept or message to larger audiences, usually through a mass medium such as television or newspapers. When a company advertises, it does not know the consumers personally, nor is it able to respond immediately to reactions to the advertising message. Instead the marketing manager must wait and see how people are reacting to the mass-communicated promotion. Any clutter from competitors’ messages or other distractions can reduce the effectiveness of the mass communication effort.

Marketing Communication Chapter 16 Integrated Marketing Communications Marketing Communication As Senders As Receivers Develop messages Adapt messages Spot new communication opportunities Inform Persuade Remind Notes: Marketers are both senders and receivers of messages. As senders, marketers inform, persuade, and remind the target market to adopt courses of action. As receivers, marketers attune themselves to the target market in order to develop and adapt messages, and spot new communication opportunities. Marketing communication is a two-way process.

Exhibit 16.2 Communication Process Chapter 16 Integrated Marketing Communications Exhibit 16.2 Communication Process Notes: Marketing communication is a two-way process, as shown in Exhibit 16.2. The sender originates the message. Encoding is the conversion of the sender’s ideas and thoughts into a message, usually words or signs. Transmission of a message requires a channel—some communication medium. Reception occurs when the message is detected by the receiver. Transmission may be hindered because of noise—anything that interferes with, distorts, or slows down the transmission of information. Decoding is the interpretation of the language and symbols sent. Proper match between the message to be conveyed and the target market’s attitude is the job of the marketing manager. Differences in culture, age, social class, education, and ethnicity can lead to miscommunication. Marketers targeting consumers in foreign countries must also worry about translation and miscommunication issues. The receiver’s response to a message is direct feedback to the source. Since mass communicators are cut off from direct feedback, they rely on market research or analysis of viewer perceptions for indirect feedback.

Exhibit 16.3 Characteristics of the Elements in the Promotional Mix Chapter 16 Integrated Marketing Communications Exhibit 16.3 Characteristics of the Elements in the Promotional Mix Notes: The four elements of the promotional mix differ in their ability to affect the target audience. Exhibit 16.3 summarizes these differences. A deeper treatment of each element appears over the next four slides. LO3

Indirect and impersonal Same message to all audiences Chapter 16 Integrated Marketing Communications Characteristics of the Elements in the Promotional Mix Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Advertising Indirect and impersonal Low Little Delayed One-way Yes Fast Same message to all audiences LO3

Usually indirect, impersonal Usually no direct control Chapter 16 Integrated Marketing Communications Characteristics of the Elements in the Promotional Mix Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Public Relations Usually indirect, impersonal Moderate to low Little Delayed One-way No Usually fast Usually no direct control

Usually indirect and impersonal Same message to varied target Chapter 16 Integrated Marketing Communications Characteristics of the Elements in the Promotional Mix Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Sales Promotion Usually indirect and impersonal Moderate to low Little to moderate Varies Mostly one-way Yes Fast Same message to varied target

Direct and face-to-face Chapter 16 Integrated Marketing Communications Characteristics of the Elements in the Promotional Mix Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Personal Selling Direct and face-to-face High Much Immediate Two-way Yes Slow Tailored to prospect

Web 2.0 Web 2.0 tools include: Blogs (online journals) Chapter 16 Integrated Marketing Communications Web 2.0 Web 2.0 tools include: Blogs (online journals) Podcasting (online radio) Vodcasts (online videos) Social Networks (Facebook, MySpace) Notes: These tools were primarily used by individuals to express themselves, but soon businesses began to see that they could be used to engage with customers as well.

Consumer-Generated Blogs Chapter 16 Integrated Marketing Communications Blogging Sponsored by a company or one of its brands and maintained by one or more of the company’s employees. Consumer-Generated Blogs Corporate Blogs Independent and not associated with the marketing efforts of any particular company or brand. Notes: The Internet and related technologies are having an impact on marketing communication including the promotion mix. Blogs generated by companies (corporate blogs) allow marketers to have a direct, personalized feedback channel with customers.

The Goals and Tasks of Promotion Chapter 16 Integrated Marketing Communications The Goals and Tasks of Promotion Explain the goals and tasks of promotion

Goals and Tasks of Promotion Chapter 16 Integrated Marketing Communications Goals and Tasks of Promotion Informing Reminding Persuading Target Audience Notes: Promotion seeks to modify behavior and thoughts in some way. It also strives to reinforce existing behavior. Promotion has three basic tasks: it can inform the target audience, persuade the target audience, or remind the target audience. Often a marketer will try to accomplish two or more of these tasks at the same time.

Goals and Tasks of Promotion Chapter 16 Integrated Marketing Communications Goals and Tasks of Promotion Informing Reminding Persuading Target Audience PLC Stages: Introduction Early Growth Growth Maturity Notes: Informative promotion seeks to convert an existing need into a want or to stimulate interest in a new product. It is more prevalent during the early stages of the product life cycle. Persuasive promotion is designed to stimulate a purchase or an action. It becomes the main promotion goal when the product enters the growth stage of its life cycle. Reminder promotion is used to keep the product/brand name in the public’s mind. It is effective during the maturity cycle. A discussion of each category follows. Discussion/Team Activity: Name products/brands and discuss the stage of their product life cycle. Categorize the type of promotion—informative, reminder, or persuasive-- that is used in the product/brand promotional mix.

Goals and Tasks of Promotion Chapter 16 Integrated Marketing Communications Goals and Tasks of Promotion Increase awareness Explain how product works Suggest new uses Build company image Informative Promotion Beyond the Book

Goals and Tasks of Promotion Chapter 16 Integrated Marketing Communications Goals and Tasks of Promotion Encourage brand switching Change customers’ perceptions of product attributes Influence immediate buying decision Persuade customers to call Persuasive Promotion Beyond the Book

Goals and Tasks of Promotion Chapter 16 Integrated Marketing Communications Goals and Tasks of Promotion Remind customers that product may be needed Remind customers where to buy product Maintain customer awareness Reminder Promotion Beyond the Book

Promotional Goals and the AIDA Concept Chapter 16 Integrated Marketing Communications Promotional Goals and the AIDA Concept Discuss the AIDA concept and its relationship to the promotional mix

The AIDA Concept AIDA Concept Attention Interest Desire Action Chapter 16 Integrated Marketing Communications The AIDA Concept AIDA Concept Model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message. Attention Interest Desire Action Notes: The goal of any promotion is to get someone to buy a good or service, or take some action. A classic model for reaching promotional goals is called the AIDA concept—attention, interest, desire, and action—the stages of consumer involvement. This model proposes that consumers respond to marketing messages in a cognitive (thinking), affective (feeling), and conative (doing) sequences.

Exhibit 16.4 Chapter 16 Integrated Marketing Communications Notes: Exhibit 16.4 depicts the relationship between the promotional mix and the AIDA model. It shows that although advertising does have an impact in the later stages, it is most useful in gaining attention for goods or services.

The AIDA Concept Action Desire Interest Attention Conative (doing) Chapter 16 Integrated Marketing Communications The AIDA Concept Action Desire Interest Attention Conative (doing) Affective (feeling) Cognitive (thinking)

Factors Affecting the Promotional Mix Chapter 16 Integrated Marketing Communications Factors Affecting the Promotional Mix Describe the factors that affect the promotional mix

Target market characteristics Type of buying decision Chapter 16 Integrated Marketing Communications Factors Affecting the Choice of Promotional Mix Nature of the product Stage in PLC Target market characteristics Type of buying decision Promotion funds Push or pull strategy Notes: Promotional mixes vary a great deal from one product and one industry to the next. Advertising and personal selling are used to promote goods and services, supplemented by sales promotion. Public relations helps develop a positive image for the product and the organization. A firm may choose not to use all four promotional elements, or it may choose to use them in varying degrees. This slide shows the factors affecting the promotion mix chosen by a firm. Subsequent slides describe the key points of each factor.

Exhibit 16.5 Product Life Cycle and the Promotional Mix Chapter 16 Integrated Marketing Communications Exhibit 16.5 Product Life Cycle and the Promotional Mix Notes: The Product Life Cycle is a factor in designing a promotion mix, as shown in Exhibit 16.5. In the introduction stage, the basic goal of promotion is to inform the target audience of product availability. Advertising and public relations inform the target audience, while sales promotion encourages early trial. Personal selling gets retailers to carry the product. During the growth stage, advertising and public relations continue to be important, although sales promotion can be reduced because customers need fewer incentives to purchase. The promotional strategy is to emphasize the product’s differential competitive advantage. Persuasive promotion is used to build and maintain brand loyalty. Personal selling has succeeded in obtaining adequate distribution for the product. In the maturity stage, competition becomes fiercer, and persuasive and reminder advertising are more strongly emphasized. Sales promotion comes back into focus to try to increase market share. As the product enters the decline stage, all promotion, especially advertising, is reduced. Nevertheless, personal selling and sales promotion efforts may be maintained, particularly at the retail level. Heavy use of Advertising; PR for awareness; sales promotion for trial Advertising, PR, brand loyalty; personal selling for distribution Ads decrease; sales promotion; personal selling; reminder & persuasive AD/PR decrease; limited sales promotion; personal selling for distribution Light Advertising; pre- introduction publicity

Target Market Characteristics Chapter 16 Integrated Marketing Communications Target Market Characteristics For… Widely scattered market Informed buyers Brand-loyal repeat purchasers Advertising Sales Promotion Less Personal Selling Notes: Sometimes personal selling is required even when buyers are well informed and geographically dispersed. Print advertising can be used to find potential customers in markets were they are hard to locate.

Type of Buying Decision Chapter 16 Integrated Marketing Communications Type of Buying Decision Advertising Sales Promotion Routine Personal Selling Neither Routine nor Complex Public Relations Print Advertising Complex Notes: For a routine buying decision, such as the purchase of toothpaste, the most effective promotional tools are advertising and especially sales promotion. For buying decisions that are neither routine nor complex, advertising and public relationships help establish awareness. In contrast, consumers making complex decisions need large amounts of information, and personal selling is the most effective tool. Print ads are also effective for conveying large amounts of information. Discussion/Team Activity: Consider recent purchases of routine and complex products. What promotion tool(s) were effective to reach the buyer and influence the purchase decision?

Available Funds Trade-offs with funds available Chapter 16 Integrated Marketing Communications Available Funds Trade-offs with funds available Number of people in target market Quality of communication needed Relative costs of promotional elements Notes: When funds are available to permit a mix of promotional elements, a firm will try to optimize its return on promotion dollars while minimizing the cost per contact. The cost per contact is high for personal selling, public relations, and sales promotions. On the other hand, the cost per contact is low for national advertising since it reaches a large number of people. There is a trade-off among the funds available, the number of people in the target market, the quality of communication needed, and the relative costs of the promotional elements.

Exhibit 16.6 Push Strategy versus Pull Strategy Chapter 16 Integrated Marketing Communications Exhibit 16.6 Push Strategy versus Pull Strategy Notes: Manufacturers may use aggressive personal selling and trade advertising to convince a wholesaler/retailer to carry and sell their merchandise. This is known as a push strategy. The wholesaler, in turn, pushes the merchandise forward by persuading the retailer to handle the goods. The retailer uses advertising and other forms of promotion to convince customers to buy the “pushed” products. At the other end is a pull strategy, which stimulates consumer demand to obtain product distribution. The manufacturer uses a pull strategy by focusing promotional efforts on end consumers and opinion leaders. The wholesaler then places an order for the “pulled” merchandise from the manufacturer. Consumer demand pulls the product through the channel of distribution. A company typically uses a mix of push and pull strategies. The Push and Pull strategies are diagrammed in Exhibit 16.6. Discussion/Team Activity: Discuss products and/or industries that utilize push and/or pull strategies in their promotion mix.

Integrated Marketing Communications Chapter 16 Integrated Marketing Communications Integrated Marketing Communications Discuss the concept of integrated marketing communications

Integrated Marketing Communications Chapter 16 Integrated Marketing Communications Integrated Marketing Communications Integrated Marketing Communications The careful coordination of all promotional messages to assure the consistency of messages at every contact point where a company meets the consumer.

IMC Popularity Growth Proliferation of thousands of media choices Chapter 16 Integrated Marketing Communications IMC Popularity Growth Proliferation of thousands of media choices Fragmentation of the mass market Slash of advertising spending in favor of promotional techniques that generate immediate response

Vans – Integrated Marketing Communication Chapter 16 Integrated Marketing Communications Chapter 16 Videos Vans – Integrated Marketing Communication This video examines the carefully planned strategy that Vans developed to create loyalty in a fickle niche market. Describe Vans’ pyramid strategy. How does it protect the brand? http://www.cengage.com/marketing/book_content/1439039429_lamb/company_clips/ch16.html Beyond the Book