Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter 17 Integrated Marketing Communications

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Chapter Overview Promotion Promotion Marketing Communications Marketing Communications

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Integrated Marketing Communications Coordination of all promotional activities to produce a unified customer-focused promotional message Success of any IMC program depends on identifying the members of an audience and understanding what they want

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Where’s The Tracker? Tracker’s IMC Program Included a Game for Chevrolet Tracker That Drew 1.3 Million Entries Online and Another 100,000 Offline

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Example of an Ad Enhancing GM’s Integrated Marketing Communications Program

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved 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 function as a team

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Role of Databases in Effective IMC Programs 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

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The Communications Process An effective promotional message accomplishes three tasks: It gains the receiver’s attention It achieves understanding It stimulates the receiver’s needs and suggests an appropriate method of satisfying them AIDA concept

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved See if this ad gets your attention. Keep in mind not all advertisements are designed to sell a product or service. So what is this ad’s objective(s)?

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Example of an Ad Accomplishing the Three Tasks of the Communications Process for Its Target Market

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Global Difficulties with the Communication Process Global Difficulties with the Communication Process In China: KFC’s 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: Pepsi’s slogan, “Come alive with the Pepsi generation” came out as “Pepsi will bring your ancestors back from the dead”

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Objectives of Promotion Provide Information Provide Information Disney World Ad promoting a free video to provide Information for vacation planning

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Increase Demand Increase Demand 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

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Differentiate the Product Differentiate the Product Homogenous demand for many products results when consumers regard the firm’s output as virtually identical to its competitors’

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Daewoo Lanos Television Ad Differentiating Its Product from Those of the Competition

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Identify how two competitors, Visa and MasterCard, go about differentiating their products in these two ads.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Accentuate the Product’s Value Accentuate the Product’s Value Promotion can explain the greater ownership utility of a product to buyers Johnson & Johnson First Aid To Go! Accentuating a Product’s Value

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Stabilize Sales Stabilize Sales For the typical firm, sales fluctuations may result from cyclical, seasonal, or irregular demand Stabilizing these variations is often an objective of promotional strategy Class Discussion Is the purpose of this ad primarily to provide information, increase demand, differentiate the product, accentuate the product’s value or stabilize sales?

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Elements of the Promotional Mix Promotional mix Promotional mix: blend of personal selling and nonpersonal selling designed to achieve promotional objectives Personal selling Personal selling Nonpersonal selling Nonpersonal selling

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Advertising Advertising Paid, nonpersonal communication through various media with the hope of informing or persuading members of a particular audience

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Product Placement Product Placement Marketer pays a motion picture or television program owner a fee to display his or her product prominently in the film or show Big budget movies, such as The Matrix, feature prominent placement of various products throughout the movie.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Sales Promotion Sales Promotion Marketing activities that stimulates consumer purchasing Trade promotion

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved TV AD using a popular sales promotion technique: A free premium with the purchase of an item.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Direct Marketing Direct Marketing Direct communications other than personal sales contact between buyer and seller, designed to generate sales, information requests, or store visits

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Public relations Public relations: firm’s communications and relationships with its various publics Publicity Publicity: stimulation of demand for good, service, place, idea, person, or organization by unpaid placement of commercially significant news or favorable media presentations

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Sponsorships 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

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Sponsorship Spending Sponsorship Spending has more than tripled during the past 10 years to almost $10 Billion. AT&T: A Sponsor of the PGA Tour

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Growth of Sponsorships Growth of Sponsorships Sponsorship has grown rapidly during the past 30 years How Sponsorship Differs from Advertising How Sponsorship Differs from Advertising Degree of control Nature of the message Audience reaction Measurements of effectiveness

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Direct Marketing Rapidly growing promotional mix element Related overall spending total $1.7 trillion Direct Marketing Communication Channels Direct Marketing Communication Channels

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Direct Mail Direct Mail Marketers combine information from internal and external databases, surveys, coupons, and rebates that require responses to provide information about consumer lifestyles, buying habits, and wants Catalogs

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Telemarketing Telemarketing: Includes outbound contacts by salespeople or inbound contacts initiated by customers who want to obtain information and place orders Offering Toll-Free Telephone Numbers to Catalog Shoppers

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Direct Marketing via Broadcast Channels Direct Marketing via Broadcast Channels Brief (30 to 90 second) direct response ads on television or radio Home shopping channels like:  QVC  HSN Infomercial: promotional presentation for a single product running 30 minutes or longer in a format that resembles a regular television program

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Electronic Direct Marketing Channels Electronic Direct Marketing Channels direct marketing is a natural and easy extension of traditional direct mail marketing Other Direct Marketing Channels Other Direct Marketing Channels Print media is generally not as effective as Web marketing or telemarketing for direct marketers

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Peoplepc This Print Ad Supplements a Promotional Campaign That Is Primarily Based on Broadcast Advertising

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Starbucks Encore Starbucks Encore Starbucks’ Direct-Response Print Ad

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Developing an Optimal Promotional Mix 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

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Promotional Strategies Pulling strategy Pulling strategy Pushing strategy Pushing strategy

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Colgate Total Colgate Total Using a Pulling Strategy With Ads Like This Combined With a Pushing Strategy Created Strong Demand for This Improved Product

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Budgeting for Promotional Strategy Percentage-of-sales method Fixed-sum-per-unit method Meeting competition method Task-objective method

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Measuring the Effectiveness of Promotion Two basic measurement tools: Direct sales results Indirect evaluation concentrates on quantifiable indicators of effectiveness like:  Recall  Readership

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The Value of Marketing Communications Social Importance Social Importance Society provides no commonly accepted set of standards regarding taste The one generally accepted standard in a market society is freedom of choice Promotion helps achieve socially oriented objectives like the elimination of drug abuse

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Promotional Message Addressing a Universal Social Concern

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Merck Vaccine Division The Social Importance of Marketing Communications

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Business Importance Business Importance Promotion has become increasingly important to both large and small firms Promotion is an effective tool to change attitudes, boost brand loyalty and increase sales Both business and nonbusiness enterprises recognize the importance of promotion

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved The effectiveness of advertisements like this classic to encourage brand loyalty and increase sales is well-documented.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved Economic Importance Economic Importance Effective promotion has allowed society to derive benefits not otherwise available Promotion increases the number of units sold, which lowers production costs and sales prices