McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Advertising, Sales Promotion, Public Relations, Direct Marketing, Personal Selling, Integrated Marketing Communications, Awareness, Comprehension, Conviction, Ordering, Percent of Sales, Per-Unit expenditure, All You Can Afford, Competitive Parity, The Research and Task Approaches, Encoding, Decoding, Reach, Average Frequency, Push and Pull Strategies, Trade Promotions, Consumer Promotions, Frequency Marketing Programs Integrated Marketing Communications: Advertising, Sales Promotion, Public Relations, and Direct Marketing Chapter 8 Key Terms

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Strategic Goals Of Marketing Communication  Create awareness  Build positive images  Identify prospects  Build channel relationships  Retain customers

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Promotional Mix  Concept refers to the combination and types of nonpersonal and personal communication the organization puts forth during a specified period  Nonpersonal forms  Advertising  Sales promotion  Public relations  Direct marketing  Personal forms  Personal selling

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Promotional Mix  Advertising – Paid form of nonpersonal communications transmitted through a mass medium to target audience  Sales promotion – Activity or material offering a direct inducement for purchasing a product  Public relations – Nonpersonal form of communication seeking to influence attitudes, feelings, and opinions  Publicity  Direct marketing – Direct forms of communication with customers

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Promotional Mix  Personal selling – Face-to-face communication with potential buyers to inform and persuade  Firms should take into account three basic factors when devising its promotion mix:  The role of promotion in the overall marketing mix  The nature of the product  The nature of the market

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Integrated Marketing Approach  Goal is to develop marketing communications programs that coordinate and integrate all elements of the promotion mix to present a consistent message  Seeks to manage all sources of brand or company contacts with existing and potential customers  Potential buyers go through a process of  Awareness of the product  Comprehension of what it can do and important features  Conviction that it has value for them  Ordering on the part of a sufficient number of potential buyers

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Integrated Marketing Approach How Various Promotion Tools Might Contribute to the Purchase of a Hypothetical Product

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Some Differences between Traditional Marketing Communication Efforts and Integrated Marketing Communications

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Advertising: Planning and Strategy  Objectives  Generalist viewpoint – Concerned with sales, profits, and return on investment  Middle viewpoint – Sees advertising as a competitive weapon  Specialist viewpoint – Concerned with the effects of specific ads or campaigns  In the long run and often in the short run, advertising is justified on the basis of the revenue it produces  Approach that aids intelligent decision making is needed

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Developing Advertising Objectives: Nine Questions  Does the advertising aim at immediate sales?  Does the advertising aim at near-term sales?  Does the advertising aim at building a long-range consumer franchise?  Does the advertising aim at helping increase sales?  Does the advertising aim at some specific step that leads to a sale?

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Developing Advertising Objectives: Nine Questions  How important are supplementary benefits of advertising?  Should the advertising impart information needed to consummate sales and build customer satisfaction?  Should advertising build confidence and goodwill for the corporation?  What kind of images does the company wish to build?

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Advertising Decisions  Key decisions to be made include  Determining the size of the advertising budget  Allocation of the advertising budget  Important to remember that brand equity and consumer preference for brands drive market share

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Expenditure Question  Percent of sales – A percentage figure is taken and applied to either past or future sales  Per-unit expenditure – A fixed monetary amount is spent on advertising for each unit of the product expected to be sold  All you can afford – Advertising budget is established as a predetermined share of profits or financial resources

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Expenditure Question  Competitive parity – Advertising budgets are based on those of competitors or other members of the industry  Research approach – Advertising budget is argued for and presented on the basis of research findings  Task approach – Initially formulates the advertising goals and defines the tasks to accomplish these goals  Management determines how much it will cost to accomplish each task and adds up the total

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Preparing the Advertising Campaign: The Eight-M Formula

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Allocation Question: Message Strategy  To be effective, the advertising message should meet two general criteria  It should take into account the basic principles of communication  It should be predicated upon a good theory of consumer motivation and behavior  The basic communication process involves three elements  Sender or source of the communication  Communication or message  Receiver or audience

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Allocation Question: Message Strategy  Encoding – Translating the product idea or marketing message into an effective ad  Decoding – Perceiving content of the message to be the same as the intended content  A relationship between advertising and consumer behavior exists  End goal of an advertisement and its associated campaign is to move the buyer to a decision to purchase the advertised brand

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Allocation Question: Media Mix  Cost per thousand – Generally refers to the dollar cost of reaching 1,000 prospects  “Positive effects” theory – States that the more the viewers are involved in a television program, the stronger they will respond to commercials  Reach – Number of different targeted audience members exposed at least once to the advertiser’s message within predetermined time frame  Average frequency – Number of times, on average, people are exposed to an ad within a given time period

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Allocation Question: Media Mix  The marketer’s dilemma is to develop a media schedule that both  Exposes a sufficient number of targeted customers (reach) to the firm’s product  Exposes them enough times (average frequency) to the product to produce the desired effect

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Procedures for Evaluating Advertising Programs and Some Services Using the Procedures

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Sales Promotions  Push marketing strategies – Involve aiming promotional efforts at distributors, retailers, and sales personnel to gain their cooperation in ordering, stocking, and accelerating the sales of a product  Pull marketing strategies – Involve aiming promotional efforts directly at customers to encourage them to ask the retailer for the product  Trade sales promotions – Aimed at distributors and retailers of products  Consumer promotions – Fulfill several distinct objectives for the manufacturer

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Sales Promotions Example of Sales Promotion Activities

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Sales Promotions Push versus Pull Strategies in Marketing Communications

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Sales Promotions Some Commonly Used Forms of Consumer Promotions

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Sales Promotions  Sales promotions can often  Involve competitive retaliation  Devalue image of promoted brand in consumer’s eyes  Not used as sole promotional tool due to its inability to  Always generate long-term buyer commitment to a brand  Change, except temporarily, declining sales of a product  Convince buyers to purchase an unacceptable product  Make up for a lack of advertising or sales support  Frequency marketing programs – Consumers are rewarded or purchases of products or services over a sustained period of time

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Some Objectives of Sales Promotion

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Public Relations  News release or press release – Announcement regarding changes in organization or the product line  News conference – Meeting held for representatives of the media to announce major news events  Sponsorship – Providing support for and associating organization’s name with events, programs, people  Public service announcements – Many nonprofit organizations rely on the media to donate time for advertising for contributions and donors

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Direct Marketing  Online  Direct Mail  Catalogs  Direct Response Advertising  Personal Selling