Integrated Marketing Communications (KOM 5325) Hamisah Zaharah Hasan, PhD hamisah@upm.edu.my 03-8946 8667

The course covers the functions of Integrated Marketing Communications discussing topics such as advertising, direct marketing, the Internet, interactive media, sales promotion, public relations, corporate advertising and direct selling; market environment which includes segmenting, targeting, positioning and consumer purchasing behavior; evaluation of a company’s marketing and promotional situation; Integrated Marketing Communications strategies and programs.

Course Objectives: analyze the differences between the major marketing communication functions (C4); evaluate a company’s marketing and promotional situation (P4); develop effective Integrated Marketing Communications strategies and programs (A4) and contribute to the planning and coordinating of group work (CS, LL)

Course Evaluation Assignment 1 : 10 points Midterm exam : 20 points Group project : 30 points Final exam : 40 points

Welcome to IMC

THE EVOLUTION OF IMC 1980s companies see the need for more strategic integration of their promotional tools Process IMC involves coordinating the various elements & other marketing activities that communicate with a firm’s customers. e.g. use ads, sales promotion, corp. sponsorship, direct marketing, etc Companies built profitable relationship with customers, stakeholders, stockholders.

IMC the beginning .... Advertisers were not clear of advertising in the new millennium ….. The industry realized its vulnerability to the outside world OUTSIDE THE BOX?

BEFORE IMC ..... For many years, the promotional function in most companies was dominated by mass media ads. Companies relied primarily on their ads agencies for guidance in nearly all areas of marcom. In fact, most marketers did use additional promotional & marketing tools but, sales promotion & direct marketing agencies as well as package design firms were generally viewed as auxiliary services & often used on a per-project basis. PR agencies were used to manage the organization’s publicity, image & affairs with relevant publics on an ongoing basis but were not viewed as integral participants in the marcom process.

DEPARTMNTALIZATION? They failed to recognize that the wide range of marketing & promotional tools must be coordinated to communicate effectively and present a consistent image to target audience Many marketers manage its various marketing & promotional functions separately. Different budgets, views of market, goals & objectives.

what is IMC ? …. A concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines e.g. general ads., direct response, sales promotion, and public relations …. and combines these disciplines to provide clarity, consistency and maximum communications impact ….. Belch & Belch,1999

IMC .... according to Wells et al. The concept or philosophy of marketing that stresses bringing together all the variables of the marketing mix, all the media, all the actions with which a company reaches its publics, and integrating the company’s strategy & programs …..

IMC follows the concept of marketing that start with the consumer needs and wants and work back to the brand. Through the information from the database companies are able to find out about consumers. IMC is a practice of unifying communication tools from packaging ---- to sending consistent, persuasive message to target audience Schultz

ONCE THEY EMBRACED IMC... ….. The began asking their ad agencies to coordinate the use of a variety of promotional tools rather than relying primarily on media advertising. …. Some companies began looking beyond the traditional advertising agencies & use other types of promotional specialists to develop & implement various components of their promotional plans.

THE FOCUS OF IMC .... ….. Using all forms of promotion …..Approach to planning marketing ….Promotion programs ….Coordinating communication functions IMC helps companies identify the most appropriate & effective methods to conduct customers & stakeholders.

WHY THE GROWING IMPORTANCE OF IMC ??? Significant marketing development Added value of integrating various communication functions Maximize return on investment

Media OLD MEDIA NEW MEDIA ...

INTERNET, VCD, DVD, MOBILE PHONE RADIO/TV/MAGAZINES/NEWSPAPER NEW TECHNOLOGY OLD MEDIA VS INTERNET, VCD, DVD, MOBILE PHONE RADIO/TV/MAGAZINES/NEWSPAPER

AVOID DUPLICATION ---- integrate marcom activities NEW TECHNOLOGY NEW ENVIRONMENT --- new ways to reach consumers DIFFERENT CONSUMERS ----- sophisticated, demanding, EXPENSIVE TRADITIONAL MEDIA REASONS FOR IMC

Why IMC? Use major communication functions in concert (synergy) to provide clarity, consistency, and maximum communications impact Synergy yields results greater than if each functional area had selected its own targets, chosen its own message strategy, and set its own media schedule and timing

INTRODUCTION to PROMOTION and INTEGRATED MARKETING COMMUNICATIONS

Relationship Between Promotion, the Promotional Mix, and Integrated Marketing Communications Communication Process in Marketing Used to Create a Favorable Predisposition Toward: Brand of Product Service Idea Person PROMOTIONAL MIX Blend of Communications Tools and Activities Used by a Firm Carries out the Promotion Process Communicates Directly with Target Markets 1.2

INTEGRATED MARKETING COMMUNICATIONS (IMC) Manages the Processes and Activities of Using Promotional Tools Unified Way Produces a Synergistic Communications Effect 1.3

Management of the Promotion Mix IMC: Process Tools Management of the Promotion Mix 1.4

The Promotional Mix ADVERTISING Paid Mass Media Attempt to Persuade Complex System of Strategic Planning and Creative Genius INTERNET ADVERTISING Electronic Mail (e-mail) Internet Relay Chat (IRC) Usenet World Wide Web (www) SALES PROMOTION Use of Incentives to Generate a Specific Short-Term Response Household Consumer Trade Buyer Business Buyer 1.5

ADVERTISING

Example of Sales Promotion

Example of Mass Media Advertising 1.6

Example of Sales Promotion 1.7

The Promotional Mix DIRECT MARKETING AND e-COMMERCE Distinguished From Other Primary Promotional Tools in 3 Ways Uses a Combination of Media Designed to Elicit a Direct Response Transactions Can Occur Anywhere E-Commerce is Another Form of Direct Marketing Business is Conducted Between Buyers and Sellers Using Electronic Exchange Media 1.8

Creating an Event to Showcase a Firm’s Brand POINT-OF-PURCHASE shelf-talkers, signage, easel stands, bottle-neckers, price cards, hang-tags, pop-ups SPONSORSHIP Funding an Event Creating an Event to Showcase a Firm’s Brand POINT-OF-PURCHASE Materials Used in Retail Setting to Attract Shoppers’ to a Company’s Brand SUPPORTIVE COMMUNICATIONS Used to Target Audiences Outside Mainstream Media or Electronic Communications 1.9

SUPPORTIVE COMMUNICATIONS Used to Target Audiences Outside Mainstream Media or Electronic Communications

PUBLIC RELATIONS Communication that can Foster Goodwill Between a Firm and its Many Constituent Groups PERSONAL SELLING Presentation of Information about a Firm’s Products or Services by One Person to Another Person or to a Small Group of People 1.10

Personal Selling is the Most Important Variable in the Promotional Mix of Many Organizations 1.11

ROLE OF PROMOTION IN MARKETING STRATEGY Must Have Marketing Strategy Decisions about Products (Brand) Branding – Established Name, Term, Symbol or Design that Identifies for Consumers that a Product is being Offered by a Particular Seller and Clearly Distinguished the Product of that Seller from those Offered by Competitors 1.12

1.12

ROLE OF PROMOTION IN MARKETING STRATEGY Role of Promotion in Marketing Strategy Affects 3 Key Aspects of Decision Making with Respect to Brands Creating the Marketing Mix Achieving Effective Market Segmentation, Product Differentiation, and Positioning Enhancing Revenues and Profits 1.13

Assumes a Wide Range of Responsibilities Related to: Conception ROLE OF PROMOTION IN THE MARKETING MIX Assumes a Wide Range of Responsibilities Related to: Conception Pricing Distribution Brands Product (Brand) 1.14

ROLE OF PROMOTION IN THE MARKETING MIX Promotion Affects the Product Area of the Marketing Mix Information and Persuasion Introduction of New Brand or Brand Extensions Building and Maintaining Brand Loyalty Among Consumers Within the Trade 1.15

One Role for Promotion is to Help Introduce Brand Extensions Like this Extension of Jell-O into the Yogurt Market 1.16

ROLE OF PROMOTION IN THE MARKETING MIX Price Effects the Consumer Market Effects the Trade Market Distribution Consumer Access to Brands Securing Trade Distribution 1.17

Promotion is Important in Helping to Execute These Strategies Market Segmentation Product Differentiation Positioning External Internal 1.18

The Role of Promotion in Revenue and Profits Sales Occur Brand has Well-Conceived Marketing Mix Complete Marketing Mix Good Promotion Large-Scale Demand /Production Produces Cost to Produce Item is Reduced Known as Economies of Scale Brand Loyalty at Any Cost Firm Raises Prices Known as Inelasticity of Demand 1.19

Promotional Tools Help Increase Brand Loyalty 1.20

Integrated Marketing Communications FACTORS CONTRIBUTING TO IMC’s RISING PROMINENCE Fragmentation of Media Better Audience Assessment Through Database Technology Consumer Empowerment Increased Advertising Clutter Shifting Channel Power Desire of Greater Accountability 1.21

Clutter of Advertising Promotion and IMC Help Cut Through the Clutter of Advertising 1.22

Participants in IMC Management Marketing Organization Marketing Plan Goal & Objectives Customer/Prospect Databases IMC Management Personal Selling Advertising Agency Research Creative Strategies Production Message Placement Public Relations Advertising Sales Promotions P-O-P Supportive Specialized Promotion Organizations Media Organizations Event Management Firms Web Site Designers Sales Promotions Agencies Direct Marketing Agencies Public Relations Firms P-O-P Agencies & Designers Internet Advertising Sales Promotions Direct Marketing e-Commerce 1.23

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THE PROMOTION INDUSTRY: MARKETERS, AGENCIES, and MEDIA ORGANIZATIONS

The Promotion Industry in Transition ALTERED BY SIX TRENDS Information in Marketplace is an Interactive System between Marketers and Consumers Proliferation of Cable TV, Direct-Marketing & Alternative New Media Causes Media Fragmentation Growing Investment in Advertising Causes Media Clutter

Growing Investment in Advertising Causes Media Clutter

The Promotion Industry in Transition ALTERED BY SIX TRENDS New Communications/Distributions Channels are Growing in Influence Fragmentation of Marketing Budgets Resulting in Greater Portions of Budgets going to Trade & Consumer Promotions Improved Information Systems Allow Retailers & Distributors more Control over Marketing & Promotional Decisions

Structure of the Promotion Industry and Participants in the Process Marketers Manufacturers Resellers, retailers, Government and and service firms wholesalers, and social organizations distributors Advertising and Promotion Agencies Advertising agencies: Agency services: Agency compensation: Full-service agencies Account services Commission Creative boutiques Marketing research Markup charges Media-buying services Creative and production Fee system Interactive agencies services Pay-for-results In-house agencies Media planning research Promotion agencies: Direct marketing and database agencies E-Commerce agencies Event planning Design firms Public relations firms Sales staffing and training firms

External Facilitators Marketing and Production facilitators advertising research Consultants firms Information intermediators Media Organizations And Trade Partners Media Organizations: Interactive media Trade Partners: Broadcast media Support media Wholesalers, distributors, Print media Media conglomerates retailers B-to-B trade communities Internet portals Target Audience(s) Household consumers Business and professional Government and social Trade resellers buyer organizations

Structure of Promotion Industry Producer of Consumer products and services, etc… MARKETERS Manufacturing and Service Firms Trade Resellers Federal, State and Local Governments Social Organizations March of Dimes Nature Conservancy MAKNA Organizations that that buy products to sell to consumers

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Marketer that Relies on Advertising The U.S. Government is a Marketer that Relies on Advertising 2.5

Structure of Promotion Industry (con’t) Grey Global Group, Omnicom Group AGENCIES Advertising Agencies Full Service Agency Creative Boutique Interactive Agency In-House Agency Media-Buying Agency Idea factories Visit http://www.ad4ever.com Gap, Calvin Klein, Revlon do their own in-house work

A German advertising agency with the colorful name "indigo:"

AGENCIES Promotional Agencies Direct Marketing and Database Agencies Fulfillment Centers E-Commerce Agencies Sales Promotion Agencies Consumer Sales Promotion Trade Sales Promotion Event-Planning Agencies Design Firms Logo Design Public Relations Firms Sales, Staffing, Training & Assessment Firms

Marketers Develop Logo Designs that Last, Like this Pillsbury Logo Design Firms Help Marketers Develop Logo Designs that Last, Like this Pillsbury Logo 2.9

AGENCIES Agency Services Account Services Marketing Research Creative & Production Creative Services Production Services Media-Planning and Buying Administrative

AGENCIES (con’t) Agency Compensation Commissions Markup Charges Fee System Pay-for-Results 2.72

Approaches to Determining the Advertising Appropriation All you can afford Pick all that is left after all other relevant allocations have been made. this approach is used by Small fishes (small companies with small budget) or may be by some other firms that are big when they are introducing the new product. This approach is merely an availability oriented budget and unsophisticated. In the competition-matching approach, marketers try to match their major competitors’ appropriations in terms of absolute dollars or to allocate the same percentage of sales for advertising that competitors allocate. 20 20 20 20 18 20 20

Approaches to Determining the Advertising Appropriation Competitive Parity (Matching) Match or base their sales promotion budget to that of the major competitors. The logic attributed to this method is that the collective minds of the companies in the industry probably generate promotion budget that are close to optimal and any departure from the industry norms may lead to promotion war. In the competition-matching approach, marketers try to match their major competitors’ appropriations in terms of absolute dollars or to allocate the same percentage of sales for advertising that competitors allocate. 20 20 20 20 18 20 20

Approaches to Determining the Advertising Appropriation Percent-of-Sales % Used to determine the promotional budget of the company. So they more or less pull certain percentage of the sales made in a fixed period. E.g. last year or for several past years. This decision is more dependent on the current business scenario and current working of the company. It might be that the company may consider just last years sales figures under consideration as they may have made great sales. You may take one year or an average of several this depends on many condition in which the org functions. I. In the percentage of sales approach, marketers multiply a firm’s past sales, plus a factor for planned sales growth or decline, by a standard percentage based on what the firm traditionally spends on advertising and what the industry averages. 19 19 19 19 17 19 19

Approaches to Determining the Advertising Appropriation Objective-and-Task Set the ultimate promotion objectives. That may relate to reach short term sales objectives . These objectives may even relate to introducing a new product, stimulate trial, increasing distribution, etc., within a specified period of time. Determine how much money would be required to fulfill each of these tasks in order to achieve the promotion objectives. If the cost happens to be greater that money available then the objectives should be refined or the funds are made available the contingency reserve or by reducing the budgets of the other promotional activities. Determining the advertising budget I. The advertising appropriation is the total amount of money a marketer allocates for advertising for a specific time period. II. Many factors affect the amount of the advertising appropriation, including size of geographic market, distribution of buyers within the market, type of product advertised, and the firm’s sales volume relative to competitors’. III. Various techniques are used to determine the advertising appropriation. A. In the objective and task approach, marketers initially determine the objectives that campaign is to achieve and then attempt to list the tasks required to accomplish them. Once the tasks have been determined, their costs are added to ascertain the appropriation required to accomplish the objectives. 18 18 18 18 16 18 18

EXTERNAL FACILITATORS Marketing and Advertising Research Firms Consultants Production Facilitators Information Intermediator Trade Partners

EXTERNAL FACILITATORS Marketing and Advertising Research Firms Consultants Production Facilitators Information Intermediator Trade Partners

Broadcast Media Interactive Media Print Media Support Media Media Organizations and Trade Partners Available to Marketers Broadcast Media Interactive Media Print Media Support Media Media Conglomerates Wholesalers, Retailers, B2B Communities, Portals

Media Organizations and Trade Partners Available to Marketers

AUDIENCES Household Consumers Trade Resellers Business and Professional Buyers Government and Social Organizations