1 The Communications Process & The Marketing Mix Sunarto Prayitno

2 The Special Feature of Marketing Communications Marketing communications is a systematic relationship between a business and its market in which the marketer assembles a wide variety of ideas, designs, messages, media, shapes, forms, and colors, both to communicate ideas to, and to stimulate a particular perception of products and services by, individual people who have been aggregated into a target market.

3 The Special Feature of Marketing Communications The result of this process of assembling is referred to by marketers as the communications mix, and this is what is seen, heard and hopefully understood by the customers in the market. To assembles this mix, the marketer uses a number of marketing communications tools: personal selling, advertising, sales promotion, public relations, direct marketing and marketing design and much more.

4 Direct and Indirect Benefits Each marketing communications tool will convey either direct or indirect benefits, and will be used to communicate to the customers either close to where the buying decision is made, or at a distance away from where the buying decision is made.

5 Direct and Indirect Benefits Direct tools convey direct benefits, indirect tools convey indirect benefits. A direct benefit is the main reason why the customer buys, and for this reason, direct benefits are usually communicated by the most powerful communications tools: advertising and personal selling. An indirect benefit is some ancillary want which can also be fulfilled by purchase, but it is never the main reason why the customer buys. These indirect benefits are conveyed by the less powerful communications tools: sales promotions, public relations and marketing design.

6 Direct and Indirect Benefits Direct Tools Indirect Tools Distance from the buying point Advertising Public Relations Sponsorship Corporate Identity Close to or at the buying point Personal Selling Point-of-sale promotions Other sales promotions Close to and/or distant from the buying point Direct marketing and promotions (Exhibition) Direct-mail Offers (Database marketing) Design (Packaging, Brand Signatures, and Corporate Identity) Word-of-Mouth The relationship of marketing communications tools to distance from buying point

7 Closeness to the Buying Decision Some communications tools, such as personal selling and point-of-sale promotions, are used at or close to where the customer makes their decision to buy. In personal selling, the communication is an interactive one between a salesperson and a prospect, in which the salesperson seeks to impose a predetermined pattern of personal communication on the prospective buyer.

8 Closeness to the Buying Decision This pattern will vary slightly from one organization to another, depending on the attitude of the sales manager, but will always include the seven Ps of selling: –Prospecting (looking for potential customers). –Preparation (objective setting, customer research, etc.). –Presentation (demonstration, discussion). –Possible problems (handling objections). –‘Please give me an order’ (closing the sale or getting the order). –Pen-to-paper (record the details accurately). –Post-sales services (building a continuing relationship).

9 Closeness to the Buying Decision Since the Second World War, as the marketing has been progressively adopted in business, the role of personal selling to the consumer-buyer has declined, and is now used mainly in industrial or business-to-business marketing. Now much consumer marketing is thus dependent on non-personal selling techniques called merchandising, in which the store layout, the design of the product packaging, and the position of product on the shelves are the main factors in achieving sales.

10 Closeness to the Buying Decision Point-of-sale communication are of two kind: Incentives on the shelf or pack attached to goods on display. These encourage the customer to try a new product or experiment with a change of brand, and include price-off offers, more for same price, and banded offers. Point-of-purchase advertising. This consists of advertising messages created and displayed at the point where the customer pays for the goods, usually at or close to a till or check-out. They include box-talkers, shelf-talkers, and special display stands with promotional messages on them.

11 State of Mind of the Customer Just as it is important that the communication takes place within the overlap of the fields of perception, the area of common understanding between the marketer and the customer, it is also necessary for the marketer to recognize that there are different ways in which customers will assess the communication and then decide how to respond to it. While all customers are unique, there are four typical types of customer each of whom will have a different way of assessing a marketing communications and responding to it. There are: the learning customer, the self-justifying customer, the routine customer, and the professional customer.

12 State of Mind of the Customer 1. The Learning Customer: Some customers become highly involved in a buying decision, looking at a wide range of alternatives, developing detail information on them, and comparing prices and method of payment. This is usually the case with purchases which for the customer are infrequent, high cost and when there are many alternative products in the market all with significantly different features. Gathering information and evaluating it will be important for this customer, who will become highly involved in detail and who will see significant risk in making their choice.

13 State of Mind of the Customer Buying Problem KnowingsFeelingsAction Learning Customers: Stages in the buying readiness process

14 State of Mind of the Customer These customers are learning about their buying problem as they progressively solve it. They spend a great deal of time, effort and thought on the purchase, and are therefore called high-involvement customers. Effective marketing communications should therefore provide technical detail, for which newspaper and magazine will be the best media. Sales staff, particularly in retailing, should be trained to spot this learning customer and to assist them in making a firm choice. These customers are also likely to rely on the advice of friends and will eventually advise other friends, so messages should be designed to achieve multi-step communication.

15 State of Mind of the Customer 2. The Self-Justifying Customer: Some customers make up their minds fairly quickly, especially when there is little differentiation between products and brands available. Festinger (1957) developed his hypothesis of cognitive dissonance to explain that this type of customer buys quickly and then evaluates the purchase. If the product turns out to have features or qualities which are not what the customer expected or which the customer did not want, they will adjust their original expectations to fit the features and qualities of what they have bought. The dissonance between what they expected and what they have got is reduced by this adjustment.

16 State of Mind of the Customer This customer buys quickly because they assume that they know the products available, then develop ways of confirming that perception of themselves, and finally acquire the knowledge to support that perception. Marketing communications again need to supply technical detail for this type of customer, but with messages designed to encourage the customer to evaluate the product in specific ways that help them to justify the purchase.

17 State of Mind of the Customer Buying Problem ActionFeelingsKnowings Self-Justifying Customers: Stages in the buying readiness process

18 State of Mind of the Customer These customers can play an important role in word-of- mouth communication as they will need to express their self-justification, and messages should be designed to turn these customers into key steps in multi-step communication. Brand advertising will support self-justification and will help to build brand loyalty for repeat purchase.

19 State of Mind of the Customer 3. The Routine Customer: Most purchases which people make are routine – buying a light bulb, selecting a pack of breakfast cereal, taking clothes to dry-cleaners. These are not generally risky decisions as the products or services are very similar and are therefore said to have low differentiation. Event with brands which are routinely selected, say as part of the weekly grocery shopping, the customer choice is out of habit rather than because of brand loyalty.

20 State of Mind of the Customer Routine customers have low involvement in their buying decisions, partly because it is a routine choice which does not involve searching for information, and partly because there is little differentiation between products and brands in the market other than the design of the packaging. Marketing communications therefore need to focus on supporting this routine, reminding the customer that the brand is still there and providing simple reasons why that brand should remain part of the customer’s routine.

21 State of Mind of the Customer Packaging design is important in the communications mix as it helps the customer to recognize the brand on the shelf and save time comparing different brands. Television advertising using short, frequently repeated messages will reinforce routine. This routine customer can be induced to switch brand using sales promotions, point-of-sales promotion, on- pack offers, and competition.

22 State of Mind of the Customer Buying Problem KnowingsActionFeelings Routine Customers: Stages in the buying readiness process

23 State of Mind of the Customer Merchandising is therefore important, and part of the marketing communications planning should involve negotiating with distribution channel for high-impact shelf-facings for the brand to maximize the communication to the customer from the supermarket shelf. For the same reason, the design of the packaging should be reviewed regularly to ensure that it maintains a distinctly different image from that of competing brands, so that the customer can recognize it easily and at a distance.

24 State of Mind of the Customer 4. The Professional Customer: Most organizations have professionally trained buyers who manage their procurement budgets, negotiate supply contracts and manage the flow of components, goods and services into their factories and offices. These are the professional buyers, the main point of contact for sales representatives involved in business-to- business or industrial marketing.

25 State of Mind of the Customer So sometimes the professional buyer is buying a similar way to the learning customer, and sometimes they are operating like a routine customer. When they are reviewing and negotiating an annual supply contract, they are high involved, as the outcome can be critical to the manufacturing and market performance of their company, and they will develop a detailed analysis of alternative suppliers and products.

26 State of Mind of the Customer When negotiating a supply contract KnowingsFeelingsAction Professional Customers: Stages in the buying readiness process Routine buying from an established supply contract ActionKnowingsFeelings

27 State of Mind of the Customer Professional buyers therefore follow two different sequences of stages in the buying-readiness process. When they are finding new or reviewing existing suppliers, they first search for information and then negotiate with sales representatives before awarding a supply contract. When they are buying from existing suppliers under an existing contract they first place the order, then evaluate the supplier after they have received information about how the order has been met by the supplier.

28 Hierarchy of Effects Models The three stages in the customer’s response – knowings, feeling, and action – have been used in models of the marketing communication response process since the 1920s. Whatever the end result required by the marketer, the customer will go through these stages of response to the marketing communication, and each stage will be the logical outcome of the stage preceding it, like a hierarchy of related levels in organization.

29 Hierarchy of Effects Models For this reason, this process of the customer passing through stages of gradually developing response to marketing communications is referred to as the hierarchy of effects concept (Lavidge and Steiner, 1961). A variety of models of this concept has been developed over the past 70 years, mainly derived from attempts to measure advertising effectiveness, and a summary of the more well-known models is shown in the next.

30 Awareness StagesAIDA Model Hierarchy of Effects Model Innovatio n Adoption Model DAGMAR Model Howar & Sheth Model Information Processing Model Cognition Stage AttentionAwareness Knowledge AwarenessUnawareness Awareness Comprehension Attention Compehension Presentation Attention Comprehension Affection Stage Interest Desire Liking Preference Conviction Interest Evaluation Conviction Attitude Yielding Retention Behavioral Stage ActionPurchase Trial Adoption Action Intention Purchase Behavior EK Strong (1925) Lavidge & Steiner (1961) EM Rogers (1961) RH Colley (1961) Howard & Sheth (1969) Hofacker (2000) Hierarchy of Effects Models

Intellectual Property of IMCS 31 The Foote, Cone & Belding (FCB) Grid ThinkingFeeling High Involvement 1. Informative (thinker) Car-house-furnishings- Car-house-furnishings- new products new products Model: Learn-feel-do (Economic?) (Economic?) 2. Affective (feeler) Jewelry-cosmetics- Jewelry-cosmetics- fashion apparel- fashion apparel- motorcycles motorcycles Model: Feel-learn-do Model: Feel-learn-do (Psychological?) (Psychological?) Low Involvement 3. Habit formation (doer) Food-household items Food-household items Model: Do-learn-feel Model: Do-learn-feel (Responsive?) (Responsive?) 4. Self-satisfaction (reactor) (reactor) Cigarettes-liquor-candy Cigarettes-liquor-candy Model: Do-feel-learn Model: Do-feel-learn (Social?) (Social?)

32 Different Times to Respond to Each Communications Tool Some marketing communications tools will cause a measurable response in a market in a short period of time like personal selling. Other tools have a drip-feed effect, difficult to isolate and measure, over a much longer period, like public relations. The time taken for the different marketing communications tools to have an effect in the market will vary.

33 Different Times to Respond to Each Communications Tool Those tools which operate close to where a customer makes a buying decision such as an effective retail sales assistant or a price-off promotion in a shop, will have an immediate effect on sales, as the customer is generally in a situation where they wish to buy and can be guided through their choice. Other tools, such as advertising and public relations, which operate at a distance in time and place from the point where the buying decision is made, are less likely to have an immediate effect as they reach the customer when they are not in buying situation and are often messages which are intended to support and develop awareness of the brand rather than cause immediate buying activity.

34 Different Communications Mixes for Different Markets The ways in which marketing communications mixes are assembled will vary according to the type of market targeted. In business to business or industrial marketing, the salesforce normally has the major role, supported by exhibitions and database direct communications. Advertising is only a small proportion of the industrial marketer’s communications budget. With consumer brands, the reserve is true – advertising will generally take the larges share of the communications budget, supported by sales promotions.

35 Different Communications Mixes for Different Distribution Channel Strategies When a new product is launched, one of the most important tasks of the marketer is to get the product or service into distribution. That means promoting to the intermediaries in the distribution channel. This is called a push strategy, as it is forcing the product down the channel with personal selling, discounts, and special deals. Retailers will want to be reassured that an eventual pull strategy will follow.

36 Different Communications Mixes for Different Distribution Channel Strategies Once the product is being stocked by these intermediaries, the task of the marketer changes, and the communications mix is redirected towards the end customer, to attract them into the shop to purchase the product. This is called a pull strategy, and it will required a shift in the communications mix towards mass advertising, sales promotions, and point-of-sales promotions. Whichever strategy is being used, it is important to integrate the marketing communications mix with the other elements of the strategic marketing mix.

37 Main Elements of Push and Pull Strategies Pricing Target Market Product Push Strategy WholesalersRetailers Personal Selling Differentiate by Packaging Discounting to Channel Pull Strategy End User End Buyers AdvertisingSalesPromotionsPoint-of-Sale Differentiate by Brand Market-Based Pricing Marketing Communications