2-1 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Chapter 2 Integrated marketing communication: how marketing communication evolved

2-2 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 1.To review the concept of marketing, examining how marketing communications has changed. 2.To introduce and define the concept of integrated marketing communication (IMC). 3.To examine reasons for the increasing importance of IMC. 4.To explore the concept of integration, its different types and the necessity of integrating the whole organisation, not just the marketing communication tools. 5.To examine how IMC has been implemented and the typical barriers to implementation. Learning objectives

2-3 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Tools Marketing evolution IMC as a discipline Integration Relationships and value Marketing mix Advertising Direct marketing Interactive IMC Evolution Sales promotion PR Sponsorship Personal selling Implementation Definition & direction Importance of IMC Barriers Types Integrating the organisation

2-4 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Air New Zealand Nothing to hide campaign

2-5 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Campaign objectives were to :  hold Air New Zealand’s market share  leverage the campaign for retail promotional sales  convey that Air NZ airfare was all-inclusive— unlike the competition  build on the airline’s leadership and innovation credentials  lift Air NZ brand profile in offshore markets, primarily through unpaid media. Air New Zealand Nothing to hide campaign (cont.)

2-6 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Tools Marketing evolution IMC as a discipline Integration Relationships and value Marketing mix Advertising Direct marketing Interactive IMC Evolution Sales promotion PR Sponsorship Personal selling Implementation Definition & direction Importance of IMC Barriers Types Integrating the organisation

2-7 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Marketing: where IMC begins Revised definition of marketing Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients and society at large. Revised definition of marketing Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients and society at large. Traditional definition Marketing is the process of conception, pricing, promotion and distribution of goods, services and ideas. Traditional definition Marketing is the process of conception, pricing, promotion and distribution of goods, services and ideas.

2-8 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Marketing: where IMC begins (cont.) Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients and society at large. AMA, 2007 Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients and society at large. AMA, 2007 Relationships Value co-creation Social impact Exchange

2-9 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Relationships and value Value = Benefits Costs Minus Value refers to the customer’s perception of all the benefits of a product or service weighed against the costs of acquiring and consuming it.

2-10 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Relationship marketing Relationship marketing involves creating, maintaining and enhancing long term relationships with consumers, as well as other stakeholders for mutual benefit.

2-11 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Factors driving shift to relationship marketing Desire for superior value Relationship marketing Relationship marketing Flexible manufacturing processes Advances in IT Demanding customers

2-12 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Value co-creation

2-13 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Value co-creation (cont.)

2-14 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell The marketing mix Customer needs Customer needs Price Promotion Place (distribution) Place (distribution) Product

2-15 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Expanded marketing mix Customer needs Customer needs Product Price Place (distribution) Place (distribution) Promotion Processes People Physical evidence Physical evidence

2-16 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell IMC and the marketing mix

2-17 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Tools Marketing evolution IMC as a discipline Integration Relationships and value Marketing mix Advertising Direct marketing Interactive IMC Evolution Sales promotion PR Sponsorship Personal selling Implementation Definition & direction Importance of IMC Barriers Types Integrating the organisation

2-18 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Evolution of IMC  Companies relied primarily on advertising agencies for guidance.  This led to the dominance of advertising with other marketing communication elements added on as an auxiliary or afterthought.  Many marketers built barriers around promotional functions.  Recognising the need to integrate all elements of the communication mix, marketers developed the concept of IMC to present a consistent image.

2-19 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Fragmented approach to marketing communication Point of purchase Publicity Public relations Direct marketing Special events Packaging Sales promotion Media Adver- tising Interactive marketing Direct response

2-20 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Coordinated IMC approach Point of purchase Publicit y Interactive marketing Public relations Direct marketing Special events Packaging Sales promotion Direct response Media advertising

2-21 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Consumer evolution Many market-related factors have contributed to the rise of IMC, including:  demographics  lifestyles  media usage  purchasing habits

2-22 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Axe Wake up campaign

2-23 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Agency evolution Many industry factors contributed to the rise of IMC, including:  increasing professionalism of sales promotion, direct marketing and PR  competition between advertising agencies and specialist communications service providers  clients expectations that agencies offer a broader range of services  marketers redefining their activities in a more strategic and coordinated manner  consumer’s perceptions of brands as a synthesis of the bundle of messages received or contact points with a brand.

2-24 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell IMC defined A concept of marketing communications planning that recognises the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines—for example, general advertising, direct response, sales promotion, and public relations—and combines these disciplines to provide clarity, consistency, and maximum communications impact. American Association of Advertising Agencies (4As) A concept of marketing communications planning that recognises the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines—for example, general advertising, direct response, sales promotion, and public relations—and combines these disciplines to provide clarity, consistency, and maximum communications impact. American Association of Advertising Agencies (4As)

2-25 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell IMC defined Integrated marketing communication is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communications programs over time with consumers, customers, prospects, employees, associates and other targeted relevant external and internal audiences. The goal is to generate both short-term financial returns and build long-term brand and shareholder value. Don Schultz, North Western University Integrated marketing communication is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communications programs over time with consumers, customers, prospects, employees, associates and other targeted relevant external and internal audiences. The goal is to generate both short-term financial returns and build long-term brand and shareholder value. Don Schultz, North Western University

2-26 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell A contemporary perspective of IMC IMC Recognised as a strategic business process Multiple relevant audiences Demand for accountability & measurement of outcomes

2-27 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell My type of IMC

2-28 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Reasons for the growing importance of IMC Limited internet availability Widespread internet availability Marketer-control over information Consumer demand for timely information and entertainment Media advertising Multiple forms of communication Mass media Specialised media Manufacturer dominance Retailer dominance General focus Database marketing Low agency accountability Greater agency accountability FromToward

2-29 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Tools Marketing evolution IMC as a discipline Integration Relationships and value Marketing mix Advertising Direct marketing Interactive IMC Evolution Sales promotion PR Sponsorship Personal selling Implementation Definition & direction Importance of IMC Barriers Types Integrating the organisation

2-30 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Integration Integration is a management process that can be both a functional task of coordination, as well as a strategic tool. Message (tactical) Message (tactical) Types of integration Types of integration Strategic

2-31 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Types of integration

2-32 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Integration continuum At one end of the continuum, audiences receive mixed or incorrect messages (dysfunction). At the other end, the combined effect of all messages adds value (synergy). Dysfunction Synergy ????

2-33 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Message integration Message integration is about verbal and visual consistency. Achieving message integration Achieving message integration Logo Colour Theme line Message consistency Common tone Shared consistency

2-34 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Strategic integration Strategic integration brings together all the elements of the IMC mix. Achieving strategic integration Achieving strategic integration Corporate mission Common objectives Multiple communications disciplines Shared budget Strong leadership Cross-functional teams Multiple audiences Coordination

2-35 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell IMC integration

2-36 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Tools Marketing evolution IMC as a discipline Integration Relationships and value Marketing mix Advertising Direct marketing Interactive IMC Evolution Sales promotion PR Sponsorship Personal selling Implementation Definition & direction Importance of IMC Barriers Types Integrating the organisation

2-37 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell IMC implementation

2-38 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell IMC practices

2-39 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Barriers to implementation Absence of measurement tools Lack of database development Multiple agencies Organisational barriers Organisational barriers “Silo” structures “Turf” battles Lack of expertise

2-40 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Tools Marketing evolution IMC as a discipline Integration Relationships and value Marketing mix Advertising Direct marketing Interactive IMC Evolution Sales promotion PR Sponsorship Personal selling Implementation Definition & direction Importance of IMC Barriers Types Integrating the organisation

2-41 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell IMC audience contact tools Target audience Broadcast media (TV/radio) Print media (newspapers, magazines) Public relations/ publicity Internet/ interactive Direct marketing Direct marketing Sales promotion Product placements Events and sponsorship Word-of-mouth POP (displays, packaging) POP (displays, packaging) Personal selling Out-of-home media

2-42 Copyright  2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Summary and conclusions  Marketing activities involve combining the four controllable elements of the marketing mix into a comprehensive program.  IMC involves combining the elements of the promotional mix in an integrated manner.  Integrating IMC involves both tactical and strategic integration.  IMC tools include: advertising, sales promotion, public relations, sponsorship, personal selling and other relevant communications activities.