CH-1-4 Integrated Marketing Communications – Advertising and Promotion: An Integrated Marketing Communications Perspective : Chapter Notes

This Document Contains Chapters 1 to 4 Chapter 1 Integrated marketing communications Chapter Overview The purpose of this opening chapter is to provide the student with an overview of the field of advertising and promotion. The first section summarizes the content of promotional messages as it reviews how marketing communication is used to convey the marketing mix. The elements of the promotional mix are introduced and a brief overview of the kinds of firms involved in promotion is highlighted. This chapter introduces the concept of integrated marketing communications (IMC) and discusses its evolution, a renewed perspective, and importance. Most marketers understand the value of strategically integrating the various communication functions rather than having them operate autonomously and so the depth of these topics provide a foundation of the emerging IMC trend.. A model of the IMC planning process is examined that gives direction for the content of a promotional plan. Finally, we describe the perspective and organization of the text that is consistent with the planning process. Learning Objectives 1. Describe the importance of marketing communication within the marketing mix. 2. Identify the tools of the promotional mix - advertising, sales promotion, public relations, direct marketing, Internet marketing, and personal selling – and summarize their purpose. 3. Illustrate the concept of integrated marketing communications (IMC) by considering its evolution, renewed perspective, and importance. 4. Explain the IMC planning process and express the steps in developing a marketing communications program. 5. Identify how the IMC planning process is continued throughout all chapters. Chapter and Lecture Outline I. MARKETING COMMUNICATION Many students may already have had a marketing course; however, it is still helpful to define marketing and stress that it involves more than just selling or other promotion functions. Previously, the American Marketing Association defined marketing as: the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. The description of marketing should include a discussion of the activities involved in the marketing process and its role and importance in different types of companies including both profit and nonprofit organizations. It is important to stress that each element of the marketing mix is multidimensional in nature and includes a number of decision areas. This reminder leads the way to defining the text’s scope. In discussing the marketing mix, it should be highlighted that marketing communication is responsible for drawing attention to product, price and distribution elements in the message received by the audience. A Communicating Product—an organization exists because it has a product, service, idea or cause to offer. Discussion can focus on the value offered by the product and the fact that goods and services offer attributes and benefits that satisfy not only functional but social and psychological needs as well. Communication for brand identification is important with respect to brand name, brand logo, band tag-line and packaging. As some of the text exhibits illustrate, the focus of many ads are to identify the brand characteristics clearly to encourage recognition at the point of purchase where many decision are made. Communicating all facets of the product is expected to contribute to brand equity; an intangible asset of added value or goodwill that results from the favorable image, impressions of differentiation, and/or the strength of consumer attachment to a company name, brand name, or trademark. A discussion of the overall assessment of brand can ensue with reference to the data in the brand exhibits. B Communicating Price—the price variable of the marketing mix refers to what the consumer must give up in exchange for a product or service. Marketing managers must be concerned with establishing a price level, developing pricing policies and monitoring consumers’ and competitors’ reactions to price in the marketplace. From a marketing communication standpoint, price is often a key piece of information in an ad or is the main selling message. C Communicating Distribution—marketing channels or the place element of the marketing mix refers to the set of interdependent organizations involved in the process of making a product or service available to customers. In discussing the latter, the importance of resellers in marketing and promotional strategy should be introduced. Attention should be given to the need to develop promotional programs for the trade or resellers to encourage them to stock and promote a product. II. THE PROMOTIONAL MIX Promotion is defined as the coordination of all seller-initiated efforts to set up channels of information and persuasion to sell goods and services or promote an idea. It should be noted that promotion is best viewed as the communication function of marketing as most of an organization’s communication with the marketplace takes place through a carefully planned and controlled promotional program that utilizes elements of the promotional mix. The promotional mix should be defined as the tools or elements that are used to accomplish an organization’s objectives. The role and function of each promotional mix element in the marketing program can be discussed along with its advantages and disadvantages. A. Advertising—any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor. Advantages of advertising: • cost-efficient way for communicating, particularly with large audiences • cost-effective communication if audiences process the message and the message is appropriate for that audience • valuable tool for creating and maintaining brand equity by creating images and symbolic appeals and for differentiating similar products • encourage online interaction with the brand • flexible tool for all sorts of products, situations, and audiences • advertising occurs in all domains; consumer markets including national, retail/local and direct-response advertising, and, business and professional market including industrial, professional and trade advertising. • opportunity to leverage popular advertising campaigns into successful IMC programs which can generate support from retailers and other trade members • ability to control the message (what, when and how something is said and where it is delivered) Disadvantages of advertising: (not in the text) • the cost of producing and placing ads can be very high, particularly television commercials • it can be difficult to determine the effectiveness of advertising • there are credibility and image problems associated with advertising • the vast number of ads has created clutter problems and consumers are not paying attention to much of the advertising they see and/or hear B. Sales Promotion—marketing activities that provide extra value or incentive to the sales force, distributors, or the ultimate consumer and can stimulate immediate sales. Sales promotion is generally broken into two major categories: consumer and trade activities. Advantages of sales promotion: • provides extra incentive to consumers or trade members to purchase or stock/promote a brand • way of appealing to price sensitive consumer • way of generating extra interest in product or ads • effects can often be more directly measured than those of advertising • can be used as a way of building or reinforcing brand equity Disadvantages of sales promotion: • companies may become too reliant on sales promotion and focus too much on short-run marketing planning and performance • some forms of sales promotion do not help establish or reinforce brand image and short-term sales gains are often achieved at the expense of long-term brand equity • problems with sales promotion clutter as consumers receive many coupons, contests, sweepstakes and other promotional offers • consumers may become over-reliant on sales promotion incentives which can undermine the development of favorable attitudes and brand loyalty. • in some industries promotion wars may develop whereby marketers sales promotion incentives extensively which results in lower profit margins and makes it difficult to sell products at full price It is important to address the potential terminology problem concerning the use of the terms promotion and sales promotion. In this text the term promotion represents an element of the marketing mix by which firms communicate with their customers and includes the various promotional mix elements. However, many marketing and advertising practitioners use the term promotion in reference to sales promotion activities. We use the term promotion in the broader sense. When discussing sales promotion activities, we are referring to this one specific element of the promotional mix. C. Public Relations—a management function which evaluates public attitudes, identifies the public policies and procedures of an individual or organization with the public interest, and executes a program of action to earn public understanding and acceptance. Publicity—nonpersonal communications about an organization, product, service, or idea that is not directly paid for nor run under identified sponsorship. The distinction should be made between publicity and public relations noting that public relations generally has a broader objective than publicity, as its purpose is to establish and maintain a positive image of the company among its various publics. Many of the advantages and disadvantages of advertising pertain to public relations. Publicity is an important communication technique used in public relations, however other tools may also be used. Advantages of publicity: • credibility of publicity is usually higher than other forms of marketing communication • low cost way of communicating • often has news value and generates word of mouth discussion among consumers Disadvantages of publicity: • lack of control over what is said, when, where and how it is said • can be negative as well as positive D. Direct Marketing—a system of marketing by which organizations communicate directly with target customers to generate a response and/or a transaction. Direct marketing has become such an integral part of the integrated marketing communications program of many organizations and this text views it as a component of the promotional mix. Advantages of direct marketing: • changes in society have made consumers more receptive to the convenience of direct-marketed products • allows a company to be very selective and target its marketing communications to specific customer segments • messages can be customized to fit the needs of specific market segments • effectiveness of direct-marketing efforts are easier to assess than other forms of promotion Disadvantages of direct marketing: • consumers and businesses receive unsolicited communication which makes them less receptive to direct-marketing • direct marketing has image problems • problems with clutter as there are too many direct-marketing messages competing for consumers’ attention E. Internet Marketing—interactive media allow for a back-and-forth flow of information whereby users can participate in and modify the content of the information they receive, usually via the Internet. While the most prevalent perspective on the Internet is that it is an advertising medium, it is actually a medium that can be used to communicate other elements of the promotional mix including sales promotion, direct marketing, and public relations. Advantages of internet marketing: • can be used for a variety of integrated marketing communication functions including advertising, direct marketing, sales promotion, public relations and selling • can be used to target very specific groups of customers with a minimum of waste • messages can be tailored to appeal to the specific interests and needs of the target audience • a higher degree of customer involvement when customers are visiting a web site due to its interactive nature • possible to provide customers with a great deal of information regarding product and service descriptions and specifications, purchase information and more • tremendous creative potential as a well-designed web site can attract a great deal of attention and interest among customers and be an effective way to generate interest in a company as well as its various products and services. Disadvantages of internet marketing: • concern that the Internet as an advertising medium as many Internet users do not pay attention to banner ads and the click-through rate on most is extremely low. • clutter on the Internet which makes it difficult for advertising messages to be noticed and/or given attention. • audience measurement for the Internet is still a problem as is measuring the effectiveness of banner ads and other promotional messages on the Internet. F. Personal Selling—direct person to person communication whereby a seller attempts to assist and/or persuade prospective buyers to purchase a company’s product or service or act on an idea. Advantages of personal selling: • direct contact between buyer and seller allows for more communication flexibility • can tailor and adapt message to specific needs or situation of the customer • allows for more immediate and direct feedback • promotional efforts can be targeted to specific markets and customers who are best prospects Disadvantages of personal selling: • high cost per contact ($155 to $300, depending on the industry) • expensive way to reach large audiences • difficult to have consistent and uniform message delivered to all customers G. Participants—the organizations that participate in the integrated marketing communications process are shown to give an introduction to various industry members and their responsibilities. However, marketers are also looking for agencies that can offer a range of integrated marketing communication capabilities to their clients and help them compete in the rapidly changing world of advertising and promotion. The student should become familiar with the various players including clients, advertising agencies, media organizations, marketing communications specialist organizations and those who provide collateral services. It is particularly important to note that with the movement toward IMC, marketing communication specialist organizations such as direct response agencies, sales promotion agencies, public relations firms and interactive agencies are playing an increasingly important role in the promotional process. III. INTEGRATED MARKETING COMMUNICATIONS The transition from traditional promotional management to IMC planning has evolved over time with different interpretations regarding the change. These three sections provide background information to illustrate the new perspective, however the debate highlighted in the second section can potentially fuel a student debate. A. The Evolution of IMC—marketers previously built strong barriers around marketing and promotional functions, planning and managing them separately with different budgets, different views of the market and different goals and objectives. In the 1990s, companies moved toward integrated marketing communications (IMC), which involves coordinating the various promotional elements along with other marketing activities that communicate with a firm’s customers. Subsequently, marketers asked their ad agencies to coordinate the use of promotional tools rather than relying primarily upon media advertising. Agencies responded by acquiring public relations, sales promotion, direct marketing firms, and interactive agencies and touting their capability to meet all of their clients’ IMC needs. Companies also looked beyond advertising agencies and used other types of promotional specialists to develop and implement components of their promotional plans. A task force from the American Association of Advertising Agencies (4As) developed one of the first definitions of integrated marketing communications. 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-for example, general advertising, direct response, sales promotion, and public relations- and combines these disciplines to provide clarity, consistency, and maximum communications impact. B. Renewed Perspective of IMC—One leading IMC scholar suggests that IMC has reached the stage of being a strategic business process due to multiple audiences for communication and demands placed upon marketing communication to measure its outcomes clearly for accountability. This point raises the issue as to whether IMC is legitimately a new concept and business activity or new terms to describe previous promotional practices. Instructors can allow for debate on this point, although students may not appreciate the subtly of the issue early in the course. C. Importance of IMC—companies can no longer be tied to a specific communication tool; rather they should use whatever contact methods offer the best way of delivering the message to their target audiences. A successful IMC program requires that a firm find the right combination of promotional tools and techniques and coordinate their use. There are a few reasons why IMC has become very important for most firms: • Audience Contacts—An IMC perspective encourages planners to consider a variety of target audiences for the organization in which certain tools may be more appropriate than others for delivering the most relevant message. • Consumer’s point of view—as a marketer, it is important to keep concepts distinct to allow communication with other people within an organization when making decisions. However, consumers do not distinguish between various forms of persuasive communication-many promotional tools appear as “advertising-like” messages. • Relationship marketing—the focus of market-driven companies is on developing and sustaining relationships with their customers. This has led to an emphasis on relationship marketing, which involves creating, maintaining, and enhancing long-term relationships with individual customers as well as other stakeholders for mutual benefit. Marketers are giving more attention to the lifetime value of a customer because studies have shown that reducing customer defections can increase future profit. • Consumer adoption of technology and media—the growth of the internet with many different interactive experiences, expanded media vehicle alternatives through cable/satellite television, the explosion of mobile devices, and many other alternatives has led to new promising avenues for marketing communication. These trends fuel the need for planners to consider all avenues for marketing communication in face or reaching many target audiences. • Planning efficiency and effectiveness—IMC planning is expected to contribute to better overall marketing communication plans that lead to more efficient media spends. Will various agencies and personnel involved all specialists contribute to the decisions. IV PLANNING FOR INTEGRATED MARKETING COMMUNICATIONS Promotional management involves coordinating the promotional mix elements to develop a controlled and integrated program of effective marketing communication. It involves various decision areas such as: • which promotional tools to use and how to combine them effectively • determining the size of and distributing the advertising and promotional budget across the promotional mix elements • determining the influence of various factors on the promotional mix including the product type, target market, buyer decision process, stage of the product life cycle, and channels of distribution It is useful to explain the Integrated Marketing Communications Planning Model presented in Figure 1-7. The steps are as follows: • Review the Marketing Plan • Assess the Marketing Communications Situation • Determine IMC Plan Objectives • Develop IMC Programs • Implement and Control the IMC Plan V IMC PLANNING: ORGANIZATION OF TEXT This begins a continuing reprise throughout the book as a concluding section for all a chapters to illustrate how some of the content can be applied to IMC planning. To illustrate the approach, Chapter 1 describes how the book is organized around the planning framework presented in Figure 1-7. Teaching Suggestions This initial chapter is designed to provide students with an overview of advertising and promotion, and a brief look at the role of promotion in the marketing mix. It is important to define the six elements of the promotional mix, discuss their role as marketing communication tools, and discuss their advantages and limitations. Our view of the promotional mix goes beyond the traditional communication tools of advertising, sales promotion, public relations and personal selling as we include direct marketing and Internet marketing. Direct marketing and the Internet are now common methods by which marketers communicate with their target audiences and we feel they are best viewed as distinct IMC tools. You should introduce the concept of integrated marketing communications and discuss its evolution. It is important to review the various factors that underlie the adoption of an IMC approach to advertising and promotion by many companies. You might also spend some time discussing the pros and cons of IMC. Although we advocate the IMC approach in this text, not everyone agrees with it. An excellent discussion of the arguments on both sides of this issue is presented in a report of the Task Force on Integrated Communications prepared by Tom Duncan, Clarke Caywood and Doug Newsom titled Preparing Advertising and Public Relations Students for the Communications Industry in the 21st Century. A copy of this report can be obtained by contacting the Association for Education in Journalism and Mass Communication at the University of South Carolina in Columbia, South Carolina. During an introductory lecture there is latitude to discuss issues and aspects concerning each promotional mix variable. For example, various perspectives regarding advertising such as its social and economic effect might be noted along with common complaints and criticisms of advertising. We do not suggest going into a detailed discussion of these charges at this early stage of the course. We feel that students are best able to evaluate and appraise various arguments for and against advertising and other promotional mix elements toward the end of the course. Thus, the final chapter evaluates the regulatory, ethical, social and economic aspects of advertising. We feel that it is important in either the first or second lecture to cover the integrated marketing communications planning model in some detail. This text is built around this model and it provides the student with the “big picture” as to the decision sequence and various considerations involved in the development of an advertising and promotional program. It is also important to communicate to students that advertising and promotion management is a process. A great deal of internal and external analyses, as well as the coordination of the promotional mix elements, is required to develop an effective program of marketing communications that can be integrated into an organization’s overall marketing strategy. Vignette 1. Why would consumers accept this approach for communicating food quality? McDonald’s approach with digital media is an example where a major brand exterted greater control of message delivery after experiencing difficulties with its initial social media experiences. By addressing consumers’ questions, McDonald’s directed the content of its message in a way that attempted to clearly focus on the quality of the food, something it had done significantly for a considerably time period. It also attempted to reinforce its brand by showing that it practiced marketing honestly and ethically with its truthful behind-the-scenes stories. These two ideas present higher involvement methods of encouraging the target audience to accept that McDonald’s was in fact an authentic food marketer; something that might have been difficult to achieve with previous low-involvement messages. 2. Do the results highlighted indicate a successful or unsuccessful campaign? This question gets students thinking about all the decisions a promotional planner faces on a regular basis and whether the decision are effective or not. It provides the instructor an opportunity to review the IMC tools and allow an open interpretation regarding effectiveness. One could believe that 8 million YouTube hits is good, about 25% of Canada which suggest very significant reach, although some hits could come from other locations and may be multiple views of some frequent visitors. The amount of processing; 4.5 minutes and the reading of 12 questions imply substantial message exposure compared to what might occur with TV ads. IMC Perspective 1-1 1. Explain why one of the four marketers was most successful. All four managers are clearly successful having been recognized by Strategy Magazine. The objective of this perspective is to illustrate the jobs marketers who are responsible for marketing communication decisions to students as part of their career aspirations. Students will likely form an opinion on the types of decisions made or the nature of the business. An important criteria to reinforce is that students should try to make a link of the decisions to how they might have been most effective. This chapter begins the idea permeating the book that it is important to understand how all marketing communication decisions are evaluated for effectiveness.. IMC Perspective 1-2 1. Why would digital communication tools be a useful source of information for food consumers? For many consumers, food is a high involvement decision since it affects long-term health and nutrition; consumers would be interested in uncovering the actual ingredients among other things. Additionally, consumers look to have greater connections with food brands since they part of their everyday lives and would presumably be more interested in participating in public relations activities or sales promotions via instant internet communication. Chapter 2 Organizing for integrated marketing communications Chapter Overview The purpose of this chapter is to familiarize the student with the ways that organizations organize for purposes of developing and executing integrated marketing communications programs. A description of the role and functions of advertising agencies is provided, as is an explanation of how agencies are compensated and evaluated. The chapter also discusses organizations that provide specialized integrated marketing communication services including direct-response, sales promotion and interactive agencies as well as public relations firms. It is important for students to understand that a variety of different organizations may play a role in the development of a company’s IMC program. Learning Objectives 1. Identify the role of the advertising agency and the services it provides. 2. Describe methods for compensating, and evaluating advertising agencies. 3. Contrast the role and functions of specialized marketing communications organizations. 4. Evaluate the perspectives on the use of integrated services across agencies or within one agency, and agency-client responsibilities and partnerships. Chapter and Lecture Outline I. ADVERTISING AGENCIES A. Advertising Agency Decision Companies can employ the services of an external advertising agency or use an in-house agency. 1. In-House Agency —companies set up their own internal ad agencies. The design varies from as small as an advertising department to as large as an external agency. In the latter case, the in-house agency will operate as a separate entity and control advertising and promotional expenditures in millions of dollars. This option is usually chosen so that costs are minimized and control over the agency’s activities is maximized. 2. Advertising Agency —external agencies provide a variety of services to their clients, including those discussed in the previous section. Though clients have the capabilities of performing these roles themselves, they elect to use outside agencies for the following reasons: (1) the skills offered, (2) objectivity and (3) experience. B. Advertising Agency Industry Figure 2-3 captures the state of the major players in the Canadian advertising agency industry. Most agencies are an amalgamation of other agencies like sales promotion, digital, PR etc. and are part of large international consortiums. Not captured in the table are smaller regional or local agencies that remain independent. However, these firms presumably represent a substantial portion of the money spent on agencies. C. Full Service Advertising Agencies These agencies offer their clients a full range of services including account/client services, planning and research services, creative services, digital creative services, production services, media services, , specialized services (e.g., sales promotion, direct, PR, interactive). • Account services—the link between the advertising agency and its clients. Account executives serve as the liaison between the agency and client and are responsible for coordinating the agency's efforts in planning, creating and producing ads. • Planning and research services—many full-service agencies provide a variety of marketing services to their clients and maintain departments such as research, strategy and planning. These departments assist the other services by ensuring that the marketing communication strategy addresses the communication issue accurately. • Creative services—agency personnel in this department include artists and copywriters who are responsible for the creation and execution of the client’s advertising messages. Creative services may also include print and broadcast production departments, which are responsible for actually producing the advertising messages and putting them into final form. Digital creative specialists are now part of many marketing communication plans as customized messages for Internet media may be required. • Production services—dedicated staff may be responsible for the physical development of ads in all or select formats. The traffic department coordinates all phases of production and sees that all ads are completed on time and deadlines for submitting the ads to the media are met. • Media services—the media department is very important since many clients are consolidating their media buying to save money and improve media efficiency. This department analyzes, selects and contracts for media space and time on behalf of clients. • Specialized services—as implied in the term, full-service agencies, provide a variety of additional services to their clients so that a complete IMC plan can be delivered that includes all tools (e.g., sales promotion, PR, direct, digital). Attention should be given to the two types or agency organization structures used by agencies. Under the departmental system each of the agency functions is set up as a separate department and is called upon to perform its specialty for all of the agency’s clients. Agencies can use the group system in which individuals from each department work together as teams to service a particular account. Many clients prefer the group system because agency employees become very familiar with their business and it ensures continuity in servicing the account. II. AGENCY COMPENSATION The services that advertising agencies provide may be compensated in a variety of ways including: A. Commissions from media—the agency is compensated based on the time or space it purchases for its client. The commission is typically 15%. The commission system is criticized since it ties agency compensation to media costs and encourages agencies to rely on commissionable media (i.e., TV) that is more expensive than non-commissionable media. However, some prefer this system because it is easy to administer and forces agencies to compete on bases other than price. Many advertisers have moved to a negotiated commission system that takes the form of reduced percentage rates, variable commission rates and minimum and maximum compensation rates. B. Fee arrangements are of two types: a fixed-fee method where the agency charges a basic monthly fee for all of its services and credits to the client any media commissions earned. Under a fee-commission combination the media commissions received by the agency are credited against the fee. If commissions are less than the agreed-on fee, client must make up the difference. C. Cost-plus agreement—under this compensation method the client agrees to pay the agency a fee based on costs of its work plus some agreed-on profit margin. This system requires the agency to keep detailed records of costs incurred in working on a client’s account. D. Incentive-based compensation—while there are many variations on this system, the basic idea is that the agency’s compensation level will depend upon how well it meets predetermined performance goals for its clients such as sales or market share. Incentive-based compensation E. Evaluation of agencies—given the substantial amounts of money being spent on advertising by many companies, demands for accountability are increasing. The agency evaluation process generally involves two types of assessments—financial audits and qualitative audits. An increasing trend among larger firms is to formalize this process. F. Reasons for Losing Clients—agencies are like their clients in the sense that they must solicit business, and often gain and lose business. The text offers a variety of reasons as to why agencies lose clients. Current issues of Marketing Magazine will be useful in providing the instructor with examples of account changes and the reasons the clients decided to change agencies. III. SPECIALIZED SERVICES In addition to advertising agencies, other outside organizations may provide marketers with specialized services that are important in developing and executing integrated marketing communication programs. A. Creative boutiques—these types of agencies specialize in and provide only advertising creative services. Because of their specialty of creative ideas, clients looks to these types of agencies of new inspiration to portray their brands or for specific messages to more focused target audiences. B. Media buying services—are specialists at working with media companies and packaging offering to clients to meet their media strategy and tactic decisions. C. Sales Promotions Agencies—are companies specializing in sales promotions. Services provided by large sales promotion agencies include promotional planning, creative, research, tie-in coordination, fulfillment, premium design, and contest/sweepstakes management. D. Public Relations Firms—develop and implement programs to manage an organization’s publicity, image, and affairs with consumers and other relevant publics including employers, suppliers, stockholders, government, labor and the general public. E. Direct Response Agencies—provide their clients a variety of services including data base development and management, direct mail, research, media services, and creative and production capabilities. F. Interactive Agencies—develop web sites, kiosks, Internet ads, and other forms of interactive advertising. IV. IMC PLANNING: AGENCY RELATIONSHIPS A trend in the advertising industry is to combine all of the above services under one roof. These one-stop service agencies bring together service providers so that the client needs only to use their firm to receive all of the marketing support s/he requires. Advantages and disadvantages of these arrangements include: A. Integrated IMC Services—It has been argued that IMC is nothing new, particularly in smaller companies and communication agencies that have coordinating promotion tools. The text discusses the advantages and disadvantages of the one-stop shop. 1. Advantages of integrated services: • Greater control of the promotional process allows for more synergy among each of the communication program elements • More convenient for clients to coordinate all promotional efforts with one agency • Agencies with IMC capabilities can create a single image for the client 2. Disadvantages of integrated services: • Synergy and economies of scale are often not achieved by a single agency handling all communication areas • Internal conflicts often arise within various departments within a large agency over areas such as advertising, public relations or sales promotion • Limits client’s ability to take advantage of specialists in various IMC areas B. Agency-Client Responsibility—Another topic covered in this section is whether the client or advertising agency should have the primary responsibility for planning and coordinating the IMC process. Most marketers believe it is their responsibility to set strategy for and coordinated integrated campaigns while agency executives see this as their domain. The major barrier is a lack of people in agencies with the broad perspective and skills needed to make IMC work effectively. Internal turf battles, agency egos, and fear of budget reductions are also cited as major barriers to successful integrated marketing campaigns. C. Agency-Client Partnership—A summary of recent research on the nature of agency-client relationships is presented with a number of survey findings. This material can be selectively used to give an idea as to the present situation. Teaching Suggestions Students are usually unfamiliar with how companies organize for advertising and promotion, and the role that various organizations play in this process. While most students are familiar with advertising agencies, they are less likely to know anything about direct response and sales promotion agencies, public relations firms and interactive agencies. You might note that there are some excellent career opportunities available in these areas. Students are often interested in working for an advertising agency. This chapter will help to familiarize them with other major participants in the IMC process and the important role they play. It is important for the instructor to keep up to date with events that are taking place. Good sources of information on advertising are publications such as Marketing Magazine, Info Presse, Advertising Age, AdWeek, and BrandWeek. You can also access information from these publications online at www.adage.com and www.adweek.com. For excellent articles and sources of information on sales promotion students should be referred to Promo magazine, which can be accessed online at www.promomagazine.com. We suggest that use of the outline provided here be supplemented by additional articles from the media listed above. We have also found strong student interest in identifying which current advertisements have been created by various agencies. Most major agencies have excellent websites that contain client rosters, examples of their advertising, information about their advertising philosophy, approaches to branding and other IMC content. In addition, books written by those in the business on the advertising world are also well received. There are some very interesting books on the advertising industry that could be suggested readings for students. Some of these provide insights into the workings of the advertising world while others discuss the various perspectives that agencies operate from. Some suggestions include: • Rosser Reeves, Reality in Advertising • Alison Fendley, Saatchi & Saatchi, The Inside Story • Kevin Goldman, Conflicting Accounts (The Creation and Crash of the Saatchi & Saatchi Advertising Empire) • David Ogilvy, Ogilvy on Advertising • David Ogilvy, Confessions of an Advertising Man • Eric Clark, The Want Makers • John Oliver, The Image Makers • John O’Toole, The Trouble With Advertising • Martin Mayer, Madison Avenue, U.S.A. Vignette 1. As the owner of Sid Lee, would you sell the agency to a major super agency or retain your independence? This question gets to the heart of the matter regarding an issue that many successful innovators face which is to stay independent and entrepreneurial or become part of big entity and draw upon the resources of a larger organizational structure. The advertising industry, like any other, faces this same issue and the Sid Lee example provides an opportunity to explore this issue in light of other smaller firms going in the direction of selling. Clearly, there is no right answer, but an opportunity to develop arguments as to whether the creativity would continue if it did not remain independent. IMC Perspective 2-1 1. Do you agree that the marketing communication identified by the agencies is worth recognition? This is a relatively simple question in that it reviews the vignette’s facts, whereby DDB is responsible for very innovative creative executions that have led to important and relevant communication and business results. This is consistent with the criteria for winning the Cassies and generally considered the right approach for advertising since it is consistent with the PRB for agency remuneration. An additional key point for students to realize that some of the most creative communication observed in Canada is the work of marketing suppliers (i.e., agencies) and not the actual managers of the products advertisers. While this is relatively elementary of instructors, it is quite illustrative for many unfamiliar students. Students should have no trouble identifying a couple key points for each winner along the lines of uniqueness and clever message for a particular target audience. The question encourages an open-ended debate to generate discussion that hopefully would lead to some consensus on the criteria for selecting creative campaigns. It acts as an entry point for much of the material over the next few chapters and can generate some excitement for the early material in the text and the course. Each snippet gives some idea of originality and allows students to describe how it is unique or how it could help solve a communication problem or take advantage of a communication opportunity. Instructors could look for examples of each of these to round out the discussion. The question is another lead in to the positioning and creativity that is so important in the first half of the text. IMC Perspective 2-2 1. Explain why a media agency is so critical for advertising. These examples show that a media agency is critical for arranging special execution of the creative strategy and therefore shows the strong interdependency of both media and creative. This point reinforces the idea of IMC very well since deciders from all major agencies should be “at the table” to ensure consistency across all elements of the strategy. Chapter 3 Consumer behaviour and target audience decisions Chapter Overview The purpose of this chapter is to examine the field of consumer behaviour and to demonstrate how knowledge and understanding of the consumer can be used in developing promotional decisions. This chapter utilizes the consumer decision-making process model as a framework for examining consumer behaviour. The influence of psychological concepts such as motivation, perception, attitudes and integration processes are examined at the appropriate stages of the model. Attention is given to the three major variations in the consumer decision-making process: routine response behaviour, limited problem solving and extended problem solving. Consideration is given to how advertising and promotional strategies differ depending on the type of decision making process consumers are using. The chapter includes a description on how to make the initial decision of a promotional plan, namely, the target audience. This final section reviews the use of segmentation to determine the most appropriate profile of the target audience and highlights the significance of using current purchase behaviour as the key segmentation variable to initiate this decision. Learning Objectives 1. Describe the consumer decision-making process and how it relates to marketing communication. 2. Distinguish internal psychological processes, their influence on consumer decision making, and implications for marketing communication. 3. Contrast how the consumer decision-making process varies for different types of purchases and the effects on marketing communication. 4. Compare the similarities and differences of target market and target audience. 5. Identify the options for making a target audience decision for marketing communication. 6. Express why a profile of the target audience is important for message, media, and IMC tool decisions. Chapter and Lecture Outline I. THE CONSUMER DECISION-MAKING PROCESS A brief introduction to consumer behaviour and an indication of the increased importance that this domain of study has assumed in marketing would be a good starting point. The instructor should discuss the fact that to operationalize the marketing concept it is critical that the marketer have an understanding of the consumer decision making processes. Likewise, to effectively design effective advertising and promotions programs, these processes must be understood and considered. It is important to point out that the development of successful marketing communication programs begins with understanding why consumers behave as they do. Consumer behaviour can be defined as the process and activities that people engage in when searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to satisfy their needs and desires. You should let the students know that this model will be used as a framework for analyzing the consumer decision-making process. You will be going through the various stages of the model, discussing what occurs at each and how advertising and promotion can be used to influence consumer decision-making. The consumer purchase decision process is generally viewed as consisting of sequential steps or stages through which the buyer passes in purchasing a product or service. Figure 3-1 of the text shows the various steps in this process such as need recognition, information search, alternative evaluation, purchase decision, post-purchase evaluation as well as the relevant internal psychological processes that occur at each stage such as motivation, perception, attitude formation, integration and learning. A. Need recognition—the first step in the consumer decision-making process is that of problem recognition, which is caused by a difference between the consumer’s ideal state and actual state. B. Consumer Motivation—the way a consumer perceives a need and becomes motivated to solve a consumption problem will influence the remainder of the decision making process. To better understand the reasons underlying consumer purchases, marketers develop considerable attention to examining motives or factors that compel or drive a consumer to take a particular action. One approach to understanding consumer motivation is the classic theory of human motivation popularized by Maslow. His hierarchy of needs postulates five basic levels of human needs: • physiological needs • safety needs • social/love and belonging needs • esteem needs • self-actualization needs The implications of Maslow’s hierarchy for developing advertisements that appeal to different types of needs should be discussed. C. Information Search—the second step in the consumer decision making process is information search. Internal search involves a scan of information stored in memory to recall past experiences or knowledge regarding purchase alternatives. External search involves go to outside sources to acquire information such as personal sources, marketer controlled sources, public sources, or through personal experiences such as examining of handling a product. D. Perception—perception is the process by which an individual receives selects, organizes, and interprets information to create a meaningful picture of the world. There are a number of processes involved in perception which determine how marketing information will be received: • Sensation—the immediate and direct response of the senses to a stimulus such as an advertisement. • Selective exposure—consumers choose whether or not to make themselves available to information. • Selecting information—determining whether incoming information will be attended to and how much attention it will be given. • Selective attention—consumer chooses to focus attention on certain stimuli while excluding others. • Interpreting information—the process by incoming information is interpreted and assigned meaning. • Selective comprehension—interpreting information on the basis of the consumer’s own attitudes, beliefs, motives and experiences. • Retaining information—the storage of information in consumer’s memory. • Selective retention—consumers do not remember all information they receive due to the clutter of many advertising messages E. Alternative Evaluation—after acquiring information during the information search stage the consumer moves to alternative evaluation. At this stage the consumer compares the various brands and services he or she has identified as being capable of solving the consumption problem and satisfying the needs or motives that initiated the decision process. There are a number of important factors and processes that are important during the alternative evaluation stage: 1. The evoked set is a subset of all the brands of which the consumer is aware. A goal of marketers is to ensure that their brands are included in the evoked set of consumers. 2. Evaluative criteria and consequences—evaluative criteria are the dimensions or attributes of a product or service that are used to compare different alternatives. Consequences are the specific events or outcomes that consumers experience when a product or service is purchased and/or consumed. Functional consequences are tangible and can be experienced directly by consumers. Psychosocial consequences refer are more intangible, subjective and personal. F. Attitudes—attitudes refer to a summary construct that represents an individual’s overall feelings or evaluation of an object such as a brand, a company, another person, a retail store, or even an advertisement. Attitudes are one of the most heavily studied concepts in consumer behaviour. Marketers’ keen interest in attitudes is based on the assumption that they are related to purchase behaviour. G. Purchase Decision—as an outcome of the alternative evaluation stage the consumer may develop a purchase intention or predisposition to buy a certain brand. Once a purchase intention has been made and an intention formed, the consumer must still implement it and make the actual purchase. Many purchase decisions are made on the basis of brand loyalty which is a preference for a particular brand that results in its repeated purchase. Many purchase decisions for nondurable, low involvement items take place in the store and decision and purchase occur almost simultaneously. For these types of decisions top-of-mind awareness of a brand is important as is the influence of packing, shelf displays, point-of-purchase material, and various sales promotion tools. H. Integration Processes—an important aspect of the alternative evaluation stage is the way consumers combine information to evaluate alternatives and arrive at a purchase decision. Consumers may use formal integration rules which require examination and comparison of alternatives on specific attributes. These include both compensatory and non compensatory integration strategies. Consumers may also use informal integration rules which are often referred to as heuristics. Promotional planners need to understand consumers’ integration processes and the types of decision rules they might use in a situation. Advertising messages can be constructed to be consistent with these decision rules or to suggest how consumers might go about making a decision. It is also important for marketers to recognize that some purchase decisions are the result of a constructive process that occurs at the time of purchase. I. Postpurchase Evaluation—the consumer decision process does not end once the product or service has been purchased. After using a product or service the consumer compares the level of performance with expectations. J. Satisfaction occurs when the consumer’s expectations are either met or exceeded, while dissatisfaction results when performance is below expectations. Another possible outcome of purchase is cognitive dissonance which refers to a feeling of psychological tension or postpurchase doubt a consumer may experience after making a purchase choice. Consumers often look to advertising for supportive information regarding the choice they have made. II. VARIATIONS IN CONSUMER DECISION MAKING A. Types of Decision Making—consumers do not always engage in all five steps of the purchase decision process nor proceed in the sequence presented. There are three major variations of the consumer decision making process: 1. Routine response behaviour—many purchase decisions for low-priced, frequently purchased products are based on a habitual or routine choice process consisting of little more than recognizing the problem, engaging in brief internal search and making the purchase. Marketers of products characterized by routine response behaviour must get and/or maintain their brands in the consumers’ evoked set and encourage brand loyalty. Those not in the evoked set must encourage trial and brand switching. 2. Limited problem solving—often a consumer has a limited amount of experience in purchasing a product or service but in somewhat aware or knowledgeable of the brands available and/or the criteria to use in making a purchase decision. When consumers purchase a product through limited problem solving, marketers should make information available to consumers that will help them make their decision. 3. Extended problem solving—the most complex and detailed form of decision making occurs when consumers have little, if any, knowledge regarding the criteria to use in making a purchase decision or the various brands available. As with limited problem solving, marketers of products characterized by extensive problem solving must provide consumers with detailed information that helps them in making their purchase decision. B. Group Decision Making Reference Groups—a reference group is a group whose perspective or values are being used by an individual as the basis for his/her judgments, opinions and actions. Marketers utilize reference group influences in developing advertisements by associating, or sometimes disassociating, products, services or certain behaviours with certain types of groups. Many purchase decisions are made by families rather than by individuals. Marketers must understand the various roles in the family decision making process such as initiator, information provider, influencer, decision maker, purchaser and user or consumer. They must also determine who in the family is responsible for the various roles in the decision making process so messages can be targeted to them. Messages must also be designed so as to appeal to the appropriate family member(s). III. TARGET AUDIENCE DECISION A. The marketing planning process involves the steps shown in Figure 3-5. The marketing strategy is directed towards the target market. The target market is the focus of the company’s marketing efforts. Selection of the target market is not only a very important part of a firm’s marketing strategy, but also has implications for advertising and promotional strategy and tactics. It is used a guide to determine the target audience decision, a primary consideration at the start of the promotional planning process. B. Market Segmentation—the target market process involves the identification of the needs and wants of specific groups of people (or segments), selection of one or more of these groups as targets, and the development of marketing strategies aimed at each. A number of ways of segmentation are available (Figure 3-6) to the marketer including: • Geographic—the market is divided into geographic units with alternative marketing strategies targeted to each • Demographic—division involves demographic variables such as age, sex, family size, income, education and social class among others • Socioeconomic—division involves variables such as income, education, and occupation. • Psychographic—markets are divided based on the values, lifestyle, personality, culture, and social class. • Values- as demonstrated by VALS and PRIZM • Lifestyle—activities, interests, opinions (AIO). • Personality—enduring characteristics, e.g., introvert. • Culture—culture refers to the complexity of learned meanings, values norms, and customs shared by members of a society. Subcultures refer to smaller groups or segments in a society that possess similar characteristics that set them apart from the larger cultural mainstream. Subcultures may be based on age, geography, race, religion, racial, lifestyles, and ethnicity. • Social Class—social class refers to relatively homogenous divisions in a society into which people sharing similar lifestyles, values, norms, interests, and behaviours can be grouped. Social class structures in Canada are generally based on occupational status, educational attainment and source or income. Social class is important to marketers because consumers within social stratums often exhibit similar values, life styles and buying behaviour and provide a natural basis for market segmentation. • Behaviouristic—this form of segmentation divides consumers into groups according to their brand loyalty, user status, usage rate, situation or benefits sought. These characteristics are then usually combined with one of the previously mentioned bases to develop segment profiles. Behaviouristic segmentation also considers both the purchase and the usage situation. C. Target Market Selection—having conducted the segmentation analysis, the marketer will be faced with the dilemma of trying to know which segmentation variables are most critical, how many should be used, and how much detail is required for marketing mix decisions. From a promotional planning perspective, the priority of each type of segmentation variable has to examine carefully to determine which takes priority. D. Target Audience Options—R&P state that the primary and most logical factor for initially defining a target audience is the current behaviour of consumers. R&P identified two customer groups and three non-customer groups. 1. Customer groups: • direct communication to brand loyal customers who regularly buy their firm’s product. • consumers habitually purchase from a few favourites or those brands within their evoked set for some product categories; thus, favourable brand switchers are a second customer group highlighted by R&P. 2. Non-customer groups: • New category users are those customers that are not yet purchasing within a product category. • Other brand switchers purchase a few different brands within a category. • Other brand loyals purchase only one brand and are completely loyal. Examples of ads and other IMC tools are useful to demonstrate how this approach works. It is fairly obvious to discern whether a message is directed to customers or non-customers, however some students have difficulty making the distinction. Discussion allows instructors to also note examples where it may be less obvious. The additional profiling variables of demographic and other segmentation variables can be highlighted. Multiple examples from one brand can show how a firm could have more than one target audience to reinforce the point in Chapter 1. IV. IMC PLANNING: TARGET AUDIENCE PROFILE The implications of consumer behaviour and target audience decision are summarized with a conclusion on the importance of using the segmentation variables appropriately so as to give direction for decisions in the areas for message creation, media placement and IMC tool usage. This planning section allows students to see how the IMC plan will unfold with a complete profile of the target audience. Teaching Suggestions Because of the consumer emphasis dictated by the marketing concept, consumer behaviour has increased in importance, and has found its way into virtually every aspect of marketing, including advertising and promotion. Thus, it is very important for the student to understand that advertising and promotion strategies are designed for the purpose of influencing customer behaviour. Promotional planners require understanding of consumer behaviour including the way consumers relate to products and services, the goals and motives they seek to achieve and satisfy, and the process by which they make purchase decisions. You should emphasize that the success marketers have in influencing the purchase behaviour of their target customers depends in large part on how well they understand their purchase patterns and behaviour. The chapter links consumer behaviour with the target audience decision. Segmentation approaches are reviewed as the concepts are relevant for both marketing and promotion decisions. Students will be familiar with using segmentation for target market decisions of a marketing plan; however, promotion often requires more precise identification and profile for its intended recipient, or target audience. This important distinction is highlighted and the instructor should be careful to use examples where we can clearly see a specific target audience in the ad, that is obviously consistent with who the brand may be targeting with its overall marketing plan. Some students may have covered some of this material in a basic marketing or consumer behaviour class. However, this chapter will still be valuable to them since it discusses how this material is used in the development of advertising and promotional programs. Vignette 1. How does each varied creative help Kraft? (Question in book is from Fourth Edition-mistake) 1. Using the background provided in the vignette, how do market communication planners use the information from market research to make promotional decisions? (Question for Fifth Edition-new) The data indicates a profile for of young consumers in terms of lifestyle, their media exposure, usage of social media and brand effects. Planners can use this information for estimating many message and media decisions for an annual plan. Lifestyle data gives an opportunity to figure out messages content. The media data assists in knowing how to deliver the message. Finally, the brand effects data allows promotional planners to understand whether they decisions performed well. IMC Technology Perspective 3-1 1. How does in-store communication with digital technology change consumer behaviour? Shopping will likely become much more experiential as consumers use technology to evaluate features more easily and with greater depth and involvement. This may lead to consumer having stronger confidence in the purchasing, and the longer time spent in one location interacting with technology may lead to fewer visits to competing stores. This perspective is more of a description to show students technological changes and allow them to consider how technology in general influences behaviour in marketing. IMC Perspective 3-1 1. How many variables should a promotional planner consider when segmenting and profiling a target audience? These examples illustrate audiences with different cultural backgrounds or ethnicities depending upon one’s point of view of the best way to describe consumers. Underlying this target audience profile variable is the fact that consumers will be customers or non-customers. This example brings to the forefront the complexity of the target audience decision as multiple variables are generally required. This point is further reinforced with question 6 in the review questions. Chapter 4 Communication response models Chapter Overview The purpose of this chapter is to examine the communication process by introducing the student to the fundamentals of communication and examining various models and perspectives of how consumers respond to advertising messages. A basic model of communication is presented which introduces the controllable elements of the communications process—source, message, channel and receiver. The chapter is devoted to examining the target audience or receiver and the process by which consumers respond to advertising and other promotional messages. The response process is analyzed in terms of traditional response hierarchy models as well as alternative response models. Attention is given to comparing alternative response models such as the standard learning versus low involvement models. The chapter also examines the cognitive response approach and Elaboration Likelihood Model to show how more detailed analyses can be made of receivers’ cognitive processing of marketing communications. The end of the chapter attempts to resolve the debate with a model more suitable for decision-making. Learning Objectives 1. Explain the elements of the communication process and identify the role of marketing communication. 2. Contrast traditional communication response models and alternative response hierarchies. 3. Develop the response processes of receivers of marketing communication through two models of cognitive processing. 4. Illustrate a response model for managerial decision making. 5. Construct ideas on how the knowledge of response models can be used for IMC planning. Chapter and Lecture Outline I. A MODEL OF THE COMMUNICATION PROCESS A commonality shared by all elements of the promotional mix is that their function is to communicate. Thus, it is important that advertising and promotional planners have an understanding of the communication process. This chapter reviews the fundamentals of communication and examines various perspectives regarding how consumers respond to promotional messages. Communication has been defined as the “passing of information,” the “exchange of ideas,” or the “process of establishing a commonness or oneness of thought between a sender and a receiver.” For communication to occur there must be some common thinking or ground between the two parties and a passing of information. The communications process is often very complex with success depending on many factors such as the nature of the message, audience interpretation and the environment in which it is received along with the receiver’s perception of the source and medium. The challenge of developing effective marketing communications becomes particularly evident when companies are developing advertising and promotional messages for foreign markets. A model of communication that represents the elements of the communications process is shown as Figure 4-1 that include: A. Source/Encoding—the sender or source of a communication is the person or organization that has information to share with another person or group. It should be noted that the source can be an individual (e.g., salesperson or hired spokesperson) or a nonpersonal entity such as the corporation or organization itself. The receivers’ perception of the source influences the manner in which the communication is received, interpreted and responded to. Encoding is the process of putting together thoughts, ideas and information into a symbolic form to communicate a message. The sender’s goal is to encode the message in such a manner so as to ensure that it will be understood by the receiver. B. Message—the encoding process leads to the development of a message that contains the information or meaning the source or sender hopes to convey. Messages can take a variety of forms and may include symbolic forms or signs. The message must be put into a transmittable form that is appropriate for the channel of communication being used. Advertising messages range from simply written words or copy that will be read or heard as a radio message to the expensive production of elaborate television commercials with a great deal of visual impact and imagery. C. Channel—the channel is the method or medium by which the communication travels from source or sender to receiver. At the broadest level, channels of communication exist as two types: • Personal Channels which involve direct interpersonal contact with target individuals or groups. For example a salesperson serves as a personal channel of communication when delivering a sales presentation. • Nonpersonal channels are those which carry a message without involving interpersonal contact between sender and receiver. These channels are often referred to as the mass media as messages transmitted through them are sent to many individuals at one time. The two major categories of nonpersonal channels are print and broadcast media. D. Receiver/Decoding—the receiver is the person(s) with whom the sender shares thoughts or information. Receivers are generally viewed as the consumers in the target audience targeted by the firm’s marketing and promotional program. The target audience may consist of individuals, groups, niche markets, market segments, or a general public or mass audience. Decoding is the process of transforming and interpreting the sender’s message back into thought and is heavily influenced by the receiver’s frame of reference or field of experience. Effective communication is more likely when common ground or shared meaning or understanding exists or has been established between the sender and receiver. E. Noise—throughout the communications process the message is subject to noise which refers to factors that can distort or interfere with adequate reception or comprehension. Noise can occur during the encoding, transmission, or decoding of a message. Noise can also occur because of a lack of common ground or understanding between the sender and receiver. F. Response/Feedback—response refers to the reaction the receiver has after seeing, hearing and/or reading the message. These responses can range from non-observable actions such as storing information in memory to taking immediate actions such as ordering a product seen in a direct response ad. Feedback is the part of the receiver’s response that is communicated back to the sender and takes a variety of forms. Feedback provides the sender with a way of monitoring how the message is being decoded and received by the target audience. II. THE RESPONSE PROCESS An important aspect of developing effective communication involves having an understanding of the response process the receiver may go through and how the promotional efforts of the market might influence this process. This section begins by covering three traditional response hierarchy models and then discussing alternative models of the response process. A. Traditional Response Hierarchy Models—Figure 4-2 in the text shows four of the best-known response hierarchy models. These models are discussed giving attention to their origin and implications and include: • The AIDA Model (attentioninterestdesireaction) • The Hierarchy-of-Effects Model (awarenessknowledgelikingpreferenceconvictionpurchase • The Information-Processing Model (presentationattentioncomprehensionyieldingretentionbehaviour) B. Implications of the Traditional Hierarchy Models —the hierarchy models are useful to promotional planners from several perspectives. They delineate the series of stages potential purchasers often must be taken through to move them from a state of no or little awareness to the point where they are ready to purchase. The hierarchy models can also be useful as “intermediate” measures of communication effectiveness. Knowing where potential buyers are with respect to the various stages of the hierarchy helps the marketers know the specific communication task that must be performed. All of these models view the response process as consisting of movement through a sequence of stages and assume a similar ordering whereby cognitive development precedes affective reaction which in turn precedes behaviour. While this is a logical progression that may be accurate in many situations, the response sequence may not always operate this way. Thus, attention needs to be given to alternative orderings of the response hierarchy. C. Alternative Response Hierarchy Models—research and theorizing has led to a questioning of the cognitive  affective  conative sequence of the response process and has resulted in the development of alternative orderings of these stages. Michael Ray’s “three-orders” model of information processing, which is shown in Figure 4-3 of the text, identifies three alternative orderings of these stages based on perceived product differentiation and product involvement. These include the: 1. Standard learning hierarchy—in many purchase situations consumers go through the response process in the manner depicted by the traditional communications models or a “learn  feel  do” sequence or hierarchy. Under this hierarchy the receiver is viewed as an active participant in the communications process who actively seeks or gathers information through “active learning.” 2. Dissonance/attribution hierarchy—in some situations consumers may behave first then develop attitudes or feelings as a result of that behaviour and learn or process information that supports their attitudes and behaviour. The dissonance or attributional hierarchy consists of a “do  feel  learn” sequence. This hierarchy may occur when consumers are trying to reduce post-purchase dissonance or anxiety that results from doubt or concern over a purchase. This dissonance reduction process involves “selective learning” whereby the receiver seeks information that supports the choice made and avoids information that does not bolster the wisdom of the decision. 3. Low-involvement hierarchy—the low involvement hierarchy is thought to characterize situations of low consumer involvement in the purchase process. The response hierarchy under low involvement consists of a “learn  do  feel” sequence and the receiver is viewed as engaging in “passive learning” and “random information catching” rather than active information seeking. The concept of involvement has received a great deal of attention for consumer behaviour and advertising researchers. Involvement has received so much attention since it is viewed as a variable that can help explain the way consumers process information and make purchase decisions. A problem that has plagued the study of involvement has been defining and measuring the construct. III. COGNITIVE PROCESSING OF COMMUNICATIONS The hierarchical response models were for many years the primary focus of approaches to studying receivers’ responses to marketing communications. However, the inability of these approaches to explain what might be causing or determining these reactions to the message has led to an interest in understanding the nature of cognitive processing of advertising and other persuasive communications. Cognitive processing concerns how external information (such as an advertising message) is transformed into meanings or patterns of thought and how these meanings are combined to form judgments. Several approaches and models have been developed to examine the nature of consumers’ cognitive processing of advertising messages. A. The Cognitive Response Approach—a commonly used method for examining consumers cognitive processing of advertising messages is through the assessment of their cognitive responses or thoughts that occur to them while reading, viewing, and/or hearing the communication. The focus of this approach, which is commonly used by academic researchers as well as practitioners, is to determine the types of thought evoked by an advertising message and how these responses relate to traditional “outcome” measures such as attitude toward the ad, brand attitudes and purchase intention. The model shown in Figure 4-4 depicts the three basic categories of cognitive responses identified by researchers and their relationship to attitude and intention constructs. These include: 1. Product message thoughts—counterarguments and support arguments 2. Source-oriented thoughts—source derogations and source bolsters 3. Ad execution thoughts—thoughts individuals have toward the ad itself. These thoughts can be either positive or negative and are important because they are related to attitude toward the ad which is an important determinant of advertising effectiveness. B. The Elaboration Likelihood Model—the Elaboration Likelihood Model (ELM) developed by Cacioppo and Petty has become a very popular way of analyzing differences in the way consumers process and respond to persuasive messages. The ELM is presented in Figure 4-5 of the text. According to the ELM, there are two basic processes or routes to persuasion, which are based on motivation and ability to process the message. Under the central route to persuasion the receiver is viewed as a very active and involved participant in the communications process whose ability and motivation to attend, comprehend and evaluate a message are very high. Under the peripheral route to persuasion the receiver is viewed as lacking motivation or ability to process information and is not likely to engage in detailed cognitive processing. The receiver may use “peripheral cues” such as focusing on the message source or executional elements of the ad rather than message content. Classical conditioning, known as a behavioural learning theory, can help explain how the peripheral route works. Behavioural learning theory emphasizes the role of external or environmental stimuli in causing behaviour while minimizing the significance of internal psychological processes. Classical conditioning assumes that learning is essentially an associative process whereby the relationship between an unconditioned stimulus and conditioned stimulus develops through repetition and contiguity. Classical conditioning has many applications in advertising as products and services are become associated with perceptions, images, and emotions that evoke favorable reactions from consumers. IV. RESPONSE MODEL FOR MANAGERIAL DECISION MAKING A. Importance of a Managerial Model—Professors Demetrios Vakratsas and Tim Ambler reviewed more than 250 journal articles and books in an effort to better understand how advertising works and affects the consumer. They concluded that there is little support for the concept of a hierarchy of effects in the sense of a temporal sequence. They note that in trying to understand the response process and the way it works there are three critical intermediate effects between advertising and purchase including cognition, affect and experience. They also conclude that individual responses to advertising are mediated or filtered by factors such as motivation and ability to process information, which can radically alter or change the individual’s response to advertising. They suggest that the effects of advertising should be evaluated using these three dimensions with some intermediate variables being more important than others. This suggests that marketers should focus on knowledge, liking and trial or usage as critical variables that advertising may affect. B. Managerial Model Approach—This chapter continues with Rossiter and Percy’s perspective presents a managerial framework to make promotional decisions that account for the academic and practitioner research on advertising over the past fifty years. Its similarity to the more theoretical conclusion is readily observed. The experience element is captured by R&P’s view that the target audience based on previous purchase behaviour of a brand be the foremost characteristic initially considered in establishing a communications plan. C. Processing of Messages— The processing of marketing communication messages is illustrated in Figure 4-7. Moreover, the cognition and affect considerations are noted in the processing stage as are the high and low involvement processing consistent with the more recent approaches for understanding audience responses to marketing communication messages. D. Communication Effects of Messages—The communication effect of marketing communication messages are also shown in Figure 4-7 indicating once again the relevance of cognition and affect as the brand attitude effect is comprised of both elements in its measurement. It is also evident in category need, and need fulfillment is energized via consumer motivation; a psychological process with strong emotion. The brand components shows the managerial applicability with specific effects for an individual brand manager rather than communication in general. Teaching Suggestions This chapter is designed to introduce the student to the fundamentals of communication. It is the most theoretical chapter in the text. However, we feel this material is very important as it presents the basic elements of communication and provides a detailed examination of the process by which consumers respond to marketing communications. The material also provides the student with a foundation that is important for subsequent chapters of the text. We feel it is very important to stress to the student that communication is the common goal of all promotional mix elements. They must have a solid foundation in this area if they are to evaluate other areas of advertising and promotion such as creative strategy, media strategy and alternatives and effectiveness measurement. We have found that it is helpful to emphasize to students that decisions regarding the controllable elements of the communication program, such as selecting a source, developing a message strategy and appeal, and selecting advertising media, cannot be made unless the promotional planner has some insight into how members of the target audience will respond to these factors. Students need to have some understanding of the traditional hierarchical models including their implications and limitations. It is also important to point out the limitations of the traditional cognitive affective  conative sequence assumed by these models and to cover the alternative response hierarchies. After reviewing the alternative models of the response process, it should be apparent to the student that the traditional standard learning hierarchy may not be appropriate in many communication situations. From a promotional planning perspective, it is important that the marketer be able to examine the communications situation and determine what type of response hierarchy is most likely to occur. Vignette 1. Why was the Subaru executive so concerned about the BRZ being noticed? Exposure of a brand is critical in developing awareness for a car since there are so many to choose from. So the manager understands that as much exposure as possible will have stronger chance of consumers recalling the brand when it is time to shop for a car, or recognize it when going from dealer to dealer while planning the test drive. The importance of it being noticed in the context of the creative is equally important for consumers to be exposed to “hot” message in order for the right brand associations are formed. 2. Was the approach selected a good way to get noticed for this type of car and this brand? This example shows the value of creative advertising to ensure the optimal response from the target audience. In this case the creative in intertwined with the media which magnifies the overall effect of processing the “hot” message and retaining it when shopping for a car. IMC Perspective 4-1 1. Do you agree with the criticism of these ad reviewers? Each of the criticisms stem from the concern that the creative is ineffective in communicating a compelling motive, and once that is missed in ad message consumers are reluctant to comprehend it sufficiently to be persuaded in the intended direction that the brand expects. This illustration assists in pointing out how students can form opinions when evaluating ads from the point of view of the target audience. This skill in critical for fully understanding how advertising works and having the ability to express why advertising will not be expected to work. IMC Technology Perspective 4-1 1. How do these technological innovations affect how consumers will interpret marketing communication messages? This question raises the issue of whether processing marketing communication messages will be altered with new ways of receiving messages. Certainly comparisons over time across different media might suggest some differences, but they will likely suggest some similarity. While the processing of TV ads seemed new and novel sixty years ago, eventually the models of explaining the response included the well-established print and TV. Similarly, banner ads on the internet seemed novel twenty years ago, but eventually we see that consumer process these much like other low involvement media for the most part, unless the audience is highly involved during a shopping stage. In the end, technology gets adapted, and the delivery of a marketing communication message is experience much like other technology as it becomes common and accustomed to. Instructor Manual for Advertising and Promotion: An Integrated Marketing Communications Perspective George E. Belch, Michael A. Belch, Michael A. Guolla 9780070891302