Chapter 8 Integrated Marketing Communications High-Level Chapter Outline I. Strategic Goals of Marketing Communication A. Create Awareness B. Build Positive Images C. Identify Prospects D. Build Channel Relationships E. Retain Customers II. The Promotion Mix III. Integrated Marketing Communications IV. Advertising: Planning and Strategy A. Objectives of Advertising V. Advertising Decisions A. The Expenditure Question Percent of Sales Per-Unit Expenditure All You Can Afford Competitive Parity The Research Approach The Task Approach B. The Allocation Question Message Strategy Media Mix VI. Sales Promotion A. Push versus Pull Marketing B. Trade Sales Promotions C. Consumer Promotions D. What Sales Promotion Can and Can’t Do VII. Public Relations VIII. Direct Marketing Detailed Chapter Outline I. Strategic Goals of Marketing Communication Marketers seek to communicate with target customers for the obvious goals of increased sales and profits. A. Create Awareness Marketing communications designed to create awareness are especially important for new products and brands in order to stimulate trial purchases. As an organization expands globally, creating awareness must be a critical goal of marketing communications. B. Build Positive Images When products or brands have distinct images in the minds of customers, the customers better understand the value that is being offered. A major way marketers create positive and distinct images is through marketing communications. C. Identify Prospects Identifying prospects is becoming an increasingly important goal of marketing communication because modern technology makes information gathering, much more practical, even in large consumer markets. Technology now enables marketers to stay very close to their customers. D. Build Channel Relationships An important goal of marketing communications is to build a relationship with the organization’s channel members. When producers use marketing communications to generate awareness, they are also helping the retailers who carry the product. Producers may also arrange with retailers to distribute coupons, set up special displays, or hold promotional events in their stores, all of which benefit retailers and wholesalers. Retailers support manufacturers when they feature brands in their ads to attract buyers. Cooperating in these marketing communication efforts can build stronger channel relationships. E. Retain Customers Loyal customers are a major asset for every business. It costs far more to attract a new customer than to retain an existing customer. Marketing communications can support efforts to create value for existing customers. They can serve as sources of information about product usage and new products being developed. They can also gather information from customers about what they value, as well as their experiences using the products. II. The Promotion Mix The promotion mix concept refers to the combination and types of nonpersonal and personal communication the organization puts forth during a specified period. There are five elements of the promotion mix, four of which are nonpersonal forms of communication (advertising, sales promotion, public relations, and direct marketing), one, personal selling, which is a personal form of communication. Advertising—is a paid form of nonpersonal communication about an organization, its products, or its activities that is transmitted through a mass medium to a target audience. Sales promotion—is an activity or material that offers customers, sales personnel, or resellers a direct inducement for purchasing a product. Public relations—is a nonpersonal form of communication that seeks to influence the attitude, feelings, and opinions of customers, noncustomers, stock holders, suppliers, employees, and political bodies about the organization. Direct marketing—uses direct form of communication with customers. Its objective is to generate orders, visits to retail outlets or requests for further information. Personal selling—is face-to-face communication with potential buyers to inform them about and persuade them to buy an organization’s product. III. Integrated Marketing Communications In many organizations, elements of the promotion mix are often managed by specialists in different parts of the organization or, in some cases, outside the organization when an advertising agency is used. The goal of integrated marketing communications is to develop marketing communications programs that coordinate and integrate all elements of promotion—advertising, sales promotion, personal selling, and publicity—so that the organization presents a consistent message. The concept of integrated marketing communication is illustrated in Figure 8.1. It is generally agreed that potential buyers usually go through a process of: Awareness of the product of service Comprehension of what it can do and its important features Conviction that it has value for them Ordering The goal of integrated marketing communication is an important one, and many believe that it is critical for success in today’s crowded marketplace. IV. Advertising: Planning and Strategy Advertising seeks to promote the seller’s product by means of printed and electronic media. From a marketing management perspective, advertising is an important strategic device for maintaining a competitive advantage in the marketplace. A. Objectives of Advertising There are at least three different viewpoints about the contribution of advertising to the economic health of the firm. The generalist viewpoint is primarily concerned with sales, profits, return on investment, and so forth. At the other extreme, the specialist viewpoint is represented by advertising experts who are primarily concerned with measuring the effects of specific ads or campaigns. A middle view, one that might be classified as more of a marketing management approach, understands and appreciates the other two viewpoints but, in addition, sees advertising as a competitive weapon. Objectives for advertising can be assigned that focus on creating awareness, aiding comprehension, developing conviction, and encouraging ordering. In the long run and often in the short run, advertising is justified on the basis of the revenue it produces. Since most business firms do not have the data required to use the marginal analysis approach, they employ less-sophisticated decision-making models. The ultimate objective of the business advertiser is to make sales and profits. Marketing managers must also be aware that advertising not only complements other forms of communication, but is subject to the law of diminishing returns. V. Advertising Decisions The marketing managers must make two key decisions: Determining the size of the advertising budget Determining how the advertising budget should be allocated Many marketers have lost sight of the connection between advertising spending and market share. They practice the art of discounting: cutting ad budgets to fund price promotions or fatten quarterly earnings. Companies employing these tactics may benefit in the short term but may be at a severe competitive disadvantage in the long term. A. The Expenditure Question Most firms determine how much to spend on advertising by one of the following methods. Percent of Sale This is one of the most popular rule-of-thumb methods, and its appeal is found in its simplicity. This approach is usually justified by the following arguments: Advertising is needed to generate sales. A number of cents (i.e., the percentage used) out of each dollar of sales should be devoted to advertising in order to generate needed sales. The percentage is easily adjusted and can be readily understood by other executives. The percent-of-sales approach is popular in retailing. Per-Unit Expenditure In per-unit expenditure, a fixed monetary amount is spent on advertising for each unit of the product expected to be sold. This method is popular with higher-priced merchandise, such as automobiles or appliances. Here the seller realizes that the reasonably competitive price must be established for the products in question and attempts to cost out the gross margin. The basic problem with this method and the percentage-of-sales method is that they view advertising as a function of sales, rather than sales as a function of advertising. All You Can Afford Here the advertising budget is established as a predetermined share of profits or financial resources. The availability of current revenues sets the upper limit of the ad budget. The only advantage to this approach is that it sets reasonable limits on the expenditures for advertising. From the standpoint of sound marketing practice, this method is undesirable because there is no necessary connection between liquidity and advertising opportunity. Competitive Parity This approach is often used in conjunction with other approaches, such as the percent-of-sales method. The basic philosophy underlying this approach is that advertising is defensive. From a strategy standpoint, this is a “followership” technique that assumes that the other firms in the industry know what they are doing and have similar goals. Competitive parity is not a preferred method, although some executives feel it is a safe approach. The Research Approach Here the advertising budget is argued for and presented on the basis of research findings. Although the research approach is generally more expensive than some other models, it is a more rational approach to the expenditure decision. The Task Approach Well-planned advertising programs usually make use of the task approach, which initially formulates the advertising goals and defines the tasks to accomplish these goals. This approach is often in conjunction with the research approach. B. The Allocation Question This question deals with the problem on deciding on the most effective way of spending advertising dollars. A general answer to the question is that management’s choice of strategies and objectives determines the media and appeals to be used. A successful ad campaign has two related tasks Say the right things in the ads themselves Use the appropriate media in the right amounts at the right time to reach the target market Message Strategy The advertising process involves creating messages with words, ideas, sounds, and other forms of audiovisual stimuli that are designed to affect consumer (or distributor) behavior. To be effective, the advertising message should meet two general criteria: It should take into account the basic principles of communication. It should be predicted upon a good theory of consumer motivation and behavior. The basic communication process involves three elements: The sender or source of the communication The communication or message The receiver or audience Advertising messages must be transmitted and carried by particular communication channels commonly known as advertising media. Marketing Insight 8-5 provides some relative merits of major advertising media. For many products and services, advertising is an influence that may affect the consumer’s decision to purchase a particular product or brand. The end goal of an advertisement and its associated campaign is to move the buyer to a decision to purchase the advertised brand. The planning of an advertising campaign and the creation of persuasive messages require a mixture of marketing skill and creative know-how. Some of the critical types of information an advertiser should have are as follows: Who the firm’s customers and potential customers are. How many such customers there are. How much of the firm’s type and brand of product they are currently buying and can reasonably be expected to buy in the short-term and long-term future. Which individuals, other than customers and potential customers, influence purchasing decisions. Where they buy the firm’s brand of product. When they buy, and frequency of purchase Which competitive brands they buy and frequency of purchase. How they use the product. Why they buy particular types and brands of products. Media Mix Media selection is no easy task. Marketing Insight 8–5 presents a brief summary of the advantages and disadvantages of some of the major advertising media. In the advertising industry, a common measure of efficiency or productivity is cost per thousand, or CPMs. This figure generally refers to the dollar cost of reaching 1,000 prospects, and its chief advantage lies in its simplicity and allowance for a common base of comparison between differing media types. The major disadvantage of the use of CPMs also relates to its simplicity. Involving programs produce engaged respondents who demonstrate more favorable responses to advertising messages. Reach, in general, is the number of different targeted audience members exposed at least once to the advertiser's message within a predetermined time frame. Just as important as the number of different people exposed (reach) is the number of times, on average, that they are exposed to an advertisement within a given time period. This rate of exposure is called average frequency. Since marketers all have budget constraints, they must decide whether to increase reach at the expense of average frequency or average frequency at the expense of reach. In essence, the marketer’s dilemma is to develop a media schedule that both: Exposes a sufficient number of targeted customers (reach) to the firm’s product Exposes them for enough times (average frequency) to the product to produce the desire effect. VI. Sales Promotion Over the past two decades, the popularity of sales promotion has been increasing. Two reasons for this increased popularity are undoubtedly the increased pressure on management for short-term results and the emergence of new purchase tracking technology. Figure 8.2 presents some popular targets of sales promotion and the methods used. A. Push versus Pull Marketing Push and pull marketing strategies compromises the two options available to marketers interested in getting their product into the hands of customers (Figure 8.3). Push strategies involve aiming promotional efforts at distributors, retailers and sales personnel to gain their cooperation in ordering, stocking, and accelerating the sale of a product. Pull strategies involve aiming promotional efforts directly at customers to encourage them to ask the retailer for the product. B. Trade Sales Promotions Trade promotions are those promotions aimed at distributors and retailers of product who make up the distribution channel. The major objectives are to: Convince retailers to carry the manufacturer's products Reduce the manufacturer's inventories and increase the distributor's or retailer's inventories Support advertising and consumer sales promotions Encourage retailers either to give the product more favorable shelf space or to place more emphasis on selling the product Serve as a reward for past sales efforts Promotions built around price discounts and advertising or other allowances are likely to have higher distributor/retailer participation level than other type promotions because a direct economic incentive is attached to the promotion. C. Consumer Promotions Consumer promotions can fulfill several distinct objectives for the manufacturer. Some of the more commonly sought-after objectives include: Inducing the consumer to try the product Rewarding the consumer for brand loyalty Encouraging the consumer to trade up or purchase larger sizes of a product Stimulating the consumer to make repeat purchases of the product Reacting to competitor efforts Reinforcing and serving as a complement to advertising and personal selling efforts Figure 8.4 presents a brief description of some of the most commonly used forms of consumer promotion activities. D. What Sales Promotion Can and Can’t Do Advocates of sales promotion often point to its growing popularity as a justification for the argument that we don’t need advertising; sales promotion itself will suffice. Marketers should bear in mind that sales promotion is only one part of a well-constructed integrated marketing communications program. While sales promotion is proven to be effective in achieving the objectives listed in the previous sections, there are several compelling reasons why it should not be used as the sole promotional tool. These reasons include sales promotion’s inability to: Generate long-term buyer commitment to a brand in many cases Change, except on a temporary basis, declining sales of a product Convince buyers to purchase an otherwise unacceptable product Make up for a lack of advertising or sales support for a product When the competition gets drawn into the promotion war, the effect can be a significant slowing of the sharp sales increases predicted by the initiator of the promotion. The dilemma marketers face is how to cut back on sales promotions without losing market share to competitors. In addition to developing pricing policies to cut back on short-term promotions, some consumer products companies are starting to institute frequency marketing programs in which they reward consumers for purchases of products or services over a sustained period of time. VII. Public Relations Public relation is a nonpersonal form of communication that tries to influence the overall image of the organization and its products and services among its various stakeholder groups. The most popular and frequently used public relations tool is publicity. There are several forms of publicity: News release News conference Sponsorship Public service announcements VIII. Direct Marketing Direct marketing allows the organization to communicate with customers through direct mail, e-mail, mobile marketing, catalogs, telemarketing, and direct response advertising. The Internet has had a tremendous impact on every aspect of direct mail. Direct marketing methods are certainly not new. What is new is the ability to design and use them more efficiently and effectively because of the Internet and the ability to develop and compile comprehensive databases (Marketing Insight 8–7). Cellular technology such as a smartphone enable the customer to purchase wherever they happen to be. Marketing by way of these handheld devices has become known as mobile marketing. For the American consumer facing a “poverty of time,” direct marketing offers many benefits. In addition to saving time, consumers often save money, get better service, and enjoy increased privacy; many even find it entertaining. Direct marketing activities are often very effective in generating sales leads when a customer asks for more information about a product or service and can also increase store traffic when potential buyers are encouraged to visit a dealership or retail store. Key Terms Advertising: A paid form of nonpersonal communications about an organization, its product, or its activities that is transmitted through a mass medium to a target audience. Average frequency: The number of times customers, on average, are exposed to an advertisement within a given time period. Consumer promotions: Promotions directed at consumers designed to induce the customer to try the product, reward brand loyalty, encourage the consumer to trade-up or purchase larger sizes, stimulate repeat purchases, and reinforce other advertising or personal selling efforts. Cost per thousand: A common measure of efficiency or productivity in advertising, cost per thousand (CPM) refers to the dollar cost of reaching 1,000 prospects. Direct marketing: Direct communication with customers through direct mail, e-mail, mobile marketing, catalogs, telemarketing, and direct response advertising. Expenditure question: The methods used to decide how much to spend on advertising, ranging from simple (a percent of sales), to more complex (the task approach which determines goals and how much it will cost to accomplish each goal). Frequency marketing program: Programs designed to reward customers for purchases of a product or service over a sustained period of time. Integrated marketing communications: Marketing communications programs that coordinate and integrate all elements of the promotion mix so that the organization presents a consistent message. It seeks to manage all sources of brand or company contacts with existing and potential customers. Mobile marketing: Marketing by way of handheld devices (e.g., smartphones). Objectives of advertising: Creating awareness, aiding comprehension, developing conviction, and encouraging ordering. Within each category more specific objectives can be developed that take into account time and degree of success desired. Personal selling: Face-to-face communication with potential buyers to inform them about and persuade them to purchase an organization’s product. Promotion mix: The combination and types of nonpersonal and personal communication an organization puts forth during a specified period. There are five elements of the promotion mix, four of which are nonpersonal forms of communication (advertising, sales promotion, public relations, and direct marketing), and one, personal selling, which is a personal form of communication. Public relations: Efforts directed at influencing the attitudes, feelings, and opinions of customers, noncustomers, stockholders, suppliers, employees, and political bodies about the organization. A popular form is publicity. Pull strategy: Promotional efforts directed at customers to encourage them to ask the retailer for the product. They are designed to “pull” a product through the distribution channel from manufacturer to buyer. Push strategy: Promotional efforts directed at distributors, retailers, and sales personnel to gain their cooperation in ordering, stocking, and supporting the sales of a product. As such they “push” the product toward the customer. Reach: The number of targeted audience members exposed at least once to an advertiser's message within a predetermined time frame. Sales promotion: An activity or material that offers customers, sales personnel, or resellers a direct inducement for purchasing a product. Trade promotions: Promotions aimed at distributors and retailers of products who make up the distribution channel. Additional Resources Burns, Brian C., and Tom U. Snyder. Selling in a New Market Space. New York: McGraw-Hill, 2010. Seitel, Fraser, and John Doorley. Rethinking Reputation. New York: Palgrave Macmillan, 2012. Mullin, Jeanniery, and David Daniels. Email Marketing. Indianapolis: Wiley Publishers, 2009. Percival, Sean. My Space Marketing: Creating a Social Network to Boom Your Business. Indianapolis: Que Books, 2009. Postman, Joel. SocialCorp: Social Media Goes Corporate. Berkeley CA: New Riders, 2009. Reich, Brian, and Don Soloman. Media Rules: Mastering Today's Technology to Connect With and Keep Your Audience. Hoboken NJ: John Wiley and Sons, 2008. Fox, Vanessa. Marketing in The Age of Google. Hoboken, NJ: John Wiley and Sons, 2012. Instructor Manual for A Preface to Marketing Management J. Paul Peter, James H. Donnelly, Jr. 9780077861063, 9781259251641
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