Transcript Principles of Marketing - Lecture 9

Lecture 9
Principles of Marketing
Theocharis Katranis
Spring Semester 2013
Principles of Marketing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Today’s Lecture
1. We will define the five promotion mix tools for communicating
customer value.
2. We will discuss the changing communications landscape and the need
for integrated marketing communications.
3. We will outline the communications process and the steps in
developing effective marketing communications.
4. We will explain the methods for setting the promotion budget and
factors that affect the design of the promotion mix.
5. We will define the role of advertising in the promotion mix.
6. We will describe the major decisions involved in developing an
advertising program.
7. We will define the role of public relations in the promotion mix and
explain how companies use public relations to communicate with their
publics.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
The Promotion mix or
(Marketing Communications Mix)
Definition:
It is the specific blend of Promotion Tools that the
company uses to persuasively communicate
customer value and build customer relationships.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 9
The Promotion mix or
(Marketing Communications Mix)
Promotion Mix Tools
1. Advertising
2. Sales Promotion
3. Personal Selling
4. Public Relations
5. Direct Marketing
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 9
The Promotion mix or
(Marketing Communications Mix)
1. Advertising - Definition
Advertising is any paid form of nonpersonal
presentation and promotion of ideas, goods,
or services by an identified sponsor.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 9
The Promotion mix or
(Marketing Communications Mix)
2. Sales Promotion - Definition
Sales Promotion are short-term incentives to
encourage the purchase or sale of a product or
service.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 9
The Promotion mix or
(Marketing Communications Mix)
3. Personal Selling
Personal Selling are Personal Presentations by
the firm’s sales force for the purpose of making
sales and building customer relationships.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 9
The Promotion Mix or
(Marketing Communications Mix)
4. Public Relations
Public Relations is the action of building good
relations with the company’s various publics
by obtaining favourable publicity, building up
a good corporate image, and handling or
heading off unfavourable rumors, stories, and
events.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 9
The Promotion Mix or
(Marketing Communications Mix)
5. Direct Marketing
Direct Marketing are direct connections with
carefully targeted individual consumers to both
obtain an immediate response and cultivate lasting
customer relationships-the use of direct mail, the
telephone, direct-response television, e-mail, the
internet, and other tools to communicate directly
with specific consumers.
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Theocharis Katranis, MBA,
Spring Semester 2013
Lecture 9
Integrated Marketing
Communications (IMC)
Definition:
It is the action of carefully integrating and
coordinating
the
company’s
many
communications channels to deliver a clear,
consistent, and compelling message about the
organization and its products.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Integrated Marketing
Communications
The New Marketing Communications Landscape
1. Consumers are better informed through Internet
2. Marketers are developing focused marketing programs
designed to build closer relationships with customers in
more narrowly defined micromarkets.
3. The new communications technologies give companies
exciting new media for interacting with targeted consumers.
At the same time, they give consumers more control over the
nature and timing of messages they choose to send and
receive.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
The NEED for Integrated
Marketing
Communications
1. Consumers today are bombarded by commercial
messages from a broad range of sources.
2. Mass-media advertisements say one thing, while
a price promotion sends different signal and a
product label creates still another message.
3. Company sales literature says something
altogether different and the company’s Web site
seems out of Sync with everything else.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
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Integrated Marketing
Communications
Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
1. Identifying the target Audience
2. Determining the Communication Objectives
3. Designing a Message
4. Choosing Media
5. Selecting the Message Source
6. Collecting Feedback
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
1. Identifying the target Audience
The Audience may be current users or potential
buyers.
The Audience may be individuals, groups,
special publics, or the general public.
The Audience is affected from What, How,
When, Where, and Who will say the message.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
2. Determining the Communication Objectives
Marketers must decide what response they seek
from their targeted audience.
The marketing communicator needs to know
where the target audience now stands and to
what stage it needs to be moved i.e. Knowledge,
linking, preference, conviction and purchase.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message
Ideally, the Message should:
3.1 Get Attention
3.2 Hold Interest
3.3 Arouse Desire
AIDA
MODEL
3.4 Obtain Action
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message
The Marketing Communicator must decide what to
say (Message Content) and how to say it
(Message Structure and Format)
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message
Message Content – Three Types of Appeals
1. Rational
2. Emotional
3. Moral
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message
Message Content – Three Types of Appeals
1. Rational
Rational Appeal! This relates to the audience’s
self-interest. They show that the product will
produce the desired benefits.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message
Message Content – Three Types of Appeals
2. Emotional
Emotional Appeal! It attempts to stir up either
negative or positive emotions that can motivate
purchase I.e. love, joy, and humor.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message
Message Content – Three Types of Appeals
3. Moral
Moral Appeals! They are directed to the
audience’s sense of what is “right” and “proper”
i.e cleaner environment.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message
Message Structure
Message Structure by Three Issues:
- Drawing a conclusion or leave it to the audience?
- Whether to present the strongest arguments first of last
- Whether to present a one-sided argument or a two-sided
argument.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
3. Designing a Message – Message Format
The communicator must decide on the headline, copy,
illustration, and colour.
If a Message is going to carried over the radio, The
communicator must decide words, sounds and voices.
If a Message is going to carried on TV, the presenters must plan
their facial expressions, gestures, dress, posture and hairstyles.
If the message is carried on the product or its package, the
communicator has to watch texture, scent, colour, size and shape.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
4. Choosing Media
Two types of communication Channels
4.1 Personal
4.2 Nonpersonal
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
4. Choosing Media
4.1 Personal Communication Channels - Definition
They are channels through which two or more
people communicate directly with each other,
including face to face, on the phone, through mail
or e-mail, or even through an internet “chat”.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
4. Choosing Media
4.2 Nonpersonal Communication Channels - Definition
They are Media that carry messages without personal
contact of feedback, including major media,
atmospheres, and events i.e. newspapers, magazines,
direct-mail, TV, Radio, billboards, signs, posters.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
5. Selecting the Message Source
Messages delivered by highly credible sources
are more persuasive i.e. Food companies that
promote to doctors, dentists and other health
care providers to motivate these professionals to
recommend their products to patients.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Steps in Developing Effective
Marketing Communication
6. Collecting Feedback
After sending the message, the communicator
must research its effect on the target audience.
This involves asking the target audience members
whether they remember the message, how many
times they saw it, what points they recall, how
they felt about the message, and their past and
present attitudes toward the product and the
company.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
Usually companies spend:
1. 10% to 12% of sales for consumer packaged goods
2. 14% of sales for cosmetics
3. 1% of sales for industrial machinery products
BUT within industry, both low and high spenders can be
found.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
The FOUR Methods used:
1. Affordable Method
2. Percentage-of-Sales Method
3. Competitive-Parity Method
4. Objective-and-Task Method
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
1. Affordable Method - Definition
It is the action of Setting the promotion budget
at the level management thinks the company
can afford.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
2. Percentage-of-Sales Method
It is the action of Setting the promotion budget at
a certain percentage of current or forecasted sales
or as a percentage of the unit sales price.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
3. Competitive-Parity Method
It is the action of Setting the promotion
budget to match competitors’ outlays.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
4. Objective-and-Task Method
It is the action of Developing the promotion budget
by (1) defining specific objectives, (2) determining
the tasks that must be performed to achieve these
objectives, and (3) estimating the costs of
performing these tasks. The sum of these costs is
the proposed promotion budget.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
Factors affecting the design of the Promotion Mix
The nature of each Promotion Tool
1. Advertising
Advertising can reach masses of geographically dispersed
buyers at a low cost per exposure and enables the seller to
repeat a message many times.
Although Advertising reaches many people quickly, it is
impersonal.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
Factors affecting the design of the Promotion Mix
The nature of each Promotion Tool
2. Personal Selling
Personal Selling involves personal interaction between two
or more people, so each person can observe the other’s
needs and characteristics and make quick adjustments.
It also allows all kind of customer relationships to spring
up business and personal friendships.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
Factors affecting the design of the Promotion Mix
The nature of each Promotion Tool
3. Sales Promotion
Sales Promotion includes a wide assortment of tools like
coupons, contests, cents-off deals, premiums – all of which
have many unique qualities.
They attract consumer attention and offer strong incentives
to purchase at a given time.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
Factors affecting the design of the Promotion Mix
The nature of each Promotion Tool
4. Public Relations
Public Relations – (News stories, features, sponsorships) –
are very believable to readers.
A well-thought-out Public Relations campaign used with
other promotion mix elements can be very effective and
economical.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Setting the Total Promotion
Budget and Mix
Factors affecting the design of the Promotion Mix
Also
- Type of product/market
- The Product life-cycle stage
(Product Development / Introduction /
Growth / Maturity / Decline
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Socially Responsible
Marketing Communication
Legal and Ethical issues
Marketers must be aware of all legal and ethical
issues when creating their communication
strategies to their consumers.
For example a diet bread cannot be advertised as
having fewer calories simply because its slices are
thinner.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Advertising Objective - Definition
It is a specific communication task to be
accomplished with a specific target audience
during a specific period of time.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Advertising Decisions – FOUR Steps
1. Setting Advertising Objectives
2. Setting the Advertising Budget
3. Developing Advertising Strategy
4. Evaluating Advertising Effectiveness and
Return on Advertising Investment
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
2. Setting the Advertising Budget
Advertising Budget is the money and other resources
allocated to a product or company advertising program.
New Products, typically, need large advertising budgets
to build awareness and to gain customer trial.
Mature brands usually require lower budgets as a ratio to
sales.
Whenever there is strong competition, heavily advertising
is also needed.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
3. Developing Advertising Strategy
Advertising Strategy is the strategy by which
the company accomplishes its advertising
objectives. It consists of two major elements:
creating advertising messages and selecting
advertising media.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
3. Developing Advertising Strategy
3.1 Creating Advertising Messages
3.2 Selecting Advertising Media
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
3. Developing Advertising Strategy
3.1 Creating Advertising Messages
Messages must be better planned, more imaginative,
more entertaining and more rewarding to consumers.
Message Strategy Statements tend to be plain,
straightforward outlines of benefits and positioning
points that the advertiser wants to stress.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
3. Developing Advertising Strategy
3.2 Selecting Advertising Media - Definition
Advertising Media are the vehicles through
which advertising messages are delivered to
their intended audiences.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
3. Developing Advertising Strategy
3.2 Selecting Advertising Media
Four Major Steps:
3.2.1 Deciding on reach, frequency and impact
3.2.2 Choosing among major media types – (TV,
Radio,Newspapers, The Internet, Direct Mail, Magazines, Outdoor)
3.2.3 Selecting specific media vehicles (specific media within each general media type).
3.2.4 Deciding on media timing
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
4. Evaluating Advertising Effectiveness and Return
on Advertising Investment
Advertisers should regularly evaluate the communication
effects of an ad or ad campaign to find out whether the ads
and media are communicating the ad message well.
Advertisers should also measure the sales and profit effects
of advertising by comparing past sales and profits with past
advertising expenditures.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Other Advertising Considerations
1. Most large companies use outside Advertising
Agencies because they offer several advantages. They
can create a marketing plan, develop ad campaigns and
prepare, place and evaluate ads.
Advertising Agency is a marketing services firm that
assists
companies
in
planning,
preparing,
implementing, and evaluating all or portions of their
advertising programs.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Other Advertising Considerations
2. International Advertising Decisions
Companies that need to develop International
Advertising Decisions, usually select and cooperate
with International Advertisers i.e. companies with
experience and knowledge in advertising issues for
every country they operate.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Public Relations
Public Relations departments may perform any or all
of the following Functions:
1. Press Relations or Press Agency
2. Product Publicity
3. Public Affairs
4. Lobbying
5. Investor Relations
6. Development
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Public Relations - Functions
1. Press Relations or Press Agency
It is the action of creating and placing
newsworthy information in the news media to
attract attention to a person, product, or service.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Public Relations - Functions
2. Product Publicity
It is the action of Publicizing specific
products.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Public Relations - Functions
3. Public Affairs
It is the action of building and maintaining
national or local community relations.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Public Relations - Functions
4. Lobbying
It is the action of building and maintaining
relations with legislators and government
officials to influence legislation and regulation.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Public Relations - Functions
5. Investor Relations
It is the action of Maintaining relationships
with shareholders and others in the financial
community.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Public Relations - Functions
6. Development
It is the Public Relations with donors or
members of nonprofit organizations to gain
financial or volunteer support.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
It is important to know that...
Companies use public relations to build good
relations with consumers, investors, the media
and their communities.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
The Role and Impact of Public Relations
Public Relations can have a strong impact on public
awareness at a much lower cost than advertising can.
The company does not pay for the space or time in the media.
The company pays for a staff to develop and circulate
information and to manage events.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Major Decisions in Advertising,
and Public Relations
Major Public Relations Tools
1. Favourable News about the company its products
and people
2. Speeches on sales, trade associations
3. Special Events i.e. press tours, grand openings
4. Written Materials i.e. brochures, articles
5. Audiovisual Materials i.e. DVD
6. Corporate Identity Materials i.e. Logos,
business forms and cards, signs
7. Company’s participation in public service activities
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Summary - Lecture 9
1. We defined the five promotion mix tools for communicating
customer value.
2. We discussed the changing communications landscape and the need
for integrated marketing communications.
3. We outlined the communications process and the steps in developing
effective marketing communications.
4. We explained the methods for setting the promotion budget and
factors that affect the design of the promotion mix.
5. We defined the role of advertising in the promotion mix.
6. We described the major decisions involved in developing an
advertising program.
7. We defined the role of public relations in the promotion mix and
explained how companies use public relations to communicate with
their publics.
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Theocharis Katranis, MBA
Spring Semester 2013
Lecture 9
Chapters 14 and 15
END of Lecture 9
Thank you for your attention
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Theocharis Katranis, MBA
Spring Semester 2013