Transcript SLIDES: Chapter 15

Part 6: Promotional Decisions
15. Integrated Marketing
Communications
16. Advertising and Public Relations
17. Personal Selling and Sales
Promotion
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Chapter 15
Integrated
Marketing
Communications
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Chapter Objectives
1. Explain how integrated marketing communications
relates to the development of an optimal promotional
mix.
2. Describe the communication process and how it relates
to the AIDA concept.
3. Explain how the promotional mix relates to the
objectives of promotion.
4. Identify the different elements of the promotional mix
and explain how marketers develop an optimal
promotional mix.
5. Describe the role of sponsorships and direct marketing
in integrated marketing communications.
6. Contrast the two major alternative promotional
strategies.
7. Explain how marketers budget for and measure the
effectiveness of promotion.
8. Discuss the value of marketing communications.
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Chapter Overview
 Promotion: function of informing,
persuading, and influencing the
consumer’s purchase decision
 Marketing Communications:
transmission from a sender to a receiver
of a message dealing with the buyerseller relationship
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Integrated Marketing Communications
 Coordination of all promotional activities –
media advertising, direct mail, personal
selling, sales promotion, and public relations
– to produce a unified customer-focused
promotional message
Success of any IMC program depends
critically on identifying the members of an
audience and understanding what they
want
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 Importance of Teamwork
IMC requires a total strategy
including all marketing activities, not
just promotion
Successful implementation of IMC
requires that everyone involved in
every aspect of promotion – public
relations, advertising, personal
selling, and sales promotion –
function as a team
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 Role of Databases in Effective IMC
Programs
With the growth of the Internet, marketers
have been given the power to gather
information faster and to organize it
easier than ever before
By sharing this knowledge appropriately
among all relative parties, a firm can lay
the foundation for a successful IMC
program
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The Communications Process
 An effective promotional message
accomplishes three tasks:
It gains the receiver’s attention
It achieves understanding by both receiver
and sender
It stimulates the receiver’s needs and
suggests an appropriate method of
satisfying them
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 AIDA concept (Attention-Interest-DesireAction) – an explanation of the steps through
which an individual reaches a purchase
decision
Sender
Encoding
Channel
Decoding
Response
Feedback
Noise
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 Global Difficulties with the Communication
Process
In China: KFC’s slogan: “Finger lickin’ good”
came out as “Eat your fingers off”
Also in China: Coca-Cola had thousands of
signs made using the translation: “Ke-kou-ke-la”
Depending on the dialect this means . . .
“Bite the wax tadpole,” or
“Female horse stuffed with wax”
In Taiwan: Pepsi’s slogan, “Come alive with the
Pepsi generation” came out as “Pepsi will bring
your ancestors back from the dead”
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Objectives of Promotion
 Provide Information
Inform the market about the availability of a
particular good or service
 Increase Demand
Some promotions are aimed at increasing
primary demand, the desire for a general
product category
More promotions are aimed at increasing
selective demand, the desire for a specific
brand
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 Differentiate the Product
Homogenous demand for many products
results when consumers regard the firm’s
output as virtually identical to its
competitors’– then, the firm has virtually no
control over marketing variables
 Accentuate the Product’s Value
Promotion can explain the greater ownership
utility of a product to buyers, thereby
accentuating its value and justifying a higher
price
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 Stabilize Sales
For the typical firm, sales
fluctuations may result from
cyclical, seasonal, or irregular
demand
Stabilizing these variations is often
an objective of promotional
strategy
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Elements of the Promotional Mix
 Promotional mix: blend of personal selling
and nonpersonal selling designed to achieve
promotional objectives
Personal selling: interpersonal
promotional process involving a seller’s
person-to-person presentation to a
prospective buyer
Nonpersonal selling includes:
Advertising, Product placement, Sales
promotion, Direct marketing, Public
relations
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 Advertising
Paid, nonpersonal communication through
various media by a business firm, not-for-profit
organization, or individual identified in the
message with the hope of informing or
persuading members of a particular audience
 Product Placement
Marketer pays a motion picture or television
program owner a fee to display his or her
product prominently in the film or show
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 Sales Promotion
Marketing activities that stimulates
consumer purchasing (includes:
displays, trade shows, coupons,
premiums, contests, product
demonstrations, and various
nonrecurrent selling efforts)
Trade promotion
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 Direct Marketing
Direct communications other than
personal sales contact between
buyer and seller, designed to
generate sales, information
requests, or store visits
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 Public relations: firm’s communications and
relationships with its various publics
 Publicity: stimulation of demand for good,
service, place, idea, person, or organization
by unpaid placement of commercially
significant news or favorable media
presentations
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 Guerilla Marketing: Unconventional,
innovative, and low-cost marketing
techniques designed to get consumers’
attention in unusual ways.
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Sponsorships
 Provision of funds for a sporting or cultural
event in exchange for a direct association
with the events or activity
 Spending now $11 Billion year
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 Growth of Sponsorships
Sponsorship has grown rapidly during the
past 30 years
Corporate sponsorship spending has
increased faster than promotional outlays
for advertising and sales promotion
 How Sponsorship Differs from Advertising
Sponsor’s degree of control
Nature of the message
Audience reaction
Ambush marketing
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 Assessing Sponsorship Results
Marketers utilize some of the same
techniques to measure both advertising
and sponsorship
The differences between the two
promotional alternatives often necessitate
some unique research techniques
Despite the impressive visibility of special
events like soccer’s World Cup and
football’s Super Bowl, the demands do not
necessarily lead directly to increased sales
or improved brand awareness
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Direct Marketing
 Few promotional mix elements are growing as
rapidly as direct marketing
Related overall spending total $1.7 trillion
 Direct Marketing Communication Channels
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 Direct Mail
Marketers combine information from internal
and external databases, surveys, coupons,
and rebates that require responses to
provide information about consumer
lifestyles, buying habits, and wants
 Catalogs
Over 10,000 different consumer mail-order
catalogs and thousands more for businessto- business sales are mailed each year
generating over $57 million in consumer
sales and $36 million in B2B sales
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 Telemarketing: promotional presentation
involving the use of the telephone for
outbound contacts by salespeople or
inbound contacts initiated by customers
who want to obtain information and place
orders
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 Direct Marketing via Broadcast Channels
Broadcast direct marketing includes:
Brief (30 to 90 and second) direct response
ads on television or radio
Home shopping channels like:
Quality Value Channel (QVC)
Home Shopping Network (HSN)
Infomercial: promotional presentation for
a single product running 30 minutes or
longer in a format that resembles a regular
television program
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 Electronic Direct Marketing Channels
Web advertising is an important component
of electronic direct marketing
E-mail direct marketing is a natural and
easy extension of traditional direct mail
marketing
 Other Direct Marketing Channels
Print media is generally not as effective as
Web marketing or telemarketing for direct
marketers
Magazine and newspaper ads with toll-free
telephone numbers, kiosks, and other
media are still useful in many situations
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Developing an Optimal Promotional Mix
 Factors that influence the effectiveness of
a promotional to mix:
Nature of the market
Nature of the product
Stage in the product life-cycle
Price
Funds available for promotion
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 Nature of the market
 Personal selling may prove effective with a market
composed of a limited number of buyers
 Advertising is more effective when a market has large
numbers of potential customers scattered over sizable
geographic areas
 Personal selling often works better for intermediary
target markets
 Nature of the product
 Highly standardized products with minimal servicing
requirements usually need less personal selling than
custom products with complex features and/or
frequent maintenance needs
 Consumer products are more likely to rely heavily on
advertising than are business products
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 Stage in the product life-cycle
 Promotional mix must be tailored to the products
stage in the product life-cycle
 In the introductory stage, there is a heavy emphasis
on personal selling to the to the intermediaries
 However, advertising and sales promotion help to
create awareness and stimulate initial purchases
 In the growth and maturity stages, advertising gains
relative importance
 Personal selling efforts at marketing intermediaries to
expand distribution is continued
 In the maturity and early decline stages, firms
frequently reduce advertising and sales promotion
expenditures
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 Price
 Advertising dominates the promotional mix for lowunit-value products due to the high personal contact
costs of personal selling
 Consumers a high-priced items like luxury cars
expect lots of well-presented information via
videocassettes, CDs, fancy brochures, and personal
selling
 Funds available for promotion
 A critical element in the promotional strategy is the
size of the promotional budget
 While the cost-per-contact of a $2 million, 30-second
TV commercial during the Super Bowl is relatively
low, such an expenditure exceeds the entire
promotional budgets of many, if not most firms
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Influencing Factors
Personal Selling
Advertising
Nature of the market
Number of buyers
Geographic
concentration
Type of customer
Limited number
Concentrated
Business purchaser
Large number
Dispersed
Ultimate consumer
Nature of the product
Complexity
Service
requirements
Type of good or
service
Use of trade-ins
Custom-made, complex
Considerable
Business
Trade-ins common
Standardized
Minimal
Consumer
Trade-ins uncommon
Stage in the product life
cycle
Often emphasized at every stage;
heavy emphasis in the introductory
and early growth stages in
acquainting marketing
intermediaries and potential
consumers with the new good or
service
Often emphasized at every
stage; heavy emphasis in the
latter part of the growth stage,
as well as the maturity and
early decline stages, to
persuade consumers to select
specific brands
Price
High unit value
Low unit value
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Pulling and Pushing
Promotional Strategies
 Pulling strategy: promotional effort by a
seller to stimulate demand among final users,
who will then exert pressure on the
distribution channel to carry the good or
service, pulling it though the marketing
channel
 Pushing strategy: promotional effort by a
seller to members of the marketing channel
intended to stimulate personal selling of the
good or service, thereby pushing it through
the marketing channel
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Budgeting for Promotional Strategy
 Percentage-of-sales method
 Fixed-sum-per-unit method
 Meeting competition method
 Task-objective method
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Method
Description
Example
Percentage-ofsales method
Promotional budget is set as a
“Last year we spent $10,500 on
specified percentage of either past promotion and had sales of $420,000.
or forecasted sales.
Next year we expect sales to grow to
$480,000, and we are allocating $12,000
for promotion.”
Fixed-sum-perunit method
Promotional budget is set as a
predetermined dollar amount for
each unit sold or produced.
“Our forecast calls for sales of 14,000
units, and we allocate promotion at the
rate of $65 per unit.”
Meeting
competition
method
Promotional budget is set to
match competitor’s promotional
outlays on either an absolute or
relative basis.
“Promotional outlays average 4 percent
of sales in our industry.”
Task-objective
method
Once marketers determine their
specific, promotional objectives,
the amount (and type) of
promotional spending needed to
achieve them is determined.
“By the end of next year, we want 75
percent of the area high-school students
to be aware of our new, highly
automated fast-food prototype outlet.
How many promotional dollars will it
take, and how should they be spent?”
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 Figure 15.9
Allocation of Promotional Budgets for consumer
Packaged Goods
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Measuring the Effectiveness of Promotion
 Two basic measurement tools:
Direct sales results measures the
effectiveness of promotion by revealing the
specific impact on sales revenues for each
dollar of promotional spending
Indirect evaluation concentrates on
quantifiable indicators of effectiveness like:
Recall - how much members of the target
market remember about specific products
or advertisements
Readership – size and composition of a
message’s audience
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 Measuring Online Promotions
Early attempts at measuring online promotional
efforts involved counting hits and visits
Incorporating direct response and comparing
different promotions for effectiveness
Two major techniques for setting online
advertising rates:
Cost per impression (CPM), technique that
related the cost of an ad to every thousand
people who read it
Cost per response (click-throughs), which
assumes that those who actually click on an
ad want more information
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The Value of Marketing Communications
 Social Importance
Criticisms of promotional messages as
tasteless and lacking any contribution to
society sometimes ignore the fact that society
provides no commonly accepted set of
standards
The one generally accepted standard in a
market society is freedom of choice for the
consumer
Promotion has become an important factor in
campaigns aimed at achieving socially
oriented objectives like the elimination of drug
abuse
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 Business Importance
Promotional strategy has become
increasingly important to both small and large
firms
Its effectiveness to encourage attitude
changes, brand loyalty and increase sales is
well-documented
Both business and nonbusiness enterprises
recognize the importance of promotional
efforts
Nonbusiness organizations using promotion
include governments and religions
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 Economic Importance
Effective promotion has allowed society to
derive benefits not otherwise available
Promotion increases the number of units
sold; the resulting economies of scale
lower production costs and allows lower
sales prices
Subsidizes the information contents of
newspapers and the broadcast media
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