Communicating Customer Value: Advertising and Public Relations Chapter 12 Next Exit Prentice Hall, Copyright 2009

Rest Stop: Previewing the Concepts Discuss the process and advantages of integrated marketing communications in communicating customer value. Define the five promotion tools and discuss the factors that must be considered in shaping the overall promotion mix. Describe and discuss the major decisions involved in developing an advertising program. Explain how companies use public relations to communicate with their publics. Prentice Hall, Copyright 2009

GEICO – Building Relationships Case Study GEICO – Building Relationships GEICO – Past GEICO initially targeted government employees and noncommissioned military officers with exceptional driving records. Used direct mail and telephone to market directly to consumers. Passed cost savings on to customers via lower premiums. GEICO – Present Purchased by Warren Buffet who increased ad spending. All ads feature the “15 minutes could save you 15% or more on car insurance” value proposition. Funny ads (talking gecko, “good news,” “Cavemen,” testimonials with celebrity translation) have resulted in 91% awareness and double-digit market share gains. Prentice Hall, Copyright 2009

Figure 12.1 Integrated Marketing Communications Prentice Hall, Copyright 2009

Integrated Marketing Communications Several factors are changing the face of marketing communications: Consumers are better informed and more communications empowered. Mass markets have fragmented, leading to a shift away from mass marketing. Changes in communications technology have created new media for interacting with targeted consumers. Prentice Hall, Copyright 2009

Integrated Marketing Communications Firms are doing less broadcasting and more narrowcasting. Specialty magazines Cable TV Video on demand Internet catalogs Podcasts Product placements in TV and video games Prentice Hall, Copyright 2009

Integrated Marketing Communications A strong need for integrated marketing communications (IMC) exists because conflicting messages from different sources can create confusion or blur brand perceptions. Prentice Hall, Copyright 2009

Integrated Marketing Communications Carefully integrating and coordinating the company’s many communication channels to deliver a clear, consistent, and compelling message about the organization and its products. Prentice Hall, Copyright 2009

Nikon Uses IMC Marketing in Action Nikon’s TV and print ads are consistent and direct consumers to their Web site. Prentice Hall, Copyright 2009

Shaping the Overall Promotion Mix Nature of advertising: Can reach masses of geographically dispersed buyers at a low cost per exposure Can repeat a message many times Consumers view advertised products as more legitimate Is impersonal, one-way communication Can be very costly for some media types Prentice Hall, Copyright 2009

Shaping the Overall Promotion Mix Nature of personal selling: Involves personal interaction between two or more people Most effective tool at building preferences, convictions and actions Allows relationship building and two-way communication Requires long-term commitment Most expensive promotion tool Prentice Hall, Copyright 2009

Shaping the Overall Promotion Mix Nature of sales promotion: Wide assortment of tools Attracts consumer attention Can be used to dramatize product offers Offers strong incentives to buy Invites and rewards quick consumer response Effects are short-lived Prentice Hall, Copyright 2009

Shaping the Overall Promotion Mix Nature of public relations: Very believable Reaches people who avoid salespeople and ads Can dramatize a company or product Tends to be used as an afterthought Planned use can be effective and economical Prentice Hall, Copyright 2009

Shaping the Overall Promotion Mix Nature of direct marketing: Many forms of direct marketing exist Direct marketing forms share four primary characteristics: Nonpublic Immediate Customized Interactive Well suited to highly targeted marketing Prentice Hall, Copyright 2009

Promotion Mix Strategies Push strategy: Promotion strategy that calls for using the sales force and trade promotion to push the product through channels. Pull strategy: Promotion strategy that calls for spending a lot on advertising and consumer promotion to induce final consumers to buy the product. Prentice Hall, Copyright 2009

Figure 12.2 Push vs. Pull Promotion Strategy Prentice Hall, Copyright 2009

Advertising Advertising has been used for centuries. U.S. advertisers spend more than $285 billion each year; worldwide spending exceeds $604 billion. Advertising is used by: Business firms Not-for-profit organizations Professionals Social agencies Government Prentice Hall, Copyright 2009

Figure 12.3 Major Advertising Decisions Prentice Hall, Copyright 2009

Major Advertising Decisions Advertising objective: Specific communication task to be accomplished with a specific target audience during a specific period of time. Advertising objectives can be classified by their primary purpose: Inform Persuade Compare Remind. Prentice Hall, Copyright 2009

What’s This Ad’s Objective? Marketing in Action What’s This Ad’s Objective? Prentice Hall, Copyright 2009

Major Advertising Decisions Setting the advertising budget: Affordable method Percentage-of-sales method Competitive-parity method Objective-and-task method Prentice Hall, Copyright 2009

Advertising Strategy The strategy by which the company accomplishes its advertising objectives. It consists of two major elements: creating advertising messages and selecting advertising media. Prentice Hall, Copyright 2009

Major Advertising Decisions Developing advertising strategy: Creating advertising messages Message strategy and message execution must break through the clutter Selecting advertising media Set reach, frequency, and impact goals Choose among major media types Select specific media vehicles Decide on media timing Prentice Hall, Copyright 2009

“Madison & Vine” A term that has come to represent the merging of advertising and entertainment in an effort to break through the clutter and create new avenues for reaching consumers with more engaging messages. Prentice Hall, Copyright 2009

Melding Ads and Entertainment Marketing in Action Melding Ads and Entertainment The aim of advertainment is to make ads so fun, entertaining, or useful that people want to watch them. Branded entertainment involves making the brand an inseparable part of some other form of entertainment. Visit the brandgames.com Web site, click “The Work” button, and learn more. Prentice Hall, Copyright 2009

Major Advertising Decisions Planning the message strategy: Identify customer benefits Develop compelling creative concept—the “Big Idea” Advertising appeals should be: Meaningful Believable Distinctive Prentice Hall, Copyright 2009

Major Advertising Decisions Message Execution Styles: Slice of Life Lifestyle Fantasy Mood or Image Musical Personality Symbol Technical Expertise Scientific Evidence Testimonial Evidence or Endorsement Prentice Hall, Copyright 2009

Quick Flick Marketing American Express Click to play video Prentice Hall, Copyright 2009

Major Advertising Decisions Message execution process: Choose the execution style Choose a tone Use memorable, attention-getting words Choose format elements: Illustration Headline Copy Prentice Hall, Copyright 2009

Analyze This Ad! What is the message execution style? Marketing in Action Analyze This Ad! What is the message execution style? What is the tone of the ad? Are the words used attention-getting and memorable? How does the illustration work with the rest of the ad? Prentice Hall, Copyright 2009

Major Advertising Decisions Consumer-generated messages: Tapping consumers for message ideas or actual ads can involve: Searching existing Web video sites Holding contests or inviting consumers to submit ad message ideas and videos Prentice Hall, Copyright 2009

Marketing in Action Crash the Super Bowl The Doritos “Crash the Super Bowl Challenge” contest invited consumers to create their own video ads. Prentice Hall, Copyright 2009

Major Advertising Decisions Setting media objectives: Reach: Percentage of people exposed to ad. Frequency: Number of times a person is exposed to advertisement. Media Impact: The qualitative value of a message exposure through a given medium. Prentice Hall, Copyright 2009

Major Advertising Decisions Consumer-generated messages: Benefits of consumer-generated messages: Collects new ideas and fresh brand perspectives at relatively little expense. Boosts consumer involvement and gets consumers talking and thinking about the brand. Prentice Hall, Copyright 2009

How did you find out about them? Think about the consumer- generated advertisements that you might have seen recently. How did you find out about them? What makes consumer- generated ads worth watching? Prentice Hall, Copyright 2009

Major Advertising Decisions Each media type has specific advantages and disadvantages. Choosing among media types requires consideration of the: Medium’s impact Message effectiveness Cost Media mix should be regularly reexamined. Prentice Hall, Copyright 2009

Major Advertising Decisions Media vehicles: Specific media within each general media type, such as Newsweek. Factors to consider when choosing vehicles: Cost Audience quality Audience engagement Editorial quality Prentice Hall, Copyright 2009

Major Advertising Decisions Must also decide how to schedule the advertising over the course of a year. Follow seasonal pattern Oppose seasonal pattern Same coverage all year Choose the pattern of the ads: Continuity Pulsing Prentice Hall, Copyright 2009

Evaluating Advertising and Return on Advertising Investment Is equal to the net return on advertising investment divided by the costs of the advertising investment. Evaluating advertising involves: Measuring the communication effects of an ad—“Copy Testing.” Measuring the sales effects of an ad: Is the ad increasing sales? Prentice Hall, Copyright 2009

Other Advertising Considerations Organization of ad function: Small companies—one person in firm Large companies—ad department that may also work with an ad agency Advertising agencies employ specialists who perform ad tasks better then the company’s own staff can. Bring outside viewpoints to problem-solving Wide range of experience Prentice Hall, Copyright 2009

Other Advertising Considerations International advertising issues: To what degree should global advertising be adapted to various countries? Greater need for standardization of global brand advertising strategies. Specific advertising programs must usually be adapted to local cultures and other factors. Prentice Hall, Copyright 2009

Standardized Worldwide Advertising Marketing in Action Standardized Worldwide Advertising Gillette’s ads for its Venus razor are virtually the same worldwide. Prentice Hall, Copyright 2009

Public Relations Public Relations: Building good relations with the firm’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Prentice Hall, Copyright 2009

Public Relations Public relations departments perform the following functions: Press relations or press agency Product publicity Public affairs Lobbying Investor relations Development Prentice Hall, Copyright 2009

Public Relations Role and Impact May strongly impact public awareness at a lower cost than advertising Can yield spectacular results Is beginning to play an increasingly important brand-building role Prentice Hall, Copyright 2009

Major Public Relations Tools News Speeches Special events Written materials Audiovisual materials Corporate identity materials Public service activities Social networking Company Web site Prentice Hall, Copyright 2009

Company Web Sites Marketing in Action Company Web sites can be important PR vehicles. Butterball’s site offers recipes, carving tips, and more. Prentice Hall, Copyright 2009

Rest Stop: Reviewing the Concepts Discuss the process and advantages of integrated marketing communications in communicating customer value. Define the five promotion tools and discuss the factors that must be considered in shaping the overall promotion mix. Describe and discuss the major decisions involved in developing an advertising program. Explain how companies use public relations to communicate with their publics. Prentice Hall, Copyright 2009

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