Marketing Communications Chapter 15 Marketing Communications Chapter 16 Marketing Communications MKTG9 Lamb, Hair, and McDaniel © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications LEARNING OUTCOMES 16-1 Discuss the role of promotion in the marketing mix 16-2 Describe the communication process 16-3 Explain the goals and tasks of promotion 16-4 Discuss the elements of the promotional mix © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications LEARNING OUTCOMES 16-5 Discuss the AIDA concept and its relationship to the promotional mix 16-6 Discuss the concept of integrated marketing communications 16-7 Describe the factors that affect the promotional mix © 2016 Cengage Learning. All Rights Reserved.

Discuss the role of promotion in the marketing mix Chapter 15 Marketing Communications The Role of Promotion in the Marketing Mix 16-1 Discuss the role of promotion in the marketing mix © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications The Role of Promotion Promotional Strategy A plan for the optimal use of the elements of promotion: Advertising Public Relations Personal Selling Sales Promotion Social Media Notes: Few goods or services, no matter how well developed, priced, or distributed, can survive in the marketplace without effective promotion—communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response. © 2016 Cengage Learning. All Rights Reserved.

16.1 Role of Promotion in the Marketing Mix Chapter 15 Marketing Communications Notes: As Exhibit 16.1 shows, the marketing manager determines the goals of the promotional strategy in light of the firm’s overall goals for the marketing mix. Using the overall goals, marketers combine the elements of the promotional strategy into a coordinated plan. This plan becomes an integral part of the marketing strategy for reaching the target market. The main function of promotional strategy is to convince target customers that the goods and services offered provide a competitive advantage over the competition. © 2016 Cengage Learning. All Rights Reserved.

Competitive Advantage Chapter 15 Marketing Communications Competitive Advantage Unique features Excellent service Low prices Rapid delivery High product quality Notes: The main function of a marketer’s promotional strategy is to convince the target market that the goods and services offered provide a competitive advantage. A competitive advantage is the set of unique features of a company and its products that are perceived as superior over the competition. These features are listed on this slide. Discussion/Team Activity: Discuss companies and products that demonstrate a competitive advantage based on the features shown above. © 2016 Cengage Learning. All Rights Reserved.

Describe the communication process Chapter 15 Marketing Communications Marketing Communication 16-2 Describe the communication process © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Communication The process by which meanings are exchanged or shared through a common set of symbols. Notes: Promotional strategy is closely related to the process of communication. As humans, we assign meaning to feelings, ideas, facts, attitudes, and emotions. © 2016 Cengage Learning. All Rights Reserved.

Marketing Communication Chapter 15 Marketing Communications Marketing Communication Categories of Communication Interpersonal Mass Notes: Communication can be divided into two major categories: • Interpersonal communication is direct, face-to-face communication between two or more people. • Mass communication refers to communicating a concept or message to larger audiences, usually through a mass medium such as television or newspapers. When a company advertises, it does not know the consumers personally, nor is it able to respond immediately to reactions to the advertising message. Instead the marketing manager must wait and see how people are reacting to the mass-communicated promotion. Any clutter from competitors’ messages or other distractions can reduce the effectiveness of the mass communication effort. © 2016 Cengage Learning. All Rights Reserved.

Marketing Communication Chapter 15 Marketing Communications Marketing Communication As Senders As Receivers Develop messages Adapt messages Spot new communication opportunities Inform Persuade Remind Notes: Marketers are both senders and receivers of messages. As senders, marketers inform, persuade, and remind the target market to adopt courses of action. As receivers, marketers attune themselves to the target market in order to develop and adapt messages, and spot new communication opportunities. Marketing communication is a two-way process. © 2016 Cengage Learning. All Rights Reserved.

The Sender and Encoding Chapter 15 Marketing Communications The Sender and Encoding Sender The originator of the message in the communication process. Encoding The conversion of a sender’s ideas and thoughts into a message. © 2016 Cengage Learning. All Rights Reserved.

The Channel and Noise Channel Chapter 15 Marketing Communications The Channel and Noise Channel A medium of communication used to transmit a message. Noise Anything that interferes with, distorts, or slows down the transmission of information. © 2016 Cengage Learning. All Rights Reserved.

The Receiver and Decoding Chapter 15 Marketing Communications The Receiver and Decoding Receiver The person who decodes the message in the communication process. Decoding The interpretation of the message transmitted by the sender. Notes: In interpersonal communication, the receiver’s response to a message is called feedback. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. 16.2 Communication Process Chapter 15 Marketing Communications Notes: Marketing communication is a two-way process, as shown in Exhibit 16.2. The sender originates the message. Encoding is the conversion of the sender’s ideas and thoughts into a message, usually words or signs. Transmission of a message requires a channel—some communication medium. Reception occurs when the message is detected by the receiver. Transmission may be hindered because of noise—anything that interferes with, distorts, or slows down the transmission of information. Decoding is the interpretation of the language and symbols sent. Proper match between the message to be conveyed and the target market’s attitude is the job of the marketing manager. Differences in culture, age, social class, education, and ethnicity can lead to miscommunication. Marketers targeting consumers in foreign countries must also worry about translation and miscommunication issues. The receiver’s response to a message is direct feedback to the source. Since mass communicators are cut off from direct feedback, they rely on market research or analysis of viewer perceptions for indirect feedback. © 2016 Cengage Learning. All Rights Reserved.

Communication and the Internet Traditional advertising model: Impersonal Numbers driven Unquantifiable consumer behavior Internet and social media advertising: Personal Direct communication Feedback driven Highly visible communication © 2016 Cengage Learning. All Rights Reserved.

Explain the goals and tasks of promotion Chapter 15 Marketing Communications The Goals of Promotion 16-3 Explain the goals and tasks of promotion © 2016 Cengage Learning. All Rights Reserved.

Goals and Tasks of Promotion Chapter 15 Marketing Communications Goals and Tasks of Promotion Informing Reminding Persuading Target Audience Connecting Notes: Promotion seeks to modify behavior and thoughts in some way. It also strives to reinforce existing behavior. Promotion has four basic tasks. It can inform, persuade, remind, or connect with the target audience. Often a marketer will try to accomplish two or more of these tasks at the same time. © 2016 Cengage Learning. All Rights Reserved.

Goals and Tasks of Promotion Chapter 15 Marketing Communications Goals and Tasks of Promotion Connecting Informing Reminding Persuading Target Audience PLC Stages: Introduction Early Growth Growth Maturity All Notes: Informative promotion seeks to convert an existing need into a want or to stimulate interest in a new product. It is more prevalent during the early stages of the product life cycle. Persuasive promotion is designed to stimulate a purchase or an action. It becomes the main promotion goal when the product enters the growth stage of its life cycle. Reminder promotion is used to keep the product/brand name in the public’s mind. It is effective during the maturity cycle. Connecting is designed to form relationships with customers and potential customers to encourage them to be brand advocates. This helps introduce new products, stimulate purchase, and keep the brand in customer’s minds, which makes connecting important for all stages in the PLC. A discussion of each category follows. Discussion/Team Activity: Name products/brands and discuss the stage of their product life cycle. Categorize the type of promotion—informative, reminder, or persuasive—that is used in the product/brand promotional mix. © 2016 Cengage Learning. All Rights Reserved.

Goals and Tasks of Promotion Chapter 15 Marketing Communications Goals and Tasks of Promotion Increase awareness Explain how product works Suggest new uses Build company image Informative Promotion © 2016 Cengage Learning. All Rights Reserved.

Goals and Tasks of Promotion Chapter 15 Marketing Communications Goals and Tasks of Promotion Encourage brand switching Change customers’ perceptions of product attributes Influence immediate buying decision Persuade customers to call Persuasive Promotion © 2016 Cengage Learning. All Rights Reserved.

Goals and Tasks of Promotion Chapter 15 Marketing Communications Goals and Tasks of Promotion Remind customers that product may be needed Remind customers where to buy product Maintain customer awareness Reminder Promotion © 2016 Cengage Learning. All Rights Reserved.

Goals and Tasks of Promotion Chapter 15 Marketing Communications Goals and Tasks of Promotion Form relationships through social media Encourage transparent information exchange Customers become brand advocates Connect Promotion © 2016 Cengage Learning. All Rights Reserved.

elements of the promotional mix Chapter 15 Marketing Communications The Promotional Mix 16-4 Discuss the elements of the promotional mix © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications The Promotional Mix A combination of promotion tools used to reach the target market and fulfill the organization’s overall goals. The promotional mix includes: Advertising Public Relations Sales Promotion Personal Selling Social Media Notes: Most promotional strategies use several components of promotion, which may include advertising, public relations, sales promotion, personal selling, and social media to reach the target market. The more emphasis is placed on a particular promotional element, the more important that element is considered to be in the overall promotional mix. A discussion of each of the promotional mix elements follows. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Advertising Most commonly distributed by traditional media, though increasingly through non-traditional media, such as Web sites, e-mail, blogs, and interactive video kiosks in malls and supermarkets. Notes: Almost all companies use some form of advertising, ranging from a newspaper classified ad to a multimillion-dollar campaign. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Advertising Media Traditional Advertising Media New Advertising Media Television Radio Newspapers Magazines Pay-per-click advertising Banner advertising Direct mail Billboards Transit advertising Web sites E-mail Blogs Videos Interactive games Notes: Media choices are plentiful and fragmented. In addition to the traditional advertising media, new methods are being used to reach consumers. Internet advertising is being increasingly used as a vital component of many companies’ promotion and marketing mixes. Discussion/Team Activity: Some consumers and lawmakers feel that consumer privacy is being violated with Internet advertising methods. Discuss this as a class. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Advertising Advantages Disadvantages Total cost is high National reach is expensive for small companies Reach large number of people Low cost per contact Can be micro-targeted Notes: Advertising has the advantage of being able to reach larger numbers of people, but it can also be microtargeted to small groups. Although the cost per contact in advertising is low, the total cost to advertise is typically very high, and can be restrictive of advertising on a national level. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Public Relations Evaluates public attitudes, identifies areas within the organization that public may be interested in, and executes a program to earn public understanding. Notes: Many organizations spend large amounts of money to build a positive public image. Public relations help an organization communicate with stockholders, customers, suppliers, government, employees, and the community. Social media sites like Twitter can provide large amounts of publicity quickly. © 2016 Cengage Learning. All Rights Reserved.

The Function of Public Relations Chapter 15 Marketing Communications The Function of Public Relations Maintain a positive image Educate the public about the company’s objectives Introduce new products Support the sales effort Generate favorable publicity Notes: Public relations is used to maintain a positive image, as well as the functions shown on this slide. Nothing sells a product better than free publicity, but publicity should not be viewed as free. Preparing news releases, staging events, persuading media personnel to print or broadcast them costs money. Discussion/Team Activity: Discuss current examples of publicity regarding organizations. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Sales Promotion Marketing activities—other than personal selling, advertising, and public relations—that stimulate consumer buying and dealer effectiveness. Notes: Sales promotion is generally a short-run tool used to stimulate immediate increases in demand. Sales promotion is used to improve the effectiveness of other ingredients in the promotion mix, especially advertising and personal selling. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Sales Promotion Free samples Contests Premiums Trade Shows Vacation Giveaways Coupons End Consumers Trade Customers Notes: Sales promotion can be aimed at end consumers, trade customers, or a company’s employees. A major promotional campaign might use several of the tools shown on this slide, along with the other elements of the promotion mix. Discussion/Team Activity: Discuss a few recent product releases. What sales promotion techniques were used to complement the other components of the marketing mix? What techniques make sales promotion efforts effective on college campuses? Company Employees © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Personal Selling Planned presentation to one or more prospective buyers for the purpose of making a sale. Notes: Personal selling is a purchase situation involving a personal, paid-for communication between two people in an attempt to influence each other. Both buyer and seller have specific objectives. The buyer may need to minimize cost or assure a quality product, while the salesperson may need to maximize revenue and profits. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Personal Selling Traditional Selling Attempts to persuade the buyer into a specific point of view; creates a win-lose outcome. Relationship Selling Long-term relationships; creates a win-win outcome. Notes: Traditional methods of personal selling include a planned presentation to one or more prospective buyers. The seller tries to persuade the buyer to accept a point of view or take action. Frequently, the traditional view of personal selling creates a win-lose outcome at the expense of the buyer. Relationship selling emphasizes a win-win outcome and the accomplishment of mutual objectives that benefit both buyer and salesperson in the long-term. The goal is a long-term, committed relationship based on trust and customer loyalty. Personal selling is increasingly dependent on the Internet to attract potential buyers seeking information. © 2016 Cengage Learning. All Rights Reserved.

Chapter 15 Marketing Communications Social Media Promotion tools used to facilitate conversations among people online. Notes: Social media include blogs (online journals), microblogs (Twitter), podcasting (online audio and video broadcasts), and social networks such as Facebook and LinkedIn. Social media are ubiquitous—it just depends on how deep that layer goes for each brand. Discussion/Team Activity: Have students discuss marketing activities they experience on their favorite social media. Ask for positive and negative examples, and have them discuss what made the experience good or bad. How could it have been improved if it was negative? © 2016 Cengage Learning. All Rights Reserved.

The Communication Process and the Promotional Mix Chapter 15 Marketing Communications The Communication Process and the Promotional Mix Shift from one-way communication to customer-controlled, customized, many-to-many communication. Consumer-generated content Paid media Earned media Owned Media Notes: Consumer-generated content impacts the brand image and marketing message because social media makes it easier for large numbers of consumers to connect with each other—something that traditionally has not affected mass-media marketing. Promotional tactics needed new classification: Paid Media: media based on the traditional ad model where a brand pays for media space. Earned Media: media based on a public relations or publicity model that gets customers talking about the brand. Owned Media: new category of media based on brands publishing their own content to maximize brand value. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. 16.3 Chapter 15 Marketing Communications Digital Media Types Owned Media Web Sites Blogs Social Media Presence Earned Media Media Coverage SEO Publicity activities Paid Media Banner ads Sponsored posts Social Media is concentrated here, between owned and earned media, with some (but not much) paid media depending on the strategy. Notes: As a result of the impact of social media as well as the proliferation of new platforms, tools, and ideas, promotional tactics can also be categorized according to media type—paid, earned, or owned, as shown in Exhibit 16.3. © 2016 Cengage Learning. All Rights Reserved.

16.4 Characteristics of the Elements in the Promotional Mix Chapter 15 Marketing Communications Characteristics of the Elements in the Promotional Mix Notes: The four elements of the promotional mix differ in their ability to affect the target audience. Exhibit 16.4 summarizes these differences. © 2016 Cengage Learning. All Rights Reserved.

Discuss the AIDA concept and its relationship to the promotional mix Chapter 15 Marketing Communications Promotional Goals and the AIDA Concept 16-5 Discuss the AIDA concept and its relationship to the promotional mix © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications The AIDA Concept Attention Interest Desire Action Notes: The goal of any promotion is to get someone to buy a good or service, or take some action. A classic model for reaching promotional goals is called the AIDA concept—attention, interest, desire, and action—the stages of consumer involvement. This model proposes that consumers respond to marketing messages in a cognitive (thinking), affective (feeling), and conative (doing) sequences. Model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. The AIDA Concept Chapter 15 Marketing Communications Action Desire Interest Attention Conative (doing) Affective (feeling) Cognitive (thinking) © 2016 Cengage Learning. All Rights Reserved.

16.5 The Promotional Mix and AIDA Attention Interest Desire Action Chapter 15 Marketing Communications Attention Interest Desire Action Advertising Public Relations Sales Promotion Personal Selling Social Media Notes: Exhibit 16.5 depicts the relationship between the promotional mix and the AIDA model. It shows that although advertising does have an impact in the later stages, it is most useful in gaining attention for goods or services. Very Effective Somewhat Effective Not Effective © 2016 Cengage Learning. All Rights Reserved.

Discuss the concept of integrated marketing communications Chapter 15 Marketing Communications Integrated Marketing Communications 16-6 Discuss the concept of integrated marketing communications © 2016 Cengage Learning. All Rights Reserved.

Integrated Marketing Communications Chapter 15 Marketing Communications Integrated Marketing Communications The careful coordination of all promotional messages to assure the consistency of messages at every contact point where a company meets the consumer. Notes: Marketers determine what roles each aspect of the promotional mix will play in the marketing mix. This includes the timing of promotions and examining campaign results. These activities are generally coordinated by the marketing communications director. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications IMC Popularity Growth Proliferation of thousands of media choices. Fragmentation of the mass market. Slash of advertising spending in favor of promotional techniques that generate immediate response. Notes: Integrated marketing communications (IMC) is the careful coordination of all promotional messages—traditional advertising, direct marketing, social media, interactive, public relations, sales promotion, personal selling, event marketing, and other communications—for a product or service to assure the consistency of messages at every contact point where a company meets the consumer. Following the concept of IMC, marketing managers carefully work out the roles that various promotional elements will play in the marketing mix. © 2016 Cengage Learning. All Rights Reserved.

Describe the factors that affect the promotional mix Chapter 15 Marketing Communications Factors Affecting the Promotional Mix 16-7 Describe the factors that affect the promotional mix © 2016 Cengage Learning. All Rights Reserved.

Target market characteristics Type of buying decision Chapter 15 Marketing Communications Factors Affecting the Choice of Promotional Mix Nature of the product Stage in PLC Target market characteristics Type of buying decision Promotion funds Push or pull strategy Notes: Promotional mixes vary a great deal from one product and one industry to the next. Advertising and personal selling are used to promote goods and services, supplemented by sales promotion. Public relations helps develop a positive image for the product and the organization. A firm may choose not to use all four promotional elements, or it may choose to use them in varying degrees. This slide shows the factors affecting the promotion mix chosen by a firm. Subsequent slides describe the key points of each factor. © 2016 Cengage Learning. All Rights Reserved.

16.6 Product Life Cycle and the Promotional Mix Chapter 15 Marketing Communications Product Life Cycle and the Promotional Mix Notes: The Product Life Cycle is a factor in designing a promotion mix, as shown in Exhibit 16.6. In the introduction stage, the basic goal of promotion is to inform the target audience of product availability. Advertising and public relations inform the target audience, while sales promotion encourages early trial. Personal selling gets retailers to carry the product. During the growth stage, advertising and public relations continue to be important, although sales promotion can be reduced because customers need fewer incentives to purchase. The promotional strategy is to emphasize the product’s differential competitive advantage. Persuasive promotion is used to build and maintain brand loyalty. Personal selling has succeeded in obtaining adequate distribution for the product. In the maturity stage, competition becomes fiercer, and persuasive and reminder advertising are more strongly emphasized. Sales promotion comes back into focus to try to increase market share. As the product enters the decline stage, all promotion, especially advertising, is reduced. Nevertheless, personal selling and sales promotion efforts may be maintained, particularly at the retail level. Light Advertising; Pre-introduction publicity Heavy Advertising; PR for awareness; sales promotion for trial Advertising, PR, brand loyalty; personal selling for distribution Ads decrease; sales promotion; personal selling; reminder & persuasive AD/PR decrease; limited sales promotion; personal selling for distribution © 2016 Cengage Learning. All Rights Reserved.

Target Market Characteristics Chapter 15 Marketing Communications Target Market Characteristics For… Widely scattered market Highly informed buyers Brand-loyal repeat purchasers Advertising Sales Promotion Less Personal Selling Notes: Sometimes personal selling is required even when buyers are well informed and geographically dispersed. Print advertising can be used to find potential customers in markets were they are hard to locate. © 2016 Cengage Learning. All Rights Reserved.

Type of Buying Decision Chapter 15 Marketing Communications Type of Buying Decision Advertising Sales Promotion Routine Personal Selling Neither Routine nor Complex Public Relations Print Advertising Complex Notes: For a routine buying decision, such as the purchase of toothpaste, the most effective promotional tools are advertising and especially sales promotion. For buying decisions that are neither routine nor complex, advertising and public relationships help establish awareness. In contrast, consumers making complex decisions need large amounts of information, and personal selling is the most effective tool. Print ads are also effective for conveying large amounts of information. Discussion/Team Activity: Consider recent purchases of routine and complex products. What promotion tool(s) were effective to reach the buyer and influence the purchase decision? © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Available Funds Trade-offs with funds available Number of people in target market Quality of communication needed Relative costs of promotional elements Notes: When funds are available to permit a mix of promotional elements, a firm will try to optimize its return on promotion dollars while minimizing the cost per contact. The cost per contact is high for personal selling, public relations, and sales promotions. On the other hand, the cost per contact is low for national advertising since it reaches a large number of people. There is a trade-off among the funds available, the number of people in the target market, the quality of communication needed, and the relative costs of the promotional elements. © 2016 Cengage Learning. All Rights Reserved.

16.7 Push Strategy versus Pull Strategy Chapter 15 Marketing Communications Notes: Manufacturers may use aggressive personal selling and trade advertising to convince a wholesaler/retailer to carry and sell their merchandise. This is known as a push strategy. The wholesaler, in turn, pushes the merchandise forward by persuading the retailer to handle the goods. The retailer uses advertising and other forms of promotion to convince customers to buy the “pushed” products. At the other end is a pull strategy, which stimulates consumer demand to obtain product distribution. The manufacturer uses a pull strategy by focusing promotional efforts on end consumers and opinion leaders. The wholesaler then places an order for the “pulled” merchandise from the manufacturer. Consumer demand pulls the product through the channel of distribution. A company typically uses a mix of push and pull strategies. The push and pull strategies are diagrammed in Exhibit 16.7 Discussion/Team Activity: Discuss products and/or industries that utilize push and/or pull strategies in their promotion mix. © 2016 Cengage Learning. All Rights Reserved.

© 2016 Cengage Learning. All Rights Reserved. Chapter 15 Marketing Communications Chapter 16 Video Pepe’s Pizzeria Pepe’s Pizzeria is a popular restaurant located in Connecticut. The CEO discusses the thought process behind their marketing strategy, how promotions work for Pepe’s and the general location strategy that comes into play when opening new locations. CLICK TO PLAY © 2016 Cengage Learning. All Rights Reserved.