© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-2 INTEGRATED MARKETING COMMUNICA- TIONS AND DIRECT MARKETING C HAPTER

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Discuss integrated marketing communication and the communication process. 2.Describe the promotional mix and the uniqueness of each component. 3.Select the promotional approach appropriate to a product’s life-cycle stage and characteristics.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-4 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 4.Discuss the characteristics of push and pull strategies. 5.Describe the elements of the promotion decision process. 6.Explain the value of direct marketing for consumers and sellers.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-6 THE COMMUNICATION PROCESS Promotional Mix Integrated Marketing Communications (IMC)Integrated Marketing Communications (IMC) Communication Source Message Channel of Communication Receivers

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-7 FIGURE 18-1 FIGURE 18-1 The communication process

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 18-8 THE COMMUNICATION PROCESS Encoding and Decoding  Encoding Encoding  Decoding Decoding  Field of Experience Field of Experience

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide THE COMMUNICATION PROCESS Feedback  Response Response  Feedback Feedback Noise  Pretesting  Feedback Loop

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-2 FIGURE 18-2 The promotional mix

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide THE PROMOTIONAL ELEMENTS Advertising  Paid Aspect  Nonpersonal Component  Wasted Coverage Personal Selling

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide THE PROMOTIONAL ELEMENTS Public Relations  Public Relations Public Relations  Publicity Publicity Sales Promotion Direct Marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-A FIGURE 18-A Factors that influence the use of promotional tools

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-3 FIGURE 18-3 Promotional tools used over the product life cycle of Purina Dog Chow

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide INTEGRATED MARKETING COMMUNICATIONS—DEVELOPING THE PROMOTIONAL MIX Stages of the Buying Process  Prepurchase Stage  Purchase Stage  Postpurchase Stage

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-4 FIGURE 18-4 How the importance of promotional elements varies during the stages of consumer’s purchase decision

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide INTEGRATED MARKETING COMMUNICATIONS—DEVELOPING THE PROMOTIONAL MIX Channel Strategies  Push Strategy Push Strategy  Pull Strategy Pull Strategy Direct-to-Consumer

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-5 FIGURE 18-5 A comparison of push and pull promotional strategies

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide DEVELOPING AN IMC PROGRAM Identifying the Target Audience  Hierarchy of Effects Hierarchy of Effects Awareness Interest Specifying Promotion Objectives Evaluation Trial Adoption

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide DEVELOPING AN IMC PROGRAM Setting the Promotion Budget  Percentage of Sales Budgeting Percentage of Sales Budgeting  Competitive Parity Budgeting (Matching Competitors or Share of Market) Competitive Parity Budgeting (Matching Competitors or Share of Market)  All-You-Can-Afford Budgeting All-You-Can-Afford Budgeting  Objective and Task Budgeting Objective and Task Budgeting

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-7 FIGURE 18-7 U.S. promotion expenditures by companies in 2003

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-8 FIGURE 18-8 The objective and task approach

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide DIRECT MARKETING The Growth of Direct Marketing  Direct Orders Direct Orders The Value of Direct Marketing  Lead Generation Lead Generation  Traffic Generation Traffic Generation Technological, Global, and Ethical Issues in Direct Marketing

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide FIGURE 18-9 FIGURE 18-9 Direct marketing expenditures, sales, and employment by medium

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Promotional Mix The promotional mix consists of the combination of one or more of the communication tools used to: (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Integrated Marketing Communications (IMC) Integrated marketing communications (IMC) is the concept of designing marketing communications programs that coordinate all promotional activities— advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Communication Communication is the process of conveying a message to others and requires six elements: a source, a message, a channel of communication, a receiver, and the processes of encoding and decoding.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Source A source is a company or person who has information to convey.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Message A message is the information sent by a source to a receiver in the communication process.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Channel of Communication A channel of communication is the means (e.g., a salesperson, advertising media, or public relations tools) of conveying a message to a receiver.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Receivers Receivers are consumers who read, hear, or see the message sent by a source in the communication process.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Encoding Encoding is the process of having the sender transform an idea into a set of symbols.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Decoding Decoding is the process of having the receiver take a set of symbols, the message, and transform them back to an idea.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Field of Experience A field of experience is a mutually shared understanding and knowledge that the a sender and receiver apply to a message so that it can be communicated effectively.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Response A response is the impact the message had on the receiver’s knowledge, attitudes, or behaviors in the feedback loop.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Feedback Feedback is the sender’s interpretation of the response and indicates whether a message was decoded and understood as intended.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Noise Noise includes extraneous factors that can work against effective communication by distorting a message or the feedback received.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Advertising Advertising is any paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Personal Selling Personal selling is the two-way flow of communication between a buyer and seller, designed to influence a person’s or group’s purchase decision, usually in face-to-face communication between the sender and receiver.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Public Relations Public relations is a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Publicity Publicity is a nonpersonal, indirectly paid presentation of an organization, good, or service.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Sales Promotion Sales promotion is a short-term inducement of value offered to arouse interest in buying a good or service.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Direct Marketing Direct marketing uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Push Strategy A push strategy consists of directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Pull Strategy A pull strategy consists of directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Hierarchy of Effects The hierarchy of effects is the sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action (either trial or adoption of the product). The stages include awareness, interest, evaluation, trial, and adoption.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Percentage of Sales Budgeting Percentage of sales budgeting consists of allocating funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Competitive Parity Budgeting Competitive parity budgeting consists of allocating funds to promotion by matching the competitor’s absolute level of spending or the proportion per point of market share. Also called matching competitors or share of market.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide All-You-Can-Afford Budgeting All-you-can-afford budgeting consists of allocating funds to promotion only after all other budget items are covered.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Objective and Task Budgeting Objective and task budgeting consists of allocating Allocating funds to promotion whereby the company (1) determines its promotion objectives, (2) outlines the tasks to accomplish these objectives, and (3) determines the promotion cost of performing these tasks.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Direct Orders Direct orders are the result of direct marketing offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Lead Generation Lead generation is the result of a direct marketing offer designed to generate interest in a product or a service and a request for additional information.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Traffic Generation Traffic generation is the outcome of a direct marketing offer designed to motivate people to visit a business.