Part 3: The marketing mix Chapter 15: The marketing communications mix Step 5: Design the marketing strategy Copyright  2004 McGraw-Hill Australia Pty.

Part 3: The marketing mix Chapter 15: The marketing communications mix Step 5: Design the marketing strategy Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

When we finish this lecture you should
Understand why a marketing manager should specify objectives to guide the advertising effort Know when the various types of advertising are appropriate and how to select the best advertising medium Know how to plan the best message or copy strategy Understand some of the issues relevant to international advertising Recognise the role and importance of direct marketing Understand the nature and variety of sales promotions Understand the reason for the growth of sponsorship in Australasia Know the principles of public relations and publicity Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

The marketing communications mix
Various categories of promotional tools available to marketers—all contributing to the role of the whole marketing communications mix—a combination of Advertising Direct-response promotion Sales promotion Publicity Public relations Personal selling Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Advertising Marketing managers must decide
Who is their target audience What kind of advertising to use How to reach customers (via which types of media) What to say to them (the copy strategy) Who will do the work (the company’s own advertising department or an outside agency) Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Figure 15.1 Strategy planning for advertising
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

The importance of advertising
Involves a huge amount of money Work is done by relatively few people Major expense is for media time/space Companies spend only a small percentage of sales on advertising In a nutshell Advertising is the most visible and contentious aspect of marketing. Advertising has become part of many people’s lives, particularly in countries with high TV ownership. Explanation Advertising grew to prominence when mass markets developed. That is, when the population at large could afford consumer products, marketers found that advertising presented an economic means of communicating with them. The advent of media such as radio and TV meant that hard-hitting messages, which often worked very well in persuading people to buy, could be delivered for a low per-person cost (a fraction of a cent per sale, for example). And media usually offers the important advantage of immediacy. We can simultaneously contact millions of people. Application Fast-moving consumer goods (FMCG) marketers use advertising widely. Proctor and Gamble is the biggest US advertiser after General Motors. Television, magazines and outdoor advertising feature such products as food, drinks, fast foods, snacks, healthcare products, beauty care products, household consumables, and so on. Why? Because nearly everyone is a potential user of FMCG products. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Setting advertising objectives
Help introduce new products to specific target markets Help position the firm's brand or marketing mix by informing and persuading target customers or intermediaries about its benefits Help obtain desirable outlets (distribution) Provide ongoing contact with target customers Prepare the way for the personal selling effort Get immediate buying action Help buyers confirm purchasing decisions In a nutshell To get maximum cost-effectiveness from advertising expenditure, we must set narrowly defined, measurable objectives (pp. 483–484). Explanation ‘You can’t manage if you can’t measure.’ If an advertising campaign seeks to raise product awareness of a new product, then an objective might be ‘to achieve brand recognition of 27 per cent among 13–18 year old Australians by September 30’. Success is easily measured by surveys based on showing brand logos, for example, to samples of the target audience. Application Life assurance selling is a tough job. The salesperson must talk about death or incapacitating illness, planning for the future, and other depressing subjects. Then she/he must extract substantial sums of money from the buyer. So, insurance companies often advertise with the objective of paving the way for their salespeople. ‘The Man From the Prudential’ was a famous advertising icon, positioning him as a helpful professional who had his clients’ interests at heart, offering an important service in a close, warm and personalised way. This strategy helped Prudential to become a leading UK life assurance marketer. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Figure 15.2 Examples of different types of advertising over adoption process stages
In a nutshell Advertising can send messages to consumers at each stage of the buying process (p. 484). Explanation An ad preaching product benefits, let’s say a digital camera, might be wasted on a population ignorant of the technology. This implies the need to progressively woo customers, using a sequence such as: 1. ‘What’s this? A camera that doesn’t use film?’ 2. ‘At last, a camera which lets you look at the picture you just took.’ 3. ‘The most pixels you’ll get in a camera under $1000.’ 4. ‘With free enhanced optical zoom accessory till September 30th.’ Application A classic ad by Ford used the line ‘Aren’t you glad you bought a Ford?’ The copy then outlined the product features which had been used in more conventional ads. This campaign targeted the objective of keeping existing customers happy, hence acting as referral sources for new buyers. This type of ad may also facilitate cognitive dissonance reduction, a psychological mechanism which makes buyers happy even if they’ve made a wrong choice. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Types of advertising Product advertising—Tries to sell a specific product to final users or channel members Pioneering advertising builds primary demand Competitive advertising builds selective demand Corporate/institutional advertising—Tries to promote an organisation's image, reputation or ideas—rather than a specific product In a nutshell Advertising can promote at the level of the specific (product) or the general (institutional) (pp. 484–486). Explanation ‘Product advertising’ is used to boost sales (to pioneer sales of a new product, for example, by an industry group marketing the product), or to win market share for a given brand. ‘Institutional advertising’ aims to create a positive image for the advertiser rather than to market a product. An example is the promotion of New Zealand as a great tourist destination, a campaign run by the government. Application When BHP Billiton decided to drill for oil in Bass Strait, it knew it risked annoying environmentalists. It acted pre-emptively, running a series of TV ads which showed seals happily perching on the girders of a drilling rig as waves washed over them. The picture reinforced the message that the drilling program had been managed with due sensitivity, avoiding negative impact on sea life. The company continued its drilling operations with little environmentalist flak. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Coordinating advertising efforts
Vertical cooperation Involves the cooperation of members from different levels of a distribution channel Is common in relation to advertising decisions Advertising allowances Price reductions given to organisations in the channel to encourage them to advertise or otherwise promote the supplier’s products locally Horizontal cooperation Involves cooperation between several members at the same level of a distribution channel Often occurs in relation to advertising In a nutshell There are opportunities for synergy if the advertising task is shared by several members of the distribution channel. Explanation Cooperative advertising involves intermediaries and producers sharing the cost of the advertisements. This helps them to compete in their local markets and also helps the producer to obtain more for its money, because regional media are usually cheaper than national media. Also, if a retailer is paying a share of the cost, they are more likely to be committed to the product. The producer might also offer advertising allowances (price reductions) to companies further along the channel to encourage them to advertise the product locally. Horizontal cooperation enables smaller organisations to benefit from the media purchasing power by cooperating like a large company. Companies like hotels might join with credit card companies and food outlets to advertise together. Application Allowances and support material alone do not guarantee cooperation. Benetton has created and used some controversial and shocking campaigns (see Most of their franchisers saw the advertisements as tasteless and potentially harmful to sales. In order to protest, some of the German franchisees stopped paying their fees to Benetton and sued Benetton for damages. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Major advertising media
Magazine Television Newspaper Yellow Pages Radio Outdoors Cinema Internet In a nutshell Media should be chosen to fit promotional strategy (pp. 488–489). Explanation Different media offer different advantages and disadvantages. The Skateboarder (a magazine) gives a narrowly targeted focus, and national TV gives a very wide focus. Then there’s the cost, with approximate comparisons accessible via ‘cost per thousand’ data. But mere attractive cost structures omit other important factors such as the media’s image—a fashion marketer wouldn’t advertise in a cheap newspaper. A need to send an ongoing message might not be realised through newspaper ads—newspapers get recycled the next day. Application McDonald’s is a heavy user of many forms of advertising. One is outdoor advertising (billboards) which tell us, for example, that it‘s 20 minutes to the nearest restaurant. Many hungry drivers will plan to stop at the restaurant when they see this message. As well, children who are too young to read recognise the golden arches and begin the pestering process they know often achieves a visit to their friend, Ronald McDonald. In this context, the billboard is an appropriate medium. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Choosing the ‘best’ advertising medium
Promotional objectives Target market you need to reach Funds available Nature of the media Who it reaches With what frequency At what impact At what cost Overall fit with the rest of the marketing mix In a nutshell Media selection is a juggling act, aiming for the most advantages and the least disadvantages per dollar spent (pp. 488–491). Explanation Every medium has its advantages and disadvantages. Newspapers cover a large population but the hundreds of ads they carry could bury yours. And tomorrow, your ad could be in the recycle bin. Radio may target segmented audiences (according to their music tastes, for instance), but it often functions merely as background noise, getting little attention. And big as a billboard is, it can’t carry too much copy or the speeding motorist won’t have time to read it. Application Real estate agents often advise vendors that many sales come from locals moving to a new house in the suburb they’ve come to know and love. This may be why the local suburban newspaper is frequently dominated by real estate ads (a majority of the pages in some papers). Here, we see excellent targeting, low cost, and the potential to carry the colour pictures so useful in attracting the prospective buyer to make the inspection which is vital to the sale. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Figure 15.3 Advantages and disadvantages of several types of media

Figure 15.3 Advantages and disadvantages of several types of media (continued)

Measuring advertising effectiveness
Sales Direct-response advertising Pre-testing advertising Attitude research Laboratory-type devices Split runs of advertisements Customer recall In a nutshell It is too simple to measure the effectiveness of advertising just by looking at sales. Explanation The total marketing mix is responsible for the sales—advertising alone is not responsible for sales. The only type of advertisement that contradicts this is direct-response advertising, where the results are measurable by the increase in sales of the product to which consumers have responded. Application Advertisers should ideally pre-test their advertisements before launching the campaign. Sometimes laboratory-type devices that measure skin moisture or eye reaction are used to gauge consumer response. At other times, focus groups may be used to obtain reactions and attitudes to the campaign. Some advertisements are shown in different parts of the world or within different areas of a country to try to gauge which may be the better advertisement. Advertisers can also use surveys of customers after they have run the advertisement, to see if the customers can recall the advertisement, the slogan or the brand name. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

International aspects of advertising
Legal aspects of advertising In most countries, the government takes an active role in deciding what kinds of advertising are permitted, what is considered fair and what is inappropriate Global agencies for global advertising Many agencies are small, with 10 or fewer employees Some large agencies have merged, creating mega-agencies In a nutshell In most countries, the government takes an active role in deciding what kinds of advertising are permitted, what is considered fair and what is inappropriate. Explanation Different countries have different regulations. It is important for the international marketer to understand what they are, and are not, allowed to do in a foreign country. Application In France and Japan, the use of cartoon characters in advertising to children is limited, while Sweden and Canada ban any advertising targeted directly at children. In Switzerland, an advertiser cannot use an actor to represent a consumer. New Zealand and Switzerland limit political advertisements on TV. In Australia, New Zealand and the US, print advertisements must be identified so that they are not confused with editorial content. This is not the case in many other countries. Most countries place limits on the number and length of commercials. In Italy, a TV advertisement can be shown only 10 times per year. In many countries Pepsi advertises its cola as ‘the choice of the new generation’ but in Japan, the Fair Trade Committee does not allow this advertisement because, at the moment, Pepsi is not ‘the choice’ of the Japanese people. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Figure 15.4 Top eight advertising agency supergroups and examples of products they advertise

Direct-response promotion
Special considerations with ‘direct marketing’ Direct communication between a seller and the individual customer using a promotion method other than face-to-face personal selling Started with mail advertising, but has evolved to include other media Distinctive feature—It attempts to evoke a direct response from the customer Closely tied to the use of a database to target customers In a nutshell Direct marketing works better when it’s well targeted (pp. 496–498). Explanation We’ve all heard stories of direct mail addressed to dead customers, men receiving lingerie promotions, and babies invited to trade up to a new car. Clearly, the cost-effectiveness of direct-response marketing improves with good targeting. Application An Australian bank ‘mined’ its database to target a first home buyers mortgage promotion. Given banks’ holdings of comprehensive data on each customer, the bank was able to send direct mail to customers: * aged between 25 and 35 * with incomes above $ (read from direct-credit salary payments) * with recent substantial pay rises (read from direct-credit salary payments) * who’d recently opened some form of savings account * with joint accounts (evidence of a committed relationship). The campaign earned business far in excess of its modest cost. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Direct-response online
Many promotional mixes now include an advertiser’s Web site and a viewer can respond by clicking to obtain more detailed information Information might include pictures, videos, sound, text, order entry and so on A small subset of the total number of Web sites account for a large percentage of the potential audience Portals are Web sites that act as a gateway to the Internet In a nutshell Some experts predict that portals may become (for the Internet) what networks once were for the TV—the place of choice where an advertiser is willing to pay high rates because of the unique opportunity to reach a very large number of people. Explanation Many promotional mixes now include an advertiser’s Web site. The content on a Web site is quite different from that of a traditional advertisement, since greater detail and more information can be included—allowing the viewer to direct the pace and direction of the information they use. Most Web sites also provide links to outside information and they also provide the ability to the company for more information. Targeting can be even more precise using Web sites. The use of key words is very important. A cosmetic retailer arranges for its advertisement to pop up on the screen when certain key words are typed in. This is called ‘context advertising’. ‘Pointcasting’ is the display of an advertisement only to a person meeting certain qualifications. The person might have expressed an interest in the topic of the advertisement. Application Dell might want its computer advertisements to be on a Web site so that they can be seen by computer users. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Sales promotion Promotion activities (other than advertising, publicity and personal selling) that stimulate interest, trial or purchase May be focused at channel members, final customers or users, or employees Skill may be difficult to develop inside the company, since a promotion activity is often designed and used only once Sales promotion spending is increasing and exceeds advertising spending In a nutshell Sales promotion is a communications tool (other than advertising, publicity or personal selling) for boosting sales (498–502, Figures 15.5 and 15.6). Explanation As a weapon in the marketer’s armoury, sales promotion can be narrowly targeted to consumers, channel intermediaries, or employees. A key element is the ‘hardware’—coupons, displays, banners, point-of-sale posters and so on. Intermediaries may increase profits by participating in deals. Employees, for instance salespeople, may work hard to sell promotional deals, and win ‘salesperson of the month’ contests with prizes of cars and free travel. Application Retailers in a country town were concerned that much of its population did their Christmas shopping in the nearby regional city. They put together a ‘Win a car’ offer which required coupons to the total value of $500 to be stuck to the card to make it eligible for the draw. The drawing ceremony, held a few days before Christmas, was attended by over 1000 people (close to the town’s population). Retailers reported sales way above those for previous years, and the drawing ceremony became a big annual event. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Figure 15.5 Examples of sales promotion activities

Figure 15.6 Some possible effects of a sales promotion on sales

Sponsorship An investment in cash or kind, in an event, sport, art, person or idea, in exchange for access to the commercial potential of that event, sport, art, person or idea Not a new concept (traced back to Ancient Rome and Gladiatorial Games) Sport sponsorship is by far the most intensive form of sponsorship A wide range of possible objectives A general lack of rigorous evaluation by sponsors In a nutshell Sponsorship delivers benefit by association. For instance, a bank (not an attractive image) buys good consumer feelings from a sports team (highly attractive image) (pp. 502–503). Explanation Intuitively, we can guess that consumers’ image of a sponsor is improved, and that this boost to image helps build a relationship with customers. But, this may be difficult to prove. An exception is the sponsorship of a football team by a whisky marketer, which reported sales leaps after every game of its sponsored team. Application Australia’s Westpac Rescue Helicopter service illustrates a situation where a bank (at best, the banking industry doesn’t project an exciting image, and it’s currently tagged with rather negative connotations) pays for a life-saving service provided to swimmers, hikers and so on. The Westpac helicopter is a familiar sight on New South Wales beaches, and it is watched by many thousands on good beach days. As well, it often figures in TV news when it plays the hero in a dramatic rescue. This prime time TV exposure must be the equivalent of millions of dollars of paid advertising. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Public relations and publicity
Public relations (PR) involves communicating with several interest groups—Employees, shareholders, governments and political parties as well as customers and the general public It is aimed at fostering positive publicity and may be used to counter negative publicity Publicity comprises all word-of-mouth (negative or positive) and media coverage There is such a thing as negative publicity (including rumours and myths) In a nutshell ‘Any publicity’s good publicity’ (pp. 503–505). Explanation The significant role of the press release in contemporary journalism illustrates the role assumed by public relations/publicity. Organisations wanting to put forward their point of view and take the initiative in giving the media their story. Obviously, journalists seek to write objectively, but it’s interesting to read a newspaper while asking oneself what press release might have prompted a given article. A recent newspaper story reported that red wine has been found to contain a chemical which promotes longevity. Can you guess the probable source of the press release which gave birth to this story? Application A mobile phone service provider recently organised a streaker to run across a sports ground before a crowd of thousands wearing nothing but the company’s logo painted on his buttocks. The incident was widely reported on TV and newspapers. This earned the marketer millions of dollars in free publicity. The strategy worked again when the CEO apologised for his company’s lapse of taste, again with heavy media coverage. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Creating synergies There is a wide array of tools in the promotional mix There is an unlimited number of possible combinations The aim of marketers is to create synergy and to ensure that every promotional activity reinforces the desired image—For example, a sponsorship program that is not advertised is unlikely to have the same impact as one which is advertised and used for PR and sales promotions purposes In a nutshell In using promotional tools, marketers strive for = 5 (p. 505). Explanation In our discussion on the value of gearing promotion to adoption stage processes, we mentioned the benefits of using different media and different messages in sequence. Synergy also flows from the ‘simultaneous’ use of an array of promotional elements. Among possible explanations, the threshold effect may be cited. This suggests that a stimulus (for example, an ad) isn’t noticed until it exceeds a sensory threshold. Beyond that threshold, its impact builds. Big FMCG marketers often spend strikingly large sums on product launches to make sure their message gets across. Application FedEx, the US parcel delivery multinational, advertises in most of the traditional ways, and uses a wide range of other promotional tools (sponsorships, and so forth). But it also trains its thousands of staff, as walking billboards, to offer the utmost in courtesy and service. And it reports that its TV commercials give a synergistic benefit by acting as de facto staff training tools, teaching staff how to give the superb service which is an industry byword. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

What we will be doing in the next chapter
In the following chapter we will be discussing sales marketing, including The importance and nature of personal selling The elements of the personal selling process The when and where of using the three types of sales presentation The importance of providing good customer service The importance of long-term customer relationships Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing 4/e by Quester, McGuiggan, Perreault and McCarthy

Part 3: The marketing mix Chapter 15: The marketing communications mix Step 5: Design the marketing strategy Copyright  2004 McGraw-Hill Australia Pty.

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Part 3: The marketing mix Chapter 15: The marketing communications mix Step 5: Design the marketing strategy Copyright  2004 McGraw-Hill Australia Pty.

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Presentation on theme: "Part 3: The marketing mix Chapter 15: The marketing communications mix Step 5: Design the marketing strategy Copyright  2004 McGraw-Hill Australia Pty."— Presentation transcript:

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