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© 2013 Cengage Learning. All rights reserved.
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16: Integrated Marketing Communications Part 7: Promotion Decisions
© 2013 Cengage Learning. All rights reserved.
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Learning Objectives Describe the nature of integrated marketing communications Examine the process of communication Understand the role and objectives of promotion Explore the elements of the promotion mix Examine the selection of promotion mix elements Understand word-of-mouth communication and how it affects promotion Understand product placement promotions Examine criticism and defenses of promotion © 2013 Cengage Learning. All rights reserved.
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Integrated Marketing Communications
Coordination of promotion and other marketing efforts to ensure maximum informational and persuasive impact on customers IMC is increasingly accepted Coordinate/manage promotional efforts Synchronization of promotional elements Use more precisely targeted promotional tools Consistent message to customers Use of database marketing Protect consumer privacy © 2013 Cengage Learning. All rights reserved.
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Promotion and the Communication Process
Communications: A sharing of meaning through the transmission of information Source: A person, group, or organization with a meaning it attempts to share with a receiver/audience Receiver: The individual, group, or organization that decodes a coded message An audience is two or more receivers Coding process (Encoding): Converting meaning into a series of signs or symbols © 2013 Cengage Learning. All rights reserved.
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The Communication Process
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Decoding the Message Communications channel: The medium of transmission that carries the coded message from the source to the receiver/audience Decoding process: Converting signs and symbols into concepts and ideas Noise: Anything that reduces a communication’s clarity and accuracy Feedback: Receiver’s response to a decoded message Channel capacity: The limit on the volume of information a channel can handle effectively; determined by the least efficient component of the communication process © 2013 Cengage Learning. All rights reserved.
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Discussion Questions Many companies make blunders when marketing internationally Follow the link to access a list of cross-cultural marketing mistakes What are the problems with these messages? How did noise interfere with the reception of the message? What could these companies have done differently to avoid costly and embarrassing communications mistakes? © 2013 Cengage Learning. All rights reserved.
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Promotion Communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an organization positively and to accept its products Promotion’s goal is to stimulate product demand and build customer relationships Most organizations expend a large amount of resources on promotion © 2013 Cengage Learning. All rights reserved.
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Where People Get Their News and Information
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Information Flows are Important in Integrated Marketing Communications
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Objectives of Promotion
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Create Awareness Awareness is crucial to initiating the product adoption process for new products For existing products, promotional efforts create increased awareness of brands, product features, image-related issues, or operational characteristics © 2013 Cengage Learning. All rights reserved.
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Stimulate Demand Primary demand: Demand for a product category rather than a specific brand Pioneer promotion: Promotion that informs consumers about a new product A way to stimulate primary demand during the introductory stage of the product life cycle Selective demand: Demand for a specific brand © 2013 Cengage Learning. All rights reserved.
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Encourage Product Trial
If customers stall in the evaluation stage, marketers can use methods to encourage product trial in order to move them to adoption Trial techniques Free samples Coupons Test drives Limited free-use offers Contests Games © 2013 Cengage Learning. All rights reserved.
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Identify Prospects Some promotional efforts aim to locate and identify customers who are interested in the firm’s products and are most likely to buy Techniques include Direct-response information form Toll-free number The organization should follow up with prospects © 2013 Cengage Learning. All rights reserved.
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Retain Loyal Customers
A major goal of marketing is to maintain long-term customer relationships Keeping current customers is less costly than acquiring new customers Retention techniques include Frequent-user programs Special offers for existing customers Online communications Customer-only events Sweepstakes © 2013 Cengage Learning. All rights reserved.
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Discussion Question Southwest Airlines has become a model for customer loyalty Click here to read Southwest’s annual report How has Southwest achieved customer loyalty as many airlines fail? © 2013 Cengage Learning. All rights reserved.
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Facilitate Reseller Support
Strong relationships with resellers are important to an organization’s ability to maintain a sustainable competitive advantage Various promotional methods help achieve this goal Resellers view promotion as a form of support Share promotional expense Special offers/buying allowances © 2013 Cengage Learning. All rights reserved.
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Combat Competitive Promotional Efforts
Promotional activities may aim to offset or lessen the effect of a competitor’s promotional and marketing programs This type of promotional activity does not necessarily increase sales or market share A combative promotional objective is often used by firms in highly competitive consumer markets © 2013 Cengage Learning. All rights reserved.
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Reduce Sales Fluctuations
A business cannot operate at peak efficiency when sales fluctuate rapidly Holidays Seasonal products Promotional activities are often designed to stimulate sales during slumps © 2013 Cengage Learning. All rights reserved.
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The Four Elements of the Promotion Mix
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Advertising A paid nonpersonal communication about an organization and its products transmitted to a target audience through mass media Advertising is changing as mass media consumption habits are changing The Internet and digital media aim at smaller, more targeted audiences Advertising is flexible and can reach large or small audiences © 2013 Cengage Learning. All rights reserved.
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Advantages and Disadvantages of Advertising
Cost-efficient when it reaches a large number of people at a low cost per person It lets the source repeat the message several times Visibility gained from advertising can enhance a firm’s image Disadvantages Absolute dollar outlay is high Rarely provides rapid feedback Difficult to measure its effect on sales Less persuasive than personal selling Generally limited time exposure © 2013 Cengage Learning. All rights reserved.
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Personal Selling A paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation Advantages A more specific form of advertising Has a greater impact on consumers Provides immediate feedback Disadvantages Expensive Labor intensive Time consuming © 2013 Cengage Learning. All rights reserved.
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Types of Interpersonal Communication
Kinesic: Body language; communicating through movement of the head, eyes, arms, hands, legs, or torso Proximic: Communicating by varying the physical distance between two parties in face-to-face interactions Tactile: Communication through touching © 2013 Cengage Learning. All rights reserved.
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Public Relations A broad set of communication efforts used to create/maintain favorable relationships between an organization and its stakeholders Publicity is a non-personal communication in a news-story form about an organization, its products, or both Is transmitted through a mass medium at no charge Public relations should be viewed as an ongoing program during crises and good times © 2013 Cengage Learning. All rights reserved.
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Public Relations Tools
Publicity Annual reports Brochures Event sponsorships Sponsorship of socially responsible programs Press releases/Conferences/ Feature articles © 2013 Cengage Learning. All rights reserved.
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Sales Promotion A activity or material that acts as a direct inducement, offering adding value or incentive to resellers, salespeople, or customers Free samples Games Rebates Sweepstakes Contests Premiums Coupons © 2013 Cengage Learning. All rights reserved.
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What is PETA promoting in this advertisement?
Discussion Question What is PETA promoting in this advertisement? Courtesy of People for the Ethical Treatment of Animals. PETA.org. © 2013 Cengage Learning. All rights reserved.
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Product Categories with the Greatest Distribution of Coupons
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Selecting Promotion Mix Elements
Resources, objectives, and policies Characteristics of the target market Characteristics of the product Cost and availability of promotional methods Push and pull channel policies © 2013 Cengage Learning. All rights reserved.
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Promotional Resources, Objectives, and Policies
The size of an organization’s promotional budget affects the number and intensity of promotional methods used A company’s objectives and policies influence the types of promotions included Different objectives will require different promotional mixes © 2013 Cengage Learning. All rights reserved.
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Characteristics of the Target Market
Size Often drives which promotional elements are chosen Small target markets often rely on personal selling Geographic distribution Personal selling is feasible when customers are concentrated in a small area Dispersed customers often best reached with advertising Demographic characteristics Age, income, education, etc. will affect consumers’ media consumption patterns and are important considerations when developing the promotion mix © 2013 Cengage Learning. All rights reserved.
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Characteristics of the Product
Business products concentrate on Personal selling Sales promotion Consumer products concentrate on Convenience goods = advertising Durables and expensive products = personal selling Both = public relations Product price and product use are important factors © 2013 Cengage Learning. All rights reserved.
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Distribution Intensity of the Product
Intensive distribution Advertising, sales promotion Selective distribution Promotion mixes may vary Exclusive distribution Personal selling © 2013 Cengage Learning. All rights reserved.
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Costs and Availability of Promotional Methods
National advertising/Sales promotion Have higher expenses but low cost per individual International promotion Can be difficult because of lack of promotional channels Personal selling Is dependent on recruiting and hiring qualified salespeople © 2013 Cengage Learning. All rights reserved.
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Push and Pull Channel Policies
Push policy: Promoting a product to the next institution down the marketing channel Pull policy: Promoting a product directly to consumers in order to develop strong consumer demand Organizations may use both push and pull policies at the same time © 2013 Cengage Learning. All rights reserved.
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Comparison of Push and Pull Promotional Strategies
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The Importance of Word-of-Mouth Communication
Word-of-mouth (WOM) communication: Personal, informal exchanges of communication that customers share with one another about products, brands, and companies Most customers are likely to be influenced by friends and family members when making purchases Effective WOM communication is becoming increasingly important Is most effective for new-to-market and expensive products © 2013 Cengage Learning. All rights reserved.
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The Importance of Word-of-Mouth Communication (continued)
Buzz marketing: An attempt to incite publicity and public excitement surrounding a product through a creative event Viral marketing: A strategy to get consumers to share a marketer’s message, often through or online video, in a way that spreads dramatically and quickly © 2013 Cengage Learning. All rights reserved.
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Product Placement A form of advertising that strategically locates products or product promotions within entertainment media to reach a product’s target market In-program product placements have become a successful method of reaching consumers Has become more important as more consumers bypass advertisements through DV-R, TiVo, and the Internet Increasing in popularity internationally © 2013 Cengage Learning. All rights reserved.
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Think About It The Gap utilized product placement in the movie The Social Network Can you think of other examples of product placement that you have seen? Merrick Morton/© Columbia Pictures/Courtesy Everett Collection © 2013 Cengage Learning. All rights reserved.
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Criticisms and Defenses of Promotion
Is promotion deceptive? Some are, but not all promotion should be condemned Laws, government regulation, and industry self-regulation have helped decrease deceptive promotion Does promotion increase prices? If promotion is working to stimulate demand, producing and marketing larger quantities can actually help reduce prices Does promotion create needs? Marketing does not create needs, but makes consumers aware of needs they already have © 2013 Cengage Learning. All rights reserved.
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Criticisms and Defenses of Promotion (continued)
Does promotion encourage materialism? Marketers assert that values are instilled at home and promotion does not change people into materialistic consumers Does promotion help customers without costing too much? Promotions inform customers about a product’s uses, features, advantages, prices, or purchase locations Should potentially harmful products be promoted? Defenders argue that, as long as it is legal to sell a product, promoting it should also be allowed © 2013 Cengage Learning. All rights reserved.
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Key Concepts Integrated marketing communications Pioneer promotion
Selective demand Source Promotion mix Receiver Kinesic communication Coding process Proxemic communication Communications channel Tactile communication Decoding process Push policy Noise Pull policy Feedback Word-of-mouth communication Channel capacity Buzz marketing Promotion Viral marketing Primary demand Product placement © 2013 Cengage Learning. All rights reserved.
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