1. Integrated Marketing Communications
Chapter 15
Integrated Marketing Communications

2. Chapter Objectives
Explain how integrated marketing communications relates to the development of an optimal promotional mix.
Describe the communication process and how it relates to the AIDA concept.
Explain how the promotional mix relates to the objectives of promotion.
Identify the different elements of the promotional mix and explain how marketers develop an optimal promotional mix.
Describe the role of sponsorships and direct marketing in integrated marketing communications.
Contrast the two major alternative promotional strategies.
Explain how marketers budget for and measure the effectiveness of promotion.
Discuss the value of marketing communications.

3. Chapter Overview
Promotion: function of informing, persuading, and influencing the consumer’s purchase decision
Marketing Communications: transmission from a sender to a receiver of a message dealing with the buyer-seller relationship

4. Integrated Marketing Communications
Coordination of all promotional activities – media advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused promotional message
Success of any IMC program depends critically on identifying the members of an audience and understanding what they want

5. Importance of Teamwork
IMC requires a total strategy including all marketing activities, not just promotion
Successful implementation of IMC requires that everyone involved in every aspect of promotion – public relations, advertising, personal selling, and sales promotion – function as a team

6. Figure 15.2
Chrysler Crossfire: Using a Web Site and a Toll-free Number in an IMC Campaign

7. Role of Databases in Effective IMC Programs
With the growth of the Internet, marketers have been given the power to gather information faster and to organize it easier than ever before
By sharing this knowledge appropriately among all relative parties, a firm can lay the foundation for a successful IMC program

8. The Communications Process
An effective promotional message accomplishes three tasks:
It gains the receiver’s attention
It achieves understanding by both receiver and sender
It stimulates the receiver’s needs and suggests an appropriate method of satisfying them

9. AIDA concept (Attention-Interest-Desire-Action) – an explanation of the steps through which an individual reaches a purchase decision [Table on P.487]
Cheerios Coupon
Sender – General Mills Cheerios
Encoding – Marketing and Ad Agency
Channel – FSI, Coupon in Sunday Paper
Decoding – Reader see and clips coupon
Response – Cheerios purchased, coupon redeemed
Feedback – Detailed reports from News America or Valassis
Noise – Bad coupon design, wrong newspapers, wrong markets, damaged FSI

10. Global Difficulties with the Communication Process
In China: KFC’s slogan: “Finger lickin’ good” came out as “Eat your fingers off”
Also in China: Coca-Cola had thousands of signs made using the translation: “Ke-kou-ke-la”
Depending on the dialect this means . . .
“Bite the wax tadpole,” or
“Female horse stuffed with wax”
In Taiwan: Pepsi’s slogan, “Come alive with the Pepsi generation” came out as “Pepsi will bring your ancestors back from the dead”

11. Objectives of Promotion
Provide Information
Inform the market about the availability of a particular good or service
Disney World Ad promoting a free video to provide Information for vacation planning

12. Figure 15.3
Schick: Offering Product Information and Benefits to Consumers

13. Increase Demand
Some promotions are aimed at increasing primary demand, the desire for a general product category
More promotions are aimed at increasing selective demand, the desire for a specific brand

14. Differentiate the Product
Homogenous demand for many products results when consumers regard the firm’s output as virtually identical to its competitors’– then, the firm has virtually no control over marketing variables

15. Accentuate the Product’s Value
Promotion can explain the greater ownership utility of a product to buyers, thereby accentuating its value and justifying a higher price
Johnson & Johnson First Aid To Go! Accentuating a Product’s Value

16. Stabilize Sales
For the typical firm, sales fluctuations may result from cyclical, seasonal, or irregular demand
Stabilizing these variations is often an objective of promotional strategy

17. Elements of the Promotional Mix
Promotional mix: blend of personal selling and nonpersonal selling designed to achieve promotional objectives
Personal selling: interpersonal promotional process involving a seller’s person-to-person presentation to a prospective buyer
Nonpersonal selling includes: Advertising, Product placement, Sales promotion, Direct marketing, Public relations

18. Advertising
Paid, nonpersonal communication through various media by a business firm, not-for-profit organization, or individual identified in the message with the hope of informing or persuading members of a particular audience

19. Product Placement
Marketer pays a motion picture or television program owner a fee to display his or her product prominently in the film or show

20. Sales Promotion
Marketing activities that stimulates consumer purchasing (includes: displays, trade shows, coupons, premiums, contests, product demonstrations, and various nonrecurrent selling efforts)
Trade promotion

21. Direct Marketing
Direct communications other than personal sales contact between buyer and seller, designed to generate sales, information requests, or store visits

22. Public relations: firm’s communications and relationships with its various publics
Publicity: stimulation of demand for good, service, place, idea, person, or organization by unpaid placement of commercially significant news or favorable media presentations

23. Guerilla Marketing: Unconventional, innovative, and low-cost marketing techniques designed to get consumers’ attention in unusual ways.

26. Sponsorships
Provision of funds for a sporting or cultural event in exchange for a direct association with the events or activity
Spending now $11 Billion year
AT&T: A Sponsor of the PGA Tour

27. Growth of Sponsorships
Sponsorship has grown rapidly during the past 30 years
Corporate sponsorship spending has increased faster than promotional outlays for advertising and sales promotion
How Sponsorship Differs from Advertising
Sponsor’s degree of control
Nature of the message
Audience reaction
Ambush marketing

28. Assessing Sponsorship Results
Marketers utilize some of the same techniques to measure both advertising and sponsorship
The differences between the two promotional alternatives often necessitate some unique research techniques
Despite the impressive visibility of special events like soccer’s World Cup and football’s Super Bowl, the demands do not necessarily lead directly to increased sales or improved brand awareness

29. Direct Marketing
Few promotional mix elements are growing as rapidly as direct marketing
Related overall spending total $1.7 trillion
Direct Marketing Communication Channels

30. Direct Mail
Marketers combine information from internal and external databases, surveys, coupons, and rebates that require responses to provide information about consumer lifestyles, buying habits, and wants
Catalogs
Over 10,000 different consumer mail-order catalogs and thousands more for business-to- business sales are mailed each year generating over $57 million in consumer sales and $36 million in B2B sales

31. Offering Toll-Free Telephone Numbers to Catalog Shoppers
Telemarketing: promotional presentation involving the use of the telephone for outbound contacts by salespeople or inbound contacts initiated by customers who want to obtain information and place orders
Offering Toll-Free Telephone Numbers to Catalog Shoppers

32. Direct Marketing via Broadcast Channels Broadcast direct marketing includes:
Brief (30 to 90 and second) direct response ads on television or radio
Home shopping channels like:
Quality Value Channel (QVC)
Home Shopping Network (HSN)
Infomercial: promotional presentation for a single product running 30 minutes or longer in a format that resembles a regular television program

33. Electronic Direct Marketing Channels
Web advertising is an important component of electronic direct marketing
direct marketing is a natural and easy extension of traditional direct mail marketing
Other Direct Marketing Channels
Print media is generally not as effective as Web marketing or telemarketing for direct marketers
Magazine and newspaper ads with toll-free telephone numbers, kiosks, and other media are still useful in many situations

34. Starbucks Encore
Starbucks’ Direct-Response Print Ad

35. Developing an Optimal Promotional Mix
Factors that influence the effectiveness of a promotional to mix:
Nature of the market
Nature of the product
Stage in the product life-cycle
Price
Funds available for promotion

36. Nature of the market
Personal selling may prove effective with a market composed of a limited number of buyers
Advertising is more effective when a market has large numbers of potential customers scattered over sizable geographic areas
Personal selling often works better for intermediary target markets
Nature of the product
Highly standardized products with minimal servicing requirements usually need less personal selling than custom products with complex features and/or frequent maintenance needs
Consumer products are more likely to rely heavily on advertising than are business products

37. Sierra Mist: Promotion focusing on the nature of the product

38. Stage in the product life-cycle
Promotional mix must be tailored to the products stage in the product life-cycle
In the introductory stage, there is a heavy emphasis on personal selling to the to the intermediaries
However, advertising and sales promotion help to create awareness and stimulate initial purchases
In the growth and maturity stages, advertising gains relative importance
Personal selling efforts at marketing intermediaries to expand distribution is continued
In the maturity and early decline stages, firms frequently reduce advertising and sales promotion expenditures

39. Price
Advertising dominates the promotional mix for low-unit-value products due to the high personal contact costs of personal selling
Consumers a high-priced items like luxury cars expect lots of well-presented information via videocassettes, CDs, fancy brochures, and personal selling
Funds available for promotion
A critical element in the promotional strategy is the size of the promotional budget
While the cost-per-contact of a $2 million, 30-second TV commercial during the Super Bowl is relatively low, such an expenditure exceeds the entire promotional budgets of many, if not most firms

40. Figure 15.8
McDonald’s Dollar menu: Promotion Based on Price

41. Personal Selling Advertising
Influencing Factors
Personal Selling
Advertising
Nature of the market Number of buyers Geographic concentration Type of customer
Limited number
Concentrated
Business purchaser
Large number
Dispersed
Ultimate consumer
Nature of the product Complexity Service requirements Type of good or service Use of trade-ins
Custom-made, complex
Considerable
Business
Trade-ins common
Standardized
Minimal
Consumer
Trade-ins uncommon
Stage in the product life cycle
Often emphasized at every stage; heavy emphasis in the introductory and early growth stages in acquainting marketing intermediaries and potential consumers with the new good or service
Often emphasized at every stage; heavy emphasis in the latter part of the growth stage, as well as the maturity and early decline stages, to persuade consumers to select specific brands
Price
High unit value
Low unit value

42. Pulling and Pushing Promotional Strategies
Pulling strategy: promotional effort by a seller to stimulate demand among final users, who will then exert pressure on the distribution channel to carry the good or service, pulling it though the marketing channel
Pushing strategy: promotional effort by a seller to members of the marketing channel intended to stimulate personal selling of the good or service, thereby pushing it through the marketing channel

43. Budgeting for Promotional Strategy
Percentage-of-sales method
Fixed-sum-per-unit method
Meeting competition method
Task-objective method

44. Method Description Example
Percentage-of-sales method
Promotional budget is set as a specified percentage of either past or forecasted sales.
“Last year we spent $10,500 on promotion and had sales of $420,000. Next year we expect sales to grow to $480,000, and we are allocating $12,000 for promotion.”
Fixed-sum-per-unit method
Promotional budget is set as a predetermined dollar amount for each unit sold or produced.
“Our forecast calls for sales of 14,000 units, and we allocate promotion at the rate of $65 per unit.”
Meeting competition method
Promotional budget is set to match competitor’s promotional outlays on either an absolute or relative basis.
“Promotional outlays average 4 percent of sales in our industry.”
Task-objective method
Once marketers determine their specific, promotional objectives, the amount (and type) of promotional spending needed to achieve them is determined.
“By the end of next year, we want 75 percent of the area high-school students to be aware of our new, highly automated fast-food prototype outlet. How many promotional dollars will it take, and how should they be spent?”

45. Figure 15.9
Allocation of Promotional Budgets for consumer Packaged Goods

46. Measuring the Effectiveness of Promotion
Two basic measurement tools:
Direct sales results measures the effectiveness of promotion by revealing the specific impact on sales revenues for each dollar of promotional spending
Indirect evaluation concentrates on quantifiable indicators of effectiveness like:
Recall - how much members of the target market remember about specific products or advertisements
Readership – size and composition of a message’s audience

47. Measuring Online Promotions
Early attempts at measuring online promotional efforts involved counting hits and visits
Incorporating direct response and comparing different promotions for effectiveness
Two major techniques for setting online advertising rates:
Cost per impression (CPM), technique that related the cost of an ad to every thousand people who read it
Cost per response (click-throughs), which assumes that those who actually click on an ad want more information

48. The Value of Marketing Communications
Social Importance
Criticisms of promotional messages as tasteless and lacking any contribution to society sometimes ignore the fact that society provides no commonly accepted set of standards
The one generally accepted standard in a market society is freedom of choice for the consumer
Promotion has become an important factor in campaigns aimed at achieving socially oriented objectives like the elimination of drug abuse

49. Promotional Message Addressing a Universal Social Concern

50. Merck Vaccine Division
The Social Importance of Marketing Communications

51. Business Importance
Promotional strategy has become increasingly important to both small and large firms
Its effectiveness to encourage attitude changes, brand loyalty and increase sales is well-documented
Both business and nonbusiness enterprises recognize the importance of promotional efforts
Nonbusiness organizations using promotion include governments and religions

52. Economic Importance
Effective promotion has allowed society to derive benefits not otherwise available
Promotion increases the number of units sold; the resulting economies of scale lower production costs and allows lower sales prices
Subsidizes the information contents of newspapers and the broadcast media

53. End of Chapter Fifteen