1. Part 5 PROMOTION DECISIONS

2. 15: Integrated Marketing Communications
16: Advertising and Public Relations
17: Personal Selling and Sales Promotion

3. Chapter 15 Integrated Marketing Communications
Professor Jason C. H. Chen, Ph.D.
School of Business Administration
Gonzaga University
Spokane, WA 99258

4. 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 criticisms and defenses of promotion

5. Integrated Marketing Communications
Refer to coordination promotion and other marketing efforts for maximum informational and persuasive impact
Goal - To send a _________ message to customers
Allow an organization to coordinate and manage its promotional efforts
Enable synchronization of promotion elements
Improve the efficiency and effectiveness of promotion budgets
Foster long-term customer relationships
consistent

6. Communication Process
Communication: Sharing of meaning through the transmission of information
Source: Person, group, or organization with a meaning it tries to share with a receiver or an audience
Receiver: Individual, group, or organization that decodes a coded message
Coding process: Converting meaning into a series of _____ or symbols
signs
Communications channel: Medium of transmission that carries the coded message from the source to the receiver

7. Figure 15.1 - The Communication Process

8. Decoding Process Converting signs or symbols into concepts and ideas
Noise: Anything that reduces a communication’s clarity and accuracy
Has many sources and may affect any or all parts of the communication process
Occurs when a source uses signs or symbols that are unfamiliar to the receiver
Can originate in the receiver

9. Decoding Process Feedback: Receiver’s response to a decoded message
Coded and sent through a communications channel
Decoded by the receiver
Immediate during face-to-face communication
Slow when mass communication is used
Channel capacity: Limit on the volume of information a communication channel can handle effectively

10. Sources of News Information for Americans
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11. Promotion
Promotion is communication that builds and maintains favorable relationships by informing, persuading and _________ one or more audiences
To view an organization _________ and ______ its products
For maximum benefit, marketers strive for proper:
Planning
Implementation
Coordination
Control of communications
reminding
positively
accept

12. Figure 15.2 - Information Flows Are Important in Integrated Marketing Communications

13. Table 15.2 - Possible Objectives of Promotion
awareness
For example, ___________ is crucial to initiating the product adoption process for new products or a line extension
(For target market and market segmentation)

14. 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
Operational characteristics
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15. AIDA Model (Also study p. 466 in ch16)
Awareness
Create _________
Produce _________
Create _______
Result in purchase Action
Interest
Desire

16. Fig. Extra -1: Relation of Promotion Objectives, Adoption process, and AIDA Model
Action
Confirmation
Reminding
Desire
Trail
Decision
Persuading
Attention
Interest
Awareness
Evaluation
Informing
AIDA Model
Adoption Process
Promotion Objectives
Exhibit 14-4 Relation of Promotion Objectives, Adoption process, and AIDA Model (P;p.399)

17. Fig. Extra-2: Impact of promotional tools on consumer response
Advertising
Personal Selling
Effectiveness
Public relations and publicity
Sales promotion
Awareness/Attention
Interest
Desire
Action

18. Stimulate Demand
Primary demand: Demand for a product category rather than for a specific brand through pioneer promotion
Pioneer promotion: Informs consumers about a new product
A way to stimulate primary demand
Selective demand: Demand for a specific brand
Requires singling out attributes important to potential buyers

19. Encourage Product Trial
If customers stall in the evaluation stage, marketers can use methods to encourage product trial in order to move them to product adoption
Trial Techniques:
Free samples
Coupons
Test drives
Limited free-use offers
Contests
Games
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20. Identify Prospects
Certain types of promotional efforts aim to identify customers who are interested in the firm’s product and are likely potential buyers
Techniques Include:
Television advertisement encouraging the viewer to visit the company’s website to share information and receive something of value
Company should respond with phone calls, , or personal contact by salesperson
Social media technology?
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21. Retain Loyal Customers
The primary 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
CRM? (Data mining tools)
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22. Customer Retention Listening to the customer
Q: How many times more to find a new customer and keep him/her as a regular customer?
Listening to the customer
Loyalty programs to reward most-valued customers
e-Communications – e-newsletters, e-cards, or e-alerts
Interactive promotions – Sweepstakes and contests
Events – Seminars, workshops, etc.
Client appreciation programs – Invitations to special events, etc.
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23. Facilitate Reseller Support
Reseller support is a two-way street:
Producers Resellers
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 form of support
Share promotional expense
Special offers/buying allowances
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24. Combat Competitive Promotional Efforts
Promotional activities may aim to offset or ______ the effect of a competitor’s promotional and marketing activities
This type of promotional activity does not necessarily increase sales or market share, but it may _______ a sales or market share loss.
A combative promotional objective is used most often by firms in highly competitive consumer markets
lessen
prevent

25. Reduce Sales Fluctuations
A business cannot operate at peak efficiency when sales fluctuate rapidly with the following factors
Holidays
Seasonal products
Climate
Promotional activities are often designed to stimulate sales during slumps
Snapper may offer sales prices on lawn mowers into the fall season to extend the selling season

26. Figure 15.3 - The Four Possible Elements (Methods) of a Promotion Mix
Public relations
Advertising
Personal selling
Place
Product
Price
Promotion C
Sales promotion
Promotion mix: Combination of specific methods used to manage the integrated marketing communications for a particular product

27. 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 highly flexible and can reach large or small audiences depending on need
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28. Advantages and Disadvantages of Advertising
Cost-efficient when it reaches a vast number of people at a low cost per person
It lets the source repeat the message several times
Adds to a product’s value and Includes celebrity endorsers can enhance a firm’s and product's image
Visibility gained from advertising can enhance a firm’s image
Disadvantages:
Absolute dollar outlay is ____
Rarely provides rapid feedback
Difficult to measure its effect on sales
Less persuasive than personal selling
Limited time available to communicate a message to customers
high

29. Personal Selling and its Advantages and Disadvantages
Personal selling is a paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation
Advantages
Is a more specific form of advertising
Has greater impact on consumers
Provides immediate feedback
Disadvantages
Is ________
Is directed to a ________ number of individuals
expensive
small

30. Public Relations
Public relations is a broad set of communication efforts used to create/maintain favorable relationships between organization and 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 and should have someone responsible for public relations either internally or externally.
Goal
To create and enhance a ________ image of the organization
positive

31. Public Relations Tools
Publicity
Annual reports
Brochures
Event sponsorships
Sponsorship of socially responsible programs
Press releases/Conferences/Feature articles
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32. Sales Promotion
Activities or materials that act as a direct inducement, offering added value or incentive for the product to resellers, salespeople, or customers
Free samples
Games
Rebates
Sweepstakes
Contests
Premiums
Coupons
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33. Top Coupon Categories
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34. Selecting Promotion Mix Elements
Promotional
Mix
1. Resources,
Objectives,
Policies
2. Characteristics
of the Target
Market
3. Characteristics
of the Product
4. Cost and
Availability of
Methods
5. Push and Pull
Channel Policies

35. 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 used
Different objectives will require different promotional mixes.
E.g., creating mass awareness of a new convenience good (breakfast cereal), its promotion mix may be:
advertising, sales promotion, and
public relations

36. Characteristics of the Target Market
Size
When limited - Promotion mix may emphasize ________ _______
When large - Promotion mix may be _________ and sales promotion
When the population density is uneven - Marketers may utilize regional advertising and target larger markets
personal selling
advertising

37. Characteristics of the Target Market
Geographic distribution
Personal selling is used when the customers are concentrated in a small area
Regional or national advertising is used when the customers are numerous and dispersed
Demographic characteristics affect:
Types of promotional techniques selected
Messages and images employed

38. Characteristics of the Product
Business products
Concentrate on personal selling
Use some advertising and sales promotion
Consumer products
Advertising and sales promotion for convenience goods
Personal selling for consumer durables
Public relations for both convenience goods and consumer durables
Product price is an important factor

39. Characteristics of the Product
Price influences the promotion mix
High-priced products - ______________
Low-priced products – __________
Distribution intensity affects the promotion mix
Intensive distribution - Advertising and sales promotion
Selective distribution - Promotion mixes vary
Exclusive distribution - Personal selling
Usage affects the combination of promotional methods
Highly personal products – Advertising
Service businesses use tangible products to promote their intangible services
Personal selling
Advertising

40. Push and Pull Channel Policies
Push policy:
Promoting a product only to the next institution down the marketing channel
Promotion mix: stress on _______________ , sometimes sales promotion and advertising
Pull policy:
Promoting a product directly to consumers
Develops strong consumer demand that pulls products through a marketing channel
Promotion mix: primarily focus on ____________ and sales promotion
Not mutually exclusive and can be used simultaneously
personal selling
advertising

41. Figure 15.4 - Comparison of Push and Pull Promotional Strategies

42. Word-of-Mouth (WOM) Communications
Personal, informal exchanges of communication shared by customers about products, brands, and companies
Most customers are likely to be influenced by friends and family members when making purchases
Crucial for customers in selecting services
Leads to new-customer acquisition
Effective WOM relies on marketers identifying opinion leaders and is for _______-market and more _______ products
Electronic word of mouth (E-WOM)
Communicating about products through websites, blogs, , social networks, or online forums
new-to
expensive

43. Growing Importance of Word-of-Mouth Communications
Buzz marketing: Attempt to incite publicity and public excitement surrounding a product through a creative event
Should not violate any laws or have the potential to be misconstrued and cause undue alarm
Viral marketing: Strategy to get consumers to share a marketer’s message
Done through or online video
Done in a way that spreads dramatically and quickly

44. Viral Marketing
Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networking services and other technologies to try to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes, analogous to the spread of viruses or computer viruses.
In Volkswagen's The Fun Theory, the brand used a series of experiments to find out if you could make people healthier, more environmentally conscious, safer, etc., if you made a mundane activity more fun. In addition to piano stairs and the world's deepest trashcan, the brand invited creative people to come up with their ways of making boring things fun.

45. Product Placement
A form of advertising that strategically locates products or product promotions within entertainment media content to reach the product’s target market
Important due to increasing fragmentation (target market) of television viewers
In-program product placements
Successful in reaching consumers as they are being entertained (e.g., X Factor)
Has become more important as more consumers bypass advertisements (about 60 – 80% users) through digital video recorders, TiVo, and the Internet

46. Criticisms and Defenses of Promotion
Even though promotional activities can help customers make informed purchasing decisions, social scientists, consumer groups, government agencies, and members of society in general have long criticized promotion.
Two main reasons for such criticism:
1) Promotion does have flaws, and
2) it is a highly visible business activity that pervades our daily lives.
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 _______ prices
reduce

47. Criticisms and Defenses of Promotion
Does promotion create needs?
Marketing does not create needs, but makes consumers ______ of needs they already have
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
aware

48. Table 15.4 - Criticisms and Defenses of Promotion

49. Video Case
VIDEO CASE 15: FRANK PEPE’S PIZZERIA NAPOLETANA USES POSITIVE WORD-OF-MOUTH TO BECOME A PREMIERE PIZZERIA: The Tale of New Belgium Brewing

50. Summary
This case discusses how a pizzeria successfully uses integrated marketing communication. Positive word-of-mouth marketing about the company’s products has increased its customer base. The pizzeria uses personal selling to communicate the value of its products when customers enter the store. It also uses advertising such as direct mail and digital marketing on sites like Facebook and Twitter. A major form of sales promotion that the pizzeria uses is free pizza the week before opening a new store. Finally, the company makes use of public relations through fundraisers and donations. Frank Pepe’s Pizzeria Napoletana has become an expert at using all four parts of the promotion mix to attract customers.

51. 1. What are the various promotion elements that Pepe’s uses to communicate with customers?
Pepe’s uses personal selling to communicate the value of its products when customers enter the store. It also uses advertising such as direct mail and digital marketing on sites like Facebook and Twitter.
A major form of sales promotion that the pizzeria uses is free pizza the week before opening a new store. The company also makes use of public relations through fundraisers and donations. These different components coupled with a premium product and quality experience has led many customers to tell others about the company (word-of-mouth marketing).  

52. 2. What role does word of mouth play in Pepe’s integrated marketing communications?
Word-of-mouth marketing is one of the strongest forms of marketing because consumers tend to trust other consumers.
Pepe’s uses a combination of strong customer relationships, premium product offerings, and strong integrated marketing to create customer satisfaction. These satisfied customers often tell their friends and family about their positive experience with Pepe’s, leading to additional customers.

53. 3. Evaluate free pizza as a form of sales promotion in Pepe’s success.
Pepe’s provides a week of free pizza before opening a new location. This allows the company to attract new customers who might not have known about Pepe’s before and also helps employees to break in new ovens and become familiar with Pepe’s culture.
Not only does this form of sales promotion allow customers to try Pepe’s quality product, but it also builds goodwill and a positive image among the community.