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CHAPTER 9 (blend of the chapters 13+14+15 of the text book) Integrated Marketing Communication Strategy Objective: examining the steps in developing effective marketing communication and how the promotion budget and mix is determined. Steps in Developing Effective Communication It is not enough to develop a good product, price it attractively and make it available to target customers. Companies also must communicate with their customers to market their products. A company’s total marketing communication program is called the promotion mix which consists of (1) advertising, (2) personal selling, (3) sales promotion, and (4) public relations. In order to develop effective communications, the company must; 1. Identify the target audience 2. Determine the response sought 3. Choose a message 4. Choose the media through which to send the messages 5. Collect feedback Identifying the Target Audience The target audience would be the potential buyers or the current users of the product. The target audience affects the communicator’s decisions on; what will be said how will it be said when it will be said where it will be said who will say it Determining the Response Sought Of course, the final response is purchase. Purchase is the result of a long process of consumer decision making. The marketing communicator need to know where the target audience now stands, therefore, to what stage it needs to be moved. If the target market is totally unaware of the product, knows only its name or knows ver little about it, the communicator must first build awareness and knowledge. If the target market knows the product, the marketer must develop liking (feeling favorable about the product), preference (prefering the product over the other products), and conviction (believing that the product is the best for them) If the target market is convinced about the product, the marketer must push the consumers to do the purchase. If the target market has started to forget the product, the marketer must remind them again. Choosing a Message The communicator must develop an effective message in order to get the desired audience response. Ideally the message should; get Attention hold Interest arouse Desire obtain Action (known as the AIDA model) In putting the message together, the marketing communicator must decide (1) what to say (message content) and (2) how to say it (message structure and format). Message Content The communicator must create an appeal or theme that would produce the desired response. There are three types of appeals; rational appeals; relate to the audience’s self-interest. They show that the product will produce the desired benefits. Messages include product’s quality, economy, value, or performance. E.g. Mercedes “engineered like no other car in the world”. emotional appeals; attempt to stir up either negative (such as fear, guilt, shame) or positive (such as love, humor, pride, joy) emotions that can motivate purchase. E.g. Crest in its toothpaste ads “there are some things you just can’t afford to gamble with”. moral appeals; are directed to the audience’s sense of what is right and proper.Messages include social issues such as cleaner environment, equal rights for women, aid to the needy... Message Structure and Format The marketing communicator also needs a strong structure and format for the message. In a print ad, advertisers can use novelty, contrast, eyecatching pictures and headlines, distinctive formats, message size and position, colour, shape and movement. In a radio ad, words, sounds, and voices. On TV or in person, facial expressions, gestures, dress, posture and hair style... Choosing Media After the message is chosen, the communicator must select channels of communication. There are two broad types of communication channels; personal nonpersonal Personal Communication Channels In personal communication channels, two or more people communicate directly (face to face, over the telephone, or even through mail) with each other. Personal communication channels are effective because they allow for personal addressing and feedback. Besides company salespeople, consumer buying guides etc, neighbours, friends, family members, and associates may communicate with the target buyers. This is known as word-of-mouth influence. Personal communication is more important for expensive, risky or highly visible products e.g. automobiles for which consumers seek opinions of knowledgeable people. Companies can create opinion leaders (people whose opinions are sought by others) to make them work for the company by supplying those opinion leaders with the product on attractive terms. Opinion leaders would be radio personalities, heads of organizations …. Nonpersonal Communication Channels Nonpersonal communication channels are media that carry messages without personal contact or feedback. They include media, atmosphere and events. Media; include print media (newspaper, magazines, direct mail); broadcast media (radio, television); and display media (billboards, signs, posters) Atmospheres; are designed environments to create and reinforce buyer’s leaning toward purchasing a product. E.g. lobby design of a hotel. Events; are staged occurrences that communicate messages to target audiences. E.g. press conferences, grand openings, shows, exhibitions, public tours, and other events. Such nonpersonal communications may first flow to the opinion leaders and then from them to the target audiences. That is why, most of the time, mass communicators aim their messages directly at opinion leaders. The Message Source The message’s impact on the target market is also affected by the message source. Messages delivered by highly credible sources are more persuasive. Many food companies aim promotions at doctors, dentists… Marketers also use well-known actors, cartoon characters …Beyaz ads for Rinso ... Collecting Feedback After sending the message, the communicator must research its effect on the target audience. This involves asking the target members their opinion and behaviour about the message. Setting the Total Promotion Budget The marketer must decide how much to spend on promotion.According to the type of industry, the promotion spendings vary. E.g. 20-30%of the sales in cosmetics, 2-3%in industrial machinery. There are basically four methods to set the total budget for advertising; affordable method percentage-of-sales method competitive-parity method objective-and-task method Affordable Method Setting the promotion budget at the level that management thinks the company can afford. Small companies project their total revenues, deduct their operating expenses and capital outlays, and then devote some of the remaining funds to advertising. This method places advertising last among expenses, therefore, ignores the effects of promotion on sales. This method may result in either over or under spending for advertising. Percentage-of-Sales Method Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the sales price. The advantage of this method is that it helps management think about the relationships between promotion spending, selling price, and profit per unit. The disadvantages are; (1) it wrongly views sales as the cause of promotion rather than as the result, (2) it may prevent increase in promotional spending, when the sales are falling, (3) it does not provide any basis for choosing a specific percentage, except last year’s and competitors percentages. Competitive-Parity Method Setting the promotion budget to match competitor’s outlays. The company monitors competitor’s advertising or industry averages. The advantage of this method is that it mat prevent promotional wars. The disadvantages of this method are; (1) each company has its own promotional needs, therefore, the competitors’ spending may be misleading, (2) there is no guarantee that this method will prevent promotion wars. Objective-and-Task Method Setting promotion budgets based on what the company wants to accomplish with promotion. This is the most logical budget setting where the company (1) defines specific promotion objectives, (2) determines the tasks needed to achieve these objectives, (3) estimates the total costs of performing these tasks. This is the most difficult method to use because it is hard to understand which tasks will achieve specific objectives. E.g. if Sony wants to create 95% awareness for its new camera within 6 months, it is difficult to decide what messages and promotions to use and how much to spend. Setting the Promotion Mix After the budget has been determined, the marketer must decide which promotion tools to use - advertising, personal selling, sales promotion, and public relations. He must blend the promotion tools into a coordinated promotion mix. The following factors influence the marketer’s choice of promotion tools; the nature of each promotion tool promotion mix strategies The Nature of Each Promotion Tool Each promotion tool - advertising, personal selling, sales promotion, and public relations has unique characteristics and costs. Marketers must understand theses characteristics in order to select the proper tools. Advertising Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor. Major media types are; newspapers television direct mail radio magazines outdoor Advantages low cost per contact ability to reach customers where and when salespersons cannot great scope of creative versatility and dramatization of messages ability to create images that salespersons cannot “institutional advertising” is a form of advertising done to create a favourable image of an organization. nonthreatening nature of nonpersonal presentation potential to repeat message several times prestige and impressiveness of mass-media advertising Disadvantages inability to “close” sales advertising “clutter” customer’s ability to ignore advertising messages difficulty getting immediate response or action difficulty measuring advertising effectiveness relatively high “waste” factor Possible Advertising Objectives Advertising aims to (1) inform, (2) persuade, or (3) remind. Informative advertising; tells the market about a new product informs the market of a price change explains how the product works describes available services corrects false impressions reduces consumer’s fears builds a company image Persuasive advertising; builds brand preference encourages switching to the brand of the company persuades customers to purchase now or make a sales call keeps the product in customer’s mind during off-season maintains the product’s top-of-mind awareness remind consumers where to buy the product Reminder advertising; Profiles of Major Media Types Newspapers: reach many people but have limited opportunity to reach market segments , have short life time, do not have reproduction quality. Magazines: have many advantages over newspapers like having high-quality reproduction, color availability, prestige, audience selectivity, and long life. However, cost more, prepared in a long time, and reduce an advertiser’s ability to repeat ads. Radio: can reach an entire area, specific target markets by matching the radio station and time with the property’s target market. However, if not repeated, they have shot life span. Television: television’s main advantage over radio is that it combines sight with sound. TV commercials can show friendly company staff. Gets high attention, and remembered as a result. Commercials can run many times daily and reach many people, and can reach specific audiences by selecting the correct TV shows. However, they are very expensive. Outdoor Advertising: billboards along highways or in and around large cities are used to remind and attract potential guests about the product. They must be bold, dynamic and graphic so that passersby can get the message at a glance. They have large circulation, broad reach and low cost but have limited message length. Direct Mail: involves the mailing of the advertising message in brochures, coupons or other formats. It is especially used by clubs, and banks for credit card holders and members. It allows audience selectivity, can be personalized, and easily measured but have high cost of developing and mailing. Sales Promotion Sales promotions are short-term incentives to to make an immediate purchase or sales of a product or service. Advertising offers reasons to buy a product or service, sales promotion offers reasons to buy now. Advantages generating immediate purchase in a large extent ability to provide quick feedback ability to add excitement to a service or product flexible timing efficiency Disadvantages short-term benefits ineffective in building long-term loyalty for company or “brand” inability to be used on its own in the long term without other promotional mix elements often misused for just short-term benefits Profiles of Major Sales Promotions Consumer-Promotion Tools Couponing: attract potential guests with a special offer such as a free night’s lodging after a special number of credits. They can be given out personally, included in direct mail advertising or printed in newspapers and magazines. They can increase off-season business with other sales promotions such as bonus offers or discounting. Product Sampling: introduces new products to the guests, some are free, most effective to introduce a product but most expensive as well, determines whether guests like a new product and encourages them to order the item. Contests: give consumers a chance to win something such as cash, trips, goods by luck or through extra effort, can increase sales, should be cost effective - increased sales should offset the cost of contest promotions and prizes. E.g. CocaCola New Year’s prize (a BMW) will be one of the customers who sent the correct amount of Coca-Cola lid. Packages: offer consumers savings off the regula price of a product, have discount price to attract new guests and increase sales. E.g. a holiday package including lodging, transportation, and food and beverage with a reasonable price. Premiums: they are given to guests who pay the regular prices for certain products or services. E.g. an upgraded room might be provided or free movie tickets for the restaurant guests. Pizza Hut’s free drinks when a large pizza is ordered. Or when a customer buys one shampoo, he gets the third one free. Gifts or Gift Certificates: free gifts or cash offers, are used by chains or exclusive properties to increase sales. E.g. key chains, T-Shirts… Discounting: straight reduction from the list price of a product during a stated period of time, are used to attract more guests and increase total sales. E.g. one dinner on the menu might be reduced to 50%. Benetton reduces its prices by 20% during the low season. Bonus Offers: the consumer buys a product or service at the regular price and then receives a bonus, generally directed to the regular users, E.g. guest buys three dinners at a regular price and the fourth one becomes free. Or when the customer uses his credit card, each time he gets credits, and when he reaches a certain credit point, he is entitled to get free gifts such as toasters, hair dryers... Trade-Promotion Tools Discounting: straight reduction from the list price on purchases during a stated period of time, encourages dealers to buy in quantity or to carry a new item; dealers can use the discount for immediate profit, for advertising, or for price reductions to their customers. Allowance: promotional money paid by manufacturers to retailers who agree to help promote the manufacturer’s products in some way. E.g. an advertising allowance compensates retailers for advertising the product. A display allowance compensates them for using special displays. Free goods or push money: cash or gifts to dealers or their sales force to “push” the manufacturer’s goods. Specialty advertising items: they carry the company’s name, such as pens, pencils, calendars, paperweights, memo pads, ashtrays... Public Relations Building good relations with the company’s various public’s by obtaining favourable publicity, building up a good “corporate image” and handling or heading off unfavourable rumors, stories and events. Advantages low cost effective because they are not seen as commercial messages credibility prestige and impressiveness of mass-media coverage added excitement and dramatization maintenance of “public” presence Disadvantage difficult to arrange consistently lack of control Major Public Relations Tools News: PR people find or create favorable news about the company and its products or people. Sometimes news stories occur naturally, and sometimes the PR person suggests events or activities (e.g. X conference, Miss World…) that would create news. Speeches: company executives answer the questions from the media or give talks at trade associations or sales meetings. Special events: ranging from news conferences, receptions, press tours (fam trips), grand openings… to reach and interest target publics. Written materials: include press release, annual reports, brochures, articles, company newsletters, magazines… to reach and influence the target markets. Audiovisual materials: such as films, video- and audiocassettes… Corporate-identity materials: help to create a corporate identity that the public immediately recognizes such as logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, company cars and trucks become marketing tools when they are attractive, distinctive, and memorable. Public-service activities: companies can also improve their goodwill by contributing money and time to public-service activities. E.g. giving donations to street children. Personal Selling Personal selling involves oral conversations. These are held, either by telephone or face-to-face, between salespersons and prospective customers. The people who do the selling go by many names: salespeople, sales representatives, account executives, sales consultants, sales engineers, agents, district managers, and marketing representatives. The major roles of the sales force are (1) representing the company to customers, (2) representing customers to the company, (3) producing customer satisfaction and company profits. Advantages ability to close sales ability to hold the customer’s attention immediate feedback and two-way communications presentations tailored to individual needs ability to target customers precisely ability to cultivate relationships ability to get immediate action Disadvantages high cost per contact inability to reach some customers as effectively The Changing Face of Marketing Communications Two major factors are changing the face of today’s marketing communications. First, as mass markets have fragmented, companies are shifting away from mass marketing. Now, they are developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micromarkets. Second, the improvements in computer and information technology helps marketers to reach smaller customer segments more effectively. Direct Marketing Direct marketing is the new way of marketing communications. Here, the company markets through various advertising media that interact directly with consumers, generally encouraging the consumer to make a direct response. In other words, direct marketing consists of direct communications with carefully targeted consumers to obtain an immediate response. There are four major forms of direct marketing are; direct-mail and catalog marketing; involves mailing of letters, ads, samples, foldouts… sent to potential customers on mailing lists. The mailing lists are developed from customer lists or obtained from mailing-list houses. Catalog marketing involves selling through catalogs that are mailed to a select list customers or made available in stores. telemarketing; using the telephone to sell directly to consumers. Outbound telephone marketing is used directly to consumers and businesses. Inbound too-free 800 numbers are used to receive orders from television and radio ads, direct mail, or catalogs. television marketing; takes two major forms. The first is direct-response advertising where marketers air television spots, often 60 to 120 seconds long, that persuasively describe a product and give customers a toll-free number for ordering. Home shopping channels is another form of television direct marketing which are television programs or entire channels dedicated to selling gods and services. online computer shopping: is conducted through interactive online computer systems which link consumers with sellers electronically. Consumers use a home computer to hook into the system through cable or telephone lines. Promotion Mix Strategies Marketers can choose from two basic promotion mix strategies; push promotion; a push strategy involves “pushing” the product through distribution channels to final consumers. Here, the producer directs its promotional activities (primarily personal selling and trade promotion) toward channel members to induce them to carry the product and to promote it t final consumers. pull promotion; the producer directs its promotional activities (advertising and consumer promotion) toward final consumers to induce them to buy the product. If the pull strategy is effective, consumers then will demand the product from channel members. Companies generally use both of them in combination. Companies consider the following factors when developing their promotion mix strategies; type of product/market the buyer-readiness stage the product life-cycle stage Type of Product/Market The importance of different promotion tools varies between consumer and business markets. Consumer goods companies; pull more spend more on advertising, then sales promotion, personal selling, and public relations Industrial goods companies; push more spend more on personal selling, then sales promotion, advertising, public relations Generally, personal selling is used more heavily with expensive and risky goods and in markets with fewer and larger sellers. Buyer-Readiness Stage The effects of the promotional tools vary for the different buyer-readiness stages. In the awareness and knowledge stages; advertising and public relations play the major role rather than personal selling. In the customer liking, preference and conviction stages; personal selling makes more sense. In the purchase stage (closing the sale stage); sales calls and sales promotions are most effective. Product Life-Cycle Stage The effects of different promotion tools also vary with stages of the product life cycle. In the introduction stage; advertising and public relations are good for producing high awareness and sales promotion is useful in promoting early trial. Personal selling must be used to get the trade to carry the product. In the growth stage; advertising and public relations are still powerful but sales promotions can be reduced. In the mature stage; sales promotion again becomes important relative to advertising. Advertising is only needed to remind the consumers of the product. In the decline stage; advertising is kept to remind, public relations may drop, salespeople give up, sales promotions may still be used.
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