integrated marketing communications

Agribusiness project

INTEGRATED MARKETING COMMUNICATIONSTrainer: Vladimir Pandurov

Learning Objectives( day 1)

1.1. Discuss the concept of integrated Discuss the concept of integrated marketing communications - IMCmarketing communications - IMC

2. Discuss the elements of the 2. Discuss the elements of the IMC IMC ((promotionalpromotional)) mix. mix.

3. Describe the communication process.3. Describe the communication process.

4. Explain the goal and tasks of promotion.4. Explain the goal and tasks of promotion.

5. Discuss the AIDA concept and its 5. Discuss the AIDA concept and its relationship to the relationship to the IMCIMC mix. mix.

6.6. Describe the factors that affect the Describe the factors that affect the IMCIMC mix.mix.

7.7. Describe the IMC planning process.Describe the IMC planning process.

8.8. Approaches to Determining Approaches to Determining the Promotional Budgetthe Promotional Budget

Learning Objectives ( day 1)

Learning Objective

Discuss the concept of integrated Discuss the concept of integrated marketing communications - IMCmarketing communications - IMC

11

Integrated Marketing Communications (IMC):

“is the coordination and integration of all marketing communications tools, avenues, and sources within a company into a seamless program that maximizes the impact on consumer and other end users at a minimal cost.”

Clow and Baack, 2004, p.8

– The concept under which a company integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its products

Source: Marketing: An introduction, Armstrong & Kotler

IMC definition(s) 11

The specific mix of advertising, personal selling, sales promotion, and public relations a company uses to pursue its advertising and marketing objectives.

Kotler

IMC definition(s)

“IMC is capable of enhancing the holistic consumer experience and creating a holistic brand value structure, which can unite the consumer’s sensory, emotional, social and intellectual experiences in a new and positive way.”

Tsai (2005)

11

Integrated Marketing Communications

• Integrated Marketing Communications is the integrated areas of marketing, advertising, sales promotion, and public relations.

• There is a need for communications cross training as a basic requirement to function as a practitioner.

IMC definition(s) 11

• The Marketing Communications Environment is Changing:– Mass markets have fragmented, causing marketers to

shift away from mass marketing• Media fragmentation is increasing as well

– Improvements in information technology are facilitating segmentation

- Increasingly difficult to target audiences & communicate effectively

Consumers no longer passive recipients They demand more than information

From a myriad of sources

The Need for Integrated Marketing Communications 11

– Conflicting messages from different sources or promotional approaches can confuse company or brand images

– The problem is particularly prevalent when functional specialists handle individual forms of marketing communications independently

– The Web alone cannot be used to build brands; brand awareness potential is limited

– Best bet is to wed traditional branding efforts with the interactivity and service capabilities of online communications

– Web efforts can enhance relationships

The Need for Integrated Marketing Communications 11

• A shifting of marketing dollars from media advertising to other forms of promotion, particularly consumer and trade-oriented sales promotions.– A movement away from relaying on advertising-

focused approaches, which emphasize mass media such as network television and national magazines, to solve communication problems.

– A shift in marketplace power from manufacturers to retailers.

The Reason for Integrated Marketing Communications 11

– The rapid growth and development of database marketing.

– Demands for greater accountability from advertising agencies and changes in the way agencies are compensated.

– The rapid growth of the Internet, which is changing the very nature of how companies do business and the ways they communicate and interact with consumers.

The Reason for Integrated Marketing Communications 11

Point ofPurchase

Publicity

PublicRelations

DirectMarketing

InteractiveMarketing

SpecialEvents

Packaging

SalesPromotion

DirectResponse

Traditional Approach to Marketing Communications

MediaAdver-tising

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

11

Contemporary IMC Approach

Point ofPurchase

Publicity

InteractiveMarketing

PublicRelations

DirectMarketing

SpecialEvents

PackagingSales

PromotionDirect

Response

MediaAdver-tising


11

Traditional Mass Marketing Communication Model

11

IMC Communication Model 11

Some Differences between Some Differences between Traditional Marketing Traditional Marketing

Communication Efforts and Communication Efforts and IMCIMC11

Traditional CompensationTraditional Compensation Performance Based Compensation Performance Based Compensation Traditional CompensationTraditional Compensation Performance Based Compensation Performance Based Compensation

Media AdvertisingMedia Advertising Multiple Forms of CommunicationMultiple Forms of Communication

Mass MediaMass Media Specialized MediaSpecialized Media

Manufacturer DominanceManufacturer Dominance Retailer DominanceRetailer Dominance

General FocusGeneral Focus Data Based MarketingData Based Marketing

Low Agency AccountabilityLow Agency Accountability Greater Agency AccountabilityGreater Agency Accountability

Limited Internet AvailabilityLimited Internet Availability Widespread Internet AvailabilityWidespread Internet Availability

Media AdvertisingMedia Advertising Multiple Forms of CommunicationMultiple Forms of Communication

Mass MediaMass Media Specialized MediaSpecialized Media

Manufacturer DominanceManufacturer Dominance Retailer DominanceRetailer Dominance

General FocusGeneral Focus Data Based MarketingData Based Marketing

Low Agency AccountabilityLow Agency Accountability Greater Agency AccountabilityGreater Agency Accountability

Marketing Revolution and Shifting Tides

From Toward


11

• Integrated marketing means approaching communication issues from the customer’s perspective

– Consumers do not separate promotional material or newspaper advertising or community responsiveness into separate compartments

– They lump everything together to make judgments about services and organizations

IMC - The Customer’s Perspective 11

1. Integrated marketing communication is not about ads, direct e-mail pieces, or public relations projects

– It is about understanding the consumer and what the consumer actually responds to

– In other words, behavioral change is the communicators’ mission

– If the customer does not act, the communicator – and the communication have failed


2. Organization can not succeed without good relationship with their publics

– Organizations need relationships with their customers that go beyond the pure selling of a product or service

– They need to build relationships

– As the world becomes more competitive in everything, relationship building becomes more critical


3. Integrated marketing communications require collaboration on strategy

– Not just on execution

– The entire communication function must be part of the launch of a product, service, campaign or issue from its inception

– Communicators must participate in the planning of a campaign, not just in the implementation of communication vehicles


4. Strategic plans must be clear on the role that each discipline is to play in solving the problem

– The roles of advertising, marketing and public relations are different

– None of them can do everything by itself

– Therefore, although advertising might control the message

– Marketing and product promotion might provide support

– It is public relations that should provide credibility for the product and even more important for the organization


5. Public relations is about relationships

– Public relations professionals can become proprietors of integrated marketing communications

– The essence of public relations is building relationship between institutions and its publics

– Public relations professionals more than any others, should lead the integrated marketing initiative

– Such an understanding is pivotal to the successful rendering of integrated marketing communications


6. To be players in integrated marketing communication,

public relations professionals need to practice more than

the craft of public relations

– Public relations people must expand their horizons, increase their knowledge of their discipline

– Seek out and participate in interdisciplinary skills building

– Public relations professionals must approach their task to enhance customer relationship through a strategy of total communication


14-25

• Marketing the anything-but-ordinary car presented big challenges.

• The MINI is a tiny but potent car that has a retro 60s look.

• Canadians tend to be serious about their cars.

• The marketing team concluded that In Canada the car performance was the main attribute to stress.

• BMW choose Taxi as its advertising agency.

• Taxi created an integrated strategy with unified brand personality: “The MINI is an individualistic, high-performance, premium vehicle that’s fun to drive.”

• The campaign began with a 60-second movie theatre spot called “Anthem”.

• Traditional print and outdoor advertising followed next: “parks as faster than a Ferrari”, “Onramps are foreplay”, and “The world is your go-kart track”.

• Ads were placed everywhere• Edgy and humorous TV spots were

also used.• Other components: “Velocity” parties,

online contests, driving events, and investments in showroom improvements.

• Hip dealerships were selected and trained in a new soft-sell approach.

• Product placement in the remake of The Italian Job, online marketing, and publicity.

• Finally word of mouth.• The campaign was a huge success

and annual sales goals were exceeded.

Case StudyBMW MINI

Canada

Creative Outdoor Communication

Humor

11

Learning Objective 22

Discuss the elements Discuss the elements of the of the IMC mix IMC mix

((promotional mixpromotional mix))..

AdvertisingAdvertising

Direct MarketingDirect Marketing

Interactive/Internet Marketing


Sales PromotionSales Promotion

Publicity/PublicRelations

Publicity/PublicRelations

Personal SellingPersonal Selling

The IMC mix 22

Advertising

Impersonal, one-way

mass communication

about a product or

organization that is

paid for by a marketer.

The IMC mix 22

Advertising Media

Traditional Advertising Media

Traditional Advertising Media

ElectronicAdvertising Media

ElectronicAdvertising Media

Television Radio Newspapers Magazines Books Direct mail Billboards Transit cards

Internet Computer modems Fax machines

The IMC mix 22

Advertising

AdvantagesAdvantages

• Ability to reach large number of people

• Cost per contact is low

• Ability to repeat message with frequency

• Can be micro-targeted

DisadvantagesDisadvantages

• Total cost is high

• Impersonal; one-way communication(no feedback from audience)

The IMC mix 22

Creative Outdoor Communication

DEVELOPING AN ADVERTISING CAMPAIGN

EvaluateAdvertisingEffective-

ness

Select &Schedule

Media

DetermineAdvertising

Budget

DetermineAdvertisingObjectives

SelectTargetMarket

DesignCreativeStrategy

22

22ADVERTISING STRATEGY

• MESSAGE STRATEGIESObjective vs. Subjective MessagesComparative Message TechniquesEmotional Techniques: Mood, Fear, HumorCelebrity Endorsements vs. Non-Celebrity Images

• MEDIA STRATEGIESBroadcast: Television, RadioPrint: Newspapers, Magazines, JournalsSpecialized: Outdoor, Transit, Direct Mail, Internet


• RELATIVE STRENGTHS AND WEAKNESSES OF STRATEGIESEffectiveness and Efficiency: Reach and

FrequencyTarget CapabilitiesCostBelievabilityAppropriateness for Message (Image, Details)

Reach & Frequency

• Reach: number of different target consumers who are exposed to a message at least once during a specific period of time

• Frequency: number of times an individual is exposed to a given message during a specific period of time

• Cost per contact: cost of reaching one member of the target market– Allows comparison across advertising strategy

vehicles


EVALUATING ADVERTISING EFFECTIVENESS

PretestingPretesting

PosttestingPosttesting

Sales EffectivenessEvaluations

Sales EffectivenessEvaluations

Tools:•Focus Groups•Screening•Persuasion Scores

Tools:•Unaided Recall Tests•Aided Recall Tests•Inquiry Evaluations

Tools:•Monitor Sales

22

Public RelationsThe marketing function that

evaluates public attitudes,

identifies areas within the

organization that the public may be

interested in, and executes a

program of action to earn public

understanding and acceptance.

The IMC mix 22

PUBLIC RELATIONS 22

• EFFORTS TO IMPROVE AND MANAGE RELATIONSHIPS WITH PUBLICS– Customers– Stock Holders– Community– Government– News Media

• PUBLICITY– Not Overtly Sponsored– High Credibility

Public Relations

Evaluates public attitudes

Evaluates public attitudes

Identifies areas of public interestIdentifies areas of public interest

Executes programs to “win” public

Executes programs to “win” public

Functions ofFunctions ofPublic RelationsPublic Relations

Functions ofFunctions ofPublic RelationsPublic Relations

PUBLIC RELATIONS 22

Crisis managem

ent

Crisis managem

ent

Message flexibility

Message flexibility

Cost effective

Cost effective

Public re lations

Public re lations

- -Difficult to re ach audience

s

- -Difficult to re ach audience

s

More objective

More objective

Advice on i mportant tr

ends

Good citizenship

2000Source: Pelsmacker, Patrick De., Geuens, Maggie and Bergh , Joeri Van den . ppp p p p p, : . . 24 0 .

Strengths of public relations 22

Effectivenes s hard

to measure Lack of con

trol

Public relations

Journalists a s gatekeepe

rs

2000Source: Pelsmacker, Patrick De., Geuens, Maggie and Bergh , Joeri Van den . 249Marketing Communications Essex, England : Pearson Education Ltd. pp. .

Weaknesses of public relations 22

Bad reputation

Bad reputation

Globalization

Globalization

New technologies New technol

ogies

PR PR

Corporate branding

Corporate branding

-Single issu e publics

-Single issu e publics

Good employe e relation

Measurin g effect

Growing con sumer awar

eness

Specialization

Trends and challenges in public relations 22

2000Source: Pelsmacker, Patrick De., Geuens, Maggie and Bergh , Joeri Van den . 249Marketing Communications Essex, England : Pearson Education Ltd. pp. .

Personal Selling

Planned presentation to

one or more prospective buyers for

the purpose

of making a sale.

The IMC mix 22

PERSONAL SELLING 22

• PERSONAL SELLING– Oral presentation in a conversation with one or more prospective

purchasers for the purpose of making a sale– Personal selling represents the most popular promotional effort in

terms of financial expenditures and number of people employed

• Personal Selling is:– (1) Dyadic, (2) Flexible, (3) Focused (personalized), and (4)

Often results directly in a sale– Other promotional elements move the customer toward the sale,

personal selling closes the sale

STEPS IN THE SELLING PROCESS: A RELATIONSHIP APPROACH 22

• INITIATING RELATIONSHIPS– Prospecting– Pre-Call Planning– Approach

• DEVELOPING CUSTOMER RELATIONSHIPS– Sales Communications and Presentations– Gaining and Managing Commitment

• ENHANCING CUSTOMER RELATIONSHIPS– Follow-Up– Support

• TRADITIONAL vs. RELATIONSHIP APPROACHES– Consultative (needs-satisfaction) vs. Manipulative (product-focused)

Sales Promotion

Marketing activities--other than

personal selling, advertising, and

public relations--that stimulate

consumer buying and

dealer effectiveness.

The IMC mix 22

EndConsumers

EndConsumers

Trade CustomersTrade Customers

CompanyEmployees Company

Employees

Sales PromotionSales PromotionTargetsTargets

Sales PromotionSales PromotionTargetsTargets

Sales Promotion 22

Consumer FactorsConsumer Factors

AccountabilityAccountability

Increased Retail PowerIncreased Retail Power

Impact of TechnologyImpact of Technology

Short-Term FocusShort-Term Focus

Reasons for the Growth in Sales Promotion: 22

StimulateTrial

StimulateTrial

SupportFlexible Pricing

SupportFlexible Pricing

IncreaseConsumption

IncreaseConsumption

NeutralizeCompetitorsNeutralize

Competitors

ComplementaryProducts

ComplementaryProducts

EncourageRepurchaseEncourage

Repurchase

ImpulsePurchasing

ImpulsePurchasing

OBJECTIVES OF CONSUMER PROMOTIONS 22

Price Deals

AdvertisingSpecialties Coupons

Sampling Rebates

Contests, Games,Sweepstakes

Premiums Cross-Promotions

CONSUMER SALES PROMOTION TECHNIQUES 22

Increase ResellerInventory

InfluencePrice Discount

Defend AgainstCompetitors

Avoid PriceReductions

InfluenceReseller Promotion

Gain/MaintainDistribution

Increase ResellerInventory

InfluencePrice Discount

Defend AgainstCompetitors

Avoid PriceReductions

InfluenceReseller Promotion

Gain/MaintainDistribution

OBJECTIVES OF TRADE PROMOTIONS 22

Cannot Reverse Declining Sales Trend

Cannot Reverse Declining Sales Trend

Cannot Overcome Inferior Product

Cannot Overcome Inferior Product

May Encourage Competitive Retaliation

May Encourage Competitive Retaliation

May Hurt ProfitMay Hurt Profit

LIMITATIONS OF SALES PROMOTION 22

Direct Marketing

It is a form of integrated marketing

communications whereby an

organization communicates directly

with target customers to generate

a response and/or transaction

The IMC mix 22

DirectResponse

Advertising

DirectResponse

Advertising

DirectMail

DirectMail

CatalogsCatalogs

TelemarketingTelemarketing

InternetSales

InternetSales

ShoppingChannels

ShoppingChannels

DirectMarketing

DirectMarketing

The IMC mix 22

Includes call for action.

Phone number, mail-in form,

website address provided.

Bose Uses Direct Response Advertising 22


• Back-and-forth communication– Users participate in and modify the form and content of

information– Happens in real time

• Interactive media– Internet– CD-ROMs– Kiosks– Interactive television– Digital cell phones


22

Builds and maintains customer

relationships

Builds and maintains customer

relationships

Obtains customer database

information

Obtains customer database

information

Communicates and interacts with buyers

Communicates and interacts with buyers

Provides customer

service and support

Provides customer

service and support

Educates or informs

customers

Educates or informs

customers

A persuasive advertising

medium

A persuasive advertising

medium

A sales tool or an actual sales vehicle

A sales tool or an actual sales vehicle

TheInternet

TheInternet

Using the Internet as an IMC Tool 22

It’s Google’s World

The most powerful brand in the world

22

• Founded in 1998– Delivers relevant search results by favoring pages linked to

by other sites– Sells ads linked to search keywords– Annual revenue exceeds $10 billion

• Keys to success– Simplicity– Speed– Accuracy

It’s Google’s World 22

Google Adwords

• Keyword-targeting advertising– Text ads at top or side of search results– Advertisers compete for top spot– Cost is “per click” (CPC)

• Contextual ads– Appear on other relevant Web sites

• Site-targeted– Generates sales and branding– Cost is per thousand impressions (CPM)


Google Rapidly Expanding

• Beyond online search advertising– Automated purchase of radio ads– Magazine and newspaper ad-buying– YouTube– Google TV Ads– Partnership with Nielsen Media Research– New varieties of online ads


Rapidly Changing Media Environment

• Increasingly difficult to target audiences & communicate effectively– Consumers no longer passive recipients– They demand more than information– From a myriad of sources


Integrated Marketing Approach

• Traditional mass media– Television, radio, magazines, newspapers, billboards– Now drive consumers to Web sites

• Online strategies– Provide detailed information– Be experiential, entertaining, interactive– MySpace, YouTube, Facebook, wireless mobile media

devices, e-mail

22

Learning Objective

Describe the Describe the communication process.communication process.

33

Communication

The process by which we

exchange or share

meanings through a common set

of symbols.

Communication 33

Marketing Communication

Categories of CommunicationCategories of

Communication

InterpersonalInterpersonalCommunicationCommunicationInterpersonalInterpersonal

CommunicationCommunicationMassMass

CommunicationCommunicationMassMass

CommunicationCommunication

Communication 33

As SendersAs Senders As ReceiversAs Receivers

Inform

Persuade

Remind

Develop messages

Adapt messages

Spot new communication opportunities

The Communication Process 33

SenderSender The originator of the message in the communication process.

The originator of the message in the communication process.

EncodingEncodingThe conversion of a sender’s ideas

and thoughts into a message, usually in the form of words or signs.

The conversion of a sender’s ideas and thoughts into a message, usually

in the form of words or signs.

The Sender and Encoding 33

NoiseNoise

SenderSender EncodingMessage

EncodingMessage

MessageChannel

MessageChannel

MessageChannel

MessageChannel

DecodingMessage

DecodingMessage ReceiverReceiver

The Communication Process 33

Communication Mode Communication Mode

Communication ControlCommunication Control

Feedback AmountFeedback Amount

Feedback SpeedFeedback Speed

Message Flow DirectionMessage Flow Direction

Message Content ControlMessage Content Control

Sponsor IdentificationSponsor Identification

Reaching Large Audience Reaching Large Audience

Message FlexibilityMessage Flexibility

AdvertisingAdvertisingAdvertisingAdvertising

Indirect and non-personal Indirect and non-personal

LowLow

LittleLittle

DelayedDelayed

One-wayOne-way

YesYes

YesYes

Fast Fast

Same message to all audiencesSame message to all audiences

Characteristics of Advertising 33










Public RelationsPublic RelationsPublic RelationsPublic Relations

Usually indirect, non-personal Usually indirect, non-personal

Moderate to lowModerate to low

LittleLittle

DelayedDelayed

One-wayOne-way

NoNo

NoNo

Usually fast Usually fast

Usually no direct controlUsually no direct control

Characteristics of Public Relations 33










Sales PromotionSales PromotionSales PromotionSales Promotion

Usually Indirect and non-personal Usually Indirect and non-personal

Moderate to lowModerate to low

Little to moderateLittle to moderate

VariesVaries

Mostly one-wayMostly one-way

YesYes

YesYes

Fast Fast

Same message to varied targetSame message to varied target

Characteristics of Sales Promotion 33










Personal SellingPersonal SellingPersonal SellingPersonal Selling

Direct and face-to-face Direct and face-to-face

HighHigh

MuchMuch

ImmediateImmediate

Two-wayTwo-way

YesYes

YesYes

Fast Fast

Tailored to prospectTailored to prospect

Characteristics of Personal Selling 33










Direct MarketingDirect MarketingDirect MarketingDirect Marketing

Direct and impersonalDirect and impersonal

HighHigh

MuchMuch

ImmediateImmediate

Two-wayTwo-way

YesYes

YesYes

Slow Slow

More’less tailored to prospectMore’less tailored to prospect

Characteristics of Personal Selling 33

Learning Objective

Explain the goal andExplain the goal and tasks of promotion.tasks of promotion.

44

InformingInforming RemindingReminding

PersuadingPersuading

TargetAudienceTarget

Audience

Goals and Tasks of Promotion

44

InformingInforming RemindingReminding

PersuadingPersuading

TargetAudienceTarget

Audience

PLC StagesPLC Stages:Introduction Early Growth

PLC Stages:PLC Stages:Growth Maturity

PLC Stages:PLC Stages:Maturity


44

Informative Objective

• Increase awareness

• Explain how product works

• Suggest new uses

• Build company image


44

Persuasion Objective

• Encourage brand switching

• Change customers’ perception of product attributes

• Influence buying decision

• Persuade customers to call


44

Reminder Objective

• Remind customers that product may be needed

• Remind customers where to buy product

• Maintain customer awareness

Learning Objective 44

Discuss the AIDA concept Discuss the AIDA concept and its relationship to and its relationship to the promotional mix.the promotional mix.

55Learning Objective

The AIDA Concept

Model that outlines the process for

achieving promotional goals in

terms of stages of consumer

involvement with the message.


AAttentionttention

IInterestnterest

DDesireesire

AActionction

55The AIDA Concept

AwarenessAwarenessAwarenessAwareness InterestInterestInterestInterest DesireDesireDesireDesire ActionActionActionAction

AdvertisingAdvertising Veryeffective

Veryeffective

Somewhateffective

Noteffective

Noteffective

PublicPublicRelationsRelations

PublicPublicRelationsRelations

Veryeffective

Veryeffective

Veryeffective

Veryeffective

Veryeffective

Veryeffective

Noteffective

Noteffective

SalesSalesPromotionPromotion

Somewhateffective

Somewhateffective

Veryeffective

Veryeffective

Veryeffective

PersonalPersonalSellingSelling

Somewhateffective

Veryeffective

Veryeffective

Somewhateffective

Somewhateffective

55AIDA and the IMC Mix

66

Describe the factors that Describe the factors that affect the affect the IMCIMC mix. mix.

Learning Objective

Nature of ProductNature of Product

Stage in PLCStage in PLC

Target Market FactorsTarget Market Factors

Type of Buying DecisionType of Buying Decision

Promotion FundsPromotion Funds

Push or Pull StrategyPush or Pull Strategy

Factors Factors AffectingAffectingChoice of Choice of IMCIMC Mix Mix

Factors Factors AffectingAffectingChoice of Choice of IMCIMC Mix Mix

66Factors Affecting the

Promotional Mix

• Product characteristics – Business product vs. consumer product

• Costs and risks

• Social risk

Factors that influence Factors that influence IMC IMC mixmix

66Nature of the Product

TimeTime

IntroductionIntroduction GrowthGrowth

MaturityMaturity

DeclineDecline

Sal

es (

$)S

ales

($)

66Stage in the Product Life Cycle

Light Advertising,

pre-introduction

Publicity

Heavy use of advertising,

PR forawareness;

sales promotion

for trial

AD/PRdecreaseLimited Sales

Promotion, Personal Selling for

distribution

Ads decrease.

Sales Promotion,Personal Selling

Reminder & Persuasive

Advertising, PR, Brand

loyaltyPersonal Selling for

distribution

IntroductionIntroduction GrowthGrowth

MaturityMaturityDeclineDecline

Sal

es (

$)S

ales

($)

TimeTime

66Product Life Cycle and the IMC Mix

FOR:

• Widely scattered market

• Informed buyers

• Repeat buyers

Advertising

Sales Promotion

Less Personal Selling

66Target Market Characteristics

Advertising

Sales PromotionType ofType of

Buying DecisionBuying Decisionaffectsaffects

Promotional Promotional Mix ChoiceMix Choice

Type ofType ofBuying DecisionBuying Decision

affectsaffectsPromotional Promotional Mix ChoiceMix Choice

ComplexComplexComplexComplex

RoutineRoutineRoutineRoutine

Personal Selling

Not RoutineNot Routineor Complexor Complex

Not RoutineNot Routineor Complexor Complex

Advertising

Public Relations

66Type of Buying Decision

• Trade-offs with funds available

• Number of people in target market

• Quality of communication needed

• Relative costs of promotional elements

66Available Funds

ManufacturerManufacturerpromotes to promotes to wholesalerwholesaler

ManufacturerManufacturerpromotes to promotes to wholesalerwholesaler

Wholesaler Wholesaler promotes to promotes to

retailerretailer

Wholesaler Wholesaler promotes to promotes to

retailerretailer

Retailer Retailer promotes topromotes toconsumerconsumer

Retailer Retailer promotes topromotes toconsumerconsumer

ConsumerConsumerbuys frombuys from

retailerretailer

ConsumerConsumerbuys frombuys from

retailerretailer

PUSH STRATEGYPUSH STRATEGY

Orders to manufacturer

ManufacturerManufacturerpromotes to promotes to

consumerconsumer

ManufacturerManufacturerpromotes to promotes to

consumerconsumer

Consumer Consumer demands demands productproduct

from retailerfrom retailer

Consumer Consumer demands demands productproduct

from retailerfrom retailer

Retailer Retailer demands demands productproduct

from wholesalerfrom wholesaler

Retailer Retailer demands demands productproduct

from wholesalerfrom wholesaler

Wholesaler Wholesaler demandsdemands

product fromproduct frommanufacturermanufacturer

Wholesaler Wholesaler demandsdemands

product fromproduct frommanufacturermanufacturer

Orders to manufacturer

PULL STRATEGYPULL STRATEGY

66Push and Pull Strategies

• Push strategy is directed toward the channel members– Provide incentives for those in the

distribution channels to buy the product• Pull strategy is directed toward the ultimate

purchaser– The focus is on creating demand at the

household or ultimate consumer level

66Push and Pull Strategies

77

IMC PLANNING PROCESSIMC PLANNING PROCESS

Learning Objective

Marketing Plan ReviewMarketing Plan Review

Situation AnalysisSituation Analysis

Communications ProcessAnalysis

Communications ProcessAnalysis

Budget DevelopmentBudget Development

Program DevelopmentProgram Development

Integration & ImplementationIntegration & Implementation

Monitoring, Evaluating, Controlling

Monitoring, Evaluating, Controlling

METHODS

PUSH vs.PULL

IMC PLANNING PROCESS 77

Promotional Program Situation Analysis

Analysis of the Communications Process

Budget Determination

Develop Integrated Marketing Communications Programs

Review of Marketing Plan

AdvertisingSales

PromotionPR/

PublicityPersonalSelling

DirectMarketing

AdvertisingObjectives

SalesPromotionObjectives

PR/Publicity

Objectives

PersonalSelling

Objectives

DirectMarketingObjectives

MessageStrategy

SalesPromotionStrategy

PR/PublicityStrategy

PersonalSelling

Strategy

DirectMarketingStrategy

Integration & Implementation of Marketing Communications Strategies

Monitor, Evaluate & Control Promotional Program

Internet/Interactive

Internet/InteractiveObjectives

Internet/InteractiveStrategy

IMC PLANNING PROCESS 77

Approaches to Determining Approaches to Determining the Promotional Budgetthe Promotional Budget


Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 17-103

Affordable

Percentage-of-Sales

Competitive Parity

Objective-and-Task

Approaches to Determining the Promotional Budget

88

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.

88

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.

• Probably the most widely used as it is simple• But, what about cause and effect?

88

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.

88

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.

88

Media Strengths 88

Evaluating Media

• Example– Grey’s Anatomy: 9.3 million TVs – Grey’s Anatomy: $440,000 per 30 seconds– McDonald’s meal contribution: $0.50

• $440,000/0.50 = 880,000 meals/breakeven – 9.3 million viewers are exposed; thus, McDonalds needs

9.5% to purchase

• 880,000 / 9.3 million = 9.5%– The question is…Is this reasonable?

88

Impact of Phone Contacts on Spending

88

Impact of Email Contacts on Spending

88

Impact of Mail Contacts on Spending

88

Impact on Profit of Different

Combinations

($10)

$10

$30

$50

$70

$90

0 1 2 3 4 5 6 7 8

Pfofit

Equal # of contactsPhone=Mail, No emailEmail, No phone or mail

88

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