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Integrated Marketing Communications CHAPTER15 Chapter Objectives Explain how integrated marketing communications relates to the development of an optimal promotional mix. Describe the com-munication 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. Discuss the factors that influence the effectiveness of a promotional mix. Contrast pushing and pulling strategies. Explain how marketers budget for and measure the effectiveness of promotion. Discuss the value of marketing communications. 4 1 6 7 2 5 8 3 9
INTEGRATED MARKETING COMMUNICATIONS • Promotion Communication link between buyers and sellers; the function of informing, persuading, and influencing a consumer’s purchase decision. • Marketing communications Messages that deal with buyer-seller relationships. • Integrated marketing communications (IMC) Coordination of all promotional activities to produce a unified, customer-focused promotional message. • Consumers receive many marketing messages all day. • Strategy begins with their wants or needs and then works backward to product. • Must segment market according to customer demographics and preferences.
IMPORTANCE OF TEAMWORK • Requires consistent, coordinated promotional effort at every stage of customer contact. • Involves both in-house resources and outside vendors. ROLE OF DATABASES IN EFFECTIVE IMC PROGRAMS • Internet allows companies to gather information faster and organize it more easily. • Ability to harness data challenges ability to sift through it effectively. • Direct sampling also provides customer opinions.
THE COMMUNICATION PROCESS • Effective message does three things: • Gains the receiver’s attention. • Achieves understanding by both sender and receiver. • Stimulates receiver’s needs and suggests appropriate means of satisfying them. • AIDA concept Steps through which an individual reaches a purchase decision: attention, interest, desire, and action. • AIDA concept is vital for understanding an reaching customers. • Noise can be a particular issue in international communications, including in the world’s 74 English-speaking countries.
OBJECTIVES OF PROMOTION PROVIDE INFORMATION • Goal is informing the market about the availability of a product. INCREASE DEMAND • May increase primary demand, or desire for a particular product category. • May increase selective demand, or desire for a specific brand.
DIFFERENTIATE THE PRODUCT • Differentiation allows firms more control over marketing variables such as price. ACCENTUATE THE PRODUCT’S VALUE • Greater value helps justify a higher price in the marketplace. • Marketers advise staying away from these words—quality, value, service, caring, and integrity—because they are overused and vague. STABILIZE SALES • Can help make demand more consistent throughout the year.
ELEMENTS OF THE PROMOTIONAL MIX • Promotional mix Subset of the marketing mix in which marketers attempt to achieve the optimal blending of the elements of personal and nonpersonal selling to achieve promotional objectives. • Personal selling, advertising, and sales promotion usually account for the bulk of a firm’s promotional expenditures. PERSONAL SELLING • Oldest form of selling. • A seller’s promotional presentation conducted on a person-to-person basis with the buyer. • More than 13 million people in U.S. have careers in personal sales.
NONPERSONAL SELLING • Advertising and product placement. • Sales promotion Marketing activities other than personal selling, advertising, guerrilla marketing, and public relations that stimulate consumer purchasing and dealer effectiveness. • Trade promotion—incentives to encourage marketing intermediaries to sell more of certain items or product lines. • Direct marketing Direct communications, other than personal sales contacts, between buyer and seller, designed to generate sales, information requests, or store or Web site visits. • Public relations Communications and relationships with various publics. • Publicity—nonpersonal stimulation of demand unpaid placement of news about it or through a favorable presentation of it on the radio or television. • Guerrilla marketing Unconventional, innovative, and low-cost marketing techniques designed to get consumers’ attention in unusual ways.
SPONSORSHIPS • $28 billion business worldwide. • Sponsorship Relationship in which an organization provides funds or in-kind resources to an event or activity in exchange for a direct association with that event or activity. • Sponsor purchases access to event’s audience and image associated with activity. • Sponsorship often more cost effective but usually offers less control over market coverage. • Audiences often view sponsorship more positively than advertising.
DIRECT MARKETING • Effective—for every $1 spent, firms typically receive $11.49 in revenue. • Opens large new international markets and promotes goals beyond creating product awareness. • Databases are an important tool. DIRECT MARKETING COMMUNICATION CHANNELS • Direct mailings such as brochures and catalogs. • Telecommunications and television and radio. • Internet via e-mail and electronic messaging. • Print media such as newspapers and magazines. • Specialized channels such as electronic kiosks.
DIRECT MAIL • Allows narrow targeting, intensive coverage, and other benefits. • Per reader cost is high and many consumer view it as junk. CATALOGS • Catalog sales reached $160 billion in a recent year. • Companies adding online catalogs to complement print catalogs. TELEMARKETING • Most frequently used form of direct marketing. • Provides a high return on expenditures, an immediate response, and the opportunity for personalized two-way conversations. • May be outbound or inbound. • 1996 Telemarketing Sales Rule created Do Not Call Registry and curtailed abusive telemarketing practices.
DIRECT MARKETING VIA BROADCAST CHANNELS • Brief direct-response advertisements on television or radio. • Home shopping channels. • Infomercials. ELECTRONIC DIRECT MARKETING CHANNELS • U.S. spending on online advertising totals about $16 billion per year. • Includes Web advertising and e-mail notices. • Online customer acquisition programs often cost less than traditional ones. OTHER DIRECT MARKETING CHANNELS • Print media and other traditional channels are critically important. • Kiosks also provide an outlet for electronic sales.
PULLING AND PUSHING PROMOTIONALSTRATEGIES • Pulling strategy Promotional effort by the seller to stimulate final-user demand, which then exerts pressure on the distribution channel. • Pushing strategy Promotional effort by the seller directed to members of the marketing channel rather than final users. • Advertising creates an environment for successful personal selling and remains important as an affirmation of customer’s decision.
BUDGETING FOR PROMOTIONAL STRATEGY • Composition of budget depends on strategy. • B2B markets often allocate more to personal selling than advertising. • Reverse is usually true for consumer goods.
MEASURING THE EFFECTIVENESSOF PROMOTION • Direct sales results test to reveal impact on sales revenues of promotional spending. • Indirect evaluation that focuses on quantifiable indicators of effectiveness. • Two major ways of setting Internet advertising rates: • Cost per impression—cost relates to the number of people who view the ad. • Cost per response (click-throughs)—cost relates to the number of people who click the ad.
THE VALUE OF MARKETINGCOMMUNICATIONS SOCIAL IMPORTANCE • One generally accepted standard in a market society is freedom of choice for the consumer. BUSINESS IMPORTANCE • Long-term increase in funds allocated to promotion indicates faith in its ability to encourage attitude changes, brand loyalty, and additional sales. ECONOMIC IMPORTANCE • Provides employment for millions of people. • Increases units sold and allows economies of scale that mean lower prices, which make a product available to more people.