Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-1 CHAPTER FIFTEEN INTEGRATED MARKETING...

15-1

Copyright © 2001 by Harcourt, Inc. All rights reserved.

CHAPTER FIFTEENCHAPTER FIFTEEN

INTEGRATED MARKETING INTEGRATED MARKETING COMMUNICATIONSCOMMUNICATIONS

Text by Profs. Gene Boone & David KurtzMultimedia Presentation byProf. Milton PressleyThe University of New Orleans

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CHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVES• Relate the concept of integrated marketing

communications to the development of the optimal promotional mix

• Explain the relationship of promotional strategy to the process of communication

• List the objectives of promotion• Explain the concept of the promotional mix

and its relationship to the marketing mix

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CHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVES• Discuss the role of sponsorships and direct

marketing in integrated marketing communications planning

• Identify the primary determinants of a promotional mix

• Contrast the two major alternative promotional strategies

• Compare to the primary methods of developing a promotional budget

• Defend promotion against common public criticisms

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• 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

Chapter OverviewChapter OverviewChapter OverviewChapter Overview

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Integrated Marketing Integrated Marketing CommunicationsCommunicationsIntegrated Marketing Integrated Marketing CommunicationsCommunications• Integrated marketing communications (IMC):

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

© PhotoDisc

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Recognizing That Many Consumers Dislike the Face-to-Face Sales Recognizing That Many Consumers Dislike the Face-to-Face Sales Tactics That Often Characterize Showroom Floors, GM Has, as Tactics That Often Characterize Showroom Floors, GM Has, as

Part of Its IMC Program, Streamlined the Car-buying Part of Its IMC Program, Streamlined the Car-buying Experience Here On Its WebSiteExperience Here On Its WebSite

Recognizing That Many Consumers Dislike the Face-to-Face Sales Recognizing That Many Consumers Dislike the Face-to-Face Sales Tactics That Often Characterize Showroom Floors, GM Has, as Tactics That Often Characterize Showroom Floors, GM Has, as

Part of Its IMC Program, Streamlined the Car-buying Part of Its IMC Program, Streamlined the Car-buying Experience Here On Its WebSiteExperience Here On Its WebSite


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Where’s The Where’s The Tracker?Tracker?

Tracker’s IMC Program Tracker’s IMC Program Included a Game for Included a Game for Chevrolet Tracker That Chevrolet Tracker That Drew 1.3 Million Entries Drew 1.3 Million Entries Online and Another Online and Another 100,000 Offline100,000 Offline

Where’s The Where’s The Tracker?Tracker?

Tracker’s IMC Program Tracker’s IMC Program Included a Game for Included a Game for Chevrolet Tracker That Chevrolet Tracker That Drew 1.3 Million Entries Drew 1.3 Million Entries Online and Another Online and Another 100,000 Offline100,000 Offline


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CheeriosCheerios

One of Many Different One of Many Different Ads in an IMC Ads in an IMC Campaign for Campaign for Cheerios That Cheerios That Produced a Unified Produced a Unified Customer-Focused Customer-Focused Message Aimed at Message Aimed at Cheerios’ Many Cheerios’ Many Different Target Different Target MarketsMarkets

CheeriosCheerios

One of Many Different One of Many Different Ads in an IMC Ads in an IMC Campaign for Campaign for Cheerios That Cheerios That Produced a Unified Produced a Unified Customer-Focused Customer-Focused Message Aimed at Message Aimed at Cheerios’ Many Cheerios’ Many Different Target Different Target MarketsMarkets


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Figure 15.1: Figure 15.1: Joint Integrated Joint Integrated Marketing Marketing Promotion by Promotion by General Mills and General Mills and Nintendo Nintendo PlayStationsPlayStations

Figure 15.1: Figure 15.1: Joint Integrated Joint Integrated Marketing Marketing Promotion by Promotion by General Mills and General Mills and Nintendo Nintendo PlayStationsPlayStations

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Importance of TeamworkImportance of TeamworkImportance of TeamworkImportance 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

© PhotoDisc

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Role of Databases in Role of Databases in Effective IMC ProgramsEffective IMC ProgramsRole of Databases in Role of Databases in Effective IMC ProgramsEffective 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 © PhotoDisc

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Figure 15.2: Figure 15.2: Radio Shack – Radio Shack – Using Database Using Database Information to Information to Stock Retail Stock Retail StoresStores

Figure 15.2: Figure 15.2: Radio Shack – Radio Shack – Using Database Using Database Information to Information to Stock Retail Stock Retail StoresStores

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Snyder Communications, an Illinois-Based Direct Sampler for Snyder Communications, an Illinois-Based Direct Sampler for Consumer-Products Companies, Uses a Database to Target Its Consumer-Products Companies, Uses a Database to Target Its Programs to Hispanic Households With Children Aged 6 – 12.Programs to Hispanic Households With Children Aged 6 – 12.

Snyder Communications, an Illinois-Based Direct Sampler for Snyder Communications, an Illinois-Based Direct Sampler for Consumer-Products Companies, Uses a Database to Target Its Consumer-Products Companies, Uses a Database to Target Its Programs to Hispanic Households With Children Aged 6 – 12.Programs to Hispanic Households With Children Aged 6 – 12.


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Table 15.1: Table 15.1: Relating Promotion to the Communications ProcessRelating Promotion to the Communications Process

THE COMMUNICATIONS PROCESSTHE COMMUNICATIONS PROCESSTHE COMMUNICATIONS PROCESSTHE COMMUNICATIONS PROCESS

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Figure 15.3: Figure 15.3: Calvin Klein: Calvin Klein: Kiosks Provide Kiosks Provide Instant Feedback Instant Feedback for Fragrance for Fragrance MarketersMarketers

Figure 15.3: Figure 15.3: Calvin Klein: Calvin Klein: Kiosks Provide Kiosks Provide Instant Feedback Instant Feedback for Fragrance for Fragrance MarketersMarketers

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• 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• The above tasks are related to the AIDA concept

(Attention-Interest-Desire-Action) – an explanation of the steps through which an individual reaches a purchase decision

THE COMMUNICATIONS PROCESSTHE COMMUNICATIONS PROCESSTHE COMMUNICATIONS PROCESSTHE COMMUNICATIONS PROCESS

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TUMSTUMS

A Print Message A Print Message Following the AIDA Following the AIDA ConceptConcept

TUMSTUMS

A Print Message A Print Message Following the AIDA Following the AIDA ConceptConcept


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Global Difficulties With the Global Difficulties With the Communication ProcessCommunication ProcessGlobal Difficulties With the Global Difficulties With the Communication ProcessCommunication 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”



Objectives ofObjectives ofObjectives ofObjectives of

• Traditional function of promotion was to inform the market about the availability of a particular good or service

• Marketers still direct large portions of current promotional efforts at providing information

Provide Provide InformationInformationPromotionPromotionPromotionPromotion

© PhotoDisc

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Figure 15.4: Figure 15.4: Haagen-Dazs –Haagen-Dazs –Providing Providing Information to Information to ConsumersConsumers

Figure 15.4: Figure 15.4: Haagen-Dazs –Haagen-Dazs –Providing Providing Information to Information to ConsumersConsumers

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Haagen-Dazs Also Provides Information to Haagen-Dazs Also Provides Information to Consumers via Its WWW SiteConsumers via Its WWW Site

Haagen-Dazs Also Provides Information to Haagen-Dazs Also Provides Information to Consumers via Its WWW SiteConsumers via Its WWW Site


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Walt Disney WorldWalt Disney World

Ad Promoting a Free Ad Promoting a Free Video to Provide Video to Provide Information for Vacation Information for Vacation PlanningPlanning

Walt Disney WorldWalt Disney World

Ad Promoting a Free Ad Promoting a Free Video to Provide Video to Provide Information for Vacation Information for Vacation PlanningPlanning




• 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

Provide Provide InformationInformation

Increase Increase DemandDemandPromotionPromotionPromotionPromotion

© PhotoDisc

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MindSpring MindSpring Internet ServicesInternet Services

Increasing Selective Increasing Selective DemandDemand

MindSpring MindSpring Internet ServicesInternet Services

Increasing Selective Increasing Selective DemandDemand


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Nokia Cellular Phone Company Attempts to Convince Nokia Cellular Phone Company Attempts to Convince Potential Buyers of Nokia’s Advantages Over Other Cellular Potential Buyers of Nokia’s Advantages Over Other Cellular

Phones (Build Selective Demand) Via Its WWW SitePhones (Build Selective Demand) Via Its WWW Site

Nokia Cellular Phone Company Attempts to Convince Nokia Cellular Phone Company Attempts to Convince Potential Buyers of Nokia’s Advantages Over Other Cellular Potential Buyers of Nokia’s Advantages Over Other Cellular

Phones (Build Selective Demand) Via Its WWW SitePhones (Build Selective Demand) Via Its WWW Site




• Product differentiation is a frequent objective

• 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

• Product differentiation permits more flexibility in marketing strategy


Increase Increase DemandDemand

Differentiate Differentiate the Productthe ProductPromotionPromotionPromotionPromotion

© PhotoDisc

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Hefty OneZip Hefty OneZip

Differentiating Its Differentiating Its Product Product

Hefty OneZip Hefty OneZip

Differentiating Its Differentiating Its Product Product


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Achie McPhee, Having Differentiated Its Party Supplies, Achie McPhee, Having Differentiated Its Party Supplies, Maintains a WWW Site as Part of Its IMC EffortsMaintains a WWW Site as Part of Its IMC Efforts

Achie McPhee, Having Differentiated Its Party Supplies, Achie McPhee, Having Differentiated Its Party Supplies, Maintains a WWW Site as Part of Its IMC EffortsMaintains a WWW Site as Part of Its IMC Efforts




• Promotion can explain the greater ownership utility of a product to buyers, thereby accentuating its value and justifying a higher price



Differentiate Differentiate the Productthe Product

Accentuate Accentuate Product’s Product’s

ValueValue

PromotionPromotionPromotionPromotion

© PhotoDisc

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Johnson & JohnsonJohnson & JohnsonFirst Aid To Go!First Aid To Go!

Accentuating a Accentuating a Product’s ValueProduct’s Value

Johnson & JohnsonJohnson & JohnsonFirst Aid To Go!First Aid To Go!

Accentuating a Accentuating a Product’s ValueProduct’s Value




• For the typical firm, sales fluctuations may result from cyclical, seasonal, or irregular demand

• Stabilizing these variations is often an objective of promotional strategy



Differentiate Differentiate the Productthe Product

Accentuate Accentuate Product’s Product’s

ValueValue

Stabilize Stabilize SalesSales

PromotionPromotionPromotionPromotion

© PhotoDisc

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The Promotional MixThe Promotional MixThe Promotional MixThe Promotional Mix

• Promotional mix: blend of personal selling and nonpersonal selling (including advertising, sales promotion, direct marketing, and public relations) designed to achieve promotional objectives

Personal Personal SellingSelling

Nonpersonal Nonpersonal SellingSelling

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• Personal selling: interpersonal promotional process involving a seller’s person-to-person presentation to a prospective buyer



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• Nonpersonal selling includes:• Advertising• Sales promotion• Direct marketing• Public relations



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Nonpersonal SellingNonpersonal SellingNonpersonal SellingNonpersonal Selling

AdvertisingAdvertising• 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

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AdvertisingAdvertising• Sales promotion:

marketing activities other than personal selling, advertising, and publicity that stimulates consumer purchasing and dealer effectiveness (includes displays, trade shows, coupons, premiums, contests, product demonstrations, and various nonrecurrent selling efforts)

Sales promotionSales promotion

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Figure 15.5: A Figure 15.5: A Joint Promotion Joint Promotion Using LicensingUsing Licensing

Figure 15.5: A Figure 15.5: A Joint Promotion Joint Promotion Using LicensingUsing Licensing

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Van de Kamp’sVan de Kamp’sBreaded Fish Breaded Fish SticksSticks

Sales Promotion Sales Promotion Designed to Designed to Stimulate Stimulate Consumer Consumer Purchasing Purchasing

Van de Kamp’sVan de Kamp’sBreaded Fish Breaded Fish SticksSticks

Sales Promotion Sales Promotion Designed to Designed to Stimulate Stimulate Consumer Consumer Purchasing Purchasing


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AdvertisingAdvertising• Trade promotion: sales

promotions aimed at marketing intermediaries rather than ultimate consumersSales promotionSales promotion

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AdvertisingAdvertising• Direct marketing: direct

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


Direct marketingDirect marketing

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AdvertisingAdvertising• 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


Direct marketingDirect marketing

Public relationsPublic relations

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Table 15.2: Table 15.2: Relating Promotion to the Communications ProcessRelating Promotion to the Communications Process

Personal Selling Advertising

Sales Promotion

Direct Marketing

Public Relations

Permits measurement of effectiveness.Elicits an immediate response.Tailors the message to fit the customer.

Reaches a large group of potential consumers for a relatively low price per exposure.Allows strict control over the final message.Can be adapted to either mass audiences or specific audience segments.

Produces an immediate consumer response.Attracts attention and creates product awareness.Allows easy measurement of results.Provides short-term sales increases.

Generates an immediate response.Covers a wide audience with targeted advertising.Allows complete, customized, personal message.Produces measurable results.

Creates a positive attitude toward a product or company.Enhances credibility of a product or company.

Ad

vant

ages

Continued on next slide . . .

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Table 15.2: Table 15.2: Relating Promotion to theRelating Promotion to the Communications Process Communications Process (Continued)(Continued)

Personal Selling Advertising

Sales Promotion

Direct Marketing

Public Relations

Relies almost exclusively upon the ability of the salesperson.Involves high cost per contact.

Does not permit totally accurate measurement of results.Usually cannot close sales.

Is nonpersonal in nature.Is difficult to differentiate from competitor’s efforts.

Suffers from image problem.Involves a high cost per reader.Depends on quality and accuracy of mailing lists.May annoy consumers.

May not permit accurate measurement of effect on sales.Involves much effort directed toward nonmarketing-oriented goals.

Dis

adva

nta

ges

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SPONSORSHIPSSPONSORSHIPSSPONSORSHIPSSPONSORSHIPS• Sponsorship: provision of funds for a

sporting or cultural event in exchange for a direct association with the events; in e-commerce, a long-term linkage between a Web site and a marketer

• Sponsor IBM is prominentlyfeatured on the Sydney2000 Olympic WebSite

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AT&T AT&T Digital One RateDigital One Rate

AT&T: A Sponsor of AT&T: A Sponsor of the PGA Tour the PGA Tour

AT&T AT&T Digital One RateDigital One Rate

AT&T: A Sponsor of AT&T: A Sponsor of the PGA Tour the PGA Tour


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Figure 15.6: Figure 15.6: Sponsorship Sponsorship Spending (in Spending (in Millions of Millions of Dollars) by Dollars) by North American North American CorporationsCorporations

Figure 15.6: Figure 15.6: Sponsorship Sponsorship Spending (in Spending (in Millions of Millions of Dollars) by Dollars) by North American North American CorporationsCorporations

Sponsorship SpendingSponsorship SpendingSponsorship SpendingSponsorship Spending

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Growth of SponsorshipsGrowth of SponsorshipsGrowth of SponsorshipsGrowth of Sponsorships• Sponsorship has grown

rapidly for the past 30 years• During this period corporate

sponsorship spending has increased faster than promotional outlays for advertising and sales promotion

© PhotoDisc

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How Sponsorship Differs How Sponsorship Differs From AdvertisingFrom AdvertisingHow Sponsorship Differs How Sponsorship Differs From AdvertisingFrom Advertising• Differences include the:

• Sponsor’s degree of control vs. that of the advertiser’s

• Nature of the message• Audience reaction• Measurements of effectiveness

© PhotoDisc

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Assessing Sponsorship Assessing Sponsorship ResultsResultsAssessing Sponsorship Assessing Sponsorship ResultsResults• Marketers utilize some of the same techniques to

measure both advertising and sponsorship• However, the differences between the two

promotional alternatives often necessitate some unique research techniques, as well

• 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

© PhotoDisc

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Figure 15.7: Figure 15.7: Steps in the Steps in the Sponsorship Sponsorship ProcessProcess

Figure 15.7: Figure 15.7: Steps in the Steps in the Sponsorship Sponsorship ProcessProcess

Using Using Sponsorship Sponsorship

in a in a Promotional Promotional

StrategyStrategy

Using Using Sponsorship Sponsorship

in a in a Promotional Promotional

StrategyStrategy

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DIRECT MARKETINGDIRECT MARKETINGDIRECT MARKETINGDIRECT MARKETING

• Few promotional mix elements are growing as rapidly as direct marketing

• Related overall spending total more than $162 billion

• Direct marketing accounts for 57 percent of total U.S. advertising expenditures

© PhotoDisc

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Figure 15.8: Direct Marketing Sales Figure 15.8: Direct Marketing Sales by Media Categoryby Media Category

Figure 15.8: Direct Marketing Sales Figure 15.8: Direct Marketing Sales by Media Categoryby Media Category

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Direct Marketing Direct Marketing Communications ChannelsCommunications ChannelsDirect Marketing Direct Marketing Communications ChannelsCommunications Channels• Direct marketing uses many different

media forms including:• Telephone• Direct mail• Television• Newspapers• Magazines• Radio

• Marketers often combine two or more media in one direct marketing program

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Direct MailDirect MailDirect MailDirect Mail• Marketers combine information from internal

and external databases, surveys, personalize coupons, and rebates that require responses to provide information about consumer lifestyles, buying habits, and wants

• As the information improves, direct-mail has become a viable channel for identifying a firm’s best prospects

• Direct mail is a critical tool in creating effective direct marketing campaigns

© Milton Pressley

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Figure 15.9: Figure 15.9: Targeted Direct Targeted Direct Mail – Van Gogh Mail – Van Gogh ExhibitionExhibition

Figure 15.9: Figure 15.9: Targeted Direct Targeted Direct Mail – Van Gogh Mail – Van Gogh ExhibitionExhibition

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CatalogsCatalogsCatalogsCatalogs• A highly popular form of direct mail• Over 10,000 different consumer mail-order

catalogs and thousands more for business-to- business sales are mailed each year

• They typically generate over $57 million in consumer sales and $36 million in business-to-business sales

• Almost 45 percent of Americans still refuse to purchase from a catalog

© Milton Pressley

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TelemarketingTelemarketingTelemarketingTelemarketing• 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

© PhotoDisc

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Figure 15.10: Offering Toll-Free Telephone Numbers Figure 15.10: Offering Toll-Free Telephone Numbers to Catalog Shoppersto Catalog ShoppersFigure 15.10: Offering Toll-Free Telephone Numbers Figure 15.10: Offering Toll-Free Telephone Numbers to Catalog Shoppersto Catalog Shoppers

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Direct Marketing Via a Direct Marketing Via a Broadcast ChannelsBroadcast ChannelsDirect Marketing Via a Direct Marketing Via a Broadcast ChannelsBroadcast 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

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Time-Life Supports Its Broadcast Direct Marketing Time-Life Supports Its Broadcast Direct Marketing Efforts With This Direct Marketing WebsiteEfforts With This Direct Marketing Website

Time-Life Supports Its Broadcast Direct Marketing Time-Life Supports Its Broadcast Direct Marketing Efforts With This Direct Marketing WebsiteEfforts With This Direct Marketing Website


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Electronic Direct Electronic Direct Marketing ChannelsMarketing ChannelsElectronic Direct Electronic Direct Marketing ChannelsMarketing Channels

• Web advertising is an important component of electronic direct marketing

• E-mail direct marketing is a natural and easy extension of traditional direct mail marketing

© PhotoDisc

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Other Direct Marketing Other Direct Marketing ChannelsChannelsOther Direct Marketing Other Direct Marketing ChannelsChannels• 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

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peoplepcpeoplepc

This Print Ad This Print Ad Supplements a Supplements a Promotional Campaign Promotional Campaign That Is Primarily Based That Is Primarily Based on Broadcast on Broadcast Advertising Advertising

peoplepcpeoplepc

This Print Ad This Print Ad Supplements a Supplements a Promotional Campaign Promotional Campaign That Is Primarily Based That Is Primarily Based on Broadcast on Broadcast Advertising Advertising


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Starbucks EncoreStarbucks Encore

Starbucks’ Direct-Starbucks’ Direct-Response Print Ad Response Print Ad

Starbucks EncoreStarbucks Encore

Starbucks’ Direct-Starbucks’ Direct-Response Print Ad Response Print Ad



Nature of ProductNature of Product

Stage in PLCStage in PLC

PricePrice

Funds AvailableFunds Available

• 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

Nature of MarketNature of Market

DEVELOPING AN OPTIMAL DEVELOPING AN OPTIMAL PROMOTIONAL MIXPROMOTIONAL MIXDEVELOPING AN OPTIMAL DEVELOPING AN OPTIMAL PROMOTIONAL MIXPROMOTIONAL MIX




PricePrice


• 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 MarketNature of MarketNature of MarketNature of Market


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Nescafe Is Targeting the Younger Coffeehouse Nescafe Is Targeting the Younger Coffeehouse Crowd With IMC Efforts Like Its Innovative WebsiteCrowd With IMC Efforts Like Its Innovative Website

Nescafe Is Targeting the Younger Coffeehouse Nescafe Is Targeting the Younger Coffeehouse Crowd With IMC Efforts Like Its Innovative WebsiteCrowd With IMC Efforts Like Its Innovative Website



Nature of ProductNature of ProductNature of ProductNature of Product


PricePrice


• 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



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Curad Curad Aqua-ProtectAqua-Protect

Advertisement for a Advertisement for a New Consumer New Consumer Product to Create Product to Create Awareness Awareness

Curad Curad Aqua-ProtectAqua-Protect

Advertisement for a Advertisement for a New Consumer New Consumer Product to Create Product to Create Awareness Awareness




Stage in PLCStage in PLCStage in PLCStage in PLC

PricePrice


• 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



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Figure 15.11: DVD Players Promotion for a New Figure 15.11: DVD Players Promotion for a New Product to Stimulate DemandProduct to Stimulate DemandFigure 15.11: DVD Players Promotion for a New Figure 15.11: DVD Players Promotion for a New Product to Stimulate DemandProduct to Stimulate Demand



Stage in PLCStage in PLCStage in PLCStage in PLC

PricePrice


• 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



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Blockbuster, in the Maturity Stage of the PLC, Continually Blockbuster, in the Maturity Stage of the PLC, Continually Revamps Its Promotions. This Web Page Advertises Up to Revamps Its Promotions. This Web Page Advertises Up to 40% Off on DVDs for Father’s Day, One-Cent Shipping on 40% Off on DVDs for Father’s Day, One-Cent Shipping on

Selected Items, and Other Special OffersSelected Items, and Other Special Offers

Blockbuster, in the Maturity Stage of the PLC, Continually Blockbuster, in the Maturity Stage of the PLC, Continually Revamps Its Promotions. This Web Page Advertises Up to Revamps Its Promotions. This Web Page Advertises Up to 40% Off on DVDs for Father’s Day, One-Cent Shipping on 40% Off on DVDs for Father’s Day, One-Cent Shipping on

Selected Items, and Other Special OffersSelected Items, and Other Special Offers





PricePricePricePrice


• 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






PricePrice

Funds AvailableFunds AvailableFunds AvailableFunds Available

• 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



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Table 15.3: Table 15.3: Factors Influencing Choice of Promotional MixFactors Influencing Choice of Promotional Mix

Personal Selling AdvertisingNature of the market Number of buyers Geographic concentration Type of customer

Limited numberConcentratedBusiness purchaser

Large numberDispersedUltimate consumer

Nature of the product Complexity Service requirements Type of good or service Use of trade-ins

Custom-made, complexConsiderableBusinessTrade-ins common

StandardizedMinimalConsumerTrade-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

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© PhotoDisc

PULLING AND PUSHING PULLING AND PUSHING PROMOTIONAL STRATEGIESPROMOTIONAL STRATEGIESPULLING AND PUSHING PULLING AND PUSHING PROMOTIONAL STRATEGIESPROMOTIONAL 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

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Figure 15.12: Figure 15.12: Use of a Pulling Use of a Pulling Strategy by Strategy by Home DepotHome Depot

Figure 15.12: Figure 15.12: Use of a Pulling Use of a Pulling Strategy by Strategy by Home DepotHome Depot

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Colgate TotalColgate Total

Using a Pulling Using a Pulling Strategy With Ads Like Strategy With Ads Like This Combined With a This Combined With a Pushing Strategy (30 Pushing Strategy (30 Million Samples to Million Samples to Dental Practitioners)Dental Practitioners)Created Strong Created Strong Demand for This Demand for This Improved ProductImproved Product

Colgate TotalColgate Total

Using a Pulling Using a Pulling Strategy With Ads Like Strategy With Ads Like This Combined With a This Combined With a Pushing Strategy (30 Pushing Strategy (30 Million Samples to Million Samples to Dental Practitioners)Dental Practitioners)Created Strong Created Strong Demand for This Demand for This Improved ProductImproved Product


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BUDGETING FOR BUDGETING FOR PROMOTIONAL STRATEGYPROMOTIONAL STRATEGYBUDGETING FOR BUDGETING FOR PROMOTIONAL STRATEGYPROMOTIONAL STRATEGY• Percentage-of-sales method: allocating

funds for promotion during a given time period based on a specified percentage of either past or forecasted sales

• Fixed-sum-per-unit method: allocating promotional expenditures as a predetermined dollar amount for each sales or production unit

© PhotoDisc

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BUDGETING FOR BUDGETING FOR PROMOTIONAL STRATEGYPROMOTIONAL STRATEGYBUDGETING FOR BUDGETING FOR PROMOTIONAL STRATEGYPROMOTIONAL STRATEGY• Percentage-of-sales method: allocating

promotional spending to match that of a competitor, either as an absolute amount or relative to the firms’ market shares

• Fixed-sum-per-unit method: allocating promotional spending by defining goals and then determining the amount of promotional spending needed to achieve them

© PhotoDisc

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Figure 15.13: Allocation of Figure 15.13: Allocation of Promotional BudgetsPromotional Budgets

Figure 15.13: Allocation of Figure 15.13: Allocation of Promotional BudgetsPromotional Budgets

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Table 15.4Table 15.4: Promotional Budget Determination: Promotional Budget DeterminationMethod 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?”

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MEASURING THE MEASURING THE EFFECTIVENESS OF PROMOTIONEFFECTIVENESS OF PROMOTIONMEASURING THE MEASURING THE EFFECTIVENESS OF PROMOTIONEFFECTIVENESS 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

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Measuring Online Measuring Online PromotionsPromotionsMeasuring Online Measuring Online PromotionsPromotions• Early attempts at measuring online

promotional efforts involved:• Counting hits, user requests for a file• Counting visits, pages downloaded or read

in one session

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Measuring Online Measuring Online PromotionsPromotionsMeasuring Online Measuring Online PromotionsPromotions• 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

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SocialSocialImportanceImportance


THE VALUE OF MARKETING THE VALUE OF MARKETING COMMUNICATIONSCOMMUNICATIONSTHE VALUE OF MARKETING THE VALUE OF MARKETING COMMUNICATIONSCOMMUNICATIONS

• 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

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• Promotion has become an important factor in campaigns aimed at achieving socially oriented objectives like the elimination of drug abuse

• What is important is how promotion is used rather than whether it is used

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Figure 15.14: Figure 15.14: Promotional Promotional Message Message Addressing a Addressing a Universal Social Universal Social ConcernConcern

Figure 15.14: Figure 15.14: Promotional Promotional Message Message Addressing a Addressing a Universal Social Universal Social ConcernConcern

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Merck Vaccine Merck Vaccine DivisionDivision

The Social The Social Importance of Importance of Marketing Marketing Communications Communications

Merck Vaccine Merck Vaccine DivisionDivision

The Social The Social Importance of Importance of Marketing Marketing Communications Communications


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• 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

BusinessBusinessImportanceImportance



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• Both business and nonbusiness enterprises recognize the importance of promotional efforts

• Nonbusiness organizations using promotion include governments and religions




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Doritos IMC Strategy Also Includes Doritos IMC Strategy Also Includes Maintaining Its WebSiteMaintaining Its WebSite

Doritos IMC Strategy Also Includes Doritos IMC Strategy Also Includes Maintaining Its WebSiteMaintaining Its WebSite


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EconomicEconomicImportanceImportance

EconomicEconomicImportanceImportance



• 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


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STRATEGIC IMPLICATIONSSTRATEGIC IMPLICATIONSSTRATEGIC IMPLICATIONSSTRATEGIC IMPLICATIONS• It’s difficult to overstate the impact of the Internet

on the promotional mix for 21st Century firms• Both small and large firms are on the Web• Entrepreneurs have found a lucrative new launch

pad for their enterprises• Online companies must buy advertising –

electronic and traditional• Online and offline firms both spend about $50 to

get each new customer• IMC will continue to play an important role as the

Internet brings the global community closer together

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Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-1 CHAPTER FIFTEEN INTEGRATED MARKETING...

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Transcript of Copyright © 2001 by Harcourt, Inc. All rights reserved. 15-1 CHAPTER FIFTEEN INTEGRATED MARKETING...