Chapter 18 - Lecture Outline
I. The Nature of Integrated Marketing Communications
Integrated marketing communications is the coordination of promotion and other marketing efforts to ensure the maximum informational and persuasive impact on customers.
A. A major goal of integrated marketing communications is to send a consistent message to customers.
1. Integrated marketing communications provides an organization with a way to coordinate and manage its promotional efforts to ensure that customers receive consistent messages.
2. It fosters long-term relationships and efficient use of promotional resources.
B. Integrated marketing communications has been increasingly accepted for several reasons.
1. Mass media advertising is used less today than in the past because of high cost and unpredictable audiences.
2. More precisely targeted promotional tools such as cable TV, direct mail, the Internet, special-interest magazines, CDs and DVDs, cell phones, and iPods are available.
3. Database marketing also allows marketers to be more precise in targeting individual customers.
4. Today, a number of promotion-related companies provide one-stop shopping to clients seeking advertising, sales promotion, and public relations, thus reducing coordinating efforts.
5. Rising costs have also meant that upper management demands systematic evaluations of communication efforts and reasonable return on investments.
C. The specific communication vehicles employed and the precision with which they are used are changing as both information technology and customer interests become increasingly dynamic.
II. Promotion and the Communication Process
Communication is a sharing of meaning. Implicit in this definition is the notion of transmission of information because sharing necessitates transmission.
A. As shown in Figure 18.1, communication begins with a source—a person, group, or organization that has a meaning it attempts to share with an audience.
B. A receiver is an individual, group, or organization that decodes a coded message; an audience is two or more receivers.
C. To transmit meaning, a source must convert the meaning into a series of signs or symbols representing ideas or concepts; this is called the coding process or encoding.
1. To share meaning, the source should use signs or symbols familiar to the receiver or audience. This requires knowing the target market and ensuring that messages—e.g., advertisements—use language understood by the target market.
2. When coding a meaning, a source needs to use signs or symbols that the receiver or audience uses for referring to the concepts the source intends to convey.
D. To share an encoded message with a receiver or audience, a source selects and uses a communication channel, the means of carrying the coded message.
1. When a source chooses an inappropriate medium of transmission, a coded message may reach the wrong receivers.
2. If an inappropriate medium is chosen, a coded message may reach the intended receivers in an incomplete form because the intensity of the transmission is weak.
E. In the decoding process, signs or symbols are converted by the receiver into concepts and ideas.
1. The meaning that a receiver decodes is seldom exactly the same as the meaning the source intended.
2. When the result of decoding differs from what was coded, noise exists. Noise, anything that reduces a communication’s clarity and accuracy, has many sources and may affect any or all parts of the communication.
a) Noise sometimes arises within the medium of transmission itself.
b) Noise will occur if the source uses signs or symbols that are unfamiliar to the receiver or have a different meaning than the one intended.
c) A receiver may be unaware of a coded message because his or her perceptual processes block it out.
F. The receiver’s response to a message is feedback to the source.
1. During feedback, the receiver or audience is the source of the message that is directed toward the original source, which then becomes a receiver. Thus, communication can be viewed as a circular process.
2. During face-to-face communication, such as in a personal selling situation, both verbal and nonverbal feedback can be immediate, enabling communicators to adjust their messages quickly to improve the effectiveness of their communication.
3. When mass communication like advertising is used, feedback is often slow and difficult to recognize.
G. Each communication channel is limited on the volume of information it can handle effectively. This limit, called channel capacity, is determined by the least efficient component of the communication process.
III. The Role and Objectives of Promotion
Promotion is communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an organization more positively and to accept its products.
A. The overall role of promotion is to stimulate product demand and to build and enhance relationships with current and potential customers.
1. Marketers indirectly facilitate favorable relationships by focusing information about company activities and products on interest groups, current and potential investors, regulatory agencies, and society in general.
a) Promotion of responsible use of potentially harmful products
b) Promotion by companies that help selected groups
c) Cause-related marketing links purchase of products to philanthropic efforts for one or more causes to help boost sales and generate goodwill.
d) Marketers also sponsor special events, often leading to news coverage
2. For maximum benefit from promotional efforts, marketers strive for proper planning, implementation, and control of communications.
B. Although there are several objectives of promotion, these vary widely from one organization to another and within organizations over time.
1. Create Awareness
a) For an organization introducing a new product or a line extension, making customers aware of the product is crucial to initiating the product adoption process.
b) For existing products, promotional efforts aim to increase awareness of brands, product features, image-related issues, and/or operational characteristics.
2. Stimulate Demand
a) Primary demand is demand for a product category rather than for a specific brand of product.
(1) Primary demand is stimulated through pioneer promotion, which informs potential customers about the product: what it is, what it does, how it can be used, and where it can be purchased.
(2) Sometimes an industry trade association uses promotional efforts to stimulate primary demand.
b) Selective demand is demand for a specific brand.
(1) Marketers employ promotional efforts that point out the strengths and benefits of a specific brand.
(2) Advertising campaigns, price discounts, free samples, coupons, consumer contests, and sweepstakes are promotional activities that stimulate selective demand.
3. Encourage Product Trial
a) Promotion activities are necessary to move customers through the product-adoption process.
b) Free samples, coupons, test drives or limited free-use offers, contests, and games make product trial convenient and low risk for potential customers.
4. Identify Prospects
a) Certain types of promotional efforts are directed at identifying customers who are interested in the firm’s product and are most likely to buy it.
b) Advertisements may provide direct response information forms or toll-free response lines.
c) Customers who fill out information blanks or call organizations usually have higher interest in products.
5. Retain Loyal Customers
a) The costs of retaining customers are usually lower than those for acquiring new ones.
b) Common promotional activities directed at retaining loyal customers are frequent-user programs and special offers for existing customers only.
c) Reinforcement advertising assures current users that they have made the right choice.
6. Facilitate Reseller Support
a) Strong relationships with resellers are important to a firm’s ability to maintain a sustainable competitive advantage.
b) Use of various promotional methods helps organizations achieve this goal.
7. Combat Competitive Promotional Efforts
a) Promotional activities may prevent a sales or market share loss.
b) A combative promotional objective is most common in extremely competitive consumer products markets.
8. Reduce Sales Fluctuations
a) Demand for many products varies because of climate, holidays, or seasons.
b) Promotional activities are designed to stimulate sales during sales slumps or low-demand periods.
IV. The Promotion Mix
A. When an organization combines specific methods to promote a particular product, that combination constitutes the promotion mix for that product.
1. The four possible elements of a promotion mix are advertising, personal selling, public relations, and sales promotion.
2. For some products, firms use all four ingredients; for other products, only two or three.
B. Advertising
Advertising is a paid, nonpersonal communication about an organization and its products transmitted to a target audience through mass media such as television, radio, the Internet, newspapers, magazines, direct mail, outdoor displays, and signs on mass transit vehicles.
1. Individuals and organizations use advertising to promote goods, services, ideas, issues, and people.
2. Because advertising is highly flexible, it can reach a large target audience or focus on a small, precisely defined segment.
3. Advertising offers several benefits.
a) It is extremely cost-efficient when it reaches a vast number of people at a low cost per person.
b) It lets the source repeat the message several times.
c) The visibility an organization gains from advertising can enhance its image.
4. Advertising also has several disadvantages.
a) Even though the cost per person reached may be low, the absolute dollar outlay can be extremely high, thus limiting and sometimes preventing the use of advertising in a promotion mix.
b) It rarely provides rapid feedback.
c) It is difficult to measure the effects of advertising on sales.
d) Advertising ordinarily has less persuasive impact on customers than personal selling.
C. Personal Selling
Personal selling is a paid, personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation.
1. Like advertising, personal selling has both advantages and limitations.
a) The cost of reaching one person through personal selling is considerably more than through advertising, but personal selling efforts often have greater impact on customers.
b) Personal selling provides immediate feedback.
2. The salesperson can take advantage of several types of communication in addition to verbal language.
a) Kinesic communication, or body language, includes movement of one’s head, eyes, arms, hands, legs, or torso.
b) Proxemic communication occurs when either party varies the physical distance that separates the two parties.
c) Tactile communication is communicating through touching.
3. Management of salespeople is very important in making personal selling effective.
D. Public Relations
Public relations is a broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders.
1. Public relations uses a variety of tools—annual reports, brochures, event sponsorship, etc.
2. Publicity, another public relations tool, is nonpersonal communication in news story form about an organization, its products, or both, that is transmitted through a mass medium at no charge.
3. Unpleasant situations and negative events may generate unfavorable public relations for an organization; effective marketers have policies and procedures in place to help manage public relations problems.
4. Public relations should not be viewed as a set of tools to be used only during crises, but as an ongoing program.
E. Sales Promotion
Sales promotion is an activity or material that acts as a direct inducement offering added value or incentive for the product to resellers, salespeople, or customers; examples include free samples, games, rebates, sweepstakes, contests, premiums, and coupons.
1. Marketers spend more on sales promotion than on advertising.
2. Unlike advertising and personal selling, marketers’ use of sales promotion tends to be irregular, particularly when used to promote seasonal products.
3. Marketers frequently rely on sales promotion to improve the effectiveness of other promotion-mix ingredients.
F. An effective promotion mix requires the right combination of advertising, personal selling, public relations, and sales promotion.
V. Selecting Promotion Mix Elements
A. Marketers vary the compositions of promotion mixes for many reasons. A promotion mix can include all four elements, but frequently a marketer selects fewer than four.
B. Promotional Resources, Objectives, and Policies
1. The size of an organization’s promotional budget affects the number and relative intensity of promotional methods included in the promotion mix.
a) If a company’s promotional budget is extremely limited, the firm is likely to rely on personal selling because it is easier to measure a salesperson’s contribution to sales than to measure the effect of advertising.
b) A business must have a sizable promotional budget to use regional or national advertising and sales promotion activities.
2. An organization’s promotional objectives and policies also influence the types of promotion used.
a) If a company’s objective is to create mass awareness of a new convenience good, its promotion mix is likely to lean heavily toward advertising, sales promotion, and possibly public relations.
b) If a company hopes to educate consumers about the features of a durable good, its promotion mix may combine a moderate amount of advertising, possibly some sales promotion, and a great deal of personal selling because this is an excellent way to inform customers about such products
c) If a firm’s objective is to produce immediate sales of nondurable services, the promotion mix will probably stress advertising and sales promotion.
C. Characteristics of the Target Market
The size, geographic distribution, and demographic characteristics of an organization’s target market help dictate the ingredients to be included in a product’s promotion mix.
1. If the size of the market is limited, the promotion mix will probably emphasize personal selling because it can be effective for reaching a small number of people. When markets for a product consist of millions of customers, organizations rely on advertising and sales promotion.
2. If a company’s customers are concentrated in a small geographic area, personal selling is more feasible than if the customers are dispersed across a vast area. Advertising may be more practical when the company’s customers are numerous and not concentrated.
3. Demographic characteristics such as age, income, or education level may dictate the types of promotional techniques that a marketer selects.
D. Characteristics of the Product
1. Generally, promotion mixes for business products concentrate on personal selling, whereas consumer goods promotion relies on advertising. However, this generalization should be treated cautiously; producers of business products do use some advertising to promote goods.
2. Marketers of seasonal products may have to emphasize advertising, and possibly sales promotion, because off-season sales may be insufficient to support an extensive year-round sales force.
3. A product’s price influences the composition of the promotion mix.
a) High-price products call for more personal selling because consumers associate greater risk with the purchase of such products and usually want the advice of a salesperson.
b) For low-price convenience items, marketers use advertising rather than personal selling.
4. The stage of the product life cycle affects marketers’ decisions regarding the promotion mix.
a) In the introduction stage, a considerable amount of advertising may be necessary for both business and consumer products to make potential users aware of the new product.
b) The growth and maturity stages necessitate heavy emphasis on advertising for consumer services, whereas business products often require a concentration of personal selling and some sales promotion.
c) In the decline stage, marketers usually decrease their promotional activities, especially advertising.
5. The intensity of market coverage at which a product is distributed may influence the composition of its promotion mix.
a) When a product is marketed through intensive distribution, the firm depends heavily on advertising and sales promotion.
b) Promotion mixes of products distributed through selective distribution vary considerably.
c) Products distributed exclusively are promoted primarily through personal selling.
6. A product’s use can also affect the combination of promotional methods employed.
E. Costs and Availability of Promotional Methods
The costs of promotional methods and the availability of promotional techniques are major factors to analyze when developing a promotion mix.
1. National advertising and sales promotion efforts require large expenditures; however, if they reach extremely large numbers of people, the cost per individual may be quite small.
2. Although there are numerous media vehicles within the United States, a firm may find that no available advertising medium effectively reaches a certain market.
F. Push and Pull Channel Policies
One element marketers should consider is whether to use a push policy or a pull policy.
1. With a push policy, the producer promotes the product to the next institution down the marketing channel.
2. With a pull policy, the firm promotes directly to consumers with the intention of developing a strong consumer demand for the products.
3. These policies are not mutually exclusive.
(Marketing Entrepreneurs: Mike Gellman, SpireMedia)
VI. Personal and Electronic Word-of-Mouth Communication
A. Depending on the type of customers and the products involved, buyers to some extent rely on word-of-mouth communication from personal sources such as family members and friends.
1. Word-of-mouth communication is personal informal exchanges of communication that customers share with one another about products, brands, and companies.
a) Most customers are likely to be influenced by friends and family members when making purchases.
b) Word-of-mouth communication is very important when people are selecting restaurants and entertainment, and automotive, medical, legal, banking, and personal services such as hair care.
2. Effective marketers that understand the importance of word-of-mouth communication attempt to identify opinion leaders and encourage them to try their products in the hope they will spread favorable word about them.
3. An approach called buzz marketing is an attempt to create a trend or acceptance of a product through word-of-mouth communications.
a) The idea behind buzz marketing is that an accepted member of a social group will always be more credible than any other form of paid communication.
b) Buzz marketing works best as a part of an integrated marketing communication program that also uses advertising, personal selling, sales promotion, and publicity.
4. Marketers should not underestimate the importance of both word-of-mouth communication and personal influence, nor should they have unrealistic expectations about the performance of commercial messages.
B. In addition, customers are increasingly going online for information and opinions about goods and services as well as about the companies.
1. Electronic-word-of-mouth, or e-word-of-mouth, is communicating about products through websites, blogs, email, or online forums.
a) At consumer-oriented websites, consumers can learn about other consumers’ feelings toward and experiences with specific products.
b) Users can also search within product categories and compare consumers’ viewpoints on various brands and models.
2. Electronic word-of-mouth is particularly important to consumers staying abreast of trends.
3. Viral marketing is a terms used to describe a strategy to get Internet users to share ads and promotions among friends.
C. Word-of-mouth, no matter how it’s transmitted, is not effective in all product categories.
1. It seems to be most effective for new-to-market and more expensive products.
2. Despite the obvious benefits of positive word-of-mouth, marketers must also recognize the potential dangers of negative word-of-mouth, particularly in dealing with online platforms that can reach more people and encourage consumers to “gang up” on a company or product.
VII. Criticisms and Defenses of Promotion
A number of specific criticisms have been lodged against promotional activities.
A. Is Promotion Deceptive?
1. Although some promotion is deceptive or misleading, not all promotion should be condemned.
2. Laws, government regulation, and industry self-regulation have helped decrease deceptive promotion.
B. Does Promotion Increase Prices?
1. Promotion is often blamed for higher prices, but if promotion is working to stimulate demand, producing and marketing larger quantities can actually help reduce prices.
2. Promotion can also help keep prices lower by facilitating price competition.
C. Does Promotion Create Needs?
1. Critics of promotion claim that promotion manipulates consumers by persuading them to buy products they do not need, but without promotion, many needs would still exist.
2. Marketing does not create needs, but capitalizes on them.
D. Does Promotion Encourage Materialism?
Promotions are sometimes criticized for encouraging materialism. Marketers assert that values are instilled at home and promotion does not change people into materialistic consumers.
E. Does Promotion Help Customers Without Costing Too Much?
Critics question whether promotion helps consumers enough to be worth the costs. Consumers do benefit, for promotions inform them about a product’s uses, features, advantages, prices, or purchase locations.
F. Should Potentially Harmful Products Be Promoted?
Organizations are often criticized for promoting products associated with unhealthy activities. Those who defend such promotion argue that as long as it is legal to sell a product, promoting it should also be allowed.