Chapter 16: Integrated Marketing Communications

How are sales fluctuations reduced?

- A business cannot operate at peak efficiency when sales fluctuate widely; Holidays (note: deals during holiday); Seasonal products (note: deals after holidays too because products can be seasonal) - Promotional activities are often designed to stimulate sales during slumps; During peak periods, a marketer may refrain from advertising to prevent stimulating sales to the point at which the firm cannot handle all of the demand; A company may advertise that customers can be better served by coming in on certain days

What are disadvantages of advertising?

- Absolute dollar outlay can be high - Rarely provides rapid feedback - Often difficult to measure its effect on sales - Less persuasive than personal selling - Has a limited time exposure Notes: No direct link between people liking the advertisement and buying the product (may not be immediate); Personal selling can talk over challenges, but advertising just presents people information and that's all; Billboards - you just drive by, radio - can't be repeated

What are advantages and limitations of personal selling?

- Advantages: Involves more specific communication than advertising, Has greater impact on customers, Provides immediate feedback - Limitations: Is expensive

Why and how is advertising changing?

- Advertising is changing as consumers' mass media consumption habits are changing; Consumers are striving to maximize their presence and impact through digital media; Ads are being designed that cater to smaller, more personalized audiences; Traditional media like newspapers are in a decline due to a drop in readership - Companies shifting more towards targeting communications; Tries to reach us where we live, etc. - Changing the way we advertise (ex: less people read newspapers)

How can competitive promotional efforts be combatted?

- At times, a marketer's objective in using promotion is to offset or lessen the effect of a competitor's promotional or marketing programs; This type of promotional activity does not necessarily increase the organization's sales or market share, but it may prevent a sales or market share loss - A combative promotional objective is used most often by firms in extremely competitive consumer markets - Want to avoid customers switching back and forth between companies because of promotional efforts such as special discounts; Want to increase brand loyalty and customer loyalty to businesses

Why is the concept of integrated marketing communications increasingly effective?

- Because mass media advertising is used less frequently today because of its high cost and lower effectiveness in reaching some target markets, marketers can now take advantage of more precisely targeted promotional tools, such as TV, direct mail, the internet, special-interest magazines, smartphones, mobile applications, social media, sales calls, and outdoor boards - Database marketing and marketing analytics are allowing marketers to target individual customers more precisely

Can advertising be flexible or inflexible?

- Being highly flexible, advertising can reach an extremely large target audience or focus on a small, precisely defined segment - Inflexible in that millions of people get the same information at the same time (when something is released at the same time through mass communication)

Possible Objectives of Promotion: Identify Prospects

- Certain types of promotional efforts aim to identify customers who are interested in the firm's product and are likely potential buyers; For example, a marketer may run a television advertisement encouraging the viewer to visit the company's website and share personal information in order to receive something of value from the company; The organization can respond with phone calls, e-mail, or personal contact by salespeople - Get information to customers because they sign up for something; Increases awareness; Helps businesses even if customers do not buy something immediately

What is a major factor to consider when developing a promotion mix?

- Costs of promotional methods are major factors to analyze when developing a promotion mix; National advertising and sales promotion require large expenditures (However, if these efforts succeed in reaching extremely large audiences, the cost per individual reached may be quite small); Some forms of advertising are relatively inexpensive (Many small, local businesses advertise products through local newspapers, magazines, radio and television stations, outdoor displays, internet ads, and signs on mass transit vehicles) - A consideration that marketers explore when formulating a promotion mix is the availability of promotional techniques; A firm may find that no available advertising medium effectively reaches a certain target market; The problem of media availability becomes more pronounced when marketers advertise in foreign countries (Some media may not be available or are illegal; Regulations or standards for media content may be restrictive) - Local advertising where you need to (spot advertising) might be cheaper and easier

What is advertising and what is its use?

- Definition: advertising is paid, non personal communication (not individualized, mass communication the same way to every one), mass communication (through billboards, commercials, etc.); Advertising is a paid non personal communication about an organization and its products transmitted to a target audience through mass media - Individuals and organizations use advertising to promote goods, services, ideas, issues, and people

How can word of mouth communication not be face-to-face?

- Electronic word of mouth is communicating about products through websites, blogs, e-mail, social networks, or online forums; Consumers are increasingly going online for information and opinions about goods and services as well as about the companies - Word of mouth is not always face to face (can be over social media or online websites) - Buzz marketing - Viral marketing

Possible Objectives of Promotion: Create Awareness

- For an organization that is introducing a new product or a line extension, making customers aware of the product is crucial to initiating the product adoption process - For existing products, promotional efforts may aim to increase awareness of: Brands, Product features, Image-related issues (such as organizational size or socially responsive behavior), Operational characteristics (such as store hours, locations, and credit availability) - Done when you have a brand new product -Starts with adoption process (innovators, early adopters, etc.) - Increase awareness if existing product

What are characteristics of promotion?

- For maximum benefit from promotional efforts, marketers strive for proper planning, implementation, coordination, and control of communications - Effective management of integrated marketing communication is based on information about and feedback from customers and the marketing environment, often obtained from an organization's marketing information system - Companies constantly reinforce and promote products for customers to buy (Even if they are a well-known business)

Selecting Promotional Mix: Characteristics of the product

- Generally, promotion mixes for business products concentrate on personal selling, whereas advertising plays a major role in promoting consumer goods; Marketers of business products use some advertising and occasionally sales promotion to promote products; Personal selling is used extensively for consumer durables, such as home appliances, automobiles, and houses, whereas consumer convenience items are promoted mainly through advertising and sales promotion; Public relations appears in promotion mixes for business and consumer products - A product's price also influences the composition of the promotion mix; High-priced products call for personal selling; For low-priced convenience items, marketers use advertising

What are the roles and objectives of promotion?

- How successfully marketers use promotion to maintain positive relationships depends on some extent on the quantity and quality of information the organization receives - Because customers derive information and opinions from many different sources, integrated marketing communications planning also takes into account informal methods of communication, such as word of mouth and independent information sources on the internet - Have to research customers to find out there interests, where they are visiting; Talk to customers

Elements of Target Market: Size

- If the size is limited, the promotion mix will probably emphasize personal selling, which can be very effective for reaching small numbers of people - When a product's market consists of millions of customers, organizations rely on advertising and sales promotion, because these methods reach masses of people at a low cost per person - Size of market is limited - personal selling is better; Millions of people or wide geographic region then advertising is better

How do stages of a product's life cycle affect decisions regarding the promotion mix?

- Introduction: Advertising plus personal selling and sales promotion is used to generate awareness for both business and consumer products - Growth and Maturity: Consumer products require heavy emphasis on advertising; Business products often call for a concentration of personal selling and some sales promotion - Decline: Marketers decrease all promotional activities, especially advertising

What are advantages of advertising?

- Is extremely cost-efficient when it reaches a vast number of people at a low cost per person (Lower cost when it reaches large amounts of people) - Lets the source repeat the message several times (Repeated ads, can run them more than once) - Visibility gained from advertising can enhance an organization's image (Advertising is the best way to spread information (TV is the best way))

How can businesses retain loyal customers?

- Maintaining long-term customer relationships is a major goal of most marketers; The costs of retaining customers are usually considerably lower than those of acquiring new ones; Retention techniques include: - Frequent-user programs (ex: frequent customer cards, Ulta) - Special offers for existing customers (for new customers, old, etc.) - To retain loyal customers, marketers not only advertise loyalty programs but also use reinforcement advertising, which assures current users that they have made the right brand choice and tells them how to get the most satisfaction from the product - Cheaper to keep customers than get new ones

What are characteristics of word of mouth communication?

- Most customers are likely to be influenced by friends and family members when they make purchases (take peoples recommendations); Opinion leaders or people in your peer group or reference group; More likely to listen to these type of people; Marketers want to seed to the market (find the reference groups or opinion leaders) - Research has identified a link between word-of-mouth communication and new-customer acquisition when there is customer involvement and satisfaction - Effective marketers who understand the importance of word-of-mouth communication attempt to identify opinion leaders and encourage them to try their products in the hope that they will spread favorable publicity about them - Consumers are more likely to share negative word-of-mouth information than positive word-of-mouth communication

What are possible objectives of promotion?

- Objectives have to be clear, realistic, written down and measurable - Create awareness: retain loyal customers - Stimulate demand: facilitate reseller support - Encourage product trial: combat competitive promotional efforts - Identify prospects: reduce sales fluctuations

Elements of Target Market: Geographic distribution

- Personal selling is more feasible if a company's customers are concentrated in a small area - When the company's customers are numerous and dispersed, regional or national advertising may be more practical

Pull policy (definition)

- Promoting a product directly to consumers to develop strong consumer demand that pulls products through the marketing channel; Done primarily through advertising and sales promotion - Manufacturer communicates to the customer in hopes that the customer will ask for the product from the retailer - Create demand among the customers and the customers pull product from the channel

Push policy (definition)

- Promoting a product only to the next institution down the marketing channel; Normally stresses personal selling - Promote to the next level in the channel (ex: manufacturer to wholesaler to retailer to customer) - Manufacturer uses some sort of trade publication to advertise to wholesalers and retailers - Advertise to each level and use personal selling to push it

What are the general steps of the communication process?

- Source --> Coded Message --> Communication Channel --> Decoded Message --> Receiver or audience - Uses feedback to go back through each stage of the process and repeats - Noise occurs throughout the communication process

How is reseller support facilitated?

- Strong relationships with resellers are important to a firm's ability to maintain a sustainable competitive advantage; Various promotional methods can help an organization achieve this goal; Sharing a portion of retailers' advertising expenses for promoting the products; Providing wholesalers and retailers with special offers and buying allowances; Working with retailers in the presentation and promotion of the products - Manufacturer might sell to the retailers - Ex: might have special offer that allows them to buy the products cheaper

What are the four possible elements of a promotion mix?

1. Advertising 2. Personal selling 3. Public relations 4. Sales promotion

What factors are considered when selecting a promotion mix?

1. Promotion resources, objectives, and policies 2. Characteristics of the target market 3. Push and pull channel policies 4. Cost and availability of promotional methods 5. Characteristics of the product

Promotion mix (definition)

A combination of promotional methods used to promote a specific product; Direct marketing is a type of marketing promotions

What is publicity?

A component of public relations is publicity; Publicity is non personal communication in news-story form about an organization or its products, or both; Is transmitted through a mass medium at no charge; Publicity is free because it is given by the media to people; Credibility factor

Source (definition)

A person, group, or organization with a meaning it tries to share with a receiver or an audience

Communication (definiton)

A sharing of meaning through the transmission of information

Viral marketing

A strategy to get consumers to share a marketer's message, often through e-mail or online video, in a way that spreads dramatically and quickly; Getting someone to share the information; Ex: share this post to get 10% off your next purchase; not face-to-face

Elements of Target Market: Demographic characteristics

Age, income, education, etc., may affect the types of promotional techniques a marketer selects, as well as the messages and images employed

Buzz marketing (defintion)

An attempt to incite publicity and public excitement surrounding a product through a creative event; Doing something to initiate the talk; Ex: could be an event that gets people talking about it; not face-to-face

What are examples of public relations tools?

Annual reports, Brochures, Event sponsorships, Sponsorship of socially responsible programs, Publicity (News releases, Press conferences, Feature articles)

Noise (definiton)

Anything that reduces a communication's clarity and accuracy; Noise is anything that decreases the accuracy and clarity of what the deceiver is encoding (needs to be in a language that is understandable); Competing messages (ex: someone talking to you while you're listening to the teacher)

Proxemic communication (definition)

Communicating by varying the physical distance in face-to-face interactions

Kinesic communication (definition)

Communicating through the movement of head, eyes, arms, hands, legs, or torso

Tactile communication (definition)

Communication through touching; Shown that a simple kind of touch could bring servers more tip money

Promotion (defintion)

Communication to build and maintain relationships by informing and persuading one or more audiences; Many organizations spend considerable resources on promotion to build and enhance relationships with current and potential customers as well as other stakeholders; Promotion is communication of benefits of buying the product

Decoding process (definition)

Converting signs and symbols into concepts and ideas

Integrated marketing communications (definition)

Coordination of promotion and other marketing efforts for maximum informational and persuasive impact on customers; Coordinating multiple marketing tools to produce this synergistic effect requires a marketer to employ a broad perspective; A major goal of integrated marketing communications is to send a consistent message to customers

Selecting Promotional Mix: Characteristics of the Target Market

Crucial elements of the target market: Size, geographic distribution, demographic characteristics

Primary demand (definition)

Demand for a product category rather than a specific brand; for the whole category (ex: Milk ads advertise the entire brand - Drink Milk); Presumably all of the individual brands benefit from this; Seen in the introductory stage; can be used to stimulate demand

Selective demand (definition)

Demand for a specific brand; Requires singling out attributes important to potential buyers; Can be stimulated by: Differentiating the product from competing brands in the minds of potential buyers, Increasing the number of product uses and promoting them through advertising campaigns, as well as through price discounts, free samples, coupons, consumer contests and games, and sweepstakes, Encouraging existing customers to use more of the product; Select your specific brand, bullets show how they can differentiate themselves from competitors; can be used to stimulate demand

What are examples of sales promotion?

Free samples, Games, Rebates, Sweepstakes, Contests, Premiums, Coupons

Possible Objectives of Promotion: Encourage Product Trials

If customers stall during the evaluation stage, marketers can use certain types of promotion—such as free samples, coupons, test drives, or limited free-use offers, contests, and games—to encourage product trial in order to move them through the product adoption process

Does promotion increase prices?

If promotion is working to stimulate demand, producing and marketing products in larger quantities can actually help reduce prices; Promotion also helps keeps prices lower by facilitating price competition

How does information flow in integrated marketing communications?

Information about customers and marketing environment forces --> integrated marketing communications plan --> customers --> feedback --> back to the beginning and repeated

What can integrated marketing communications enable?

Integrated marketing communications also enable synchronization of promotion elements and can improve the efficiency and effectiveness of promotion budgets

What is a major challenge with integrated marketing communications?

Integrating and customizing marketing communications while protecting customer privacy has become a major challenge; Through digital media, companies can provide product information and services that are coordinated with traditional promotional activities

What else can influence the composition of the promotion mix?

Intensity of market coverage is another factor affecting the composition of the promotion mix; Intensive distribution - convenience products, no brand preference (Advertising, sales promotion) ; Selective distribution - varies, brand preference (Promotion mixes vary); Exclusive distribution - one outlet, expensive and high end product (Personal selling)

What are the different types of interpersonal communication that salespersons use when they meet a customer face-to-face?

Kinetic communication, Proxemic communication, Tactile communication; all used when a salesperson and a customer meet face-to-face

What is a potential challenge of word of mouth communication?

More likely to share negative information instead of positive information

Word of mouth communication (definition)

Personal informal exchanges of communication that customers share about products, brands, and companies; Word of mouth is not advertising; Instead it creates a buzz for consumers

What is personal selling?

Personal selling is a paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation; Very flexible (can adjust sales pitches based on customers concerns or priorities); Most extensively used in the business-to-business market and also in the business-to-consumer market for high-end products such as homes, care, electronics and furniture

Possible Objectives of Promotion: Stimulate Demand

Primary demand, New introductory promotion, selective demand, etc.

Does promotion create needs?

Promotion does not create needs, but it does capitalize on them by making consumers aware of needs they already have

New introductory promotion (definition)

Promotion that informs consumers abouta new product

What is public relations?

Public relations is a broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders; Create and maintain favorable relations between an organization and its stakeholders; Stakeholders can be customers, employees, stockholders, community where the company operates, media, government, retired employees, etc.; Have a stake in the companies success

Selecting Promotional Mix: Push and pull channel policies

Push and pull policies are not mutually exclusive; at times, an organization uses both simultaneously; Opposite, but generally used together Stronger when used together

What is 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; Direct inducement to purchase; Used in conjunction with the other elements (ex: coupons, sweepstakes, etc.); People won't know about the coupons or contest unless it is advertised

Is promotion deceptive?

Some promotions are deceptive, but not all promotion should be condemned; Laws, government regulation, and industry self-regulation have helped decrease deceptive promotion

Receiver (definition)

The individual, group, or organization that decodes a coded message

Channel capacity (definition)

The limit on the volume of information a communication channel can handle effectively; Example: too many pictures flashing where you can not register each one you see

Communications channel (definition)

The medium of transmission that carries coded message from the source to the receiver; Transmission media include printed words (newspapers and magazines), broadcast media (television and radio), and digital communication

Feedback (definition)

The receiver's response to a decoded message; Can be verbal and nonverbal; In interpersonal communication, feedback occurs through talking, teaching, smiling, nodding, eye movements, and other body movements and postures; Gives feedback to the source to let them know they got the message; Example: any communication that lets them you got it, even buying the product is feedback

Selecting Promotional Mix: Promotion resources, objectives, and policies

The size of an organization's promotional budget affects the number and relative intensity of promotional methods included in a promotion mix; A company's promotional objectives and policies influence the types of promotion selected; Different objectives will require different promotional mixes

What is an important factor to consider with specific communication?

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

Product placement (definition)

The strategic location of products or product promotions within entertainment media content to reach the product's target market; In-program product placements have become a successful method of reaching consumers; With this, the company is paying a move studio, tv production company, etc. put into a tv show, movie, video game, books, etc.; Characters in the book, game, movie, etc. advertise product without screaming in your face that it is an advertisement; Effective because its more subtle and seems more legitimate

What is an Audience?

Two or more receivers

Coding process (definition)

also known as encoding, converting meaning into a series of signs or symbols; When coding meaning into a message, the source must consider certain characteristics of the receiver or audience; When coding a meaning, a source needs to use signs or symbols that the receiver or audience uses to refer to the concepts the source intends to convey