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16: Integrated Marketing CommunicationsPart 7: Promotion Decisions

© 2013 Cengage Learning. All rights reserved.


Describe the nature of integrated marketing communications

Examine the process of communication Understand the role and objectives of promotion Explore the elements of the promotion mix Examine the selection of promotion mix elements Understand word-of-mouth communication and

how it affects promotion Understand product placement promotions Examine criticism and defenses of promotion

Learning Objectives

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Coordination of promotion and other marketing efforts to ensure maximum informational and persuasive impact on customers

IMC is increasingly accepted Coordinate/manage promotional efforts Synchronization of promotional elements Use more precisely targeted promotional tools Consistent message to customers Use of database marketing Protect consumer privacy

Integrated Marketing Communications


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Communications: A sharing of meaning through the transmission of information

Source: A person, group, or organization with a meaning it attempts to share with a receiver/audience

Receiver: The individual, group, or organization that decodes a coded message An audience is two or more receivers

Coding process (Encoding): Converting meaning into a series of signs or symbols

Promotion and the Communication Process



The Communication Process

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Communications channel: The medium of transmission that carries the coded message from the source to the receiver/audience

Decoding process: Converting signs and symbols into concepts and ideas

Noise: Anything that reduces a communication’s clarity and accuracy

Feedback: Receiver’s response to a decoded message Channel capacity: The limit on the volume of information a channel can handle effectively; determined by the least efficient component of the communication process

Decoding the Message



Many companies make blunders when marketing internationally Follow the link to access a list of

cross-cultural marketing mistakes What are the problems with these messages? How did noise interfere with the reception of

the message? What could these companies have done

differently to avoid costly and embarrassing communications mistakes?

Discussion Questions

http://www.kwintessential.co.uk/cultural-services/articles/crosscultural-marketing.html

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Communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an organization positively and to accept its products Promotion’s goal is to stimulate product

demand and build customer relationships

Most organizations expend a large amount of resources on promotion

Promotion



Where People Get Their News and Information


Information Flows are Important in Integrated

Marketing Communications


Objectives of Promotion

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Awareness is crucial to initiating the product adoption process for new products

For existing products, promotional efforts create increased awareness of brands, product features, image-related issues, or operational characteristics

Create Awareness


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Primary demand: Demand for a product category rather than a specific brand

Pioneer promotion: Promotion that informs consumers about a new product A way to stimulate primary demand during the

introductory stage of the product life cycle Selective demand: Demand for a specific brand

Stimulate Demand


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If customers stall in the evaluation stage, marketers can use methods to encourage product trial in order to move them to adoption

Trial techniques Free samples Coupons Test drives Limited free-use offers Contests Games

Encourage Product Trial


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Some promotional efforts aim to locate and identify customers who are interested in the firm’s products and are most likely to buy

Techniques include Direct-response information form Toll-free number

The organization should follow up with prospects

Identify Prospects


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A major goal of marketing is to maintain long-term customer relationships Keeping current customers is less costly than

acquiring new customers Retention techniques include

Frequent-user programs Special offers for existing customers Online communications Customer-only events Sweepstakes

Retain Loyal Customers



Southwest Airlines has become a model for customer loyalty Click here to read Southwest’s annual report

How has Southwest achieved customer loyalty as many airlines fail?

Discussion Question

http://www.southwestonereport.com/

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Strong relationships with resellers are important to an organization’s ability to maintain a sustainable competitive advantage

Various promotional methods help achieve this goal Resellers view promotion as a form of

support Share promotional expense Special offers/buying allowances

Facilitate Reseller Support


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Promotional activities may aim to offset or lessen the effect of a competitor’s promotional and marketing programs This type of promotional activity does not

necessarily increase sales or market share A combative promotional objective is often

used by firms in highly competitive consumer markets

Combat Competitive Promotional Efforts


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A business cannot operate at peak efficiency when sales fluctuate rapidly Holidays Seasonal products

Promotional activities are often designed to stimulate sales during slumps

Reduce Sales Fluctuations



The Four Elements of the Promotion Mix

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A paid nonpersonal communication about an organization and its products transmitted to a target audience through mass media Advertising is changing as mass media

consumption habits are changing• The Internet and digital media aim at smaller, more targeted audiences

Advertising is flexible and can reach large or small audiences

Advertising


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Advantages Cost-efficient when it reaches a large number of

people at a low cost per person It lets the source repeat the message several times Visibility gained from advertising can enhance a

firm’s image Disadvantages

Absolute dollar outlay is high Rarely provides rapid feedback Difficult to measure its effect on sales Less persuasive than personal selling Generally limited time exposure

Advantages and Disadvantages of Advertising


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A paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation

Advantages A more specific form of advertising Has a greater impact on consumers Provides immediate feedback

Disadvantages Expensive Labor intensive Time consuming

Personal Selling


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Kinesic: Body language; communicating through movement of the head, eyes, arms, hands, legs, or torso

Proximic: Communicating by varying the physical distance between two parties in face-to-face interactions

Tactile: Communication through touching

Types of Interpersonal Communication


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A broad set of communication efforts used to create/maintain favorable relationships between an organization and its stakeholders Publicity is a non-personal communication in a

news-story form about an organization, its products, or both• Is transmitted through a mass medium at no charge

Public relations should be viewed as an ongoing program during crises and good times

Public Relations


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Publicity Annual reports Brochures Event sponsorships Sponsorship of socially responsible

programs Press releases/Conferences/ Feature articles

Public Relations Tools


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A activity or material that acts as a direct inducement, offering adding value or incentive to resellers, salespeople, or customers Free samples Games Rebates Sweepstakes Contests Premiums Coupons

Sales Promotion



What is PETA promoting in this advertisement?

Discussion Question

Courtesy of People for the Ethical Treatment of Animals. PETA.org.


Product Categories with the Greatest Distribution of

Coupons

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Resources, objectives, and policies Characteristics of the target market Characteristics of the product Cost and availability of promotional

methods Push and pull channel policies

Selecting Promotion Mix Elements


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The size of an organization’s promotional budget affects the number and intensity of promotional methods used

A company’s objectives and policies influence the types of promotions included Different objectives will require

different promotional mixes

Promotional Resources, Objectives, and Policies


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Size Often drives which promotional elements are chosen Small target markets often rely on personal selling

Geographic distribution Personal selling is feasible when customers are

concentrated in a small area Dispersed customers often best reached with advertising

Demographic characteristics Age, income, education, etc. will affect

consumers’ media consumption patterns and are important considerations when developing the promotion mix

Characteristics of the Target Market


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Business products concentrate on Personal selling Sales promotion

Consumer products concentrate on Convenience goods = advertising Durables and expensive products = personal

selling Both = public relations

Product price and product use are important factors

Characteristics of the Product


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Intensive distribution Advertising, sales promotion

Selective distribution Promotion mixes may vary

Exclusive distribution Personal selling

Distribution Intensity of the Product


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National advertising/Sales promotion Have higher expenses but low cost per

individual International promotion

Can be difficult because of lack of promotional channels

Personal selling Is dependent on recruiting and

hiring qualified salespeople

Costs and Availability of Promotional Methods


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Push policy: Promoting a product to the next institution down the marketing channel

Pull policy: Promoting a product directly to consumers in order to develop strong consumer demand

Organizations may use both push and pull policies at the same time

Push and Pull Channel Policies



Comparison of Push and Pull Promotional Strategies

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Word-of-mouth (WOM) communication: Personal, informal exchanges of communication that customers share with one another about products, brands, and companies

Most customers are likely to be influenced by friends and family members when making purchases

Effective WOM communication is becoming increasingly important

Is most effective for new-to-market and expensive products

The Importance of Word-of-Mouth Communication


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Buzz marketing: An attempt to incite publicity and public excitement surrounding a product through a creative event

Viral marketing: A strategy to get consumers to share a marketer’s message, often through email or online video, in a way that spreads dramatically and quickly

The Importance of Word-of-Mouth Communication (continued)


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A form of advertising that strategically locates products or product promotions within entertainment media to reach a product’s target market In-program product placements have become a

successful method of reaching consumers Has become more important as more

consumers bypass advertisements through DV-R, TiVo, and the Internet

Increasing in popularity internationally

Product Placement



The Gap utilized product placement in the movie The Social Network

Can you think of other examples of product placement that you have seen?

Think About It

Merrick Morton/© Columbia Pictures/Courtesy Everett Collection

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Is promotion deceptive? Some are, but not all promotion should be condemned Laws, government regulation, and industry self-

regulation have helped decrease deceptive promotion Does promotion increase prices?

If promotion is working to stimulate demand, producing and marketing larger quantities can actually help reduce prices

Does promotion create needs? Marketing does not create needs, but

makes consumers aware of needs they already have

Criticisms and Defenses of Promotion


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Does promotion encourage materialism? Marketers assert that values are instilled at home and

promotion does not change people into materialistic consumers

Does promotion help customers without costing too much? Promotions inform customers about a product’s uses,

features, advantages, prices, or purchase locations Should potentially harmful products be promoted?

Defenders argue that, as long as it is legal to sell a product, promoting it should also be allowed

Criticisms and Defenses of Promotion (continued)



Key ConceptsIntegrated marketing

communicationsPioneer promotion

Communication Selective demandSource Promotion mix

Receiver Kinesic communicationCoding process Proxemic communication

Communications channel Tactile communicationDecoding process Push policy

Noise Pull policyFeedback Word-of-mouth communication

Channel capacity Buzz marketingPromotion Viral marketing

Primary demand Product placement

© 2013 cengage learning. all rights reserved. 1-1

Documents

cengage learning

product demand

marketing efforts

defenses of promotion

promotion decisions

objectives of promotion

selection of promotion

coordination of promotion