chapter 10.rtf

Chapter 10: Integrated Marketing Communications

MULTIPLE CHOICE

1. Which of the following statements about integrated marketing communications (IMC) is FALSE?a.

IMC refers to the strategic, coordinated use of promotion to create one consistent message.

b.

IMC takes a 360-degree view of the customer.

c.

The role of mass television advertising is growing more important to IMC strategy.

d.

IMC reduces costs and increases efficiency because it can reduce or eliminate redundancies and waste.

e.

The key to IMC is consistency and uniformity of message across all elements of promotion.

ANS: C

2. Why is promotion based on creativity alone likely to waste valuable marketing resources?a.

Because truly creative promotion is too expensive

b.

Because the majority of promotional efforts do not create results in the short term

c.

Because promotion that is based solely on creativity is no better than one-on-one personal selling

d.

Because most potential customers simply ignore promotion

e.

All of the above are reasons.

ANS: B

3. To be successful, firms must move potential customers beyond mere interest in the product. Good promotion will stimulate _____ by convincing potential customers of the product’s superiority and its ability to satisfy specific needs.

dedication d actioninvestigation e desire

c.

attention

ANS: E

4. In terms of the AIDA model, mass communication elements such as advertising and public relations tend to be very effective at:a.

stimulating awareness of and interest in a product.

b.

explaining highly complex and technical products.

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c.

stimulating immediate purchase of a product.

d.

marketing high priced products.

e.

closing the sale.

ANS: A

5. When firms use a(n) _____ strategy, they focus their promotional efforts toward stimulating demand among final customers, who then exert pressure on the supply chain to carry the product.

pressurization guerillaIMC push

c.

pull

ANS: C

6. In launching its new line of power tools, Black and Decker spent a considerable amount of time and resources to educate, motivate, and compensate members of its supply chain. By investing heavily in these types of promotions, Black and Decker hopes its _____ strategy will lead to a more effective product launch.

pull pushAIDA placement

c.

institutional

ANS: D

7. Which of the following is perhaps the main advantage associated with the use of advertising?a.

It takes little time to develop an advertising campaign.

b.

The total dollar layout in advertising is usually low.

c.

It is an extremely cost efficient way to reach a large number of people.

d.

It can quickly convey a large amount of technical information.

e.

It can be quite memorable.

ANS: C

8. In a recent campaign, IBM advertised that it provides infrastructure and solutions for e-business. Interestingly, these messages did not name the company’s products or explain how their infrastructure and solutions actually work. What type of advertising is IBM using?


advocacyproduct

institutional competitivec.

pioneer

ANS: B

9. The most widely used method of setting the advertising budget and planning advertising expenditures is the _____ approach.

objectives and task arbitrarypercentage of sales incremental

c.

competitive matching

ANS: B

10. In the context of IMC strategy, what is the difference between public relations and publicity?a.

Public relations deals with positive information; publicity deals with controlling negative information.

b.

Publicity deals with many stakeholders; public relations deals only with customers.

c.

Publicity is normally done via an in-house staff; public relations is typically outsourced to a specialist.

d.

Publicity is more narrowly defined and focused on gaining media attention.

e.

There is no difference between public relations and publicity.

ANS: D

11. Overall, what is the major disadvantage associated with the use of public relations and publicity?a.

It is normally very expensive.

b.

The amount of negative publicity always outweighs the good.

c.

Few, if any, customers pay attention to public relations messages.

d.

Most people find it to be less credible than advertising.

e.

The firm has limited control over how the message will be delivered or interpreted.

ANS: E

12. _____ is paid personal communication that attempts to inform customers about products and persuade them to purchase those products.


Personal sellingPublic

relationsSales promotion Advertising

c.

Publicity

ANS: A

13. In today’s economy, personal selling has evolved to take on elements of customer service and marketing research. Why is this the case?a.

It is less expensive to deliver service and conduct research with the sales staff.

b.

It is more time efficient because salespeople are already interacting with customers.

c.

Personal selling now focuses more on developing relationships than on generating transactions.

d.

It allows salespeople to earn higher commissions for doing more work.

e.

None of the above is correct.

ANS: C

14. As a method of sales force compensation, _____ is best suited to situations where aggressive selling is required and salespeople have direct control over sales outcomes (i.e., their efforts are directly responsible for meeting sales goals).

straight commission

direct compensation

a combination approach

pay-as-you-go salary

c.

straight salary

ANS: A

15. Which sales force compensation system is best suited to situations where salespeople are responsible for pre- and post-sale service and sales managers want maximum control over selling expenses?

straight commission

geographic allocation

a combination approach

straight salary

c.

direct compensation

ANS: E


16. Despite conventional thinking, _____ accounts for the bulk of promotional spending in many firms. This is especially true for firms selling consumer products in grocery stores and mass-merchandise retailers.

personal selling sales promotionadvertising publicity

c.

public relations

ANS: D

17. Which of the following statements best represents the universal goal of all sales promotion activities?a.

to increase sales volume in the long term

b.

to stimulate customer interest and attention

c.

to induce product trial and purchase

d.

to enhance the image of the firm

e.

to gain the attention of members of the supply chain

ANS: C

18. Which of the following IS NOT a reason that most firms prefer rebates over coupons when granting price reductions to customers?a.

Firms have more control over rebates.

b.

Rebates can be launched and ended very quickly.

c.

Rebate programs allow firms to collect additional customer information.

d.

Rebates are much better at inducing purchase.

e.

Most customers never bother to redeem rebate offers.

ANS: D

19. Which of the following sales promotion methods would you recommend to a packaged goods marketer who wants to stimulate trial of a new product?

a contest or sweepstake

an in-store product demonstration

a coupon a point-of-purchase display

c.

a free sample of the product


ANS: C

20. A price reduction offered to channel intermediaries for purchasing specified quantities of a product at a single time is called a:

merchandise credit.

push money allowance.

buying allowance. cooperative incentive.

c.

selling incentive.

ANS: B

ESSAY

1. Discuss the issues associated with the increasing fragmentation of mass media audiences. How are advertisers and media companies coping with the issue?

ANS:The traditional media business is hanging on for the ride of its life. That ride is called fragmentation and it’s going to forever change the way both media and advertisers do business. The problem is that consumers’ attention is being spread across an increasing array of media and entertainment choices. Those choices include the Internet, targeted cable programming, video-on-demand, TiVo (or digital video recorders), iPods, DVDs, video games, and wireless phones. Today, mass audiences are dwindling fast as consumers spend less time with traditional media such as television, magazines, and newspapers. Consumers now expect to use media whenever and wherever they want, and on any device. They are no longer wed to full-length television programming or to leisurely reading the newspaper.

For advertisers, these trends are alarming because it is their traditional bread-and-butter demographic that is fragmenting the most. For example, the number of 18- to 34- year-old men who watch primetime television has been declining steadily since 2000. Those who watch television increasingly use TiVo or other DVR devices to skip advertising. These changes are forcing marketers to adapt by finding newer, more effective ways to reach their target audiences. One way marketers are countering the trend is by linking sales promotion to target markets through strategic integration into related television programming. Company sponsorship of programming can allow a close connection between brand and target market.

In addition to outright sponsorship of popular programs, marketers are also making deals with television and cable networks to place their products into actual programs. In-program product placements have been successful in reaching consumers as they are being entertained rather than during the competitive commercial breaks. Media companies themselves have also been forced to adapt, most notably by fragmenting their content and business models to match their fragmented audiences. One way that companies have addressed the problem is by making their content available on multiple platforms.


Despite the challenges of reaching fragmented audiences, the trend actually has a big side benefit. The science behind traditional broadcast television ratings and audience measurement has always been uncertain. With on-demand services, advertisers are able to precisely measure audience characteristics whether the content is delivered via the Internet, cable, or wireless devices. This one-two punch of profits and precise measurement may mark the death of the traditional 30-second primetime television spot.

2. Discuss the steps involved in the AIDA model of outlining promotional goals. How does IMC strategy shift from one step to the next in the model? How does the important of various promotional elements vary across the steps?

ANS:Ultimately, the goals and objectives of any promotional campaign culminate in the purchase of goods or services by the target market. The classic model for outlining promotional goals and achieving this ultimate outcome is the AIDA model—attention, interest, desire, and action:

Attention – Firms cannot sell products if the members of the target market do not know they exist. As a result, the first major goal of any promotional campaign is to attract the attention of potential customers.

Interest – Attracting attention seldom sells products. Therefore, the firm must spark interest in the product by demonstrating its features, uses, and benefits.

Desire – To be successful, firms must move potential customers beyond mere interest in the product. Good promotion will stimulate desire by convincing potential customers of the product’s superiority and its ability to satisfy specific needs.

Action – After convincing potential customers to buy the product, promotion must then push them toward the actual purchase.

The role and importance of specific promotional elements varies across the steps in the AIDA model. Mass-communication elements, such as advertising and public relations, tend to be used more heavily to stimulate awareness and interest due to their efficiency in reaching large numbers of potential customers. Along with advertising, sales promotion activities, such as product samples or demonstrations, are vital to stimulating interest in the product. The enhanced communication effectiveness of personal selling makes it ideally suited to moving potential customers through internal desire and into action. Other sales promotion activities, such as product displays, coupons, and trial-size packaging, are well suited to pushing customers toward the final act of making a purchase.

3. Identify and discuss the issues and challenges involved in measuring the effectiveness of an advertising campaign. Is it relatively easier to measure effectiveness before or after the campaign has been implemented? Explain.


ANS:Evaluating the effectiveness of advertising is one of the most challenging tasks facing marketers. Many of the effects and outcomes of advertising take a long time to develop, especially regarding important outcomes such as enhanced brand image, corporate reputation, and positive product attitudes. The effect of advertising on sales lags in some cases, with the effect occurring long after the campaign has ended. The seemingly unending methods that can be used to evaluate advertising effectiveness further complicate the task of measuring advertising results. Some methods include evaluating the achievement of advertising objectives; assessing the effectiveness of advertising copy, illustrations, and layouts; and evaluating the effectiveness of various media. Effectiveness measures can also look at different market segments and their responses to advertising—including brand image; attitudes toward the advertising, the brand, or the firm; and actual customer purchasing behavior.

Advertising effectiveness can be evaluated before, during, or after the campaign. A pretest attempts to evaluate the potential effectiveness of one or more elements of the advertising program. To pretest advertisements, firms often use a panel of actual or potential buyers who judge one or more aspects of an advertisement. Pretests are founded on the belief that customers are more likely to know what type of advertising will influence them. During an ad campaign, the company typically measures effectiveness by looking at actual customer behavior patterns such as purchases, responses to toll-free telephone numbers, rate of coupon redemption, page visits to the firm’s website, or even personal communications. The firm may record the number of inquiries or communication contacts, and judge advertising effectiveness based on industry norms or the firm’s own internal benchmarks. Firms may even peruse blogs for evidence of the effectiveness of their promotional campaigns.

The evaluation of advertising effectiveness after a campaign is a posttest. The nature of the firm’s advertising objectives will determine what kind of posttest is most appropriate. For example, if a campaign’s objective is to increase brand awareness or create a more favorable attitude toward the firm, then the posttest will measure changes in these variables. Customer surveys, panels, or experiments may be used to evaluate a campaign based on communication objectives. Firms will also use performance outcomes such as sales or market share changes to determine campaign effectiveness. Unfortunately, the connection between advertising and these types of outcomes is not always clear. The difficulty in linking advertising to sales becomes compounded by the fact that many factors can affect sales. Furthermore, most of these factors are beyond the control of the firm. For instance, competitors’ actions, regulatory decisions, changes in economic conditions, and even the weather might influence or diminish a firm’s sales or market share during a specific time period when advertising effectiveness is under scrutiny.

4. Discuss the importance of managing negative public relations and give examples of how firms have handled negative events. What can we learn from these examples? What do you believe is the key to successfully managing a negative event?

ANS:One of the most important aspects of public relations deals with the unexpected and often unfavorable public reactions resulting from an ethical or legal inquiry, unsafe products, accidents, or the controversial actions of employees and executives. For example, all airlines have carefully planned procedures and personnel in place to respond to an aviation accident; however, they always face a very difficult and distressing situation when these accidents occur. Likewise, the news has been filled with ethical and legal scandals involving many firms. For example, Microsoft (anti-competitive activities) and AIG (executive compensation after receiving government bailout monies) have had to deal with negative publicity in recent years.


Negative coverage of a company’s problems can have quick, dramatic, and long- lasting effects. Negative publicity is critically important when its effects reduce the degree of trust that customers have in a specific industry or firm. For example, Exxon’s response to the Valdez accident in 1989 is one of the classic examples of how not to respond to negative publicity. When faced with the massive oil spill in Alaska, Exxon failed to communicate effectively with the press and various stakeholders. It took several days before top executives communicated clearly how Exxon was going to deal with the environmental disaster.

A single negative event, especially one that is potentially dangerous to customers, can wipe out a company’s image and negate the goodwill generated over decades. Today, the media, and individual consumers, can report incidents through television and the Internet faster than ever before. As a result, negative stories receive more attention now than in the past. To avoid negative publicity, it is vital to avoid negative incidents and events that can create problems. Firms can achieve this goal through effective ethical and legal compliance programs, safety programs, quality-control procedures, and programs designed to enhance employee integrity. However, no matter how hard a firm tries to avoid negative events, the potential for negative incidents and publicity is always present. Therefore, all firms should have plans and procedures in place to respond to negative events when they occur. In particular, specific policies and procedures for handling the media and their coverage of the event are absolutely necessary. One of the great public relations lessons learned over time is that firms must expedite news coverage of negative events rather than try to block the news or cover up facts about the incident.

5. Discuss the role of sales promotion in consumer markets. In your answer, identify several types of consumer sales promotion activities and how they might be used in an overall IMC program.

ANS:Any member of the supply chain can initiate consumer sales promotions, but manufacturers and retailers typically offer them. For manufacturers, sales promotion activities represent an effective way to introduce new products or promote established brands. Coupons and product sampling are frequently used during new product launches to stimulate interest and trial. Retailers typically offer sales promotions to stimulate customer traffic or increase sales at specific locations. Coupons and free products are common examples, as are in-store product demonstrations. Many retailers are known for their sales promotions such as the free toys that come with kid’s meals at McDonald’s, Burger King, and other fast food establishments.

A potentially limitless variety of sales promotion methods can be used in consumer markets. Truthfully, developing and using these methods is limited only by the creativity of the firm offering the promotion. However, firms will typically offer one or more of the following types of sales promotions to consumers:

Coupons – Coupons reduce the price of a product and encourage customers to try new or established brands. Coupons can be used to increase sales volume quickly, to attract repeat purchasers, or even to introduce new product sizes or models. To be most effective, coupons need to be accessible, easy to recognize, and easy to use. For the most part, this requires that coupons be distributed on packages (the highest redemption rates), through inserts in print advertising, through direct mail, or through in-store displays.

Rebates – Rebates are very similar to coupons except that they require much more effort on the consumer’s part to obtain the price reduction. Although consumers prefer coupons because of the ease of use, most firms prefer rebates for several reasons. First, firms have more control over rebates because they can be launched and ended very quickly. Second, a rebate program allows the firm to collect important consumer information that can be used to build customer databases. The best reason is that most consumers never bother to redeem rebate offers. This allows a firm to


entice customers to purchase a product with only a minimal loss of profit.

Samples – Free samples are one of the most widely used consumer sales promotion methods. Samples stimulate trial of a product, increase volume in the early stages of the product’s life cycle, and encourage consumers to actively search for a product. Samples can be distributed through the mail, attached to other products, and given out through personal selling efforts or in-store displays. Samples can also be distributed via less direct methods. For example, free samples of soap, shampoo, coffee, or sunscreen might be placed in hotel rooms to create consumer awareness of new products.

Loyalty Programs – Loyalty programs, or frequent-buyer programs, reward loyal customers who engage in repeat purchases. These programs are popular in many industries due to their potential to dramatically increase profits over the long term. We are all familiar with the frequent-flier programs offered by major airlines. Other companies, such as hotels, auto rental agencies, and credit card companies, offer free goods or services for repeat purchases.

Point-of-Purchase Promotion – Point-of-purchase (POP) promotion includes displays, counter pieces, display racks, or self-service cartons that are designed to build traffic, advertise a product, or induce impulse purchases. POP promotions are highly effective because they are used in a store where consumers make roughly 70 to 80 percent of all purchase decisions. Another type of POP promotion is an in-store product demonstration. Examples of these demonstrations include fashion shows, food preparation demonstrations in grocery stores, and free makeovers in the cosmetics departments of department stores and specialty stores.

Premiums – Premiums are items offered free or at a minimum cost as a bonus for purchasing a product. Examples of premiums include a free car wash with a gasoline fill-up, a free toothbrush with a purchase of a tube of toothpaste, and the toys offered inside a McDonald’s Happy Meal. Premiums are good at increasing consumption and persuading consumers to switch brands.

Contests and Sweepstakes – Consumer contests, games, and sweepstakes encourage potential consumers to compete for prizes or try their luck by submitting their names in a drawing for prizes. In addition to being valuable information collection tools, contests and sweepstakes are good at attracting a large number of participants and generating widespread interest in a product. Because they require no skill to enter, sweepstakes are an effective way to increase sales or market share in the short term.

Direct Mail – Direct mail, which includes catalog marketing and other printed material mailed to individual consumers, is a unique category because it incorporates elements of advertising, sales promotion, and distribution into a coordinated effort to induce customers to buy. The use of direct mail has grown tremendously in recent years due to consumer time constraints, relatively low cost, and the advent of sophisticated database management tools.

Firms can use any one or all of these consumer promotion methods in their overall IMC program. However, the choice of one or more methods must be made in consideration of the firm’s IMC objectives. Furthermore, the choice must also consider the use of sales promotions by competitors and whether a particular method involves ethical or legal dimensions. Consumer sweepstakes, in particular, have specific legal requirements to ensure that each entrant has an equally likely chance of winning.


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