PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications

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Principles of Marketing MGT301

Lesson 32

Lesson overview and learning objectives:

This Lesson is about integrating the firm's marketing communication in order to generate synergies

between the various elements of communications package. It gives an overview of integrated

marketing communication, communication process, different methods to set promotional budget

and various promotional tools.

PROMOTION THE 4TH P OF MARKETING MIX

A. The Marketing Communications

Modern marketing calls for more than just developing a good product, pricing it attractively, and

making it available to target

S im p le M a r k e tin g

customers. Companies must also

communicate with current and

S y s te m

prospective customers, and what

they communicate should not be

C o m m u n ic a tio n

left to chance. For most

P r o d u c t/S e r v ic e

companies, the question is not

P r o d u c e r /S e lle r

C onsum er

whether to communicate, but

M oney

how much to spend and in what

ways.

All

their

Feedback

communications efforts must be

blended into a consistent and

coordinated

communications

program. As shown in the fig, completion of marketing process requires something of value with

both producer and customer that should be communicated with each other for performing the

exchange process.

B. The Marketing Communications Mix.

A company's total marketing communications mix--also called its promotion mix consists of the

specific blend of advertising, personal selling, sales promotion, public relations, and direct-

marketing tools that the company uses to pursue its advertising and marketing objectives.

Definitions of the five major promotion tools follow:

Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or

services

identified

sponsor.

Personal selling: Personal presentation by the firm's sales force for the purpose of making sales and

building

customer

relationships.

Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service.

Public relations: Building good relations with the company's various publics by obtaining favorable

publicity, building up a good corporate image, and handling or heading off unfavorable rumors,

stories,

and

events.

Direct marketing: Direct connections with carefully targeted individual consumers to both obtain

an immediate response and cultivate lasting customer relationships--the use of telephone, mail,

fax, e-mail, the Internet, and other tools to communicate directly with specific consumers.

Each category involves specific tools. For example, advertising includes print, broadcast, outdoor,

and other forms. Personal selling includes sales presentations, trade shows, and incentive

programs. Sales promotion includes point-of-purchase displays, premiums, discounts, coupons,

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specialty advertising, and demonstrations. Direct marketing includes catalogs, telemarketing, fax,

kiosks, the Internet, and more. Thanks to technological breakthroughs, people can now

communicate through traditional media (newspapers, radio, telephone, television), as well as

through newer media forms (fax machines, cellular phones, pagers, and computers). The new

technologies have encouraged more companies to move from mass communication to more

targeted communication and one-to-one dialogue.

C. Integrated Marketing Communications

During the past several decades, companies around the world have perfected the art of mass

marketing--selling highly standardized products to masses of customers. In the process, they have

developed effective mass-media advertising techniques to support their mass-marketing strategies.

These companies routinely invest immense amount of money in the mass media, reaching tens of

millions of customers with a single ad. However, as we move into the twenty-first century,

marketing managers face some new marketing communications realities.

D. The Changing Communications Environment

Two major factors are changing the face of today's marketing communications. First, as mass

markets have fragmented, marketers are shifting away from mass marketing. More and more, they

are developing focused marketing programs designed to build closer relationships with customers

in more narrowly defined micro markets. Second, vast improvements in information technology

are speeding the movement toward segmented marketing. Today's information technology helps

marketers to keep closer track of customer needs--more information about consumers at the

individual and household levels is available than ever before. New technologies also provide new

communications avenues for reaching smaller customer segments with more tailored messages.

The shift from mass marketing to segmented marketing has had a dramatic impact on marketing

communications. Just as mass marketing gave rise to a new generation of mass-media

communications, the shift toward one-to-one marketing is spawning a new generation of more

specialized and highly targeted communications efforts.

Given this new communications environment, marketers must rethink the roles of various media

and promotion mix tools. Mass-media advertising has long dominated the promotion mixes of

consumer product companies. However, although television, magazines, and other mass media

remain very important, their dominance is now declining. Market fragmentation has resulted in

media fragmentation--in an explosion of more focused media that better match today's targeting

strategies. More generally, advertising appears to be giving way to other elements of the promotion

mix. In the glory days of mass marketing, consumer product companies spent the lion's share of

their promotion budgets on mass-media advertising. Today, media advertising captures only about

26 percent of total promotion spending. The rest goes to various sales promotion activities, which

can be focused more effectively on individual consumer and trade segments. They are using a

richer variety of focused communication tools in an effort to reach their diverse target markets. In

all, companies are doing less broadcasting and more narrowcasting.

E. The Need for Integrated Marketing Communications

The shift from mass marketing to targeted marketing, and the corresponding use of a richer

mixture of communication channels and promotion tools, poses a problem for marketers.

Consumers are being exposed to a greater variety of marketing communications from and about

the company from a broader array of sources. However, customers don't distinguish between

message sources the way marketers do. In the consumer's mind, advertising messages from

different media such as television, magazines, or online sources blur into one. Messages delivered

via different promotional approaches--such as advertising, personal selling, sales promotion,

public relations, or direct marketing--all become part of a single message about the company.

Conflicting messages from these different sources can result in confused company images and

brand positions.

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All too often, companies fail to integrate their various communications channels. The result is a

hodgepodge of communications to consumers. Mass advertisements say one thing, a price

promotion sends a different signal, a product label creates still another message, company sales

literature says something altogether different, and the company's Web site seems out of sync with

everything else.

The problem is that these communications often come from different company sources.

Advertising messages are planned and implemented by the advertising department or advertising

agency. Sales management develops personal selling communications. Other functional specialists

are responsible for public relations, sales promotion, direct marketing, online sites, and other forms

of marketing communications. Recently, such functional separation has been a major problem for

many companies and their Internet communications activities, which are often split off into

separate organizational units. In the past, no one person was responsible for thinking through the

communication roles of the various promotion tools and coordinating the promotion mix. Today,

however, more companies are adopting the concept of integrated marketing communications

(IMC).

The IMC solution calls for recognizing all contact points where the customer may encounter the

company, its products, and its brands. Each brand contact will deliver a message, whether good,

bad, or indifferent. The company must strive to deliver a consistent and positive message at all

contact points.

Integrated marketing communications produces better communications consistency and greater

sales impact. It places the responsibility in someone's hands--where none existed before--to unify

the company's image as it is shaped by thousands of company activities. It leads to a total

marketing communication strategy aimed at showing how the company and its products can help

customers solve their problems.

F. A View of the Communication Process

Integrated marketing communications involves identifying the target audience and shaping a well-

coordinated promotional program to elicit the desired audience response. Too often, marketing

communications focus on overcoming immediate awareness, image, or preference problems in the

target market. But this approach to communication has limitations: It is too short term and too

costly, and most messages of this type fall on deaf ears. Today, marketers are moving toward

viewing communications as managing the customer relationship over time, during pre-selling,

selling, consuming, and post consumption stages. Because customers differ, communications

programs need to be developed for specific segments, niches, and even individuals. Given the new

interactive communications technologies, companies must ask not only "How can we reach our

customers?" but also "How can we find ways to let our customers reach us?"

Thus, the communications process should start with an audit of all the potential contacts target

customers may have with the company and its brands. For example, someone purchasing a new

computer may talk to others, see television ads, read articles and ads in newspapers and magazines,

visit various Web sites, and try out computers in one or more stores. The marketer needs to assess

the influence that each of these communications experiences will have at different stages of the

buying process.

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To communicate effectively,

marketers need to understand

how communication works.

Communication involves the

nine elements shown in Figure.

Two of these elements are the

Encoding

Message

Source

major

parties

communication--the sender and

the receiver. Another two are the

major communication tools--

the message and the media. Four

Feedback

Noise

more are major communication

functions--encoding, decoding,

response, and feedback. The last

element is noise in the system.

· Sender:

The

party

Decoding

Receiver

Channel

sending the message to

another party.

· Encoding: The process

of putting thought into

symbolic form.

Message: The set of symbols that the sender transmits

Media: The communication channels through which the message moves from sender to

receiver

· Decoding: The process by which the receiver assigns meaning to the symbols encoded by

the sender.

· Receiver: The party receiving the message sent by another party

· Response: The reactions of the receiver after being exposed to the message--any of

hundreds of possible responses

· Feedback: The part of the receiver's response communicated back to the sender

· Noise: The unplanned static or distortion during the communication process, which results

in the receiver's getting a different message than the one the sender sent.

For a message to be effective, the sender's encoding process must mesh with the receiver's

decoding process. Thus, the best messages consist of words and other symbols that are familiar to

the receiver. The more the sender's field of experience overlaps with that of the receiver, the more

effective the message is likely to be. Marketing communicators may not always share their

consumer's field of experience. For example, an advertising copywriter from one social stratum

might create ads for consumers from another stratum--say, blue-collar workers or wealthy

business owners. However, to communicate effectively, the marketing communicator must

understand the consumer's field of experience.

This model points out several key factors in good communication. Senders need to know what

audiences they wish to reach and what responses they want. They must be good at encoding

messages that take into account how the target audience decodes them. They must send messages

through media that reach target audiences, and they must develop feedback channels so that they

can assess the audience's response to the message.

G. Steps in Developing Effective Communication

We now examine the steps in developing an effective integrated communications and promotion

program. The marketing communicator must do the following: Identify the target audience;

determine the communication objectives; design a message; choose the media through which to

send the message; select the message source; and collect feedback.

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e. Identifying the Target Audience

A marketing communicator starts with a clear target audience in mind. The audience may be

potential buyers or current users, those who make the buying decision or those who influence it.

The audience may be individuals, groups, special publics, or the general public. The target audience

will heavily affect the communicator's decisions on what will be said, how it will be said, when it

will be said, where it will be said, and who will say it.

f. Determining the Communication Objectives

Once the target audience has been defined, the marketing communicator must decide what

response is sought. Of course, in many cases, the final response is purchase. But purchase is the

result of a long process of consumer decision making. The marketing communicator needs to

know where the target audience now stands and to what stage it needs to be moved. The target

audience may be in any of six buyer-readiness stages, the stages consumers normally pass through

on their way to making a purchase. These stages include awareness, knowledge, liking, preference,

conviction, and purchase (see Figure ).

The marketing communicator's target market may be totally unaware of the product, know only its

name, or know one or a few things about it. The communicator must first build awareness and

knowledge. Of course, marketing communications alone cannot create positive feelings and

purchases for productar itself must provide superior value for the customer. In fact, outstanding

marketing communications can actually speed the demise of a poor product. The more quickly

potential buyers learn about the poor product, the more quickly they become aware of its faults.

Thus, good marketing communication calls for "good deeds followed by good words."

g. Designing a Message

Having defined the desired audience response, the communicator turns to developing an effective

message. Ideally, the message should get Attention, hold Interest, arouse Desire, and obtain Action

(a framework known as the AIDA model). In practice, few messages take the consumer all the way

from awareness to purchase, but the AIDA framework suggests the desirable qualities of a good

message. In putting the message together, the marketing communicator must decide what to say

(message content) and how to say it (message structure and format).

h. Message Content

The communicator has to figure out an appeal or theme that will produce the desired response.

There are three types of appeals: rational, emotional, and moral. Rational appeals relate to the

audience's self-interest. They show that the product will produce the desired benefits. Examples

are messages showing a product's quality, economy, value, or performance. Emotional appeals

attempt to stir up either negative or positive emotions that can motivate purchase. Communicators

may use positive emotional appeals such as love, pride, joy, and humor.

i. Message Structure

The communicator must also decide how to handle three message structure issues. The first is

whether to draw a conclusion or leave it to the audience. Early research showed that drawing a

conclusion was usually more effective. More recent research, however, suggests that in many cases

the advertiser is better off asking questions and letting buyers come to their own conclusions. The

second message structure issue is whether to present a one-sided argument (mentioning only the

product's strengths) or a two-sided argument (touting the product's strengths while also admitting

its shortcomings). Usually, a one-sided argument is more effective in sales presentations--except

when audiences are highly educated or likely to hear opposing claims, or when the communicator

has a negative association to overcome.

j. Message Format

The marketing communicator also needs a strong format for the message. In a print ad, the

communicator has to decide on the headline, copy, illustration, and color. To attract attention,

advertisers can use novelty and contrast; eye-catching pictures and headlines; distinctive formats;

message size and position; and color, shape, and movement. If the message is to be carried over

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the radio, the communicator has to choose words, sounds, and voices. The "sound" of an

announcer promoting banking services should be different from one promoting quality furniture.

If the message is to be carried on television or in person, then all these elements plus body

language have to be planned. Presenters plan their facial expressions, gestures, dress, posture, and

hairstyle. If the message is carried on the product or its package, the communicator has to watch

texture, scent, color, size, and shape.

k. Choosing Media

The communicator now must select channels of communication. There are two broad types of

communication channels--personal and nonpersonal.

Personal Communication Channels

In personal communication channels, two or more people communicate directly with each other.

They might communicate face to face, over the telephone, through the mail, or even through an

Internet "chat." Personal communication channels are effective because they allow for personal

addressing and feedback.

Some personal communication channels are controlled directly by the company. For example,

company salespeople contact buyers in the target market. But other personal communications

about the product may reach buyers through channels not directly controlled by the company.

These might include independent experts--consumer advocates, consumer buying guides, and

others--making statements to target buyers. Or they might be neighbors, friends, family members,

and associates talking to target buyers. This last channel, known as word-of-mouth influence, has

considerable effect in many product areas.

Personal influence carries great weight for products that are expensive, risky, or highly visible. For

example, buyers of automobiles and major appliances often go beyond mass-media sources to seek

the opinions of knowledgeable people.

Companies can take steps to put personal communication channels to work for them. For

example, they can create opinion leaders--people whose opinions are sought by others--by

supplying certain people with the product on attractive terms. For instance, they can work through

community members such as local radio personalities, class presidents, and heads of local

organizations. They can use influential people in their advertisements or develop advertising that

has high "conversation value."

Nonpersonal Communication Channels

Nonpersonal communication channels are media that carry messages without personal contact or

feedback. They include major media, atmospheres, and events. Major media include print media

(newspapers, magazines, direct mail), broadcast media (radio, television), display media (billboards,

signs, posters), and online media (online services, Web sites). Atmospheres are designed

environments that create or reinforce the buyer's leanings toward buying a product. Thus, lawyers'

offices and banks are designed to communicate confidence and other qualities that might be valued

by their clients. Events are staged occurrences that communicate messages to target audiences. For

example, public relations departments arrange press conferences, grand openings, shows and

exhibits, public tours, and other events.

Nonpersonal communication affects buyers directly. In addition, using mass media often affects

buyers indirectly by causing more personal communication. Communications first flow from

television, magazines, and other mass media to opinion leaders and then from these opinion

leaders to others. Thus, opinion leaders step between the mass media and their audiences and carry

messages to people who are less exposed to media. This suggests that mass communicators should

aim their messages directly at opinion leaders, letting them carry the message to others.

l. Selecting the Message Source

In either personal or nonpersonal communication, the message's impact on the target audience is

also affected by how the audience views the communicator. Messages delivered by highly credible

sources are more persuasive. Thus, marketers hire celebrity endorsers--well-known athletes,

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actors, and even cartoon characters--to deliver their messages. Many food companies promote to

doctors, dentists, and other health care providers to motivate these professionals to recommend

their products to patients.

m. Collecting Feedback

After sending the message, the communicator must research its effect on the target audience. This

involves asking the target audience members whether they remember the message, how many

times they saw it, what points they recall, how they felt about the message, and their past and

present attitudes toward the product and company. The communicator would also like to measure

behavior resulting from the message--how many people bought a product, talked to others about

it, or visited the store.

Feedback on marketing communications may suggest changes in the promotion program or in the

product offer itself.

H. Setting the Total Promotion Budget

One of the hardest marketing decisions facing a company is how much to spend on promotion.

How does a company decide on its promotion budget? We look at four common methods used to

set the total budget for advertising: the affordable method, the percentage-of-sales method, the competitive-

parity method, and the objective-and-task method.

a. Affordable Method

Some companies use the affordable method: They set the promotion budget at the level they

think the company can afford. Small businesses often use this method, reasoning that the company

cannot spend more on advertising than it has. They start with total revenues, deduct operating

expenses and capital outlays, and then devote some portion of the remaining funds to advertising.

Unfortunately, this method of setting budgets completely ignores the effects of promotion on

sales. It tends to place advertising last among spending priorities, even in situations in which

advertising is critical to the firm's success. It leads to an uncertain annual promotion budget, which

makes long-range market planning difficult. Although the affordable method can result in

overspending on advertising, it more often results in under spending.

b. Percentage-of-Sales Method

Other companies use the percentage-of-sales method, setting their promotion budget at a

certain percentage of current or forecasted sales. Or they budget a percentage of the unit sales

price. The percentage-of-sales method has advantages. It is simple to use and helps management

think about the relationships between promotion spending, selling price, and profit per unit.

Despite these claimed advantages, however, the percentage-of-sales method has little to justify it. It

wrongly views sales as the cause of promotion rather than as the result. "A study in this area found

good correlation between investments in advertising and the strength of the brands concerned--

but it turned out to be effect and cause, not cause and effect. . . . The strongest brands had the

highest sales and could afford the biggest investments in advertising!" Thus, the percentage-of-

sales budget is based on availability of funds rather than on opportunities. It may prevent the

increased spending sometimes needed to turn around falling sales. Because the budget varies with

year-to-year sales, long-range planning is difficult. Finally, the method does not provide any basis

for choosing a specific percentage, except what has been done in the past or what competitors are

doing.

c. Competitive-Parity Method

Still other companies use the competitive-parity method, setting their promotion budgets to

match competitors' outlays. They monitor competitors' advertising or get industry promotion

spending estimates from publications or trade associations, and then set their budgets based on the

industry average.

Two arguments support this method. First, competitors' budgets represent the collective wisdom

of the industry. Second, spending what competitors spend helps prevent promotion wars.

Unfortunately, neither argument is valid. There are no grounds for believing that the competition

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has a better idea of what a company should be spending on promotion than does the company

itself. Companies differ greatly, and each has its own special promotion needs. Finally, there is no

evidence that budgets based on competitive parity prevent promotion wars.

d. Objective-and-Task Method

The most logical budget-setting method is the objective-and-task method, whereby the company

sets its promotion budget based on what it wants to accomplish with promotion. This budgeting

method entails (1) defining specific promotion objectives, (2) determining the tasks needed to

achieve these objectives, and (3) estimating the costs of performing these tasks. The sum of these

costs is the proposed promotion budget.

The objective-and-task method forces management to spell out its assumptions about the

relationship between amount spent and promotion results. But it is also the most difficult method

to use. Often, it is hard to figure out which specific tasks will achieve specific objectives. What

specific advertising messages and media schedules should be used to attain this objective? How

much would these messages and media schedules cost?

I. Setting the Overall Promotion Mix

The company now must divide the total promotion budget among the major promotion tools--

advertising, personal selling, sales promotion, public relations, and direct marketing. The concept

of integrated marketing communications suggests that it must blend the promotion tools carefully

into a coordinated promotion mix. But how does the company determine what mix of promotion

tools it will use? Companies within the same industry differ greatly in the design of their promotion

mixes. We now look at factors that influence the marketer's choice of promotion tools.

a. The Nature of Each Promotion Tool

Each promotion tool has unique characteristics and costs. Marketers must understand these

characteristics in selecting their tools.

Advertising

Advertising can reach masses of geographically dispersed buyers at a low cost per exposure, and it

enables the seller to repeat a message many times. For example, television advertising can reach

huge audiences. Beyond its reach, large-scale advertising says something positive about the seller's

size, popularity, and success. Because of advertising's public nature, consumers tend to view

advertised products as more legitimate. Advertising is also very expressive--it allows the company

to dramatize its products through the artful use of visuals, print, sound, and color. Advertising also

has some shortcomings. Although it reaches many people quickly, advertising is impersonal and

cannot be as directly persuasive as company salespeople. For the most part, advertising can carry

on only a one-way communication with the audience, and the audience does not feel that it has to

pay attention or respond. In addition, advertising can be very costly. Although some advertising

forms, such as newspaper and radio advertising, can be done on smaller budgets, other forms, such

as network TV advertising, require very large budgets.

Personal Selling

Personal selling is the most effective tool at certain stages of the buying process, particularly in

building up buyers' preferences, convictions, and actions. It involves personal interaction between

two or more people, so each person can observe the other's needs and characteristics and make

quick adjustments. Personal selling also allows all kinds of relationships to spring up, ranging from

a matter-of-fact selling relationship to personal friendship. The effective salesperson keeps the

customer's interests at heart in order to build a long-term relationship. Finally, with personal selling

the buyer usually feels a greater need to listen and respond, even if the response is a polite "no

thank you."

These unique qualities come at a cost, however. A sales force requires a longer-term commitment

than does advertising--advertising can be turned on and off, but sales force size is harder to

change.

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Sales Promotion

Sales promotion includes a wide assortment of tools--coupons, contests, cents-off deals,

premiums, and others--all of which have many unique qualities. They attract consumer attention,

offer strong incentives to purchase, and can be used to dramatize product offers and to boost

sagging sales. Sales promotions invite and reward quick response--whereas advertising says, "Buy

our product," sales promotion says, "Buy it now." Sales promotion effects are often short lived,

however, and often are not as effective as advertising or personal selling in building long-run brand

preference.

Public Relations

Public relations are very believable--news stories, features, and events seem more real and

believable to readers than ads do. Public relations can also reach many prospects who avoid

salespeople and advertisements--the message gets to the buyers as "news" rather than as a sales-

directed communication. As with advertising, public relations can dramatize a company or product.

Marketers tend to under use public relations or to use it as an afterthought. Yet a well-thought-out

public relations campaign used with other promotion mix elements can be very effective and

economical.

Direct Marketing

Although there are many forms of direct marketing-- telemarketing, direct mail, electronic

marketing, online marketing, and others--they all share four distinctive characteristics. Direct

marketing is nonpublic: The message is normally addressed to a specific person. Direct marketing

also is immediate and customized: Messages can be prepared very quickly, and they can be tailored to

appeal to specific consumers. Finally, direct marketing is interactive: It allows a dialogue between the

marketing and the consumer, and messages can be altered depending on the consumer's response.

Thus, direct marketing is well suited to highly targeted marketing efforts and to building one-to-

one customer relationships.

b. Promotion Mix Strategies

Marketers can choose from two basic promotion mix strategies--push promotion or pull

promotion. Figure 14.4 contrasts the two strategies. The relative emphasis on the specific

promotion tools differs for push and pulls strategies. A push strategy involves "pushing" the

product through distribution channels to final consumers. The producer directs its marketing

activities (primarily personal selling and trade promotion) toward channel members to induce them

to carry the product and to promote it to final consumers. Using a pull strategy, the producer

directs its marketing activities (primarily advertising and consumer promotion) toward final

consumers to induce them to buy the product. If the pull strategy is effective, consumers will then

demand the product from channel members, who will in turn demand it from producers. Thus,

under a pull strategy, consumer demand "pulls" the product through the channels.

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Some small industrial goods companies use only push strategies; some direct-marketing companies

use only pull. However, most large companies use some combination of both. Companies consider

many factors when developing their promotion mix strategies, including type of productmarket and

the product life-cycle stage. For example, the importance of different promotion tools varies between

consumer and business markets. Consumer goods companies usually "pull" more, putting more of

their funds into advertising, followed by sales promotion, personal selling, and then public

relations. In contrast, business-to-business marketers tend to "push" more, putting more of their

funds into personal selling, followed by sales promotion, advertising, and public relations. In

general, personal selling is used more heavily with expensive and risky goods and in markets with

fewer and larger sellers.

The effects of different promotion tools also vary with stages of the product life cycle. In the

introduction stage, advertising and public relations are good for producing high awareness, and

sales promotion is useful in promoting early trial. Personal selling must be used to get the trade to

carry the product. In the growth stage, advertising and public relations continue to be powerful

influences, whereas sales promotion can be reduced because fewer incentives are needed. In the

mature stage, sales promotion again becomes important relative to advertising. Buyers know the

brands, and advertising is needed only to remind them of the product. In the decline stage,

advertising is kept at a reminder level, public relations is dropped, and salespeople give the product

only a little attention. Sales promotion, however, might continue strong.

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