Daily Archives: August 13, 2011

INTEGRATED MARKETING COMMUNICATIONS

Marketing communications include conveying and sharing meaning between buyers and sellers, either as individuals and firms or between individuals and firms. ¬†Integrated marketing communications refer to the strategic, coordinated use of promotion to create one consistent message across multiple channels to ensure the maximum persuasive impact on the firm’s current and potential customers. ¬†Imc takes a 360-degree view of the customer that considers each and e ery contact that a customer or potential customer may have ni his or her relationship with the firm. ¬†The key to IMC is consistency and uniformity of message across all elements of promotion. ¬†By coordinating all communication ‚Äútouch points‚ÄĚ firms using IMC once an image of truly knowing and caring about their customers that can translate into long-term customer relationships. ¬†Likewise, IMC reduces costs and increases efficiency because it can reduce or eliminate redundancies and waste in the overall promotional program. ¬†Many firms have embraced IMC because mass-media advertising has become more expensive and less predictable than in the past. ¬†IMC helps to inform, persuade, and remind customers about the firm‚Äôs products. ¬†We also explore the strategic decisions to be made with respect advertising, public relations, personal selling and sales management, and sales promotion.

Strategic Issues in Integrated Marketing Communications
Holistic perspective that coordinates not only all promotional elements but also the IMC program with the rest of the marketing programs (product, price, and supply chain strategy).  For example, the advertising campaign stresses quality, the sales force talks about low price, the supply chain pushes intensive distribution, and the website stresses product innovation, then what is the customer to believe?
Ultimately, the goals and objectives of any promotional campaign culminate in the purchase of goods and 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-the first major goal of any promotional campaign is to attract the attention of potential customers.
  • The interest-the firm must spark interest in the product by demonstrating its features, uses, and benefits.
  • The desire-good promotion will stimulate desire by convincing potential customers of the product‚Äôs superiority and its ability to satisfy specific needs.
  • Action-promotion must then push them toward the actual purchases.

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. ¬†Other sales promotional activities such as product displays, coupons, and trial-size packaging, are well suited to publishing customers toward the final act of making a purchase. ¬†When firms use a pull-strategy, they focus their promotional efforts toward stimulating demand among final customers, who then exert pressure on the supply chain to carry the product. ¬†In a push strategy, promotional efforts focus on members of the supply chain, such as wholesalers and retailers, to motivate them to spend extra time and effort on selling the product. ¬†This strategy relies heavily on personal selling and trade sales promotion to push products through the supply chain toward final customers. ¬†The role and importance of specific promoitaoinl elements also vary depending on the nature of the products. ¬†Industrial products rely more heavily on personal selling; consumer products require greater use of advertising, sales promotion, and public relations. ¬†Early in a product‚Äôs lif cycle, even before its introduction, the heavy expenditures on promotional activities are often a significant drain on the firm’s resources. ¬†By the time a product has moved into the maturity phase of its life cycle, the firm can reduce promotional expenditures somewhat, thereby enjoying lower costs and higher profits.

Advertising
a key component of promotion and is actually one of the most visible elements of an integrated marketing communications program.  Advertising is paid, nonpersonal communication transmitted through media such as television, radio, magazines, newspapers, direct mail, outdoor displays, the Internet, and mobile devices.  Advertising targeted to market segments such as African Americans, gays, Hispanics, and Asian Americans have been an accelerating trend among advertisers.  Targeting potential customers by coordinating the message with their lifestyles is an important strategic consideration.  The diverse Hispanic market of Mexican-Americans, Cuban-Americans, Puerto Ricans, Dominicans, Salvadorans, and more Hispanic subcultures.  Advertising can be a cost-efficient element of an IMC program when used to reach a large number of people via television, magazines, outdoor displays, or outdoor ads.  Ad Meter Award.  Despite the new opportunities for amateur ad makers, the initial expenses for advertising is generally quite high, which is a major drawback of advertising to genital  However, online advertising provides an opportunity to reach highly specialized markets at a relatively low cost.  Most online ad revenue comes from search advertising, followed by classifieds and banner ads.  The use of rich media advertising, including animations and audio/video combinations, will continue to grow as broadband internet access becomes more widely available both in the home and via mobile connections.

Types of Advertising
Advertising promotes all types of products, including goods, services, ideas, issues, people, and anything else that marketers want to communicate to potential customers.

Institutional Advertising
promotes a firm’s image, ideas, and culture, with the goal of creating or maintaining an overall corporate image.  Aimed at various stakeholders, including shareholders, consumer advocacy groups, government regulators, or the public at large, institutional advertising can create a positive view of their organization.  Advocacy advertising often promotes socially approved behavior such as recycling, the responsible use of alcoholic beverages, support for the arts, or the firm’s support for cultural diversity.

Product Advertising
Promotes the image, features, uses, benefits, and attributes of products.  Forms: Pionee advertising stimulates demand for a product category rather than any one specific brand.  The goal is to increase customer interest and awareness in the product category in order to increase the size of the entire market Ex. got milk.  Competitive advertising attempts to stimulate demand for a specific demand for a specific brand by promoting the brands image, features, uses, and benefits.  This is the type of advertising that we see most often in the media.  The most successful slogans and ad campaigns are those that are combined with other promotional elements in an integrated marketin effort.  Other types of product advertising include reminder advertising to let customers know that a brand is available and reinforcement advertising to assure current customers that they mad eth right-choice into buying and consuming a certain product.  Sam adams always a good decisions campaign.
Comparative advertisng occurs when one firm compares its product with one  or more competitve products on specific features or benefits.  Common in soft drinks, automobiles, computers, and other over-the-counter medicatons.  Can be direct or indirect.

Determining the Advertising Budget
The total amount of money a firm allocates to advertising activities for a specific time period, is difficult to determine because the effects of advertising are difficult to measure.  Determinants include the geographic size of the market, the distribution or density of customers, the types of products advertised, sales volume relative to the competition, and the firm’s own historical advertising budget.  Ways to determine an appropriate advertising budget:

  • Percentage of sales approach most widely used method for determining the advertising budget. ¬†The approach is simple, straighforward, and based on what the firm traditionally spends on advertising. ¬†Flaw of this is its implied assumption that sales create advertising. ¬†Reduced advertising is not the best strategy.
  • Objectives and Task Approach-requires that the firm lay ouout its goals for the advertising campaign and then list the tasks required to accomplish specific advertising objectives. ¬†Major drawback is that the level of effort needed to accomplish advertising objectives is difficult to know with certainty.
  • Competitive Matching Approach-firms attempting to match major competitor‚Äôs advertising expenditures in absolute dollars. ¬†Problem with this approach is that all firms are different, so competitors are likely to have different advertising objectives and different resources to devote to advertising.
  • Arbitrary Approach-Intuitiion and personal experience set the advertising budget under this approach. ¬†The arbitrary approach can lead to mistakes in budgeting because it is not necessarily scientific, objective, or logical

Evaluating advertising effectiveness
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. ¬†One of the issues facing social media as an advertising medium is the difficulty associated with tracking the effectiveness of social media advertisement and ‚Äúfan‚ÄĚ sites.
To pretest advertisements, firms often use a panel of actual or potential buyers who judge one or more aspects of an advertisement.  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, the rate of coupon redemption, page visits to the firm’s website, or even personal communications.
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.

Public Relations
The corporate affair is a collection of strategic activities aimed at marketing an organization, and its ideals to potential stakeholders (consumers, the general public, stakeholders, media, government, and so on).  The goal of public relations is to track public attitudes, identify issues that may elicit public concern, and develop programs to create and maintain positive relationships between a firm and its stakeholders.  Public relations can improve the public’s general awareness of a company and can create specific images such as quality, innovativeness, value, or concern for social issues.

Public relations methods
Firms use a number of public relations methods to convey messages and to create the right attitudes, images, and opinions.  Public relations professionals prepare materials such as brochures, newsletters, annual reports, and news releases that reach and influence desired stakeholders.
Publicity-includes the firm’s activities designed to gain media attention through articles, editorials, or new stories.  By encouraging the media to report on a firms desired image.

  • News (or press) releases-used to draw attention to a company event, product, or person affiliated with the firm.
  • Feature articles-full-length story prepared for a specific purpose or target audience. ¬†Feature articles typically focus on the implications or economic impact of a firm’s actions. ¬†They are also very useful when responding to negative events or publicity.
  • White papers-more technical and focus on very specific topics of interest to a firms stakeholders. ¬†White papers are similar to feaure articles, hoewer they are more technical and focus on very specific topics of interest to the firms stakeholders. ¬†White papers promote ¬†a firms stance on important prodcut or market issues and can be useed ¬†to promote the firms own proudcts and soulutions.
  • Press Conferences-a meeting with news media called to announce or respond to major events. ¬†Media personnel recieve invitations to a specific location, with written materials, photographs, exhibits, and even products given to them.
  • Event sponsorship-local evens-high school, international evens Tour de France
  • Product Placement-beverages, computers, clothing, and automobiles. ¬†These firms have a strong interest in placing their products in the hands of movie and television characters that consumers see as enjoying the product or using the product as part of the action.
  • Employee Relations-Provide organizational support for employees with respect to their jobs and lives. ¬†Employee relations can encompass many different activities, including internal newsletters, training programs, employee assistance programs, and human resource programs. ¬†The firm has much less control over how the message will be delivered. ¬†Another drawback involves the risk of spending a great deal of time and deffor itn developing public relaitns messages that fial to attrarct media tttention.

Negative Puablic Relations
Unexpected and often unfavorable public relations resulting from an ehtical or legal inquiry, unsafe products, accidents, or the controversial actions of employees and executives.  Sometimes public relations campaigns themselves cause problems, leading to unintended consequences on the parts of the campaign creators.  The city of Bost underwent a bomb scare after Ted Turner and Turner Broadcasting.
Negative publicity is critically important when its effects reduce the dergree of trust that customers have in a specific industry or firm.  Tylenol cyanide-tampering.
Negative stories reveie more attention now thatn in th epast.  To avoid negative publicity, is vital to avoid negative incidents and events that can create problems.  Firms can achieve this goal through effecitive ethical and legal compliance programs, safety programs, quality-control procedures, and programs designed to enhance employee integrity.  One of the great public relations lessons learned over time is that firms must expedite new coverage of negative events rather than try to block the news or cover up facts about the incident.

Personal Selling and Sales Management
Personal Selling is paid personal communication that attempts to inform customers about products and persuades them to purchase the products. ¬†The complexity of these types of contracts requires a long-term, personal relationship between salespeople and companies. ¬†Compared to other types of promotion, personal selling is the most precise form of communication because it assures companies that they are in direct contact with an excellent prospect. ¬†The most serious drawback of personal selling is the cost per contact. ¬†Personal selling is also expensive due to the costs associated with recruiting, selecting, training, and motivating salespeople. ¬†Despite the high costs, personal selling plays an increasingly important role in IMC and overall marketing strategy. ¬†These goals typically involve finding prospects, informing prospects, persuading prospects to buy, and keeping customers satisfied through follow-up service after the sale. ¬†To effectively deliver on these goals, salespeople have to be not only competent in selling skills but also thoroughly trained in technical product characteristics. ¬†Very few businesses can survive on the profits generated from purely transactional marketing (one-time purchases). ¬†For this reason, personal selling has evolved to take on elements of customer sevice and marketing research. ¬†Every contact with a customer gives the sales force a change to deliver exceptional service and learn more about the customers needs. ¬†Salespeople also have the opportunity to learn about competing products and the customer’s reaction toward them. ¬†The importance of building relationships during the sales process. ¬†The frontline knowledge held by the sales force is on e of the most important assests of the firm. ¬†In fact, the knowledge held by the sales force is often an importanst strenght that can be leveraged in develloping marketing strategy.

The sales management process
Generating performance outcomes, the sales force often creates the firm’s reputation, and the conduct of individual salespeople determines the perceived ethicalness of the entire firm.

Developing Sales Force Objectives
Vital to the overall IMC strategy and must be fully integrated with the objectives and activities of other promotional events.  Salespeople may be needed to find new customers through prospecting-the identification of potential customers most likely to buy the firm’s products.
A different skill st must be developed to provide support, educate consumers, and provide service after the sale.  The connection between selling skills and sales force objectives reinforces the importance of having a fully integrated sales management process.
The technical aspect of establishing sales force objectives involve desired Sales dollars, sales volume, or market share.  Further, individual sales objectives might be based on order size, the number of sales calls, or the ratio of order to calls.  Ultimately, sales objectives help evaluate and control sales force activities, as well as compensate individual salespeople.
Determining Sales Force Size
The size of the sales force is a function of many variables, including the type of salespeople used, specific sales objectives, and the importance of personal selling within the overall IMC program.  The size of the sales force is important because the firm must find a balance between sales expenses and revenue generation.
Determining the specific objectives and tasks that are required to fulfill sales and IMC goals is one approach.  This number can be divided by the average number of sales calls that a salesperson can make in one year to derive an estimate of sales force size.  Another method involves marginal analysis, where additional salespeople join the sales force until the cost of adding an additional salesperson equals the potential sales that can be generated by that salesperson.

Recruiting and Training Salespeople
Recruiting the right types of salespeople should be closely tied to personal selling and IMC strategies.  Firms usually recruit potential salespeople from a number of sources including within the firm, competing firms, employment agencies, educational institutions, and direct-response advertisements placed on the Internet, in magazines, or in newspapers.  The cost of hiring and training salesperson can be expensive.  State Farm Insurance strives for low sales force turnover by forcing applicants for agent positions to undergo a yearlong series of interviews, tests, and visits with agents before finding out whether they will be hired.  Formal training methods have moved toward self-directed, online training modules and away from classroom training.  The majority of sales training will be done online or via wireless delivery to handheld devices.  The worldwide online sales training market is growing mainly because it is much more cost-effective than traditional training.

Controlling and Evaluating the Sales Force
Controlling and evaluating the sales force require a comparison of sales objectives with actual sales performance.  To effectively evaluate a salesperson, predetermined performance standards must be in place.  These standards also determine the compensation plan for the sales force.  To improve sales performance, the firm can increase incentives to better motivate the sales force, provide additional training to salespeople, or perhaps even change the performance standards if they are inconsistent with market failures.

The impact of technology on Personal Selling
The development of integrated supply chains and the procurement of standardized products over the Internet reduced the need for salespeople in many industries.  How can firms use new technology to reduce costs and increase productivity while maintaining personalized, one-to-one client relationship?  One of the keys to using sales technology effectively is to seamlessly integrate it with customer relationship management systems, competitive intelligence activities, and internal customer databases.  By automating many repetitive selling tasks, like filling repeat orders, sales technology can actually increase sales, productivity, and one-to-one relationships at the same time.  Third-party providers like Salesforce.com-an on-demand, web-based provider of integrated CRM and sales automation solutions.  Key to these solutions is integration.  By pushing integrated customer, competitive, and product information toward the salesperson, technology can increase salesperson productivity and sales revenue by allowing the sales force to serve customers’ needs more effectively.

Sales Promotion
Sales promotion activities account for th bulk of promotional spending in many firms.  This is especially true for firms selling consumer products.  Sales promote involves activities that create buyer incentives to purchase a product or that add value for the buyer or the trade.  Sales promotion can be targeted toward consumers, channel intermediaries, or the sales force.  Sales promotion has one universal goal: to induce product trial and purchase.
Most firm use sales promotion i support of advertising, public relations, or personal selling activities rather than as stand-alone promotional element.  Advertising is frequently coordinated with sales promotion activities to provide free product samples, premiums, or value-added incentives.

Sales Promotion in Consumer Markets
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 product are common examples, as is in-store product demonstration.
Types of sales promotions to consumers:

  • 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 purchases, 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. ¬†Although coupon cutting (cutting coupons from newspapers or direct mail) was once quite common, the practice declined over the years. ¬†Marketers perceive a bright future for electronic coupons because redemption rates are higher, and because printing and processing costs are lower.
  • Rebates-Require much more effort on the consumer‚Äôs part to obtain the price reduction. ¬†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.

Samples-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 personal selling efforts or in-store displays.  Samples can also be distributed via less direct methods.  Free samples might be placed in hotel rooms to create consumer awareness of new products.
Loyalty Programs-reward loyal customers who engage in repeat purchases.  Discover Card, Hallmark Gold Crown Card

  • Point-of-Purchase Promotion-displays, counter pieces, display racks, or self-service cartons that are designed to build traffic, advertise a product, or induce impulse purchases. ¬†In-store product demonstration. ¬†Examples of these demonstrations include fashion shows, food preparation demonstrations in grocery stores like Whole Foods, and free makeovers in the cosmetics departments of department stores and specialty stores.
  • Premiums-are items offered free or at minimum cost as a bonus for purchasing a product. ¬†Premium is good at increasing consumption and persuading consumers to switch brands.
  • Contest and Sweepstakes-Consumer contests, games, and sweepstakes encourage potential consumers to compete for prizes to try their luck by submitting their names in a drawing for prizes. ¬†Contest 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-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

Sales Promotion in Business Markets
Sales promotion in business markets is also known as trade promotion.  By targeting channel intermediates with promotional activities, manufacturers hope to push heri products through the channel by increasing sales and encouraging increased effort among their channel partners.

  • Trade Allowances-Manufactures offer a number of different trade allowances, or price reductions, to their channel intermediaries. ¬†Buying allowances are price reductions for purchasing specified quantities of a product at a single time (the equivalent of a bulk discount). ¬†Related to this is a buy-back allowance where the reduction is proportional to the total amount of product purchased during the time frame of a promotional offer. ¬†Finally, a merchandise allowance is a manufactures agreement to pay intermediaries a specific sum of money in exchange for specific promotional efforts such as special displays or advertising. ¬†The goal of the allowance is to induce intermediaries to perform specific actions.
  • Free Merchandise
  • Training Assistance-Can offers training to an intermediary’s employees. ¬†This typically occurs when the products involved are rather complex.
  • Cooperative Advertising-a manufacturer agrees to apy a certain amount of an intermediary’s media cost of advertising the manufacturer‚Äôs products. ¬†A very popular sales promotion method among retailers.
  • Selling Incentives-Push money and sales contests. ¬†Push money is in the form of additional compensation to encourage outstanding performance within an intermediary‚Äôs sales force. ¬†Sales personnel can be recognized for outstanding achievements by receiving money, vacations, computers, or even cars for meeting or exceeding certain sales targets.