Type
Solution Manual
Book Title
A Preface to Marketing Management 14th Edition
ISBN 13
978-0077861063

978-0077861063 Chapter 8 Lecture Note 1

April 8, 2019
Chapter 8
Integrated Marketing Communications
High-Level Chapter Outline
I. Strategic Goals of Marketing Communication
A. Create Awareness
B. Build Positive Images
C. Identify Prospects
D. Build Channel Relationships
E. Retain Customers
II. The Promotion Mix
III. Integrated Marketing Communications
IV. Advertising: Planning and Strategy
A. Objectives of Advertising
V. Advertising Decisions
A. The Expenditure Question
Percent of Sales
Per-Unit Expenditure
All You Can Afford
Competitive Parity
The Research Approach
The Task Approach
B. The Allocation Question
Message Strategy
Media Mix
VI. Sales Promotion
A. Push versus Pull Marketing
B. Trade Sales Promotions
C. Consumer Promotions
D. What Sales Promotion Can and Can’t Do
VII. Public Relations
VIII. Direct Marketing
Detailed Chapter Outline
I. Strategic Goals of Marketing Communication
Marketers seek to communicate with target customers for the obvious goals of increased
sales and profits.
A. Create Awareness
Marketing communications designed to create awareness are especially important for
new products and brands in order to stimulate trial purchases.
As an organization expands globally, creating awareness must be a critical goal of
marketing communications.
B. Build Positive Images
When products or brands have distinct images in the minds of customers, the
customers better understand the value that is being offered.
A major way marketers create positive and distinct images is through marketing
communications.
C. Identify Prospects
Identifying prospects is becoming an increasingly important goal of marketing
communication because modern technology makes information gathering, much more
practical, even in large consumer markets.
Technology now enables marketers to stay very close to their customers.
D. Build Channel Relationships
An important goal of marketing communications is to build a relationship with the
organization’s channel members.
When producers use marketing communications to generate awareness, they are also
helping the retailers who carry the product.
Producers may also arrange with retailers to distribute coupons, set up special
displays, or hold promotional events in their stores, all of which benefit retailers and
wholesalers.
Retailers support manufacturers when they feature brands in their ads to attract buyers.
Cooperating in these marketing communication efforts can build stronger channel
relationships.
E. Retain Customers
Loyal customers are a major asset for every business. It costs far more to attract a new
customer than to retain an existing customer.
Marketing communications can support efforts to create value for existing customers.
They can serve as sources of information about product usage and new products being
developed.
They can also gather information from customers about what they value, as well as
their experiences using the products.
II. The Promotion Mix
The promotion mix concept refers to the combination and types of nonpersonal and
personal communication the organization puts forth during a specified period.
There are five elements of the promotion mix, four of which are nonpersonal forms of
communication (advertising, sales promotion, public relations, and direct marketing), one,
personal selling, which is a personal form of communication.
oAdvertising—is a paid form of nonpersonal communication about an organization, its
products, or its activities that is transmitted through a mass medium to a target
audience.
oSales promotion—is an activity or material that offers customers, sales personnel, or
resellers a direct inducement for purchasing a product.
oPublic relations—is a nonpersonal form of communication that seeks to influence the
attitude, feelings, and opinions of customers, noncustomers, stock holders, suppliers,
employees, and political bodies about the organization.
oDirect marketing—uses direct form of communication with customers. Its objective
is to generate orders, visits to retail outlets or requests for further information.
oPersonal selling—is face-to-face communication with potential buyers to inform
them about and persuade them to buy an organization’s product.
III. Integrated Marketing Communications
In many organizations, elements of the promotion mix are often managed by specialists in
different parts of the organization or, in some cases, outside the organization when an
advertising agency is used.
The goal of integrated marketing communications is to develop marketing communications
programs that coordinate and integrate all elements of promotion—advertising, sales
promotion, personal selling, and publicity—so that the organization presents a consistent
message. The concept of integrated marketing communication is illustrated in Figure 8.1.
It is generally agreed that potential buyers usually go through a process of:
oAwareness of the product of service
oComprehension of what it can do and its important features
oConviction that it has value for them
oOrdering
The goal of integrated marketing communication is an important one, and many believe
that it is critical for success in today’s crowded marketplace.
IV. Advertising: Planning and Strategy
Advertising seeks to promote the sellers product by means of printed and electronic
media.
From a marketing management perspective, advertising is an important strategic device for
maintaining a competitive advantage in the marketplace.
A. Objectives of Advertising
There are at least three different viewpoints about the contribution of advertising to the
economic health of the firm.
The generalist viewpoint is primarily concerned with sales, profits, return on
investment, and so forth.
At the other extreme, the specialist viewpoint is represented by advertising experts
who are primarily concerned with measuring the effects of specific ads or campaigns.
A middle view, one that might be classified as more of a marketing management
approach, understands and appreciates the other two viewpoints but, in addition, sees
advertising as a competitive weapon.
Objectives for advertising can be assigned that focus on creating awareness, aiding
comprehension, developing conviction, and encouraging ordering.
In the long run and often in the short run, advertising is justified on the basis of the
revenue it produces.
Since most business firms do not have the data required to use the marginal analysis
approach, they employ less-sophisticated decision-making models.
The ultimate objective of the business advertiser is to make sales and profits.
Marketing managers must also be aware that advertising not only complements other
forms of communication, but is subject to the law of diminishing returns.
V. Advertising Decisions
The marketing managers must make two key decisions:
oDetermining the size of the advertising budget
oDetermining how the advertising budget should be allocated
Many marketers have lost sight of the connection between advertising spending and market
share. They practice the art of discounting: cutting ad budgets to fund price promotions or
fatten quarterly earnings.
Companies employing these tactics may benefit in the short term but may be at a severe
competitive disadvantage in the long term.
A. The Expenditure Question
Most firms determine how much to spend on advertising by one of the following
methods.
Percent of Sale
This is one of the most popular rule-of-thumb methods, and its appeal is found in
its simplicity. This approach is usually justified by the following arguments:
oAdvertising is needed to generate sales.
oA number of cents (i.e., the percentage used) out of each dollar of sales
should be devoted to advertising in order to generate needed sales.
oThe percentage is easily adjusted and can be readily understood by other
executives.
The percent-of-sales approach is popular in retailing.
Per-Unit Expenditure
In per-unit expenditure, a fixed monetary amount is spent on advertising for each
unit of the product expected to be sold.
This method is popular with higher-priced merchandise, such as automobiles or
appliances.
Here the seller realizes that the reasonably competitive price must be established
for the products in question and attempts to cost out the gross margin.
The basic problem with this method and the percentage-of-sales method is that
they view advertising as a function of sales, rather than sales as a function of
advertising.
All You Can Afford
Here the advertising budget is established as a predetermined share of profits or
financial resources.
The availability of current revenues sets the upper limit of the ad budget.
The only advantage to this approach is that it sets reasonable limits on the
expenditures for advertising.
From the standpoint of sound marketing practice, this method is undesirable
because there is no necessary connection between liquidity and advertising
opportunity.
Competitive Parity
This approach is often used in conjunction with other approaches, such as the
percent-of-sales method.
The basic philosophy underlying this approach is that advertising is defensive.
From a strategy standpoint, this is a “followership” technique that assumes that
the other firms in the industry know what they are doing and have similar goals.
Competitive parity is not a preferred method, although some executives feel it is a
safe approach.
The Research Approach
Here the advertising budget is argued for and presented on the basis of research
findings.
Although the research approach is generally more expensive than some other
models, it is a more rational approach to the expenditure decision.
The Task Approach
Well-planned advertising programs usually make use of the task approach, which
initially formulates the advertising goals and defines the tasks to accomplish these
goals.
This approach is often in conjunction with the research approach.