978-0077861063 Chapter 8 Lecture Note 1

Type

Quiz

Book Title

A Preface to Marketing Management 14th Edition

ISBN 13

978-0077861063

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 seller’s 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.