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CHAPTER10
Marketing Communications, Social Media, and Customer Response
Yahoo! helps Intel stay connected to hundreds of
millions of mobile customers around the globe.
With Yahoo!’s massive reach, Intel is able to pinpoint their target audience within relevant content
areas and educate consumers about the power of mobile computing. Our dedicated team of
technology experts has worked closely with Intel to create an innovative ad program designed
specifically to increase brand awareness, preference and demand for Intel Centrino mobile technology.
As their Wi-Fi Engine, Yahoo! helps Intel lead the technology revolution by reaching consumers at
multiple touch points. Today, Intel is becoming synonymous with mobile computing thanks to a unique
campaign on Yahoo! Maps that highlights Wi-Fi hotspots with Intel Centrino logos. Consumers can’t
miss the underlying message: Intel provides them with the ability to access information online,
anywhere, anytime. Intel provides the world with the foundation for some of today’s most useful
technologies. The company relies on Yahoo! to increase their brand awareness and help consumers
look to the future.— Yahoo! Central: Ad Solutions by Industry
The above Web post is from a Yahoo site that carries testimonials of the company’s online advertising
effectiveness. This comment could be used to initiate a discussion on the ways Yahoo is targeting Intel
customers to build brand awareness, brand preference, and market demand for mobile communications.
Introductory Exercise
Every February, the American International Toy Fair in New York draws 20,000 visitors and more than 100,000
toys. This is where retailers evaluate and pick toy lines to order for the Holiday Season 9 months later. In
selecting a toy, retailers look for two things: sales trends and a marketing plan (how is the manufacturer going
to advertise and promote the toy). Mattel, for example, spends 17 cents of every dollar it takes in on
advertising. That amounted to more than $850 million in 2002.
Trade shows are a form of marketing communication. What role does this trade show play in the marketing
of toys?
Why do retailers such as Wal-Mart and Sears want to see a toy manufacturer’s marketing plan?
Why is advertising critical to the success of a new toy?
Teaching Objectives
Demonstrate the role that marketing communications play in building higher levels of customer response and
market share.
Present marketing communications strategies that could be used to increase awareness, sustain message
retention, and stimulate customer action.
Discuss the various kinds of push and pull marketing communications and how to evaluate the profit impact
of alternative marketing communications strategies.
Harvard Business SchoolCase Materials
Coca-Cola on Facebook (2011). HBS Case 511110-PDF-ENG. In 2008, executives at Coca-Cola had to
decide what to do with a fan-created page on Facebook that had amassed over 1 million followers in 3
months. From a legal point of view the fan-created page was in violation of Facebook's terms of service
because a non-copyright holder was using the imagery and logo associated with a known brand. Facebook
contacted Michael Donnelly, Group Director, Worldwide Interactive Marketing for The Coca-Cola Company,
to let him know that he was in the position to take down the hugely popular, fan-created site or, conversely,
Market-Based Management Copyright © 2012
Sixth Edition –39– Pearson Education, Inc.
Instructor’s Manual– Chapter 4 Publishing as Prentice Hall
he could take it over and make it an official marketing channel for the company. Coke was already revisiting
its social media policies, with the Diet Coke and Mentos user-generated video incidents fresh in its memory.
Those videos, which featured elaborate geysers with Diet Coke as their main ingredient, were among the
most viewed online videos at the time but were not initially sanctioned by the company. Donnelly knew that
opening up the brand to creative consumers was necessary, but he and his team had to figure out how and
to what extent they should do so, while still protecting one of the world's most valuable brands.
UnME Jeans: Branding in Web 2.0 (2011/2008). HBS Case 509035-PDF-ENG. This case introduces
emerging Web 2.0 social media in virtual worlds, social networking sites, and video sharing sites.It
encourages students to explore the opportunities and risks social media present for brands. The case allows
students to grapple with the strategic and tactical decisions that accompany marketing communications
strategy and to combine information on consumer behavior with an understanding of brand objectives in
order to assess and evaluate social media options. Brand Manager Margaret Foley is facing an increasingly
complex media environment in which her traditional media plan, focused on television, print, and radio
advertising, has become less effective due to declining audiences, increased advertising clutter, and
consumers tuning out. She is exploring emerging Web 2.0 social media options to determine if they can
better achieve her branding and advertising objectives. Her challenge is to cut through all of the hype
surrounding Web 2.0 and to analyze social media's potential for her brand by delving into the consumer
needs and behaviors underpinning Web 2.0 technologies.
Yesmail.com. HBS Case 9-500-092. Yesmail.com has become the leader in “permission marketing.” This
business provides promotional e-mail messages to customers who have given their permission to receive
these promotions. The business has built a large database of clients and has to decide whether to (1) build
brand banner ads and mass-media communications and develop a list of proprietary customers, or (2) build
a network of partner Web sites and have them outsource their marketing permissions to Yesmail.com. Each
strategy has differing sales and profit implications, as well as differing pricing and value propositions.
Heineken: Global Branding and Advertising. HBS Case 9-588-031. Describes in detail the
communications research of anti-drug marketing communications. Subsequent Cases: B and C. Teaching
Note: 5-589-066. Video: 9-593-517.
Boston Fights Drugs (A): Designing Communications Research. HBS Case 9-594-026. Catalina
Marketing is a very successful marketing service firm. Its current customers include major supermarket
retailers and consumer products manufacturers nationwide. Catalina provides a unique way for its clients to
distribute coupons for products through point-of-sale technology at the supermarket register. The company is
trying to decide where and how to expand its operations. Teaching Purpose: To discuss the issues of
effective supermarket advertising, new advertising and information gathering technology, and potential
expansion options for Catalina.
Procter & Gamble: DayQuil Brand Sampling. HBS Case 98A029 (14 pages). This case focuses on
promotional sampling in a foreign country where the rules of the game are different. The case deals with
sales promotion, consumer behavior, and brand advertising.
Boost Your Marketing ROI with Experimental Design. HBS Case R01109k (7 pages). This note reviews
experimental design techniques to understand which messages have the greatest impact in a world where
consumers are blitzed daily with thousands of messages by television, radio, newspapers, in-store
promotions, billboards, telemarketers, and the Internet. A hypothetical company called Biz Ware is used to
illustrate the mathematical aspects of experimental design.
Market-Based Strategic Thinking
1. What type of marketing communication is Lexus most likely to create? How could the company
measure the effectiveness of its communications effort?
Lexus marketing communications would most likely use pure brand or brand-with-message
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2. What type of marketing communication would be most effective in motivating individuals to donate
to a social cause?
A marketing communication for a social cause generally is geared to create interest through a combination
3. How would a company such as Apple use a combination of the communication strategies shown in
Figure 10-2?
Apple could have in play at any point in time any to the marketing communications strategies shown in
Figure 10-2. The company could use pure-brand communications for the iPod or Mac, since these two
4. Why would a brand-image communication be more effective for a brand with low awareness?
The goal of a brand-image communication is to grab the attention of target customers with a positive
5. How would you evaluate the sales and profit impact of the Kyocera brand-information
communication?
The Kyocera ad shown in Figure 10-3 encourages readers to go to the Kyocera TCO website to do cost
comparisons with comparable competing printers. Ad effectiveness could be gauged using several Google
6. Why is the Feynman Group’s Dell “Deal of the Month” brand-action communication (Figure 10-4)
likely to have a high marketing ROI?
Figure 10-4 shows this brand-action communication. Assume last month’s sales promotion offered Dell
7. What role does message exposure play in the success of a marketing communication for General
Motors’ new Volt?
For the Volt,without effective advertising exposure, there is no chance for customer and sales response no
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8. Why are customer awareness and message comprehension critical to the success of a marketing
strategy for industrial products?
As illustrated in Figure 10-15, customer awareness and message comprehension are near the front end of
9. How can interest in ad copy affect interest in a product and subsequently influence customer
response?
Without stimulating interest in ad copy, a business will largely fail to communicate product benefits and
10. When a business has an excellent marketing communications program and customers indicate
high intention to purchase but there is a very low customer response, what kind of a marketing
problem does the business face?
A low purchase level with high intention to purchase suggests a distribution problem. It could be that
11. When should a business use a combination of pulsing and heavy-up marketing communications?
More cold beverages are consumed in warmer months and hot beverages in colder months. While
12. Why is the message frequency for a marketing communication considerably lower than the number
of messages sent?
There are many reasons. With regard to electronic communications, message frequency is lowered by
13. Why will a business’s market share be lower if it is not effective with both pull and push marketing
communications?
As illustrated in Figure 10-20, customer response is affected by “customer pull” and “customer push”
marketing communications. Pull communications stimulate customer awareness and attraction while
market share.
14. At what stage of a product’s life cycle is advertising elasticity likely to be highest?
Advertising elasticity is the percentage change in sales volume per 1 percent change in advertising dollars.
Elasticity is likely to be greatest during the growth phase of the product life cycle. During the emerging
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15. How should the carryover sales effect of an advertising effort be used to evaluate the profit impact
of the advertising effort?
An average advertising carryover effect is about 0.5. As Figure 10-22 shows, this means a typical ad effort
will produce 50 percent of the advertising-sales impact the period following the ad effort and 25 percent of
16. What behaviors need to be tracked in order to evaluate the profit impact of a trade promotion?
Trade promotions are promotions carried out with the help of intermediaries, such as retailers or dealers.
future periods to see if the customers who responded to the trade promotion continue to buy the brand after
the promotion ends.
Many trade promotions prove unprofitable when all costs and behaviors are taken into account.
17. How does the promotional price elasticity for a product change with advertising support? What
effect does market share have on promotional price elasticity?
As illustrated in Figure 10-23, the promotional price elasticities for sparkling wine, ground coffee, and cat
18. Why are public relations-type marketing communications important to the overall success of a
marketing communications effort?
Pull marketing communications targeted at end users are naturally very important in creating a high level of
customer response. However, push marketing communications targeted at intermediaries, industry
19. Why are marketing communications directed at a market’s infrastructure important?
Apple is famous for its efforts in communicatingits product launches to the market and its infrastructure
(retailers, industry gurus, print media, and TV media). Apple’s goal is to create a media buzz prior to
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PeriodCarryover EffectVolume Due to Ad EffortSales ImpactProfit Impact
0 (.30) = 1.010,000 units$1,000,000$500,000
20. If advertising elasticity is so much smaller than promotional price elasticity, why should a business
advertise?
Average advertising elasticities (0.22) are much smaller than average promotional price elasticities (–8.0).
To determine which is more profitable, however, requires that a business determine the net marketing
21. How should a business use the advertising carryover effect to evaluate the sales response and
profitability of a marketing communication?
Assume the advertising carryover effect of a communication is 0.3 and the price of the advertised product
is $100, unit cost $50, and advertising expense $400,000. The table here outlines a way to evaluate both
$712,500.
The total sales impact (includes the time beyond the five periods) is computed using the formula on
page366 in the text.
Total Sales Effect = Original Sales Impact / (1- Carryover Effect)
22. Why are indirect sales promotions rarely profitable? Why do manufacturers continue to offer
indirect sales promotions despite their unprofitability?
Indirect price promotions that offer a price discount to intermediaries are rarely profitable for three reasons.
First, customers forward buy and this reduces customer demand during the following period. Second,
intermediaries run down inventories prior to the price promotion and forward buy during the promotion to
23. How does retailer forward-buying affect the profitability of a brand promotion?
A retailer will slowly deplete inventories prior to a price promotion in order to buy more at a lower price
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period following the promotion. When all these effects are taken into account, a business may find that its
trade promotions are actually reducing profits.
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