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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
CHAPTER 12
ENGAGING CONSUMERS AND COMMUNIATING CUSTOMER VALUE:
ADVERTISING AND PUBLIC RELATIONS
PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES
1. Define the five major promotion mix tools for communicating customer value.
2. Discuss the changing communications landscape and the need for integrated marketing
communications.
3. Describe and discuss the major decisions involved in developing an advertising program.
4. Explain how companies use public relations to communicate with their publics.
JUST THE BASICS
CHAPTER OVERVIEW
This chapter concentrates on the final element of the marketing mix—promotion.
Companies use promotion to communicate customer value clearly and persuasively.
Promotion is not a single tool but rather a mix of several tools.
Ideally, under the concept of integrated marketing communications, the company will carefully
coordinate these promotion elements to deliver a clear, consistent, and compelling message about
the organization and its products.
The chapter begins by introducing the various promotion mix tools.
Next, it examines the rapidly changing communications environment and the need for integrated
marketing communications.
Finally, the chapter looks closely at two of the promotion tools—advertising and public relations.
ANNOTATED CHAPTER NOTES/OUTLINE
GEICO: From Bit Player to Behemoth through Good Advertising
Founded in 1936, GEICO initially targeted a select customer group of government employees
and noncommissioned military officers with exceptional driving records. Unlike its competitors,
GEICO had no agents. Instead, the auto insurer marketed directly to customers.
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
In 1994, however, when GEICO decided to expand its customer base, it knew that it must also
expand its marketing. So it entered the world of mass media.
By now, you know a lot about GEICO and its smooth-talking gecko. But at the start, the insurer
faced a tough task—introducing a little-known brand with a funny name to a national audience.
To this day, every single one of the hundreds of ads and other content pieces in the GEICO
campaign has driven home the now-familiar pitch: “15 minutes could save you 15 percent or
more on car insurance.”
GEICO has also adapted its content delivery to the fast-changing digital times. The brand was
one of the first in its industry to provide customers with mobile apps and options for obtaining
quotes, buying policies, and managing their accounts. The company is also an acknowledged
leader in the use of online and social media.
The brand’s advertising has changed the way the entire insurance industry markets its products.
Their strategy is absolutely working for GEICO. It is a testament to how GEICO has used
advertising to evolve from a bit player to a behemoth.
INTRODUCTION
Building good customer relationships calls for more than just developing a good product, pricing
it attractively, and making it available to target customers.
Companies must also engage consumers and communicate their value propositions to customers.
THE PROMOTION MIX
Use Key Term Promotion Mix (Marketing Communications Mix) here.
Use Chapter Objective 1 here.
The promotion mix is also called the marketing communications mix.
It consists of five tools:
Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods,
or services by an identified sponsor.
Sales promotion: Short-term incentives to encourage the purchase or sale of a product
or service.
Personal selling: Personal presentation by the firm’s sales force for the purpose of
making sales and building customer relationships.
Public relations (PR): Building good relations with the company’s various publics by
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
obtaining favorable publicity, building up a good corporate image, and handling or
heading off unfavorable rumors, stories, and events.
Direct and digital marketing: Direct connections with carefully targeted individual
consumers to both obtain an immediate response and cultivate lasting customer
relationships.
Use Key Terms Advertising, Sales Promotion, Public Relations, Personal Selling, and Direct
and Digital Marketing here.
Use Discussion Question 12-1 here.
Use Chapter Objective 2 here.
INTEGRATED MARKETING COMMUNICATIONS
The New Marketing Communications Landscape
Factors which are changing the face of marketing communications:
1. Consumers are changing. They are better informed and more
communications-empowered.
2. Marketing strategies are changing. As mass markets have fragmented, marketers are
shifting away from mass marketing.
3. Changes in digital technology are causing changes in the ways in which companies and
customers communicate with each other.
Use Key Term Brand Content Management here.
Use Marketing at Work 12.1 here.
The Need for Integrated Marketing Communications
Integrated marketing communications (IMC) requires the company to integrate its many
communications channels carefully to deliver a clear, consistent, and compelling message about
the organization and its brands. (Figure 12.1)
Use Key Term Integrated Marketing Communications here.
Use Figure 12.1 here.
Use Discussion Question 12-2 here.
IMC leads to a total marketing communications strategy aimed at building strong customer
relationships by showing how the company and its products can help customers solve their
problems.
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
SHAPING THE OVERALL PROMOTION MIX
The concept of integrated marketing communications suggests that the company must blend the
promotion tools carefully into a coordinated promotion mix.
The Nature of Each Promotion Tool
Each promotion tool has unique characteristics and costs.
Advertising
Advantages:
1. 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.
2. Large-scale advertising says something positive about the seller’s size, popularity, and
success.
3. Consumers tend to view advertised products as more legitimate.
Shortcomings:
1. Advertising is impersonal and cannot be as directly persuasive as can company
salespeople.
2. Advertising can carry on only a one-way communication with the audience.
3. Advertising can be very costly.
Personal Selling
Advantages:
1. Personal selling is the most effective tool at certain stages of the buying process,
particularly in building up buyers’ preferences, convictions, and actions.
2. It involves personal interaction between two or more people.
3. With personal selling, the buyer usually feels a greater need to listen and respond.
Shortcomings:
1. A sales force requires a longer-term commitment than does advertising.
2. Personal selling is the company’s most expensive promotion tool.
Sales Promotion
Sales promotion includes a wide assortment of tools—coupons, contests, cents-off deals,
premiums, and others.
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
Advantages:
1. They attract consumer attention.
2. They offer strong incentives to purchase.
3. They can be used to dramatize product offers and to boost sagging sales.
4. Sales promotions invite and reward quick responses.
Shortcomings:
1. Sales promotion effects are often short-lived.
2. They are often are not as effective as advertising or personal selling in building long-run
brand preference and customer relationships.
Public Relations (PR)
Public relations is very believable—news stories, features, sponsorships, and events seem
more real and believable to readers than ads do.
Public relations can reach many prospects who avoid salespeople and advertisements.
Public relations can dramatize a company or product.
Direct and Digital Marketing
Although there are many forms of direct marketing, they all share four distinctive characteristics:
1. Direct marketing is nonpublic:
2. Direct marketing is immediate.
3. Direct marketing is customized.
4. Direct marketing is interactive.
Promotion Mix Strategies (Figure 12.2)
Marketers can choose from two basic promotion mix strategies—push promotion or pull
promotion.
A push strategy involves “pushing” the product through marketing channels to final
consumers.
A pull strategy involves the producer directing its marketing activities toward final
consumers to induce them to buy the product.
Most large companies use some combination of both strategies.
Factors to consider when designing promotion mix strategies include type of product and market.
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
Use Key Terms Push Strategy and Pull Strategy here.
Use Discussion Question 12-3 here.
Use Figure 12.2 here.
Use Linking the Concepts here.
ADVERTISING
U.S. advertisers now spend almost $183 billion yearly on advertising.
Use Figure 12.3 here.
Use Chapter Objective 3 here.
The four decisions to make when developing an advertising program are (see Figure 12.3):
1. Setting Advertising Objectives
Advertising objectives should be based on past decisions about the target market, positioning,
and the marketing mix, which define the job that advertising must do in the total marketing
program.
Use Key Term Advertising Objective here.
An advertising objective is a specific communication task to be accomplished with a specific
target audience during a specific period of time.
Advertising objectives can be classified by primary purpose (Table 12.1):
Use Table 12.1 here.
Use Key Term Advertising Budget here.
Informative advertising is used heavily when introducing a new product category.
Persuasive advertising becomes important as competition increases. Here, the
company’s objective is to build selective demand.
oComparative advertising (attach advertising) involves directly or indirectly
comparing one brand with another.
Reminder advertising is important for mature products—it helps to maintain customer
relationships and keep consumers thinking about the product.
2. Setting the Advertising Budget
Here are the four common methods used to set the total budget for advertising:
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
Affordable Method
The affordable method involves setting the promotion budget at the level believed to be what
the company can afford.
Small businesses often use this method.
Shortcomings:
It ignores the effects of promotion on sales.
It tends to place promotion 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.
It more often results in under spending.
Percentage-of-Sales Method
The percentage-of-sales method involves setting the promotion budget at a certain
percentage of current or forecasted sales.
It is simple to use and helps management think about the relationships between promotion
spending, selling price, and profit per unit.
Shortcomings:
It wrongly views sales as the cause of promotion rather than as the result.
It 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.
The method does not provide any basis for choosing a specific percentage.
Competitive-Parity Method
The competitive-parity method requires setting the promotion budgets to match competitors’
outlays.
Two arguments support this method.
Competitors’ budgets represent the collective wisdom of the industry.
Spending what competitors spend helps prevent promotion wars.
Neither argument is valid.
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
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 advantage of the objective-and-task method is that it forces management to spell out its
assumptions about the relationship between dollars spent and promotion results.
It is the most difficult method to use.
Use Marketing by the Numbers here.
Use Key Terms Affordable Method, Competitive-Parity Method, Percentage-of-Sales Method,
and Objective-and-Task Method here.
3. Developing Advertising Strategy
Advertising strategy consists of two major elements:
Creating advertising messages
Selecting advertising media.
Creating the Advertising Message and Brand Content
Today, the average household receives about 189 TV channels, and consumers have more than
7,200 magazines from which to choose.
Breaking Through the Clutter. Ads are sandwiched in with a clutter of other
commercials, announcements, and network promotions, totaling nearly 20 minutes of
non-program material per prime-time hour with commercial breaks coming every 6 minutes on
average.
Use Key Terms Advertising Strategy and Madison & Vine here.
Use Online, Mobile, and Social Media Marketing here.
Such clutter in television and other ad media has created an increasingly hostile advertising
environment.
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
Just to gain and hold attention, today’s advertising messages must be better planned, more
imaginative, more entertaining, and more rewarding to consumers.
Merging Advertising and Entertainment. To break through the clutter, many marketers
are now subscribing to a new merging of advertising and entertainment, dubbed “Madison &
Vine.”
Madison & Vine is the merging of advertising and entertainment in an effort to create new
avenues for reaching consumers with more engaging messages.
The merging of advertising and entertainment takes one of two forms:
1. Advertainment involves making the ads themselves so entertaining, or useful, that
people actually want to watch them.
2. Branded Entertainment (brand integration) involves making the brand an inseparable
part of some other form of entertainment. The most common form is product placement.
Message and Content Strategy. The first step in creating effective advertising messages
is to plan a message strategy—to decide what general message will be communicated to
consumers.
Developing an effective message strategy begins with identifying customer benefits that can be
used as advertising appeals. The advertiser must next develop a compelling creative concept—
or “big idea”—that will bring the message strategy to life in a distinctive and memorable way.
Advertising appeals should have three characteristics.
Being meaningful
Being believable
Being distinctive
Message Execution. The advertiser has to turn the big idea into an actual ad execution
that will capture the target market’s attention and interest.
Execution styles include the following:
Slice of life: This style shows one or more “typical” people using the product in a normal
setting.
Lifestyle: This style shows how a product fits in with a particular lifestyle.
Fantasy: This style creates a fantasy around the product or its use. For instance, many ads are
built around dream themes.
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Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations
Mood or image: This style builds a mood or image around the product or service, such as
beauty, love, or serenity.
Musical: This style shows people or cartoon characters singing about the product.
Personality symbol: This style creates a character that represents the product.
Technical expertise: This style shows the company’s expertise in making the product.
Scientific evidence: This style presents survey or scientific evidence that the brand is better or
better liked than one or more other brands.
Testimonial evidence or endorsement: This style features a highly believable or likable
source endorsing the product.
Use Key Terms Creative Concept and Execution Style here.
Use Critical Thinking Exercise 12-6 here.
Use Marketing Ethics here.
The advertiser must choose tone, words, and format for the ad.
Consumer-Generated Messages. Taking advantage of today’s interactive technologies,
many companies are now tapping consumers for message ideas or actual ads.
If used carefully, consumer-generated advertising efforts can produce big benefits.
For little expense, companies can collect new creative ideas.
These campaigns can boost consumer involvement and get consumers talking and
thinking about a brand and its value to them.
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