978-0134492513 Chapter 14 Lecture Notes Part 2

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Choosing Communication Channels and Media

The communicator now must select channels of communi-

cation. There are two broad types of communication

channels: personal and nonpersonal.

Personal Communication Channels

In personal communication channels, two or more people

communicate directly with each other.

Some personal communication channels are controlled

directly by the company. For example, company salespeople

contact buyers in the target market. But other personal

communications about the product may reach buyers

through channels not directly controlled by the company.

Word-of-mouth influence has considerable effect in many

areas.

Companies can take steps to put personal communication

channels to work for them.

They can create marketing programs that will generate

favorable word-of-mouth communications about their

brands.

Companies can create opinion leaders—people whose

opinions are sought by others—by supplying influencers

with the product on attractive terms or by educating them so

that they can inform others.

Buzz marketing involves cultivating opinion leaders and

getting them to spread information about a product or

service to others in their communities.

Nonpersonal Communication Channels

Nonpersonal communication channels are media that

carry messages without personal contact or feedback.

Major media include print media, broadcast media, display

media, and online media.

Atmospheres are designed environments that create or

reinforce the buyer’s leanings toward buying a product.

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Key Term: Personal

communication

channels

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Key Terms:

Word-of-mouth

influence, Buzz

marketing

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Ad: BzzAgent

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Key Term:

Nonpersonal

communication

channels

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Events are staged occurrences that communicate messages

to target audiences.

Nonpersonal communication affects buyers directly.

Communications first flow from television, magazines, and

other mass media to opinion leaders and then from these

opinion leaders to others. Thus, opinion leaders step

between the mass media and their audiences and carry

messages to people who are less exposed to media.

Selecting the Message Source

The message’s impact on the target audience is also affected

by how the audience views the communicator. Messages

delivered by highly credible sources are more persuasive.

Marketers often hire celebrity endorsers to deliver their

message. But companies must be careful when selecting

celebrities to represent their brands.

Collecting Feedback

After sending the message, the communicator must research

its effect on the target audience. This involves asking the

target audience members whether they remember the

message, how many times they saw it, what points they

recall, how they felt about the message, and their past and

present attitudes toward the product and company.

The communicator would also like to measure behavior

resulting from the message—how many people bought a

product, talked to others about it, or visited the store.

Feedback on marketing communications may suggest

changes in the promotion program or in the product offer

itself.

Review Learning Objective 3: Outline the communication

process and the steps in developing effective marketing

communications.

Assignments, Resources

Use Discussion Question 14-4 here

Use Video Case here

Use Real Marketing 14.2 here

Use Critical Thinking Exercise 14-7 here

p. 413 Explain the methods for setting the promotion budget Learning Objective

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and factors that affect the design of the promotion mix.

SETTING THE TOTAL PROMOTION BUDGET AND

MIX

How does the company decide on the total promotion

budget and its division among the major promotional tools

to create the promotion mix?

Setting the Total Promotion Budget

One of the hardest marketing decisions facing a company is

how much to spend on promotion. We look at four common

methods used to set the total budget for advertising.

Affordable Method

Some companies use the affordable method—they set the

promotion budget at the level they think the company can

afford.

Small businesses often use this method, reasoning that the

company cannot spend more on advertising than it has.

Unfortunately, this method of setting budgets completely

ignores the effects of promotion on sales. It tends to place

advertising 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 that makes

long-range market planning difficult. Although the

affordable method can result in overspending on

advertising, it more often results in underspending.

Percentage-of-Sales Method

Other companies use the percentage-of-sales method,

setting their promotion budget at a certain percentage of

current or forecasted sales. Or, they budget a percentage of

the unit sales price.

The percentage-of-sales method has advantages.

It is simple to use.

It helps management think about the relationship

between promotion spending, selling price, and

4

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Key Term:

Affordable Method

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Key Term:

Percentage-of-Sales

Method

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Ad: Coca-Cola

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profit per unit.

However, it wrongly views sales as the cause of promotion

rather than the result.

The percentage-of-sales budget 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.

Finally, the method does not provide any basis for choosing

a specific percentage, except what has been done in the past

or what competitors are doing.

Competitive-Parity Method

Other companies use the competitive-parity method,

setting their promotion budgets to match competitors’

outlays.

They monitor competitors’ advertising or get industry

promotion spending estimates from publications or trade

associations, and then set their budgets based on the

industry average.

Two arguments support this method:

1. Competitor’s budgets represent the collective

wisdom of the industry.

2. Spending what competitors spend helps prevent

promotion wars.

Unfortunately, neither argument is valid. There are no

grounds for believing that the competition has a better idea

of what the company should be spending on promotion than

does the company itself.

Companies differ greatly, and each has its own special

promotion needs. Finally, there is no evidence that budgets

based on competitive parity prevent promotion wars.

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

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Key Term:

Competitive-parity

method

with promotion.

This budgeting method entails:

1. Defining specific promotion objectives

2. Determining the tasks needed to achieve these

objectives

3. Estimating the costs of performing these tasks

The sum of these costs is the proposed promotion budget.

The advantage of the objective-and-task method is that it

forces management to define its assumptions about the

relationship between dollars spent and promotion results.

But it also is the most difficult method to use. Often, it is

hard to figure out which specific tasks will achieve stated

objectives.

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Key Term:

Objective-and-task

method

Assignments, Resources

Use Discussion Question 14-5 here

Use Marketing by the Numbers here

Use Think-Pair–Share 5 here

Troubleshooting Tip

Some students have difficulty remembering the four

budget methods suggested in the text. It makes for

an interesting discussion to have the accounting or

finance majors discuss each method as an

accountant or financial advisor would. Which

method would they prefer? Why?

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Shaping the Overall Promotion Mix

The IMC concept suggests that the company must blend the

promotion tools carefully into a coordinated promotion mix.

Companies within the same industry differ greatly in the

design of their promotion mixes.

The Nature of Each Promotion Tool

Each promotion tool has unique characteristics and costs.

Marketers must understand these characteristics in selecting

their mix of tools.

Advertising can reach masses of geographically dispersed

buyers at a low cost per exposure, and it enables the seller

to repeat the message many times.

Beyond its reach, large-scale advertising says something

positive about the seller’s size, popularity, and success.

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Ad: Supercell

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Because of advertising’s public nature, consumers tend to

view advertised products as more legitimate.

Advertising also has some shortcomings. Although it

reaches many people quickly, advertising is impersonal and

cannot be as directly persuasive as can company

salespeople. For the most part, advertising can only carry on

a one-way communication with the audience, and the

audience does not feel that it has to pay attention or

respond. In addition, advertising can be very costly.

Personal selling is the most effective tool at certain stages

of the buying process, particularly in building up buyers’

preferences, convictions, and actions.

The effective salesperson keeps the customer’s interests at

heart in order to build a long-term relationship. Finally, with

personal selling, the buyer usually feels a greater need to

listen and respond, even if the response is a polite “No

thank you.”

These unique qualities come at a cost, however. A sales

force requires a longer-term commitment than does

advertising—advertising can be turned on and off, but sales

force size is harder to change. Personal selling is also the

company’s most expensive promotion tool.

U.S. firms spend up to three times as much on personal

selling as they do on advertising.

Sales promotion includes a wide assortment of tools—

coupons, contests, cents-off deals, premiums, and others—

all of which have many unique qualities.

They attract consumer attention, offer strong incentives to

purchase, and can be used to dramatize product offers and

to boost sagging sales.

Sales promotions invite and reward quick response.

However, their effects are often short-lived.

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 that avoid

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salespeople and advertisements—the message gets to the

buyers as “news” rather than as a sales-directed communi–

cation.

Marketers tend to underuse public relations or to use it as an

afterthought.

Direct and digital marketing has four distinctive

characteristics:

1. Direct marketing is less public: The message is

normally directed to a specific person.

2. Direct marketing is immediate and customized:

Messages can be prepared very quickly and can be

tailored to appeal to specific consumers.

3. Direct marketing is interactive: It allows a dialogue

between the marketing team and the consumer, and

messages can be altered depending on the

consumer’s response.

Thus, direct marketing is well suited to highly targeted

marketing efforts and to building one-to-one customer

relationships.

Promotion Mix Strategies

Marketers can choose from two basic promotion mix

strategies. Figure 14.4 contrasts the two strategies.

A push strategy involves “pushing” the product through

distribution channels to final consumers. The producer

directs its marketing activities (primarily personal selling

and trade promotions) toward channel members to induce

them to carry the product and to promote it to final

consumers.

Using a pull strategy, the producer directs its marketing

activities (primarily advertising and consumer promotion)

toward final consumers to induce them to buy the product.

If the pull strategy is effective, consumers will then demand

the product from channel members, who will in turn

demand it from producers. Thus, under a pull strategy,

consumer demand “pulls” the product through the channels.

Most large companies use some combination of both.

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Key Terms: Push

strategy, Pull

strategy

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Figure 14.4: Push

versus Pull

Promotion Strategy

Companies consider many factors when designing their

promotion mix strategies, including type of product and

market. For example, the importance of different promotion

tools varies between consumer and business markets.

Business-to-consumer (B-to-C) companies usually “pull”

more, putting more of their funds into advertising, followed

by sales promotion, personal selling, and then public

relations.

In contrast, business-to-business (B-to-B) marketers tend to

“push” more, putting more of their funds into personal

selling, followed by sales promotion, advertising, and

public relations.

Assignments, Resources

Use Critical Thinking Question 14-6 here

Use Online, Mobile, and Social Media Marketing

here

Use Additional Project 5 here

Use Individual Assignment 2 here

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Integrating the Promotion Mix

Having set the promotion budget and mix, the company

must now take steps to see that all of the promotion mix

elements are smoothly integrated.

Integrating the promotion mix starts with customers.

Whether it’s advertising, personal selling, sales promotion,

PR, or direct marketing, communications at each customer

touchpoint must deliver consistent messages and

positioning.

An integrated promotion mix maximizes the combined

effects of all a firm’s promotional efforts.

SOCIALLY RESPONSIBLE MARKETING

COMMUNICATION

In shaping its promotion mix, a company must be aware of

the large body of legal and ethical issues surrounding

marketing communications.

Advertising and Sales Promotion

By law, companies must avoid false or deceptive

advertising. Advertisers must not make false claims, such as

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Ad: Made w/Code

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suggesting that a product cures something when it does not.

They must avoid ads that have the capacity to deceive, even

though no one actually may be deceived.

Sellers must avoid bait-and-switch advertising that attracts

buyers under false pretenses.

A company’s trade promotion activities are also closely

regulated. For example, under the Robinson-Patman Act,

sellers cannot favor certain customers through their use of

trade promotions. They must make promotional allowances

and services available to all resellers on proportionately

equal terms.

Companies can use advertising and other forms of

promotion to encourage and promote socially responsible

programs and actions.

Personal Selling

A company’s salespeople must follow the rules of “fair

competition.” Most states have enacted deceptive sales acts

that spell out what is not allowed.

For example, salespeople may not lie to consumers or

mislead them about the advantages of buying a product. To

avoid bait-and-switch practices, salespeople’s statements

must match advertising claims.

Different rules apply to consumers who are called on at

home versus those who go to a store in search of a product.

Because people called on at home may be taken by surprise

and may be especially vulnerable to high-pressure selling

techniques, the Federal Trade Commission (FTC) has

adopted a three-day, cooling-off rule to give special

protection to customers who are not seeking products.

Much personal selling involves business-to-business trade.

In selling to businesses, salespeople may not offer bribes to

purchasing agents or to others who can influence a sale.

They may not obtain or use technical or trade secrets of

competitors through bribery or industrial espionage. Finally,

salespeople must not disparage competitors or competing

products by suggesting things that are not true.

Review Learning Objective 4: Explain the methods for

setting the promotion budget and factors that affect the

design of the promotion mix.

Assignments, Resources

Use Critical Thinking Exercise 14-8 here

Use Marketing Ethics here

Use Company Case here

Use Think-Pair–Share 6 here

Use Outside Example 2 here

Troubleshooting Tip

The last area within the chapter that needs special

attention is found in the section on Integrating the

Promotion Mix. This is a new concept to most

students. Carefully explain the points and ask for

demonstration of understanding on the part of the

students.