Chapter 1 Primary Demand Stimulation

CHAPTER 1

The World of Integrated Marketing

Communication

PPT 1-1 here

KEY TERMS

promotion

promotional mix

advertising

client or sponsor

integrated marketing

communication (IMC)

advertising campaign

audience

target audience

household consumers

members of business

organizations

members of a trade

channel

professionals

trade journals

government officials and

employees

global promotion

international promotion

national promotion

regional promotion

local promotion

cooperative (co-op)

promotion

marketing

marketing mix

brand

brand extension

brand loyalty

brand equity

market segmentation

differentiation

positioning

external position

internal position

economies of scale

inelasticity of demand

primary demand

stimulation

selective demand

stimulation

direct-response promotion

delayed-response

promotion

brand advertising

corporate advertising

gross domestic product

(GDP)

value

symbolic value

Chapter 1: The World of Integrated Marketing Communication ❖ 2

SUMMARY

PPT 1-2 here

LO1 Define promotion and integrated marketing communication

(IMC).

Promotion is the communication process in marketing that is used to create a favorable

marketing, public relations, and personal selling. One of the mostly widely used tools is

advertising, which is distinguished by its three essential elements: paid sponsorship, use of mass

LO2 Discuss a basic model of communication.

Promotion occurs through various forms of communication, and advertising involves a particular

LO3 Describe the different ways of classifying audiences for promotion and IMC.

In the language of promotion, an audience is a group of individuals who receive and interpret

advertisements and other promotional messages sent from companies. Broad audience categories

are household consumers, members of business organizations, members of a trade channel,

LO4 Explain the key role of IMC as a business process.

As organizations carry out marketing activities, IMC helps them do so in a way that achieves

profitability and other goals. It provides a way to coordinate promotional activities, which are a

key part of the marketing mix—the blend of strategic emphasis on product, pricing, promotion,

Chapter 1: The World of Integrated Marketing Communication ❖ 3

accessible website, in whole or in part.

involves selection of options such as primary versus selective demand stimulation, direct- versus

CHAPTER OUTLINE

INTRODUCTORY SCENARIO: Sound Familiar?

This introductory scenario sets an important tone for student understanding of the changes taking

place in integrated marketing communication (IMC). And, it should strike some very responsive

cords within the class. You will likely have students who have engaged in activities just like the

scenario in the last 24 hours:

• Visited MySpace or Facebook

• Read a blog

• Ordered something from a website

• IMed their friends

• Sent to or received programming on their cell or iPod

• Seen an ad embedded in a video game

Here are the issues to highlight:

• Consumers, like your students, want to control their information flow and are turning

away from mass-media message reception, which they cannot control

• Consumers trust information sources they believe they are controlling more than mass-

mediated messages

• Companies are struggling to find ways to incorporate messages into those more trusted

media

I. The New World of Integrated Marketing Communication

At this point, it is important to provide a perspective on brand promotion and IMC.

• Consumer preferences and technology are reshaping the commercial communication

environment

• The lines between information, entertainment, and IMC are blurring, and this

phenomenon is referred to as “Madison and Vine.”

• Fundamentally, though, firms still use IMC tools like advertising to build brands in the

marketplace.

Chapter 1: The World of Integrated Marketing Communication ❖ 4

Despite the importance of IMC to firms, the average person has a hard time understanding and

appreciating these processes:

• Many people believe brand promotion deceives others—but not them, of course!

• Many people think that those who work in advertising are morally bankrupt.

• It can be hard-hitting and informative or boring and ineffective.

• It can be creative and entertaining or simply annoying and intrusive.

• It affects language and culture.

II. Promotion via Integrated Marketing Communication

PPT 1-3, 1-4 here

It is important to start students out with clear definitions of the fundamental terms in the brand

promotion process:

Promotion Defined: Promotion is the communications process in marketing that is used to

create a favorable predisposition toward a brand of product or service, an idea, or even a person.

Most often, it involves promotion for a brand of product or service.

Promotional Mix Defined: The promotional mix is a blend of communications tools used by a

firm to carry out the promotion process and communicate directly with audiences. A wide range

of tools is available:

• Advertising

• Point-of-Purchase (in-store) materials

• Influencer (peer-to-peer) communications

Chapter 1: The World of Integrated Marketing Communication ❖ 5

• Corporate advertising

Advertising Defined: Advertising is a paid, mass-mediated attempt to persuade.

PPT 1-5 here

• Paid means that a client or sponsor is involved. (PSAs are not ads technically.)

• Mass mediated means that the advertising is delivered through a communication

medium like television, radio, newspapers, or the Internet.

Integrated Marketing Communication Defined: Integrated marketing communication (IMC)

is the process of using a wide range of promotional tools working together to create widespread

brand exposure.

PPT 1-6 here

Advertising is the most-used tool in the promotion mix, so IMC often relies heavily on

advertising.

PPT 1-7 here

III. Mass-Mediated Communication

PPT 1-8, 1-9, 1-10 here

Promotion occurs through various forms of communication, and advertising is a particular type:

mass-mediated communication (meaning it occurs not face-to-face, but through a medium, such

as magazines or the World Wide Web).

A simple model of mass-mediated communication is presented in Exhibit 1.2. This contemporary

Chapter 1: The World of Integrated Marketing Communication ❖ 6

• Accommodation and Negotiation: Production and reception are partially independent

but subject to mediation and interpretation—producers of the message cannot control

reception or interpretation. No ad contains a single meaning for all audience

members.

IV. Audiences for Promotion

PPT 1-11 here

An audience is a group of individuals who receives and interprets messages from marketers

through mass media. A target audience is a particular group of consumers singled out for a

specific message.

A. Audience Categories

• Household consumers: Individuals who buy and use products for personal use.

They are the largest audience for brand promotion—over 111 million households

• Members of business organizations: Firms that buy and use products to make or

resell other products.

• Members of a trade channel: Retailers, wholesalers, and distributors are

B. Audience Geography

PPT 1-12, 1-13 here

• Global promotion: Brand promotion that uses a common theme and presentation in

all markets around the world. It is rare for a brand to have universal cultural appeal,

but when it does, global promotion can be used.

• International promotion: A marketer prepares and places different messages (this

is the key distinction from global promotion) in each different national market where

a brand is sold.

Chapter 1: The World of Integrated Marketing Communication ❖ 7

advertising in which national marketers share promotional expenses with local

marketers. Intel, Sony, and Chevrolet invest heavily in co-op advertising.

V. IMC as a Business Process

PPT 1-14 here

A. IMC in Marketing: As organizations develop brands, price them, distribute them,

and advertise and promote them to a target audience, IMC helps them do so in a way that

1. Promotion in the Marketing Mix

PPT 1-15 here

Marketing is the process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, and services to create exchanges that

2. Supporting Brand Management

PPT 1-16, 1-17 here

A brand is a name, term, sign, symbol, or any other feature that identifies one seller’s

good or service as distinct from those of other sellers. In many ways, a brand is a

firm’s most precious asset. Effective brand promotion supports brand development

and management in five important ways:

• Information and persuasion: It informs and persuades target audiences about

the values a brand has to offer.

• Introduction of a new brand or brand extensions: A brand extension is an

adaptation of an existing brand to a new product area. Brand promotion informs

consumers about the extension and aids in obtaining cooperation in the trade

Chapter 1: The World of Integrated Marketing Communication ❖ 8

accessible website, in whole or in part.

marketing communication can influence brand preferences in wholesalers and

retailers. Marketers can provide training, point-of-purchase advertising displays,

and traffic-building events as well as discount pricing and premiums (gifts).

PPT 1-18 here

3. Implementing Market Segmentation, Differentiation, and Positioning

PPT 1-19 here

Brand promotion is critical to segmentation, differentiation, and positioning

strategies:

• Market segmentation: Breaking down a large, diverse market into segments that

PPT 1-20 here

• Positioning: Designing a product or service so that it can occupy a distinct place

4. Enhancing Revenues and Profits

PPT 1-21 here

This is a very important discussion that is somewhat complex for students. Brand

promotion positively affects both top-line revenue and bottom-line profit:

• Profits are affected by economies of scale: high-volume sales result in high-

C. Promotion Objectives

PPT 1-22, 1-23 here

• Primary demand stimulation: Stimulating demand for an entire product category is

Chapter 1: The World of Integrated Marketing Communication ❖ 9

a type of promotion most appropriately used by trade associations. A key and very

essential point here: Primary demand stimulation is only a possibility in new product

categories—currently this would be products like netbook computers. There is no

• Selective demand stimulation: Promoting the value of a particular brand compared

with the competition. The true power of advertising lies here.

• Direct-response promotion: Promotional messages that ask an audience to take

immediate action.

• Delayed-response promotion: Promotional messages that use imagery and

D. Economic Impact of Promotion

PPT 1-24, 1-25, 1-26 here

• Effect on gross domestic product. As brand promotion stimulates the economy and

• Effect on business cycles. Brand promotion, through demand stimulation, can have a

• Effect on competition. Brand promotion can stimulate greater competition as firms

• Effect on value. Value refers to consumer perception that a product or service

delivers satisfaction beyond the cost incurred to acquire the product or service.

Chapter 1: The World of Integrated Marketing Communication ❖ 10

SOLUTIONS TO REVIEW QUESTIONS

1. As consumers exercise ever-greater individual control over when and how they receive

information, how are marketers adapting their brand messages? What is the role, if any, for

traditional media outlets in this new environment?

After decades of focusing on traditional media sources such as television, radio, and

newspapers to reach consumers, the rapid growth of the Internet and other evolving

2. What does it mean when we say that advertising is intended to persuade? How do different

ads persuade in different ways?

An attempt at persuasion is one of the defining characteristics of all advertising. Advertising

is a form of (persuasive) communication designed with the goal of getting customers to seek

3. What is the concept of integrated marketing communication (IMC)? How is IMC distinct

from advertising?

IMC is the use of various promotional tools, including advertising, in a coordinated manner

4. Explain the differences between regional advertising, local advertising, and cooperative

advertising. What would you look for in an ad to identify it as a cooperative ad?

Regional advertising refers to a concentrated ad campaign in a particular geographic region

(e.g., New England). Local advertising is even more focused and often targets a specific

5. How do the goals of direct-response and delayed-response promotion differ? How would you

explain marketers’ growing interest in direct-response promotion?

Chapter 1: The World of Integrated Marketing Communication ❖ 11

Direct-response promotion always features an immediate call for action from the consumer.

Delayed-response promotion is designed to shape brand preferences in such a way that at

6. Differentiate between global promotion and international promotion. Find and describe a

current U.S. advertisement for an automobile. Do you think consumers in China, Germany, and

Mexico would react favorably to this ad? Why or why not?

Global promotion uses a common theme and presentation in all markets around the world. A

7. How does integrated marketing communication affect brand management and development?

If building brand loyalty is one goal, can you identify several examples of businesses that have

successfully used IMC campaigns to create strong brand equity?

IMC can affect brand development and management across these five critical areas:

providing information to and persuading consumers, introducing new brands or brand

8. If a firm developed a new line of athletic shoes, priced them competitively, and distributed

them in appropriate retail shops, would there be any need for brand promotion? Is brand

promotion really needed for a good product that is priced right?

9. Many companies spend millions of dollars to sponsor and associate their names with events

such as NASCAR races or rock concerts. How well do these event sponsorships fit the definitions

for advertising and IMC given in this chapter?

Chapter 1: The World of Integrated Marketing Communication ❖ 12

accessible website, in whole or in part.

audience and Budweiser pays for this exposure as a way to build preference for its brands.

Anheuser-Busch sponsors these events with a clear intent to persuade a mass audience.

Hence, like advertising, event sponsorship is a paid, mass-mediated attempt to persuade.

When it is integrated with other brand promotion activities to achieve marketing goals, it is a

component of IMC.

10. How does the process of market segmentation enable an organization to spend its brand

promotion dollars more efficiently and more effectively?

SOLUTIONS TO EXPERIENTIAL EXERCISES

1. In this chapter, audiences for promotional messages were divided into five broad audience

categories. For each category, find one promotional piece (for example, a magazine or Internet

ad, direct-mail piece, or sponsored event) that appears to be targeted to members of that

audience. Analyze the content and style of each message, and determine whether it seems

effective, given the intended audience category. Why was the message effective or ineffective?

Did you have difficulty locating messages for any type of audience category? If so, explain why

you think that might have occurred and what it reveals about the nature and methods of

promotion to that audience category.

Students should find an ad or other promotional message for each of the following categories

Household consumers: Individuals who buy and use products for personal use.

Government officials and employees: Members of federal, state, or local governments

warrant special communications because of the large volume of business they do with

organizations.

Students should be able to find good examples from consumer magazines and business

Chapter 1: The World of Integrated Marketing Communication ❖ 14

outcomes, definitions, and visuals. Encourage students to use the accompanying Student

VIDEOS

To view the two videos for this chapter, go to the PROMO book companion website,

www.cengage.com/login.

(*) Indicates the correct answer in the multiple-choice video questions.

IBM: Flying Cars

1. The IBM “Flying Cars” spot is likely aimed at which of the target audiences described in the

book?

2. The IBM “Flying Cars” spot is aimed at showing that Lotus software is:

3. The IBM “Flying Cars” spot is related to brand positioning because:

4. The IBM “Flying Cars” spot is an example of:

5. The book suggests that promotion supports brand development and positioning. Based on your

reading and in viewing the IBM “Flying Cars” spot, what positioning is IBM trying to achieve?

What is the “distinct and valued place” in the consumers’ minds?

The spot seeks to position IBM and its Lotus software as achievable cutting edge technology.

McDonald’s “Baby”