Chapter 17 – Integrated Marketing Communications and Direct Marketing
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CHAPTER CONTENTS
PAGE
POWERPOINT RESOURCES TO USE WITH LECTURES …………………………………… 17-2
LEARNING OBJECTIVES (LO) ……………………………………………………………………………. 17-4
KEY TERMS ………………………………………………………………………………………………………….. 17-4
LECTURE NOTES
• Chapter Opener: Sometimes Taco Bell Leads to Wedding Bells! …………………………. 17-5
• The Communication Process (LO 17-1)……………………………………………………………. 17-7
• The Promotional Elements (LO 17-2) ………………………………………………………………. 17-9
• Integrated Marketing Communications—Developing the Promotional
Mix (LO 17-3) …………………………………………………………………………………………….. 17-14
• Developing an IMC Program (LO 17-4) ………………………………………………………….. 17-20
• Executing and Assessing the Promotion Program ……………………………………………… 17-25
• Direct Marketing (LO 17-5) …………………………………………………………………………… 17-27
APPLYING MARKETING KNOWLEDGE …………………………………………………………… 17-33
BUILDING YOUR MARKETING PLAN ………………………………………………………………. 17-38
VIDEO CASE (VC)
• VC-17: Taco Bell: Using IMC to Help Customers Live Mas! …………………………….. 17-39
APPENDIX D CASE (D)
• D-17: Banyan Tree Holdings: Creating a Brand with IMC …………………………………. 17-42
IN-CLASS ACTIVITIES (ICA)
• ICA 17-1: An IMC for Lay’s STAX………………………………………………………………… 17-47
• ICA 17-2: An IMC for a Toro Snowthrower …………………………………………………….. 17-51
CONNECT APPLICATION EXERCISES ………………………………………………17-56
• Promotional Mix Elements Click and Drag*
• Promotion Decision Process Click and Drag*
• Taco Bell: Using IMC to Help Customers Live Mas! Video Case
• Push or Pull? Choosing Channel Strategies Click and Drag*
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• Marketing Analytics: Evaluating Promotional Spending Analytics Exercise
*Note: An alternate version of each Click and Drag exercise is available in Connect for students with
accessibility needs.
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Textbook Figures Slide
Figure 17-1 The six key elements of the communication process……………………………………………. 17-6
Figure 17-2 The five elements of the promotional mix ………………………………………………………….. 17-9
Figure 17-3 The product life cycle illustrates how promotional objectives change …………………… 17-17
Figure 17-4 How the importance of promotional elements varies during the stages of a
consumer journey ………………………………………………………………………………………….. 17-19
Figure 17-5 A comparison of push and pull promotional strategies ………………………………………. 17-22
Figure 17-6 The promotion decision process includes planning, implementation, and
evaluation …………………………………………………………………………………………………….. 17-23
Figure 17-7 U.S. promotion expenditures of the top 10 companies …………………………..……………. 17-27
Figure 17-8 Business usage and response rates of popular forms of direct marketing ……………… 17-32
Applying Marketing Metrics
How Much Should You Spend on IMC?: Promotion-to–Sales Ratio
[See UMD17PromoSalesRatio.xls] ……………………………………………………………………………………. 17-28
Marketing Matters and Making Responsible Decisions
Marketing Matters—Hey Marketers. College Students Are Digital and Mobile! ………………………. 17-15
Making Responsible Decisions—Ethics: What Iss the Future of Your Privacy? ……………………….. 17-33
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Videos Slide
17-1: North Face Ad ………………………………………………………………………………………………………….. 17-8
17-2: McDonald’s Video …………………………………………………………………………………………………… 17-12
17-3: Data & Marketing Assoc. ………………………………………………………………………………………….. 17-13
17-4: Olympics Video ……………………………………………………………………………………………………….. 17-29
17-5: PHD Media Video ……………………………………………………………………………………………………. 17-30
17-6: Ad Choices Video …………………………………………………………………………………………………….. 17-33
17-7: Taco Bell Video Case ……………………………………………………………………………………………….. 17-34
In-Class Activities (ICA)
ICA 17-1: An IMC for Lay’s STAX …………………………………………………………………………………… 17-38
ICA 17-2: An IMC for a Toro Snowthrower ……………………………………………………………………….. 17-41
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LEARNING OBJECTIVES (LO)
After reading this chapter students should be able to:
LO 17-1: Discuss integrated marketing communication and the communication process.
LO 17-2: Describe the promotional mix and the uniqueness of each component.
LO 17-3: Select the promotional approach appropriate to a product’s target audience, life-cycle
stage, and characteristics, as well as stages of the buying decision and channel
strategies.
LO 17-4: Describe the elements of the promotion decision process.
LO 17-5: Explain the value of direct marketing for consumers and sellers.
KEY TERMS
advertising
noise
all-you-can-afford budgeting
objective and task budgeting
channel of communication
percentage of sales budgeting
communication
personal selling
competitive parity budgeting
promotional mix
decoding
public relations
direct marketing
publicity
direct orders
pull strategy
encoding
push strategy
feedback
receivers
field of experience
response
hierarchy of effects
sales promotion
integrated marketing communications
(IMC)
source
lead generation
traffic generation
message
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LECTURE NOTES
SOMETIMES TACO BELL LEADS TO WEDDING BELLS!
• Taco Bell customers are interested in the “cool” factor. Some customers even add
Taco Bell to their wedding festivities.
a. Created the Love & Tacos Contest
• Customers submitted a photo or video on Instagram or Twitter telling their
Taco Bell love story.
• Consumers voted for the top 10, and Taco Bell judges then selected a winning
couple for an all-expenses-paid trip to get married at the new Las Vegas
restaurant.
– Also contest to be a guest at the wedding.
– “Love”-themed marketing activities – pop-up wedding and elopement.
– New menu item – a $600 wedding package in Las Vegas, complete with
Taco Bell garter, bow tie, taco sauce packet wedding bouquet, and more!
• Taco Bell uses many forms of promotion including television, radio, outdoor,
cinema ads, and public relations.
– Introduced the Quesalupa with TV ad on Super Bowl.
– Advertising modified to emphasize it only uses antibiotic-free chicken and
cage-free eggs, attributes important to its millennial audience.
– Special promotions with partners such as Sony give diners the chance to
win Playstation VR headsets, etc.
– NBA gave away free tacos to all visitors when an away team “steals” a
game in the league finals.
– Airbnb offered a free night in a Taco Bell converted living space.
– Revised logo to a simpler version to connect better with young diners.
b. Social media plays an important role in campaigns.
• Taco Bell’s YouTube channel – things fans have done to eat at Taco Bell.
• Taco Bell Clip Show posts content from wedding proposals to sauce packet
trick shots.
• Taco Bell’s successful marketing campaigns demonstrate the opportunity for
engaging potential customers and the importance of integrated elements of a
marketing communication program.
• The many types of promotion illustrated demonstrate:
a. The opportunity for engaging potential customers.
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b. The importance of integrating the various elements of a marketing
communications program.
• Promotion:
a. Represents the fourth element of the marketing mix.
b. Consists of advertising, personal selling, sales promotion, public relations, and
direct marketing.
• The promotional mix is the combination of one or more communication tools to:
1. Inform prospective buyers about the benefits of the product.
2. Persuade them to try it.
3. Remind them later about the benefits they enjoyed by using the product.
• Marketers often viewed the communication tools as separate and independent.
a. The advertising department often designed and managed its activities without
consulting departments or agencies that had responsibility for sales promotion or
public relations.
b. The result was often an overall communication effort that was usually
uncoordinated and inconsistent.
• Integrated marketing communications (IMC):
a. Is the concept of designing marketing communications programs that…
b. Coordinate all promotional activities to…
c. Provide a consistent message across all audiences.
• By taking consumer expectations into consideration, IMC is a key element in a
company’s customer experience management strategy.
I. THE COMMUNICATION PROCESS [LO 17-1]
[Figure 17-1] Communication is the process of conveying a message to others that
requires six elements: a source, a message, a channel of communication, a receiver, and
the processes of encoding and decoding.
• A source is a company or person who has information to convey.
• A message is the information sent by a source to a receiver.
• A channel of communication is the means (e.g., a salesperson, advertising media,
or public relations tools) of conveying a message to a receiver.
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• Receivers are consumers who read, hear, or see the message sent by a source.
A. Encoding and Decoding
• Encoding is the process of having the sender transform an idea into a set of
symbols.
• Decoding.
a. Is the reverse of encoding, or…
b. Is the process of having the receiver take a set of symbols, the message, and
transform them back to an idea.
c. Is performed by the receivers according to their own frame of reference,
which consists of their attitudes, values, and beliefs.
[Video 17-1: North Face Ad]
• Errors occur during the communication process in several ways:
a. The source may not transform the abstract idea into an effective set of
symbols.
b. A properly encoded message may:
• Be sent through the wrong channel and…
• Never make it to the receiver.
c. The receiver may not transform the set of symbols into the intended idea.
d. Feedback may be so delayed or distorted that it is of no use to the sender.
e. Therefore, effective communication can be very difficult.
• Field of experience.
a. Is a mutually shared understanding and knowledge that:
• The sender and receiver apply to the message so that…
• It can be communicated effectively.
b. Misinterpretations:
• Occur when messages are taken to cultures with different fields of
experience.
• Are the result of bad translations.
B. Feedback
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• A feedback loop consists of a response and feedback.
a. A response is the impact the message had on the receiver’s knowledge,
attitudes, or behaviors.
b. Feedback is the sender’s interpretation of the response, which indicates
whether a message was decoded and understood as intended.
• Pretesting consists of approaches to ensure that messages are decoded properly.
C. Noise
• Noise includes extraneous factors that:
a. Can work against effective communication by…
b. Distorting a message or the feedback received.
• Noise occurs when:
a. A printing mistake affects the meaning of a newspaper ad.
b. Words or pictures are used that fail to communicate the message clearly.
c. A prospective buyer may misunderstand a salesperson’s message because of
his/her’s:
• Accent.
• Use of slang terms.
• Communication style.
LEARNING REVIEW
17-1. What are the six elements required for communication to occur?
17-2. A difficulty for U.S. companies advertising in international markets is that the
audience does not share the same __________.
17-3. A misprint in a newspaper ad is an example of __________.
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Answer: noise, the extraneous factors that distort a message
II. THE PROMOTIONAL ELEMENTS [LO 17–2]
[Figure 17-2] Firms use one or more of five promotional alternatives based on either:
• Mass selling.
a. Tactics used with groups of prospective buyers.
b. Includes advertising, sales promotion, and public relations.
• Customized interaction.
a. Tactics used between a seller and a prospective buyer.
b. Consists of face-to-face, telephone, and interactive electronic communication.
c. Includes personal selling and direct marketing.
A. Advertising
• Advertising is any paid form of nonpersonal communication about an
organization, product, service, or idea by an identified sponsor.
a. The paid aspect is important because the space for the advertising message
normally must be bought.
b. An exception is a public service announcement (PSA), in which advertising
time or space is donated.
c. The nonpersonal component involves mass media, which:
• Are nonpersonal.
• Do not have an immediate feedback loop, as does personal selling.
d. Marketing research plays a valuable role before the message is sent. It
determines that:
• The target market will actually see the medium chosen.
• The message will be understood.
• The advantages of using advertising are:
a. It is attention-getting.
b. It communicates specific product benefits to prospective buyers.
c. A firm controls what is said and to whom it is sent.
d. A firm also controls when to send it, which implies how often it is sent.
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e. Once created, the same message is sent to all receivers in a market segment.
e. If an advertiser pretests the message’s pictorial, text, and brand elements, it:
• Can ensure the ad’s ability to capture consumers’ attention.
• Trusts that receivers in a market segment will decode it.
• The disadvantages of using advertising are:
a. The costs to produce and place a message are significant.
b. The lack of direct feedback makes it difficult to know how well the target
audience received the message.
B. Personal Selling
• Personal selling is the two-way flow of communication between a buyer and
seller, often in a face-to-face encounter, designed to influence a person’s or
group’s purchase decision.
• The advantages of using personal selling are:
a. A salesperson can control to whom a presentation is made.
b. Reduces wasted coverage—communication w/ those not in the target market.
c. The salesperson can:
• See or hear the potential buyer’s reaction to the message.
• Modify the message if the feedback is unfavorable.
• The disadvantages of using personal selling are:
a. Flexibility—different salespeople can change the message so no consistent
communication is given to all customers.
b. On a cost-per-contact basis, it is the most expensive promotional element.
C. Public Relations
• Public relations is a form of communication management that seeks to influence
the feelings, opinions, or beliefs about a company and its offerings held by:
a. Customers. d. Suppliers.
b. Prospective customers. e. Employees.
c. Stockholders. f. Other publics.
• A public relations department’s tools include:
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a. Publicity. e. Press conferences.
b. Special events. f. Social media.
c. Lobbying efforts. g. Image management.
d. Annual reports.
• Publicity’s role is often the most important tool.
[Video 17-2: McDonald’s Video]
• Publicity.
a. Is a nonpersonal, indirectly paid presentation of an organization, product, or
service.
b. Can take the form of a news story, editorial, or product announcement.
c. A difference between publicity and both advertising and personal selling is the
“indirectly paid” dimension.
d. With publicity, a firm:
• Does not pay for space in a mass medium (such as television or radio).
• Attempts to get that medium to run a favorable story about the firm.
• Makes an indirect payment in that it must support a public relations staff.
e. The advantage of using publicity is credibility:
• People believe favorable media stories, reports, and product reviews.
• Publicity is particularly effective when consumers lack prior knowledge of
the product or service.
f. The disadvantage of using publicity is the user’s lack of control. There is no
guarantee a story will:
• Result from inviting media to an event.
• Be positive.
• Reach members of the target audience will receive the message.
• As a result, publicity is rarely the primary public relations tool.
• Social media such as Facebook, Twitter, and topic-specific blogs:
a. Have grown dramatically in recent years.
b. Allow public discussions of almost any company activity.
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• Many public relations departments now focus on facilitating and responding to
online discussions.
• Generally, publicity is an important element of most promotional campaigns,
although the lack of control means that it is rarely the primary element.
• According to research, publicity followed by advertising with the same message
increases the positive response to the message.
D. Sales Promotion
• Sales promotion is a short-term inducement of value offered to arouse interest in
buying a product or service.
• Along with advertising or personal selling, sales promotions are offered to
intermediaries as well as to ultimate consumers.
• Examples include coupons, rebates, samples, contests, and sweepstakes.
• The advantages of using sales promotion:
a. Often stimulates sales for the duration of a short-term program, such as a
coupon or sweepstakes with an expiration date.
b. Offers value to the consumer in terms of a cents-off coupon or rebate.
c. May increase store traffic from consumers who are not store-loyal.
• The disadvantages of using sales promotion:
a. Sales gains are often temporary and drop off after it ends.
b. Advertising support is needed to convert the customer who tried the product
because of a sales promotion into a long-term buyer.
c. If sales promotions are used continuously:
• They lose their effectiveness.
• Customers:
– Begin to delay purchase until a coupon is offered.
– Question the offering’s value.
d. The federal government regulates some aspects of sales promotions.
E. Direct Marketing
• Direct marketing is a promotion alternative that uses direct communication with
consumers to generate a response in the form of:
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a. An order. c. A visit to a retail outlet.
b. A request for further information.
• This form of communication can take many forms:
a. Face-to-face selling. d. Telemarketing.
b. Direct mail. e. Direct response advertising.
c. Catalogs. f. Online marketing.
• The advantages of using direct marketing are:
a. It consists of interactive communication.
b. Can be customized to match the needs of specific target markets.
c. Messages can be developed and adapted quickly to facilitate one-to-one
relationships with customers.
d. Has been one of the fastest-growing forms of promotion.
• The disadvantages of using direct marketing are:
a. Its database containing information about the target market:
• Needs to be comprehensive and up-to-date.
• Is expensive and time consuming to construct and maintain.
b. Customer concerns about privacy have led to a decline in response rates.
[Video 17-3: Data & Marketing Association]
[ICA 17-1: An IMC for Lays STAX]
[ICA 17-2: An IMC for a Toro Snowthrower]
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LEARNING REVIEW
17-4. Explain the difference between advertising and publicity when both appear on
television.
Answer: Since advertising space on TV is paid for, a firm can control what it wants to
17-5. Cost per contact is high with the __________ element of the promotional mix.
17-6. Which promotional element should be offered only on a short-term basis?
III. INTEGRATED MARKETING COMMUNICATIONS—
DEVELOPING THE PROMOTIONAL MIX
In putting together the promotional mix, a marketer must:
• Determine the balance of the promotional elements used based on:
a. The target audience for the promotion. d. Decision stage of the buyer.
b. The stage of the product’s life cycle. e. The channel of distribution.
c. Characteristics of the product.
• Coordinate a consistent promotional effort:
a. Since the elements are often the responsibility of different departments…
b. Using a promotional process to ensure an IMC approach.
A. The Target Audience
• Promotional programs are directed to the ultimate consumer, an intermediary
(retailer, wholesaler, or distributor), or both.
• Promotional programs directed to buyers of consumer products use:
a. Mass media to reach large numbers of potential buyers.
b. Personal selling at the place of purchase—usually the retail store.
c. Direct marketing to encourage first-time or repeat purchases.
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d. Combinations to reach some target audiences.
MARKETING MATTERS
Technology: Hey Marketers, College Students Are Digital and Mobile!
College students spend more than $545 billion each year, making them an attractive
market for many businesses. The challenge for marketers is that these students are tech-
savvy, hyper-connected, and demanding. The freshman class of 2025 is expected to be the
largest ever with more than 2.5 million students.
College students consists of “digital natives” who have grown up with technology.
They have and use laptops, high-def TV, game consoles, tablets, and smartphones. Research
found that 86 percent of new college students own a smartphone. They access Facebook,
Twitter, YouTube, and Instagram; they download apps, coupons, and information 24/7. They
communicate with email, text, and blogs.
Guidelines to ensure the success of mobile campaigns directed at college students are:
a. Create a mobile-ready app that is flashy, fun, and has the potential to “go viral.”
b. Create apps that help shoppers make price comparisons and match product
characteristics to their needs, preferences, and lifestyles.
c. Develop communications that are short, honest, authentic, and transparent about
the purpose and value of the brand.
d. Develop campaigns that encourage multitasking.
• Promotional programs can be directed to the ultimate consumer, to an
intermediary, or to both:
a. Programs directed to buyers of consumer products often use mass media
because the number of potential buyers is large.
b. Personal selling is used at the place of purchase.
c. Direct marketing bay be used to encourage first-time or repeat purchases.
• Personal selling is also the major promotional ingredient for business buyers and
intermediaries.
• Salespeople assist intermediaries by:
a. Coordinating promotional campaigns sponsored by the manufacturer.
b. Providing marketing advice and expertise.
B. The Product Life Cycle [LO 17-3]
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[Figure 17-3] Shows how the composition of the promotional mix for Purina Dog
Chow changes over the four stages of its product life cycle.
1. Introduction Stage. The objective is to inform and generate awareness.
a. All the promotional mix elements are used at this time, although the use of
specific mix depends on the product.
b. Advertising is used to reach target consumers to build up awareness and
interest in the product.
c. Publicity may begin before the product is commercially available.
2. Growth Stage. The objective is to persuade the consumer to buy the product
rather than substitutes to gain brand preference and solidify distribution.
a. Sales promotion is less important at this stage.
b. Publicity is not a factor because it depends on novelty of the product.
c. Advertising stresses brand differences.
d. Personal selling is used:
• For consumer products. To solidify the channel of distribution,
the salesforce calls on:
– Wholesalers to increase inventory levels.
– Retailers to gain shelf space.
• For business products. The salesforce tries to obtain contracts to be the
sole source of supply for the buyer.
3. Maturity Stage. The objective is to maintain existing buyers.
a. Advertising is used to remind buyers of the product’s existence.
b. Sales promotion, in the form of discounts and coupons, is offered to both
ultimate consumers and intermediaries to maintain loyalty.
c. Sponsoring events can also help maintain loyalty.
d. Direct marketing actions like direct mail are used to:
• Maintain involvement with existing customers.
• Encourage repeat purchases.
e. Price cuts and discounts can increase a mature brand’s sales.
f. The salesforce seeks to satisfy intermediaries.
4. Decline Stage. The objective is to phase out the product.
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a. Little money is spent in the promotional mix.
b. The rate of sales decline can be:
• Rapid when a product is replaced by an improved or lower cost product.
• Slow if there is a loyal group of customers.
C. Product Characteristics
The proper blend of elements in the promotional mix depends on the type of product.
Three specific characteristics are considered:
• Complexity.
a. Refers to the technical sophistication of the product and hence the amount of
understanding required to use it.
b. The more complex the product, the greater the emphasis on personal selling
and less on advertising.
• Purchase risk to the buyer.
a. Refers to financial, social, and physical risk.
b. Although advertising helps, the greater the risk, the greater the need for
personal selling.
• Ancillary services.
a. Pertains to the degree of service or support required after the sale that is
common to many industrial and consumer products.
b. Advertising’s role is to establish the seller’s reputation.
c. Direct marketing explains how a product can be customized to specific needs.
d. Personal selling:
• Builds buyer confidence.
• Provides evidence of customer service.
D. Stages of the Buying Decision
[Figure 17-4] The promotional mix elements vary with the three stages in a
consumer’s purchase decision process.
1. Prepurchase Stage.
a. Advertising informs the potential customer of the existence of both the
product and the seller.
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b. Sales promotion in the form of free samples is used to gain low-risk trial.
c. When the salesperson calls on a customer after heavy advertising:
• The customer has some awareness of the product.
• Is important in industrial settings when product sampling is not possible.
2. Purchase Stage.
a. Personal selling is most important.
b. The impact of advertising is lowest.
c. Sales promotion, in the form of coupons, deals, point-of-purchase displays,
and rebates, stimulate demand.
d. Social media can play an important role in the final decision by delivering
promotions and giving consumers control of the process.
e. Direct marketing activities reduce the time consumers take to adopt offerings.
3. Postpurchase Stage.
a. The more personal selling (i.e., a salesperson) is used to provide postpurchase
support, the more the buyer is satisfied.
b. Advertising provides postpurchase assurance to reduce a customer’s cognitive
dissonance or anxiety.
c. Sales promotion in the form of coupons and direct marketing reminders
encourages repeat purchases.
d. Public relations play only a minor role.
E. Channel Strategies
[Figure 17-5] Two types of promotional strategies (push and pull) help marketers
achieve control of and can assist in moving a product through the marketing channel.
1. Push Strategy.
a. [Figure 17-5A] A push strategy directs the promotional mix to channel
members to gain their cooperation in ordering and stocking the product.
b. Salespeople call on intermediaries to encourage orders and provide sales
assistance.
c. Intermediaries are offered sales promotions, such a case allowances, to
stimulate demand.
d. Marketers push products to channels members so they in turn will push them
to their customers.
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2. Pull Strategy.
a. In some instances, manufacturers face resistance from channel members who
do not want to:
• Order a new product.
• Increase inventory levels of an existing brand.
b. [Figure 17-5B] A pull strategy directs the promotional mix at ultimate
consumers to encourage them to ask the retailer for a product.
c. Seeing demand from consumers, retailers order the product from wholesalers,
pulling the item through intermediaries.
d. Many firms use direct-to-consumer advertising. This strategy:
• Complements traditional personal selling and free samples.
• Is designed to encourage consumers to ask their retailer for the product—
pulling it through the channel.