The marketing communication process a conceptual framework

Transcription

1 Licensed to: CengageBrain User

2 This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it. For valuable information on pricing, previous editions, changes to current editions, and alternate formats, please visit to search by ISBN#, author, title, or keyword for materials in your areas of interest.

3

4 The marketing communication process a conceptual framework Part 1 introduces the fundamentals of integrated marketing communications (IMC). Chapter 1 presents an overview of marketing communications and explains the key features of integrated marketing communications. This chapter also outlines the conceptual basis of brand equity by examining brand recognition and brand recall, and explains how IMC can build brand equity. Chapter 2 examines the marketing communication process and explains how meaning can be created. The behavioural foundations of marketing communications are analysed and the brand-related effects of the consumer processing model (CPM) and the hedonic, experiential model (HEM) compared. Chapter 3 discusses the nature and role of consumer attitudes and how attitudes are related to persuasion. The elaboration likelihood model (ELM) is considered as a means to examine consumers motivation, opportunity and ability three important aspects of the persuasion process. Chapter 4 introduces market segmentation and brand positioning as key elements in effective marketing communications. Changing demographics, such as Australia s ageing population and family composition, are examined to determine their impact on marketing communication strategies. The section on positioning describes the necessity of formulating a distinct communication strategy that enables marketing communicators to distinguish their brand from competitors and to imprint that difference distinctively and favourably in the minds of the target consumers. Each chapter begins by discussing a current IMC Challenge while practical applications of IMC in Action and marketing communications in Asia Pacific countries, as well as the role of Ethics in IMC, are all considered within the chapter. At the end of each part there is a case study which is a comprehensive study of the theories that are discussed in the previous chapters. part one

5 Chapter one Integrated marketing communications and brand equity enhancement LEARNING OBJECTIVES After studying this chapter you should understand and be able to explain: 1 The nature of the integrated marketing communications process. 2 How marketing communication objectives are developed. 3 The concept of brand equity. 4 The importance of brand awareness. IMC Challenge Wrigley s Extra chewing gum The challenge for Wrigley s was to regain market share for Extra. Wrigley s launched Extra chewing gum on to the Australian market in 1987 into a product category that was dominated by sugar-based brands. Over the next decade, Extra grew into the most recognised chewing gum in the category and was the most valuable brand in Wrigley s portfolio of local brands. The leadership that Extra had achieved was based on the product s rational dental benefits that had been established by cognitive marketing messages. By 2006, however, Extra s market dominance was waning as challengers, such as Woolworths domestic brand and the imported Mentos brand, gained market share. As shown in Figure 1.1, by May 2006 the percentage of Australians aged 15 to 49 who regularly chewed Extra had dropped below 35 per cent. To overcome those competitive threats and increase their market share, Wrigleys decided it was time to develop consumers emotional connection to the Extra brand. Percentage of people who chew Extra Extra Regular usage: Australians Figure 1.1 Extra regular usage: Australians aged January 2006 March 2006 May 2006 July 2006 September 2006 November 2006 January 2007 March 2007 May 2007 July 2007 September 2007 November 2007 January 2008 March 2008 May 2008 July 2008 September 2008 November 2008 Source: Wrigley global online consumer tracking, in James Quinlan and Catriona Collins, Wrigley s Extra waking the sleeping giant, 2009 Effies Awards, DDB Sydney, p. 5

6 integrated marketing communications and brand equity enhancement chapter one 3 In 2007, a new campaign was developed that moved away from the previous Confidence to smile strategy, towards promoting the benefits of chewing Extra to keep your mouth clean. A TV commercial was created that told the story of a group of food characters, who were in fact particles of leftover food, that remain in a man s mouth and eventually lead to dental plaque. The tag line for the new campaign was, Chewing Extra wipes away plaque to keep your mouth extra clean. During the next two years, the food characters were seen in a series of seven TV commercials and other media channels, including: packaging to remind the current users about the benefits of Extra at the point of consumption Consider this: Which of the two objectives do you think achieved its stated goal? point of sale to remind the target market about the need to chew after eating online where people could invite others to food-related events sampling at outdoor food events to reinforce the link between eating and drinking and the benefits of chewing Extra. The marketing objective of the new campaign was to grow sales revenues by encouraging the target market consumers to increase their frequency of usage; that is, to chew Extra more often. On the other hand, the communication objective was to improve the brand s image by highlighting Extra s oral healthcare benefits as the solution to the consumers functional needs. All companies use marketing communications in some form or another it is a critical component of effective marketing. The first step in understanding the nature and importance of integrated marketing communications (IMC) is to examine the different elements of marketing communications mix, followed by an examination of the features and benefits of IMC. It is important that all the elements of the marketing communication mix advertising, sales promotions, direct marketing, personal selling, product packaging, point-of-purchase materials, outdoor displays, marketing public relations and sponsorships are integrated to achieve an organisation s marketing communication objectives and to enhance the equity of its brands. The result of that integration is synergy all the elements of marketing communication working together to achieve effective integrated marketing communications. Each chapter explains the concept of brand equity from the customer s perspective and discusses how organisations can increase their brand equity, which, in turn, will increase consumer brand loyalty and market share. the nature of marketing communications In order to understand what marketing communications means, it is necessary to examine its two basic parts: marketing and communications. Marketing consists of the marketing mix strategies that organisations develop to transfer value, through exchange, to their customers. Communication is a process that conveys shared meaning between individuals, or between organisations and individuals. Together, marketing communications represents all the elements of the marketing mix that facilitate exchanges by targeting the brand to a group of customers, positioning the brand as being distinct from competitive brands and sharing the brand s meaning and unique differences with the product s target audience. By maintaining a consistent message over time and across various forms of communication media, a brand can achieve a competitive market share. Marketing communications is a critical aspect of a company s overall marketing mission and a major determinant of its success in a market. The importance of marketing communications, as indicated by the increased spending by Australian organisations, has increased in recent years. In 2009, the Wesfarmers Group, whose brands include Coles supermarkets, Bunnings, Target, Officeworks and Kmart, was Australia s largest advertiser, spending approximately $205 million. 1 It has been claimed that marketing and communications are virtually inseparable marketing is communication and communication is marketing. 2 All organisations whether engaged in businessto-business exchanges (B2B), business-to-consumer marketing (B2C), or delivering not-for-profit services, such as museums, symphony orchestras and charitable organisations such as the Red Cross use various forms of marketing communications to promote their offerings and achieve their marketing marketing communications

7 4 part one the marketing communication process a conceptual framework and other organisational goals. The major types of marketing communications include traditional mass media advertising, online advertising, outdoor advertising (such as billboards, bus shelters and public transport), sales promotions (such as samples, coupons and rebates), store signage, point-of-purchase displays, product packages, direct-mail literature, opt-in s, marketing public relations, event and cause sponsorships, and presentations by salespeople. Collectively, these types of communication and the associated media constitute what has traditionally been labelled the promotion component of the marketing mix. Although the 4Ps framework has led to widespread use of the term promotion for describing communication between organisations and their customers, the term marketing communications represents the totality of promotion. In this text, IMC includes all the major types of marketing communications, while promotions is used only as a shorthand for sales promotions. McDonald s Australia, for example, used several different types of marketing communications to launch its new Angus burger in August The marketing campaign for the Angus burger included free-to-air TV, radio, outdoor, online, newspapers and magazine ads using the tag line, A little bit fancy, to differentiate the new burger from the existing Double Beef and Bacon burgers. 3 Figure 1.2 McDonald s used several different types of media to launch its Angus burger Source: Photolibrary/Alamy/Karin Hildebrand The marketing communications mix It is important to understand the major forms of marketing communications. 1 Advertising. Advertising involves either mass communication via newspapers, magazines, radio, television, and other media such as billboards, the Internet or cinema, or direct communication targeted at each B2B customer or ultimate consumer. Both forms of advertising are paid for by an identified sponsor, the advertiser, but are considered to be non-personal because the organisation is simultaneously communicating with multiple receivers (perhaps millions), rather than with a specific person or small group. Direct market advertising, which includes traditional mail-outs and opt-in (or permission) ing, has increased in recent years due to the effectiveness of targeted communications and the widespread adoption of computer-based technology. Managing and implementing advertising strategy is discussed in Part 2. 2 Direct marketing. Direct marketing uses several types of media to reach consumers and encourage them to purchase or take some form of immediate response, such as contacting the originator of the marketing message. As such, direct marketing is an interactive process rather than being a one-way form of communication. Database marketing is an integral part of direct marketing because it provides companies with information that allows them to profile their customers and to establish long-term relationships. Direct marketing is discussed in Chapter 11.

8 integrated marketing communications and brand equity enhancement chapter one 5 3 Sales promotions. Sales promotions include all marketing activities that attempt to stimulate buyer action or immediate sales of a product. In comparison, advertising is designed to accomplish communication objectives, such as creating brand awareness and influencing customer attitudes. Sales promotions are directed at trade intermediaries, such as wholesalers and retailers, and/or at consumers. Trade-oriented sales promotions include the use of various types of allowances to encourage wholesaler and retailer responses. Consumer-oriented sales promotions include using price reductions, free samples, contests/sweepstakes, coupons and rebates to encourage consumers to buy. Both types of sales promotion are considered in Chapter Sponsorship marketing. Sponsorship marketing is the practice of promoting the interests of a company and its brands by associating the company and its brands with a specific event. For example, VISA was one of the major sponsors of the XXI Olympic Winter Games in Vancouver in Marketing public relations (MPR). Like advertising, MPR involves non-personal communication to a mass audience, but unlike advertising, a company (the identified sponsor) does not pay for media time or space. MPR usually consists of favourable news items or editorial comments about a company s products or services that receive free print space or broadcast time because journalists consider the information pertinent and newsworthy for their audiences. In that sense, MPR assumes a mantle of credibility because it is perceived as being an unbiased report not paid for by the company receiving the publicity. For example, press releases by companies about their sustainable products provide news media with information about these products or services in response to increased public awareness of damage to Australia s physical environment. MPR and sponsorship marketing are discussed in Chapter Personal selling. Personal selling is based on person-to-person communication, where the salesperson informs, educates and persuades prospective buyers to purchase the company s products or services. These selling efforts often include providing retailers with introductory discounts and assuring them that company advertising, sampling and in-store promotion will successfully move the products and increase the retailers sales revenues. The nature of personal selling is discussed in Chapter Point-of-purchase communications. Point-of-purchase communications include in-store displays, posters, signs and other materials that are designed to influence consumer buying decisions at the point of purchase. In-store displays, for example, were influential in attracting consumers attention to the re-launch of Coca-Cola s energy drink, Mother. Point-of-purchase marketing communications are discussed in Chapter 8. The effectiveness of IMC involves using different types of communication media and depends on understanding a brand s marketing environment and integrating the assorted communication media to effectively influence consumers decision making; that is, to ultimately have them purchase the branded product. The integration of the various types of marketing communication media for example, using advertising together with sales promotions generally provides better results than using only one form of marketing communications. Marketing communications at the brand level Marketing communications, in its various forms such as advertising, direct marketing, sales promotions, sponsorships, personal selling, marketing public relations and point-of-purchase, should develop and deliver messages about the benefits and features of different types of products, services, stores, events and/or people. All of these different marketing objects share a common attribute; that is, they have a brand. Hungry Jack s, Red Bull, Evian, Myer, Levi s, Nokia, Sony, Intel, Microsoft, Visa, VirginBlue.com, Kodak, Dell, Honda and Mercedes-Benz are all brands. Most marketing communication occurs at the brand level. It is critical, therefore, to understand that the success of a company s marketing communication efforts relies on the brand, which is a convenient and appropriate label used to describe the organisation s products. A well-known and respected brand is a valuable asset. Brands perform several roles for the organisations that market them. 4 Successful brands perform several important economic functions such as achieving economies of scale by producing a branded product to satisfy customer demand at the lowest possible unit cost and creating competitive barriers to other organisations that may consider entering the product category. A favourable brand image also performs strategic roles by differentiating one company s product from competitive brands and by enabling a manufacturer to gain leverage vis-à-vis retailers and other marketing intermediaries. From a consumer s perspective, strong, favourable brands offer an assurance of consistent quality and performance, and the particular features and benefits that consumers seek, which reduces the financial and functional risks associated with buying other brands in a particular category. A brand creates expectations about what it will deliver in terms of consistent quality, convenience, reliability and status. 5

9 6 part one the marketing communication process a conceptual framework overview of integrated marketing communications Defining IMC The rationale of IMC is that marketing communications should build profitable relationships between the company and its customers. IMC consists of three components: the concept, synergy and a process. 6 The concept relies on delivering the marketing message to all the stakeholders that have some form of contact with the organisation. Responsibility for delivering the company s marketing communication to its stakeholders usually rests with the different functional departments within the company. For example, marketers create advertisements to communicate with potential customers, the sales team communicates with buyers and the public relations personnel communicate with the general public. The second component, synergy, suggests that when marketing communications are coordinated and consistent, they have a greater impact on enhancing the customers brand knowledge than individual marketing messages. To ensure that the company s marketing communications achieve that effect, all the marketing messages issued by the various functional departments in the organisation must be coordinated and consistent. The IMC process requires the marketing department to profile the customer/prospect segment and then determine what types of messages and media channels will best achieve the communication objectives of informing, persuading, reminding and encouraging action from that market segment. 7 Overall, IMC is about delivering consistent brand messages that are relevant to the targeted customers and prospects, with the aim of directly influencing their buying behaviour and building profitable relationships by planning, creating, integrating and implementing the various forms of marketing communications such as advertisements, sales promotions, personal selling, sponsorships and marketing public relations. Key features of IMC The five features that provide the foundation of integrated marketing communications are listed in Table 1.1. Table 1.1 Key features of IMC 1 Profile the identified target market. 2 Use the relevant media channels. 3 Achieve communication synergy; that is, speak with a single voice. 4 Influence the target market s behaviour. 5 Build customer relationships. Profile the identified target market The key feature of IMC planning begins with profiling the customer or prospect segment to determine the most appropriate messages and media for either informing, persuading or reminding these customers and prospects to respond positively towards the organisation s brand. Profiling a target market involves collecting demographic data, determining their values and lifestyles and analysing their buying behaviour to answer the following questions: How much of the product does the target market buy? How often do they buy? and Where do they purchase the product? Use the relevant media channels IMC uses all forms of marketing communications and the appropriate media as potential message delivery channels. The relevant media channel is any message medium that is capable of reaching the target customers and presenting the brand in a favourable light. European brand managers tend to use media other than advertising to build brand awareness and enhance brand image. 8 For example, Hugo Boss created its exclusive image primarily by sponsoring professional sporting events such as tennis, golf and ski competitions. 9

10 integrated marketing communications and brand equity enhancement chapter one 7 Achieve communication synergy Synergy is an inherent component of IMC. The different types of marketing communication such as advertisements, sales promotions, personal selling, point-of-purchase signage, MPR and event sponsorships must present the same brand message and convey that message consistently across diverse message channels, or points of contact. Marketing communications for a brand must, therefore, speak with a single voice. Coordination of messages and media is critical to achieve a strong and unified brand image, and to move consumers to action. 10 In general, the single-voice, or synergy, principle involves selecting a specific positioning statement for a brand. A positioning statement is the key idea that defines what a brand stands for in the minds of the target market, compared with its competitors. It is essential that the positioning statement delivers the same idea across all media channels every time the target audience comes into contact with the brand. Market segmentation and positioning are discussed in more detail in Chapter 4. Influence the target market s behaviour The goal of IMC is to positively influence the behaviour of the target audience rather than just create brand awareness or enhance consumer attitudes towards the brand. IMC requires that the organisation s communication efforts encourage some form of behavioural response; that is, brand awareness and a favourable brand attitude must move the target audience to action. An IMC program is ultimately evaluated in terms of whether it influences a consumer s purchase behaviour. Prior to purchasing a new brand, consumers must be informed about the brand and its benefits, and then encouraged by persuasive marketing messages to develop a favourable attitude towards it. Marketing communications need to achieve these intermediate, or pre-behavioural, goals because a successful marketing campaign must accomplish more than only encouraging consumers to like the brand. This is why sales promotions and direct-to-consumer advertising are used extensively, because they encourage more cost-effective behavioural changes, such as product trial, than other forms of marketing communications. For example, the challenge for State police departments that plan road-safety campaigns is how to change drivers attitudes towards speeding. Although most motorists understand that speeding is a major cause of road accidents and fatalities, they tend to think that these events will happen to other drivers and not to them. Road-safety messages are effective in making people aware of the problems associated with speeding, but the campaigns are ineffective if they do not cause motorists to change their attitudes and drive within the speed limits. The IMC goal for a road-safety campaign is to develop compelling messages that influence motorists behaviour to slow down. A creative approach, other than the standard speeding kills message, is needed to redirect driver behaviour. Emotional appeals, education programs and law enforcement are the three steps used by the Figure 1.3 The Transport Accident Commission (TAC) in Victoria was successful in changing drivers attitudes towards driving within the speed limits Source: Fairfaxphotos/Ken Irwin

11 8 part one the marketing communication process a conceptual framework Transport Accident Commission (TAC) in Victoria to change drivers attitudes and to take action to reduce their speed on the road. The result of the TAC campaigns was that after three years the road toll was reduced by half, while the number of cars using Victorian roads increased by 37 per cent. 11 Build customer relationships Successful marketing communications requires an organisation to build a relationship between the brand and its customers. Customer relationships are an enduring link between a brand and its customers that leads to repeat purchases and generates stronger customer loyalty towards the brand. 12 Relationships between brands and customers are created by positive brand experiences that make strong, favourable and lasting impressions, and ensure the long-term viability of the company. Building customer relations is not the same as database marketing; customer relationship management (CRM) relies on having relevant customer data to satisfy customers needs and wants. In mature markets, database marketing is often used as the means to sell more to current customers, which may in fact destroy established customer loyalty. Changes in marketing communication practices The adoption of an IMC approach requires fundamental changes to the way that marketing communications have traditionally been practised. The following interrelated events have been influential in changing those traditional practices. 1 Reduced dependence on mass media advertising. Mass media advertising is not always the most effective or cost-efficient medium for contacting customers and prospects. This does not mean that media advertising is unimportant. The key issue is that other communication methods should be examined before mass media advertising is automatically assumed to be the best approach. 2 Increased reliance on focused communication methods. Direct mail, opt-in or permission s, special interest magazines, pay TV and event sponsorships are some of the focused media that are less expensive and often more effective than mass media advertising. Targeting messages to selected consumer segments by using an organisation s databases is a more focused form of marketing communications. 3 Increased demands on communication suppliers. Marketing communication suppliers, such as advertising agencies, sales promotion firms and public relations agencies, have traditionally offered a specialised range of marketing communications services. It is important for these suppliers to offer a diverse range of services that include advertising services and sales promotion assistance, public relations, direct marketing and event marketing support. 4 Increased efforts to assess marketing communications return on investment. A key feature of IMC is that it requires systematic analysis to determine whether marketing communication programs yield a reasonable return on investment. The investment in marketing communications must be assessed in terms of the profit-to-investment ratio to determine whether changes are needed, or whether other forms of marketing communications investment might be more profitable. Ethics in IMC The Communications Council Code of Ethics The Communications Council has created a code of ethics based on the voluntary regulation of the advertising industry. The code is a combination of broad principles which set voluntary standards of behaviour for advertising practitioners. The Communications Council believes that ethical behaviour by industry members of the Communications Council is the foundation of upholding the highest ethical practice of marketing communications. To provide support for the ethical behaviour of its members, the Communications Council has considered four basic issues that relate to ethics. The first is to define ethics as being a system of moral principles that allow people to determine right from wrong, good from bad behaviour in their daily life or in a situation where there is a conflict of interest. The second issue is to explain why the advertising industry needs a code of ethics which relies on trust in its business dealings and needs to recognise that its role in business consists of both opportunities and responsibilities. That reliance on trust includes agencies, clients, consumers and the general public. The third issue that the Communications Council considers important is how to behave in situations where there are ethical dilemmas

12 integrated marketing communications and brand equity enhancement chapter one 9 because ethics cannot be imposed they evolve from individual behaviour and must be understood by all members of the business community. The last issue that relates to ethics is the voluntary code of what the advertising industry believes is doing the right thing. The code contains 10 basic principles: 1 Stand up for what you believe is right. Advertising is not a science and requires the opinions of all members involved in creating an advertising campaign, and that requires industry members to be truthful in all their dealings with clients and colleagues. Examples of unethical behaviour include hidden charges and scam advertisements. 2 Honour all agreements. Agreements are expressions of trust and agencies often have access to confidential information such as marketing strategies that are based on customers research and competitive analysis. Examples of unethical behaviour include transferring charges between clients and using confidential information for personal benefit. 3 Don t break the law; don t bend the law. Laws exist to protect the community and members of the advertising industry need to think beyond loopholes in the legal system to support moral arguments. Examples of unethical behaviour include benefitting from another person s ideas and displaying a product with a price from a lesser product. 4 Respect all people. Everybody is entitled to respect and different segments of the community should be portrayed in a manner that is respectful to the agency s advertising and its client. Examples of unethical behaviour include typecasting racial stereotypes and taking other people s personal matters into a public forum. 5 Strive for excellence in everything you do. People will do their best when encouraged to do so by clients, colleagues or suppliers. Examples of unethical behaviour include passing the responsibility of failure to colleagues or reducing a supplier s fee because of project cost over-runs. 6 Give clients your best advice; without fear or favour. Members of the ad industry have a responsibility to provide the best they are capable of and to act in the interest of clients. Examples of unethical behaviour include recommending a particular media channel because of a bulk discount that your agency has received or proposing a particular campaign strategy that is not in the best interest of a client. 7 Look after your colleagues. Working in the advertising industry can be frustrating, hectic but also fun. To impose conditions that penalise employees who do not work the extra hours that are often required to launch a campaign is unethical, as is not divulging important client information to your colleagues. 8 Compete fairly. Respect the intellectual ownership of other people s work and do not knowingly represent someone else s work as your own. This condition of ethical behaviour is important because if Communications Council members do not voluntarily regulate themselves, other community and government bodies will take the opportunity to impose rules on the industry. Examples of unethical behaviour include misrepresenting your competitor s skills or suggesting proposals that cannot be achieved within the budget. 9 Think before you act. The best business decisions are those that are based on information and ethical behaviour requires industry members to think before they act. The excuse that everybody does it is not a sound basis for making a decision. For example, agreeing to a client s deadline that cannot be met and promising that certain tasks will be completed in-house when they are not, is unethical behaviour. 10 Be honest. The advertising industry needs to be beyond reproach because the relationships that are developed with clients, colleagues and the public are based on trust. Sometimes things will conspire against being honest; if you know of some behaviour that could not be considered as being ethical, there is a strong possibility that so do others. Therefore, it is up to you to stand up for what you believe is right. Source: The Communications Council brand equity enhancement A model of the marketing communication decision-making process The conceptual framework of consumers decision-making processes shown in Figure 1.4 provides a conceptual framework to evaluate the various types of brand-level marketing communication decisions and outcomes. The model consists of a set of fundamental decisions that relate to positioning, targeting, setting objectives and budgeting; a set of implementation decisions that involve the

13 10 part one the marketing communication process a conceptual framework integration of communications elements and the choice of messages, media and momentum; and program evaluation, which measures the marketing communication results, provides feedback and suggests possible corrective actions. The primary objective of marketing communications is to enhance brand equity as the means of moving customers to take favourable actions towards the brand; that is, trial, repeat purchases and ideally become brand loyal. Enhancing equity and affecting customer behaviour depends on the effective use of all elements of the marketing mix. Marketing communications play a pivotal role of informing customers about new brands and their relative advantages by raising the image of the brand. Brand equity is enhanced when consumers become familiar with the brand and hold favourable, strong and perhaps unique mental associations about that brand. 13 A brand cannot achieve equity if consumers are not familiar with it. Once consumers have become aware of a brand, the amount of equity generated depends on how favourably they perceive the brand s benefits and attributes when they are compared to competitive brands. Figure 1.4 Making brand-level marketing communication decisions and achieving desired outcomes Making brand-level marketing communication decisions The framework in Figure 1.4 shows that fundamental decisions (positioning, targeting, setting objectives and budgeting) influence implementation decisions regarding the mixture of communication elements and the determination of messages, media and momentum. The expected outcomes from these decisions are enhancing brand equity and affecting behaviour. Subsequent to the implementation of the marketing communication decisions, program evaluation which measures the results of the marketing communication efforts, provides feedback (as shown by the dashed arrow in Figure 1.4) and suggests possible strategies for taking corrective action is essential to determine whether outcomes match objectives. Program evaluation highlights the need for corrective action if performance falls below the IMC objectives. Fundamental marketing communication decisions Positioning A brand s position is its key feature, benefit or image that it represents in the target audience s collective mind. A brand positioning statement is the central idea that encapsulates a brand s meaning and distinctiveness vis-à-vis competitive brands in the product category. In October 2009, the ANZ bank launched a new campaign to reposition the bank as being a regional super bank in a bid to create a strong unified image for its brand. The move away from the bank s more convenient

14 integrated marketing communications and brand equity enhancement chapter one 11 banking message to one that highlighted the bank s regional operations in 32 countries with 19 different languages was used to show consumers that the ANZ understood their issues and needs, and that the bank lived in the same world as its customers. The core message of the campaign to rebrand the ANZ which cost $15 million, was We live in your world. That marketing media included a 60-second TV commercial, and print, online and outdoor ads that promoted the bank s new regional initiatives. 14 Targeting Targeting allows marketing communicators to deliver their messages more precisely and so prevent wasted coverage to consumers who do not fit the target audience profile. The selection of target segments, therefore, is a critical step in designing and implementing effective and efficient marketing communications. Positioning and targeting decisions are interdependent targeting decisions are made about the intended target markets, while positioning decisions are based on how a brand can be distinguished from competitive offerings. Companies identify potential target markets in terms of demographics characteristics, values and lifestyles, product purchasing behaviour and geographic considerations. It is important to recognise, however, that most profitable segments are not based on a single characteristic, such as gender, age or income. Instead, meaningful market segments generally represent consumers who share a combination of characteristics and demonstrate similar buying behaviours. For example, consider the segmentation implications of a new brand of premium-priced low-fat ice cream. The market segment for this new brand is not just women, not just men, not just younger people or older people, and, in general, not any group of people sharing any single characteristic. Rather, a meaningful segment would possess several or more shared characteristics: consumers who live in urban or suburban areas, earn annual incomes in excess of $75 000, are older than 35 and are health- and weight-conscious. Setting objectives Marketing communicating decisions are based on a brand s underlying goals or objectives and these objectives will be premised on the type of marketing communications to be used. For example, while mass media advertising is suitable for creating consumer awareness of a new or improved brand, point-of-purchase communications are more effective for influencing in-store brand selection, while personal selling is the most effective form of communication for informing B2B customers and retailers about product improvements. The common objectives of each type of marketing communications are: to facilitate the successful introduction of new brands to build sales of existing brands by increasing the frequency of use, the variety of uses or the quantity purchased to inform intermediaries such as wholesalers, agents/brokers and retailers and consumers about brand improvements to enhance a brand s image to generate sales leads to persuade the intermediaries to stock the manufacturer s brands to stimulate point-of-purchase sales to develop brand awareness, acceptance and insistence to increase customer loyalty to improve corporate relations with special interest groups to counter any bad publicity about a brand to create good publicity to reduce the effectiveness of competitors communications efforts, and to provide customers with reasons for buying immediately, instead of delaying a purchase choice. Budgeting Financial budgets are developed to cost effectively achieve the marketing communication objectives. Organisations use different budgeting procedures in allocating funds to marketing communication managers and other organisational units. A top down budgeting (TD) approach is used when senior management decides how much each brand will receive, while a bottom up budgeting (BU) approach determines how much is needed to achieve the product category level objectives. Most budgeting practices involve a combination of top down and bottom up budgeting to establish the total marketing budget. For example, in the bottom up/top down process (BUTD),

15 12 part one the marketing communication process a conceptual framework product managers submit budget requests to the general manager of marketing, who coordinates the various requests and then submits an overall budget to top management for approval. The top down/ bottom up process (TDBU) reverses the flow of influence: top managers first establish the total size of the budget and then divide it among the various product divisions. Research suggests that combination budgeting methods (BUTD and TDBU) are used more often than the unilateral methods (TD or BU). 15 The BUTD process is by far the most frequently used, especially in firms where marketing departments have greater influence than finance units. 16 Figure 1.5 illustrates that summary definition as three interconnected circles. The intersection represents the guiding structure for the implementation decisions about the appropriate mix of marketing communication tools, message development and media placement. Figure 1.5 Guiding structure for marketing communication implementation decisions Position & target (What to say and who to reach) Objective (What to accomplish) Guiding structure Budget (How much to spend) Marketing communication implementation decisions A summary definition of marketing communication decision making is: All marketing communications should be: (1) clearly positioned, (2) directed to a particular target market, (3) created to achieve a specific objective and (4) undertaken to achieve the objective within budget constraints. The fundamental marketing communication decisions are conceptual and strategic, while the implementation decisions are practical and tactical. Strategic marketing communication decisions have long-term effects, generally lasting two or more years, while tactical decisions are based on a budget period, usually no more than 12 months. Marketing communication managers make a variety of implementation decisions to accomplish brand-level objectives and achieve the brand s positioning and targeting requirements. Initially they must choose how best to integrate the various communications elements to achieve target market objectives within budget constraints. Then they must decide what types of messages will accomplish the desired positioning, which media are appropriate for delivering messages and what degree of momentum is needed to support the media effort. Selecting the mix of marketing communication elements The fundamental decision that confronts all organisations is how to allocate resources among the various elements of marketing communications mix: advertising, direct marketing sales promotion, sponsorships, marketing public relations, personal selling, point-of-purchase displays and even public events such as trade shows. For B2B companies, the mixture typically emphasises personal selling with support from trade advertising, technical journals and trade shows. 17 For consumer goods manufacturers, communication decisions are more complex because of the greater number of available options. Personal selling is important for a consumer goods company s push efforts, but the real complexity arises when deciding how best to pull a product through the channel. The terms push and pull are used to capture how marketing communication funds should be allocated. Push suggests a forward movement from a manufacturer to the trade (wholesalers or retailers) and on to the consumer; personal selling to the trade is the primary push technique. Pull means that a manufacturer promotes directly to consumers, in the expectation that the consumers will pressure retailers to stock the promoted product. In fact, manufacturers use a combination of pull and push techniques. These

16 integrated marketing communications and brand equity enhancement chapter one 13 techniques complement one another and are not perfectly substitutable. The issue is often based on how much to allocate to advertising and how much to sales promotion. The trend over the past two decades has been towards greater expenditure on sales promotion and less on advertising. Sales promotion s share of the total marketing communications budget has grown from less than 60 per cent in the late 1970s to approximately 70 per cent today. In simple terms, there is not an optimum mixture of expenditures between advertising and sales promotion, because the marketing communications-mix decision is an ill-structured problem. 18 That means for a given level of expenditure there is no way of mathematically determining the optimum allocation between advertising and sales promotion that will maximise revenue or profit. There are two main factors that affect a mathematically optimum mix. 19 First, advertising and sales promotions are somewhat interchangeable; both techniques can accomplish some of the same objectives and it is therefore difficult to precisely measure which element or combination of elements is best for every marketing situation. Second, advertising and sales promotions produce a synergistic effect because their combined results are greater than what each would achieve and this makes it difficult to determine the exact results that different combinations of advertising and sales promotion might produce. Although it is not possible to determine a mathematically optimum mixture of advertising and sales promotion expenditures, a satisfactory mixture can be formulated by considering the differing purposes of each of these elements of marketing communications. A key strategic consideration is whether short or long-term schemes are more important given a brand s life-cycle stage. An appropriate mix for mature brands is likely to be very different from the mix of marketing communications needed for brands that are in the introduction stage of their life cycle. New brands require larger investment in promotions such as introductory pricing and sampling to generate trial purchases, whereas mature brands may need proportionately greater advertising investment to maintain or enhance the brand s image. Brand equity considerations also play a role in evaluating a satisfactory combination of advertising and sales promotions. Poorly planned or excessive sales promotions can damage a brand s equity by lowering consumers perceptions of its value and that, in turn, affects its image. If a brand is frequently placed on special sale, or if some form of price deal is regularly offered, consumers will often delay purchasing the brand until its price is reduced and this can cause the brand to be purchased more for its price discount than for its non-price attributes and benefits. An effective advertising and promotion mix is summarised in the following quote: Rigid rules, or continuing application of inflexible advertising-topromotion percentages, serve no real purpose and can be quite counterproductive in today s dynamic and ever-changing marketing environment. A short-term solution that creates a long-term problem is no solution at all. 20 The short-term solution refers to spending excessive amounts on sales promotion to create quick sales, while failing to invest sufficiently in advertising to build a brand s long-term equity. Excessive use of sales promotions can diminish a brand s future value. An appropriate mixture involves spending enough on sales promotions to ensure sufficient sales volume in the short term, while simultaneously spending enough on advertising to ensure the growth or preservation of a brand s equity position. Creating messages A second implementation decision is the creation of messages in the form of advertisements, MPR releases, promotions, package designs and any other form of marketing communication messages. Systematic (versus ad hoc) decision making requires the message content in advertisements, promotions, on packages or at events to be predicated on the brand s positioning strategy and aligned with the communications objective for the target audience. Subsequent chapters discuss the development of specific marketing messages. Selecting media All marketing communication messages require some form of media to reach the target audience. Though the term media is typically applied to advertising using television, magazines or radio, the concept of media is relevant to all marketing communication tools. For example, while personal sales messages can be delivered via face-to-face communications or by telemarketing, these media alternatives have different costs and effectiveness. Point-of-purchase materials are delivered via instore signs, electronically, musically and verbally, and each represents a different medium. Detailed discussions of the various types of media are included in subsequent chapters.

17 14 part one the marketing communication process a conceptual framework Establishing momentum The word momentum refers to an object s force or impetus. A train, for example, has momentum as it travels along railway tracks. Marketing communications programs also have a degree of momentum. Simply developing an advertising message, a personal sales presentation or a MPR release is insufficient. The effectiveness of each of these message forms requires both a sufficient amount of effort and continuity of that effort to sustain the marketing communications; insufficient momentum is ineffective at best and a waste of money at worst. Momentum is a relative issue no level of momentum is equally appropriate for all marketing situations. For example, small-share motor-vehicle brands such as Hyundai, Daewoo and Mazda must spend a much larger portion of their sales on advertising than their larger competitors such as Toyota, Holden and Ford. More recent brands, versus mature brands, must spend a larger proportion of their sales to become established and create strong, favourable and perhaps unique brand images. Critical to the concept of momentum is the need to sustain a consistent effort, rather than starting to advertise for a while then discontinuing it for a period and then finally restarting the advertising campaign. Some companies never create or sustain momentum because their presence in the market is inadequate. Out of sight, out of mind is probably more relevant to brands in the market than to people. Brands are easily forgotten if they are not kept in consumers consciousness. Because consumers make hundreds of purchase decisions in many different product categories, they require continuous reminders of brand names and their benefits if those brands are to be considered serious purchase contenders. Marketing communication outcomes The marketing communication decision-making framework in Figure 1.4 indicates that the outcomes of a marketing communications program are twofold: enhancing brand equity and affecting behaviour. The double-headed arrow between these outcomes indicates that each outcome influences the other. If, for example, an advertising campaign for a new brand generates brand awareness and creates a positive brand image, consumers may be inclined to try the new brand. In this situation, the brand s equity has been enhanced, which in turn will determine consumers behaviour towards the brand. Similarly, a sales promotion for a new brand of toothpaste, such as a free sample, may encourage consumers to initially try and subsequently purchase the brand. A positive experience in using the new brand of toothpaste may lead to positive brand perceptions and, if so, the sales promotion has affected consumers behaviour and enhanced the promoted brand s equity. Program evaluation After marketing communication objectives are set, messages developed, the media selected and programs implemented, some form of evaluation must take place. This involves measuring the results of a marketing communication campaign against the marketing and communication objectives. For a local advertiser for example, a sporting goods store that promotes a special on athletic shoes over a two-day period the number of Nike, Reebok, Adidas and other brands of shoes that were sold over that period are part of the marketing objectives. For national manufacturers of branded products, marketing communication results are generally not so easy to measure. Usually a company invests in point-of-purchase communications, promotions and advertising, and then often waits for weeks to see whether these programs actually delivered the desired sales volume. It is critical to evaluate the results of marketing communication efforts because there is increasing company demand for accountability and that requires research be performed and data analysed to determine whether implemented marketing communication decisions have accomplished the objectives they were expected to achieve. Results can be measured in terms of marketing or behavioural impact (such as increased sales) or be based on communication outcomes (such as changes in consumers awareness or attitudes towards the brand). Measures of communication outcomes include brand awareness, message comprehension, attitude towards the brand and purchase intentions. These are communication, rather than marketing or behavioural, objectives in the sense that an advertiser has attempted to communicate a certain marketing message argument to the target market. The goal, therefore, for an advertiser of a relatively unknown brand could be to increase brand awareness in the group target market consumers by 30 per cent within six months of starting a new advertising campaign. This objective of a 30 per cent increase in awareness would be based on knowledge of the awareness level prior to the campaign s debut, and post-campaign measurement would then indicate whether the communication objective was achieved.

18 integrated marketing communications and brand equity enhancement chapter one 15 Failure to achieve the targeted results requires prompt corrective action (see the dashed arrow in Figure 1.4). Corrective action might call for greater investment, a different combination of the marketing communications elements, a revised creative strategy, different media allocations or a more detailed analysis of the target market. Only by systematically setting objectives and measuring results is it possible to know whether marketing communication programs are working as well as expected and how future efforts can improve on the past. 21 A fundamental IMC principle is that marketing communication efforts must ultimately be gauged by whether they affect consumers behaviour. Sales promotion is the element of marketing communications most capable of directly affecting consumers behaviour. However, over-reliance on promotions can injure a brand s reputation by creating a low-price and perhaps low-quality image. For this reason, it is important to enhance a brand s equity as the foundation for influencing consumer behaviour. It can be argued that most, if not all, marketing communication efforts are designed to enhance brand equity. the concept of brand equity To understand the concept of brand equity requires a clear understanding of the term brand. The American Marketing Association defines a brand as a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition. 22 A brand therefore exists when a product, retail outlet or service receives its own name, term, sign, symbol or design, or any particular combination of these elements. Brand equity has been defined in many ways and numerous approaches have been developed to measure it. 23 The concept of brand equity can be considered both from an organisation s and the consumer s perspective. 24 From the organisation s perspective, brand equity focuses on outcomes extending from efforts to enhance a brand s equity, such as achieving a higher market share, increasing brand loyalty and being able to charge premium prices. 25 brand equity IMC in Action How social media can influence a marketing campaign There are three stages in developing an effective marketing communications campaign in other words, telling your target market customers about the benefits of your product. The first stage is engaging the target market in the marketing campaign to let them know that you, as a marketer, understand their needs, wants and aspirations. A well-known manufacturer with an Australian brand that has been called iconic decided that its product needed a lift and held a competition for consumers to name the new product. The manufacturer was Kraft Australia; the brand was Vegemite and the product was the familiar savoury spread that had cream cheese added to its ingredients. The company believed that consumers who took part in the competition would develop an increased awareness of the new product, and that they would experience sensory stimulation and build some form of emotional attachment to the brand; all of which would contribute to their levels of engagement with the brand. The second stage is informing, and in the case of Vegemite, Kraft informed its customers about the brand, attributes and benefits of the new vegemite, and how those product characteristics represented value. The final stage of developing effective marketing communications is the action; that is, the customers purchase behaviour that they should take after exposure to Kraft s marketing communications. Consumers will purchase the product if they believe that Vegemite will satisfy their needs, wants and aspirations. a Kraft decided to call the new vegemite isnack 2.0. As it turned out, many consumers went online to angrily protest about the company meddling with the established Vegemite brand name. Kraft admitted its error and four days later pulled the isnack 2.0 brand name, confirming the power of social media to influence corporate branding decisions. In hindsight, why do you think that Kraft passed the product development and re-branding tasks of the new vegemite to the market? b a Based on: Three stages of marketing to real people, by Michael Kiely, Marketing, October 2009, p. 59 b Source: Web-emites take snack attack to new level, 2 October 2009 (Accessed 15 March 2010)

19 16 part one the marketing communication process a conceptual framework brand awareness From the consumer s point of view, a brand possesses equity to the extent that they are familiar with the brand and hold favourable, strong and unique brand associations about that brand. 26 Brand equity from the consumer s perspective therefore consists of two forms of brand knowledge: brand awareness and brand image. For example, Adidas is a German brand of athletic shoes and sports apparel. During one year in the late 1990s its advertising budget increased by 25 per cent over the previous year s budget. Adidas s director of sales and marketing explained that the significant increase in advertising was to raise consumer awareness of the Adidas name and to reinforce the message that Adidas is an authentic and high-performance athletic shoe. 27 The sales and marketing director did not directly refer to brand equity, but what he was talking about in raising awareness and conveying a desired performance image for the Adidas brand is what constitutes brand equity. The consumer-based brand equity framework shown in Figure 1.6 illustrates the two dimensions of brand knowledge: brand awareness and brand image. Brand awareness Brand awareness relates to whether a brand name comes to mind when consumers think about a particular product category and the ease with which that name is evoked. When you think of toothpaste, which brands come to mind? Colgate and Macleans probably came to mind because those brands are market share leaders. But did you also consider Listerine or Aim? These brands are not as widely known or as frequently purchased as their more successful counterparts, and as such they have less brand equity than Colgate and Macleans. Brand awareness is therefore the basic dimension of brand equity. From an individual consumer s perspective, a brand has no equity unless she or he is at least aware of the brand. Achieving brand awareness is the initial challenge for new brands, while maintaining high levels of brand awareness is an ongoing task for all established brands. Figure 1.6 A customerbased brand equity framework BRAND AWARENESS Brand recognition Brand recall BRAND KNOWLEDGE Attributes Non-product-related (e.g. price, packaging, user and usage imagery) Product-related (e.g. colour, size, design features) BRAND IMAGE Types of brand associations Favourability, strength and uniqueness of brand associations Benefits Overall evaluation (attitude) Functional Symbolic Experiential Source: Journal of marketing by AMERICAN MARKETING ASSOCIATION. Copyright 1993 Reproduced with permission of AMERICAN MARKETING ASSOCIATION in the format Textbook and CD ROM via Copyright Clearance Center. brand recognition brand recall Figure 1.6 shows two levels of awareness: brand recognition and brand recall. Brand recognition reflects a relatively superficial level of awareness, whereas brand recall elicits a deeper form of awareness. Consumers may be able to identify a brand if it is presented to them on a list, or if cues are provided. However, fewer consumers can retrieve a brand name from memory without any reminders or cues. It is this deeper level of brand awareness that is, brand recall that is the objective of IMC. Through effective and consistent marketing communication efforts, some brands are so well known that nearly every adult consumer can recall the brand. For example, most people who are conscious of

20 integrated marketing communications and brand equity enhancement chapter one 17 computers would be likely to include Windows if they were asked to name a computer operating system. Asked to name brands of athletic footwear, most people would mention Nike, Reebok and perhaps Adidas. The marketing communications imperative is to move brands from a state of unawareness, to recognition, on to recall and ultimately to top-of-mind awareness (TOMA). This pinnacle of brand-name awareness occurs when a company s brand is the first brand that consumers recall when thinking of a particular product category. Figure 1.7 illustrates this brand awareness progression. It is not only consumer-oriented (B2C) firms that are concerned with building brand awareness. A survey of B2B marketing personnel found that the majority of these practitioners consider the main goal of B2B advertising is to create awareness of a new product or brand. Those same practitioners also believe that building brand image is another goal of B2B marketing communication efforts. 28 As a concluding statement about the importance of building brand awareness, it is useful to recall the dot.com advertising fiasco that occurred in recent history. Many start-up dot.com companies invested heavily in advertising to build brand awareness in the belief that brand awareness alone would ensure the flows of revenues and profits needed to establish their viability. Unfortunately, especially for the individuals who invested in those companies, that was not the case. Topof-mind awareness (TOMA) Brand recall Brand recognition Unaware of brand Figure 1.7 The brand awareness pyramid Source: Reprinted with the permission of The Free Press, a Division of Simon & Schuster Adult Publishing Group, from Managing Brand Equity: Capitalizing on the Value of a Brand Name by David A. Aaker, Copyright 1991 by David A. Aaker. All rights reserved Asia Pacific Focus Vodafone: A new brand in a new market Simon Cliffe, University of Auckland Although Vodafone was well established overseas when it acquired BellSouth New Zealand in 1998, Vodafone entered the New Zealand mobile phone market as a virtual unknown. Initial surveys showed that only 2 per cent of people had ever heard of Vodafone. After only three months, the same surveys showed brand recognition of 94 per cent. From an initial customers (20 per cent of the market in 1998), Vodafone had grown its base to 1.83 million customers (over 56 per cent market share) by December In doing so, Vodafone had built one of the strongest brands in the New Zealand marketplace and had grown to become a significant rival to the old state-monopoly-turnedmultinational telecommunications corporation Telecom New Zealand, which is the other major mobile telecommunications provider. But how did Vodafone build such a strong brand as well as triple-digit customer growth over this period? Vodafone simply built a very strong and differentiated brand in the marketplace by adopting a strong IMC approach combined with the use of innovative ideas to ensure its communications reached its target audience. That was different from its major competitor Telecom, which was perceived by many consumers to be unfriendly, old and uncool. Vodafone s brand essence was youthful spontaneity and the company sought to communicate this wherever possible. When Vodafone entered the market, it literally entered overnight in what has been coined the red weekend. Over the space of two days all BellSouth signage and branding was replaced with Vodafone messages, including the corporate letterheads. The company was immediately delivering its brand essence. To publicise the name change, it developed a campaign that used the catchphrase Great things happen when you change your name. Various media, such as TV and billboard advertisements, were together used to reach target audiences. In building the awareness and image of its brand, Vodafone s main weapon was the string of high-profile sponsorships it acquired over the subsequent months. Deals were signed with New Zealand Warriors rugby league team; Silver Ferns, the national netball team; a number of rugby sponsorships; and a Dragon Boat Festival, to name a few. The acquisition of sports sponsorships was a deliberate ploy. New Zealand is a sportsmad country. Vodafone involved itself in heavily sponsoring New Zealand sport so that it would (1) be able to break through advertising clutter and get its brand quickly recognised in the marketplace, while (2) building a brand that resonated with