Chapter The Role of Marketing An Introduction to Integrated Marketing Communications - Exchange: Two or more parties give something that has value to one another and it is a way to communicate among parties. It is the basic marketing activity to build and maintain relationships with customers. - Marketing: It is a set of institutions, activities and processes for creating, delivering and exchanging valuable offerings for customers, clients, partners and the society. - Value: It is the difference between all the benefits that the customers perceive from the product or service and all the costs that the customers give up for getting and consuming it. o Benefits Functional product performance Experiential feelings when using the product Psychological feelings when owning a particular brand o Costs Money paid for the product or service Getting information about the product or service Purchasing the product or service Learning how to use the product Maintaining the product Disposing of the product The Marketing Mix The combination of four elements; product, price, distribution and communication for potential exchange with consumers in the market. Marketers need to know about the issues and options in each element and aware of how they combine in order to set effective marketing program to deliver value to customers. Marketers must do consumer research to analyze the market and use the information to develop marketing strategy and marketing mix. Integrated Marketing Communications IMC process involves different promotional elements and many marketing activities that communicate with the customers. IMC process is used to plan, develop, execute and evaluate coordinated measurable, persuasive brand communication programs with consumers, customers, prospects, employees, associates and relevant internal and external audiences so as to generate both short-term return on investment and long-term brand and shareholder value. Growing importance of IMC Companies can take advantage of synergy among promotional tools, develop more effective and efficient marketing communication programs, avoid duplication.
2 The role of IMC in branding The combination of several factors; name, logo, symbols, design, packaging, performance, image if product of service and any association that consumers have in mind when thinking of a brand is called brand identity. The Promotional Mix: The Tools for IMC - Promotion: The unity of seller initiated efforts to set up information and persuasion channels so as to sell products and services and to promote idea. - Promotional mix: The basic tools that the companies use to accomplish their communication objectives. There are six elements in promotional mix. Advertising It is a form of nonpersonal communication about company, product, service and idea paid by an identified sponsor. Advertising involves mass media; TV, radio, magazines, newspapers so that the message is transmitted to large groups of audience at the same time. But there is no immediate feedback from the audience. o Advertising to consumer markets National advertising: Advertisement that is broadcast nationwide on prime-time TV by famous companies. Retail/local advertising: Advertisement that is done by retailers or local stores. Primary-demand advertising: Advertisement that is broadcast to encourage consumer s demand in an entire industry. Secondary-demand advertising: Advertisement that is broadcast to create consumer s demand for a specific brand. o Advertising to business and professional markets Business-to-business advertising: Advertisement that is broadcast to encourage company s demand of industrial goods and services. Professional advertising: Advertisement that is done for professionals to encourage them to buy products for their business operations. Trade advertising: Advertisement that is done for members in marketing channel to encourage them to promote and resell the company s branded products to the final customers. Direct marketing Companies communicate with their target market directly in order to get the response and transaction. For example, database management, direct selling, telemarketing, print media, direct response ads, direct mail and the Internet. Digital/Internet marketing o Interactive media: It is two way communication that users can participate and modify information content that they receive in real time. o Social media: Online communication and interaction among people to create, share and exchange content. Sales promotion It provides extra value and incentives to the salespersons, distributors and ultimate consumer to stimulate immediate sales in limited time.
3 o Consumer-oriented sales promotion o Trade-oriented sales promotion Publicity/public relations o Publicity: It is a form of nonpersonal communications in which the company, product, service or idea do not paid for or run under an identified sponsor. o Public relations: It is management function that evaluates attitudes of the public, identifies individual s and organization s policies and procedures with public interest and executes action program to get public understanding and acceptance. Personal selling It is a form of person-to-person communication that the seller tries to persuade the prospects to buy the company s product or service. IMC Audience Contact Tools The following means of communication are used to reach the target audience. - Broadcast media - Print media - Publicity/public relations - Digital marketing - Direct marketing - Sales promotion - Product placements - Branded entertainment - Events and sponsorships - Word of mouth - Point-of-purchase - Personal selling - Out-of-home media The IMC Planning Process. Review of marketing plan The company analyzes the situations in detail, sets specific marketing objectives, sets marketing strategy and program, uses the program to implement the strategy, monitors and evaluates performance. 2. Promotional program situational analysis - Internal: The company uses its own promotional capabilities, reviews its previous programs and results, assesses its brand image, strengths and weaknesses of its products or services. - External: The company analyzes its customers, competitors and the environment. 3. Analysis of communications process The company make communication decisions. 4. Budget determination 5. Develop the IMC program The company uses IMC strategies of creative and media.
4 6. Monitor, evaluate and control The company determines whether the program is doing well or not, corrects the problems, gains management feedback and creates input for future strategy and promotion. Chapter 2 The role of IMC in the marketing process Marketing and promotions process model Marketing Analysis. Opportunity Analysis This is the analysis of marketplace. We do this to find market opportunity so that we can fulfill the gap in terms of customers need, satisfaction, trend, demand, etc. 2. Competitive Analysis Identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product or service. This will help you to know your competitors and know your company so as to go beyond your competitors. http://www.entrepreneur.com/encyclopedia/competitive-analysis
5 3. Target Market selection Next step after you evaluate yourself and your competitors, you have to define your target market to aim your focus and plan what you have to do to achieve this market. It is better to set object and KPI s. The target market identifying will help you to create appropriate ads to attract the consumers. The Target Marketing Process The Target Marketing Process. Identify markets isolate consumers with similarity. The more common ground with consumers, the more marketers able to reach and accomplish them. 2. Determining Segmentation dividing the consumer into distinct group which carry common needs, and respond to marketing action. a. Criteria to determine segment Customer Characteristics - Geographic: region, city size, density - Demographic: gender, age, race - Socioeconomic: income, education - Psychographic: personality, lifestyle Buying Situation - Outlet type: in-store, direct - Benefits sought: product feature, need - Usage - Awareness and intention: product knowledge - Behavior: involvement 3. Selecting a Target Market which segment has more potential a. Entering the segments - Undifferentiated marketing- one product sells to whole market - Differentiated marketing has numerous segments, match product or service to each segment respectively - Concentrated marketing one segment, attempt to be leader in market share
6 4. Market Positioning setting product or service to segments to complete with competitors - Positioning by product attributes and benefits position the products based on the benefit due to salient attributes, the important benefit affected on purchasing decision - Positioning by price focus on price sensitivity of consumers - Positioning by use make the product to be used in specific purpose such as car perfume - Positioning by product class - Positioning by product user focus on the target group of users such as celebrities, rich people - Positioning by competitor position the product to the same category as competitors - Positioning by cultural symbols create meaning and uniqueness for the product - Repositioning change the position of the product. Product decision Marketing Planning Program Product is not just the object to sell but it is the value and benefit deliver to customers, the product decision will help marketer to be able to make money from selling the products. a. Branding building and maintaining the company s image in customers mind. It includes brand identity which consists of name, logo, symbols package, anything related to the company, to create awareness and interest. Moreover, it carries brand equity which is building and fostering relationship with customers. b. Packaging it provide functional benefits such as economy, protection, and storage and creating need at the pointing of purchase. 2. Price decision Consumers may not buy the product because of their price sensitivity. To make effective pricing strategy, marketers must consider these factors; cost, demand, competition, and perceived value. 3. Distribution Channel Marketing channel is the place that the product is available for use or consumption. a. Direct channel it is the direct-selling system which mostly used by the company that sell expensive and complex product. Indirect channel usually using network of wholesalers or retailer. It means the company sells its product to the retailers and the retailers resell the product again.
7 Chapter 3 Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communications Organizations Marketing Communication Process The participants in marketing communication process are advertiser, advertising agency, media organization, marketing communication specialist organization, collateral services. But the key participants in marketing communication process are the clients or the advertisers. They want to market products or services and pay for advertising and promotions. Many companies use outside firms or advertising agency to create and produce communication messages and provide service of marketing and promotion process. Marketing Communication Model Noise Source Message Communication Channel Receiver Feedback Participants in the Integrated Marketing Communication Process. Advertisers/ Clients They are the major participants in the process that have the products, services, causes to be marketed. They provide funds for advertising and promotions. They develop the marketing program and make the final decisions. 2. Advertising agencies There are four types of advertising agencies as follows. o In-house agencies: The company has its own advertising agencies internally. In-house agency is set up, owned and operated by the advertiser. o Full-service agencies: They offer full range of marketing, communications and promotions services. They plan, create, produce advertising, perform research and select media. They are made up of different departments to provide needed activities in order to perform the various advertising functions to serve the client. The departments included are account services, marketing services, creative services, management and finance. o Creative boutiques: They are a small advertising agency which provide creative services only. They have better access to creative talent and can turn out inventive creative work quickly. o Media specialist companies: They specialize in buying media like radio and TV time. And they specialize in analyzing and purchasing advertising time and space. They are compensated with fee or commission.
8 3. Media organizations They provide information or entertainment to their subscribers, viewers and readers. They also provide entertainment for the firm s marketing communication message. The advertisers and advertising agencies buy time and space with them. 4. Specialized services They provide specialized services in different functions that complement the efforts of advertising agencies. o Direct marketing agencies: They provide various services such as direct mail, database analytics and management, research, media services, creative and production capabilities. o Sales promotion agencies: They provide the services needed to plan, develop and execute many sales promotion programs. o Public relations firms: They develop and implement programs to manage the organization s publicity, image and affairs with consumers and other relevant publics. o Digital/ Interactive agencies: They are specialized in the development and strategic use of various digital marketing tools like websites, banner ads, search engine optimization, mobile marketing and social media campaigns. 5. Collateral services They are the final participants in the process that include marketing research companies, package design firms, consultants, photographers, printers, video production houses and event marketing services firms. Agency Compensation Methods Commission from media Fee, cost and incentive-based systems Percentage charges Gaining and Losing Clients The agencies lose clients because of the following reasons. - Poor performance or service - Poor communication - Unrealistic demand by the client - Personality conflicts - Personal changes - Change in size of the client or agency - Conflicts of interest - Changes in the client s corporate and marketing strategy - Declining sales - Conflicting compensation philosophies - Changes in policies - Disagreements over marketing and creative strategy - Lack of integrated marketing capabilities The ways that the agencies gain clients are as follows.
9 - Referrals - Solicitations - Presentations - Public relations - Image and reputation
0 Chapter 4 Perspectives on Consumer Behavior What is consumer behavior? The study of consumers and the processes they use to choose, use (consume), and dispose of products and services. 2 Figure4- A Basic Model of Consumer Decision Making. Source of problem recognition. Out of stock when consumers use their products till it is all out, it is simple that consumers will repurchase what has been used..2 Dissatisfaction Consumers will buy when they do not satisfied with the current product or the products being used..3 New needs/want It is the purchase that depend on consumer changed. However, consumers may buy according their want, a desire to possess something they do not have aside from basic needs..4 Related products/ purchases It is a need for accessories used with main product such as mobile and cover..5 Market-Induced Problem Recognition Marketers encourage consumers to buy via ads, changes in fashion..6 New product When there is a new product that capture attention, consumers will generate need. 2 http://www.marketingteacher.com/what-is-consumer-behavior/
Maslow s Hierarchy of Needs 2. Information Search consumers are looking for details about products services to satisfy their need so as to make decision. 2. Internal Search Consumers gather the information from their memory, experience. 2.2 External Search Consumers gather information via these sources - Internet source website, social network - Personal source friends, cousin, colleague. - Public source article inside magazine, newspaper, TV - Personal experience - examining, testing the products. Perception the process in which consumers receive, select, organize, and interpret information so as to create picture of something. Sensation the immediate direct response of senses (taste, smell, sight, touch, and hearing)
2 3. Alternative Evaluation 3. The Evoked Set -the set of product choices that you believe are viable options for you to purchase based upon your needs and desires relating to the product. 3 3.2 Evaluation Criteria the various aspects consumers used to assess the different products in order to compare the alternatives. Types of Consequences. Functional Consequences the outcomes of products or services that directly experienced by consumers. 2. Psychosocial Consequences - the outcomes of products or services that generated from consumers feeling. 4. Purchase Decision 4. Purchase intention matching purchase motive with characteristics of brands under consideration. It is different actual purchase in term of the purchase intention may need addition decisions. 4.2 Brand Loyalty - Brand loyalty is a result of consumer behavior and is affected by a person's preferences. 4 It occurs when customers continue buying the products with the same brand without price or any things concerns. 5. Post purchase Evaluation the level of experience after using the products or services. Possible outcomes. Satisfaction Expectation > Actual Experience = Dissatisfaction Expectation Actual Experience = Satisfaction 2. Cognitive Dissonance - describe the feelings of discomfort that result from holding two conflicting beliefs (in this case it means products). For example, you planned to buy the new IPhone 6 which will have a grand sale on February 23, at 8.00 am. Then, you went to the Apple shop and the salesperson told you that they had already sold all the phones. You was very upset and went back home. There were inconsistency between your expectation and your experience. You are suffering from the uncomfortable, unpleasant state of cognitive dissonance. 3 http://education-portal.com/academy/lesson/evoked-set-in-marketing-definition-lesson-quiz.html 4 http://www.investopedia.com/terms/b/brand-loyalty.asp
3 The Consumer Learning Process The knowledge or experience after consuming the products or service which will be applied to future behavior. Environmental Influences on Consumer Behavior
4 The Nature of Communication Chapter 5 The Communication Process Communication is the passing of information, the exchange of ideas and the process of establishing thoughts between two parties, sender and receiver. The communication process is very complex. The success depends on the nature of the message, the audience s interpretation and the environment in which the message is received. The Basic Model of Communication. Source encoding The source or sender has information to share with another person or group of people. The source can be both individual (spokesperson) and nonpersonal entity (corporation/ organization). The receiver s perceptions of the source influence how the communication is received. The communicator should be knowledgeable, trustworthy and relate in some manner. For encoding, it is the process of putting thoughts, ideas or information into the symbolic form in the way that the receivers will understand by the words, signs and symbols. 2. Message Message contains the information or meaning that the source hopes to convey. It can be verbal, nonverbal, oral, written or symbolic. 3. Channel It is a method by which the communication travels from the sender to the receiver. For nonpersonal channels, it uses mass media, print media and broadcast media, to direct to a number of people at one time. 4. Receiver Receiver is the person, mostly are consumers, whom the sender shares thoughts, ideas and information. Decoding is the process of transforming the sender s message back into thought. 5. Noise Noise is unplanned distortion, inference, distractions, errors or problems that occur in the encoding of the message at the point of reception. 6. Response/ feedback Response is the receiver s set of reactions after seeing, hearing or reading the message. Feedback is the receiver s response which is communicated back to the source. Analyzing the Receiver
5 To analyze the audience, the marketers need to identify the target audience. The company s advertising and promotional efforts to focus on the target audience. The target audience are ranked from small groups to big groups. The groups are individual and group audiences, niche markets, market segments and mass markets. The Response Process AIDA model is the personal-selling process through attention, interest, desire and action. First, the company gets the customer s attention. Then, it arouses them some interest in the company s product. Next, it create desire to own or use the product. Lastly, it makes customers take action by get ing them make a purchase decision. The alternative response hierarchies are as follows. - The standard learning hierarchy: The consumers go through the response process in the sequence depicted by the traditional communication model, learn feel do. - The dissonance/ attribution hierarchy: the consumers behave, develop attitudes or feelings and learn information that support the behavior. Do feel learn. - The low-involvement hierarchy: The product in the purchase process is low involvement and there are minimal differences among brands. Learn do feel. The Cognitive Response Approach Cognitive response in the thoughts that occur while reading, viewing and hearing communication that can be measured by having consumers write down or verbally report reactions to the message. - Product/ message thoughts Counterarguments thoughts the recipient has that are opposed to the claim made in the message. Support arguments thoughts that affirm the position taken in the message. - Source-oriented thoughts Source derogations negative thoughts about the spokesperson or company making the message, so they are annoying and untrustworthy. Source bolsters favorable thoughts to the source of the message. - Ad execution thoughts Ad execution-related thoughts can be either favorable or unfavorable attitudes toward the advertisement and the brand. Attitude toward the ad feelings of favorability or unfavorability toward the advertisement. The Elaboration Likelihood Model ELM is the differences in the ways that consumers process and respond to the persuasive message. The change in attitude depends on the amount and nature of elaboration. There are two elements in ELM, motivation and ability. And there are two basic routes to persuasion or attitude change. The first one is central route to persuasion where
6 the receiver has high ability and motivation to attend, comprehend and evaluate messages. The second one is peripheral route to persuasion in which the receiver lack of motivation and ability to process information. They are not likely to engage in detailed cognitive processing. ELM also has important implications for marketing communication. If the level of involvement is low, peripheral cues are more important than detailed message arguments. But if the level of involvement is high, the advertisement should contain strong arguments which are difficult for the message receivers to refute.
7 Chapter 6 Source, Message, and Channel Factors Promotional Planning Through the Persuasion Matrix. Receiver/comprehension: Can the receiver comprehend the ad? Marketers should know their target market so as to create their message clear and understandable 2. Channel/presentation: Which media will increase presentation? Marketer must consider which media channel will be most effectively used to attract the target consumers such as TV commercial or magazine. 3. Message/yielding: What type of message will create favorable attitude? Marketer must create message that generate persuasion and positive feeling to consumer. 4. Source/attention: Who will be effective in getting consumers attention? Marketer must select effective source to capture consumers attention. For example, using famous athletic in sport advertisement. Source Factors Source means a person involved in marketing communication. There are 2 levels of involvement. Direct source: A person or endorser delivers or demonstrates the product him/herself e.g. James Jirayu demonstrated the feature of Toyota Altis. 2. Indirect source: a model does not deliver a message directly but draw attention instead e.g. Barcelona FC advertises Pepsi ads.. Source Creditability Creditability is the degree to which people believe and trust what other people and organizations tell them about a particular product or service. Applying Expertise using people in advertisement according to or bases on their experts e.g. Colgate advertise its toothpaste by always saying that the all toothpaste products were recommended by dentist. Applying Trustworthiness asides from the expertise, marketer must use people whom gain consumers trust such as Johnny Walker once used Raewat Puttinan looked alike, one of GMM founders to give a speech about ambition and confidence because most people trust and rely on him. Using Corporate Leaders as Spokespeople the company creates creditability by using their CEO or president to promote the product such as Nok Air used Mr. Patee Sarasin, CEO run the advertisement. 2. Source Attractiveness. Similarity representing the sense of similarity between consumers and marketer e.g. Tiger Wood in Nike.
8 2. Familiarity knowledge that consumers gain through the exposure of products or services. 3. Likeability using spot person whom admired or influences the consumers to enhance consumers perception in term of image and performance Drawbacks of using endorsers. Overshadowing the Product Consumer may focus more on the endorsers than the product. 2. Overexposure - sometime consumers do not believe in product because they know that the celebrities are paid to promote the product e.g. Nutrition food product. 3. Target Audiences Receptivity Consumers may not feel involve with the brand endorser such as using endorsers who do not match with the product. Choosing a Celebrity Endorser The most important key is that the celebrity must match with target audience, product, brand, image of celebrity, cost, trustworthiness, risk of controversy, and familiarity and likeability between audiences and celebrity. 3. Source Power occurs when someone can administer rewards and punishment to the receiver 3. Perceived control source is perceived as being administered positive or negative to receiver. 3.2 Perceived concern source follows what consumers attention or not 3.3 Perceived scrutiny The receiver s estimate of the source s ability to observe conformity. 3.4 Compliance source has power to influence consumers. Message Factors. Message Structure message should be focus on content, structure, and appeal. Order of Presentation - Primacy effect - Putting the strong point in a correct position such as in the beginning. - Recency effect Putting most persuasive message at the end of Ads. Ad message recall as a function of order of presentation 2. Message Sidedness 2. One-sided message the ads that mention only benefit or positive view of the product e.g. Dentiste (toothpaste) advertise its message by telling the benefit to reduce mouth odor in the morning.
9 2.2 Two-sided message the ads that mention both positive and negative point e.g. Lifely, elder pamper, the narrator tells not to use the product while the video explains how to use the product. 3. Message Appeal it is designed according to consumers logic such as emotion, rational. Source: Rajesh Kumar, Professor of Marketing management, IMC, Branding & Strategic Management at IMT-Ghaziabad CDL (DIMS) & IP University Differences in Information Processing Effect of Alternative Mass Media. Information in printed ads this information is self-paced; readers can read, interpret, make understand, etc. anytime they want and as many as they can such as magazine, newspaper, and email. 2. Information from broadcasting media this information is externally paced; the ads are controlled by the medium which means that audiences are limited to watch such as ads in television, radio.
0 2 Effects of Context and Environment The environment and context inside the ads may influence the ads that cause how audiences interpret the message. All of that create qualitative media effect means that the medium of message affect the efficiency of ads. For example, restaurant ads will be most effective in Food magazine, women cosmetic in CLEO. Clutter It is defined as number of ads within the medium. It should be enough amount of ads but not too many. For example, if there are 0 ads consistently displayed from the st page to 0 th page, the reader may stop reading or forget the very first ads because they have seen lots of ads with 0 p
2 Chapter 7 Establish Objectives and Budgeting for the Promotional Program The Value of Objectives - Communications: IMC programs have the objectives of facilitating coordination of various groups involved in the campaign as there are many people working on planning and developing IMC programs. - Planning and decision making: The objectives guide development of IMC plan and for decision making. The firm s promotional strategy should be based on the establishment of objectives. - Measurement and evaluation of results: The objectives also provide benchmark against which the success or failure of promotional campaign can be measured. Integrated Marketing Communications Objectives. Marketing objectives focus on specific measurable results like sales volume, market share, profits, return on investment, etc. 2. Integrated marketing communication objectives focus on particular communications tasks required to deliver the appropriate messages to the target audience. 3. Sales-oriented objectives require economic justification and based on the achievement of sales results. The factors that influence sales to increase or decrease are product quality, price, distribution, advertising and promotion, competition, technology and the economy. Communications Objectives Advertising and promotional efforts are designed to achieve brand knowledge and interest, favorable attitudes and image, and purchase intentions. They provide relevant information and create favorable predispositions toward the brand before purchase will occur. As consumers pass through three successive stages; cognitive, affective and conative, they move closer to making a purchase. Characteristics of Objectives - Concrete, measurable tasks: The message that the advertiser wants to communicate to the target audience. - Target audience: The target audience must be well-defined based on descriptive variables like demographics, psychographics, behavior, usage rate and benefits sought. - Benchmark and degree of change sought: Benchmark measure gives the promotional planners basis for determining what communications tasks that are needed to be accomplished for particular objectives.
2 2 - Specified time period: Appropriate time periods depends on the situation that the advertisers face and the type of response being sought. Zero-Based Communications Planning In involves determining what tasks need to be done which marketing communications functions should be used and to what extent. Budgeting Approaches. Top-down approaches The budgetary amount is established by executive level, then the money are passed down to the various departments. Affordable method It is all-you-can-afford method in which the firm uses the money left from other departments to invest in promotion. Arbitrary allocation The budget is determined solely by management what is felt to be necessary. Percentage of sales The budget is based on sales of the products. Competitive parity The budget is based on what the competitors allocate. Return on investment The additional investments in advertising lead to the incremental sales. 2. Build-up approaches It is the objective and task method of budget setting. It consists of three steps. First of all, defining the communications objectives to be accomplished. The second step is determining the specific strategies and tasks. The final step is estimating the costs associated with performance of these strategies and tasks. Allocating the Budget. Client-agency policies It is the individual policy of the advertising agency or the company. 2. Market size The size of the market affect the decision making. 3. Market potential some markets have higher potential than others. 4. Market share goals The goals are keeping and increasing market share. Organizational Characteristics There are several factors that influence the decision of allocating advertising and promotion budget as follows. - The organization s structure - The organization s power and politics - The use of expert opinion - The decision maker s characteristics - Approval and negotiation channels
3 2 - Pressure on senior managers to arrive at the optimal budget