McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 14, YOU SHOULD BE ABLE TO: LO1 LO2 LO3 Discuss integrated marketing communication and the communication process. Describe the promotional mix and the uniqueness of each component. Select the promotional approach appropriate to a product’s target audience, life-cycle stage, and channel strategy. 14-2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 14, YOU SHOULD BE ABLE TO: LO4 Describe the elements of the promotion decision process. LO5 Explain the value of direct marketing for consumers and sellers. 14-3 GET ENGAGED…IN THE TWITTERVERSE! 14-4 LO1 THE COMMUNICATION PROCESS Promotional Mix • Inform Prospective Buyers • Persuade Them To Try • Remind Them of the Benefits Integrated Marketing Communications (IMC) 14-5 FIGURE 14-1 The communication process consists of six key elements 14-6 LO1 THE COMMUNICATION PROCESS Communication Source Message Channel of Communication Receivers 14-7 LO1 THE COMMUNICATION PROCESS Field of Experience Encoding Feedback Decoding Response Noise Feedback Loop 14-8 LO1 The North Face Ad Who is the source? What is the message? How would you decode this ad? 14-9 FIGURE 14-2 The five elements of the promotional mix 14-10 LO2 THE PROMOTIONAL ELEMENTS ADVERTISING Mass Selling Advertising vs. Customized Interaction • Paid Aspect • Advantages • Nonpersonal • Disadvantages 14-11 LO2 THE PROMOTIONAL ELEMENTS PERSONAL SELLING Personal Selling • Wasted Coverage • Advantages • Disadvantages 14-12 LO2 THE PROMOTIONAL ELEMENTS PUBLIC RELATIONS Public Relations • Publicity • Advantages • Disadvantages 14-13 LO2 THE PROMOTIONAL ELEMENTS SALES PROMOTION AND DIRECT MARKETING Sales Promotion • Advantages • Disadvantages Direct Marketing • Advantages • Disadvantages 14-14 LO2 IMC—DEVELOPING THE PROMOTIONAL MIX THE TARGET AUDIENCE Determine the Balance of the Elements Coordinate the Promotional Effort Assess Target Audience Characteristics • Consumers • Businesses 14-15 MARKETING MATTERS LO2 How Can You Reach Generation Y? With Mobile Marketing! 14-16 LO3 IMC—DEVELOPING THE PROMOTIONAL MIX THE PRODUCT LIFE CYCLE Introduction Stage Growth Stage Maturity Stage Decline Stage 14-17 FIGURE 14-3 Promotional tools used over the product life cycle of Purina Dog Chow 14-18 LO3 IMC—DEVELOPING THE PROMOTIONAL MIX CHANNEL STRATEGIES Push Strategy Pull Strategy • Direct-to-Consumer 14-19 FIGURE 14-4 A comparison of push and pull promotional strategies 14-20 FIGURE 14-5 The promotion decision process includes planning, implementation, and evaluation 14-21 LO4 DEVELOPING AN IMC PROGRAM IDENTIFYING THE TARGET AUDIENCE Target Audience Behaviorial Targeting 14-22 LO4 DEVELOPING AN IMC PROGRAM SPECIFYING THE PROMOTION OBJECTIVES Hierarchy of Effects • Awareness • Trial • Interest • Adoption • Evaluation 14-23 LO4 DEVELOPING AN IMC PROGRAM SETTING THE PROMOTION BUDGET Percentage of Sales Budgeting Competitive Parity Budgeting • Matching Competitors • Share of Market All-You-Can-Afford Budgeting Objective and Task Budgeting 14-24 LO4 USING MARKETING DASHBOARDS How Much Should You Spend on IMC? Promotion-to-Sales Ratio Total Promotion Expenditures ($) 100 Total Sales ($) Promotion-to-Sales Ratio (%) = 14-25 LO4 DEVELOPING AN IMC PROGRAM Selecting the Right Promotional Tools Designing the Promotion Scheduling the Promotion 14-26 LO4 EXECUTING AND ASSESSING THE PROMOTION PROGRAM Pretesting Posttesting IMC Audit 14-27 LO5 DIRECT MARKETING The Growth of Direct Marketing The Value of Direct Marketing • Direct Orders Priceline Ad • Lead Generation • Traffic Generation Technological, Global and Ethical Issues in Direct Marketing 14-28 LO5 MAKING RESPONSIBLE DECISIONS What Information Should Be Private” Do-Not-Call Do Not Mail E-Privacy Directive Do Not Track DMA 14-29 VIDEO CASE 14 MOUNTAIN DEW: USING IMC AND SOCIAL MEDIA TO CREATE AND PROMOTE A NEW FLAVOR 14-30 FIGURE 1 The seven stages of the Dewmocracy 2 campaign 14-31 VIDEO CASE 14 MOUNTAIN DEW 1. What changes in the environment provided the opportunity for the Dewmocracy approach? 14-32 VIDEO CASE 14 MOUNTAIN DEW 2. Which of the promotional elements described in Figure 14-2 are used by Mountain Dew in its Dewmocracy 2 campaign? 14-33 VIDEO CASE 14 MOUNTAIN DEW 3. What are some of the different ways Mountain Dew can assess the success of its campaign? 14-34 Promotional Mix The promotional mix is the combination of one or more communication tools used to: (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product. 14-35 Integrated Marketing Communications (IMC) Integrated marketing communications (IMC) is the concept of designing marketing communications programs that coordinate all promotional activities— advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences. 14-36 Communication Communication is the process of conveying a message to others and that requires six elements: a source, a message, a channel of communication, a receiver, and the processes of encoding and decoding. 14-37 Advertising Advertising is any paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor. 14-38 Personal Selling Personal selling consists of the two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision. 14-39 Public Relations Public relations is a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services. 14-40 Publicity Publicity is a nonpersonal, indirectly paid presentation of an organization, good, or service. 14-41 Sales Promotion Sales promotion is a short-term inducement of value offered to arouse interest in buying a good or service. 14-42 Direct Marketing Direct marketing is a promotion alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet. 14-43 Push Strategy A push strategy involves directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. 14-44 Pull Strategy A pull strategy involves directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product. 14-45 Hierarchy of Effects The hierarchy of effects is the sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action (either trial or adoption of the product). The stages include awareness, interest, evaluation, trial, and adoption. 14-46 Direct Orders Direct orders is the result of direct marketing offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction. 14-47 Lead Generation Lead generation is the result of a direct marketing offer designed to generate interest in a product or service and a request for additional information. 14-48 Traffic Generation Traffic generation is the outcome of a direct marketing offer designed to motivate people to visit a business. 14-49