Chapter 12
Creating Customer Value:
Advertising, Sales Promotion, and Public Relations
Previewing the Concepts: Chapter Objectives
1.
2.
3.
4.
5.
Discuss the process and advantages of integrated marketing communications
in communicating customer value.
Define the five promotion tools and discuss the factors that must be
considered in shaping the overall promotion mix.
Describe and discuss the major decisions involved in developing an
advertising program.
Explain how sales promotion campaigns are developed and implemented.
Explain how companies use public relations to communicate with their
publics.
JUST THE BASICS
Chapter Overview
This chapter discusses the importance of coordinating the company’s marketing
mix components and integrating all the messaging elements into one cohesive unit.
A company’s marketing communications mix consists of a specific blend of
advertising, sales promotion, public relations, personal selling, and direct-marketing
tools that the company uses to pursue its advertising and marketing objectives.
Customers don’t distinguish between message sources the way marketers do. In the
consumer’s mind, advertising messages from different media and different
promotional approaches all become part of a single message about the company.
Conflicting messages from these different sources can result in confused company
images and brand positions. The problem is that different communications usually
come from different company sources. Under integrated marketing
communications, the company carefully integrates and coordinates its many
communications channels to deliver a clear, consistent, and compelling message
about the organization and its brands.
Integrated marketing communications involve identifying the target audience and
shaping a well-coordinated promotional program to elicit the desired audience
response. Marketers are moving toward viewing communications as managing the
customer relationship over time. Thus, the communications process should start
with an audit of all the potential contacts target customers may have with the
company and its brands.
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The chapter covers each marketing communications and promotion tool in detail,
explaining how they are each used, their advantages and disadvantages, and how to
best plan each communication, as well as the overall process and communications
mix. Also described are the factors that influence the marketer’s choice of
promotion tools.
Chapter Outline
1.
Introduction
a.
Crispin Porter + Bogusky (CP+B) is right where it’s at in today’s
advertising. Working with modest ad budgets, CP + B has riveted
customers’ attention with startling guerrilla tactics, unconventional
use of media, and holistic marketing strategies that tie everything
together.
b.
The term “integrated marketing communication” describes CP + B’s
approach. Appropriate adjectives include: fresh, radical, street-smart,
mischievous, all-over-the-lot, maybe-the-next-best-thing.
c.
During the 1990s, CP+B won local awards, but in 1997, the firm
drew national attention through the teen antismoking campaign
“Truth.” Based on street-level research with local teenagers, CP+B
used guerilla-ambush tactics to create an “anti-brand”—“Truth.”
d.
Between 1998 and 2002, smoking among middle and high school
students in Florida declined an average of 38 percent.
e.
“Truth” begat the celebrated BMW MINI campaign using
inexpensive, offbeat communications. This has become one of the
most celebrated marketing efforts in recent years, scooping up
numerous advertising industry awards.
f.
Building good customer relationships calls for more than just
developing a good product, pricing it attractively, and making it
available to customers.
1.
Companies must also communicate the value to customers,
and what they communicate should not be left to chance.
2.
All of their communications efforts must be blended into a
consistent and coordinated communications program.
2.
The Promotion Mix
a.
A company’s total marketing communications mix—also called its
promotion mix—consists of the specific blend of advertising, sales
promotion, public relations, personal selling, and direct-marketing
tools that the company uses to persuasively communicate customer
value and build customer relationships. Definitions of the five major
promotion tools follow:
Use Key Term Marketing Communications Mix here.
Use Chapter Objective 1 here.
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1.
2.
3.
4.
5.
Advertising is any paid form of nonpersonal presentation and
promotion of ideas, goods, or services by an identified
sponsor.
Sales promotions are short-term incentives to encourage the
purchase or sale of a product or service.
Public relations involves building good relations with the
company’s various publics by obtaining favorable publicity,
building up a good corporate image, and handling or heading
off unfavorable rumors, stories, and events.
Personal selling is personal presentation by the firm’s sales
force for the purpose of making sales and building customer
relationships.
Direct marketing establishes direct connections with
carefully targeted individual consumers to both obtain an
immediate response and cultivate lasting customer
relationships.
Use Key Terms Advertising, Sales Promotion, Public Relations, Personal Selling,
and Direct Marketing here.
Use Chapter Objective 2 here.
b.
Communication goes beyond these specific promotion tools.
1.
The product’s design, its price, the shape and color of its
package, and the stores that sell it all communicate
something to buyers.
2.
Although the promotion mix is the company’s primary
communication activity, the entire marketing mix—
promotion and product, price, and place—must be
coordinated for the greatest communication impact.
Applying the Concept
Pick several brands of shampoo, one from the grocery store, one from a salon, and
one from a health food store (if available). Discuss how each package design, the
stores in which it is sold, its price, and so forth all communicate messages to the
consumer. What are those messages?
3.
Integrated Marketing Communications
a.
During the past several decades, companies around the world have
perfected the art of mass marketing.
b.
However, as we move into the twenty-first century, marketing
managers face some new marketing communications realities.
The New Marketing Communications Landscape
c.
Two major factors are changing marketing communications.
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1.
2.
d.
Marketers are shifting away from mass marketing.
Improvements in information technology are speeding the
movement towards segmented marketing.
Improved information technology has caused striking changes in the
ways in which companies and customers communicate with one
another.
The Shifting Marketing Communications Model
e.
The shift from mass marketing to segmented marketing has had a
dramatic impact on marketing communications. The shift toward
targeted marketing and the changing communications environment
are giving birth to a new marketing communications model.
f.
Companies are doing less broadcasting and more narrowcasting.
Fragmentation will become the opportunity to reach—small clusters
of consumers who are consuming exactly what they want.
g.
The new communications model will consist of a shifting mix of
traditional mass media and a wide array of targeted, personalized
media.
Let’s Discuss This
How many magazines do you subscribe to? What are their topics? Do you read a
magazine that applies to your hobbies? To your demographic segment (age, ethnic
group, income level)? To your lifestyle (working out, music interest, etc.)?
The Need for Integrated Marketing Communications
h.
Customers don’t distinguish between message sources the way
marketers do. In the consumer’s mind, advertising messages from
different media and different promotional approaches all become
part of a single message about the company. Conflicting messages
from these different sources can result in confused company images,
brand positions, and customer relationships.
i.
Companies often fail to integrate their various communications
channels. Mass-media advertisements say one thing, a price
promotion sends a different signal, a product label creates still
another message, company sales literature says something altogether
different, and the company’s Web site seems out of sync with
everything else.
j.
The problem is that these communications often come from different
company sources.
k.
Under the concept of integrated marketing communications (IMC),
the company carefully integrates and coordinates its many
communications channels to deliver a clear, consistent, and
compelling message about the organization and its brands. The
concept is illustrated in Figure 12-1.
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l.
m.
IMC calls for recognizing all contact points where the customer may
encounter the company, its products, and its brands. Each brand
contact will deliver a message—whether good, bad, or indifferent.
The company must strive to deliver a consistent and positive
message with each contact.
IMC ties together all of the company’s messages and images.
Use Key Term Integrated Marketing Communications here.
Use Discussing the Issues 1 here.
Use Figure 12-1 here.
n.
o.
p.
4.
Integrated marketing communications involves identifying the target
audience and shaping a well-coordinated promotional campaign to
elicit the desired audience response.
Marketers are moving toward viewing communications as managing
the customer relationship over time. Because customers differ,
communications programs need to be developed for specific
segments, niches, and even individuals.
In the days of new interactive digital communications technologies,
companies must ask not only, “How can we reach our customers?”
but also, “How can we find ways to let our customers reach us?”
Shaping the Overall Promotion Mix
a.
The concept of integrated marketing communications suggests that
the company must blend the promotion tools carefully into a
coordinated promotion mix.
b.
The factors that influence the marketer’s choice of promotion tools
follow. Each promotion tool has unique characteristics and costs.
1.
Advertising can reach masses of geographically dispersed
buyers at a low cost per exposure, and it enables the seller to
repeat a message many times.
i.
Large-scale advertising says something positive about the
seller’s size, popularity, and success.
ii. Consumers tend to view advertised products as more
legitimate.
iii. Advertising also has shortcomings. Although it reaches
people quickly, advertising is impersonal. It can carry on
only a one-way communication with the audience, and
the audience does not feel that it has to pay attention or
respond. It can be very costly.
2.
Personal selling is the most effective tool at certain stages of
the buying process, particularly in building up buyers’
preferences, convictions, and actions.
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i.
c.
It involves personal interaction between two or more
people, so each person can observe the other’s needs and
characteristics and make quick adjustments.
ii. The effective salesperson keeps the customer’s interests
at heart in order to build a long-term relationship.
iii. A sales force requires a longer-term commitment than
does advertising. Personal selling is the company’s most
expensive promotion tool.
3.
Sales promotion includes a wide assortment of tools. These
tools attract consumer attention, offer strong incentives to
purchase, and can be used to dramatize product offers and to
boost sagging sales.
4.
Public relations is very believable.
i.
Public relations can reach many prospects who avoid
salespeople and advertisements.
ii. A well-thought-out public relations campaign used with
other promotion mix elements can be very effective and
economical.
5.
Direct marketing is nonpublic. The message is normally
directed to a specific person.
i. It is immediate and customized.
ii. It is interactive.
Marketers can choose from two basic promotion mix strategies. See
Figure 12-2.
1.
A push strategy involves “pushing” the product through
distribution channels to final consumers. The producer directs
its marketing activities toward channel members to induce
them to carry the product and to promote it to final consumers.
2.
In a pull strategy, the producer directs its marketing activities
toward final consumers to induce them to buy the product.
Consumers will demand the product from channel members,
who will in turn demand it from producers.
Use Key Terms Push Strategy, Pull Strategy here.
Use Figure 12-2 here.
Use Discussing the Issues 1 here.
Use Application Questions 2 here.
d.
Companies consider many factors when designing their promotion
mix strategies, including type of product/market and the product lifecycle stage.
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5.
Advertising
a.
Advertising can be traced back to the very beginnings of recorded
history.
b.
Although advertising is used mostly by business firms, it is also used
by a wide range of not-for-profit organizations, professionals, and
social agencies that advertise their causes to various target publics.
c.
Advertising is a good way to inform and persuade.
d.
Marketing management must make four important decisions when
developing an advertising campaign. See Figure 12-3.
Use Figure 12-3 here.
Use Chapter Objective 3 here.
Setting Advertising Objectives
e.
The first step is to set advertising objectives. These objectives should
be based on past decisions about the target market, positioning, and
marketing mix, which define the job that advertising must do in the
total marketing program.
f.
An advertising objective is a specific communication task to be
accomplished with a specific target audience during a specific period
of time.
Use Key Term Advertising Objective here.
1.
Advertising objectives can be classified by primary purpose—
whether the aim is to inform, persuade, or remind. Table 12-1
lists examples.
i.
Informative advertising is used heavily when
introducing a new product category. In this case, the
objective is to build primary demand.
ii.
Persuasive advertising becomes more important as
competition increases. Here, the company’s objective is
to build selective demand. Some persuasive advertising
becomes comparative advertising, in which a company
directly or indirectly compares its brand with one or
more other brands.
iii.
Reminder advertising is important for mature
products—it keeps consumers thinking about the
product.
Use Table 12-1 here.
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Setting the Advertising Budget
g.
After determining its advertising objectives, the company next sets its
advertising budget for each product.
h.
There are four common methods used to set the total budget for
advertising.
1.
In the affordable method, the company sets the promotion budget
at the level it thinks it can afford.
i. Small businesses often use this method.
ii. This method of setting budgets completely ignores the effects
of promotion on sales.
a.
It places advertising last among spending priorities.
b.
It leads to an uncertain annual promotion budget.
2.
In the percentage-of-sales method, the company sets the
promotion budget at a certain percentage of current or forecasted
sales.
i. There are advantages, because it is simple to use and helps
management think about the relationships between promotion spending, selling price, and profit per unit.
ii. However, this method has little to justify it.
a.
It wrongly views sales as the cause of promotion
rather than as the result.
b.
It is based on availability of funds rather than
opportunities.
c.
It may prevent increased spending that is sometimes
needed to turn around falling sales.
d.
Because the budget varies with year-to-year sales,
long-range planning is difficult.
e.
The method does not provide any basis for choosing a
specific percentage, except what has been done in the
past or what competitors are doing.
3.
In the competitive-parity method, companies set their promotion
budget to match competitors’ outlays.
i. Competitors’ budgets represent the collective wisdom of the
industry. Spending what competitors spend helps prevent
promotion wars.
ii. However, there are no grounds for believing that the
competition has a better idea of what a company should be
spending on promotion. There is also no evidence that
budgets based on competitive parity really do prevent
promotion wars.
4.
The most logical budget-setting method is the objective-and-task
method. Here, the company sets its promotion budget based on
what it wants to accomplish with promotion.
i. This method entails defining specific promotion objectives,
determining the tasks needed to achieve these objectives, and
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estimating the costs of performing these tasks. The sum of
these costs is the proposed promotion budget.
ii. This method forces management to spell out its assumptions
about the relationship between dollars spent and promotion
results.
iii. It is also the most difficult method to use.
Use Key Terms Affordable Method, Competitive-Parity Method, Percentage-ofSales Method, and Objective-and-Task Method here.
Use Discussing the Issues 3 here.
Let’s Discuss This
Compare and contrast what happens to an advertising budget when sales are
slipping using each budget setting method described.
Developing Advertising Strategy
i. Advertising strategy consists of two major elements: creating advertising
messages and selecting advertising media.
j. In the past, companies often viewed media planning secondary to the
message-creation process. However, media fragmentation, soaring
media costs, and more-focused target marketing strategies have
promoted the importance of the media-planning function.
k. Good advertising messages are especially important in today’s costly
and cluttered advertising environment.
l. With the growth in cable and satellite TV, VCRs, and remote-control
units, today’s viewers have many more options. They can avoid ads by
watching commercial-free cable channels. They can “zap” commercials
by pushing the fast-forward button during taped programs.
1. Many advertisers
now
see
themselves
as
creating
“advertainment”—ads that are both persuasive and entertaining.
Use Marketing at Work 12-1 here.
Use Under the Hood/Focus on Technology here.
m.
The first step in creating effective advertising messages is to plan a
message strategy—to decide what general message will be
communicated to consumers.
1.
Developing an effective message strategy begins with identifying
customer benefits that can be used as advertising appeals. Ideally,
advertising message strategy will follow directly from the company’s broader positioning strategy.
277
2.
The next step is to develop a compelling creative concept or “big
idea” that will bring the message strategy to life in a distinctive and
memorable way.
Applying the Concept
What is Staples’ big idea? Ben & Jerry’s ice cream? T-Mobile wireless service?
3.
4.
The creative concept will guide the choice of specific appeals to be
used. Advertising appeals should have three characteristics: they
should be meaningful, pointing out benefits that make the product
more desirable or interesting to consumers; they should be
believable; and they should be distinctive.
The advertiser now has to turn the big idea into an actual ad
execution that will capture the target market’s attention and
interest. Any message can be presented in different execution
styles.
i.
Slice of life: shows one or more “typical” people using the
product in a normal setting.
ii. Lifestyle: shows how a product fits in with a particular
lifestyle.
iii. Fantasy: creates a fantasy around the product or its use.
iv. Mood or image: builds a mood or image around the product,
such as beauty, love, or serenity.
v.
Musical: shows one or more people or cartoon characters
singing about the product.
vi. Personality symbol: creates a character that represents the
product.
vii. Technical expertise: shows the company’s expertise in
making the product.
viii. Scientific evidence: presents survey or scientific evidence
that the brand is better or better liked than one or more other
brands.
ix. Testimonial evidence or endorsement: features a highly
believable or likable source endorsing the product.
Use Application Questions 1 here.
5. The advertiser must also choose a tone for the ad.
6. The advertiser must use memorable and attention-getting words in
the ad.
7. Format elements make a difference in an ad’s impact as well as its
cost.
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8. The illustration is the first thing the reader notices.
9. The headline must effectively entice the right people to read the
copy.
i.
The copy—the main block of text in the ad—must be simple
but strong and convincing.
ii.
These three elements must work together effectively.
The major steps in media selection are deciding on reach, frequency, and
impact; choosing among major media types; selecting specific media
vehicles; and deciding on media timing.
1. Reach is a measure of the percentage of people in the target market
who are exposed to the ad campaign during a given period of time.
Frequency is a measure of how many times the average person in the
target market is exposed to the message. Media impact is the
qualitative value of a message exposure through a given medium.
2. The media planner has to know the reach, frequency, and impact of
each of the major media types. Table 12-2 summarizes the media
types.
n.
Use Table 12-2 here.
Use Discussing the Issues 4 here.
i. Media planners consider many factors when making their
media choices.
a.
The target consumers.
b.
The medium’s impact.
c.
The message effectiveness.
d.
Cost is another major factor. Media impact and cost must
be reexamined regularly.
Use Marketing at Work 12-2 here.
3.
The media planner must now choose the best media vehicles—
specific media within each general media type.
i.
Media planners must compute the cost per thousand persons
reached by a vehicle.
ii.
The media planner must also consider the costs of producing
ads for the different media.
iii.
In selecting media vehicles, the media planner must balance
media cost measures against several media effectiveness
factors: audience quality, audience attention, and editorial
quality.
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4.
The advertiser must decide how to schedule the advertising over the
course of a year. The advertiser also has to choose the pattern of the
ads.
i.
Continuity means scheduling ads evenly within a given
period.
ii.
Pulsing means scheduling ads unevenly over a given time
period.
Let’s Discuss This
How are ads scheduled for Chia Pets? How does J.C. Penney schedule its ads?
Evaluating Advertising
o.
The advertising program should regularly evaluate both the
communication effects and the sales effects of advertising.
1.
Measuring the communication effects of an ad or ad campaign tells
whether the ad is communicating well. Copy testing can be done
before or after an ad is printed or broadcast.
2.
The sales and profits effects of advertising are often harder to
measure than the communication effects. Sales are affected by
many factors besides advertising, such as product features, price,
and availability.
i.
One way to measure sales and profits effects of advertising is
to compare past sales and profits with past advertising
expenditures.
ii. Another way is through experiments such as varying the
spending in different markets.
Use Application Questions 3 here.
Other Advertising Considerations
p.
The company must address two additional questions. First, how will the
company organize its advertising function? Second, how will the
company adapt its advertising strategies and programs to the
complexities of inter-national markets?
1.
Different companies organize in different ways to handle advertising.
i.
In small companies, advertising might be handled by someone in the sales department.
ii. Large companies set up advertising departments whose job
it is to set the advertising budget, work with the ad agency,
and handle advertising not done by the agency.
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iii.
Advertising agencies employ specialists who can often
perform advertising tasks better than the company’s own
staff.
a.
Most large advertising agencies have the staff and
resources to handle all phases of an advertising
campaign for its clients, from creating a marketing
plan to developing ad campaigns and preparing,
placing, and evaluating ads.
Use Key Term Advertising Agency here.
2.
International advertisers face many complexities not encountered
by domestic advertisers.
i. The most basic issue concerns the degree to which global
advertising should be adapted to the unique characteristics of
markets in various countries.
a.
Standardization produces many benefits—lower
advertising costs, greater global advertising
coordination, and a more consistent worldwide image.
b.
There are also drawbacks. It ignores the fact that
country markets differ greatly in their cultures,
demographics, and economic conditions.
ii. Global advertisers face several special problems.
a.
Advertising media costs and availability differ vastly
from country to country.
b.
Countries also differ in the extent to which they
regulate advertising practices.
iii. Although advertisers may develop global strategies to guide
their overall advertising efforts, specific advertising programs
must usually be adapted to meet local cultures and customers,
media characteristics, and advertising regulations.
Use Linking the Concepts here.
6.
Sales Promotion
a. Sales promotion consists of short-term incentives to encourage the
purchase or sales of a product or service.
b. Whereas advertising and personal selling offer reasons to buy a product
or service, sales promotion offers reasons to buy now.
Use Chapter Objective 4 here.
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Rapid Growth of Sales Promotion
c. Sales promotion tools are used by most organizations, including
manufacturers, distributors, retailers, trade associations, and not-forprofit institutions.
d. They are targeted toward final buyers, retailers, and wholesalers;
business customers; and members of the sales force.
e. Several factors have contributed to the rapid growth of sales promotions.
1.
Inside the company, product managers face greater pressures to
increase their current sales, and promotion is viewed as an
effective short-run sales tool.
2.
Externally, the company faces more competition, and competing
brands are less differentiated.
3.
Advertising efficiency has declined because of rising costs, media
clutter, and legal restraints.
4.
Consumers have become more deal-oriented, and ever-larger
retailers are demanding more deals from manufacturers.
f. The growing use of sales promotion has resulted in promotion clutter,
similar to advertising clutter.
Sales Promotion Objectives
g. Sales promotion objectives vary widely.
1.
Sellers may use consumer promotions to increase short-term sales
or to help build long-term market share.
2.
Objectives for trade promotions include getting retailers to carry
new items and more inventory, getting them to advertise the
product and give it more shelf space, and getting them to buy
ahead.
3.
For the sales force, objectives include getting more sales force
support for current or new products or getting salespeople to sign
up new accounts.
4.
Sales promotion should reinforce the product’s position and build
long-term customer relationships.
Applying the Concept
Why would a business want to give salespeople incentive to sign up new accounts?
Why would they need to gain support for new products?
Major Sales Promotion Tools
h.
Many tools can be used to accomplish sales promotion objectives.
1.
The main consumer promotion tools include the following:
282
i.
ii.
iii.
iv.
v.
vi.
Samples are offers of a trial amount of a product.
Sampling is the most effective, but most expensive, way
to introduce a new product.
Coupons are certificates that give buyers savings when
they purchase specified products.
Cash refund offers (or rebates) are like coupons except
that the price reduction occurs after the purchase rather
than at the retail outlet. The consumer sends a “proof of
purchase” to the manufacturer, who then refunds part of
the purchase price by mail.
Price packs (also called cents-off deals) offer consumers
savings off the regular price of a product. The reduced
prices are marked by the producer directly on the label or
package.
Premiums are goods offered either free or at low cost as
an incentive to buy a product. A premium may come
inside the package (in-pack), outside the package (onpack), or through the mail.
Advertising specialties, also called promotional products,
are useful articles imprinted with an advertiser’s name
that are given as gifts to consumers.
Use Key Term Advertising Specialty here.
vii.
viii.
ix.
Patronage rewards are cash or other awards offered for
the regular use of a certain company’s products or
services.
Point-of-purchase (POP) promotions include displays and
demonstrations that take place at the point of purchase or
sale.
Contests, sweepstakes, and games give consumers the
chance to win something.
a.
A contest calls for consumers to submit an entry to
be judged by a panel that will select the best entries.
b.
A sweepstakes calls for consumers to submit their
names for a drawing.
c.
A game presents consumers with something every
time they buy, which may or may not help them win
a prize.
Use Discussing the Issues 4 here.
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2.
Manufacturers direct more sales promotion dollars toward retailers
and wholesalers (78%) than to consumers (22%).
i.
Trade promotion can persuade resellers to carry a brand, give it
shelf space, promote it in advertising, and push it to consumers.
ii. Manufacturers have several trade promotion tools.
a. Many of the tools used for consumer promotions, such as
contests, premiums, and displays, can also be used as
trade promotions.
b.
A discount is off the list price on each case purchased
during a stated period of time (also called a price-off, offinvoice, or off-list).
c.
An allowance can be offered in return for the retailer’s
agreement to feature the manufacturer’s products in some
way.
i. An advertising allowance compensates retailers for
advertising the product.
ii. A display allowance compensates retailers for using
special displays.
Use Key Terms Discount, Allowance here.
d.
3.
Manufacturers may offer free goods, which are extra
cases of merchandise, to resellers who buy a certain
quantity or feature a certain flavor or size.
e.
Manufacturers may offer push money—cash or gifts to
dealers or their sales forces—to “push” the
manufacturer’s goods.
f.
Manufacturers may give retailers free specialty
advertising items that carry the company’s name.
Business promotion tools are used to generate business leads,
stimulate purchases, reward customers, and motivate salespeople.
i.
Business promotion tools include many of the same tools used
for consumer or trade promotion.
ii. Many companies and trade associations organize conventions
and trade shows to promote their products. Firms selling to the
industry show their products at the trade show.
iii. A sales contest is a contest for salespeople or dealers to
motivate them to increase their sales performance over a given
period.
Developing the Sales Promotion Program
i. The marketer must make several other decisions in order to define the full
sales promotion program.
1.
The marketer must decide on the size of the incentive.
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2.
3.
j.
7.
The marketer must set conditions for participation.
The marketer must decide how to promote and distribute the promotion program itself.
4.
The marketer must consider the length of the promotion, which is
also important.
5.
The marketer must also evaluate the program.
The most common evaluation method is to compare sales before, during,
and after a promotion.
1.
Marketers should ask if the promotion attracted new customers or
more purchasing from current customers.
2.
It is important to ask if the company can hold on to these new
customers and purchases.
3.
Marketers should try to determine if the long-run customer
relationship and sales gains from the promotion justify its costs.
Public Relations
a. Public relations is building good relations with the company’s various
publics by obtaining favorable publicity, building up a good corporate
image, and handling or heading off unfavorable rumors, stories, and events.
b. Public relations departments may perform any or all of the following
functions:
1. Press relations or press agency.
2. Product publicity.
3. Public affairs.
4. Lobbying.
5. Investor relations.
6. Development.
c. Public relations is used to promote products, people, places, ideas, activities,
organizations, and even nations.
Use Chapter Objective 5 here.
Use Discussing the Issues 6 here.
The Role and Impact of Public Relations
d. Public relations can have a strong impact on public awareness at a much lower
cost than advertising can.
e. The company does not pay for the space or time in the media. Rather, it pays
for a staff to develop and circulate information and to manage events.
f. Public relations is often described as a marketing stepchild because of its
limited and scattered use. However PR is playing an increasingly important
brand-building role.
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Major Public Relations Tools
g. Public relations professionals use several tools.
1.
One of the major tools is news. PR professionals find or create favorable
news about the company and its products or people.
2.
Speeches can also create product and company publicity.
3.
Special events range from news conferences, press tours, to grand
openings, and fun events.
Use Marketing at Work 12-3 here.
4.
Written materials including annual reports, brochures, articles, and
company newsletters and magazines are often produced.
5.
Audiovisual materials, such as films, are being used increasingly as
communication tools.
6.
Corporate identity materials, such as logos, stationery, brochures, signs,
business forms, business cards, buildings, uniforms, and company cars
and trucks, all become marketing materials.
7.
Public service activities can improve public goodwill.
8.
Buzz marketing campaigns generate publicity by getting consumers
themselves to spread information about a product or service to others in
their communities.
9.
Another development is mobile marketing—traveling promotional tours
that bring the brand to consumers.
10.
A company’s Web site can be a good public relations vehicle. Web sites
are also ideal for handling crisis situations by disseminating information
through e-mail marketing, online chat, and blogs. Public relations is a
valuable part of doing business in a digital world.
h. As with other promotion tools, management should set PR objectives, choose
the PR messages and vehicles, implement the PR plan, and evaluate the
results.
i. The company’s public relations should be blended smoothly with other
promotion activities within the company’s overall integrated marketing
communications efforts.
Use Discussing the Issues 5 here.
Use Focus on Ethics here.
Travel Log
Discussing the Issues
1. Briefly describe the “new marketing communications model” as discussed in the
chapter. Why is it so important for today’s marketers to create integrated
marketing communications?
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The shift toward targeted marketing and the changing communications environment
are giving birth to a new marketing communications model. Companies are doing
less broadcasting and more narrowcasting. Fragmentation will become the
opportunity to reach small clusters of consumers who are consuming exactly what
they want. The new communications model will consist of a shifting mix of
traditional mass media and a wide array of targeted, personalized media.
Integrated marketing communications is important to reach consumers in a variety
of ways.
2. List and briefly describe the five major promotion mix tools. Broadly speaking,
what objective is each promotion tool best suited to accomplish?
The factors that influence the marketer’s choice of promotion tools follow. Each
promotion tool has unique characteristics and costs. Advertising can reach masses
of geographically dispersed buyers at a low cost per exposure, and it enables the
seller to repeat a message many times. Personal selling is the most effective tool at
certain stages of the buying process, particularly in building up buyers’
preferences, convictions, and actions. Sales promotion includes a wide assortment
of tools to attract consumer attention, offer strong incentives to purchase, dramatize
product offers and boost sagging sales. Public relations can reach many prospects
who avoid salespeople and advertisement. Direct marketing is normally directed to
a specific person.
3. Describe the four methods discussed in the text for setting the advertising
budget. For each of the four methods, list one advantage and one drawback
associated with the method. Which method is best?
In the affordable method, the company sets the promotion budget at the level it
thinks it can afford. Small businesses often use this method. This method of setting
budgets completely ignores the effects of promotion on sales. It places advertising
last among spending priorities. It leads to an uncertain annual promotion budget.
In the percentage-of-sales method, the company sets the promotion budget at a
certain percentage of current or forecasted sales. It is simple to use and helps
management think about the relationships between promotion spending, selling
price, and profit per unit. But this method wrongly views sales as the cause of
promotion rather than as the result. It may prevent increased spending that is
needed. Because the budget varies with year-to-year sales, long-range planning is
difficult. This method does not provide any basis for choosing a specific percentage,
except what has been done in the past or what competitors are doing.
In the competitive-parity method, companies set their promotion budget to match
competitors’ outlays. Competitors’ budgets represent the collective wisdom of the
industry. Spending what competitors spend helps prevent promotion wars.
The most logical budget-setting method is the objective-and-task method—setting
the promotion budget based on goals. This method entails defining specific
promotion objectives, determining the tasks, and estimating the costs. This method
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forces management to spell out its assumptions about the relationship between
dollars spent and promotion results. It is also the most difficult method to use.
4. How do media reach, frequency, and impact influence consumer brand
awareness? Is one more important than the others for increasing awareness?
Student responses will vary. Reach is a measure of the percentage of people in the
target market who are exposed to the ad campaign during a given period of time.
Frequency is a measure of how many times the average person in the target market
is exposed to the message. Media impact is the qualitative value of a message
exposure through a given medium.
5. Describe two promotional offers you have received recently. Which consumer
promotional tools do the offers employ? How did the offers impact your
purchase decision? Was the effect on your buying behavior temporary or
permanent?
Student responses will vary.
6. What role does public relations play in the overall marketing communications
mix? List two advantages and two disadvantages to relying on public relations
to promote a brand.
Student responses will vary.
Application Questions
1. As a marketing manager, create a promotion plan that uses both push and pull
strategies to sell picture phones (cell phones equipped with cameras) to
teenagers. Detail the objectives you hope to accomplish with each component
of the plan.
Student responses will vary.
2. Select a primetime television show that you watch regularly. While watching
the show, pay particular attention to product placements. Make a list of each
product promoted. Are you surprised by the number and types of products you
found? How well integrated were the product placements? What impact will
they likely have on viewer preferences and behavior?
Student responses will vary.
3. Flip through your local newspaper. Are there any stories that promote a product
or service? How might the impact of such public relations differ from an
advertisement for that product placed in the same paper?
Student responses will vary.
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Under the Hood
Although it may at first seem like a simple advancement in technology, digital
video recorders (DVRs) are having a profound affect on advertising and, as a result,
on marketing. With a few simple steps, consumers with DVRs can set up to record
an entire season of a favorite show. Just as easily, they can pause live television or
flip between different programs, keeping track of multiple channels at once. While
the technology is wonderful for consumers, many marketers are not so pleased.
Before the advent of VCRs and DVRs, advertisers counted on a captive audience to
receive marketing messages. Not surprisingly, as viewers watch recorded
programs, many now skip past commercials, hurrying to continue the main
attraction. The result is an “empowered” viewing audience that is very difficult to
reach with traditional commercial messages.
1. Will digital video recorders ultimately change the nature of advertising on
broadcast television? How?
By allowing consumers to skip commercials while still watching the shows those
ads support, DVRs are forcing advertisers to create messages that interest
consumers enough for them to opt in to viewing them. As a result, ads that attract
no interest or offer little value or entertainment are likely to reach few consumers.
Advertisers will have to be more consumer focused to reach their target audiences.
2. Beyond the strategies discussed in the chapter, what alternatives to
traditional advertising might a company pursue to reach consumers under
the new marketing communications model?
Student responses will vary.
Focus on Ethics
Although prescription drug advertising has traditionally targeted physicians,
messages aimed directly at patients have recently taken a dramatic rise. In fact,
drug manufacturers have increased spending on direct-to-consumer advertising by
800 percent in the last eight years, totaling $3.2 billion in 2003. The expected
result? Pharmaceutical companies argue that reaching out directly to patients
educates consumers about solutions to health problems that affect quality of life.
Critics argue that drug companies are padding their profits by convincing
consumers to buy drugs they don’t need. Such critics point out that 71 percent of
family physicians feel direct-to-consumer advertising pressures them to prescribe
medication they wouldn’t otherwise prescribe. Regardless of the motivation, the
advertising appears to be working. The number of prescription drugs purchased per
person in the U.S. has grown by more than 50 percent in just ten years, totaling 3.4
billion separate purchases nationwide. Although that number is certainly large,
spending on direct-to-consumer advertising makes up only 13 percent of total
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advertising outlay by drug companies. The remainder is spent targeting physicians.
Still, some suggest that direct-to-consumer advertising fuels the escalating cost of
prescription drugs, which are rising at an average of 7.4 percent per year, nearly
triple the average inflation rate.*
1. How do you feel about the increase in direct-to-consumer advertising for
prescription drugs? Are drug companies educating consumers or persuading
them to buy drugs they don’t need?
Student responses will vary.
2. What are some of the pros and cons for marketers advertising directly to
consumers? Do you believe it is more appropriate to target physicians?
Student responses will vary. Marketers advertising directly to consumers can better
control the message potential customers receive. However, they come under
scrutiny from consumer advocates who are concerned about drug companies
encouraging unnecessary prescription drug use.
*For more information, visit the Kaiser Family Foundation at www.kff.org.
GREAT IDEAS
Barriers to Effective Learning
1.
2.
3.
The majority of the textbook has been showing the students how to do each
individual function, as it must do to effectively explain the nuances of each
of the marketing mix components. This chapter shows how the
communications piece of the marketing mix must mesh with the other pieces
of the mix, delivering the same message in every medium. The difficulty for
the students will lie in the fact that there are so many moving parts to
coordinate. Ask students for examples of companies who do it well—Target
is one brand whose messaging is always consistent.
Some students will need to have explained in detail the differences among
the various communication methods outlined in the chapter. Figure 12-1 will
help in this regard. Asking students for examples from each channel of
communication will also help. Many students will be able to give examples
from their parents’ work.
Push and pull strategies will be new to the students and can sometimes
present some problems. In particular, push, because it is aimed at channel
members, can be difficult for students to comprehend. Discussing this in the
context of trade promotions can often help; discuss, in particular, how those
special display cases and racks in many retail stores can signal both a
promotional item and a push strategy on the part of the producer or
manufacturer. Pull is an easier concept to get across—you can ask the
students if any of them have, for instance, asked their gym/golf course/high
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4.
5.
6.
7.
school to carry a certain juice or other item, or how many of them, or their
parents, have asked their doctor about a drug seen advertised on television.
There is a tremendous amount of information delivered in only a few pages
in the advertising section. The differences among informative, persuasive,
and reminder advertising may seem simple to students at first, but these
concepts should be studied in some detail to ensure understanding. Again,
examples are a tremendous help here.
Message execution is also a key concept. Many students will have trouble
with the various execution styles and will particularly have difficulty with
slice of life versus lifestyle. There may also be difficulty in understanding
the difference between fantasy and mood or image. Again, use examples of
your own and from the class, as well as those shown in the text.
Sales promotions, particularly consumer promotions, will be familiar to
students. It is important that they understand the terminology, however.
Trade promotion is also fairly simple, although the difference between a
discount and an allowance is crucial to understand. Business promotions, as
well, will go quickly. You can tie this section back into the push strategy to
show how a strategy gets turned into tactics.
Public relations is a mystery to almost everyone. There will be some
questions regarding the product publicity done by public relations versus
that done by a marketing manager, but these questions can be answered by
the notion of free, because the vast majority of what PR does is to get the
company in the press. One of the examples of masterful public relations the
book points out is Johnson & Johnson during the Tylenol product-tampering
scare. This example alone is often enough to explain the importance of this
communication channel.
Student Projects
1.
2.
3.
4.
5.
6.
Take the possible advertising objectives illustrated in Table 12-1 and find an
example advertisement of each. Analyze what you perceive to be the
objective in each of your examples. What material from the advertisement
leads you to believe that a certain objective is being pursued?
Find at least two examples of push and pull strategies by manufacturers.
Look through newspapers and magazines to find examples of ads that aim to
inform, persuade, and remind.
Find examples of companies that are offering consumers coupons and
rebates. What are the differences? Which are you more likely to use?
Discuss the use of special display cases in supermarkets. Are these examples
of consumer promotion, trade promotion, or both? Are they effective?
From the section in your text entitled Message Execution, take each of the
nine execution format styles and find an illustration of each. Explain why
the advertisements that you have selected fit the categories. What objectives
do you think the advertisements are trying to achieve?
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7.
8.
9.
10.
11.
Find an advertisement that you believe displays an example of “the big
idea.” The creative concept should be clear to you. Explain what the concept
is, who you think it is intended for, and if you think the advertiser is
successful in communicating their desired concept.
Evaluate the campaigns described in Real Marketing 12-1. Were they
effective? Were they “gross”? Why or why not do such campaigns work?
What do you think were the objectives of such campaigns? Explain.
Interview a member of the mass media (radio, television, newspaper, etc.)
and discuss with them the explanation of the mass media given in Table
12-2. Do they agree with the analysis of the media forms? What could they
add to the descriptions? What do you they think are the chief advantages and
limitations of their media form? What is the primary selling point for their
media form?
Interview a grocery store representative and determine what their views are
toward sales promotion forms. By taking material from the Consumer
Promotion Tools section, determine what the professional being interviewed
deems to be the most effective tools mentioned by the chapter. Do they use
other forms not mentioned? What might they be? What is their relationship
with their suppliers with respect to sales promotion? Do they plan to spend
more or less money on sales promotion in the future? If they have a Web
site, ask about how sales promotion might be used on the Web.
Research in the library and on the Internet and find an example of a public
relations success and a failure story. Explain each. What do you think makes
your examples fit these categories?
Interactive Assignments
Small Group Assignments
1. Form students into groups of three to five. Each group should read the
opening vignette to the chapter on Crispin Porter + Bogusky (CP+B). Each
group should then answer the following questions:
a. How does CP+B approach setting advertising objectives? How does
this differ from its competitors?
b. How does the firm gain attention for the advertising message? How
do their ads break through the clutter?
c. What do you think CP+B’s opinion of traditional advertising media
would be?
d. Would CP+B’s method of marketing communication work in an
international environment? Why or why not?
Each group should share its findings with the class.
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Individual Assignments
1. Read the opening vignette to the chapter. Think about the answers to the
following questions:
a. How does CP+B approach setting advertising objectives? How does
this differ from its competitors?
b. How does the firm gain attention for the advertising message? How
do their ads break through the clutter?
c. What do you think CP+B’s opinion of traditional advertising media
would be?
d. Would CP+B’s method of marketing communication work in an
international environment? Why or why not?
Share your findings with the class.
Think-Pair-Share
1. Consider the following questions, formulate an answer, pair with the student
on your right, share your thoughts with one another, and respond to
questions from the instructor:
a. What are the key components of the definition of advertising?
b. What is an advertising objective?
c. How can an advertising objective be measured?
d. On what factors does an advertising budget depend? Which of these
factors is the most important? How can you tell?
e. What is the first step in developing an effective advertising strategy?
f. What is the “big idea”?
g. What are the characteristics of an advertising appeal?
h. Which of the message execution formats is your favorite?
i. What are the differences between reach, frequency, and impact?
Explain each.
j. What are the advantages and disadvantages between the mass media
forms as shown in Table 12-2? Which form could be the best for
promoting an ocean cruise?
k. What is an alternative media form that would be good for reaching a
14-year-old?
l. Outline the forms of timing for a media schedule. Which seems the
most reasonable? Under what circumstances?
m. How is sales promotion different from advertising?
n. What is a good sales promotional objective?
o. List and briefly identify the consumer promotional tools identified in
the chapter.
p. List and briefly identify the trade promotional tools identified in the
chapter.
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q. List and briefly identify the business promotional tools identified in
the chapter.
r. How is public relations different from advertising?
s. List and briefly identify the major public relations tools.
t. How can public relations be used on the Internet?
Outside Example
No one had defined stylish living as much as Martha Stewart. Her name has become
synonymous with perfect cooking, perfect gardening, perfect decorating, perfect
weddings, and on and on. Unfortunately, her name has also recently become
synonymous with lying about her personal stock trades, and she began serving jail
time for that conviction in late 2004.
Whether you agree with her prosecution or not, it caused quite a problem for her
company, Martha Stewart Living Omnimedia, Inc. Its stock is fighting its way back
from a pre-crisis high of $35 to a $5 a share low to a current price of $18.24
(1/9/06).
Although public relations is not all about crisis management, it certainly plays a
huge role in ensuring a company can stay alive when its eponymous founder and
leader faces federal prosecution.
1. What publics would you have focused on when news of the federal probe
broke? Explain your answer.
2. What PR tools could be useful to contain a crisis such as this? How would
you use them?
3. Is there an effective way for Martha Stewart Living Omnimedia to utilize
the Internet to keep the company on track? Outline what information you
would include, and how you would keep it current.
Classroom Exercise/Homework Assignment
Hewlett-Packard is a very successful IT solutions provider. It sells to all segments
of the market, from consumers to very large businesses. Its tag line is “Invent.”
Visit the company’s Web site at www.hp.com to read through some of the corporate
history, as well as to review its products and services. Also take a look at its press
releases before answering the following questions.
1.
Does HP really focus on Invent in its messaging? Is this an effective
positioning strategy for the company?
Students might first be drawn to the “HP labs” section of the Web site, where
naturally everything is about invention. Other students will point out that the
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amazing width and depth of the HP product line, by its very nature, signifies that
the company’s focus is on invention. Still others will go to the “newsroom,” where
the majority of press releases are about new technologies.
HP does, therefore, seem to live and breathe “Invent.”
2.
How does HP use promotions in its marketing?
There is a link on the HP home page taking the viewer directly to all business and
consumer promotions that are available. They are generally running several
promotions at once. It will be difficult to find out about trade promotions, but an
assignment for students could be to visit various retail outlets that sell HP products
(CompUSA, Staples, etc.) to ask managers about HP trade promotions.
3.
How does HP use executive speeches and articles on its Web site?
Speeches by CEO and President Mark Hurd and other members of HP’s top
management are on the Web site. The majority of the speeches address technology
issues and how HP is inventing the next generation of computing technology.
4.
Has HP succeeded in integrating its marketing communications?
Student responses will vary. The majority of the Web site is focused on the products
the company sells (even though HP’s stated strategy in the press is to move into
services to become more profitable), and that does point to its tag line. However, a
good portion of the public relations pieces on the Web site spend more time talking
about social responsibility.
HP has done a good job of combining its product line with its recent acquisition,
Compaq, and thus has taken that step toward integrating its messaging. The
company is also working very hard toward global branding for its products and is
no longer allowing individual business units to develop their own messaging, so in
that regard, HP is doing a fine job in integrating its communications.
Classroom Management Strategies
This chapter is replete with good information. Make sure to keep the focus on
integrating all communication channels as you go through the material. As
discussed previously in Barriers to Effective Learning, use examples liberally
through your discussion to drive home the importance of cohesive marketing
messaging.
1.
2.
The introductory sections are short and can be covered in 10 minutes. These
sections set the stage for the chapter and provide valuable background
information so that the remaining material is put into the proper context.
Figure 12-1 illustrates the tools in the communication process.
Setting the Overall Communication Mix goes through the different
communications channels, and 10 minutes should be spent here. Attention
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3.
4.
5.
6.
should be paid to the push and pull strategies. Figure 12-2 illustrates these
two strategies in a very clear format, and Marketing at Work 12-1 talks
about push strategies being used by consumer goods companies.
The section on Advertising is dense and should take 15 minutes. There are
several subsections here, with the heart of the section in Developing
Advertising Strategy. Table 12-1 discusses advertising objectives. The
Absolut Vodka ads re-created in the text explain how media placement
decisions are made.
Sales Promotion should also be given 15 minutes. The Major Tools
subsection contains a lot of material and can be the focus of this section.
Public relations can be covered in 10 minutes. Be sure to talk in some detail
about the different tools PR managers have at their disposal so that the
students understand this is not just about getting mentions in the
newspapers, even though that is extremely important and one of the key
focus points for PR departments. Marketing at Work 12-3 talks about buzz
marketing.
If time permits, visit Web sites of those companies popular with students,
such as Starbucks and other retail outlets that cater to a young crowd. As a
class, critique the companies’ ability to fully integrate their messaging,
bringing in examples from personal knowledge and that of the students who
have visited these locations.
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