Topic 10 Communicating customer value
Objectives
• Introducing various promotion mix tools
• Examining the rapidly changing communication environment
and the need for integrated marketing communication
• Discussing the steps in developing marketing
communications
The Marketing Communications Mix
Advertising
Sales Promotion
Public Relations
Personal Selling
Direct Marketing
Any Paid Form of Nonpersonal
Presentation by an Identified
Sponsor.
Short-term Incentives to
Encourage Trial or Purchase.
Protect and/or Promote
Company’s Image/products.
Personal Presentations.
Direct Communications With
Individuals to Obtain an
Immediate Response.
New marketing communications landscape(1)
• Consumers are changing
– Better informed and more communications empowered
– Seek out information on their own; exchange brandrelated information; or even create their own marketing
messages
New marketing communications landscape(2)
• Marketing strategies are changing
– As mass markets have fragmented, marketers are shifting
away from mass marketing.
– Developing focused marketing programs designed to build
closer relationships with customers in more narrowly
defined micro-markets.
Integrated marketing communication (IMC)
• Carefully integrating and coordinating the company’s
many communications channels to deliver a clear,
consistent, and compelling message about the
organization and its products.
– Touch point (where the customer may encounter the
company and its brands)
Think about all the ways you interact with
companies such as Nike
Elements in the Communication Process
SENDER
Message
Decoding
Encoding
Media
Noise
Feedback
Response
RECEIVER
Communication process
•
•
•
•
•
•
•
•
•
Sender: the party sending the message to another party
Encoding: the process of putting though into symbolic form
Message: the set of symbols that the sender transmits
Media: the communication channels through which the message moves
from sender to receiver
Decoding: the process by which the receiver assigns meaning to the
symbols encoded by the sender
Receiver: the party receiving the message sent by another party
Response: the reactions of the receiver after being exposed to the
message
Feedback: the part of the receiver’s response communicated back to the
sender
Noise: the unplanned static or distortion during the communication
process, which results in the receiver’s getting a different message than
the one the sender sent.
Elements in the Communication
Process
SENDER
Message
Decoding
Encoding
Media
Noise
Feedback
Response
RECEIVER
Case study:
McDonald’s “I’m lovin’ it” campaign
• Sender: McDonald’s
• Encoding: McDonald’s advertising agency assembles words,
sounds, and illustrations into an ad. That will convey the
intended message.
• Message: the actual McDonald’s ad
• Media: television and the specific television programs that
McDonald’s selects
Case study
McDonald’s “I’m lovin’ it” campaign
Case study:
McDonald’s “I’m lovin’ it” campaign
• Receiver: the customer who watches the McDonald’s ad.
• Decoding: a consumer watches the McDonald’s ad And interprets the
words and images it contains.
• Response: any of hundreds of possible responses, such as the consumer
likes McDonald’s better, is more likely to eat at McDonald’s next time,
hums the “I’m lovin’ it” jingle, or does nothing
• Feedback: McDonald’s research shows that consumers are struck by and
remember the ad, or consumers write
• Noise: the consumer it distracted while watching the commercial misses
its key points
Steps in developing effective
marketing communications
Step 1. Identifying the Target Audience
Step 2. Determining the Communication Objectives
Buyer Readiness Stages
Awareness
Knowledge
Liking
Preference
Conviction
Purchase
Step 3. Designing the Message
Message Content
What to say?
Rational Appeals
Emotional Appeals
Moral Appeals
Message Structure
Draw Conclusions
Argument Type
Argument Order
Message Format
How to say?
Layout,
Words, & Sounds,
Body Language
Rational appeals: relate to the
audience’s self-interest. They show
that the product will produce the
desired benefits.
Emotional appeals: stir up either
negative or positive emotions that
can motivate purchase.
e.g. love , joy, humor, fear and
guilty
Moral appeals: direct the
audience’s sense of what
is “right” and “proper”.
Step 4. Select Communications Channel
Personal Communication
Channels
Face to face, on the phone, through mail or e-mail, internet ”chat”
Controlled by company Vs. WOM influence
Non-personal Communication
Channels
Major media, atmospheres, events
Step 5. selecting the message source
Step 6. collecting feedback
Setting the total promotion budget
Affordable
% Of Sales
Setting the promotion
budget at the level
management thinks the
company can afford.
Setting the promotion budget
at a percentage of current or
forecasted sales
Competitive
Parity
Setting the promotion
budget to match
competitors’ outlays
Objective & Task
Developing the budget by
(1) defining specific objectives; (2) determining
the tasks that must be performed to achieve
these objectives and (3) estimating the costs of
performing these tasks. The sum of these costs
is the proposed promotion budget.
Decide on Communications Mix
Advertising
Public, Pervasive, Expressive, Impersonal
Sales Promotion
Communication, Incentive, Invitation
Public Relations & Publicity
Credibility, Surprise, Dramatization
Personal Selling
Personal Confrontation, Cultivation, Response
Direct Marketing
Nonpublic, Customized, Up-to-Date, Interactive
Factors in developing promotion mix strategies
Type of
Product/
Market
Buyer/
Readiness
Stage
Push vs.
Pull Strategy
Product LifeCycle Stage
Push Versus Pull Strategy
Producer
Producer
Marketing
activities
Intermediaries
Demand
Reseller
Marketing
activities
End users
Push Strategy
Producer Marketing activities
Demand
Producer
Intermediaries
Demand
End users
Pull Strategy
Major decisions in advertising
Objectives Setting
Budget Decisions
Message Decisions
Campaign Evaluation
Media Decisions
Advertising Objectives
•
•
•
Specific Communication Task
Accomplished with a Specific Target Audience
During a Specific Period of Time
Informative Advertising
Build Primary Demand
Persuasive Advertising
Build Selective Demand
Comparison Advertising
Compares One Brand to Another
Reminder Advertising
Keeps Consumers Thinking
About a Product.
Advertising Budget Factors
Market Share &
Consumer Base
Stage in the
Product Life Cycle
Product
Substitutability
Competition &
Clutter
Advertising
Frequency
Profiles of Major Media Types
Newspapers
Advantages: Flexibility, timeliness; good local market coverage;
broad acceptance, high believability
Limitations:
Television
Advantages:
Limitations:
Direct Mail
Advantages:
Limitations:
Short life; poor reproduction quality; small
pass-along audience
Combines sight, sound, motion; high attention;
high reach; appealing to senses
High absolute costs; high clutter; fleeting exposure;
less audience selectivity
Audience selectivity; flexibility, no ad competition within same medium; allows personalization
Relative high cost; “junk mail” image
Profiles of Major Media Types
Radio
Advantages: Mass use; high geographic and demographic
selectivity; low cost
Limitations:
Magazines
Advantages:
Limitations:
Outdoor
Advantages:
Limitations:
Audio only; fleeting exposure; lower attention;
nonstandardized rates; fragmented audiences
High geographic and demographic selectivity;
credibility and prestige; high-quality reproduction;
long life; good pass-along readership
Long ad purchase lead time; waste circulation;
no guarantee of position
Flexibility; high repeat exposure; low cost;
low message competition
Little audience selectivity; creative limitations
Advertising strategy message execution
Turning the “Big Idea” Into an Actual Ad to Capture
the Target Market’s Attention and Interest.
Testimonial
Evidence
Scientific
Evidence
Technical
Expertise
Slice of Life
Lifestyle
Typical
Message
Execution
Styles
Fantasy
Mood or
Image
Personality
Symbol
Musical
Advertising Evaluation
Advertising Program Evaluation
Communication Effects
Sales Effects
Is the Ad Communicating Well?
Is the Ad Increasing Sales?
Why the increase in Sales Promotion?
•
•
•
•
•
•
•
•
•
Growing retailer power
Declining brand loyalty
Increased promotional sensitivity
Brand proliferation
Fragmentation of consumer market
Short-term focus
Increased managerial accountability
Competition
Clutter
Channels of Sales Promotions
MANUFACTURER
Push
Trade
Promotions
RETAILER
Push
Retail
Promotions
CONSUMER
Consumer
Promotions
Pull
Consumer promotion
Consumer-Promotion Objectives
Consumer-Promotion Tools
Entice Consumers to
Try a New Product
Samples
Lure Customers Away
From Competitors’ Products
Advertising
Specialties
Coupons
Get Consumers to “Load Up’
on a Mature Product
Cash Refunds
Patronage
Patronage
Rewards
Rewards
Hold & Reward Loyal
Customers
Price Packs
Consumer Relationship
Building
Premiums
Contests
Sweepstakes
Games
Point-of-Purchase
Displays
“Deal Proneness,”
Liechtenstein, Burton, &
Netemeyer, Journal of
Retailing, Summer 1997
•
•
•
Examination of “deal proneness”
among consumers in a supermarket
setting
Surveys & Grocery Receipts used
Eight types of deals:
– Cent-off, One-free, Gift, Display,
Rebate, Contest, Sale, & Coupon
“Deal Proneness,”
Liechtenstein, Burton,
& Netemeyer
Cluster analysis yielded two interpretable
results:
 49% are “deal prone,” 51% not
 24% High “Deal prone,” 50%
intermediate, 26% deal insensitive
 “Deal-proneness” a generalized
construct - (crosses type of promotion)
 Younger & Less educated more likely to
be deal prone
Trade Promotions
Trade-Promotion Objectives
Trade-Promotion
Tools
Persuade Retailers or
Wholesalers to Carry a Brand
Price-Offs
Premiums
Give a Brand Shelf Space
Allowances
Patronage
Displays
Rewards
Buy-Back
Guarantees
Discounts
Promote a Brand in
Advertising
Push a Brand to Consumers
Free Goods
Contests
Push Money
Specialty
Advertising
Items
Business-to-Business Promotion
Business-Promotion
Objectives
Business-Promotion Tools
Generate Business Leads
Stimulate Purchases
Reward Customers
Motivate Salespeople
Conventions
Trade Shows
Sales Contests
Major public relation tools
Public
Service
Activities
Web Site
News
Speeches
Corporate
Identity
Materials
Audiovisual
Materials
Written
Materials
Special
Events