Chapter 14 Communicating Customer Value: Integrated Marketing Communications Strategy To build good customer relationships, companies must: Develop

velop a good product Price it attractively Make it available to target customers Communicate their value propositions to customer, what the company communicates should not be left to chance

The Promotion Mix (aka Marketing Communications Mix) Promotion mix is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships. Although Promotion mix is the companys primary communications activity, the entire marketing mix 4Ps must be coordinated for the greatest impact. The five major promotion tools are defined as follows: Advertising: o Any paid form of non personal presentation and promotion of ideas, gods, or services by an identified sponsor o Includes broadcast, print, internet, outdoor, and other forms Sales promotion: o Short-term incentives to encourage the purchase or sale of a product or service o Includes discounts, coupon, displays, and demonstrations Personal Selling: o Personal presentation by the firms sales force for the purpose of making sales and building customer relationships o Includes sales presentations, trade shows, and incentive programs Public relations: o Building good relations with the companys various publics by obtaining favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumours, stories, and events o Includes press releases, sponsorships, special events, and web pages Direct marketing: o Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships o Catalogs, telephone marketing, kiosks, internet, mobile marketing

Integrated Marketing Communications The new marking communications model Factors that are changing the face of todays marketing communications: o Consumers are changing capable of finding information on their own o Marketing strategies are changing companies are developing focussed marketing programs as mass markets have fragmented o Sweeping advances in communications technology are causing remarkable changes in the ways in which companies and customers communicate with each other Significant increase in the number of information and communication tools New media formats let marketers reach smaller groups of consumers in more interactive, engaging ways Regardless of whether its traditional or digital, the key is to find the mix of media that best communicates the brand message and enhances the customers brand experience

The need for Integrated Marketing Communications Integrated Marketing Communications (IMC) o Carefully integrating and coordinating the companys many communications channels to deliver a clear, consistent, and compelling message about the organization and its products o More companies today are adopting the concept of IMC because commercial messages conflict one another as a result from the carious communication channels o Aims to build strong customer relationships by showing how the company and its products can help customers solve their problem o Involves identifying the target audience and shaping a well-coordinated promotional program to obtain the desired audience response

A view of the Communication Process

Communication involves nine elements: Sender: o The party sending the message to another party Receiver: o The party receiving the message sent by another party Message: o The set of symbols that the sender transmits o Ie the actual advertisement Media: o The communication channels through which the message moves from the sender to the receiver Encoding: o The process of putting thought into symbolic form o Ie using words, wounds, illustrations in an advertisement that will convey the intended message Decoding: o The process by which the receiver assigns meaning to the symbols encoded by the sender Response: o The reactions of the receiver after being exposed to the message. Could by any pf hundreds of possible responses Feedback: o The part of the receivers response communicated back to the sender Noise: o The unplanned static or distortion during the communication process, which results in the receiver getting a different message then the one the sender sent

For a message to be effective: Senders encoding must mesh with the receivers decoding process Consists of words and other symbols that are familiar to the receiver The more the senders field of experience overlaps with that of the receiver, the more effective the message is likely to be

Steps in Developing Effective Marketing Communication Identifying the target audience The target audience will heavily affect the communicators decisions on what will be said, how it will be said, when it will be said, where it will be said, and who will say it

Determining the Communication Objectives Buyer readiness stages: o The stages consumers normally pass through on their way to a purchase including awareness, knowledge, liking, preference, conviction, and finally, the actual purchase A goal of marketing in general and of marking communications in particular, is to move target customers through the buying process. It starts with understanding customer needs and wants o Awareness knowledge liking preference conviction purchase

Designing a message The message should get attention, hold interest, arouse desire, and obtain action (AIDA model) Message content o Figure out an appeal or theme that will produce the desired response o Three types of appeals: Rational appeals relate to the audiences self interest Emotional appeals attempt to stir up either negative or positive emotions that can motivate purchase Moral appeals are directed to an audiences sense of what is right and proper Message structure o Three message structure issues Whether to draw a conclusion or leave it to the audience Whether to present the strongest arguments first or last Whether to present a one-sided argument (products strengths) or a two-sided arguments (products strengths and weaknesses) Message format o Print ad Decide on the headline, copy, illustration, and colours o Over the radio Choose words, sounds and voices

On television or in person All the above elements plus body language must be planned

Choosing Media Personal communicating channels o Effective because they allow for personal addressing and feedback o Some channels are controlled directly by the company (eg contacting business buyers) while some are not (eg consumer advocates, online buying guides) o Word of mouth influence Carries great weight for products that are expensive, risky, or highly visible o Buzz marketing Involves cultivating opinion leaders and getting them to spread information about a product or service to others in their communities Nonpersonal communication channels o Atmospheres are designed environments that create or reinforce the buyers leanings toward buying a product o Events are staged occurrences that communicate messages to target audiences (eg grand openings, shows, exhibits) o Affects buyer directly

Selecting the Message Source In either personal or nonpersonal communication, the messages impact also depends on how the target audience views the communicator Message delivered by highly credible sources are more persuasive Eg endorsements and food companies promote to doctors, dentists and other health care providers so they would recommend specific food products to their patients

Collecting feedback Communicator must research its effect on the target audience Feedback on marketing communications may suggest changes in the promotion program or in the product offer itself

Setting the Total Promotion Budget and Mix Setting the Total Promotion Budget Four common methods used to set the total budget for advertising: Affordable method o Set the promotion budget at the level they think the company can afford o Often used by small businesses o It ignores the effects of promotion on sales o Can result in overspending on advertising, it more often results in underspending Percentage of sales method o Setting the promotion budget at a certain percentage of current or forecasted sales or they budget a percentage of the unit sales price o Based on the availability to funds rather than on opportunities o Advantages: Simple to use Helps management think about the relationship between promotion spending, selling price, and profit per unit o Disadvantages: Wrongly views sales as the cause of promotion rather than as the result Prevent increased spending needed to turnaround falling sales Long-range planning is difficult because budget varies with year-to-year sales Does not provide any basis for any choosing a specific percentage Competitive parity method o Setting promotion budgets to match competitors outlays o Why? Competitors budgets represent the collective wisdom of the industry Spending what competitors spend helps prevent promotion wars BUT no grounds for believing that the competition has a better idea of what a company should be spending on promotion than the company itself. Companies differ greatly, and each has its own special promotion needs. Finally, there is no evidence that budgets based on competitive parity prevent promotion wars Objective and task method o Company sets its promotion budget based on what it wants to accomplish with promotion o Involves:

Defining specific promotion objectives Determining the tasks needed to achieve these objectives Estimating the costs of performing these tasks Advantages: Forces management to spell out its assumptions about the relationship between dollars spent and promotion results Disadvantages: Most difficult method to use Difficult to determine which specific tasks will achieve the stated objectives

Shaping the Overall Promotion Mix Factors that influence the marketers choice of promotion tools: The nature of each promotion tool o Advertising: Reach masses of geographically dispersed buyers at a low cost per exposure Enables seller to repeat message many times Viewed by consumers as more legitimate Impersonal and cannot be as directly persuasive as can company salespeople costly o Personal selling: Most effective tool in building up buyers preferences, convictions, and actions Involves personal interaction thus allows one to observe others needs and characteristics and make the necessary adjustments Allows all kinds of customer relationship Requires longer-term commitment o Sales promotion: Such as coupons, contests, premiums, and others Attract customers attention, offer strong incentives to purchase and can be used to dramatize product offers and boost sagging sales However, this method is short-lived and are not as effective as advertising or personal selling in building long-run brand preference and customer relationships o Public relations: Come across as very believable to consumers Can reach out to people who avoid salespeople and advertisement Messages gets to buyers as news rather than as a sales-directed communication o Direct marketing: Such as direct mail, catalogs, online marketing, telephone marketing etc Less public and is directed to a specific person Immediate and customized Messages can be prepared very quickly and can be tailored to appeal to specific consumers Interactive Suited to highly targeted marketing efforts and building one-to-one customer relationships Promotion Mix Strategies o Push strategy Involves pushing the product through marketing channels to final consumers o Pull strategy Producer directs its marketing activities (primarily advertising and consumer protection) toward final consumers to induce them to buy the product o A strong emphasis on push strategy may drive short run sales but at the expense of long-term brand equity o Companies consider many factors when designing their promotion mix strategies, depending on the type/product and the product life-cycle stage Business-to-consumer companies usually pull more Business-to-business marketers tend to push more o Effects of different promotion tools also vary with the stages og the product life cycle

Integrating the Promotion Mix Integrating promotion mix starts with customers Communication at each touchpoint must deliver consistent messages and positioning All of the firms functions must cooperate to jointly plan communications efforts An integrated promotion mix maximizes the combined effects of all a firms promotional efforts

Socially Responsible Marketing Communication Advertising and Sales Promotion

Companies must avoid false or deceptive advertising Sellers must avoid bait-and-switch advertising that attracts buyers under false pretenses A companys trade promotion activities are also closely regulated However, companies can use advertising and other forms of promotion to encourage and promote socially responsible programs and actions

Personal Selling Companys salespeople must follow the rules of fair competition Federal Trade Commission (FTC) adopted a three-day cooling off period o Special protection for consumers who purchased when called on, can cancel a contract or return the merchandise and get their money back no questions asked May not offer bribes to purchasing agents or others who can influence a sale Must not disparage competitors or competing products by suggesting things that are not true