Marketing Management

Dawn Iacobucci

2010 South-Western, a part of Cengage Learning

Advertising Media and Integrated Marketing Communications

Chapter 10

Marketing Framework

Advertising Media
Ad budgets are usually fixed, so choices must be made on how to allocate resources across media
1. How much do we spend? 2. When do we spend? 3. Which media do we use?

How Much Do We Spend?

Ad budget as a percentage of sales
Use past percentage or industry norm Make adjustments based on marketing goals

How Much Do We Spend?

Ad budget approximately on par with competitors Service providers track companies ad expenditures

How Much Do We Spend?

When sales decline, previous approaches imply budgets should be cut
Smaller ad budgets mean less presence and a cycle of decreased sales

The strategic advertising goal approach views advertising as an investment

Determine advertisings goal and work backward to calculate expenditure

Discussion Question
Should advertising be seen as an expense or an investment? Why?

Reach, Frequency and GRPs

Reach: the share of your target that has seen your ad at least once Frequency: the average number of times target saw the ad (within set duration) GRPs: Reach X Frequency
Ad reached 25% of target an average of 3 times - the ad delivered 75 GRPs

Reach & Frequency

For reach, the goal is to expose as many of the target customers as possible
Find most cost efficient media for reaching target

For frequency, it depends on the goal

Awareness and memory can probably be attained with a few ads Persuasion may take more If ad/product is readily understood, wear-out may occur

Media Planning
You pay more to get more--but the relationship is not perfect

Return on Marketing Investments

Example
Greys Anatomy: 9.3 million TVs Greys Anatomy: $440,000 per 30 seconds McDonalds meal contribution: $0.50
$440,000/0.50 = 880,000 meals/breakeven

9.3 million viewers are exposed; thus, McDonalds needs 9.5% to purchase
880,000 / 9.3 million = 9.5%

The question isIs this reasonable?

Media Planning
Continuous: regularity in ad exposure
Periodicity depends purchase cycles
Coca-Cola, McDonalds, Ford, etc.

Occasional: pop up from time to time

Periodicity depends on purchase cycles

Seasonal: infrequent and focused on the preterm season for the product
School supplies in August, grills in April, etc.

Discussion Questions
What type of schedule (continuous, occasional or seasonal) would you use if you were marketing Coca-cola?
What about your school?

Media Selection
The choice of media outlet is difficult because
There are more media outlets
e.g., more television stations, more radio stations via XM, the Internet, etc.

Audiences are fragmented across the many media and use technology to zip past ads

IMC
IMC: marketing messages must be seamlessly integrated across media
Positive relationship between IMC and good brand outcomes
High awareness, brand loyalty, sales, etc.

Some elements should be consistent, some should vary based on the strengths of the various media

Difficult to implement because ad agencies are not full service providers

Discussion Questions
How has Pepsi or Coca-Cola implemented IMC? Give several examples.
Can you give any examples of companies who do not effectively implement IMC?

Media Strengths-Business

Business Strengths of Media

TV ads are most expensive yet yield the largest reach Magazines have broad appeal or can be targeted Radio and newspapers are often purchased nationally, but can be purchased for local markets

Business Strengths of Media

Radio, newspapers, and magazines are less expensive than TV, but they also deliver smaller audiences Billboards, bus ads, yellow page ads, etc. are relatively inexpensive and effective in covering local numbers Magazines require long lead times for production but have nice reproduction quality

Business Strengths of Media

Newspapers and magazines are nonintrusive but viewers can ignore ads Online advertising and direct mail have the best customization options Online ads are inexpensive and can be targeted, yet, penetration isnt 100% Direct mail is relatively inexpensive and targeted, but it is not efficient (junk mail)

Media Strengths-Ad Content

Ad Content Strengths of Media

TV messages need to be simple and straightforward; radio messages even more so TV allows for vivid, dramatic portrayals Print vehicles are good for detailed product information

Discussion Question
If you were a local restaurant, which type of media would you use to advertise? Why?

Beyond Advertising
IMC goes beyond integrating across traditional media. It includes personal selling, sales promotions, public relations, etc.

Personal Selling
Personal selling and a companys sales force are essential communication vehicles for many industries Accounts for 14 million jobs
Over 10% of work force

Personal Selling
Get attention of potential customer
e.g., prospecting, qualifying potential customers, and approaching them

Get interest
e.g., sales presentations

Get desire
e.g., product demonstrations, handling customers objections

Get action
e.g., closing deal, following up service

Advertising & Selling

Discussion Question
Do you think marketers of dry erase boards should use personal selling? Why or why not?

Designing a Sales Force

How many salespeople do I need?
Larger with an aggressive launch

Where do I deploy them?

How do I compensate them?
Proportion of salary and commission

Designing a Sales Force

Pull relies on advertising and sales promotions
Direct promotional efforts to consumers

Push relies more on personal selling

Direct promotional efforts to channel members
Trade allowances: price reductions to intermediaries for allocating space, etc. May be passed on to retailers salespeople as cash, training and product demonstrations, free merchandise, conventions, etc.

Discussion Questions
How might Maytag implement a push strategy? What about a pull strategy? Do you think they do both? Why or why not?

Public Relations
PR communications are the attempt of an organization to reach
Customers, suppliers, stockholders, government officials, employees, general community

PRs intention is to convey a positive image and to educate a constituency about the companys objectives
Generate goodwill on behalf of the company

PR People
Issue press kits - news releases when anything newsworthy is happening
Features news (e.g., product launch), company information, bios, history, etc.

Maintain information on web site

Arrange events
Speaking engagements, sponsorships, philanthropy, etc.

Publicity
Communication tool that the company doesn't pay for It has the appearance of objectivity
PR can prepare press releases, but there is no guarantee that they will be picked up

Publicity can be negative or positive because companies cannot directly control it

Discussion Questions
Can you describe the effects of negative publicity?
For example, describe the effects Ford and Firestone experienced following the SUV tire blow-out incidents.

Can negatively publicity be managed? If so, how?

Product Placement
Product placement is when products are integrated into shows
More subtle than ads
e.g., Hannah Montana with Adidas

Becoming increasingly popular as consumers increasingly zap ads

Over $1 billion annually Is currently illegal in most of Europe

Event Sponsorship
Event sponsorship can occur in sports, cultural or artistic endeavors
Brands draw from their positive valence and high positive energy
Nascar racing

Not clear that sponsorship is costeffective

When Coca-Cola sponsors the Olympics, do they really need the exposure?

Sales Promotions
Sales promotions activate purchase interest, thus effecting short-term sales Coupons Rebates Promo prices Trade-ins Deals for loyalty programs Free trial-sized products Contests/sweepstakes

Discussion Question
Why might Nationwide Insurance allocate money to sponsor Nascar instead of allocating money for sweepstakes?

IMC Choices Depend on

1. The target audience 2. The companys goals
Awareness Information about features and benefits Enhancement of brand attitudes Strengthening of preferences Stimulation of purchase trial Encouragement of repeat purchasing Attraction of brand switchers

Questions to Ask
Should we schedule continuously, occasionally or seasonally? What is the consumers purchase cycle? What is the level of saturation desired? What life cycle stage is the product in? What can we afford? What is best for our target? What do we want the target to know?

Example: IMC Schedule

Media Effectiveness
If goal is awareness, reach matters
Can be measured by viewership, readership, circulation numbers, traffic indices, etc.

If goal is attitude adjustment, use surveys It can be difficult to assess ROMI because customers cant always tell you where they saw the ad

Media Effectiveness
If you spend more on advertising, do you see more in sales?
Increasing ad budget relative to the competition doesnt increase sales in general Qualitative differences, such as better ad copy, can increase the likelihood that TV advertising will positively affect sales Ads that evoke positive and not negative feelings have been related to sales

Media Effectiveness
Online advertising
Track click-thru rates, downloads, inquiries, purchases, returns, etc. & compare with cost per click, per download, per acquisition, etc.
Online ad cost effectiveness is not great, but cost is low

Discussion Question
If increased advertising spending does not lead directly to increased sales, why do it?