MKT Guide for Final Test 1 PDF

Ch 18-19 - Integrated Marketing Communication: The concept of designing marketing communications programs that coordinate all promotional activities— advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message acro...

Ch 18-19 - Integrated Marketing Communication: The concept of designing marketing communications programs that coordinate all promotional activities— advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences. - Promotional Mix: The combination of one or more communication tools used to: o (1) inform prospective buyers about the benefits of the product, o (2) persuade them to try it, and o (3) remind them later about the benefits they enjoyed by using the product. - Five Promotional Elements: To communicate with consumers, a company can use one or more of five promotional alternatives: advertising, personal selling, public relations, sales promotion, and direct marketing. o Mass Selling: ▪ Advertising: Any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor. Advertising involves mass media (such as TV, radio, and magazines), which are nonpersonal and do not have an immediate feedback loop as does personal selling. Advantages: It can be attention-getting—as with the Oculus ad—and also communicate specific product benefits to prospective buyers. By paying for the advertising space, a company can control what it wants to say and, to some extent, to whom the message is sent. Advertising also allows the company to decide when to send its message (which includes how often).  Disadvantages: The costs to produce and place a message are significant, and the lack of direct feedback makes it difficult to know how well the message was received. ▪ Public Relations: A form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services. Publicity: A nonpersonal, indirectly paid presentation of an organization, product, or service. Advantages: Publicity is particularly effective when consumers lack prior knowledge of the product or service. There is a high degree of credibility due to earned not paid nature of publicity. Disadvantages: The disadvantage of publicity relates to the user’s lack of control over it. A company can invite media to cover an interesting event such as a store opening or a new-product release, but there is no guarantee that a story will result, that it will be positive, or that the target audience will receive the message. ▪ Sales Promotion: A short-term inducement of value offered to arouse interest in buying a product or service. Advantages: Short-term nature of these programs (such as a coupon or sweepstakes with an expiration date) often stimulates sales for their duration. Offering value to the consumer in terms of a cents-off coupon or rebate may increase store traffic from consumers who are not store- loyal.  Disadvantages: If sales promotions are conducted continuously, they lose their effectiveness. Customers begin to delay purchase until a coupon is offered, or they question the product’s value. Some aspects of sales promotions also are regulated by the federal government o Customized Selling: ▪ Personal Selling: The two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision. Advantages: A salesperson can control to whom the presentation is made, reducing the amount of wasted coverage or communication with consumers who are not in the target audience. The personal component of selling has another advantage in that the seller can see or hear the potential buyer’s reaction to the message. If the feedback is unfavorable, the salesperson can modify the message. Disadvantages: Different salespeople can change the message so that no consistent communication is given to all customers. The high cost of personal selling is probably its major disadvantage. On a cost- per-contact basis, it is generally the most expensive of the five promotional elements. ▪ Direct Marketing: A promotional alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet. Advantages: Direct Marketing offers the most targeted and customizable approach of the five methods. It can  also be implemented very quickly and offers immediate customer feedback. Disadvantages: First, most forms of direct marketing require a comprehensive and up-to-date database with information about the target market. Developing and maintaining the database can be expensive and time- consuming. In addition, growing concern about privacy has led to a decline in response rates among some customer groups. - Developing the Promotional Mix: o The Product Life Cycle: ▪ Introduction: Goal: Informing consumers and increase awareness level. Tools: Reliance on all tools but particularly advertising and pre-release publicity. ▪ Growth Goal: Persuade customer to buy the product rather than the substitutes, Gain brand preference and solidify distribution. Tools: Primary focus on advertising to stress brand differences and personal selling to gain power in distribution. ▪ Maturity Goal: Maintain existing buyers and remind them of product. Tools: Focus on a mix of sales promotion and direct marketing (retargeting) ▪ Decline Goal: Phaseout product.  Tools: Cut spending on all mixes. o Product Characteristics: ▪ Complexity: Refers to the technical sophistication of the product. As complexity goes up move from Mass mediums to customized mediums. ▪ Risk: Degree of risk (financial, social, or physical) represented by the product’s purchase. As risk goes up move from Mass mediums to customized mediums. ▪ Ancillary Services: Degree of service or support required after the sale. As degree goes up move from Mass mediums to customized mediums. o Stages of the consumer journey ▪ Pre-purchase: Focus on Advertising to inform customer. Use sales promotion to stimulate trials. ▪ Purchase: Focus on a mix of personal selling, sales promotion and direct marketing. ▪ Post-purchase: Focus on personal selling and public relations to assure the buyer that the right purchase has been made. o Channel Strategies: ▪ Push Strategy: Directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. Focus on sales promotion and personal selling to stimulate demand downward. ▪ Pull Strategy: Directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product. Use advertising, public relations and direct marketing to generate demand upward. - Developing an Integrated Marketing Communications Program o Planning Stage ▪ Identifying the target audience: The proportion of the target market for the firm that the specific promotional mix is targeting is called the target audience. ▪ Specifying Promotion Objectives: Determine where in the consumers’ hierarchy of effects is the promotion focused on. Hierarchy of Effects (Purchase Funnel): The sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action that includes awareness, interest, evaluation, trial, and adoption of the product. o Awareness – Consumers’ ability to recognize and remember the product/brand o Interest – Consumers’ desire to learn about the product o Evaluation – Consumers’ appraisal of the product/brand o Trial – Consumers’ actual first purchase and use o Adoption – Consumers’ repeated purchase and use. ▪ Setting the Promotion Budget Percentage of Sales Method: Allocating funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold. o Advantages: Simple and provides a financial safeguard. o Disadvantage: Focus on short-term sales and not long-term brand building. Competitive Parity: Allocating funds to promotion by matching the competitor’s absolute level of spending or  the proportion per point of market share. Also called matching competitors or share of market. o Advantages: Competitive parity protects the brand in the marketplace. o Disadvantages: Might have very different promotional objectives from the competitor. All you can afford: Allocating funds to promotion only after all other budget items are covered. o Advantages: Fiscally conservative. o Disadvantages: Same as % of Sales method. Objective and Task: Allocating funds to promotion whereby the company: (1) determines its promotion objectives; (2) outlines the tasks to accomplish those objectives; and (3) determines the promotion cost of performing those tasks. o Advantages: Integrates strengths of all the three methods. o Disadvantages: Requires strong judgement to select the right tasks. ▪ Selecting the Right Promotional Tools: Based on the budget and objectives, select which and how much of each of the five promotional tools re to be used. ▪ Designing the Promotion: This stage involves designing the advertising copy, artwork, sales training, sales promotion activities, and/or publicity elements. ▪ Scheduling the Promotion: Decide the effective timing and frequency for each element of the promotion mix. - Implementation Stage o Pretest the promotion  o Carry out the Promotion - Evaluation Stage o Posttest the Promotion o Make needed changes - Direct Marketing: o Tools Available ▪ Direct Mails and Catalogs ▪ Television Home Shopping ▪ Telemarketing ▪ Direct Selling ▪ Online marketing/Retargeting ▪ SMS and E-Mail Marketing o Consumer Advantages: ▪ Consumer can shop from the convenience of their home. ▪ Fun and entertaining. ▪ Offers more privacy than in-store shopping. ▪ Better quality of customer service. o Firm Metrics: ▪ Direct Orders- The result of direct marketing offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction. ▪ Lead Generation - The result of a direct marketing offer designed to generate interest in a product or service and a request for additional information. ▪ Traffic Generation - The outcome of a direct marketing offer designed to motivate people to visit a business. - Advertising: - Product Advertising: Advertisements that focus on selling a product or service and which take three forms:  o (1) pioneering (or informational) – Focus on creating consumer awareness o (2) competitive (or persuasive) – Focus on persuading customers to switch from competitors’ products o (3) reminder. – Focus on reinforcing previous knowledge of a product. - Institutional Advertising - Advertisements designed to build goodwill or an image for an organization rather than promote a specific product or service. o Advocacy – State the position of a company on an issue. o Pioneering – Announce what a company is, what it can do, and where it is located o Competitive – Promote the advantages of one class of products over another. o Reminder – Bring the company’s name to the attention of the target market again. - Developing the Advertising Program - Identifying the target audience: Identify which portion of the target market is to be reached by the advertisement. - Specifying Advertising Objectives: Same as promotional objectives - Setting the Advertising budget. - Designing the Advertisement ▪ Message Appeals Fear Appeals – Focus on suggest consumer avoid some negative experience through the use of the product. Sex Appeals – Suggest that the product will increase the attractiveness of the user. Humorous Appeals – Suggest that the product is more fun or exciting than competitors’ offerings. - Creating the Actual Message - Selecting the Right Media – Selecting between different alternatives such as Internet, TV, Direct Mail, Radio, OOH, Newspapers, using the following metrics. o Reach: The number of different people or households exposed to an advertisement. o Rating: The percentage of households in a market that are tuned to a particular TV show or radio station. o Frequency: The average number of times a person in the target audience is exposed to a message or an advertisement. o Gross Rating Points (GRPs): A reference number used by advertisers that is obtained by multiplying reach (expressed as a percentage of the total market) by frequency. o Cost Per Thousand (CPM): The cost of reaching 1,000 individuals or households with the advertising message in a given medium (M is the Roman numeral for 1,000). o Comparing Different Media: Television: o Advantages: Extremely effective and carries prestige. o Disadvantages: Extremely expensive and leads to wasted coverage. Difficult to measure impact. Radio o Advantage: Highly segmented medium. o Disadvantage: No visual component, and easy to tune out of radio commercials. Magazines o Advantages: Highly specialized and especially useful for psychographic targeting. o Disadvantages: High cost and wasted coverage.  Newspapers o Advantages: Cheap and quick turnaround. o Disadvantages: Limited visual appeal and declining readership. Internet o Advantages: Highly targeted and interactive. Especially effective for retargeting o Disadvantages: Lack of clear regulatory standards. Difficult to measure impact on offline sales Out of Home o Advantages: Effective for reminder advertising in conjecture with larger campaigns and Geographical targeting o Disadvantages: Visual clutter and saturation - Scheduling the advertising o Continous (Steady) Schedule: Suitable for mass products. Ex – Breakfast Cereal. o Flighting (Intermittent) Schedule: Suitable for seasonal products. Ex – Ski Wear. o Pulse (Burst) Schedule: Suitable for mass products with seasonal spikes. Ex – Automobiles with pulse during holiday seasons. o Executing the Advertising Program o Pretesting the Program: Tests conducted before an advertisement is placed in any medium to determine whether it communicates the intended message or to select among alternative versions of the advertisement. Portfolio Tests: Test copy alternatives by creating a portfolio of different ads, and ask consumers to evaluate them comparatively.  Jury Tests: Create a panel of customers and show them a specific ad to measure consumer response Theater Tests: Invite consumers to view new television shows or movies and show consumers test commercials o Carrying Out the Advertising Program o Full Service Agency: An advertising agency that provides the most complete range of services, including marketing research, media selection, copy development, artwork, and production. Useful for large companies who run extensive, complex advertising campaigns. o Limited Service Agency: An advertising agency that specializes in one aspect of the advertising process, such as providing creative services to develop the advertising copy, buying previously unpurchased media space, or providing Internet services. Useful for small companies who have focused campaigns. o In-House Agency: Consists of the company’s own advertising staff, who may provide full services or a limited range of services. Useful for medium scale companies. o Assessing the Advertising o Post testing the advertising: Tests conducted after an advertisement has been shown to the target audience to determine whether it accomplished its intended purpose. Aided Recall – Asking consumers if they remember seeing the specific ad Unaided Recall – Asking respondents which ads they saw without any prompting for specific ads. Attitude Tests – Consumer survey before and after airing advertisements to measure change in attitudes.  Inquiry Tests – Offer additional information, product samples, or premiums as part of the campaign. Effective ads generate more inquiries than ineffective ones. Sales Tests – Use controlled experiments to compare consumer purchase tests. - Sales Promotion ▪ Consumer Oriented Sales Promotions: Sales tools used to support a company’s advertising and personal selling directed to ultimate consumers. Also called consumer promotions. Coupons: Offering a discounted price to encourage trial. Can stimulate sales in the short term. Expensive to produce and distribute. Commonly abused by customers. Deals: Short term price reductions. Useful to flank competing new products. Premiums: Offering free merchandise such as Happy Meal to create a bundle between the two brands. Contests: Create interactive competitions to increase customer engagement. Sweepstakes: Simple lottery contests to create engagement. Samples: Offering free trials or small samples to increase adoption. Loyalty Programs: Offer consumers rewards against each purchase made. Point-of-Purchase Display: Advertising displays at checkout counters. Rebates: Cash-back on proof of purchase.  Product Placement: A consumer sales promotion tool that uses a brand-name product in a movie, television show, video game, or a commercial for another product. ▪ Trade Oriented Sales Promotions: Sales tools used to support a company’s advertising and personal selling directed to wholesalers, distributors, or retailers. Also called trade promotions. Allowances and Discounts: o Merchandise Allowance: Reimbursing a retailer for extra in-store support o Case allowance: Discount on bulk/case purchases o Finance allowance: Paying retailers for the financing costs or financial losses associated with consumer promotions. Cooperative Advertising: Advertising programs whereby a manufacturer pays a percentage of the retailer’s local advertising expense for advertising the manufacturer’s products. Training of Distributors’ Salesforces o Public Relations ▪ Publicity Tools: Methods of obtaining nonpersonal presentation of an organization, product, or service without direct cost, such as news releases, news conferences, and public service announcements (PSAs). News Release: Issuing an announcement regarding changes or news launches to generate coverage in media. News Conference: Inviting representatives of the media to an informational meeting  Public Service Announcements: Free space or time donated by the media used by Nonprofit organizations High-Visibility Individuals: Use popular users with influence to create positive brand associations. o Personal Selling: The two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision. o Sales Management: Planning the selling program and implementing and evaluating the personal selling effort of the firm. o Relationship Selling: The practice of building ties to customers based on a salesperson’s attention and commitment to customer needs over time. o Types of Salespeople: ▪ Order Taker: Processes routine orders or reorders for products that were already sold by the company. ▪ Order Getter: Sells in a conventional sense and identifies prospective customers, provides customers with information, persuades customers to buy, closes sales, and follows up on customers’ use of a product or service. ▪ Customer Sales Support: Augment the selling effort by performing a variety of support services. Missionary Salespeople – Concentrate on performing promotions and introducing new products. Sales Engineers: Specialize in identifying, analyzing, and solving customer problems. ▪ Team Selling: Use an entire team of professionals in selling to and servicing major customers. Conference Selling: Meet with buyers directly to discuss problems and opportunities  Seminar Selling: Conduct an educational program for a customers’ technical staff