19-1© 2000 McGraw-Hill Ryerson Limited

C H A P T E R N I N E T E E N

INTEGRATED MARKETINGMARKETING COMMUNICATIONS &DIRECT MARKETING

19-2© 2000 McGraw-Hill Ryerson Limited

AFTER READING THIS CHAPTER YOU SHOULDAFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO:BE ABLE TO:

� Explain the communication process andits elements.

� Understand the promotional mix and theuniqueness of each component.

� Select the promotional approachappropriate to a product�s life-cyclestage and characteristics.

19-3© 2000 McGraw-Hill Ryerson Limited

AFTER READING THIS CHAPTER YOU SHOULDAFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO:BE ABLE TO:

� Differentiate between the advantages of

push and pull strategies.

� Appreciate the value of an integrated

marketing communications approach.

� Understand the value of direct

marketing for consumers and sellers.

19-4© 2000 McGraw-Hill Ryerson Limited

Movies and Name Brand ProductsMovies and Name Brand ProductsBenefits accrue to both the movie studios and thecompany�s product or service when brandedproducts and services are featured in movies. Someexamples are American Online in You�ve Got theMail, BMW Z3 in James Bond�s Goldeneye, DunkinDonuts in Lethal Weapon 4, Aviator sunglasses inTop Gun, etc.

It�s not just movies. Other outlets include musicvideos, TV shows, and even other companiescommercials. Placement of products in the manymedia alternatives available today is becoming animportant part of marketing and promotion.

19-5© 2000 McGraw-Hill Ryerson Limited

Source

Channel of

Message

Communication

Encode ReceiverDecode

Noise

Noise

Feedback loop

Noise

Fields ofexperience

PP19�1 The Communication ProcessPP19�1 The Communication Process

19-6© 2000 McGraw-Hill Ryerson Limited

Errors in CommunicationErrors in CommunicationErrors in communication can happen in severalways:

1. the source may not adequately transform the abstract idea into an effective set of symbols,

2. a properly encoded message may be sent throughthe wrong channel and never make it to the receiver,

3. the receiver may not properly transform the set of symbols into the correct abstract idea, and

4. feedback may be so delayed or distorted that it isof no use to the sender.

19-7© 2000 McGraw-Hill Ryerson Limited

Concept CheckConcept Check1. What are the six elements required

for communication to occur.

2. A difficulty for Canadian companies

advertising in international markets is

that the audience does not share the

same ___________.

3. A misprint in a newspaper ad is an

example of ____________.

19-8© 2000 McGraw-Hill Ryerson Limited

PP19-2a The Promotional MixPP19-2a The Promotional MixPromotional Mass Versus

Element Customized Payment Strengths Weaknesses

Advertising Mass fees paid for - efficient means - high absolute

space or time for reaching costs

large numbers - difficult to

of people receive good

feedback

Personal Selling Customized fees paid to - immediate - extremely

salespeople as feedback expensive per

either salaries or - very persuasive exposure

commissions - can select - messages may

audience differ between

- can give complex salespeople

information

19-9© 2000 McGraw-Hill Ryerson Limited

PP19-2b The Promotional MixPP19-2b The Promotional MixPromotional Mass Versus

Element Customized Payment Strengths Weaknesses

Public Relations Mass no direct - often the most - difficult to get

payment credible source media

in consumer�s cooperation

mind

Sales Promotion Mass wide range of - effective at - easily abused

fees paid, changing - can lead to

depending on behaviour in promotion

promotion short run wars

selected - very flexible - easily

duplicated

19-10© 2000 McGraw-Hill Ryerson Limited

PP19-2c The Promotional MixPP19-2c The Promotional MixPromotional Mass Versus

Element Customized Payment Strengths Weaknesses

Direct Marketing Customized cost of - messages can be - declining

communication prepared customer

through mail, quickly response

telephone or - facilitates - database

computer relationship management

with customer is expensive

19-11© 2000 McGraw-Hill Ryerson Limited

Concept CheckConcept Check1. Explain the difference between

advertising and publicity when both

appear on television.

2. Which promotional element should be

offered only on a short-term basis?

3. Cost per contact is high with the

________ element of the promotional

mix.

19-12© 2000 McGraw-Hill Ryerson Limited

Integrating the Promotion MixIntegrating the Promotion Mix

In putting together the promotion mix, a marketer

must consider:

1. The balance of elements, such as which element

should be emphasized and to what extent; and

2. Because the various promotional elements are

often the responsibilities of different

departments, coordinating a consistent

promotional effort is necessary.

19-13© 2000 McGraw-Hill Ryerson Limited

Factors that Influence the Use of Promotional Tools

The Promotional MixThe Promotional Mix

AdvertisingAdvertising Personal selling

Personal selling

Public Relations

Public Relations

Sales promotion

Sales promotion

Balance considerations� Target audience� Product life cycle� Product characteristics� Stages of the buying decision� Channel strategies

Balance considerations� Target audience� Product life cycle� Product characteristics� Stages of the buying decision� Channel strategies

Integrated MarketingCommunications Program

Integrated MarketingCommunications Program

DirectMarketing

DirectMarketing

19-14© 2000 McGraw-Hill Ryerson Limited

The Target AudienceThe Target Audience

Promotional programs may bedirected at the ultimate consumer or an intermediary, or both.

19-15© 2000 McGraw-Hill Ryerson Limited

PP19-3 Promotional Tools used over the Product Life Cycle ofPP19-3 Promotional Tools used over the Product Life Cycle of Purina Puppy Chow Purina Puppy Chow

Introduction

Growth Maturity

Decline

To inform To persuade To remind

Stage ofproduct

lifecycle

Promotionalobjective

Promotionalactivity

� Publicity inveterinarymagazines

� Advertising� Salesforce calling� on intermediaries� Sales promotion

in form offree samples

� Personal sellingto intermediaries

� Advertising todifferentiatePuppy Chowattributes fromthose ofcompetingbrands

� Reminderadvertising

� Sales promotion inform of discountsand coupons

� Limited personalselling

� Direct mailreminders

� Littlemoneyspent onpromotion

19-16© 2000 McGraw-Hill Ryerson Limited

Product CharacteristicsProduct Characteristics

Three specific types of product characteristics to beconsidered:

1. Complexity of the product/service

2. Degree of risk represented by the product/ service purchase

a. financial risk

b. social risk

c. physical risk

3. Ancillary services with the product/service

19-17© 2000 McGraw-Hill Ryerson Limited

Stages of the Buying DecisionStages of the Buying Decision

The importance of the promotional

elements varies with the three stages

in a consumer�s purchase decision:

1. Prepurchase stage

2. Purchase stage

3. Postpurchase stage

19-18© 2000 McGraw-Hill Ryerson Limited

PP19-4PP19-4 How the Importance of Promotional Elements Varies How the Importance of Promotional Elements Varies During the Consumer�s Purchase Decision During the Consumer�s Purchase Decision

Prepurchase Purchase Postpurchase

Personal selling

Sales promotion

Advertising

Imp

orta

nce

of

pro

mot

ion

al t

ool

High

Low

Stage of consumer�s purchase decision

Direct Marketing

Public relations

19-19© 2000 McGraw-Hill Ryerson Limited

PP19�5 A Comparison of Push and Pull Promotional PP19�5 A Comparison of Push and Pull Promotional SstrategiesSstrategies

ManufacturerManufacturer

WholesalerWholesaler

RetailerRetailer

ConsumerConsumer

Flow ofpromotion;mainlypersonalsellingdirected tointermediaries

Flow ofdemand

stimulation

ManufacturerManufacturer

WholesalerWholesaler

RetailerRetailer

ConsumerConsumer

Flow ofpromotion;mainly advertisingdirected toconsumers

Flow ofdemand

stimulation

A. Push strategy B. Pull strategy

19-20© 2000 McGraw-Hill Ryerson Limited

Integrated Marketing Communications (IMC)Integrated Marketing Communications (IMC)

Integrated marketing communicationsrefers to the concept of designingmarketing communications programsthat coordinate all promotional activities-- advertising, personal selling, salespromotion, public relations, and directmarketing -- to provide a consistentmessage across all audiences.

19-21© 2000 McGraw-Hill Ryerson Limited

Integrated Marketing Communications (IMC)Integrated Marketing Communications (IMC)

Successful IMC programs use a process referred toas the IMC audit, which

a. analyzes the internal communication network ofthe company,

b. identifies key audiences,

c. evaluates customer databases,

d. assesses messages in recent ads, public relations releases, packaging, video news releases, signage,sales promotion pieces, and direct mail,

e. and determines managers� knowledge of IMC.

19-22© 2000 McGraw-Hill Ryerson Limited

Concept CheckConcept Check

1. For consumer products, why is advertising

emphasized more than personal selling?

2. Explain the differences between a push

strategy and a pull strategy.

3. Integrated marketing communications

provide a __________ message across all

audiences.

19-23© 2000 McGraw-Hill Ryerson Limited

PP19-6 The Promotion Decision ProcessPP19-6 The Promotion Decision Process

Corrective actions Corrective actions

PlanningDeveloping the Promotion Program- identify the target audience- specify the objectives- set the budget- select the right promotional elements- design the promotion- schedule the promotion

Implementation

Executing thepromotion program- pretest the promotion- carry out the promotion

Control

Evaluating thepromotion program- posttest the promotion- make needed changes

19-24© 2000 McGraw-Hill Ryerson Limited

The Consumer�s Hierarchy of EffectsThe Consumer�s Hierarchy of EffectsThe stages a prospective buyer goes through from initialawareness to eventual action are:1. Awareness. The consumer�s ability to recognize and remember the product or brand name.2. Interest. An increase in the consumer�s desire to learn about some of the features of the product or brand.3. Evaluation. The consumer�s appraisal of the product or brand on important attributes.4. Trial. The consumer�s actual first purchase and use of the product or brand.5. Adoption. Through a favourable experience on the first

trial, the consumer�s repeated purchase and use of theproduct or brand.

19-25© 2000 McGraw-Hill Ryerson Limited

Methods Used to Set the Promotion BudgetMethods Used to Set the Promotion Budget

1. Percentage of Sales

2. Competitive Parity

3. All-You-Can-Afford

4. Objective and Task

19-26© 2000 McGraw-Hill Ryerson Limited

PP19-7 The Objective and Task ApproachPP19-7 The Objective and Task ApproachOBJECTIVE

To increase awareness among university students for a new video

game. Awareness at the end of the semester should be 20

percent of all students from the existing 0 percent today.

TASKS COSTS

Advertisements once a week for a semester in 500 $280,000

university papers.

Direct-mail samples to student leaders on 500 50,000

university campuses

Sponsor a national contest for video-game players 100,000

Total Budget $430,000

19-27© 2000 McGraw-Hill Ryerson Limited

Executing and Evaluating the Promotion ProgramExecuting and Evaluating the Promotion Program

� The ideal execution of a promotion programinvolves pretesting each design before it isactually used to allow for changes andmodifications which will improve itseffectiveness.

� Posttests are recommended to evaluate theimpact of each promotion and thecontribution of the promotion towardachieving the program objectives.

19-28© 2000 McGraw-Hill Ryerson Limited

Concept CheckConcept Check

1. What are the characteristics of good

promotion objectives?

2. What are the weaknesses of the percentage

of sales budgeting approach?

3. How have advertising agencies changed to

facilitate the use of IMC programs?

19-29© 2000 McGraw-Hill Ryerson Limited

The Value of Direct Marketing - Visible IndicatorsThe Value of Direct Marketing - Visible Indicators

Visible Indicators of the Value of Direct Marketing

- about half of the Canadian population has ordered

merchandise by phone or mail

- millions of adults have purchased items from a TV

offer

- about 20% of all adults make catalogue purchaseseach year.

- millions of adults spends hours accessing onlineservices.

19-30© 2000 McGraw-Hill Ryerson Limited

The Value of Direct Marketing - Responses It GeneratesThe Value of Direct Marketing - Responses It Generates

� The value of direct marketing can be described interms of the responses it generates.

� Direct orders: the result of offers that contain all theinformation necessary for the prospective buyer tomake a decision to purchase and complete thetransaction.

� Lead generation: the result of an offer designed togenerate interest in a product or service and arequest for additional information.

� Traffic generation: the outcome of an offer designedto motivate people to visit a business

19-31© 2000 McGraw-Hill Ryerson Limited

Concept CheckConcept Check

1. The ability to design and use

direct marketing programs has

increased with the availability of

________ and _________.

2. What are the three types of

responses generated by direct

marketing activities?