Ko Floor & Fred van RaaijMarketing Communication StrategyFirst Edition

Marketing Communication Strategy

Noordhoff Uitgevers

Noordhoff Uitgevers

Noordhoff Uitgevers

MarketingCommunicationStrategyKo J.M.G. Floor

W. Fred van RaaijAdvertising / Online marketing communication / Public Relations / Sponsorship /Sales promotion / Direct-marketing communication / In-store communication /Personal selling / Exhibitions / Integrated communication

First edition 2011

Noordhoff Uitgevers Groningen / Houten

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Cover design: G2K Designers, Groningen/Amsterdam

Cover illustration: Studio Ari Versluis & Ellie Uyttenbroek, Exactitudes

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Introduction

Marketing communication is constantly developing. This book, therefore, requiresthe description of new media and new examples. Traditional printed media, radioand television remain important media in the marketing communication plan. Butalongside these traditional media new, internet-based media are emerging, such aswebsites, weblogs, emails, Facebook and Twitter. It is consumers who decide on thecontent of the online social media such as Facebook, Hyves and Twitter. Advertisershave far less control over these online media than over traditional media.

For traditional media advertisers can design a media plan to specify what they wantto achieve during a certain period in terms of brand awareness, brand preferenceand sales. This is far less easy to do for the new online social media. Informationmust be available and easy to find for consumers. On the internet consumers mustbe able to find quick answers to all their questions and queries and in many casesthey must be able to compare products. They must also be able to find where theseproducts are available, where they are sold and how they can be ordered on theinternet. What matters especially is anticipating changing trends and preferences.The brand must be up to date and relevant and remain interesting to consumers.

In chapter 14, special attention has been paid to online marketing communication.We are grateful to Coby van Maanen-Tetteroo and Hans van der Meulen for theirhelp in writing this chapter.

Every day consumers are overloaded with all kinds of marketing communication. Allthese messages compete for attention, but only a small proportion of allcommunication really touches the consumer. In order to make the chance oftouching as large as possible, an approach is needed which comprises theory andpractice, which shows what works and what does not work. This book aims toformulate such an approach. Step by step it describes how a solid marketingcommunication plan can be drawn up. In this book all marketing communication methods will be discussed, with manyexamples to clarify the theory and to illustrate the descriptions.

We hope that consumers, teachers and students will have the same pleasure inreading this book as we had in writing it. In doing so we have benefited enormouslyfrom information and ideas supplied by numerous colleagues, teachers, studentsand others. Articles in magazines such as Adformatie and Marketing Tribunesupplied us with additional input. We are most grateful to their authors. Withouttheir input, this book would have been far less comprehensive.

On the www.marketingcommunicationstrategy.noordhoff.nl site you will find alarge quantity of supporting and additional material. This site is regularly updated inorder to include the (online) developments that were referred to at the beginning ofthis introduction.

Ko Floor and Fred van RaaijLandsmeer / Alphen, N.Br., June 2010

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Abbreviated table of contents

Part 1 Marketing and communication 11 Marketing communication and other marketing methods 22 The communication mix of a company 283 Criticism and regulation 50

Part 2 Marketing communication plan 814 Components of the marketing communication plan 825 Research into consumers, products and competition 946 Marketing communication target groups 1187 Marketing communication objectives 1368 Marketing communication strategy 1569 Creative development 182

10 Marketing communication budget 20811 Communication research 22412 Relationship client and communication agency 244

Part 3 Marketing communicationinstruments 271

13 Advertising 27214 Online marketing communication 30015 Public relations and information extension 32416 Sponsorship 34217 Sales promotion 36218 DM communication 39419 In-store communication 41820 Personal selling 44221 Exhibitions 458

Part 4 Media 47522 Media types 47623 Media plan and media selection 49824 Media research 520

Part 5 Integration of the marketingcommunication mix 537

25 Integrated marketing communication 538

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Table of contents

Introduction

Part 1Marketing and communication 1

1 Marketing communication and othermarketing methods 2

1.1 Importance of a strong brand 41.1.1 Functions of a brand for consumers 51.1.2 Functions of a brand for companies 51.1.3 Brand image 6

1.2 Changes in marketing communication 81.2.1 Direct contact with customers 81.2.2 Communication through retailers 81.2.3 Looking for distinctive features 81.2.4 First direct advertising campaigns 81.2.5 Large advertising budgets 91.2.6 More marketing communication methods 91.2.7 One-to-one communication 9

1.3 Product, brand and communication 101.3.1 Types of products 111.3.2 Brand name 131.3.3 Brand strength 151.3.4 Packaging 17

1.4 Price and communication 181.4.1 Tension between producers and retailers 18

1.5 Distribution and communication 201.5.1 Types of distribution 211.5.2 Collaboration 221.5.3 Seeking an identity 231.5.4 Contact with buyers 241.5.5 Push and pull 24

1.6 Transaction and relationship 25Summary 27

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2 The communication mix of a company 282.1 Corporate and marketing communication 302.2 Characteristics of corporate communication 31

2.2.1 Customers and prospects 332.2.2 Government and politics 342.2.3 Present and potential employees 352.2.4 Labour market 362.2.5 Financial world 372.2.6 Public opinion 38

2.3 Marketing communication instruments 392.4 Some definitions 42

2.4.1 Marketing communication 422.4.2 Advertising 432.4.3 Propaganda 452.4.4 Public relations 452.4.5 Sales promotion 46

2.5 Need for integration 462.5.1 Synergy 472.5.2 Organizational measures 48Summary 48

3 Criticism and regulation 503.1 Criticism of marketing communication 523.2 Higher price 52

3.2.1 Influence on cost price 533.2.2 Role of retailers 543.2.3 Price level of a product group 56

3.3 Restricting competition 563.3.1 Formation of monopolies 563.3.2 Loss of market leadership 57

3.4 Pseudo-needs and undesirable spending patterns 583.4.1 Undesirable spending patterns 593.4.2 Tobacco advertising ban 593.4.3 Alcohol advertising ban 603.4.4 Environment 60

3.5 Irritation 613.5.1 Insult to intelligence 613.5.2 Poor taste 613.5.3 Pseudo-reality 613.5.4 Confirmation of stereotypes 623.5.5 Criticism of television advertising 62

3.6 Deceptive marketing communication 633.6.1 Different opinions 633.6.2 Forms of deception 64

3.7 Legislation 653.7.1 Law on Deceptive Advertising (LDA) 653.7.2 Law on Games of Chance 663.7.3 Sweepstakes 663.7.4 Law on the Protection of Personal Data (LPPD) 663.7.5 Benelux Treaty on Intellectual Property (BTIP) 673.7.6 Food and Drugs Act 68

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3.7.7 Copyright Act 693.7.8 Media Law 693.7.9 Comparative advertising 70

3.8 Advertising Standards Authority 713.8.1 General rules of conduct 723.8.2 Special rules of conduct 72

3.9 Public service advertising 75Summary 77

Part 2Marketing communication plan 81

4 Components of the marketing communicationplan 82

4.1 Need for a strategic marketing communication plan 844.1.1 Planning period 844.1.2 Advantages of strategic planning 84

4.2 From company plan to marketing communication plan 854.2.1 Company plan 864.2.2 Marketing plan 87

4.3 Strategic marketing communication plan 874.3.1 Research into consumers, products and competition 894.3.2 Marketing communication target groups 894.3.3 Marketing communication objectives 894.3.4 Marketing communication strategy 904.3.5 Choice of marketing communication mix 914.3.6 Creative development 914.3.7 Choice of media 914.3.8 Marketing communication budget 924.3.9 Communication evaluation 93Summary 93

5 Research into consumers, products andcompetition 94

5.1 Importance of research 965.2 Phase models of communication effects 97

5.2.1 Purchase Involvement 975.2.2 External and internal pacing 995.2.3 Dissonance-attribution hierarchy 995.2.4 Scanning and focusing 101

5.3 Values and meanings 1025.3.1 Meansend chain 1035.3.2 Importance of benefits for marketing communication 105

5.4 Types of product and marketing communication 1085.4.1 FCB matrix: knowledge, emotion and involvement 1085.4.2 R&B matrix: informational and transformational functions 1105.4.3 Processing strategies 110

5.5 Strong and weak points of the competition 112

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5.6 Product and brand life-cycles 1135.6.1 Product life-cycle 1135.6.2 Brand life-cycle 115Summary 116

6 Marketing communication target groups 1186.1 Marketing and communication target groups 120

6.1.1 Segmentation 1216.2 General level 122

6.2.1 Geographic characteristics 1226.2.2 Socio-economic characteristics 1226.2.3 Psychological characteristics 1246.2.4 Product ownership 124

6.3 Domain-specific level 1256.3.1 Involvement 1256.3.2 Required product characteristics and benefits 1256.3.3 Product ownership and product use 1266.3.4 Nature of product use 1276.3.5 Momentary consumers 127

6.4 Brand-specific level 1276.4.1 Brand awareness 1276.4.2 Knowledge and attitudes 1286.4.3 Buying intentions 1286.4.4 Buying and usage behaviour 1286.4.5 Pyramid of customer groups 131

6.5 Roles in the decision-making process 132Summary 134

7 Marketing communication objectives 1367.1 Why objectives? 138

7.1.1 Types of objectives 1387.1.2 Positioning 1397.1.3 Advantages of communication objectives 139

7.2 Marketing objectives versus communication objectives 1397.3 Communication objectives 141

7.3.1 Category need 1427.3.2 Brand awareness 1437.3.3 Brand knowledge 1457.3.4 Positive brand attitude 1467.3.5 Behavioural intention 1477.3.6 Behaviour facilitation 1487.3.7 Behaviour 1487.3.8 Satisfaction 149

7.4 Choice of communication objective 1507.5 Making objectives measurable 151

7.5.1 Practice 1527.6 DAGMAR model 153

7.6.1 Criticism 155Summary 155

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8 Marketing communication strategy 1568.1 Positioning 158

8.1.1 Supporting the promise 1588.1.2 Competition and reputation 163

8.2 Importance of good strategy 1648.3 Different marketing communication strategies 1668.4 Communication strategy for a new product 1678.5 Communication strategy for a growing product 170

8.5.1 Emphasizing distinctive functional benefits 1708.5.2 Adding psychological meaning 171

8.6 Communication strategy for a mature product 1718.6.1 Ensuring high and spontaneous brand awareness 1728.6.2 Emphasizing better performance than other brands 1728.6.3 Emphasizing similar performance at a lower price 1738.6.4 Drawing attention to product improvements 1748.6.5 Strengthening psychological meaning 1778.6.6 Reinforcing satisfaction 177

8.7 Communication strategy for a product in its final phase 1788.7.1 Communicating radical product changes 1798.7.2 Drawing attention to new applications 1798.7.3 Increasing usage frequency 1798.7.4 Attracting new target groups 179Summary 180

9 Creative development 1829.1 Phases in creative development 184

9.1.1 Proposition 1849.1.2 Concept 1859.1.3 Execution 185

9.2 Briefing 1869.2.1 Strategy and present position of the brand 1869.2.2 Description of the target group 1869.2.3 Communication objectives 1879.2.4 Proposition 1879.2.5 Style: guidelines for text and design 1899.2.6 Choice of communication instruments and media 1909.2.7 Budget 1909.2.8 Time planning 191

9.3 Creative concept 1919.3.1 Comparative concept 191

9.4 Concept and execution 1939.4.1 Design and layout 1949.4.2 Typography and colour 1949.4.3 Language and style 1949.4.4 Music 1959.4.5 Image and text 1959.4.6 Testimonials 1969.4.7 Drama 1969.4.8 Lesson 1979.4.9 Fear 1979.4.10 Humour and eroticism 1979.4.11 Presenters 1979.4.12 Advertising properties 198

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9.5 Creativity 1999.5.1 Choosing the right person 2009.5.2 Managing the creative process 2009.5.3 Improving the creative climate 2019.5.4 Testing the result 201

9.6 Presentation to the client 2029.6.1 Assessment criteria 202

9.7 Execution of an advertisement 2049.7.1 Components of an advertisement 204Summary 206

10 Marketing communication budget 20810.1 Big company budgets 21010.2 Factors influencing the budget 210

10.2.1 What is assigned to the communication budget 21110.2.2 Role of marketing communication in the marketing process 21110.2.3 Size of the market 21110.2.4 Product life-cycle 21210.2.5 Product features and differentiation 21210.2.6 Profit margin and turnover 21310.2.7 Activities of competitors 21310.2.8 Media costs 214

10.3 Budgeting methods 21410.3.1 Proportion-of-turnover method 21410.3.2 Closing-entry method 21610.3.3 Parity method 21610.3.4 Goal-setting method 21710.3.5 Adjustment of the communication budget 219

10.4 Anti-cyclical budgeting 219Summary 221

11 Communication research 22411.1 Types of communication research 22611.2 Communication strategy research 227

11.2.1 Background research 22811.2.2 Quantitative research 22811.2.3 Qualitative research 229

11.3 Concept research 23011.4 Pre-tests 231

11.4.1 Establishing process effects 23111.4.2 Selecting among communication messages 23211.4.3 Determining placement frequency 23211.4.4 External validity 23211.4.5 Pre-test methods 233

11.5 Post-tests 23711.5.1 Medium reach 23711.5.2 Processing effects 23711.5.3 Behavioural effects 239

11.6 Communication evaluation research 24011.6.1 Changes in brand awareness, knowledge, attitude and buying

intention 24011.6.2 Changes in individual buying behaviour 24111.6.3 Changes in sales levels and market share 241Summary 241

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12 Relationship client and communication agency 24412.1 Dutch communication agencies 246

12.1.1 The American wave 24612.1.2 Mergers and acquisitions 24712.1.3 The big agencies 247

12.2 Trade associations 24712.2.1 Association of Communication Agencies 24712.2.2 Pragma 24812.2.3 Association of Dutch Advertisers 248

12.3 Organization of a communication agency 24812.3.1 Finances and administration 248

12.4 Account department 24912.4.1 Hierarchy 25012.4.2 Requirements for an account executive 25112.4.3 Account work 252

12.5 Creative department 25212.6 Marketing services 25312.7 Media department 254

12.7.1 Media planning 25412.7.2 Media buying 25512.7.3 Media administration 256

12.8 Choosing a communication agency 25612.8.1 Step 1: Services required of agency 25612.8.2 Step 2: Quantitative criteria 25712.8.3 Step 3: Provisional list of agencies 25812.8.4 Step 4: Qualitative criteria 25812.8.5 Step 5: Shortlist 25912.8.6 Step 6: Visiting agencies on the shortlist 25912.8.7 Step 7: Continued talks with selected agencies 25912.8.8 Step 8: Evaluation and choice of agency 260

12.9 Clients contribution to a good relationship 26012.9.1 Human factors 26112.9.2 Information factors 26112.9.3 Decision-making 26212.9.4 Procedures 262

12.10 Agencys contribution to a good relationship 26312.10.1 Human factors 26312.10.2 Information factors 26312.10.3 Decision-making 26312.10.4 Procedures 26312.10.5 Clientagency relationship 264

12.11 Remuneration 26412.11.1 15% arrangement 26412.11.2 Commission system 26512.11.3 Cost-plus system 26512.11.4 Fixed percentage of profit 26512.11.5 Variable percentage of profit 26612.11.6 Fixed fee 26612.11.7 Results-based fee 26612.11.8 Return on investment 266

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12.12 Agency revenue 26712.12.1 Media commission 26712.12.2 Hours worked 26712.12.3 Surcharge on purchases 26812.12.4 Capitalized turnover 268Summary 269

Part 3Marketing communication instruments 271

13 Advertising 27213.1 History of advertising 274

13.1.1 The first advertising agencies 27613.2 From mass to individual 278

13.2.1 Experience communication 27813.3 Types of advertising 280

13.3.1 Consumer advertising 28013.3.2 Retail advertising 28113.3.3 Business-to-business advertising 28113.3.4 Personnel advertising 28113.3.5 Collective advertising 281

13.4 Advertising strategy for an international brand 28413.4.1 Global strategy 28513.4.2 Adaptation strategy 28713.4.3 Differentiation strategy 28713.4.4 Local strategy 28813.4.5 Factors influencing the degree of standardization 289

13.5 Advertising plan 29013.6 Advertising objectives 291

13.6.1 Media objectives 29213.6.2 Process objectives 29213.6.3 Effect objectives 293

13.7 Accountability 29413.7.1 Research 29513.7.2 Effies 296Summary 299

14 Online marketing communication 30014.1 Emergence of the internet 30214.2 Online media 30314.3 Website 305

14.3.1 Content 30614.3.2 Interactivity and visitor recognition 30714.3.3 Retrievability 30714.3.4 Web analytics 308

14.4 Emailings 311

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14.5 Online advertising 31214.5.1 Display 31214.5.2 Search-engine advertising 31314.5.3 Affiliate networks 31514.5.4 Cost models 315

14.6 Online marketing PR 31514.6.1 Social and career networks 31614.6.2 Communication networks 31814.6.3 Viral campaigns 321

14.7 Gaming and virtual reality 32114.8 Mobile internet and text messaging 322

Summary 323

15 Public relations and information extension 32415.1 Origin of public relations 32615.2 Objectives of public relations 327

15.2.1 Internal PR 32715.2.2 External PR 329

15.3 PR disciplines 32915.3.1 Corporate PR 33015.3.2 Internal communication 33015.3.3 Financial PR 33015.3.4 Public affairs 33115.3.5 Marketing PR 331

15.4 Tasks and methods of PR 33315.4.1 Tasks of PR 334

15.5 Reputation management 33715.5.1 Tactical-defensive reputation management 33815.5.2 Tactical-assertive reputation management 33815.5.3 Strategic-defensive reputation management 33815.5.4 Strategic-assertive reputation management 338

15.6 Information extension 33815.6.1 Educational information extension 33915.6.2 Informative information extension 33915.6.3 Persuasive information extension 339Summary 340

16 Sponsorship 34216.1 Functions of sponsorship 344

16.1.1 Objectives of sponsorship 34516.1.2 Commitments of sponsorship 34816.1.3 Five types of sponsorship 349

16.2 Sponsoring social projects 34916.3 Sport sponsorship 35016.4 Sponsoring arts, culture and entertainment 352

16.4.1 Conditions of arts sponsorship 35316.4.2 Advantages of arts sponsorship 354

16.5 Sponsoring education and science 35416.6 Functions of sponsorship within marketing communication 35616.7 Measuring sponsorship effects 35716.8 Sponsorship checklist 358

16.8.1 Selection criteria 35916.8.2 Integration 360Summary 361

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17 Sales promotion 36217.1 Sales promotion as a marketing communication instrument 364

17.1.1 Sales promotion plan 36717.1.2 Types of sales promotion 367

17.2 Consumer sales promotions 36817.2.1 Attracting new customers 36817.2.2 Retaining existing customers 36817.2.3 Increasing spending per customer 36917.2.4 Stimulating product use 36917.2.5 Supporting thematic marketing communication 36917.2.6 Introducing a new brand 369

17.3 Trade sales promotions 37017.3.1 Obtaining trade support for consumer actions 37017.3.2 Expanding the number of sales outlets 37117.3.3 Increasing or diminishing stocks 37117.3.4 Improving trade relations 371

17.4 Sales promotions for sales staff 37317.5 Sales promotion strategies 374

17.5.1 Temporary discounts 37517.5.2 Coupons and refunds 37717.5.3 Bonus packaging 37917.5.4 Sampling and demonstrations 37917.5.5 Give-aways 38017.5.6 Premiums with additional payment 38217.5.7 Premium collection promotions 38217.5.8 Competitions and contests 38417.5.9 Joint sales promotions 38517.5.10 Objectives and strategy 385

17.6 Researching sales promotion 38617.6.1 Retailer cooperation 38817.6.2 Consumer participation 38817.6.3 Requirements for a successful sales promotion 38917.6.4 Synergy 390

17.7 Sales promotion in the marketing communication mix 391Summary 392

18 DM communication 39418.1 Direct marketing 396

18.1.1 History 39618.1.2 DM communication as a marketing communication instrument 397

18.2 Advantages of a direct relationship 39918.2.1 Cost saving 39918.2.2 Individual adaptation 39918.2.3 Flexible distribution 39918.2.4 Circumventing the retail trade 40018.2.5 Confidentiality 40018.2.6 Accountability 40018.2.7 DM communication plan 401

18.3 Media and types of DM communication 40218.3.1 Direct advertising 40318.3.2 Catalogues 40418.3.3 Telephone 40418.3.4 Interactive media 40618.3.5 Print media 40618.3.6 Television 40718.3.7 Integrated DM communication 407

18.4 DM communication sequence 40818.4.1 Step 1: Preparation 40918.4.2 Step 2: Proposition 40918.4.3 Step 3: Follow-up of non-response 40918.4.4 Step 4: After-sales 40918.4.5 Step 5: Cross-selling 41018.4.6 Step 6: Relation management 41018.4.7 Step 7: Recruitment 411

18.5 Databases 41218.5.1 Segmentation 41318.5.2 Relationship analysis 41318.5.3 Effect measurement 41318.5.4 Database composition 413

18.6 Financial analysis and testing 41418.6.1 Testing 415Summary 416

19 In-store communication 41819.1 Types of in-store communication 420

19.1.1 Turnover and image 42219.2 Store design 423

19.2.1 Phases in store design 42419.3 Visual merchandizing 426

19.3.1 Impulse buying 42619.3.2 Producer input 42719.3.3 Shelf position 428

19.4 Displays 42919.4.1 Turnover function 43019.4.2 Communication function 430

19.5 In-store media and material 43219.5.1 Waste 432

19.6 Packaging 43319.6.1 Requirements of producers 43519.6.2 Requirements of retailers 43719.6.3 Requirements of consumers 43819.6.4 Requirements of society 440Summary 441

20 Personal selling 44220.1 Personal selling as a marketing communication instrument 44420.2 Objectives of personal selling 446

20.2.1 Qualitative objectives 44620.2.2 Quantitative objectives 44720.2.3 Sales pitch 447

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20.3 Personal selling strategy 44820.4 Sales function 450

20.4.1 Composition of clientele 45120.4.2 Composition of the product range 45120.4.3 Support by internal sales staff 45120.4.4 Types of salesperson 452

20.5 Account management 45220.6 Size of the sales department 45420.7 Personal service and sales 455

20.7.1 Direct selling 45520.7.2 Selling through intermediaries 45520.7.3 Sales function in retailing 455Summary 456

21 Exhibitions 45821.1 Origin of exhibitions 460

21.1.1 RAI 46021.1.2 Jaarbeurs 460

21.2 Types of exhibition 46121.2.1 General consumer exhibitions 46221.2.2 Specialist consumer exhibitions 46221.2.3 Horizontal trade fairs 46221.2.4 Vertical trade fairs 46221.2.5 Trade marts 46321.2.6 Conference-linked exhibitions 46321.2.7 Local events 46321.2.8 Branded events 463

21.3 Exhibitions as marketing communication instrument 46421.3.1 Planning participation 46621.3.2 Exhibitor research 46721.3.3 Organizer research 468

21.4 Multimedia approach 46921.5 Exhibition stands 47021.6 Exhibitions in practice 472

Summary 473

Part 4Media 475

22 Media types 47622.1 Marketing communication and media 47822.2 Newspapers and freesheets 480

22.2.1 Newspapers 48022.2.2 Types of newspaper advertisements 48222.2.3 Freesheets 482

22.3 Magazines 48322.3.1 Weekly news magazines 48322.3.2 Monthly consumer magazines 48322.3.3 Radio and TV guides 48422.3.4 Trade journals 485

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22.3.5 Sponsored magazines 48522.3.6 Advantages and disadvantages of magazines for marketing

communication 48622.3.7 Portfolios 487

22.4 Directories and diaries 48722.5 Television and cable news 48722.6 Interactive media 48922.7 Radio and public address systems 492

22.7.1 Sound systems 49222.8 Outdoor media 493

22.8.1 Static outdoor media 49422.8.2 Moving outdoor media 49522.8.3 Event-linked outdoor media 49522.8.4 Use of outdoor media 495

22.9 Cinemas 49622.10 Specialty media 496

Summary 497

23 Media plan and media selection 49823.1 Media plan 500

23.1.1 Media developments 50123.2 Media objectives 501

23.2.1 Target group 50223.2.2 Market area 50223.2.3 Timing 50223.2.4 Contact frequency 50323.2.5 Other factors 503

23.3 Media strategy: criteria for media selection 50423.4 Media reach 505

23.4.1 Average reach 50623.4.2 Actual reach 50623.4.3 Cumulative reach 50623.4.4 Total reach 50623.4.5 Weighted average 506

23.5 Contact frequency 50723.6 Media costs 509

23.6.1 Absolute costs 50923.6.2 GRP and contact frequency 50923.6.3 Costs per thousand 510

23.7 Communication power of media 51023.7.1 Technical features of the medium 51023.7.2 Context of the medium 51123.7.3 Confrontation situation 51123.7.4 Ties (bonding) with the medium 512

23.8 Media mix 51223.8.1 Gross and net reach 51323.8.2 Media strategy in practice 513

23.9 Media tactics 51423.9.1 Format or length 51423.9.2 Timing 51423.9.3 Frequency 515Summary 517

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24 Media research 52024.1 Types of media research 52224.2 Comparative medium reach research 52324.3 Advertising reach research 524

24.3.1 Simultaneous methods 52724.3.2 Retrospective methods 528

24.4 Reach research per medium title 52924.5 Research into position in medium 52924.6 Inter-media comparison 532

Summary 533

Part 5Integration of the marketingcommunication mix 537

25 Integrated marketing communication 53825.1 Influencing the selection process 540

25.1.1 Integrated communication 54125.2 Integration of corporate and marketing communication 542

25.2.1 Identity and image 54425.3 Integration of marketing communication 546

25.3.1 Criteria for use of instruments 54825.3.2 Process of integrated marketing communication 548

25.4 Integration within a marketing communication instrument 55525.5 Organization of integrated communication 555

25.5.1 Collaborating with agencies 55625.5.2 Advantages of an integrated approach 557

25.6 Research 557Summary 558

Bibliography 560Acknowledgements 572Index 574

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In chapter 1 of part 1 we shall first deal with the importance of a strong brand

and the way in which companies can build a brand with marketing

communication and other marketing methods. In chapter 2 the difference

between corporate and marketing communication will be dealt with. Chapter 3

will discuss the criticisms commonly made of marketing communication and

the regulations that apply to it.

Part 1Marketing andcommunication

1 Marketing communication and

other marketing methods 2

2 The communication mix of a

company 28

3 Criticism and regulation 50

1

2 Noordhoff Uitgevers

Contents1.1 Importance of a strong brand

1.2 Changes in marketing communication

1.3 Product, brand and communication

1.4 Price and communication

1.5 Distribution and communication

1.6 Transaction and relationship

1 Marketingcommunication andother marketingmethods

p a r t 1 Marketing and communication

3 Noordhoff Uitgevers

Having one or more strong brands is of crucial importance to companies. In

this first chapter we deal with the role marketing and marketing

communication play in building or reinforcing brands. Marketing

communication methods that may be used for this purpose are advertising,

online marketing communication, sales promotions, public relations,

sponsoring, direct marketing communication, in-store communication,

packaging, personal selling and exhibitions.

Marketing communication andother marketing methods

c h a p t e r 1

1.1 Importance of a strong brand

A strong brand is worth a fortune. The Coca-Cola brand, for instance, is worth tensof billions of dollars; much more than all its factories, offices, trucks and otherassets put together. If a natural disaster were to destroy all Coca-Cola factories, thiswould be less serious than if a collective memory lapse made everyone forget thename Coca-Cola. The brands Gillette, Google, Marlboro, McDonalds, Nescaf andSony are also worth many billions. This value is based in particular on the strengthof the brand name. Possessing one or more strong brands, therefore, is becomingmore and more important to companies. It should be noted that it is not justproducts that carry a brand name (e.g. Pampers from Procter & Gamble, Calv fromUnilever) nor services (Hispeed of the Netherlands Railways). A brand may alsorepresent a company (Philips, Albert Heijn) or a non-commercial organization(Amnesty International, Internal Revenue Service).

In practice, however, brands are especially associated with manufactured products.Yet it is retailers who developed the concept of a branded product. The foundation ofthe modern branded article lies in the small, grimy and cluttered grocery shops ofBritish industrial towns such as Newcastle, Glasgow, Liverpool and London.

Thomas Lipton, famous for his fine tea, opened his first shop in Glasgow in1874. At the time, grocers and their young employees cooked, baked, smoked,mixed and produced all kinds of products for local people behind their shops, insmall and usually filthy workshops: jam, tea, coffee, biscuits, sweets, ham,sausages. Usually the grocer cut pieces from the relevant product in his shop orscooped the required amount from an earthenware jug, or a bag, barrel or case.Next, he wrapped some paper around it, sometimes with his own name on it.

Apart from these small grocers there were those who owned a number of shops.They often pre-packaged their products, staff putting them into bags or boxes inreadiness for busy days, when there would be lots of customers. Europeanmanufacturers adopted this idea, packaging their wares and making them distinctfrom others and from those of such retailers.

Around 1850 manufacturers discovered that they could produce many groceryproducts better, faster, more hygienically and more cheaply than the grocers. Theyput brand names on their products and introduced fixed consumer prices. In thisway they laid the foundation of what was later to be called the manufacturers brand.One example is Verkade. By putting the brand name on the packaging of rusks,biscuits and chocolates, Verkade was able to create a preferential brand amongcustomers, bypassing the shopkeepers. Verkade pictures and albums produced inthe period 19031940 led to reinforcement of brand loyalty among consumers.

Consumers, however, hardly distinguish between brands that represent products,services or organizations. According to the BrandAssetValuator In 2009 the top tenbrands in the Netherlands were: 1) Coca-Cola, 2) Senseo, 3) Douwe Egberts, 4) Philips, 5) Cup-a-Soup, 6) Calv, 7) Pringles, 8) Unox, 9) Magnum and 10) Conimex. This list contains many food brands, five of which belong to Unilever(Cup-a-Soup, Calv, Unox, Magnum and Conimex) and two belonging to Sara Lee(Senseo and Douwe Egberts).

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1.1.1 Functions of a brand for consumersA brand fulfils various functions both for consumers and for companies. Forconsumers the following two functions are important:

Convenience when buying; Psychological function.

Convenience when buyingBrand awareness means that consumers (especially those who have bought thebrand before) know exactly what to expect from the product or the supplier. Theyknow the product features or the supplier and can easily make a choice. If the brandhas satisfied them, they need not look any further. Considering the ever-increasingnumber of products and brands in shops, this is an important function of thebranded article. The brand creates the certainty among consumers that they willactually get what they want. And in the unlikely event that this should not be thecase, they know where to take their complaints.

Psychological functionA brand often has a psychological function for consumers. It helps them to achieve adesired form of self-expression. Nike, for instance, stands not only forsportsmanship, but also for a certain lifestyle. By buying a certain brand, consumersshow others what type of person they are (or want to be). Some consumers want todisplay their wealth, by buying expensive brands such as Armani or Versace. Othersreject such ostentation and prefer to buy unknown brands or unbranded clothing.Brands, by the way, not only have an expressive function; they can also impress.Finally, buying a specific brand may give consumers a good feeling aboutthemselves. By using an iPhone someone may feel that he is modern and with it.

1.1.2 Functions of a brand for companiesFor companies, too, a brand has a number of functions. The most important are thefollowing five:

Distinction; Continuity; Higher price; Easier product introductions; Greater independence as regards the retail trade.

DistinctionA brand helps organizations to distinguish themselves from other suppliers ofsimilar products. Because of this distinction the own brand becomes less vulnerableto competition. Especially when technical and instrumental differences betweenvarious products or companies are minimal, the psychological (emotional) surplusvalue of a brand may create the desired distinction. The products and services whichbanks offer hardly differ from one another. Yet, in the minds of consumers, ABNAMRO Bank is an entirely different bank from the Rabobank. The psychologicaldifferences are much greater than the instrumental differences. Because of thesepsychological differences a brand can create something of a monopoly position.

ContinuityStrong brands result in continuity because satisfied consumers keep buying theproduct. Brands such as Bols, Bavaria and Douwe Egberts have been in existence forhundreds of years. Brands such as Kelloggs, Campbells, Goodyear and Colgate

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have been market leaders in their product categories in the United States for morethan 50 years. A large number of loyal customers means constant demand.

Higher priceCreating a strong brand requires large investment in product development andmarketing communication. A brand that succeeds in creating psychological surplusvalue can demand a higher price than other brands. As long as the price differencesdo not become too great, consumers are willing to pay this higher price. The beermarket is a case in point. Lager brands like Heineken and Grolsch are able tocommand a higher price than other brands of similar quality. However, pricedifferences must not become excessive, as Albert Heijn discovered. Thissupermarket chain had to lower its prices drastically when, partly due to economicconditions, it lost market share to cheaper supermarkets.

Easier product introductionsA company that has built up a good reputation among its customers finds it easier toput a new product on the market than a company that is unknown. When Sonylaunches a new electronic product, consumers are more willing to try it out than theproduct of an unknown Korean company. The advantage of a strong brand is alsovalid when a company embarks on an entirely new activity. The British Virgin brand,for instance, represents much more these days than a record label. Under the samebrand Virgin sells travel, operates an airline, puts cola on the market and developsall sorts of other activities. These product introductions under the same brand areknown as brand extensions.

Greater independence as regards the retail tradeA producer who succeeds in giving his brand a strong brain position (image)among customers will become less dependent on retailers. Retailers are almostforced to include the brand in their product range. If they do not, customers maywell go to a different shop.

1.1.3 Brand imageIt is, therefore, of the greatest importance for products or companies to have a goodbrand image. This brand image is the mental picture that (potential) consumershave of a brand. Hearing or seeing a brand name evokes a number of associations inconsumers. All these associations together form the brand image. They may bepositive or negative associations; they may be instrumental or psychological. In thecase of instrumental associations it is about the presence of certain product features.The Air FranceKLM brand, for instance, may evoke associations with reliability andmodernity.

In the case of the Bokma brand many consumers immediately think of the squarebottle. However, brands also evoke psychological associations. In the case of DouweEgberts consumers think of cosiness and in the case of Blue Band of care forgrowing children. Figure 1.1 shows an imaginary and greatly simplified network ofassociations surrounding the Coca-Cola brand.

This type of association with a brand is created in various ways. Marketingcommunication is one of those (see figure 1.2).

Consumers experiences of a brand and the opinions of others may have a stronginfluence on the brands image. If consumers have bought the brand before and arehappy with it, this will have a positive influence on the brand image. The brand

image is also influenced by the opinions of friends (including friends on socialnetworks), neighbours, family members, TV personalities and other groups.Especially in the case of products with a strong expressive value, consumers take theopinions of these groups into account.

It is difficult for companies to influence this, though they can exert influencethrough marketing communication. Through the brand, companies communicatewith their target groups. Companies themselves decide on the message that willconfront consumers. Marketing communication, therefore, is an important method ofbuilding or strengthening a brand. If a strong brand can be created, investments inmarketing communication may result in a high return. Other marketing-mix methodsmay also help organizations to build, to adjust or to maintain a brand image.

This chapter discusses these other marketing-mix methods. Marketingcommunication will be dealt with in the following chapters.

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Figure 1.1 Possible network of associations with Coca-Cola

America

red-white

lechery

Cola

nice

ice(cold)

refreshing

cafene

coffee

rust

nail

pleasure

cars

Michael Jackson

Pepsi

coca-cola

Brand image Other marketing tools

Influenced by others

Own experiences with a brand

Marketing communications

Figure 1.2 Factors influencing a brand image

Ikea is usually associated with DIY.

An advertising campaign aims to

change this association.

1.2 Changes in marketing communication

Marketing communication has gone through a number of important changes overthe years. This was a consequence of changes in production methods and marketconditions. From a historical perspective, seven phases may be distinguished inmarketing communication. They will be discussed in turn:

Direct contact with customers; Communication through retailers; Looking for distinctive features; The first direct advertising campaigns; Big advertising budgets; More marketing communication methods; One-to-one communication.

1.2.1 Direct contact with customersIn the first phase the product is matched to the needs of an individual customer.Craftsmen produce almost entirely to order and there is frequent personal contactbetween craftsman and customer. Producers produce what customers or principalsask for. This situation is characteristic of the era of the guilds.

After the era of the guilds, producers thoughts are focused on producing. Theassumption is that a good product sells itself. This is why producers are mainlyconcerned with the improvement of production methods and increase inproductivity. They give little attention to types of marketing communication otherthan personal contact.

1.2.2 Communication through retailersDuring the Industrial Revolution direct contact with consumers largely disappears.Producers no longer supply consumers directly. They make use of a large number ofmerchants for the distribution of their goods. These merchants become the linkbetween producers and consumers. In this phase producers focus on production.Marketing communication is left almost entirely to the merchants and shopkeepers.

1.2.3 Looking for distinctive featuresIn the period between the Industrial Revolution and the late 1940s, producersconcentrate increasingly on sales. The introduction of new production methodsresults in larger volumes. The main problem is how to create sufficient demand. Forthis reason, marketing communication, especially in the form of personal selling,becomes important. Competition is intensifying. Management, therefore, has toconcern itself increasingly with sales. Sales departments are responsible for sellingthe goods that have been produced. Production departments are fed with data andquestions by sales departments. In particular, a product plus (unique selling point:USP) is required in order for the company to be able to distinguish itself fromcompetitors through marketing communication.

1.2.4 First direct advertising campaignsDuring the 1950s, competition becomes fiercer. A product plus is no longersufficient to maintain market position. Marketing communication is becomingincreasingly important and the communication mix is extended with the first direct

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Phases

Unique selling point: USP

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advertising campaigns. In this phase marketing communication focuses on short-term sales promotions. At first these are done by sales departments, but at a laterstage specialized employees are recruited. Producers thinking is becoming moremarket orientated, although there is still no professional marketingcommunication.

1.2.5 Large advertising budgetsFrom the 1960s consumers occupy a central position in producers thinking.Consumer marketing makes its entry and the importance of a strong brand isrealized. Producers try to re-establish contact with consumers, but at the same timethey want to keep the advantages of mass production. For the first time, large-scaleadvertising campaigns are launched with the purpose of strengthening the brand.Companies enquire into the requirements and needs of consumers and try to meetthese. Consumers have become much more demanding and are able to chooseamong a wide variety of goods, services and brands.

The first signs of marketing thinking emerged in the United States even beforethe First World War. In the agricultural sector overproduction was graduallyeliminated as a result of consumer-orientated thinking and acting.

In 1927 Procter & Gamble was the first to employ a product manager. It was hisjob to find a solution to the problems in selling the Camay soap brand.

1.2.6 More marketing communication methodsIn the early 1980s, producers start to use other marketing methods in addition toadvertising, sales promotions and personal contact. These include, for instance,sponsoring, direct marketing communication (DM communication), publicrelations and exhibitions. Moreover, producers take two target groups into accountin their marketing communication: not only consumers but also retailers. Retailersare becoming the main factor in the success or failure of a brand. Retailers are nolonger a passive tool that producers may switch on at will, and they are no longer theserving hatch of producers. Retail chains have their own marketing policy and puttheir own brands on the market. Producers have to take this into account. Moreover,a concentration of power is taking place in the retail trade and this enables retailersto make greater demands on producers. As a result, producers are forced to go intotrade marketing as well as consumer marketing.

1.2.7 One-to-one communicationIn the past few years one-to-one communication has become more important.Producers are attuning their messages as closely as possible to the requirements andcharacteristics of consumers, through personal selling and direct marketing.Internet customer databases in particular enable producers to personalize messages,as consumers choose sites that appeal to them and where they can find relevantinformation. Consumers themselves may take the initiative on the internet byseeking information, establishing contacts and making purchases. One-to-onecommunication is supported by brand campaigns in printed media, radio andtelevision.

In figure 1.3 five communication streams are shown, starting out from the point ofview of producers. Producers communicate directly with consumers (A) and alsowith the retail trade (B). Through sales staff (office and field staff ) a personal

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relationship is created with the retail trade (C). Just like producers, retailerscommunicate with consumers (D). Communication between producer and salesstaff is a form of internal communication (E). Other communication streams areconcerned with external communications. Communication is not a one-way activity.Consumers, too, may contact retailers and producers, via the internet, for instance.

In the past few years communication streams between producers, retailers andconsumers have changed in character and size. Because of the concentration of theretail trade, negotiations mainly take place at producers head offices. Theproducers account managers maintain contact with their main trading partners.Contracts are concluded centrally. Sales reps who visit shops and take orders havebecome a rarity, though sales reps do still visit shops to ensure optimal productpresentation (merchandising), for instance. Sales staff have been made redundantor been given other tasks.

Another important change in communication streams concerns the producersbudgets for communication with retailers and consumers. Especially in the last fewyears a shift has been taking place. Larger and larger amounts are spent on retailers,to the detriment of budgets for consumers.

Producers are asked to subsidize displays, advertising and other promotionalactivities by their trading partners. They must comply with these requests becausethese trading partners represent large volumes in turnover. If the total marketingcommunication budget of producers is not increased, all these contributions to theretail trade will be made to the detriment of the communication which producersaim at consumers. In the long term this may weaken consumers image of thebrand.

1.3 Product, brand and communication

The success of a marketing communication strategy depends on the way in whichmarketing communication and the other marketing methods are forged into asingle entity. In the long run, advertising and other forms of marketingcommunication will not compensate for bad product quality. On the contrary: goodcommunication may even accelerate the demise of the brand. On the basis of anadvertising statement, for instance, consumers may try the brand and then drop it indisappointment. Nor can marketing communication compensate for poordistribution or too high a price. If the brand is not available anywhere,communication budgets have been wasted. And if the price is higher than theinstrumental and/or psychological value that consumers allot to the brand,communicating will be ineffective. What applies to a product applies even more to a

B A

E

C

D

Figure 1.3 Communication streams

producer

Sales Staff

Retail Trade

Consumer

Table 1.1 Differences between the consumer market and the business market

characteristic

Number of (potential) customers

Amount of purchases

Information requirement

Duration of buying process

Number of people involved in decision making

consumermarket

business market

Large

Small

Small

Short

Small

Small

Large

Big

Long

Large

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Business-to-business

products

DMU, decision making unit

Consumer products

Convenience goods

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service, for it is almost impossible for consumers to judge a service prima facie. Thequality of the service only becomes clear after the service has been rendered. For thisreason the task of marketing communication here (perhaps even more than in thecase of a product) is to provide consumers in advance with an idea of what they canexpect if they decide to buy the service.

1.3.1 Types of productsThe buying process for consumer products differs widely from that of business-to-business products, which are sold by one producer to another (business-to-business). As a result, marketing communication is different as well. A fewimportant differences are shown in table 1.1.

On account of these differences, these markets need a different approach.Communication with the business market must be different from that with theconsumer market. In the business market personal selling often plays an importantpart. After all, large sums of money are usually involved.

Moreover, the product must be made to measure for the buyer. Advertising and otherforms of marketing communication often only serve to support personal selling inthis market. Through advertising, DM communication or a stand at a trade fair,addresses of interested companies may be collected, and these are subsequentlyvisited by a salesman. Naturally, it will be easier for the salesman to make his salespitch if the company he represents has acquired a name for itself among potentialcustomers through advertising, sponsoring, public relations or other forms ofmarketing communication (Logman, Matthyssens and Van Raaij, 2000).

Things are quite different in the consumer market. Because of the large numberof potential buyers, personal selling is much more difficult. It can reach only a fewpeople; at any rate far fewer than through mass communication. Moreover, the costsof personal selling in the consumer market outweigh the benefits. In the businessmarket the number of people involved in decision-making is greater than in theconsumer market. The terms DMU, decision making unit and purchasing centre areused for those who are involved in the decisions concerning a purchase. The needfor product information is often greater and the duration of the process longer,especially when big contracts are involved.

It is not only between consumer products and business-to-business products thatthere are differences in marketing communication. There may also be greatdifferences between various consumer products. In the case of convenience goods,which consumers buy frequently and with a minimum of mental or physicalexertion, price and quality are hardly even compared. Consumers cannot be

bothered. Moreover, differences between the various brands are small. On accountof these small differences producers need large communication budgets in order tocreate a brand preference among consumers. Besides (thematic) advertisingcampaigns, sales promotions, displays and other activities at the point of sale areimportant. That is where consumers have to be reminded of the brand. Examples ofday-to-day consumer goods are cheese, detergents and soft drinks.

Consumers have developed such a taste for some of these products that they havebecome preferential products. Examples of these are beer, cigarettes and cosmetics.In these cases consumers tend to buy well known brands or look for a reliable shopand the advice of an expert or specialist. Thematic advertising is the dominant formof communication here. In thematic advertising a product or a brand is linked topositive associations. See also chapter 2.

Shopping goods are usually durable goods for which consumers go shopping.Before the purchase is made, price, quality and other product features are compared.Examples of this type of product are flat-screen TVs, furniture and holidays.Consumers know that there may be large differences between brands. Moreover,large amounts of money are involved and the products are not bought very often.Consumers, therefore, seek wide-ranging information before buying. Informativeadvertising (e.g. through brochures) and personal selling (advice, demonstration)play an important part here.

Specialized goods are products with unique features. Consumers usually knowwhich brand they want before purchasing. They have no need to compare brands.They only want to know where the desired brand is to be found. Examples of suchgoods are an iPod, a Swatch watch and a ticket for a performance by a well knownartist. Consumers will go to a lot of trouble to buy these products. A strong brandpreference exists. As well as thematic advertising, in-store communication plays anincreasingly important part in creating the brand image. For this reason Nike,Levis, Reebok, Armani, Swatch, Apple and numerous other well known qualitybrands are opening more and more shops of their own, in order to do full justice totheir products. These shops are sometimes magnificent, attracting manyconsumers. Nike Town and the Apple shop near Central Park in New York havebecome huge tourist attractions.

However, the dividing lines between these four types of product are not always clear.What is for day-to-day use to one consumer may be a shopping commodity to

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Preferential products

Shopping goods

Specialized goods

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To some consumers clothing is a

preferential commodity. To others

it belongs in the shopping goods or

specialized goods category.

another one, or even a specialized commodity. Moreover, changes through time mayoccur: what used to be shopping goods may turn into convenience goods or vice-versa. Specialized goods may become shopping goods in a later phase of their lifecycle. This is what happened with, for example, television sets.

Convenience goods and preferential goods are characterized by low involvementwhen purchases are made. Consumers are especially interested in efficiency and buythese goods more or less as a routine. In the case of preferential goods in particular,the reliability of the suppliers is very important. Shopping goods and specializedgoods, on the other hand, are often accompanied by a high degree of involvementand active search and orientation behaviour. The four types of goods are shown intable 1.2. Convenience goods and shopping goods are usually sold in shops with awide, general product range; preferential goods and specialized goods are sold inshops with a far-reaching and specialized product range.

1.3.2 Brand nameProducers must decide whether or not they want to brand their products. This is avery important decision with a view to the nature and the size of marketingcommunication. When this decision is positive, the next question is what brandshould be put on the product. This could be a producers brand or an own brand ofthe retailer. Heineken and Mars produce exclusively producers brands. Companieslike Unox, Heinz and Bonduelle, on the other hand, produce retailers brands forchain stores, in addition to their own. De Verenigde Bierbrouwerijen (UnitedBreweries) depends largely on the production of retailers brands (e.g. Albert Heijnsproprietary brand).

When a producer has decided to put a brand on the market, a brand name has tobe selected. Two main strategies can be distinguished here: separate brands or anumbrella brand.

Procter & Gamble has decided on a separate brands policy. Each product gets anindividual brand name: Ariel for detergent, Dreft for washing-up and delicatelaundry products and Head & Shoulders for shampoo. Each brand is supported byspecific marketing communication. As a consequence, consumers do not know thatProcter & Gamble is the producer of these brands. Neither do consumers know thatFresh-Up, Odorex, Prodent and Purol are produced by Sara Lee. Unilever alsofollows this strategy of separate brands.

The great advantage of this strategy is, that a separate brain position amongconsumers can be created for each brand. For each brand a different marketingcommunication strategy is chosen. In this way all market segments can be workedon separately. Unilevers approach to the marketing of detergents and margarines isa clear example of this. For Omo, Sunil and other detergents and for Becel, Blue

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involvement

Low

general product range specialized product range

Convenience goods Thematic and action

communication Sales promotions

Preferential goods Thematic communication Personal selling

High Shopping goods Thematic communication Personal selling

Specialized goods Thematic communication In-store communication

Table 1.2 Product range, involvement and types of goods

Band, Bona and other margarine brands a different position has been chosen and aconcomitant marketing communication strategy has been developed. If there is aproblem with a certain brand, e.g. Omo Power, this has no adverse consequences forother Unilever brands.

The drawback of a separate brands strategy is clear: the necessary budgets areoften huge. Because of this Unilever has been forced to reduce the number of brandsit produces. The Royco brand, for instance, has disappeared; only Knorr and Unoxremain as Unilever soup brands. At the same time, the Knorr and Unox brands haveabsorbed other products apart from soup. Knorr has flavouring and herbs, forinstance, and Unox has smoked sausage. It has become too expensive to supportmany different brands properly with marketing communication.

In contrast, Philips uses the name Philips for every product: DVD players,handheld mixers, light bulbs and many other products. Razors are called Philishave,a clear sub-brand of Philips. The Philips brand, therefore, functions as an umbrellabrand. As a result, a single campaign is sometimes sufficient for products that are inthe same category and the cost of marketing communication can be brought down.A negative aspect is that the brand image among consumers may become diffuse.What, after all, do a light bulb and a DVD player have in common, consumers mightask. Another drawback is that a problem with one Philips product could havenegative consequences for other Philips products.

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Umbrella brand

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The Philips brand functions as an

umbrella brand for a large number

of very different products.

In choosing a brand name, the following principles might be applied: The brand name must be distinguishable from other brands, easily recognizable and

easy to remember. The brand name must be easy to read, to pronounce and to remember (also

internationally). Equity & Law is difficult for many Dutch people to pronounce and,partly because of this, it has been replaced by Axa.

The brand name must fit the atmosphere surrounding the product for instanceAmerican brand names for products for young people.

The brand name must evoke the desired associations: French brand names forcosmetics, for instance.

The brand name should say something about the main product feature (e.g.CoolBest orange juice).

It must be possible to register the brand name with a brand registration bureau. Oneof the conditions is that a brand be distinguishing. A brand name such asWaterwinkel (Watershop), for instance, is too generic for it to be registered.

With a view to export, the brand name must not evoke negative associations abroad.Fiats Croma brand was an unfortunate choice for the Netherlands because it evokesassociations with Croma cooking fat.

So, in choosing a brand name a lot of factors must be taken into account. If this isnot done, the brand name may have to be changed. Large amounts of money areinvolved if a brand name is changed. Nissan sold its cars in Japan under the Nissanbrand. In many other countries the name Datsun was used. In the United States,Datsun had a brand awareness of 85%. Nevertheless, Nissan decided to carry onebrand all over the world: Nissan. The cost of the introductory campaign for the newname was $500 million, including the name change at 1,100 dealers. In 2009 thePostbank merged with ING. This meant that all Postbank account holders had to beinformed about the new brand name and also about the names of other products: agiro account became a current account, etc. With the transition of Postbank accountholders to ING, ING became a different bank.

However, the choice of a brand name is only the beginning. The brand name isintended especially for identification. It makes the product recognizable. A brandedarticle is, however, more than a product with a brand logo on it. A brand evokescertain associations in consumers or schemata (Beijk and Van Raaij, 1989). A Swatchwatch creates different associations from a Rolex. A branded article is not just aphysical, but also a psychological product. To consumers it has a psychologicalvalue. Brands are symbols in social contacts with others. Consumers use the brandsBMW, Benetton and Nike, among others, to tell people something aboutthemselves. Marketing communication plays an important part in building thedesired value and associations of a brand.

1.3.3 Brand strengthThe strength of a brand may be expressed in terms of money. Various methods areused to calculate brand value. According to the Interbrand Group, a companyspecializing in brand appreciation, the strength of a brand factors for the strength ofa brand is a combination of seven factors. These are:

Market leadership; Stability of the brand; The nature of the market; The degree of internationalization of the brand;

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Associations in consumers

Factors for the strength

of a brand

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The long-term trend of the brand; The way in which the brand is supported; The way in which the brand is legally protected.

The worlds strongest brands, on the basis of these criteria, include: Coca-Cola,McDonalds, Marlboro, Disney, Intel, Nokia, Toyota, Google, Microsoft and GeneralElectric. The seven factors that influence the strength of a brand will now be discussed.

Market leadershipA brand that is a market leader is a more stable and more valuable possession than abrand with a lower ranking. If market leadership cannot be obtained in the existingmarket, possibilities may be sought to profile the brand in smaller markets. In thesemarkets the innovative features and the brand identity can lead to a competitiveadvantage. In the mass beer market, where brands like Heineken, Amstel andGrolsch rule the roost, the Belgian brand Hoegaarden has managed to establish astrong position in a small (part) market with its white beer.

StabilityLong-established brands that have acquired consumer loyalty and have become partof the market structure, are particularly valuable. The build-up of brand loyaltydepends heavily on marketing communication and a strict marketing discipline,which ensure that buyers expectations are met. Sony and Mars are very differentbrands, but both create a reward for consumer loyalty, which is reflected in theirmarketing communication and the quality of their products.

Nature of the marketBrands in the food and drinks market are intrinsically more valuable than those inthe high-tech or clothing markets. The latter are vulnerable to technologicaldevelopments and changes in fashion, but also to cheap imports from low-wagecountries. Fashion houses such as Armani, Chanel and Yves St. Laurent have madetheir brands less vulnerable by extending their product ranges with accessories,perfumes and similar articles (brand extension).

InternationalizationBrands that are present in foreign markets are worth more than national or regionalbrands. We are living in an increasingly small world. Satellite broadcasts and cheaptravel result in fewer differences in taste, interests and expectations amongconsumers. Benetton, Heineken, Nike and McDonalds show that internationalbrands need not be colourless.

TrendThe long-term trend of a brand is an important factor. It is difficult, if notimpossible, to change a brand image from one day to the next. Constant investmentis required in market research, marketing communication and productdevelopment. Kodaks products, for instance, have undergone drastic changes in thelast hundred years. The brand nevertheless enjoys continued market leadershipbecause it has adapted to changing technology and exploited it for the benefit ofconsumers. Coca-Cola, on the other hand, has hardly changed its product since1880. However, its image has been constantly adjusted through extensive marketingcommunication in order to keep the brand fresh and youthful. It is solely owing tothis that Coca-Cola has been able to maintain its market leadership in spite of fiercecompetition.

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SupportBrands that have been invested in constantly and that have been given specificmarketing-communication support are more valuable than brands that have had todo without. Consistent quality and constant marketing communication havebrought rewards for Douwe Egberts, Heineken and Blue Band. There are, however,more than enough examples of brands like Verkade where consistency has beenneglected and the brand identity has become diffuse.

Legal protectionA registered trademark is a legally established sole right to a name, a design, a logoor a combination of these. Strong and wide-ranging legal protection is essential toestablish the value of a brand. Adidas, for instance, is justifiably greatly concerned toprotect its brand name, for this is the companys most valuable asset. The companyhas worldwide registrations for the name Adidas and the design of the three verticalstripes.

1.3.4 PackagingPackaging may create surplus value for a product. It has to meet a number oftechnical and communicative requirements. Packaging is meant to protect theproduct during storage and transport and maintain its quality. But it should also saysomething about the product and the brand. It may be an important means todistinguish the brand from others. In a supermarket consumers are confronted withthousands of products and hundreds of brands. Here the packaging is the message.It should not only draw consumers attention but also tell them what sort of productand brand is involved. The packaging of cosmetics, for instance, may make it clearthat the brand is exclusive or low-price.

Carrefours white labelsIn the mid-1970s the French hypermarket company Carrefour introduced a number of cheap

retailer brands (white labels). In order to emphasize the low price of these proprietary brands,

white packaging was chosen, on which there was little more than the product type: for

example, Coffee on a packet of coffee and Sugar on a packet of sugar. The white packaging

gave the brand surplus value. Since then it has been replaced by multi-coloured packaging.

The packaging of retailer or store brands and producer brands has yet anothercommunicative function. A retailer or store brand is also called a private label. Thepackaging may give consumers all kinds of product information. Pre-packagedfoodstuffs, for instance, mention the product composition, sell-by date andinstructions for use.

In practice the packaging of retailer brands is similar to that of well known producerbrands. Retailers use this method to try to show that their retailer brand is just asgood as the producer brands, but, of course, a lot cheaper. Although the packagingof retailer brands and producer brands is sometimes very similar, the rest of themarketing communication differs a great deal. For producer brands there is a greatdeal of thematic consumer advertising. For retailer brands on the other hand, theemphasis is usually on sales promotions (e.g. now with a 10% discount) and,obviously, on in-store communication. In the store the retailer brands will be givenall possible attention; not just on the shelves but also on displays. Retailers makemore money on retailer brands than on most producer brands.

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Packaging

Producer brand

Retail brand

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Thus a brand is much more than a collection of physical features. Consumers buyproducts on account of the benefits they can derive from them. These benefits maybe functional or psychological. Packaging, service, the brand image and marketingcommunication may give a product psychological surplus (emotional) value. Inmany cases this surplus value is decisive for brand choice, since, in a technicalsense, product differences are often minimal.

The function of marketing communication is to differentiate a brand and to give it aface of its own or psychological value. Marketing without a face of its own is oftenpossible only through cost cutting and underbidding competitors; it is only becauseof the low price that consumers are attracted. Adding psychological surplus valuecreates a basis for a better profit margin, both for producers and for retailers. Such abrand can afford to be higher priced.

1.4 Price and communication

Price and marketing communication are critical to the success of marketing policies.Consumers have become much more price-conscious, as witnessed by theexpression: Poor people need low prices. Rich people love low prices. A number ofproducers, including Procter & Gamble, and retailers such as Aldi use a policy ofconstantly low prices (everyday low prices). Other suppliers work with specialoffers, i.e. temporary price cuts.

The price at which a brand is offered also has a communication function. It is oftendifficult for consumers to judge the quality of a product and price is often used as anindicator of quality. Producers of quality brands look on in dismay when retailerssell them at rock-bottom prices. It is also very common in the retail trade not towork in round figures. It is assumed that 19.95 looks much cheaper than 20,which crosses a psychological price threshold. Even when purchase prices are high,this method is employed. Jewellers and car dealers usually do not round off theirprices either. An exclusive watch may have a price tag of 9,995 instead of 10,000; acar does not cost 26,000 but 25,955.

Another example of psychological pricing is the use of prestige prices. Brands thatconsumers buy because of the status they have naturally come with a high price.There is positive elasticity of price here. The high price makes the brand exclusive.Without the high price part of the attractiveness of the brand would be lost. Theclothing brands Versace and Gucci and cosmetics brands Giorgio and La Prairie areexamples of such brands.

Particularly in the United States much advertising contains price comparisons. Inadvertisements, TV commercials and other advertising messages, producers andretailers directly compare their prices with those of their competitors. One conditionof this strategy is, obviously, that the different brands must be comparable.

1.4.1 Tension between producers and retailersProducers and retailers tend to have different thoughts on pricing. Producers want auniform price. They would rather not see any differences in price for their brand indifferent shops. Price wars may damage the quality image which they are buildingup through their communication. On the other hand, a discounters strongest

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weapon in his marketing communication is his price. It is often the only way inwhich he can distinguish himself from his competitors. Consequently, there istension between the two parties.

Producers attempt to ease this tension by means of recommended retail prices or bymaking arrangements about minimum selling prices. This is only partly successfulin practice. Few retailers stick to recommended retail prices. The electronics sectoris a clear example of this. Mediamarkt and other chains decide for themselves atwhat price they want to sell various products. At best, the recommended retail priceis used for comparative purposes and the difference between the recommendedretail price and the actual price is often so big that consumers find the formerimplausible.

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A high price may turn an article

into something exclusive and give

it extra psychological value.

1.5 Distribution and communication

The choice of distribution channels has a great deal of influence on marketingcommunication. Producers may decide to sell directly to consumers, as do Dellcomputers via the internet. The product offer, the pricing and the marketingcommunication policy are quite different from those of a producer that sells throughretailers. The choice of distribution channels also has a great deal of influence in thelong term. Once a choice has been made, it is difficult to reverse it in the short term.The usual distribution channels for consumer goods are shown in figure 1.4.

Centraal Beheer (Achmea) and Avon are examples of producers that sell directly toconsumers (direct marketing). This policy requires big marketing communicationbudgets. In its communication Centraal Beheer makes much use of the internet, TVcommercials and advertisements in daily papers. Avon has decided to make use ofpersonal selling, via consultants who visit consumers in their homes. However,these are exceptions. Most producers sell their products through retailers. In manycases this is more efficient than direct delivery. A drawback, though, is thatproducers will become partly dependent on the efforts of retailers to reachconsumers through their marketing. If retailers do not provide the right follow-upto the communication effort that producers make to reach consumers, much of thiseffort will have been wasted. In the shop consumers must be confronted by thebrand that they have seen at home in a TV commercial or advertisement. Part of themarketing communication budget, therefore, must be used to persuade retailers toco-operate.

Distribution channels for business-to-business products are usually shorter, as alimited number of potential customers are involved. The value of these purchases isusually high and a lot of technical know-how is required to sell the products. Forthis reason it may be attractive to producers of business-to-business products to selldirectly to customers via representatives. As a consequence, personal selling is oftenthe most important marketing communication method for business-to-businessproducts (Logman, Matthysens and Van Raaij, 2000).

The nature of the shops where the brand is available have an influence on themarketing communication of producers. The shop image and the desired brand

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producer

Agent/Importer

Wholesaler Wholesaler

Retailer Retailer Retailer

Consumer Consumer Consumer Consumer

producer producer producer

Figure 1.4 Distribution channels for consumer goods

image of producers must correspond and, preferably, reinforce each other. Theproducer of a new cosmetics brand that is to be available only at De Bijenkorf or atPerfumery Douglas will create a marketing communication plan together with theseshops. In it, much attention must be given to in-store advertising, as well as tothematic advertising in magazines. Among other things, there will have to be salespromotions in the shops in order to acquaint consumers with the new brand(demonstrations, sampling).

The number of shops in which the brand is sold also has an influence on themarketing communication. Most producers do not distribute their productsthemselves, because they cannot afford a large sales organization. Even GeneralMotors currently (still) the second largest carmaker in the world cannot providethe capital for this and makes use of 18,000 independent dealers. According to aconservative estimate, the average value of these dealers is $3 million. If they wantedto take over these dealers, General Motors would therefore have to stump up $54billion. Moreover, producers are usually of the opinion that independent agents,wholesalers and retailers are able to take care of the distribution process moreefficiently than they are themselves. Producers usually cannot match the experience,specialization, contacts and large-scale operations of retailers. Most of them haveconcluded that they are better off making money by producing goods, and leavingdistribution to others.

1.5.1 Types of distributionMost sweets manufacturers decide on intensive distribution. Sweets such as Look-o-Look are made available in as many shops, kiosks and vending machines aspossible. As a result, a large proportion of the marketing communication budget ofsweets manufacturers is spent on developing attractive packaging and obtaining theoptimum in shop presentation. For impulse-buying plays an important part in thesale of sweets.

Intensive distribution is also appropriate for numerous other convenience goods.Obviously, consumers want to buy these products with as little effort as possible. Ifthe familiar brand is not available, they will have no qualms about buying a differentbrand. For this reason, producers try to influence the brand choice in shops byregularly organizing sales promotions. These sales promotions can take the form ofa price cut, larger contents, a contest or a gift.

Selective distribution is where a brand is available in a limited number of shops.Selection of these shops may be based on numerous criteria: for instance, on thebasis of the shop formula, image and expertise. Selective distribution is used bycosmetics producers and expensive clothing manufacturers such as Burberry. In themarketing communication for these brands it is sometimes necessary to mentionwhere the product is available.

Producers who enter the market with a new product sometimes decide for exclusivedistribution. In such a case the brand is available in only one shop in a designatedarea. By offering exclusive selling rights, it is hoped that an outlet for the brand canbe found. Exclusive distribution is nearly always used for cars. Porsches used to besold by many VW dealers. Porsche, however, has reduced the number of outlets onthe one hand to emphasize exclusivity, on the other to be able to provide goodservice in these outlets. A customer who has come to buy a Porsche does not want towait while someone trades in his VW Polo. With this distribution strategy, too, it isnecessary to announce the addresses of the outlets in advertising or on the internet.

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1.5.2 CollaborationBy collaborating with producers, retailers try to reduce costs. This may involvestreamlining the logistical process or asking producers to contribute to marketingcommunication costs. As a quid pro quo, retailers include the producers brand intheir TV commercials, advertisements or brochures and give it special attention inthe shop.

Retailers who ask producers to collaborate (for a fee) in the field of marketingcommunication use a number of arguments:

Optimal cooperation by retailers makes an essential contribution to the realizationof the marketing communication objectives of producers.

Thematic marketing communication of producers needs a follow-up in the shop. Bymeans of an integrated approach to advertising, sales promotion, in-storecommunication and other marketing communication, synergy may be realized. Inthat case theme and action coalesce.

By collaborating with the retail trade, producers can bring their products to theattention of consumers at relatively low cost lower than, for instance, those of a TVcampaign.

Retailers and producers both have an interest in turnover growth.

Albert Heijn, C1000 and other chain stores finance a large proportion of theircommunication budget with contributions by producers. Producers may have atwofold objective when collaborating in this way: stimulating turnover at retailerlevel and promoting good relationships with retailers.

In the first case, commercial collaboration is used to realize a rise in turnover inthe short term. Producers complement their thematic advertising campaigns withactions in shops. In their own campaigns producers are building up their brandimage. Through collaborating with retailers they cash in on this brand image, as itwere. They tell consumers where and at what price the brand can be bought.Retailers are asked to include the brand in their advertisements and to support it intheir shops. When doing this, producers do not assume that the retailers will lay uplarger stocks. This in itself promotes higher sales, for the retailer usually will notleave the stock in the warehouse.

Producers reward retailers for all these activities with a contribution towardsmarketing communication costs.

An important second objective in collaborating in the field of marketingcommunication may be maintaining good relationships with the retail trade. In thelonger term this especially concerns securing shelf positions. Advertisingcontributions and other reimbursements have become almost obligatory in somesectors and a fixed item in negotiations between producers and retailers. Retailersrely on these contributions, and producers who do not fulfil their expectationsjeopardize the relationship.

Sometimes advertising contributions and other reimbursements are given only tosecure a relationship with retailers, particularly if producers are strongly dependenton retailers. In that case, the advertising contribution is in fact an extra discount onthe purchase price, and retailers use it as they see fit. The result is usually that thecontribution is not used for extra support of the brand in the retailers marketingcommunication. In such cases the advertising contribution obviously does not resultin stimulation of turnover.

It also happens that retailers are asked for a financial contribution to themarketing communication of producers or importers. This occurs, for instance, in

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the automobile sector. For a fee, the name and address of the dealer are mentionedat the bottom of the advertisement.

Producers are especially interested in the sale of their brand. In principle they do notcare in which shops consumers buy it. Retailers, on the other hand, have an interestin consumers buying from them. If profit margins are the same, retailers do notmind which brand consumers buy. This conflict of interests between producers andretailers may lead to problems in shared communication activities in particular(Floor and Schraders, 1983):

Retailers tend to include as many articles as possible in their advertising. This makesit impossible to devote a great deal of attention to each separate brand. Even brandsfor which producers make contributions sometimes get too little attention. In returnfor their advertising contribution producers do not get much more than a (small)picture of their product with a price attached.

The marketing communication of chain stores is strongly action orientated. Thedesign and wording of retail advertising is aggressive. The advertisements are full of(handwritten) slogans and prices in large print. This advertising policy may becontrary to the brand image. Particularly in the case of brands with a strongpsychological value this may lead to problems.

Chain stores that are involved in fierce competition will want to feature producerscheapest brands in their advertising. Producers, on the other hand, do not want toadvertise only their cheap brands, but also their more expensive brands.

These problems can be prevented only if clear agreements are made in advance. Itmust be established which products are to be included in advertisements and alsohow and when this should be done. Moreover, producers may help retailers bymaking product illustrations and texts available.

1.5.3 Seeking an identityAn important development in the retail trade is that shops have become more andmore similar in recent years. Differences have become less and less significant. Allboutiques look alike. Shoe shops, chemists and off-licences have hardly any face oftheir own and supermarkets, too, are becoming more and more uniform. This trendcan be seen in almost every sector. This is why marketing communication is one ofthe few ways in which many chain stores, just like many br