MKT320_Ch01

The IMC FoundationCHAPTER 1 Integrated Marketing Communications

CHAPTER 2 Corporate Image and Brand Management

CHAPTER 3 Buyer Behaviors

CHAPTER 4 Promotions Opportunity Analysis

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Integrated Advertising, Promotion, and Marketing Communications, Fourth Edition, by Kenneth E. Clow and Donald Baack. Published by Prentice Hall. Copyright © 2010 by Pearson Education, Inc.

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Integrated MarketingCommunications

RON JON SURF SHOP

IMC and Brand Building Go to the Beach

If there is one common denominator among beachside communities,it would be that there are plenty of surfing and swimwear shopslocated nearby. Most people couldn’t tell you the name of any onestore, unless they have visited a Ron Jon Surf Shop. Ron Jon is aprime example of how to develop and build strong brand aware-ness and loyalty in an industry in which mostly small, single-owner stores are located along the shorelines of beaches and lake-towns across the United States.

In the 1960s, surfboard technology was changing. Homemadewooden boards were being replaced with mass-produced fiberglass

models. A surfer-dude named Ron DiMenna was frustrated that hecould not buy one of these new and improved rides. As a result, he

founded the first Ron Jon Surf Shop in New Jersey. In the early days,DiMenna would buy three boards and sell two with a markup that gave

him the third board for “free.” As time passed, the company grew, andadditional locations were opened on both the East and West Coast.The center of the Ron Jon empire is located in Cocoa Beach, Florida. At the

Ron Jon Surf Shop near the beach, surfer and beach-lover figures that look likesand sculptures greet customers as they approach. Huge billboards showing images of

happy and relaxed swimmers and beautiful beach enthusiasts line the top of the building.The store itself covers more than 52,000 square feet. It is filled with an amazing variety of

items. Swimsuits, sunglasses, toys, surfboards, towels, shirts, and even beach-themed homedecorations are available. A refreshment stand with picnic tables is located outside the store forpatrons to enjoy. This Ron Jon unit is open 24 hours per day, 365 days a year—just like thebeach.

One of the most memorable Ron Jon images is its logo. The company’s beach-themed,fun-loving image has led loyal customers to attach Ron Jon decals carrying the logo practicallyeverywhere, including one near the top of the Eiffel Tower and another aboard the U.S. spacestation. Many of the products sold in the store also display the logo.

The Ron Jon marketing team effectively utilizes advertising by creating cooperative programswith other companies. When the Cocoa Beach store celebrated its 40th anniversary, ChryslerCorporation joined in and created a limited edition Ron Jon PT Cruiser. The autos were

Chapter Objectives

After reading this chapter, you should be ableto answer the following questions:

� What role does communication play inmarketing programs?

� What is the nature of thecommunication process?

� How should the communications model beapplied to marketing issues?

� What are the characteristics of a fullyintegrated advertising and marketingcommunications approach?

� How does the concept of integratedmarketing communications pertain tointernational operations?

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customized to display Ron Jon decal art on the outside. Each car came with numerous noveltyitems, including a Ron Jon sports bag, blankets, license plates, bumper stickers, key chains, anda T-shirt that guaranteed the car owner special bragging rights. Only 1,000 Ron Jon cars weremade. One was given away as the grand prize of a local surfing event.

The 40th anniversary celebration also featured a contest in which Ron Jon memorabilia weresolicited. Entrants sent in old photos, news articles, postcards, and personal stories. Each itemgave the person a chance at a gift certificate for Ron Jon merchandise.

Ron Jon sponsors events that tie in with the company’s primary business. This includes anatural alliance with professional surfing contests and other beachwear manufacturers, such asBillabong. In 2007, Ron John hosted an autograph-signing event in Cocoa Beach featuringrenowned surfer Bruce Irons.

Awareness of Ron Jon’s presence has grown through innovative marketing programs. At onepoint, Ron Jon Surf Shop was featured in a MasterCard commercial. Now, Ron Jon is expandingits reach to international customers. The company has received in-store visits from people allaround the world. Part of the reason, according to vice president for corporate development BillBieberbach, is that international customers prefer name-brand items. Ron Jon is a powerfulbrand that reaches beach lovers in other countries.

Ron Jon has also expanded into land-based sports. In the mid-2000s, the company spon-sored an “End of Summer Skateboard Contest” in Florida. Skateboarders competed for cashprizes and merchandise. Pepsi was a cosponsor of the event. Later, the two companies heldautograph sessions with Globe Pro Skateboarding. These events were aimed at new, youngcustomers who enjoy skateboarding as much as they do surfing.

Ron Jon also has launched several public relations campaigns focused on community involve-ment. In 2007, these events included a drive for patrons to donate blood, a beach cleanup drive,and major donations to the United Way campaign.

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4 PART 1 The IMC Foundation

FIGURE 1.1Current Trends AffectingMarketing Communications

The company established new licensing agreements and other extensions of the RonJon brand. Ron Jon Surf Shop opened new store locations in Orlando, Tampa, and Miamiunder these agreements. Ron Jon merchandise is offered at several international airports,including Newark International Airport and the airport at Cozumel, Mexico. The brandextensions also led to the surf-themed Ron Jon Cape Caribe Resort in Cape Canaveral,Florida, Ron Jon bottled water products, and the Ron Jon Surf School by Craig Carroll inCocoa Beach.

Ron Jon Surf Shop’s future remains bright. The overall theme of fun, relaxation, andenjoyment makes the Ron Jon brand a major force in what is often a no-name marketplace.1

OVERVIEW

The global marketplace consists of a complex set of competitors battling forcustomers in a rapidly changing environment. New companies are formed on adaily basis. Small businesses, Internet-based operations, and global conglomerates

that have expanded through takeovers and mergers are all part of a worldwide marketingenvironment.

A wide variety of media are available to the leaders of these companies. Advertisingand marketing methods range from simple stand-alone billboard advertisements to com-plex, multilingual global Web sites. The number of ways to reach potential customerscontinually increases as nontraditional methods expand and become more popular.

In the face of these sophisticated and cluttered market conditions, firms try to beheard. Marketing experts know that a company’s communications must speak with aclear voice. Customers must understand the essence of a business and the benefits of thefirm’s goods and services. With the increasing variety of advertising and promotionalvenues, and so many companies bombarding potential customers with messages, the taskis challenging.

Three trends have emerged in this turbulent new marketing communications context(Figure 1.1). First, accountability is a primary focus. Advertising agencies are expectedto produce tangible results. Company leaders who hire advertising agencies cannot spendunlimited dollars on marketing programs. The funds must be spent wisely. A couponpromotion, a contest, a rebate program, or an advertising campaign must yield measur-able gains in sales, market share, brand awareness, or customer loyalty to be consideredsuccessful.

The push for accountability is being driven by chief executive officers (CEOs), chieffinancial officers (CFOs), and boards of directors who seek visible, measurable resultsfrom marketing expenditures. According to Martyn Straw, chief strategy officer of theadvertising agency BBDO Worldwide, corporate executives and business owners aretired of “funneling cash into TV commercials and glossy ads” that keep increasing in costand seem to do less and less. As a result, a company such as PepsiCo is less likely to relyon 30-second television spots. Instead, alternative communication venues are combinedwith special events where names, profiles, and addresses of prospective Pepsi drinkerscan be collected and tracked. Straw believes that marketing has gone from being a cost orexpense to an investment. Promotional dollars must add value to generate new sales andhigher profits.2

The second new trend in advertising is tied to the first. Major changes have emergedin the tasks performed by all of the players in an advertising program. The first personfacing new job responsibilities is the account executive, the person in an advertisingagency who directs and oversees advertising and promotional programs for client compa-nies. The demand for accountability places the account manager on the hot seat. He or

� Accountability for measurable results� Changes in tasks performed by key players in advertising programs� Increased use of alternative media

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CHAPTER 1 Integrated Marketing Communications 5

Johnson & Johnson has increaseduse of alternative media inmarketing baby products.

she must respond to the scrutiny directed ateach marketing campaign. This increasedresponsibility has changed the accountexecutive’s day-to-day activities. In the past,an account executive mainly served as aliaison between the people who preparedcommercials and client companies. Now, theaccount manager may be involved in devel-oping overall strategic communication planswhile, at the same time, trying to make sureeach individual promotional activity achievestangible results.

Another person facing greater account-ability is the brand or product manager, theindividual who manages a specific brand orline of products for the client company.When sales of a brand slow, the brand man-ager looks for ways to boost them. Thebrand manager works diligently with theadvertising agency, the trade promotion specialist, the consumer promotion specialist,and any other individual or agency involved in conveying that brand image to customers.The brand manager must be a master at organizing the activities of many individualswhile integrating each marketing campaign. Every promotional effort is coordinated tomake each message speak with the same voice.

The final group of individuals facing new responsibilities is creatives, the peoplewho develop the actual advertisements and promotional materials. Most creatives areemployed by advertising agencies. Some work for individual companies; others arefreelancers. In this new era where attracting attention to a company, good, or service isdifficult, creatives are being asked to perform additional functions. This includescontributing ideas about the strategic marketing direction of the firm while developingindividual advertisements. Creatives are also being held accountable for the effectivenessof advertising campaigns.

As a result, a new partnership among account executives, brand managers, andcreatives has emerged. Most advertising and marketing agencies do more than create ads.They help the client company develop a totally integrated communications program. Thistrend toward a more integrated approach to advertising and communication continues.

The third new trend is the explosive development of alternative media. The Internethas evolved from simple Web-based advertisements to include blogs, interactive sites,and popular sites such as MySpace, Facebook, YouTube, Napster, Morpheus, and Kazaa.New handheld technologies such as iPhones and text-messaging systems have created anentirely new landscape and, in some cases, nearly a new language. As a result, companiesare cutting expenditures on traditional media commericals and are moving to nontradi-tional or alternative media. Johnson & Johnson shifted approximately 20 percent of itsmarketing budget to nontraditional media for many products, including Neutrogena,Aveeno, and the flagship Johnson & Johnson baby products.3

Younger consumers with considerable amounts of purchasing power are less inclinedto watch television. They are more likely to engage in technologically based interactionswith friends around the world. The challenge becomes finding ways to reach consumerswho are increasingly sophisticated at blocking out traditional advertising messages butwho can be reached through new technologies. Current thinking in marketing suggeststhat you cannot assume that the best approach is to capture someone’s attention. Instead,marketing communication now means finding ways to engage with and interact withconsumers.

This textbook is devoted to explaining marketing communications from the perspec-tive of the decision makers both inside and outside the firm. Various topics are viewedfrom the vantage points of the key individuals involved, including account managers,brand managers, creatives, media buyers, and Webmasters.

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Sender Encoding TransmissionDevice Decoding Receiver

Feedback

// Noise

//

// // // //

//=

FIGURE 1.2The Communications Process

This chapter explains the nature of an integrated advertising and marketing communi-cations program. First, communication processes are described. Understanding howcommunication works builds the foundation for an integrated marketing program. Next, atotally integrated marketing communications program is described. Finally, the integratedmarketing communications process is applied to global or international operations,generating the term GIMC, or globally integrated marketing communications.

COMMUNICATION AND IMC PROGRAMSCommunication can be defined as transmitting, receiving, and processing information.When a person, group, or organization attempts to transfer an idea or message,communication occurs when the receiver (another person or group) is able to comprehendthe information. The model of communication shown in Figure 1.2 shows how communi-cation takes place as the message that was sent reaches its destination in a form that isunderstood by the intended audience.4

The communication process is part of any advertising or marketing program.Consider a person planning to buy a pair of athletic shoes. Using the communicationsmodel (Figure 1.2), the senders are companies that manufacture and sell shoes. NewBalance, ASICS, Reebok, and Skechers all try to gain the customer’s attention. Most ofthese firms hire advertising agencies. Others utilize an in-house marketing group.

Encoding the message is the second step. A creative takes the idea and transforms itinto attention-getting advertisements designed for various media (television, magazines,the Internet, and others). The athletic shoe advertisements shown in this section areexamples of encoding.

Messages travel to audiences through various transmission devices. The third stage ofthe marketing communication process occurs when a channel or medium delivers the mes-sage. The channel may be a television carrying an advertisement, a Sunday paper with acoupon placed in it, a letter to the purchasing agent of a large retail store, or a blog on a com-pany’s Web site. The shoe ads in this section were transmitted through various magazines.

Decoding occurs when the message reaches one or more of the receiver’s senses.Consumers both hear and see television ads. Others consumers handle (touch) and read(see) a coupon offer. It is even possible to “smell” a message. A well-placed perfumesample might entice a buyer to purchase both the magazine containing the sample and theperfume being advertised. People who are interested in purchasing athletic shoes paycloser attention to advertisements and other information about shoes. Consider the athleticshoe advertisements shown in this section and then answer the following questions:

1. Which advertisement most dramatically attracted your attention? Why?2. Which advertisement is the least appealing? Why?3. How important is the brand name in each ad? Why?4. What is the major message of each individual advertisement?5. What makes each advertisement effective or ineffective?6. Discuss your thoughts about each advertisement with other students.

It is possible that the same advertisement will be interpreted differently by differentpeople. In other words, the message may not be received. Quality marketing communicationoccurs when customers (the receivers) decode or understand the message as it was intendedby the sender. In the case of the shoe ads, effective marketing communications depend on

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receivers getting the right message and responding in the desired fashion (such as shopping,buying, or telling their friends about the shoes).

Examine the Web sites of the four athletic shoe companies featured in theadvertisements:

� Reebok (www.rbk.com)� ASICS (www.asics.com)� New Balance (www.newbalance.com)� Skechers (www.skechers.com)

The sites provide additional insights about the messages these companies are tryingto send. Compare the materials on the Web sites to the shoe advertisements. You shouldbe able to see how the two messages go together. If they do not, the IMC program is notcompletely developed or fully integrated.

One obstacle that prevents marketing messages from being efficient and effective isnoise. Noise is anything that distorts or disrupts a message. It can occur at any stage in thecommunication process, as shown in Figure 1.2. Examples of noise that affect televisionadvertising are provided in Figure 1.3.

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FIGURE 1.3Communication Noise AffectsTelevision Advertising

� The viewer is talking on the phone.� The viewer is getting something to eat

during the ad.� The viewer of the ad dislikes or is offended

by the nature of the ad.� The ad is placed on a TV show that is

seldom watched by the producer’s target audience.

� The advertisement is placed next to an ad by a competitor.

� The creative designed an ad that the targetaudience did not get.

� The person in the ad overpowers the message.� The producer of the ad changed the background

of the ad from what the creative wanted.

The most common form of noise affecting marketing communications is clutter.Modern consumers are exposed to hundreds of marketing messages each day. Most aretuned out. Clutter includes:

� Eight minutes of commercials per half hour of television and radio programs� A Sunday newspaper jammed with advertising supplements� An endless barrage of billboards on a major street� The inside of a bus or subway car papered with ads� Web sites and servers loaded with commercials

The final component of the communication process is feedback. It takes the form ofpurchases, inquiries, complaints, questions, visits to the store, blogs, and Web site hits.Each indicates that the message has reached the receiver and that the receiver isresponding.

Account managers, creatives, brand managers, and others involved in the marketingprocess pay attention to every part of the communications model. They make sure that theproper audiences receive the messages. They try to make sure the message cuts throughnoise and clutter. In the case of athletic shoes, increases in market share, sales, and brandloyalty are common outcomes the marketing team tries to achieve.

Remember, however, that communicating with consumers and other businessesrequires more than simply creating attractive advertisements. In the next section, thenature of a fully developed integrated marketing communications program is described.An effective integrated marketing communications program integrates numerous market-ing activities into a single package in order to effectively reach target markets and otheraudiences.

INTEGRATED MARKETINGCOMMUNICATIONSAn integrated marketing communications program can be built on the foundationprovided by the communications model. Although IMC programs may be described inseveral ways, the consensus is to define them as follows: Integrated marketingcommunications (IMC) is the coordination and integration of all marketing communi-cation tools, avenues, and sources within a company into a seamless program thatmaximizes the impact on customers and other stakeholders at a minimal cost. Thisintegration affects all of a firm’s business-to-business, marketing channel, customer-focused, and internally directed communications.5

Before further examining the IMC concept, consider the traditional framework ofmarketing. The marketing mix is the starting point. As shown in Figure 1.4, promotion is

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one of the four components of the mix. For years, the traditional view was that promo-tional activities included advertising, sales promotions, and personal selling activities.Sales promotions include both sales and trade promotions, with sales promotions aimed atend users or consumers of goods and services and trade promotions directed towarddistributors and retailers. This traditional view has changed somewhat due to the account-ability issue discussed earlier. The drive to integrate all promotional efforts has expandedpromotions beyond the three traditional elements of advertising, sales promotions, andpersonal selling. Now, it also includes activities such as database marketing, directmarketing, sponsorship marketing, e-active marketing, guerrilla marketing, alternativemarketing, and public relations.

A complete IMC plan incorporates every element of the marketing mix: products,prices, distribution methods, and promotions. This textbook primarily deals with thepromotions component. Keep in mind, however, that to present a unified message,the other elements of the marketing mix must be blended into the program.

AN INTEGRATED MARKETINGCOMMUNICATIONS PLANIntegrated marketing is based on a strategic marketing plan. The plan coordinates effortsin all components of the marketing mix. The purpose is to achieve harmony in themessages sent to customers and others. The same plan integrates all promotional effortsto keep the company’s total communications program in sync.

Figure 1.5 lists the steps required to complete a marketing plan. The first step is asituational analysis, which is the process of examining factors from the organization’sinternal and external environments. The analysis identifies marketing problems andopportunities present in the external environment as well as internal company strengthsand weaknesses.

When the situation is fully understood, the second step is to define primarymarketing objectives. These objectives include targets such as higher sales, an increase inmarket share, a new competitive position, or desired customer actions, such as visitingthe store and making purchases.

Based on the marketing objectives, a marketing budget is prepared and marketingstrategies are finalized. Marketing strategies apply to all the ingredients of the marketingmix, plus any positioning, differentiation, or branding strategies.

From these strategies, marketing tactics guide the day-by-day activities necessary tosupport marketing strategies. The final step in the marketing plan is stating how toevaluate performance.

Product Price Promotion Distribution

Advertising Sales Promotions Personal Selling

DatabaseMarketing

DirectResponseMarketing

SponsorshipMarketing

E-ActiveMarketing

PublicRelations

AlternativeMarketing

FIGURE 1.4The Components of Promotion

FIGURE 1.5The Marketing Plan� Situation analysis

� Marketing objectives� Marketing budget

� Marketing strategies� Marketing tactics� Evaluation of performance

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Corporate ImageBrand Management

BuyerBehaviors

Promotions OpportunityAnalysis

AdvertisingManagement

Advertising DesignTheory and Appeals

Advertising DesignMessages and Frameworks

TraditionalMedia

E-ActiveMarketing

AlternativeChannels

Regulationsand Ethics

Evaluation

Database andDirect Response

Marketing

PublicRelations andSponsorships

SalesPromotions

FIGURE 1.6Overview of Integrated MarketingCommunications

These six steps of the marketing plan are similar to those used in creating manage-ment strategies. Both are designed to integrate all company activities into one consistenteffort and to provide guidance to company leaders and marketing experts as they integratethe firm’s total communications package. Once the marketing plan has been established,company leaders can develop an integrated marketing communications program.

IMC COMPONENTS AND THE DESIGNOF THIS BOOKFigure 1.6 presents an overview of the IMC approach used in this textbook. A briefdescription of each aspect follows. As shown, the foundation of an IMC program consistsof a careful review of the company’s image, the buyers to be served, and the markets inwhich the buyers are located.

Advertising programs are built on this foundation, as are the other elements of thepromotional mix. Finally, the integration tools located at the peak of the pyramid help thecompany’s marketing team make certain that the elements of the plan are consistent andeffective.

The IMC FoundationThe first section of this text builds the foundation for an IMC program. Chapter 2describes the corporate image and brand management elements. Strengthening the firm’simage and brands answers the question, “Who are we and what message are we trying tosend?” From there it is possible to identify target markets.

Chapter 3 describes buyer behaviors. The steps of the consumer purchasing processexplain how individuals make choices. Marketers identify the motives leading topurchases and factors affecting those decisions. Then, the IMC program can be designedto influence these consumer choices. Business-to-business buyer behaviors are alsoexamined. Knowing how to reach purchasing managers and other decision makers withintarget businesses is another critical element in an integrated communications plan.Discovering viable business-to-business marketing opportunities plays a vital role inoverall company success.

Chapter 4 describes the promotions opportunity analysis element of an IMCprogram. This includes identifying all target markets. Consumer market segments areidentified using demographics, income, social class, and various psychographicvariables. Business markets are segmented by understanding the demographics of the

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company’s buying team, noting who the end users willbe, and by determining the benefits other businessesexpect to receive from the goods and services they buy.

Advertising ToolsThe second section of this text is devoted to advertisingissues. Advertising management, as described in Chapter5, addresses the major functions of advertising, thegeneral direction the company takes, and the selection ofan advertising agency. The functions performed by anadvertising agency’s account manager as well as thoseprovided by the advertising creative are also described.

Several advertising theories, which are explored inChapter 6, are available to help the creative designadvertisements. The various advertising appeals that canbe used, including those oriented toward fear, humor,sex, music, and logic, are explained in the chapter.

Chapter 7 reveals the ingredients involved in creat-ing effective message strategies. The messages aredelivered via various executional frameworks, whichare various ways to construct the actual commercial oradvertisement. Creatives and other advertising prof-essionals know that effective advertising includes theuse of effective sources or spokespersons and followingwell-established principles of success.

IMC Media ToolsThe third section of this book contains informationregarding both traditional and new cutting-edge ideasabout how to reach potential customers. First, the tradi-tional media channels, including television, radio, mag-azines, newspapers, outdoor signs, and direct mail, aredescribed in Chapter 8, along with the advantages and disadvantages of each medium.The roles provided by media planners and media buyers are also identified.

Chapter 9 is devoted to issues associated with the Internet, with a new term, e-activemarketing, used to summarize the various activities involved. E-active marketingintegrates e-commerce programs with more recent trends that have evolved with Internetusage. These include social networks and blogs, among the other activities that consumerspursue online. Consumers play an active role in receiving and sending messages when theInternet is utilized. Consequently, the channel deserves special attention from the market-ing department.

Many communication channels are available beyond both the traditional networksand the Internet. These methods are described in Chapter 10, titled “AlternativeMarketing.” The programs that are described include buzz marketing, guerilla marketing,product placements and branded entertainment, and lifestyle marketing. The concept of abrand community is also examined.

Promotional ToolsThe next level of the IMC pyramid adds database and direct response marketing programs,trade promotions, consumer promotions, public relations efforts, and sponsorship pro-grams. When marketing managers carefully design all of the steps taken up to this point,the firm is in a better position to integrate these activities. Messages presented in theadvertising campaign can be reinforced with a variety of communication promotions.

Database and direct response marketing programs are outlined in Chapter 11. Thechapter first describes effective data collection and analysis. Then, the informationgained can be used to develop data-driven marketing programs, including permissionmarketing, frequency programs, and customer relationship management systems.

Advertising is a crucial componentof a firm’s IMC program.

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Consumer and trade promotions are described inChapter 12, which has the general title of “SalesPromotions.” Trade promotions include trade incen-tives, cooperative advertising, slotting fees, and otherpromotions and discounts that help the manufacturer orchannel member to push the product through the distri-bution channel. Consumer promotions are directed atend users and include coupons, contests, premiums,refunds, rebates, free samples, and price-off offers. Thead for Green Tea in this section includes a coupon for55 cents off.

Chapter 13 focuses on public relations programsthat connect with consumers in positive ways. Thisincludes emphasizing positive events and dealing withnegative publicity. In many cases the marketing teamutilizes public relations efforts to help a sponsorshipprogram achieve the greatest impact.

Integration ToolsThe “top” level of the IMC program includes theintegration tools needed to make sure all customers areeffectively served. Chapter 14 begins with an examina-tion of the many legal and regulatory issues that are partof the advertising and promotions environment.Further, ethical issues in marketing communicationsare discussed. Ethical systems go beyond simply meet-ing the letter of the law.

Chapter 15, the final chapter of this textbook,explains how to evaluate an integrated marketingprogram. It is crucial to evaluate communicationprograms. Evaluations can begin prior to any promo-

tional campaign and continue during the campaign to postcampaign evaluations.These evaluations can provide valuable information to alter campaigns before they arecommercially introduced, as well as providing input to modify programs that havealready run. A promotions evaluation process holds everything together; it drivesthe entire IMC process. Fully integrated marketing requires a careful linkage betweenplanning and evaluation processes; one cannot occur without the other.

Refining the IMC ProgramIMC involves much more than writing a plan. It is also not limited to the company’smarketing department. IMC is a company-wide activity. To be successful, every part ofthe organization’s operation must be included. A study conducted by the AmericanProductivity & Quality Center of Houston indicates that four stages are involved indesigning an IMC system (see Figure 1.7).6

The first stage is to identify, coordinate, and manage all forms of marketing commu-nication. The objective is to bring all of the company’s communication elements togetherunder one umbrella. This includes advertising, promotions, direct marketing, Internet ande-commerce programs, public relations, sponsorships, and other marketing activities.

Source: Based on “Integrated Marketing Communications,” Consortium Benchmarking Study, American Productivity and Quality Center (1999).

FIGURE 1.7Four Stages of an EffectiveIntegrated MarketingCommunications System

1. Identify, coordinate, and manage all formsof marketing communication.

2. Analyze customer contact points.

3. Use information technology to better servecustomers.

4. Use information technology to assist corporatestrategic planning.

An ad for Celestial SeasoningsGreen Tea offering a 55 cents-offcoupon.

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In the second stage, communications are examined from the perspective of thecustomer. The marketing team analyzes every contact method that might influencecustomers. This means studying every internal and external group that might affectperceptions of the company and its products. Employees, distributors, retailers, dealers,product package designers, and others are part of the integrated marketing program.

Information technology comes to the forefront in the third stage. Company leadersfind ways to use information technology to enhance IMC programs. With computer tech-nology and abundance of information, the marketing team has the capability to developdata-driven programs to meet the needs of individual customers and allow for thecustomization of marketing messages.

The fourth and final stage of IMC development occurs when the organization usescustomer data information and insights to assist corporate strategic planning. Theinformation guides marketing decisions and the communication approaches aimed atindividual customer segments. Firms reaching this stage, such as Dow Chemical, FedEx,and Hewlett-Packard, take databases and use them to calculate and establish a customervalue for each buyer. All customers are not equally valuable. Dow Chemical, FedEx, andHewlett-Packard allocate sales and marketing communication resources to thosecustomers with the greatest potential for return, based on calculations of customer values.This helps company leaders understand each customer’s worth and treat each oneindividually, resulting in the highest possible return on investment for marketingexpenditures.

THE VALUE OF IMC PLANSAdvances in technology and communications are major new forces in integrated market-ing communications. Consumers must be reached in a holistic fashion, which meanscompanies cannot rely totally on traditional media and marketing methods. There is astrong movement toward nontraditional and alternative methods of reaching consumers.Figure 1.8 lists several trends linked to the increasing importance of integrated advertis-ing and marketing communications programs.

Information TechnologyTechnology enables instant communications among business executives, employees,channel members, and others around the world. It also creates opportunities for marketingcommunications. For example, in the past, predictions of consumer purchasing behaviorswere based on the results of test markets, attitudinal research, and intention-to-buysurveys. Although these are excellent means of obtaining information about consumers,they are slow, costly, and potentially unreliable.

Today, purchase-behavior predictions are more precise due to the development of theUPC (universal product code) bar-code system. The technology was originally used tomanage inventories. Scanning every sale meant retailers were better able to developefficient inventory-control systems.

At the same time, UPC codes combined with other technology programs allow largeamounts of data and information about customers to be gathered. Advanced statisticalsoftware helps company leaders analyze these data. Connections between financial(e.g., credit card, banking) and business firms make it possible to collect purchasing data.Using this information, demographic and psychographic information about consumerscan be correlated with the items they buy, as well as when and where they make

FIGURE 1.8Trends Impacting IntegratedAdvertising and MarketingCommunications

� Development of information technology� Changes in channel power� Increase in competition� Brand parity

� Integration of information by consumers� Decline in effectiveness of television

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purchases. Consequently, marketers can determine whois buying a company’s products and the best communica-tion channels to reach them.

Changes in Channel PowerA marketing channel consists of a producer or manufac-turer vending goods to wholesalers or middlemen, whoin turn sell items to retailers, where the same items arefinally sold to consumers. Numerous technologicaldevelopments have changed the levels of power held bymembers of the channel. Oftentimes retailers hold themost channel power, because they control shelf spaceand purchase data. Retailers are able to determine whatproducts and brands will be placed on store shelves, andthus available to consumers. Through checkout scanners,retailers know what products and brands are selling.Many retailers share the data with suppliers and requirethem to ensure that store shelves remain well stocked.The size and power of mega-retailers means manufactur-ers and suppliers have no choice but to follow thedictates of these “big box” stores.

At the same time, the advancement of the WorldWide Web and information technology has caused somechannel power to shift to consumers.7 Consumers canobtain information about goods and services andpurchase almost anything using the Internet. Forexample, the Visa advertisement in this section encour-ages consumers to book hotel rooms, air travel, and carrentals online. Internet-driven sales have grown at a

tremendous rate. In fact, in just one year, from 2006 to 2007, U.S. online retail sales grewby 18.3 percent. Total U.S. retail sales in the United States was $243.1 billion. Figure 1.9highlights the major segments of U.S. online retail sales. It also displays the percentageeach category represents of total U.S. online retail sales.8

To illustrate how technology is changing channel power, think about an individual inthe market for a cell phone provider. First, she goes to the Internet and searches forinformation. She then identifies several possible brands and narrows them down to three.Next, she may travel to a local mall to investigate the carriers or visit with them by phone.Asking questions of the salespeople helps her gather additional product information.

Toys/video games3%

Music/videos4%

Home furnishings5%

Food/beverages3%

Other19%

Consumer electronics5%

Auto & parts8%

Appliances3%

Apparel7%

Travel35%

Computerhardware/software

8%Source: Based on “U.S. Online Retail Sales,” Digital Marketing & Media Fact Pack, Advertising Age, Crain Communications, Inc. (2007), p. 34.

FIGURE 1.9U.S. Online Retail Sales

This Visa advertisementencourages consumers to book vacations online.

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Going home, she then logs on to the Web sites of the three systems to learn aboutwarranties; the type of phone being offered; company policies, such as how easy it is tochange calling plans and about rollover minutes; and other details about the services.Having gathered sufficient information to make a decision, she can use Internet sources,the telephone, or a personal visit to the carrier’s store to finalize the purchase. She mayeven play one carrier off against another to get a better price. Soon, she has a new phonealong with the paperwork used to complete the transaction. The result is that the buyer isin charge of the entire process. Although many individuals still purchase the majority ofproducts in brick-and-mortar stores, individuals are shifting to more integratedapproaches to learning about products and to making purchases.

The same principles apply to business-to-business purchasing activities. Buyers whoshop on behalf of organizations and other company members seeking business-to-businessservices are able to tap into the same resources (i.e., Web sites, databases). This meansthat the same kind of shift in channel power is taking place in the business-to-businesssector.

Increases in CompetitionInformation technology and communication advances have dramatically changed themarketplace in other ways. Consumers can purchase goods and services from anywhere inthe world. Competition no longer comes from the company just down the street—it cancome from a firm 10,000 miles away that can supply a product faster and cheaper.Consumers want quality, but they also want a low price. The company that delivers on bothquality and price gets the business, regardless of its location. Advancements in deliverysystems make it possible for purchases to arrive almost anywhere in a matter of days.

In this competitive environment, it seems as if the only way one firm can gain sales isto take customers away from another. Consequently, integrating advertising and othermarketing communications becomes extremely important. Advertising alone is notenough to maintain sales. This situation is further complicated for manufacturers whenretailers hold stronger channel power and control the flow of merchandise to consumers.In that circumstance, manufacturers invest in trade promotions (e.g., dealer incentives,slotting allowances, discounts) to keep products in various retail outlets. Encouragingretailers to promote a manufacturer’s brand or prominently display it for consumer view-ing requires even greater promotional dollars. Manufacturers also invest in consumerpromotions (e.g., coupons, contests, sweepstakes, bonus packs, and price-off deals) tokeep customers. The goal is to keep a brand attractive to the retailer.

The U.S. running shoe market provides an excellent example of how growth for anygiven company comes at the expense of competing brands. Figure 1.10 displays market

Adidas, 13.2%

Asics, 13.3%

Avia, 1.7%

Brooks, 1.7%

New Balance,17.8%

Nike, 46.2%

Other, 2.1%

Reebok, 2.3%

Saucony, 1.7%

Source: Based on Matt Powell, “A Steady Stride,” SCB 39, no. 11 (November 2006), p. 15.

FIGURE 1.10Market Share of Top Brandsin the Running Shoe Industry

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shares for the top brands in the running shoe industry. Notice that Nike is the marketleader, with 46.2 percent of the market, compared to the number two brand, NewBalance, at 17.8 percent, and the number three brand, Adidas, at 13.2 percent. About theonly way New Balance, Adidas, Reebok, and other brands can gain market share is totake it away from another brand.9 Nike is the market leader. Consequently, it is often thetarget for such strategies.

At the same time that manufacturers fight for market share, retailers, equipped withscanner data, control product placement within a store and shelf-space allocation. To gainprominence for a particular brand at the retail level, the manufacturer’s marketing teamcoordinates all advertising, trade promotions, and consumer promotions. The goal is tomaximize marketing dollars by gaining maximum exposure to consumers and retailers.Retailers, in turn, focus on IMC efforts that are designed to maintain customer loyaltyalong with positive relationships with manufacturers. It is crucial for each company in themarketing chain to create a quality IMC program that reaches both customers and othersin the distribution chain.

Brand ParityThe increase in national and global competition is due to the availability of multiplebrands. Many of these products have nearly identical benefits. When consumers believethat most brands offer the same set of attributes, the result is brand parity. From the con-sumer’s perspective, this means that shoppers will purchase from a group of acceptedbrands rather than one specific brand. When brand parity is present, quality is often not amajor concern because consumers believe that only minor quality differences exist.Consumers routinely view quality levels of products as being nearly equal. As a result,they often base purchase decisions on other criteria, such as price, availability, or a specificpromotional deal. The net effect is that brand loyalty has experienced a steady decline.10

Brand loyalty has also been reduced because of a growing acceptance of private brands.A recent survey conducted by Top Brands revealed that consumers are willing to

switch brands in most product categories.11 In response, the marketing team tries tocreate messages that express how the company’s products are clearly different. Themessages are designed to convince consumers that the company’s brand is superior and isnot the same as the competition’s. A quality IMC program is, in part, designed to gain thebenefits associated with a strong brand name.

Integration of InformationToday’s consumers have a variety of choices regarding where they obtain informationabout a brand. If consumers are not satisfied with what they hear, they can seek additionalinformation. They might go to the Internet and read about other brands and companies.

Many businesses, such as the Marion State Bank, include a Web address on company advertisements.

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As a result, most companies now list Internet addresses on advertisements. Web users cannow discuss products and companies with other customers in chat rooms or in blogs.They may also travel to retail stores and discuss various options with the salesclerk.Others will consult independent sources of information such as Consumer Reports.

The marketing team should be concerned with the ways consumers integrate thisinformation. Company leaders should make sure that every contact point projects thesame message. Contact points are the places where customers interact with or acquireadditional information from a company. These contacts may be direct or indirect, plannedor unplanned. An effective IMC program sends a consistent message about the nature ofthe company, its products, and the benefits that result from making a purchase from theorganization.

Decline in the Effectiveness of Television AdvertisingThe influence of mass-media television advertising has declined dramatically. VCRs andDVR systems allow consumers to watch programs without commercials. The rise in popu-larity of cable TV, DVR recorders, and satellite dishes means consumers have a widevariety of viewing choices. Using the remote while watching television means that it islikely that, during most commercials, the viewer is surfing other channels to see what else ison. Many television advertisements are not seen, even by those people watching a particu-lar program. In a recent survey by conducted by Brandweek magazine, only 16 percent ofviewers said that they watch commercials during a program.12 Why do viewers switchchannels or engage in other activities? Figure 1.11 provides some answers. In general,viewers find television ads to be boring, annoying, intrusive, and too repetitious.13 To over-come this problem, it is vital to create new and innovative communications programs thatcan hold the viewer’s attention, which is not an easy task.

Many firms employ advertising agencies to assist in marketing efforts. Until 1970,almost all advertising agencies focused only on the advertising aspect of the marketingplan. Now, however, many advertising agencies spend substantial amounts of timeassisting clients in the development of IMC programs.14 In addition to advertisements,these agencies design consumer promotion materials and direct-marketing programs,along with other marketing tactics.

INTERNATIONAL IMPLICATIONSThe same trend that exists among advertising agencies in the United States also occurs inthe international arena. Instead of being called “IMC,” however, it is known as GIMC, ora globally integrated marketing communications program.15 The goal is still the same—to coordinate marketing efforts. The challenges are greater due to larger national andcultural differences in target markets.

Seen ad a lot

Percent100 20 30 40 50 60 70 80 90 100

Ad annoying

Ad boring

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Turn to another program

Program is boring

I'm boredFIGURE 1.11Reasons Viewers Do Not WatchAds During a Commercial Break

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In the past, marketers could employ two different strategies for global companies.The first approach was standardization, in which the idea was to standardize the productand message across countries. The goal of this approach was generating economies ofscale in production while creating a global product using the same promotional theme.The language would be different, but the basic marketing message would be the same.

The second approach to global marketing was adaptation. Products and marketingmessages were designed for and adapted to individual countries. Thus, the manner bywhich a product was marketed in France was different from how it was marketed in Italy,India, or Australia.

The GIMC approach is easier to apply when a company relies on the standardizationmethod; however, GIMC can and should be used with either adaptation or standardiza-tion.16 To reduce costs, careful coordination of marketing efforts should occur acrosscountries. Even when a firm uses the adaptation strategy, marketers from various coun-tries can learn from each other. Members of the marketing department should not feel likethey have to reinvent the wheel. Synergy can occur between countries. More importantly,learning can occur. As telecommunications continue to expand, contacts between peoplesof different countries are much more frequent.

Remember, a commercial targeted for customers in France may also be viewed by peoplein Spain using satellite technologies. Therefore, a company should try to transmit a consistenttheme, even when there are differences in local messages. In terms of marketing, the philoso-phy many companies use is “market globally, but act locally.” When marketers design orencode messages for local markets, they need to have the freedom to tailor or alter the mes-sage so that it fits the local culture and the target market. The final message conveyed in eachcountry often varies. Development of a GIMC is the final extension to an IMC plan. With itscompletion, companies are able to compete more effectively both at home and abroad.

SUMMARY

A new era is unfolding in the fields of advertising, promotions,and marketing communications. Marketing departments andadvertising agencies, as well as individual account managers,brand managers, and creatives, encounter strong pressures. Theyare being held accountable for expenditures of marketing com-munications dollars. Company leaders expect tangible resultsfrom promotional campaigns and other marketing programs. Asa result, new partnerships are forming among account execu-tives, creatives, and the companies that hire them. The duties ofthe account manager have expanded in the direction of a morestrategically oriented approach to advertising and marketingcommunications. Those preparing to become advertising or pro-motions professionals must be aware of both accountabilityissues and the new aspects of these jobs, including accountingfor all of the new forms of alternative media.

Communication is transmitting, receiving, and processinginformation. It is a two-way street in which a sender mustestablish a clear connection with a receiver. Effective commu-nication is the glue holding the relationship between two enti-ties together. When communication breaks down, conflicts,misunderstandings, and other problems can develop.

The components of the communication process include thesender, an encoding process, the transmission device, the decod-ing process, and the receiver. Noise is anything that distorts ordisrupts the flow of information from the sender to the receiver.

In the marketing arena, senders are companies seeking totransmit ideas to consumers, employees, other companies, retail

outlets, and others. Encoding devices are the means of transmit-ting information and include advertisements, public relationsefforts, press releases, sales activities, promotions, and a widevariety of additional verbal and nonverbal cues sent to receivers.Transmission devices are the media and spokespersons whocarry the message. Decoding occurs when the receivers (such ascustomers or retailers) encounter the message. Noise takes manyforms in marketing, most notably the clutter of an overabundanceof messages in every available channel.

Integrated marketing communications (IMC) takes advan-tage of the effective management of the communications chan-nel. Within the marketing mix of products, prices, distributionsystems, and promotions, firms that speak with one clear voiceare able to coordinate and integrate all marketing tools. Thegoal is to have a strong and positive impact on consumers, busi-nesses, and other end users.

IMC plans are vital to achieving success. The reasons fortheir importance begin with the explosion of information tech-nologies. Channel power has shifted from manufacturers toretailers and is now shifting to consumers. Company leadersmust adjust in order to maintain a strong market standing, andIMC programs can assist in this effort. New levels of competi-tion drive marketers to better understand their customers and becertain that those end users are hearing a clear and consistentmessage from the firm. As consumers develop a stronger senseof brand parity, whereby no real differences in product or ser-vice quality are perceived, marketers must re-create a situation

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in which their brand holds a distinct advantage over others.This is difficult, because consumers can collect and integrateinformation about products from a wide variety of sources,including technological outlets (Web sites) and interpersonal(sales reps) sources. Quality IMC programs help maintain thestrong voice a company needs to ensure that its messages isheard. An additional challenge is the decline in effectiveness ofmass-media advertising. IMC helps company leaders find newways to contact consumers with a unified message.

When a firm conducts business internationally, a GIMC, orglobally integrated marketing communications system, can be of

great value. By developing one strong theme and then adaptingthat theme to individual countries, the firm conveys a messagethat integrates international operations into a more coherentpackage.

This text explains the issues involved in establishing aneffective IMC program. The importance of business-to-busi-ness marketing efforts is noted, because many firms marketitems as much to other companies as they do to consumers.Successful development of an IMC program should help firmsremain profitable and vibrant, even when the complexities ofthe marketplace make these goals more difficult to reach.

KEY TERMS

communication Transmitting, receiving, and processinginformation.senders The person(s) attempting to deliver a message or idea.encoding The verbal (words, sounds) and nonverbal (gestures,facial expressions, posture) cues that the sender utilizes in dispatch-ing a message.transmission devices All of the items that carry a messagefrom the sender to the receiver.decoding When the receiver employs any of his or her senses(hearing, seeing, feeling) in an attempt to capture a message.receivers The intended audience for a message.noise Anything that distorts or disrupts a message.clutter Exists when consumers are exposed to hundreds ofmarketing messages per day, and most are tuned out.feedback Information the sender obtains from the receiverregarding the receiver’s perception or interpretation of a message.integrated marketing communications (IMC) The coor-dination and integration of all marketing communication

tools, avenues, and sources within a company into a seamlessprogram that maximizes the impact on customers and otherend users at a minimal cost. This affects all of a firm’s busi-ness-to-business, marketing channel, customer-focused, andinternally oriented communications.marketing mix Consists of products, prices, places (the dis-tribution system), and promotions.brand parity Occurs when there is the perception that mostproducts and services are essentially the same.contact points The places where customers interact with oracquire additional information about a firm.standardization When a firm standardizes its products andmarket offerings across countries with the goal of generatingeconomies of scale in production while using the same pro-motional theme.adaptation Occurs when products and marketing messagesare designed for and adapted to individual countries.

REVIEW QUESTIONS

1. How has the job of an advertising account executivechanged? How has the job of a creative changed? How hasthe job of a brand manager changed? How do the three jobsinteract in the new marketing environment?

2. Define communication. Why does it play such a crucialrole in marketing and business?

3. What are the parts of an individual communicationsmodel?

4. Who are the typical senders in marketing communications?Who are the receivers?

5. Name the transmission devices, both human and nonhu-man, that carry marketing messages. How can the humanelement become a problem?

6. Define clutter. Name some of the forms of clutter in mar-keting communications.

7. Define integrated marketing communications (IMC).8. What are the four parts of the marketing mix?

9. What steps are required to write a marketing plan?10. Describe firm and brand image.11. What are the main components of advertising?12. How has the growth of information technology made IMC

programs vital to marketing efforts?13. What reasons were given to explain the growth in impor-

tance of IMC plans in this chapter?14. What is channel power? How has it changed in the past few

decades?15. What is brand parity? How is it related to successful mar-

keting efforts?16. What is a GIMC? Why is it important for multinational

firms?17. What is the difference between standardization and adapta-

tion in GIMC programs?

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INTEGRATED LEARNING EXERCISES

1. Ron Jon Surf Shop is probably the best known retail storebrand for ocean gear in Florida. In Hawaii, the dominantname is Hilo Hattie. Go to the Hilo Hattie Web site atwww.hilohattie.com. Compare it to the Ron Jon site atwww.ronjons.com. Do the two sites have relatively com-mon themes? Which is the more attractive site? Why?

2. Find each of the following companies on the Internet. Foreach company, discuss how effective its Web site is in com-municating an overall message. Also, discuss how well themarketing team integrates the material on the Web site.How well does the Web site integrate the company’s adver-tising with other marketing communications?a. Revlon (www.revlon.com)

b. J.B. Hunt (www.jbhunt.com)

c. United Airlines (www.united.com)

d. Steamboat Resorts (www.steamboatresorts.com)

3. Information is one key to developing a successful inte-grated marketing communications program. Access each ofthe following Web sites and examine the information andnews available on each site. How would this informationhelp in developing an integrated marketing campaign?a. Brandweek (www.brandweek.com)

b. Adweek (www.adweek.com)

c. Mediaweek (www.mediaweek.com)

d. Branding Asia (www.brandingasia.com)

STUDENT PROJECT

Creative Corner

One of Procter & Gamble’s fastest growing products isFebreze. It is aimed at individuals who do not like washinglaundry and has been positioned by P&G as an alternativemethod of completing this chore. An ideal target market is the18 million college students in the United States. With busyclass schedules, work, and social events, who has time to dolaundry? For jeans and other clothes that are not quite dirty yet,Febreze offers the chance to “refresh” the clothes and kill anypossible odors. John Paquin, Executive Vice-President at theadvertising agency WPP Grey Worldwide, which handles the

Febreze product, states that “washing is not a convenient part ofthe lifestyle at college.” He also recognizes that “mainstreammedia buys [such as television] are not effective for the 18- to22-year-olds.17 For more information about Febreze, access theFebreze Web site at www.febreze.com.

1. Identify alternative media you would use to reach 18- to22-year-old college students.

2. Design an advertisement for Febreze aimed at the collegedemographic. Where would you place your ad? Why?

CRITICAL THINKING EXERCISES

Discussion Questions

1. The marketing director for a furniture manufacturer isassigned the task of developing an integrated marketing com-munications program to emphasize the furniture’s naturallook. Discuss the problems the director might encounter indeveloping this message and in ensuring that consumersunderstand the message correctly. Refer to the communi-cation process in Figure 1.2 for ideas. What kinds of noiseinterferes with the communication process?

2. Referring to Exercise 1, assume the director wants to developan integrated marketing communications program emphasiz-ing a theme focused on the furniture’s natural look. Thistheme applies to all of the company’s markets, that is, bothretailers and consumers. Using Figure 1.6 as a guide, brieflydiscuss each element of the integrated marketing communi-cations plan and how to incorporate it into an overall theme.

3. The marketing director for a manufacturer of automobiletires wants to integrate the company’s marketing program

internationally. Should the director use a standardization oradaptation approach? How could the company be certainthat its marketing program will effectively be integratedamong the different countries in which it sells tires?

4. What do you typically do during commercials on televi-sion? What percentage of the time do you watch commer-cials? What makes you watch? Ask these same questions of10 other people. What type of activities do people engagein during commercials?

5. Nike’s tagline is “Just do it.” What meaning is conveyed bythe tagline? Do you think this conveys a clear messageabout the company’s operations?

6. Brand parity has become a major issue for companies.Identify three product categories where the brand you pur-chase is not very important. Why is the brand name notimportant? Identify three product categories where thebrand is important. What brand or brands do you typicallypurchase in each category?

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A NEW SALSA SENSATION

Hector Fernandez created a salsa that became legendarywithin just a few years. Hector operated a successful restau-rant, El Casa Grande, in Taos, New Mexico, for many years. Anew chapter in his life opened when he was approached by twoof his best customers, who offered to help him produce andmarket his salsa throughout the state, with the goal of reachingregional distribution in 5 years.

As a first step, Hector located the home office of a majoradvertising agency in Albuquerque. The agency positioneditself as being a “full-service” organization. Hector wonderedexactly what that meant. He was introduced to MattBarnes, who was to serve as his marketing and promotionsconsultant.

Matt’s first questions were about Hector’s salsa: “Whatmakes your salsa better?” and “Is there a way we canconvince people of the difference?” Hector respondedthat his customers often commented about both thetaste and the texture of the salsa. He had a secret formulathat had a few unusual seasonings that made his salsa burstwith flavor. Hector also believed that it was less “runny” thanothers.

The next item the two discussed was potential customers.Hector noted that Tex-Mex was a popular form of dining inNew Mexico as well as across the country. He believed that hissalsa would appeal to a wide variety of people who enjoy Tex-Mex cuisine.

Matt’s next question was simple: “Who do you think areyour major competitors?”

Hector responded, “That’s easy, Pace and Old El Paso.”Matt then asked what Hector thought of the two compa-

nies and their products. He suggested an investigation on botha personal and competitive basis. For example, Matt asked,“What do you think of when you hear the name Pace? Howabout Old El Paso?” He noted that both brands were solid andthat Hector’s company would need a compelling brand in orderto compete.

The next step was a visit to the Web site of each company(www.pacefoods.com and www.oldelpaso.com). They noticedthat the two companies offered some products that were thesame and others that were not.

Matt asked Hector what he thought about the advertisingand promotions for each company and its products. Hectorreplied, “Well, to tell you the truth, I only remember one televisionad. It said something about one of the two companies waslocated in New York City instead of near Mexico, but I can’tremember which was which.” They concluded that it was possi-ble that neither company was involved in a great deal oftraditional advertising or that Hector was simply too busy withhis own company to notice. Hector noted that he used a DVR towatch television and that he listened to satellite radio in both hisrestaurant and his car.

Matt suggested that Hector should look in Sundaypapers for the past several weeks to see if either companywas offering price-off coupons or other promotions, such as acontest or sweepstakes. He told Hector it would be a goodidea to attend events where salsa was being sampled or sold,such as at county fairs, Mexican heritage events, and at ballparks and other sports stadiums where nachos were on themenu.

The two then discussed a crucial issue: How couldHector’s new company convince grocers and others to desig-nate some shelf space for his salsa, thereby taking space awayfrom some other product?

Finally, Matt handed Hector a package of materials (seeFigure 1.12). He asked Hector to consider how to reach everypossible type of customer for his product, including grocerystores, other restaurants, and individual consumers shoppingfor salsa. He suggested that Hector would need to think aboutwhat type of sales tactics to use, which promotional programswere most important, and how the company should look—fromits logo, to its letterhead, to the business cards handed out bysales representatives. Remember, Matt stated, “Everythingcommunicates.”

1. Can you think of a brand name that could be used notonly for salsa, but for any other product related to salsathat Hector’s company might sell?

2. How can Hector’s company compete with Pace and OldEl Paso? Is there a market niche the company canlocate?

3. What kinds of advertising and promotions tactics shouldthe company use? Will the tactics be the samein 5 years?

Hector had a great salsa, but no brand nameand no marketing communications plan.

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C A S E2

THE CABLE COMPANY

Rachel Peterson knew she faced several major challenges asshe took the job of marketing director for CableNOW. Thecompany was the sole cable provider for six communities innortheast Louisiana. All of the cities were essentially “licensedmonopolies” in the sense that no other cable company couldcompete within the city limits. In spite of this edge, however,competition was becoming a major problem.

Satellite television was the primary competitor forCableNOW’s customers. Both DirecTV and the Dish Networkhad set up operations in the six communities. The twoproviders were able to charge lower prices for basic services.They had also started to compete by offering price reductionson installations. This made switching from cable to satellitemuch easier for local residents.

CableNOW’s primary selling point was in the delivery ofprogramming during bad weather. Thunderstorms and snow-storms completely disrupt a satellite signal. Severe weather iscommon in that part of Louisiana; however, the weather eventsdo not affect a cable picture. CableNOW also held a competi-tive advantage because the company offered local businessand real estate listings to subscribers. The firm also was able to

provide local radar and weather forecasts during the “Local onthe 8s” segments on the Weather Channel. The satellite com-panies could not provide these special options.

When Rachel took the job, she knew another issue wasabout to unfold. CableNOW had been able to transmit eachcity’s local channels as part of the basic cable package. Untilthis year, the satellite companies could not. Dish Network waschanging the mix. Dish Network had just signed a contract toprovide the local stations to subscribers. DirecTV did not, butdid offer a greater number of channels in the company’s basicpackage. As a result, Rachel knew she had her work cut outas the marketing department struggled to maintain share ineach city.

1. What image or theme should CableNOW portray tosubscribers?

2. Can you think of a way to emphasize the advantagesCableNOW has in an advertising campaign?

3. Do you believe CableNOW will survive these changesover the next 10 years? Why or why not?

ENDNOTES

1. Donald Baack, “Ron Jon’s Surf Shop:Building a Brand in a No-name Marketplace,”IMC Communique (Spring 2004), p. 5;www.ronjon.com accessed November 7,2007.

2. Diane Brady, “Making Marketing MeasureUp,” BusinessWeek (December 13, 2004),pp. 112–13; “Top 10: Issues Facing Senior

Marketers in 2007,” Advertising Age 78, no.17 (April 23, 2007), p. 23.

3. Jack Neff, “J&J Jolts ‘Old’ Media with$250M Spend Shift,” Advertising Age 78, no.12 (March 19, 2007), pp. 1, 29.

4. Donald Baack, “Communication Processes,”Organizational Behavior. Houston: DamePublications, Inc. (1998), pp. 313–37.

5. James G. Hutton, “Integrated Market-ing Communications and the Evolutionof Marketing Thought,” Journal ofBusiness Research 37 (November 1996),pp. 155–62.

6. Don Schultz, “Invest in Integration,” IndustryWeek, 247, no. 10 (May 18, 1998), p. 20;“Integrated Marketing Communications,”

FIGURE 1.12Items to Be Included in an IMCProgram

� Company logo� Product brand name and company name� Business cards� Letterhead� Carry home bags (paper or plastic)� Wrapping paper� Coupons� Promotional giveaways (coffee mugs, pens,

pencils, calendars)� Design of booth for trade shows� Advertisements (billboards, space used on

cars and busses, television, radio, magazines,and newspapers)

� Toll-free 800 or 888 number� Company database

� Cooperative advertising with other businesses

� Personal selling pitches� Characteristics of target market buyers� Characteristics of business buyers� Sales incentives provided to salesforce

(contests, prizes, bonuses, and commissions)

� Internal messages� Company magazines and newspapers� Statements to shareholders� Speeches by company leaders� Public relations releases� Sponsorship programs� Web site

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Consortium Benchmarking Study, AmericanProductivity & Quality Center (1999).

7. Lauren Keller Johnson, “Harnessing thePower of the Customer,” HarvardManagement Update, 9 (March 2004),pp. 3–5; Patricia Seybold, The CustomerRevolution. London: Random House BusinessBooks (2006).

8. “U.S. Online Retail Sales,” Digital Market-ing & Media Fact Pack, Advertising Age,Crain Communications, Inc. (2007), p. 34.

9. Matt Powell, “A Steady Stride,” SCB 39, no.11 (November 2006), p. 15.

10. Jean-Noel Kapferer, “The Roots ofBrand Loyalty Decline: An International

Comparison,” Ivey Business Journal 69, no.4 (March–April 2005), pp. 1–6.

11. Debbie Howell, “Today’s Consumers MoreOpen to Try New Brands,” DSN RetailingToday 43, no. 20 (October 25, 2004),pp. 29–32.

12. Sandy Brown, “Study: DVR Users Skip LiveAds, Too,” Brandweek, 45, no. 37 (October18, 2004), p. 7; Jennifer Lach, “CommercialOverload,” American Demographics 21, no. 9(September 1999), p. 20.

13. “Commercial Breakdown,” Brand Strategy(March 2004), pp. 46–47.

14. Don E. Schultz and Philip J. Kitchen,“Integrated Marketing Communications in

U.S. Advertising Agencies: An ExploratoryStudy,” Journal of Advertising Research(September–October 1997), pp. 7–18.

15. Stephen J. Gould, Dawn B. Lerman, andAndreas F. Grein, “Agency Perceptions andPractices on Global IMC,” Journal ofAdvertising Research (January–February1999), pp. 7–26.

16. Ibid.

17. Parekh Rupal, “Febreze Sniffs Out NewTarget: Dorm Dwellers,” Advertising Age(April, 2004), pp. 34–35.

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MKT320_Ch01