Integrated Marketing Communications. Lecture 1 - Introduction

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1 Integrated Marketing Communications Lecture 1 - Introduction The Growth of Advertising and Promotion o Rapidly changing media environment = more difficult to reach and communicate with target audiences. o Mass media are losing their viewers to the highly fragmented but more narrowly targeted digital media. o Consumers now want more control of the content they receive from the media and are seeking out info. o Overall Internet advertising reached an estimated $35b in o While the traditional media and sales promotion still account for the majority of companies marketing communications expenditures, more monies are being allocated to non-traditional media and is expected to continue to increase rapidly, particularly for digital-originated spending. o In 2000, the average consumer spent less than 30 mins online each day versus nearly 4 hours today. Marketing satisfying needs and wants through the exchange process. o Activity and processes for creating, communicating and delivering value for end-users. o Exchange involves both parties in an exchange of value and a way to communicate. o Value customer s perception of benefits versus costs (acquiring & consuming) Integrated marketing communications (IMC) o Coordinating promotional elements & other marketing activities that communicate with a firm s customers. o Recognises the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines, e.g. general advertising, direct response, sales promotion and public relations. o The goal is to generate both short-term financial returns and build long-term brand and shareholder value. o IMC is an ongoing strategic business process - not just tactical integration of communication activities. o A plan that evaluates the strategic roles of several communications disciplines: Advertising, direct marketing, sales promotion and public relations. Reasons for the Growing Importance of IMC o Value of strategically integrating various communications functions rather than autonomously operation. o Companies can avoid duplication and develop more effective marketing communications programs. o Evolution of micromarketing advertising efforts focused on a small group of highly targeted consumers. o Paid search fastest growing form of online advertising. You advertise within the sponsored listings of a search engine by paying either each time your ad is clicked or when your ad is displayed. The role of IMC in Branding o Building and properly managing brand equity has become a priority for companies of all sizes. o IMC activities, such as sales promotion offers can help improve the contact consumers have with a brand. o Apple was ranked #1 in the Best Global Brands 2013 Report, with a brand value of $98,316b. o Companies are finding it more difficult to control their brand image since consumers can now use the Internet to make price and quality comparisons or to learn what others think about various brands. o The future of marketing isn t getting people to buy your brand, but to buy into your brand. The Marketing Management Process 1. Situation Analysis Focuses on factors that influence or are relevant to the development of a promotional strategy. Internal analysis assesses relevant areas involving the product/service offering and the firm. External analysis factors such as characteristics of the firm s customers, market segments, positioning strategies and competitors. 2. Objectives (marketing + communications) Marketing objectives what is to be accomplished by the overall marketing program. Communication objectives what the firm seeks to accomplish with its promotional program. 3. Select the target markets 4. Develop the marketing mix 5. Implement, evaluate & control Evaluate promotional program results/effectiveness. Take measures to control and adjust promotional strategies. 1

2 Lecture 2 IMC in the Marketing Process; Ad Agencies & Other Marketing Communication Organisations Promotion persuasion in order to sell goods and services or promote an idea. Advertising paid form of non-personal communication about organisation, product/service by identified sponsor. o More than 200 companies spend over $100m on advertising and promotion in the US each year with Procter & Gamble spending the highest amount of $4.830m. o Advantages Media advertising is still the most cost-effective way to reach large numbers of consumers with an advertising message. E.g. the average TV program on the 4 major TV networks during prime time (8pm 11pm) reaches nearly 5 million households. Magazines such as Time, Sports Illustrated and People have a weekly circulation of more than 3m. Can be used to create favourable and unique images and associations for a brand. o Most common types of advertising National advertising nationwide basis or in most regions of the country. Retail/local advertising encourage consumer to: shop at a specific store or use a local store. Primary-demand advertising stimulates demand for the general product class or entire industry. Selective-demand advertising creates demand for a specific company s brand. B2B advertising targets individuals who buy/influence the purchase of industrial goods/services. Professional advertising targets professionals, encouraging them to use a company s product. Trade advertising targets marketing channel members, encouraging them to stock, promote, and resell the manufacturer s branded products to their customers. Direct marketing organisations communicate directly with target customers to generate a response and/or a transaction. E.g. direct mail, mail-order catalogs, database management, direct selling, telemarketing + the Interne o E.g. Dell became a market leader by selling a full line of personal computers through direct marketing. o Major tool is direct-response advertising a product is promoted through an ad that encourages the consumer to purchase directly from the manufacturer. o More discretionary income but less time for in-store shopping. o Many companies now have extensive databases of their customers details, which enables them to target their current and prospective customers through direct mail, marketing, telemarketing, etc. Interactive/Internet marketing allows for two-way flow of communication whereby users can participate in and modify the form and content of the information they receive in real time. o Users can receive info and images, make enquiries, respond to questions & make purchases. o We are now into the second phase of the Internet revolution (i.e. Web 2.0), where the focus is on collaboration and sharing among Internet users. Given rise to the development and growth of social media. o Advertising is already persuasive on the first two screens TV s and personal computers and now more ads and promotional messages are appearing on the third screen of mobile phones. o One of the major factors driving the growth of this medium is the development of mobile shopping services and apps that consumers can use to make shopping more economical, efficient, productive and fun. 2

3 Sales promotion provide extra value or incentive to the sales force, distributors, or the ultimate consumer and can stimulate immediate sales. o Consumer-oriented targeted to the ultimate user of a product or service, e.g. couponing, sampling, premiums, rebates, contests, point-of-purchase materials, etc. o Trade-oriented targeted toward marketing intermediaries such as wholesalers, distributors, and retailers, e.g. price deals, sales contests, trade shows, etc. o Recently, many companies have shifted the emphasis of their promotional strategy from advertising to sales promotion because of declining brand loyalty + increased consumer sensitivity to promotional deals. Publicity non-personal communications regarding an organisation, product, service, or idea that is not directly paid for or run under identified sponsorship. o In the form of a news story/editorial/announcement about organisation and/or its products and services. o Advantage credibility and low cost. Consumers tend to be less sceptical toward favourable information about a product or service when it comes from a source they perceive as unbiased. o Disadvantage not always under the control of an organisation and is sometimes unfavourable. Public relations manages and controls a program of action to earn public understanding and acceptance. Wide variety of communication efforts to foster goodwill and gain public understanding. Used to build rapport (close and harmonious relationship) with the various publics (e.g. employees, customers, stockholders, voters, etc.) Personal selling form of person-to-person communication in which a seller attempts to assist and/or persuade prospective buyers to purchase the company s product/service or act on an idea. o Involves direct contact between buyer and seller, either face-to-face of through some form of telecommunications such as telephone sales. o It is not a direct part of the IMC program in most companies. IMC Audience Contact Tools o Touch points each and every opportunity the customer has to see or hear about the company and/or its brands or have an encounter or experience with it. Four basic categories: Company created, e.g. sales promotion. Easiest to control lowest impact. Intrinsic, e.g. customer service representatives. Unexpected, e.g. word-of-mouth. Hardest to control greatest impact. Customer-initiated, e.g. ing company to enquire about something. Traditional Marketing Approach Contemporary IMC Approach 3

4 A) Marketing and Promotions Process Model o Opportunity analysis Market opportunities are areas where there are favourable demand trends; customer needs and/or wants not being satisfied and where a firm could compete effectively. o Competitive analysis Other brand competition (DIRECT) or other product competition (INDIRECT). E.g. growth in the bottled water market has led numerous companies to compete in this area and offer different product varieties. Search for a competitive advantage edge over competitors. o Target market selection After evaluating marketing opportunities for products/services in various markets, a company selects one or more as a target market for which it will develop a marketing program(s). B) Target Marketing Process diagram to the right. It is the process whereby companies develop different marketing strategies to satisfy different consumer needs. a. Market segmentation is dividing the market into distinct groups that (1) have common needs and (2) will respond similarly to a marketing action. i. Geographic segmentation divided into different geographic units. ii. Demographic segmentation divided by demographic variables, e.g. age, sex, family, size, education and income, etc. iii. Psychographic segmentation divided on the basis of personality, lifecycles, and/or lifestyles (AIOs activities, interests and opinions). iv. Behaviouristic segmentation divided according to usage, loyalties or buying responses to a product, e.g. heavy or light users. v. Benefit segmentation grouping of consumers on the basis of attributes sought in a product. b. Determining how many segments to enter and determining which segments offer potential. Identify markets with unfulfilled needs Determine market segmentation Select market to target Position through marketing strategies i. Undifferentiated marketing ignoring segment differences and offering just one product or service to the entire market. ii. Differentiated marketing marketing in number of segments separate marketing strategy. iii. Concentrated marketing firm selects 1 segment and attempts to capture large share of market. c. Positioning the image of the product and/or brand relative to competing products or brands. i. Can position by 6 strategies: Position by product attributes and benefits, by price/quality, by use/application, by product class, by product user, by competitor or by cultural symbols. ii. Repositioning involves altering or changing a product s or brand s position. Usually occurs because of declining or stagnant sales or because of anticipated opportunities. C) Marketing Planning Program Development o Combining the various elements of the marketing mix into a cohesive and effective marketing program. 4

5 o Product Decisions involves decisions about the item itself, such as design and quality, and also about aspects such as service and warranties as well as brand name and package design. i. Branding building and maintaining a favourable identity and image of the company and/or its products or services in the mind of the consumer. ii. Packaging often the consumer s first exposure to the product so it must be favourable. o Pricing Decisions concerns establishing a price level, developing pricing policies, and monitoring competitors and consumers reactions to prices in the marketplace. The price must be consistent with the perceptions of the product, as well as the communications strategy. o Distribution channel Decisions marketing channels are sets of independent organisations involved in the process of making a product or service available for use or consumption. Either direct/indirect channels. o Promotional Decisions i. Promotional push strategy the goal is to push the product through the channels of distribution by aggressively selling and promoting the item to the resellers, or trade. ii. Promotional pull strategy spending money on advertising and sales promotion efforts directed toward the ultimate consumer. D) Promotion to Trade and Target Market (i.e. ultimate consumer) o Target market end or ultimate consumer consumers and business and/or o Trade resellers/channel members What is an IMC Plan o Provides framework for developing, implementing & controlling the organisation s IMC programs & activities. Participants in the IMC Process o Advertiser organisations with the products, services, or causes to be marketed and for which advertising agencies and other marketing promotional firms provide services. Wesfarmers (Coles, Bunning s ) are the top advertiser in Oz. o Ad agencies a firm that specialises in the creation, production, and/or placement of advertising messages. In-house agencies set up, owned and operated by an advertiser. Advantages = cost savings and more control. Disadvantages = less experience and less objectivity. E.g. Hyundai and Revlon use it. Reasons for using an agency obtain services of highly skilled specialists + obtain an objective point of view (free of internal policy constraints & biases + broad range of experience). Types of ad agencies = Full-service agencies (offers clients full range of marketing, communications and promotions services). Account services (the link between the ad agency and its client). Marketing services (in past 2 decades, use of these services has increased dramatically). Creative 5