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Promotion the 4th P

This Lesson is about integrating the firm’s marketing communication in order to generate synergies
between the various elements of communications package. It gives an overview of integrated
marketing communication, communication process, different methods to set promotional budget
and various promotional tools.


A. The Marketing Communications

Modern marketing calls for more than just developing a good product, pricing it attractively, and making it available to target customers. Companies must also communicate with current and prospective customers, and what they communicate should not be left to chance. For most companies, the question is not whether to communicate, but how much to spend and in what ways. All of their communications efforts must be blended into a consistent and coordinated communications program. As shown in the fig, completion of marketing process requires something of value with both producer and customer that should be communicated with each other for performing the
eexchange process.

B. The Marketing Communications Mix.

A company's total marketing communications mix—also called its promotion mix consists of the
specific blend of advertising, personal selling, sales promotion, public relations, and directmarketingbr> tools that the company uses to pursue its advertising and marketing objectives.
Definitions of the five major promotion tools follow:
Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or
services by an identified sponsor.
Personal selling: Personal presentation by the firm's sales force for the purpose of making sales and
building customer relationships.
Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service.
Public relations: Building good relations with the company's various publics by obtaining favorable
publicity, building up a good corporate image, and handling or heading off unfavorable rumors,
stories, and events.
Direct marketing: Direct connections with carefully targeted individual consumers to both obtain
an immediate response and cultivate lasting customer relationships—the use of telephone, mail,
fax, e-mail, the Internet, and other tools to communicate directly with specific consumers.
Each category involves specific tools. For example, advertising includes print, broadcast, outdoor,
and other forms. Personal selling includes sales presentations, trade shows, and incentive
programs. Sales promotion includes point-of-purchase displays, premiums, discounts, coupons,
specialty advertising, and demonstrations. Direct marketing includes catalogs, telemarketing, fax,
kiosks, the Internet, and more. Thanks to technological breakthroughs, people can now
communicate through traditional media (newspapers, radio, telephone, television), as well as
through newer media forms (fax machines, cellular phones, pagers, and computers). The new
technologies have encouraged more companies to move from mass communication to more
ttargeted communication and one-to-one dialogue.

C. Integrated Marketing Communications

During the past several decades, companies around the world have perfected the art of mass
marketing—selling highly standardized products to masses of customers. In the process, they havebr> developed effective mass-media advertising techniques to support their mass-marketing strategies.
These companies routinely invest immense amount of money in the mass media, reaching tens of
millions of customers with a single ad. However, as we move into the twenty-first century,
mmarketing managers face some new marketing communications realities.

D. The Changing Communications Environment

Two major factors are changing the face of today's marketing communications. First, as mass
markets have fragmented, marketers are shifting away from mass marketing. More and more, theybr> are developing focused marketing programs designed to build closer relationships with customers
in more narrowly defined micro markets. Second, vast improvements in information technology
are speeding the movement toward segmented marketing. Today's information technology helps
marketers to keep closer track of customer needs—more information about consumers at the
individual and household levels is available than ever before. New technologies also provide new
communications avenues for reaching smaller customer segments with more tailored messages.
The shift from mass marketing to segmented marketing has had a dramatic impact on marketing
communications. Just as mass marketing gave rise to a new generation of mass-media
communications, the shift toward one-to-one marketing is spawning a new generation of more
specialized and highly targeted communications efforts.
Given this new communications environment, marketers must rethink the roles of various media
and promotion mix tools. Mass-media advertising has long dominated the promotion mixes of
consumer product companies. However, although television, magazines, and other mass media
remain very important, their dominance is now declining. Market fragmentation has resulted in
media fragmentation—in an explosion of more focused media that better match today's targeting
strategies. More generally, advertising appears to be giving way to other elements of the promotion
mix. In the glory days of mass marketing, consumer product companies spent the lion's share of
their promotion budgets on mass-media advertising. Today, media advertising captures only about
26 percent of total promotion spending. The rest goes to various sales promotion activities, which
can be focused more effectively on individual consumer and trade segments. They are using a
richer variety of focused communication tools in an effort to reach their diverse target markets. In
aall, companies are doing less broadcasting and more narrowcasting.

E. The Need for Integrated Marketing Communications

The shift from mass marketing to targeted marketing, and the corresponding use of a richer
mixture of communication channels and promotion tools, poses a problem for marketers.br> Consumers are being exposed to a greater variety of marketing communications from and about
the company from a broader array of sources. However, customers don't distinguish between
message sources the way marketers do. In the consumer's mind, advertising messages from
different media such as television, magazines, or online sources blur into one. Messages delivered
via different promotional approaches—such as advertising, personal selling, sales promotion,
public relations, or direct marketing—all become part of a single message about the company.
Conflicting messages from these different sources can result in confused company images and
brand positions.
All too often, companies fail to integrate their various communications channels. The result is a
hodgepodge of communications to consumers. Mass advertisements say one thing, a price
promotion sends a different signal, a product label creates still another message, company sales
literature says something altogether different, and the company's Web site seems out of sync with
everything else.

The problem is that these communications often come from different company sources.
Advertising messages are planned and implemented by the advertising department or advertising
agency. Sales management develops personal selling communications. Other functional specialists
are responsible for public relations, sales promotion, direct marketing, online sites, and other forms
of marketing communications. Recently, such functional separation has been a major problem for
many companies and their Internet communications activities, which are often split off into
separate organizational units. In the past, no one person was responsible for thinking through the
communication roles of the various promotion tools and coordinating the promotion mix. Today,
however, more companies are adopting the concept of integrated marketing communications
The IMC solution calls for recognizing all contact points where the customer may encounter the
company, its products, and its brands. Each brand contact will deliver a message, whether good,
bad, or indifferent. The company must strive to deliver a consistent and positive message at all
contact points.
Integrated marketing communications produces better communications consistency and greater
sales impact. It places the responsibility in someone's hands—where none existed before—to unify
the company's image as it is shaped by thousands of company activities. It leads to a total
marketing communication strategy aimed at showing how the company and its products can help
ccustomers solve their problems.

F. A View of the Communication Process

Integrated marketing communications involves identifying the target audience and shaping a wellcoordinated
promotional program to elicit the desired audience response. Too often, marketingbr> communications focus on overcoming immediate awareness, image, or preference problems in the
target market. But this approach to communication has limitations: It is too short term and too
costly, and most messages of this type fall on deaf ears. Today, marketers are moving toward
viewing communications as managing the customer relationship over time, during pre-selling,
selling, consuming, and post consumption stages. Because customers differ, communications
programs need to be developed for specific segments, niches, and even individuals. Given the new
interactive communications technologies, companies must ask not only "How can we reach our
customers?" but also "How can we find ways to let our customers reach us?"
Thus, the communications process should start with an audit of all the potential contacts target
customers may have with the company and its brands. For example, someone purchasing a new
computer may talk to others, see television ads, read articles and ads in newspapers and magazines,
visit various Web sites, and try out computers in one or more stores. The marketer needs to assess
the influence that each of these communications experiences will have at different stages of the buying process. To communicate effectively,
marketers need to understand how communication works.
Two of these elements are the major parties in a communication—the sender and the receiver. Another two are the major communication tools—the message and the media. Four more are major communication functions—encoding, decoding, response, and feedback. The last element is noise in the system.
• Sender: The party sending the message to another party.
• Encoding: The process of putting thought into symbolic form.
• Message: The set of symbols that the sender transmits
• Media: The communication channels through which the message moves from sender to receiver
• Decoding: The process by which the receiver assigns meaning to the symbols encoded by the sender.
• Receiver: The party receiving the message sent by another party
• Response: The reactions of the receiver after being exposed to the message—any of hundreds of possible responses
• Feedback: The part of the receiver's response communicated back to the sender
• Noise: The unplanned static or distortion during the communication process, which results
in the receiver's getting a different message than the one the sender sent.
For a message to be effective, the sender's encoding process must mesh with the receiver's
decoding process. Thus, the best messages consist of words and other symbols that are familiar to
the receiver. The more the sender's field of experience overlaps with that of the receiver, the more
effective the message is likely to be. Marketing communicators may not always share their
consumer's field of experience. For example, an advertising copywriter from one social stratum
might create ads for consumers from another stratum—say, blue-collar workers or wealthy
business owners. However, to communicate effectively, the marketing communicator must
understand the consumer's field of experience.
This model points out several key factors in good communication. Senders need to know what
audiences they wish to reach and what responses they want. They must be good at encoding
messages that take into account how the target audience decodes them. They must send messages
through media that reach target audiences, and they must develop feedback channels so that they
ccan assess the audience's response to the message.

G. Steps in Developing Effective Communication

We now examine the steps in developing an effective integrated communications and promotion
program. The marketing communicator must do the following: Identify the target audience;br> determine the communication objectives; design a message; choose the media through which to
ssend the message; select the message source; and collect feedback.

e. Identifying the Target Audience

A marketing communicator starts with a clear target audience in mind. The audience may be
potential buyers or current users, those who make the buying decision or those who influence it.br> The audience may be individuals, groups, special publics, or the general public. The target audience
will heavily affect the communicator's decisions on what will be said, how it will be said, when it
wwill be said, where it will be said, and who will say it.

f. Determining the Communication Objectives

Once the target audience has been defined, the marketing communicator must decide what
response is sought. Of course, in many cases, the final response is purchase. But purchase is thebr> result of a long process of consumer decision making. The marketing communicator needs to
know where the target audience now stands and to what stage it needs to be moved. The target
audience may be in any of six buyer-readiness stages, the stages consumers normally pass through
on their way to making a purchase. These stages include awareness, knowledge, liking, preference,
conviction, and purchase (see Figure ).

The marketing communicator's target market may be totally unaware of the product, know only its
name, or know one or a few things about it. The communicator must first build awareness and
knowledge. Of course, marketing communications alone cannot create positive feelings and
purchases for productar itself must provide superior value for the customer. In fact, outstanding
marketing communications can actually speed the demise of a poor product. The more quickly
potential buyers learn about the poor product, the more quickly they become aware of its faults.
TThus, good marketing communication calls for "good deeds followed by good words."

g. Designing a Message

Having defined the desired audience response, the communicator turns to developing an effective
message. Ideally, the message should get Attention, hold Interest, arouse Desire, and obtain Actionbr> (a framework known as the AIDA model). In practice, few messages take the consumer all the way
from awareness to purchase, but the AIDA framework suggests the desirable qualities of a good
message. In putting the message together, the marketing communicator must decide what to say
((message content) and how to say it (message structure and format).

h. Message Content

The communicator has to figure out an appeal or theme that will produce the desired response.
There are three types of appeals: rational, emotional, and moral. Rational appeals relate to thebr> audience's self-interest. They show that the product will produce the desired benefits. Examples
are messages showing a product's quality, economy, value, or performance. Emotional appeals
attempt to stir up either negative or positive emotions that can motivate purchase. Communicators
mmay use positive emotional appeals such as love, pride, joy, and humor.

i. Message Structure

The communicator must also decide how to handle three message structure issues. The first is
whether to draw a conclusion or leave it to the audience. Early research showed that drawing abr> conclusion was usually more effective. More recent research, however, suggests that in many cases
the advertiser is better off asking questions and letting buyers come to their own conclusions. The
second message structure issue is whether to present a one-sided argument (mentioning only the
product's strengths) or a two-sided argument (touting the product's strengths while also admitting
its shortcomings). Usually, a one-sided argument is more effective in sales presentations—except
when audiences are highly educated or likely to hear opposing claims, or when the communicator
hhas a negative association to overcome.

j. Message Format

The marketing communicator also needs a strong format for the message. In a print ad, the
communicator has to decide on the headline, copy, illustration, and color. To attract attention,br> advertisers can use novelty and contrast; eye-catching pictures and headlines; distinctive formats;
message size and position; and color, shape, and movement. If the message is to be carried over
the radio, the communicator has to choose words, sounds, and voices. The "sound" of an
announcer promoting banking services should be different from one promoting quality furniture.
If the message is to be carried on television or in person, then all these elements plus body
language have to be planned. Presenters plan their facial expressions, gestures, dress, posture, and
hairstyle. If the message is carried on the product or its package, the communicator has to watch
ttexture, scent, color, size, and shape.

k. Choosing Media

The communicator now must select channels of communication. There are two broad types of
communication channels—personal and nonpersonal.

Personal Communication Channels

In personal communication channels, two or more people communicate directly with each other.
They might communicate face to face, over the telephone, through the mail, or even through anbr> Internet "chat." Personal communication channels are effective because they allow for personal
addressing and feedback.
Some personal communication channels are controlled directly by the company. For example,
company salespeople contact buyers in the target market. But other personal communications
about the product may reach buyers through channels not directly controlled by the company.
These might include independent experts—consumer advocates, consumer buying guides, and
others—making statements to target buyers. Or they might be neighbors, friends, family members,
and associates talking to target buyers. This last channel, known as word-of-mouth influence, has
considerable effect in many product areas.
Personal influence carries great weight for products that are expensive, risky, or highly visible. For
example, buyers of automobiles and major appliances often go beyond mass-media sources to seek
the opinions of knowledgeable people.
Companies can take steps to put personal communication channels to work for them. For
example, they can create opinion leaders—people whose opinions are sought by others—by
supplying certain people with the product on attractive terms. For instance, they can work through
community members such as local radio personalities, class presidents, and heads of local
organizations. They can use influential people in their advertisements or develop advertising that
hhas high "conversation value."

Nonpersonal Communication Channels

Nonpersonal communication channels are media that carry messages without personal contact or
feedback. They include major media, atmospheres, and events. Major media include print mediabr> (newspapers, magazines, direct mail), broadcast media (radio, television), display media (billboards,
signs, posters), and online media (online services, Web sites). Atmospheres are designed
environments that create or reinforce the buyer's leanings toward buying a product. Thus, lawyers'
offices and banks are designed to communicate confidence and other qualities that might be valued
by their clients. Events are staged occurrences that communicate messages to target audiences. For
example, public relations departments arrange press conferences, grand openings, shows and
exhibits, public tours, and other events.
Nonpersonal communication affects buyers directly. In addition, using mass media often affects
buyers indirectly by causing more personal communication. Communications first flow from
television, magazines, and other mass media to opinion leaders and then from these opinion
leaders to others. Thus, opinion leaders step between the mass media and their audiences and carry
messages to people who are less exposed to media. This suggests that mass communicators should
aaim their messages directly at opinion leaders, letting them carry the message to others.

l. Selecting the Message Source

In either personal or nonpersonal communication, the message's impact on the target audience is
also affected by how the audience views the communicator. Messages delivered by highly crediblebr> sources are more persuasive. Thus, marketers hire celebrity endorsers—well-known athletes,
actors, and even cartoon characters—to deliver their messages. Many food companies promote to
doctors, dentists, and other health care providers to motivate these professionals to recommend
ttheir products to patients.

m. Collecting Feedback

After sending the message, the communicator must research its effect on the target audience. This
involves asking the target audience members whether they remember the message, how manybr> times they saw it, what points they recall, how they felt about the message, and their past and
present attitudes toward the product and company. The communicator would also like to measure
behavior resulting from the message—how many people bought a product, talked to others about
it, or visited the store.
Feedback on marketing communications may suggest changes in the promotion program or in the
pproduct offer itself.

H. Setting the Total Promotion Budget

One of the hardest marketing decisions facing a company is how much to spend on promotion.
How does a company decide on its promotion budget? We look at four common methods used tobr> set the total budget for advertising: the affordable method, the percentage-of-sales method, the competitiveparity
method, and the oobjective-and-task method.

a. Affordable Method

Some companies use the affordable method/strong>: They set the promotion budget at the level they
think the company can afford. Small businesses often use this method, reasoning that the company
cannot spend more on advertising than it has. They start with total revenues, deduct operating
expenses and capital outlays, and then devote some portion of the remaining funds to advertising.
Unfortunately, this method of setting budgets completely ignores the effects of promotion on
sales. It tends to place advertising last among spending priorities, even in situations in which
advertising is critical to the firm's success. It leads to an uncertain annual promotion budget, which
makes long-range market planning difficult. Although the affordable method can result in
ooverspending on advertising, it more often results in under spending.

b. Percentage-of-Sales Method

Other companies use the percentage-of-sales method/strong>, setting their promotion budget at a
certain percentage of current or forecasted sales. Or they budget a percentage of the unit sales
price. The percentage-of-sales method has advantages. It is simple to use and helps management
think about the relationships between promotion spending, selling price, and profit per unit.
Despite these claimed advantages, however, the percentage-of-sales method has little to justify it. It
wrongly views sales as the cause of promotion rather than as the result. "A study in this area found
good correlation between investments in advertising and the strength of the brands concerned—
but it turned out to be effect and cause, not cause and effect. . . . The strongest brands had the
highest sales and could afford the biggest investments in advertising!" Thus, the percentage-ofsales
budget is based on availability of funds rather than on opportunities. It may prevent the
increased spending sometimes needed to turn around falling sales. Because the budget varies with
year-to-year sales, long-range planning is difficult. Finally, the method does not provide any basis
for choosing a specific percentage, except what has been done in the past or what competitors are

c. Competitive-Parity Method

Still other companies use the competitive-parity method/strong>, setting their promotion budgets to
match competitors' outlays. They monitor competitors' advertising or get industry promotion
spending estimates from publications or trade associations, and then set their budgets based on the
industry average.
Two arguments support this method. First, competitors' budgets represent the collective wisdom
of the industry. Second, spending what competitors spend helps prevent promotion wars.
Unfortunately, neither argument is valid. There are no grounds for believing that the competition
has a better idea of what a company should be spending on promotion than does the company
itself. Companies differ greatly, and each has its own special promotion needs. Finally, there is no
eevidence that budgets based on competitive parity prevent promotion wars.

d. Objective-and-Task Method

The most logical budget-setting method is the objective-and-task method/strong>, whereby the company
sets its promotion budget based on what it wants to accomplish with promotion. This budgeting
method entails (1) defining specific promotion objectives, (2) determining the tasks needed to
achieve these objectives, and (3) estimating the costs of performing these tasks. The sum of these
costs is the proposed promotion budget.
The objective-and-task method forces management to spell out its assumptions about the
relationship between amount spent and promotion results. But it is also the most difficult method
to use. Often, it is hard to figure out which specific tasks will achieve specific objectives. What
specific advertising messages and media schedules should be used to attain this objective? How
mmuch would these messages and media schedules cost?

I. Setting the Overall Promotion Mix

The company now must divide the total promotion budget among the major promotion tools—
advertising, personal selling, sales promotion, public relations, and direct marketing. The conceptbr> of integrated marketing communications suggests that it must blend the promotion tools carefully
into a coordinated promotion mix. But how does the company determine what mix of promotion
tools it will use? Companies within the same industry differ greatly in the design of their promotion
mmixes. We now look at factors that influence the marketer's choice of promotion tools.

a. The Nature of Each Promotion Tool

Each promotion tool has unique characteristics and costs. Marketers must understand these
characteristics in selecting their tools.


Advertising can reach masses of geographically dispersed buyers at a low cost per exposure, and it
enables the seller to repeat a message many times. For example, television advertising can reachbr> huge audiences. Beyond its reach, large-scale advertising says something positive about the seller's
size, popularity, and success. Because of advertising's public nature, consumers tend to view
advertised products as more legitimate. Advertising is also very expressive—it allows the company
to dramatize its products through the artful use of visuals, print, sound, and color. Advertising also
has some shortcomings. Although it reaches many people quickly, advertising is impersonal and
cannot be as directly persuasive as company salespeople. For the most part, advertising can carry
on only a one-way communication with the audience, and the audience does not feel that it has to
pay attention or respond. In addition, advertising can be very costly. Although some advertising
forms, such as newspaper and radio advertising, can be done on smaller budgets, other forms, such
aas network TV advertising, require very large budgets.

Personal Selling

Personal selling is the most effective tool at certain stages of the buying process, particularly in
building up buyers' preferences, convictions, and actions. It involves personal interaction betweenbr> two or more people, so each person can observe the other's needs and characteristics and make
quick adjustments. Personal selling also allows all kinds of relationships to spring up, ranging from
a matter-of-fact selling relationship to personal friendship. The effective salesperson keeps the
customer's interests at heart in order to build a long-term relationship. Finally, with personal selling
the buyer usually feels a greater need to listen and respond, even if the response is a polite "no
thank you."
These unique qualities come at a cost, however. A sales force requires a longer-term commitment
than does advertising—advertising can be turned on and off, but sales force size is harder to

Sales Promotion

Sales promotion includes a wide assortment of tools—coupons, contests, cents-off deals,
premiums, and others—all of which have many unique qualities. They attract consumer attention,br> offer strong incentives to purchase, and can be used to dramatize product offers and to boost
sagging sales. Sales promotions invite and reward quick response—whereas advertising says, "Buy
our product," sales promotion says, "Buy it now." Sales promotion effects are often short lived,
however, and often are not as effective as advertising or personal selling in building long-run brand

Public Relations

Public relations are very believable—news stories, features, and events seem more real and
believable to readers than ads do. Public relations can also reach many prospects who avoidbr> salespeople and advertisements—the message gets to the buyers as "news" rather than as a salesdirected
communication. As with advertising, public relations can dramatize a company or product.
Marketers tend to under use public relations or to use it as an afterthought. Yet a well-thought-out
public relations campaign used with other promotion mix elements can be very effective and

Direct Marketing

Although there are many forms of direct marketing— telemarketing, direct mail, electronic
marketing, online marketing, and others—they all share four distinctive characteristics. Directbr> marketing is nonpublic: The message is normally addressed to a specific person. Direct marketing
also is immediate and customized: Messages can be prepared very quickly, and they can be tailored to
appeal to specific consumers. Finally, direct marketing is interactive: It allows a dialogue between the
marketing and the consumer, and messages can be altered depending on the consumer's response.
Thus, direct marketing is well suited to highly targeted marketing efforts and to building one-toone
ccustomer relationships.

b. Promotion Mix Strategies

Marketers can choose from two basic promotion mix strategies—push promotion or pull
promotion. Figure 14.4 contrasts the two strategies. The relative emphasis on the specific
promotion tools differs for push and pulls strategies. A push strategy involves "pushing" the
product through distribution channels to final consumers. The producer directs its marketing
activities (primarily personal selling and trade promotion) toward channel members to induce them
to carry the product and to promote it to final consumers. Using a pull strategy, the producer
directs its marketing activities (primarily advertising and consumer promotion) toward final
consumers to induce them to buy the product. If the pull strategy is effective, consumers will then
demand the product from channel members, who will in turn demand it from producers. Thus,
under a pull strategy, consumer demand "pulls" the product through the channels.
Some small industrial goods companies use only push strategies; some direct-marketing companies
use only pull. However, most large companies use some combination of both. Companies consider
many factors when developing their promotion mix strategies, including type of product–market and
the product life-cycle stage. For example, the importance of different promotion tools varies between
consumer and business markets. Consumer goods companies usually "pull" more, putting more of
their funds into advertising, followed by sales promotion, personal selling, and then public
relations. In contrast, business-to-business marketers tend to "push" more, putting more of their
funds into personal selling, followed by sales promotion, advertising, and public relations. In
general, personal selling is used more heavily with expensive and risky goods and in markets with
fewer and larger sellers.
The effects of different promotion tools also vary with stages of the product life cycle. In the
introduction stage, advertising and public relations are good for producing high awareness, and
sales promotion is useful in promoting early trial. Personal selling must be used to get the trade to
carry the product. In the growth stage, advertising and public relations continue to be powerful
influences, whereas sales promotion can be reduced because fewer incentives are needed. In the
mature stage, sales promotion again becomes important relative to advertising. Buyers know the
brands, and advertising is needed only to remind them of the product. In the decline stage,
advertising is kept at a reminder level, public relations is dropped, and salespeople give the product
only a little attention. Sales promotion, however, might continue strong.

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