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Marketing: A McGraw-Hill and QUT Custom Publication
Marketing
A McGraw Hill and QUT Custom Publication
From Marketing Communication to IMC

eLearning Session

  1. The marketing plan
    1. Since marketing is typically a company's only source of income, the marketing plan may be a company's most important document. The marketing plan assembles all the pertinent facts about the organization, the markets it serves, and its products, services, customers, competition, and so on.
      • It forces all of the departments - product development, production, selling, advertising, credit, transportation - to focus on the customer.
      • It sets goals and objectives for specified periods of time and lays out strategies and tactics to achieve them in a written form.
      • It is NOT a one-time event. Plans are continually reviewed and revised.
    2. The marketing plan has a profound effect on a company's advertising plan. Successful organizations do not separate advertising plans from marketing. The market plan:
      • Helps managers analyze and improve all company operations, including marketing and advertising programs.
      • Dictates the role of advertising in the marketing mix.
      • Enables better implementation, control, and continuity of advertising programs, and it ensures the most efficient allocation of advertising dollars.
    3. Top-Down Marketing Plan (27.0K)is the most common planning format. It is good for hierarchical organizations and new products. The top-down plan has four main elements:
      • Situation analysis - The section which is a "factual" statement of the organization's current situation and how it got there. It also:
        1. Presents all relevant facts about the company's history, growth, products, sales volume, share of market, competitive status, markets served, distribution system, past advertising programs, results of marketing research studies, company capabilities, strengths and weaknesses, and any other pertinent information.
        2. After gathering historical information, the focus changes to potential threats and opportunities based on key factors outside the company: economic, political, social, technological, or commercial environments the company operates in.
      • Marketing objectives - the next step is determining the company's specific marketing objectives and stating them in a hierarchy as follows:
        1. Corporate objectives are usually stated in terms of profit or return on investment-or net worth, earnings ratio, growth, or corporate reputation.
        2. Marketing objectives, which derive from corporate objectives, relate to the needs of target markets and to specific sales goals referred to as:
          1. Need-satisfying objectives - which shift's management's view of the organization from a producer of products or services to a satisfier of target market needs.
          2. Sales-target objectives - are specific, quantitative, realistic marketing goals to be achieved within a specified time period. May be expressed as total sales volume, sales volume by product, market segment, or customer type; and market share, growth rate of sales volume, or gross profit in total or by product line.
      • Marketing strategy - a statement of how the company is going to achieve its objectives. A company's marketing strategy has a dramatic impact on its advertising and it determines the following:
        1. Selecting the target market - defining and selecting the target market using the processes of market segmentation and research.
        2. Positioning the Product - establishing what the product does and who it is for.
        3. Determining the marketing mix - developing a cost-effective mix (product, price, distribution and communication) for each target market the company pursues
      • Marketing tactics (action programs) - The determination of the specific short-term actions to be taken, internally and externally, by whom and when.
    4. Small companies use bottom-up marketing (22.0K)
      • Focus on a singular competitive mental angle which is the tactic and build a strategy around it.
      • Focus all the elements of the marketing mix (58.0K) on the tactic.
  2. Relationship marketing is the new marketing mantra.
    1. Today, advertisers are discovering the key to building brand equity is to develop interdependent, mutually satisfying relationships with customers. Greater acceptance of this concept is creating the following changes:
      • A belief that customers, not products, are the lifeblood of business.
      • A new trend away from simple "transactional marketing" to relationship marketing - creating, maintaining, and enhancing long-term relationships with customers and other stakeholders that result in exchanges of information and other things of mutual value.
      • Will be the key strategic resource for success in the 21st-century. Managing strategic partnerships will be the focus in the new market-driven concept of marketing.
    2. The importance of relationships
      • To succeed today, companies must focus on managing loyalty among carefully chosen customers and other stakeholders (among them employees, centers of influence, stockholders, the financial community, and the press). There are a number of reasons for this:
        1. The cost of lost customers - no amount of advertising is likely to win back a customer due to shoddy products or poor service. And the profit lost is the "lifetime customer value" to a firm.
        2. Defensive marketing typically costs less than offensive marketing because it takes a great deal of effort to lure satisfied customers away from competition.
          1. Fragmentation of media and resistance of sophisticated consumers to advertising messages increases the difficulty of winning new customers.
          2. It now costs five to eight times as much in marketing, advertising, and promotion costs to acquire a new customer as it does to keep an existing one.
      • The value of loyal customers
        1. 90 percent of a manufacturer's profit comes from repeat purchasers.
        2. Only 10 percent comes from trial or sporadic purchasers.
        3. Reducing customer defections by even five percent can improve profits 25 to 85 percent.
    3. Levels of Relationships (38.0K)
      • Kotler and Armstrong distinguish five levels of relationship that can be formed between a company and its various stakeholders:
        1. Basic transactional relationship - the company sells the product, but does not follow up (Kmart).
        2. Reactive relationship - the company (or salesperson) sells the product and encourages customers to call with problems (Men's Wearhouse).
        3. Accountable relationship - salesperson phones customers shortly after the sale to check on the product and asks about product improvements and any specific disappointments (Acura dealers).
        4. Proactive relationship - company representatives contact the customer from time to time with suggestions about improving product use or helpful new products (Compuserve).
        5. Partnership - the company works continuously with customers (and other stakeholders) to discover ways to deliver better value (Apple Computer).
      • Different stakeholders require different types of relationships
      • The more stakeholders involved, the more difficult it is to develop a relationship (and some customers may only want a transactional relationship).
      • High-profit product or service categories make deeper, personal relationship more desirable. .
  3. IMC: The concept and the process
    1. Technology has enabled marketers to adopt flexible manufacturing, customizing products for customized markets - indicating that "market-driven" means:
      • Bundling more services with products to create a "unique product experience."
      • Companies and customers working together.
    2. IMC is both a concept and a process.
      • The concept of integration (64.0K) is "wholeness" and wholeness in communications creates synergy - the principle benefit of IMC - because each element of communication each element of the communications mix reinforces the others for greater effect.
      • IMC is also a process in which communication becomes the driving, integrating force in the marketing mix and throughout the organization.
  4. The evolution of the IMC concept
    1. Technological changes led to specialized media and a subsequent fragmentation in the ways humans reach one another and work together. With the flood of mergers, rise in the global marketplace, escalation of competition, companies are faced with redundancies and inefficiencies. Company departments were at odds with each other, and the company's needs were out of step with customers needs.
    2. Companies had to change their perspectives
      • Inside-out view of IMC - The company adapts by working from within, changing the way it coordinates and manages its marketing communications in order to deliver a consistent overall message to its customers.
      • Outside-in view of IMC - The company views customers as partners in an ongoing relationship, recognizes the references they use, acknowledges the importance of communication, and accepts the many ways they come in contact with the company and the brand. Customers are more important than their product or plants.
      • IMC defined broadly - the process of building and reinforcing mutually profitable relationships with employees, customers, other stakeholders, and the general public by developing and coordinating a strategic communications pro-gram that enables them to have a constructive encounter with the company/brand through a variety of media or other contacts.
      • Tom Duncan, director of the IMC graduate program at the University of Colorado at Boulder, has identified four distinct levels of integration that companies use: unified image, consistent voice, good listener, and at the most integrated, world-class citizen. These levels demonstrate how IMC programs range from narrowly focused corporate monologues to broad, interactive dialogs.
    3. How the customer sees marketing communications
      • All communications or brand contacts, sponsored or not, create an "integrated product" in the consumer's mind - customers automatically integrate all the brand-related messages that emanate from the company or some other source. Companies can manage or influence these perceptions to create good relationships with stakeholders.
    4. As everything we do (and don't do) sends a message, Duncan has categorized four types of company/brand-related messages stakeholders receive:
      • Planned messages - these are the traditional marketing communications messages:
        1. Advertising, sales promotion, personal selling, merchandising material, publicity releases, event sponsorships. May also include help-wanted or financial offering ads, engineering articles in professional journals, and new contract articles.
        2. Appearing self-serving, these messages usually have the least impact.
      • Product messages - messages reflecting the marketing mix:
        1. Primarily the product, price, and distribution elements. Also called inferred messages.
        2. Product messages have great impact - when a product performs well, the customer infers a positive message that reinforces the purchase decision.
      • Service messages - messages sent by service personnel, employees who interact with customers. Service messages, like product messages, have greater impact than planned messages.
      • Unplanned messages - messages companies have little or no control over. These include employee gossip, unsought news stories, comments, comments by trade or competitors, word-of-mouth rumors, major disasters. Etc.
        1. Unplanned messages may affect customer's attitude dramatically.
        2. Some unplanned messages can be anticipated and planned responses can be prepared, especially by managers experienced in public relations.
    5. The Integration Triangle (27.0K)
      • Developed by Duncan and Moriarity, it illustrates how perceptions are created from various brand message sources.
      • There are three types of integration triangle messages:
        1. Say messages - planned messages, what companies say about themselves.
        2. Do messages - product and service messages that represent what a company does.
        3. Confirm messages - unplanned messages that reinforce the say and do messages generated by a company.
      • Constructive integration occurs when a brand does what it maker says it will do and then others confirm that, in fact, it delivers on its promises.
  5. The dimensions of IMC
    1. To maximize the synergistic benefits of IMC, Duncan suggests three dimensions to an organization's integration process.
      • Ensure consistent positioning
      • Then, facilitate purposeful interactivity between the company and its customers or other stakeholders.
      • Finally, actively incorporate a socially responsible mission into the organization's relationships with its stakeholders.
    2. Interest in IMC has gone global, moving form North America into Europe, Asia, and Latin America.
    3. IMC offers accountability by maximizing resources and linking communications activities directly to organizational goals and the resulting bottom line.
  6. The IMC approach to marketing and advertising planning
    1. IMC is a new approach
      • Mixes marketing and communications planning together, rather than separating them.
      • Begins with the customer and works back to the brand.
    2. Computer technology can determine customer behavior for use in IMC programs by helping to:
      • Identify specific users of products and services.
      • Measure users' actual purchase behaviors and relating that to specific brand and product categories.
      • Measure the impact of various advertising and marketing communications activities and determining their value in influencing the actual purchase.
      • Capture and evaluate this information over time.
    3. The ever-expanding database of customer behavior becomes the basis for planning all future marketing and communications activities.
    4. Wang and Schultz (part 1 (58.0K) and part 2 (109.0K) ) have developed a seven-step IMC planning model.
      • Segment customers and prospect in a database.
      • Analyze customer data to determine the best time, place, and situation to communicate with customers.
      • Set the marketing objectives.
      • Identify brand contacts and attitude changes necessary to support the customer's continuance or change of purchase behavior.
      • Set communications objectives and strategies for making contact with consumers and influencing their attitudes, beliefs, and purchase behavior.
      • Decide what other elements of the marketing mix (product, place, and distribution) can be used to encourage the desired behavior.
      • Determine what communications tactics to use.
  7. The advertising plan is a natural outgrowth of the marketing plan and is prepared in much the same way. In IMC planning, the advertising plan is an integral part of the overall procedure.
    1. Reviewing the Marketing Plan - first section of advertising plan is a situation analysis that is organized in four categories: internal strengths and weaknesses, and external opportunities, and threats (SWOT). This SWOT analysis briefly restates the company's current situation, reviews the target market segments, itemizes the long- and short-term marketing objectives, and cites decisions regarding market positioning and the marketing mix.
    2. Setting Advertising Objectives - second section lists, realistic, specific and measurable advertising objectives.
      • Understanding what advertising can do. Marketing sells. Advertising tells.
      • The advertising pyramid (23.0K)is a model of the progression of effects advertising has on mass audiences especially for new products.
        1. The first objective is to create "awareness" - to acquaint people with the company, product, service, or brand.
        2. The second is to develop "comprehension" - to communicate enough information so some percentage of the aware group recognizes the product's purpose, image or position, and perhaps some of its features.
        3. Next, advertising needs to communicate enough information to develop "conviction" - to persuade a certain number of people to believe in the product's value, such that ...
        4. Of those who become convinced, some can be moved to "desire" the product.
        5. Finally, some percentage of those who desire the product will take "action" - request additional in-formation, send in a coupon, visit a store, or buy it.
      • The old model versus the new
        1. The advertising pyramid represents the learn-feel-do model of advertising effects. The theory is that advertising affects attitude, and attitude leads to behavior.
        2. Some impulse purchases are do-feel-learn. The advertising pyramid also reflects the traditional mass marketing monologue. The advertiser talks, the customer listens.
        3. The IMC model is based on the fact that many marketers have databases of information on their customers. When marketers can have a dialog and establish a relationship, the model is no longer a pyramid but a circle (29.0K) .
      • By starting with the customer and then integrating all aspects of their marketing communications, companies hope to accelerate the communications process, make it more efficient, and achieve lasting loyalty from good prospects.
    3. Advertising Strategy and the Creative Mix - the advertising (or communications) objective declares where the advertiser wants to be with respect to consumer awareness, attitude, and preference; the advertising strategy describes how to get there. Advertising strategy blends elements of the creative mix (target audience, product concept, communications media, and advertising message):
      • The target audience: Everyone who should know
        1. The target audience - the specific people the advertising will address, is typically larger than the target market. Advertisers need to know who the end user is, who makes the purchase, and who influences the purchasing decision.
        2. Brand popularity (which advertising is good at creating) cuts across all levels of purchasing frequency. Dominant brands are purchased by both heavy and light users.
      • The product concept: the "bundle of values" the product might represent to the consumer.
        1. When writing the advertising plan, the advertising manager must develop a simple statement to describe the product concept - that is, how the advertising will present the product.
        2. How the consumer perceives the product is based on the level (high/low) and kind (cognitive/affective) with the product.
        3. There are several models of involvement, including:
          1. the Elaboration Likelihood Model and the FCB Grid.
          2. the Kim-Lord Grid (34.0K) that depicts the degree and kind of involvement a consumer brings to the purchase decision
      • The communications media: The message delivery system - are all the vehicles that might transmit the advertiser's message.
      • The advertising message: What the advertising communicates.
        1. What the company wants to say, and how it plans to say it, verbally and nonverbally makes up the advertising message.
        2. The combination of copy, art, and production elements in the ads forms the message, and there are infinite ways to combine these elements.
    4. The secret to successful planning is information, but the genius of business is integrating what the information means.
  8. Money drives every marketing and advertising plan. The marketing department has to convince management that advertising spending makes good business sense, even in an adverse economic climate.
    1. Advertising is an investment in future sales. It is best to see it as a long-term capital investment, building consumer preference and promoting goodwill that enhances the reputation and value of the company name. To see advertising as an investment, we must understand:
      • The relationship of advertising to sales and profits - many variables (both internal and external) influence the effectiveness of a company's marketing and advertising efforts.
        1. Increases in market share are related more to increases in the marketing budget than to price reductions. Market share is a prime indicator of profitability.
          1. While additional advertising will increase sales, the rate of return will decline at some point.
          2. Sales response to advertising is spread out over time, but the durability of advertising is brief, so a consistent investment is important.
          3. There are minimum levels below which advertising expenditures will have no effect on sales.
          4. There will be some sales even if there is no advertising.
          5. There are saturation limits imposed by culture and competition above which no amount of advertising can increase sales.
        2. Advertising isn't the only marketing activity that affects sales. A change in market share may be due to:
          1. Quality perceptions
          2. Word-of-mouth
          3. New products on market
          4. New outlets opened
          5. Better personal selling
          6. Seasonal changes in the business cycle.
        3. Most companies have no way of determining the relationship between sales and profit.
      • The variable environments of business - the advertising manager must consider the company's external situation (economic, political, social, and legal), and the internal situation (institutional and competitive environments). Plus, the company's policies and procedures
    2. Methods of allocating funds - companies use a number of methods to determine how much to spend on advertising, including the :
      • Percentage-of-sales method
        1. Simplest and most popular method because it is related to revenue and considered safe.
        2. It may be based on a percentage of last year's sales, next year's anticipated rules, or a combination of both. Usually based on an industry average or company experience.
        3. The problem is knowing what percentage to use. Unfortunately, it is too often determined arbitrarily
        4. The greatest shortcoming is that it violates a basic marketing principle. Marketing activities are supposed to "stimulate" demand and thus sales - marketing activities aren't supposed to occur as a "result" of sales.
      • Share-of-market/share-of-voice method - a high correlation usually exists between share of market and share of industry advertising, in markets with similar products. Best to keep the share of voice ahead of market share.
        1. Commonly used for new products
        2. For new products, the budget should be one and one half times the brand's expected share of market in two years, e.g. if the 2-year objective is a 10 percent share of market, it should spend 15 percent of industry's advertising during the two year period.
        3. One hazard of this method is the tendency to become complacent. Companies must be aware of all their competitor's marketing activities, not just advertising.
      • The objective/task method (also known as the budget build-up method) - is used by the majority of U.S. major national advertisers. The task method forces companies to think in terms of accomplishing goals. Its effectiveness is most apparent when the results of particular ads or campaigns can be readily measured. This method is adaptable to changing market conditions.
        1. The task method has three steps:
          1. Defining objectives
          2. Determining strategy
          3. Estimating cost
        2. The major drawback is that it is usually very difficult to determine in advance how much money is needed to reach a specific goal.
      • Additional methods - advertisers also use several other methods.
        1. Empirical research method, a company runs a series of tests in different markets with different budgets to determine the best level of advertising expenditure.
        2. Computers can generate quantitative mathematical models for budgeting and allocating ad dollars.
    3. The Bottom Line - unfortunately, all these methods rely on one of two fallacies.
      • The first is that advertising is a "result" of sales.
      • The second is that advertising "creates" sales.








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