Overview of the Integrated Marketing Communications and Marketing

Objectives

Schematics of the Marketing Process

IMC Marcoms and Overview of the Advertising and Promotion

Marcoms:

- marketer-originated messages, placed in various media

- Purpose: sell the brand by showing it, saying things about it, or both, in a manner that
establishes the marketer’s desired position for the brand in the minds of target
customers.

Advertising: Influencing others; “flirting with consumers” and moving people towards something;

Advertising communications are often regarded as a relatively indirect form of persuasion,

based on information or emotional appeals about product benefits, designed to create
favorable mental impressions that “turn the mind toward” purchase.

Advertising is an indirect way of turning a potential customer towards the advertiser product or
service by providing information that is designed to effect a favorable impression: what we will
call a positive brand attitude.
= Create Brand Awareness+ Brand Attitude
Promotion (P from Mkt mix): advertising, promotion, PR, personal selling

à Call to action: special offers stimulation

Promotions are often regarded as a more direct form of persuasion, based frequently on
external incentives rather than inherent product benefits, designed to stimulate immediate
purchase and “to move sales forward” more rapidly than would otherwise occur.
Promotion is aimed at the more short-term tactical goal of moving forward brand sales now.

There are 3 types of promotion:

• Manufacturer promotion: Program of discounts or incentives aimed at increasing

distribution or merchandising collateral or incentives to help move more product;

3 different forms:

1- sales force, such as sales commissions, frequent-flyer points rewards, and other
non-cash bonuses;
2- trade promotions: monetary incentives offered to retailers to carry and sell the
manufacturer`s products;
3- direct-to-customer promotions: to encourage trial, product or service sampling,
manufacturer’s warranties and rebates and to encourage repeat purchase, promotions
such as multiple-purchase coupons and bonus offers.

• Retail promotion: promotions offered by the retailer, and which may have originated with
the brand, through:

o physical store layout chosen to facilitate the flow of customer traffic;

o store atmosphere stimuli thought to encourage increased purchasing, such as
lighting color, in-store music;
o retail feature ads which advertise promotional deals on the products offered by the
retailer, and are placed in mass media or narrower media such as direct mail;
o in-store point-of-sale displays and price-off promotions.

• Direct-marketing promotions: are originated by the manufacturer or retailer through

database marketing to direct introductory offers to new prospects, and to reward via a
loyalty program those customers who make repeat purchases.
• Personal selling: face-to-face marketing.
à Both are forms of mkt comm
(marcoms) that can be used to
reach similar objetives (e.g.
create brand awareness, change
attitudes and stimulate
purchase).

First, we talk to the sales team then talk to the retailers Put for sale Promotions and
Advertising

Brand and Brand-Item Contacts:

- Mass-media ads (TV, radio, newspapers, outdoor)
- New media ads (web, street)
- Promotions
- Personal (face-to-face) selling
- Telemarketing
- Sponsorship
- Endorsement by a celebrity
- Product placement (in movies, TV programs)

Keep advertising, if you can

o Prior evidence suggests that firms that maintain advertising spend in a recession fare
better;
o Peter Field’s 6 tips for brands that can maintain spend:
Economic Impact of Advertising:
- Positive correlation between Advertising and consumption growth;
- Contribution to the increased spread of innovation;
- Propels competitive activity;
- The dynamics of the advertising industry propel economic growth.

The economic contribution of Advertising in EU

• On average, 1 Euro of advertising spend generated 7 Euros for the Economy (€ 92b à
€643b to GDP), representing 4,6% of the EU’s GDP (for 2014).
• Advertising provides almost 6 million jobs in the EU, equivalent to 2.6% of all EU
employment.
• Advertising provides personal and social benefits by funding or part funding media
services, meaning people can enjoy them for free or at a reduced rate.

Criticism of Advertising (not true):

- Advertising created unnecessary desires: Even though people are bombarded with
messages, they pay attention to very few of them. This is why advertisers go to such
lengths to identify a target audience where consumers are already favorably disposed
towards their product. Advertising stimulates materialism, exaggerating the requirements
of a good life.

- Advertising is misleading: because we have a lot of burocracy (we always notice if our
competitors have false campaigns, so that we can gain some space and report to the
competent authorities). The brand can protect, even though the product may not
correspond.
- Advertising insults our intelligence
- Advertising drives up cost of products

Campaign Planning Sequence

Marketing Objectives

1.Marketing Objectives & IMC Budgeting

Sales Response to Communications Efforts:

Concave sales response model: S-shaped Response model:

law of diminishing returns no zero intercept, variable impact
Communications Budgeting Methods:

• Marginal analysis – invest resources as long

as extra expenses are compensated by
higher extra returns.
• Inertia – budgets kept constant; Affordability
• Arbitrary allocation – arbitrary (not task
based) management decision
• Percentage of Sales - % of next year sales
• Competitive parity – budget is based on competitive spending – SOV (share of voice)
vs. SOM (share of market) (see graph)
• Objective and Task- starts in Comm Objectives and the resources needed to reach
them. For NPD A/S (advertising to sales ratio) and 1.5 Rule (SOV/SOM)

The higher SOV > SOM, the faster will market share grow.

If we don’t advertise, the share of voice goes down.

2. Target Audience Selection & Action Objectives and Understanding

The manager now needs to decide, from the potential market, who are the best prospects for
the campaign and what action the campaign should encourage them to take.
To determine which prospective buyers represent the best sales potential, it is useful to think of
our sales as being dependent on product category sales and our brand performance within the
category.

1.New category users (NCU’s) enter the category

by buying our brand:
-May or may not be aware;
-Both brand awareness and attitude less important
than category awareness and attitude.

2. Brand loyals (BL’s) who regularly buy our

brand:
-High awareness;
-Most positive brand attitude-immunization against
competitive message.

3. Favorable brand switchers (FBS’s) who occasionally buy our brand and also buy other
brands:
-Awareness should be high, must be measured;
-Positive Attitude, moderate preference.

4. Other-brand switchers (OBS’s) who buy other brands but not ours:
-May or may not be aware;
-Attitude can be neutral or positive.

5. Other-brand loyals (OBL’s) who regularly buy a brand other than ours:
-May or may not be aware;
-Strong positive attitude for loyal brand immunizes against our message.

Brand Loyalty: regular (repeat) purchase based on continued awareness and favorable attitude.
Non-Users: we have to convince them to buy. Brand loyalty is therefore an awareness-
attitude- behaviour concept.

Target Audience selection via leverage:

• Target marketà those to whom the entire mix is directed

• Target audienceà those to whom a particular campaign is directed
It is sometimes appropriate to identify a primary target audience (expected to contribute to most
of the sales) and one other secondary target audience (reachable but not quite as responsive
to the same campaign; who may contribute to additional sales). It doesn’t depend on the size
of the target.

Advertising communications or promotions directed to a particular prospect group must be

considered in terms of cost as well as expected revenue.

Þ Selecting a target audience via Leverage

Leverage = selection criteria

Expected increase in our brand’s sales of the selected target vs. additional cost in Advertising
or Promotion that has to be done to get those increase in sales.

We should select the target audience with the greatest leverage: with BL’s high potential, OBL’s
low potential. The likely A&P leverage of the 5 groups depends on the product category life
cycle:

NCU: have decreasing leverage as the product category matures. Early in the product category
life cycle, NCU offer good sales potential but it may also cost a considerable amount to get
them to try our brand because lengthy “educational” advertising may be required as well as
substantial promotion offer to induce trial of the category. Leverage for NCU therefore proceeds
from moderate to low during the product category life cycle.

BL: Have the highest potential for our future sales. They like the brand so it will tend to sell
itself without heavy additional advertising or promotion. Advertising for BL has to have some
continuity over the long term because contrary to prevailing wisdom consumers` brand loyalty
does not increase as they grow older.

FBS: have relatively high leverage early in the product category life cycle since most BL will
come from this group. After they experiment with various new brands, their purchases of our
brand will increase if they include it in their acceptable set. As the product life cycle matures,
FBS move to moderate leverage: their “switching it” is usually responsive to advertising and
especially promotion, but is costs a lot to retain them because the effects of promotions are
often temporary.

OBS: Have a similar life cycle pattern to FBS but a lower leverage level. They are always harder
to attract, especially if they have tried and reject us and more so as the product matures.

OBL: In most cases have very low sales potential. They have low leverage throughout the
product category life cycle.

The higher the profit leverage, the more attractive is the prospect group as a target audience.
Þ Profiling the Target Audience (we use personas):
• Demographics
• Geographics
• Geodemographics
• Psychographics
• Social class
• Values
• Culture
• Personality

Action Objectives

Once defined the target audience, actions objectives for that target have to be specified. Action
objectives are the behaviors expected to result from the campaign: observable, measurable and
actual behavior. Target audience action objectives in terms of purchase behavior are
fundamentally just 2: trial and repeat purchase.

o For NCUs, the action objectives are category trial and brand trial. We hope thereafter they
will not need to try any other brands in the category. NCUs have to be educated about
the benefits of the product category itself before they can evaluate the benefits of our
brand.

o For OBLs, the action objectives would be brand trial or, if they have already tried our brand
in the past, brand retrial. Thereafter, the action objective would be an increased repeat-
purchased rate.

o For OBSs, same action objectives as for OBLs, but the trial objective will more often be
brand retrial for the OBS target audience.

o For FBSs, the emphasis should be on repeat purchase.

o For BLs, the most typical action objective is to maintain their repeat purchase rate at the
lowest possible cost.

1) Trial Objective:

Initial action objective for:

o New product categories: The most difficult objective-setting situation facing the manager
is setting a trial goal for a new product category where our brand is the first entry in the
new category.
o New brands: It is easier to set when a new brand is being introduced into an existing
category or an established brand is being targeted to new users.
o New target audiences for established brand;
-To set a trial objective for similar categories it is possible to use either external or internal
trial data for benchmark;
-For entirely new categories the trial estimation must be based on research.

2) Repeat Purchase:

After trial, the success of most products or services depends on the repeat purchase-
exceptions: one purchase or very long purchase cycle products or services (such as, life
insurance or vacations to Australia).

If the brand is launched with a trial or retrial promotion, it is quite likely that many customers will
buy more than once while the promotion is in effect. Under this circumstance, the first repeat
purchase can be a misleading indicator of future repeat purchase.

Sales of our brand= nº of triers (penetration %) x average frequency with which they buy
(repeat purchase)

The action objectives most often chosen for marcoms campaigns are the purchase behaviors
of trial purchase for new prospective customers, who are often the primary target audience,
and repeat purchase for present customers who are often the secondary target audience.

Evidence Based Marketing

A brand’s sales value depends on two things:

1. How many buyers it has (market penetration)

2. How often do they buy the brand (purchase frequency)

This could mean very different combinations between these two - but in real markets two
brands of about equal market share have around equal market penetration, while brands of
different sizes see large variations: this means loyalty does not vary much.

Introducing the double jeopardy law in brand choice: brands with small market share have
fewer sales because they have many fewer customers (first jeopardy) who are slightly less loyal
(second jeopardy).

This means that loyalty (purchase frequency) does not vary much, and what varies mostly is
penetration (how many people bought the brand, at least once, in a particular time period).

Why does Double Jeopardy Occur?

In competitive markets, brands might have large differences because of:

• Mental Availability – propensity to be thought of in buying situations;

• Physical Availability – how easy is the brand to buy and find.

High levels of both means Higher Penetration (small brands have low in both)

è To have penetration, we have to sell in the trade:

Distributors are target audience for trial and repeat purchase objectives: if distributors will not
accept our brand, then the ultimate buyers or consumers cannot buy it (unless we’re using
direct marketing).

For those brands seeking to increase market share, distribution is crucial. The decision of
distributors to carry on our brand is trial and the decision to re-order is the equivalent to repeat
purchase; and decisions to give more shelf space or to promote at the retail level are the
equivalents of increasing purchase amount and accelerating purchase timing.

Distributors, in turn, have ultimate customers or consumers as their target. Usually, these buyers
are the same ultimate target market that the manufacturer is seeking. Distributors must consider
store loyals, store switchers, store NCUs and on.

à Weighted distribution (we need to have at least 50%): weight of the store in the weight of all
stores (Pingo Doce and Continente represent 60% in tandem)

The trade partner makes us achieve success.

Natural Monopoly Law: Light occasional buyers favor the bigger brands, or a monopoly of light
buyers; To grow à Recruit light buyers.

- Example: If you buy only a soft drink this year, it’ll probably be Coca-Cola à Consumers
of smaller brands know about and buy many more options.
Pre-purchase behaviors: The action objective is usually a pre-purchase behavior when the
purchase itself needs to be closed by personal selling. The advertising is expected to cause
the right actions à or some from of pre-purchase trial of the product or service by sampling
(test- drive, demonstration).

Purchase behaviors: For FMCG product or service the first purchase is indeed a trial
purchase- you don’t have to buy the product again if you are not satisfied. For durables- a
house, a car, clothes- the first purchase is the purchase not a trial. For target audiences who
have bought the brand-item previously, however, the current contemplated purchase will be a
re-trial and should be labeled as such because the communication objectives to reach the re-
trial will be very different than it if it were the first trial.

The purchase action objective for our current buyers- our brand loyals and our favorable brand
switchers- is repeat purchase.
Two qualifications of the purchase action objective are relevant for some marcoms campaigns,
and these concern purchase amount and purchase timing. Accelerated timing is a fairly
common objective for promotions campaigns- end-of-season price discounts to clear stock
are an example.

Post-purchase behaviors: The marketer may also derive an advantage from particular post-
purchase actions: Display- is relevant when targeting distributors and beyond purchase is an
action objective for most trade promotions. Customer recommendation- encouraging brand
buyers to engage in “word-of-mouth”. Marketers offering incentives to customers referrals are
a common tactic for this objective.

Usage- this can take several forms: it may aim for increased, more frequent, or extended uses
of the product or service as a follow-on from the purchase action objective of an increased
purchase amount.

Target Audience Understanding and Customer Decision Making:

Building the Behavioral Sequence model:

3) Decision Stage: the stages people go through in making a purchase or usage

decision
- Need arousal (need sth)
- Brand Consideration (Information search and evaluation)
- Purchase
- Usage
Starting to think about a holiday is need arousal; looking into and evaluating places to go is
brand consideration; checking availability and scheduling the trip is purchase; going on the trip
is usage.

4) Then, for each stage determine:

- Who: Individuals Involved and Decision roles
- Where: stage that is likely to occur
- Timing of each stage
- How the stage is likely to occur.

Decision Participant Roles:

• Initiator: proposes the purchase or

usage of a product (category need)
• Influencer: recommends (or
discourages) the purchase or use,
sets criteria
• Decider: actually makes the choice
• Purchaser: actually makes the
purchase
• User: uses the product or service

The individual can play all five roles when making purely personal consumer purchases. It
gets more complex for a group or a family where the decision roles may be performed by
different individuals.
We do not even look at competition products. The lower involvement in the decision, the more
concentrated the decision process is likely to be.

Active vs. passive loyals

Moments of Truth: From ZMOT to TMOT: 1) Search and evaluate ZMOT à 2) Purchase
FMOT à 3) Consume SMOT à Advocate TMOT.