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Integrated Marketing Communications:
5 Steps for Delivering Value and Measuring Returns Using Marketing Communication
Spring 2009
Ilchul
Kim, Ph.D.Visiting ProfessorCollege of Mass CommunicationShenzhen University
Notice: The copy right of this slides belongs to Professor Don E. Schultz and Professor Ilchul
Kim. Any part of this could not be reproduced or distributed without official permission of the authors
Who’s the Instructor ?
Ph.D. in marketing communications
at Hanyang
University in Seoul, Korea
Professor – Dongeui University,
Busan. Korea
Korea Air Force –Communication Officer (1st. Lieutenant)
LG Electronics Co.-
Overseas Ad. Manager
Tupperware Korea – MKTG Manager
Rexall Korea – President & CEO
Chair person- Korea IMC Academy
President –Busan Ad & PR Academy
Visiting Professor – Northwestern (US) ,
Beijing (China) University
And who are you ?
Please let us know who you are and what do you want to be in the future in English with 2 slides in 1 minute presentation. (Put your name and ID number on the front page)
Please submit to TA till Sunday by email then, collect all the slides together for presentation.
Syllabus
Course Objectives
Student Learning Objectives
Texts & Readings
Assignments
Grades
Exams
Class Calendar
Miscellaneous: TA, RA, Grouping
Assistants & Grouping
For this IMC class, two voluntary assistants are expected. Teaching assistant (TA) helps me for class-Equipment, Report collection, Coordination with students, Etc. and Research assistant (RA)-Report collection, Coordination with University, Etc.,supports me for administration
Every student should make a group of 5 and each group is responsible for the group assignment. Every group has to have a leader
Class Design
How do you understand IMC?
what do you expect from this class?
What is your next step?
Texts
Don Schultz & Heidi Schultz (2004), IMC: The Next Generation
Richard Nisbett (2003), The Geography of Thought
Gert Hofstede, Paul Pedersen, GeertHofstede (2002), Exploring Culture
Readings
1. Understanding the diffusion of Integrated Marketing Communications (2004), Journal of Advertising Research, Vol.44, No. 1, 31-45
2. Korean PR Practitioners’ Perspective on IMC Implementation (2009), Operant Subjectivity Proceeding
3. Integrated Marketing Communications: Practice Leads Theory? Journal of Advertising Research, 48 (4) 2008, 531-546. ISSN: 0021-8499.
Four Goals of This Seminar:
1.
Understand the evolution and revolution occurring in marketing and marketing communication created by information technology
2.
Discuss the role and value of brand andhow this has been affected the development of IMC
3.
Demonstrate a 5-Step Integrated Marketing Communication planning and implementation process
4.
Develop (or review) IMC programs of a specific organization
Other Topics of Particular Concern or Interest You Would Like to Add?
IMC Prologue
What, Why and How?
((整合整合
營鎖營鎖
㣦㺕㣦㺕
))
What is IMC?
Definition
History
View Points
Development Path
View Points
Nothing New-
Management Fad –Theoretical concept or
management fashion? (Cornelissen & Lock, 2000)
New Marketing Paradigm –A response to
“Theoretical concept or management fashion?” (Schultz & Kitchen, 2000)
Management & CommunicationManagement
Human Resource
Finance & Accounting
Production
Sales & Marketing
Marketing
Product
Price
Place
Promotion
Marketing Communications
Advertising
Public Relation
Sales Promotion
Direct Marketing
Online Media
Personal Selling
Message Effect & Control
High
Low High
Control
Effect
Unplanned(P.R.)
Product
Service
Planned(Advertising)
4P VS. 4C
Industry Information
Product consumer
Place Convenience
Price Cost
promotion Communication
IMC Definition
American Association of Advertising Agencies(1989)A concept of marketing communications planning that recognises
the added value in a program that integrates a variety of strategic disciplines, eg., general advertising, direct response, sales promotion and public relations – and combines these disciplines to provide clarity, consistency and maximum communication impact.
Schultz(1991)The process of managing all sources of information about a product/service to which a customer or prospect is exposed, which behaviorally moves the customer toward a sale and maintains customer loyalty.
Keegan, Moriarty, Duncan(1992)The strategic coordination of all messages and media used by an organisation
to collectively influence its perceived brand value.
Kotler et al.(1999)IMC is the concept under which a company carefully integrates and coordinates its many communications channels to deliver a clear, consistent and compelling message about the organisation
and its products.Duncan2002A cross-functional process for creating and nourishing profitable relationships with customers and other stakeholders by strategically controlling or influencing all messages sent to these groups and encouraging data-driven purposeful dialogue with them.
-Kerr, Schultz, Ilchul(2005)
IMC: Next Generation
Integrated Marketing Communication is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive marketing communication programs over time with consumers, customers, prospects, employees and other targeted, relevant external and internal audiences.
Schultz & Schultz (2004)
Evolution of IMC
Communication
Marketing
Management
• TQM• BPR• ERP• CRM• 6Sigma
Corporate
1990 1995 2000 Time
Function
DisciplineCommunication
Marketing
Management
• TQM• BPR• ERP• CRM• 6Sigma
1990 1995 2000
Basics of IMC
Achieving customer focus
Developing a closed-loop process
Aligning internal and external activities and elements
Based on investments and returns
History
Late 70s’ in the US
High raise of TV advertising cost
M & A
ROI requirement
Viewpoints
Nothing New:
Management Fashion:
New paradigm:
Your perspective?
The 4 Stages of IMC
Tactical CoordinationStage 1:
Stage 2:Redefining Scope of
Marketing Communication
Stage 3: Application of Information Technology
Stage 4:Financial and
Strategic Integration
Stage 1: Tactical Coordination
Providing a coherent, consistent communication program to customers using consistent communication across all media forms
Focused on a single concept or theme
Delivered consistently by all business units
Synergy from multi-media, multi-dimensional communication efforts
Stage 2: Redefining Scope of Marketing CommunicationSeeing communication from the customer’s point of view
Understanding all points of brand contactFostering feedback through dynamic and interactive communicationCreating dialogue with customers at all relevant points of contact
Combining internal as well as external communication
Stage 3: Application of Information TechnologyHarnessing the power of information technology to shape marketing communication objectives and capabilities
Reliance on behavioral versus attitudinal data
Differentiating customers by unique wants/needs
Sophisticated segmentation/ aggregation concepts based on customer value
Integration of “islands” of customer data
Stage 4: Financial and Strategic IntegrationPro-active, strategic role for marketing and communication
Identifying ROI on marketing and communication activities
Integrating organization around customers
Aligning business practices with brand promises
IMC Driving Forces
Digital Technology:
Branding:
Globalization:
What else?
Source; IMC: The Next Generation(2004)
Why “Integration”?
Conceptual Discussion about
IMC (Integrated Marketing Communications)
from the Socio-Psychological Perspective
Western ViewAdam Smith(1723~1790)
Wealth of Nation(1776)-分業Smith is open misrepresented as a calculating rationalist
espousing the pursuit of self-interest in the market place, regardless of the human cost
Theory of Moral Sentiments(1751)-道德“It may be prudent to follow self-interest in our economic
lives in order to secure the basic necessities, but this is the
only the first step toward the much higher goal of living morally virtuous life”
Lao Tzu
Tao Te Ching
(The Great Integrity)‘In the infancy of the universe, there were no names.
Naming fragments the mysteries of life into ten thousand things and their manifestations’
Jang Tzu 胡
蝶
夢-
Virtual Reality, Cyber-space
The Theory of Moral Sentiments(1751)-道德“It may be prudent to follow self-interest in our economic lives in order to secure the basic necessities, but this is the only the first step toward the much higher goal of living morally virtuous life”
Asian View
Warning to the division
Wealth of Nations,
1776
The Theory of Moral Sentiments,1751
Adam Smith (1723~1790)
From Division to Integration
TQC
TQM
BPR
6Sigma
CRM
ERP
IMC
Industrial Society
Quality Driven
Information Society
Consensus Centered
ProductProduct--DrivenDrivenMarketerMarketer
DistributionDistribution--DrivenDrivenMarketerMarketer
CustomerCustomer--DrivenDrivenMarketerMarketer
CustomerCustomer
MediaMedia
ChannelChannel
Brand
Information
CustomerCustomer
Information
Channel
Brand
MediaMedia
CustomerCustomer
ChannelChannel
Information
ChannelChannel
MediaMedia MediaMedia
MediaMedia
Brand Brand Brand Brand Brand
The 10 Critical Goals of An IMC System
1.
Customer knowledge/ understanding
2.
Inside-out planning
3.
Compelling, customer-focused messages
4.
Synergy and consistency between communication efforts
5.
Media-neutral communication planning
6.
Aligned and integrated processes
7.
Customer-centric organizational structure
8.
A relevant compensation system
9.
Closed-loop investment processes
10.
Financial investments and financial returns
The 5-Step Integrated Marketing Communication Process
1.1. Identifying Customers/ Identifying Customers/ ProspectsProspects
2. Valuing of 2. Valuing of Customers/Customers/ProspectsProspects
3. Creating and3. Creating andDelivering Delivering Messages and Messages and IncentivesIncentives
4. Estimating Short4. Estimating Short--termtermReturnReturn--onon-- CustomerCustomer--InvestmentInvestment
5. Estimating 5. Estimating LongLong--TermTermBrand EquityBrand Equity
IMCIMC
IMC 5-Step Process (Cont’d)
Step 2: Valuation
Step 1: Identifying Customers/Prospects
•Customer Data
•Behavioral Aggregation
• Purchase Dynamics & Share of Requirements
• Valuation
• Behavioral Objectives
Income Income FlowsFlows
Product ProductUse Potential
Product ProductUse Potential
Product ProductUse Potential
Income Income FlowsFlows
Income Income FlowsFlows
Grow/MigrateRetain
TrialUsage
LoyalCustomer
TrialUsage Switch
SpecialUsage
CompetitiveCompetitiveCustomersCustomers
EmergingEmergingUsersUsers
Present Present CustomersCustomers
Customer/Prospect DataDemographics I Psychographics I Behavior/Usage I Geography
Step 3: Creating/DeliveringMessages and Incentives
• Budget, Allocate Resources
• Execute Plan• Measure Returns
Step 4: Estimating Short-Term ROCI•Timeframe•Forecast Return On Customer Investment
• Brand knowledge
• Objectives
• Mktg. Tools
• Contact Pts.
Messages / IncentivesMessages / Incentives Messages / IncentivesMessages / Incentives Messages / IncentivesMessages / Incentives
Product|Price|Dist.|Comm
DM | ADV | SP | PR |EV
Brand BrandContact Network
Brand BrandContact Network
Brand BrandContact Network
Actual ROCI/ROBI Actual ROCI /ROBI Actual ROCI/ROBI
Marcom Program Marcom Program Marcom Program
Business BrandBuilding Building
Estimated ROCI
Business BrandBuilding Building
Estimated ROCI
Business BrandBuilding Building
Estimated ROCI
Step 5: Estimating Long-Term Brand EquityLong-Term /Short-Term
AllocationLong-Term /Short-Term
AllocationLong-Term /Short-Term
Allocation
Product|Price|Dist.|Comm Product|Price|Dist.|Comm
DM | ADV | SP | PR |EV DM | ADV | SP | PR |EV
Step One: Customer Identification From Behavioral Database
Is Your Goal to…..
Acquire new customers?
Maintain or retain present customers?
Grow present customers?
Migrate present customers through your product portfolio?
Customer Identification Depends on How You Define “Customer” or “Prospect”
Traditional Mass Marketing Customer-Volume Assumption
Volume“Marketing to the Middle”
Volume“Marketing to the Middle”
Num
ber o
f Cus
tom
ers
Num
ber o
f Cus
tom
ers
Market Group Aggregation
Segmentation
Market
A B C D
Aggregation
AAA
A
A
B
BBBB BB
C
CCCCCC
DD
DDDD
CustomerChannel
DataSales
Credit/Financial
DataAccounting
Customer End-User
DataMarketing
TraditionalAttitudinal
DataResearch Dept.
Customer Feedback
DataCustomer Service
Product Use/Application
DataTech Support
Customer/ChannelDatabase
The Six Customer Markets
Source: McDonald, Christopher, Payne & Knox
CustomerMarkets
CustomerMarkets
InternalMarketsInternalMarkets
ReferralMarketsReferralMarkets
InfluenceMarkets
InfluenceMarkets
RecruitmentMarkets
RecruitmentMarkets
SupplierMarketsSupplierMarkets
IT
Programs
Logistics
DistributionCorporate
Comm
Investors/Shareholders
Marketing
CustomerBenefits
HR
EmployeeBenefits
Operations
Products
Employee/ Brand “White Space”
Employee/ Brand“White Space”
AchievingRelevanceAchievingRelevance
Purpose of a Database
DevelopProcessDevelopProcess
Build Relationships
Build Relationships
Serve External
Customers
Serve External
Customers
Develop CorporateMemory
Develop CorporateMemory
InvolveInternal
Customers
InvolveInternal
Customers
LearningOrganization
LearningOrganization
Step Two: Identifying and Valuing Customers and Prospects
Goals of Valuation Process:
Estimate value or importance of customers or prospects based on current usage or involvement
Forecast future usage over time
What is the “cost-to-serve” or “cost to support”?
Set behavioral objectives for communication programs – acquire, maintain, grow, migrate or bring back
Determine which customers to invest in -- and how much
What marketing communication tools to use to influence future behaviors
Putting a Value on Behaviors
Emerging Customer
$
Emerging Customer
$
CustomerRetention
$
CustomerRetention
$
Prospect$
Prospect$
CustomerMigration
$
CustomerMigration
$
LapsedCustomer
$
LapsedCustomer
$
Marketing OrganizationMarketing Organization
CustomerGrowth
$
CustomerGrowth
$
% # of Cume # Tot. Cume % of Min Avg.Rank Guests Guests Rev. Rev. Total Spend Spend
($000s) ($000s)
10% 1,942 1,942 $13,501 $13,501 57.5% $2,322 $6,95220% 1,942 3,884 $3,257 $16,758 71.4% $1,248 $1,67730% 1,942 5,826 $1,987 $18,745 79.9% $843 $1,02340% 1,942 7,768 $1,402 $20,148 85.9% $613 $72250% 1,942 9,710 $1,045 $21,192 90.3% $468 $53860% 1,942 11,652 $790 $21,983 93.7% $348 $40770% 1,942 13,594 $602 $22,585 96.3% $278 $31080% 1,942 15,536 $487 $23,072 98.3% $226 $25190% 1,942 17,478 $349 $23,421 99.8% $100 $180
100% 1,942 19,420 $40 $23,460 100.0% $0 $21
19,420 $23,460
30% of Customers = 80%+ of Total Revenue
Resort Hotel Customers Decile
Ranking by Total Revenue
Resort Customers Decile Ranking by Future Profitability
Avg Avg Cume %Cume Future Future Cume of Max
# of % of Profit/ Profit/ Future FutureDecile Cust. Cust. Cust. Decile Profit Profit
1 1,942 10% $200 $388,400 $388,400 45%2 1,942 20% $140 $271,880 $660,280 77%3 1,942 30% $60 $116,520 $776,800 91%4 1,942 40% $30 $58,260 $835,060 98%5 1,942 50% $10 $19,420 $854,480 100%6 1,942 60% ($5) ($9,710) $844,770 99%7 1,942 70% ($25) ($48,550) $796,220 93%8 1,942 80% ($50) ($97,100) $699,120 82%9 1,942 90% ($100) ($194,200) $504,920 59%
10 1,942 100% ($175) ($339,850) $165,070 19%
Total 19,420 100% $165,070
30% of Customers = 92% of Maximum Profit 50% of Customers = 100% of Maximum Profit
Determining Customer or Group
Financial Value
OurOurBrandBrand
CustomersCustomers
PenetrationPenetration
Total Total CustomersCustomers
X
BuyingBuyingRateRate
Annual DemandAnnual Demandper Customerper Customer
$ C-BV = P x BR x SOP x M $ C$ C--BVBV == PP x BR xx BR x SOP xSOP x M M
Contribution Margin
Contribution Contribution MarginMargin
ContributionContributionto Firmto Firm
MarginMargin
XX Brand XBrand X
Brand YBrand Y
ShareShare
Share of Share of PurchasesPurchases(%) in Units(%) in Units
Ink Cartridge Example AssumptionsPenetration (P)
1. Total identified customers in market 100,000
2. Number of Brand X customers 40,000
3. Brand X penetration 40%
Buying Rate (BR)
4. Average printers per customer 2
5. Average refills per printer 12
6. Annual average demand per customer 24
Ink Cartridge Example AssumptionsShare of Purchases (SOP)
7. Brand X Share of Purchases 65%
8. Brand X demand per customer (2 X 12 X.65) 15.60
Margin Contribution to Brand (M)
9. Gross margin per unit sold $6.50
Value of A Customer (P*BR*SOP*M)
10. Avg
Value/Brand X customer (2 X 12 X.65 X 6.50) $101.40
11. Avg
Value/Category customer (2 X 12 X 6.50) $156.00
Growth Levers For Ink Cartridge Marketer
Increase its Penetration of the category60,000 non-users of its brand
Increase its Share of PurchaseCapture the remaining of 35% of purchases from its existing customers
Use its database of customers and prospects to identify those with higher than average usage or potential
Further Analysis Showed Three Levels of Usage
Segment Avg
#
Refills/Year% of
Customers# of Customers
Heavy 34 or more(avg. 42.4)
20% 20,000
Medium 14-33 60% 60,000
Light 13 or Less(avg
7.5)
20% 20,000
Total in Database
100,000
And Three Types of Buying Behavior
Segment Behavior % of Customers
# of Customers
Loyal Give all or most of their SOP to favored
brand
15% 15,000
Switchers Split purchasing between 2-3
preferred brands
50% 60,000
Price Buyers Only buy on sale 35% 20,000
Overview of Customer Universe
Heavy20%
Medium60%
Light20%
Total
Loyal15%
3,000 9,000 3,000 15,000
Switchers50%
10,000 30,000 10,000 50,000
Price Buyers35%
7,000 21,000 7,000 35,000
Total 20,000 60,000 20,000 100,000
Strategy Formulation
Heavy20%
Medium60%
Light20%
Total
Loyal15%
3,000 9,000 3,000 15,000
Switchers50%
10,000 30,000 1,0000 50,000
Price Buyers35%
7,000 21,000 7,000 35,000
Total 20,000 60,000 20,000 100,000
Each customer is potentially worth42 X $6.50 = $273 in profitGoal: Acquire & Retain
Strategy Formulation
Heavy20%
Medium60%
Light20%
Total
Loyal15%
3,000 9,000 3,000 15,000
Switchers50%
10,000 30,000 1,0000 50,000
Price Buyers35%
7,000 21,000 7,000 35,000
Total 20,000 60,000 20,000 100,000
Each customer is potentially worth7.5 X $4.50 = $33.75 in profit (at best)Goal: Retain as cost effectively as possible
Strategy Formulation
Heavy20%
Medium60%
Light20%
Total
Loyal15%
3,000 9,000 3,000 15,000
Switchers50%
10,000 30,000 1,0000 50,000
Price Buyers35%
7,000 21,000 7,000 35,000
Total 20,000 60,000 20,000 100,000
Each customer is potentially worth24 X .65 X $6.50 = $101.40 in profitGoal: Convert to Loyal
Step Three: Developing and Delivering Effective Marketing Messages and Incentives
Most Communication Programs Are Planned Using Accounting Rules Advertising
Direct marketing
Sales
Events
Sales promotion
Determined by which group is charged with the expense or cost of the program
Marketer’s View of
Communication Planning
Product MarketingProduct MarketingProduct Marketing
SalesPromotion
SalesPromotion
Events/Sponsorships
Events/Sponsorships
DirectMail
DirectMail
PublicRelationsPublic
RelationsMedia
AdvertisingMedia
Advertising
Customers Customers
AttitudesAttitudes BehaviorsBehaviors
?
Product DesignProduct Design
PricingPricing
DistributionDistribution
AdvertisingAdvertisingTrade ShowsTrade Shows
Advocates Advocates
Press Press andand
MediaMedia
Customer Customer ServiceService
Customer’s View of
Communication
Information Processing Model
Sensoring RegisterSensoringSensoring RegisterRegister
Short-Term MemoryShortShort--Term MemoryTerm Memory
Long-Term MemoryLongLong--Term MemoryTerm Memory
Incoming InformationIncoming InformationIncoming Information
SignalSignalStrengthStrength RelevanceRelevance
RehearsalRehearsal RetrievalRetrieval
Sender’s Field of
Experience
Receiver’s Field of
Experience
Source/Sender
Encoding M E S S A G E Decoding Receiver
F E
E D
B A
C K
R E
S P
O N
S E
N O I S E
How Communication Works
BrandCultureBrand
Culture
BrandFunctionality
BrandPersonality
Brand Imagery
Product Attributes
ProductCategory
Origin/ Ingredients
UserImagery
CorporateReputation
CoreCompetencies
Business Methods
OrganizationalValues
VisualImagery
Metaphor
Heritage
Quality/Value
PersonalityTraits
PersonalValues
Characters/Spokespeople Brand
CompetitiveContext
CompetitiveContext
DirectCompetitors
IndirectCompetitors
Brand Association Network
UseImagery
Role of Brand Association Networks in Marketing Communication
In order to change (or reinforce) customer behavior, we must change (or reinforce) their brand association networks
Understanding Brand Association Networks helps us know what and how customers feel and think about our brand
Brand Contacts:
Any information bearing experience a customer or prospect has with the brand that can influence their purchase or repurchase decisions
Brand Contacts
Brand Associations
Brand Behavior
ContactPoints
ExpectationAt Each
Message Sent
Experience At Each
PositiveOr Negative
Importance Of Contact
Target For Improvement
Brand Contact Audit Target Segment: ____________
ImportancePoint of Expect- Positive Of Contact Target toBrand ation at Experience Brand or To Brand Reinforce orContact Contact At Contact Message Negative? Judgment Improve?
Saw an ad in a Positive Became These ink Positive High Reinforcemagazine portrayal of interestd in cartridges will
new feaures the brand help me be morein the line productive
Went to Expected to Salesperson Store staff Negative High Improvethe store find on the tried to sell not conveniced
shelf me another of brand's valuebrand
Called Customer Expect to Put on hold Company does Negative High ImproveService get have not think I
my problem am importantsolvedpromptly
Brand Contact AuditTarget Segment: Printer Ink Cartridges
The Insights Gained From Studying Brand Networks and Brand Contacts Helps Us Develop an Integrated Marketing Communication Delivery Plan
We’ll use the 5 Rs of IMC
1.
Relevance
2.
Receptivity
3.
Response
4.
Recognition
5.
Relationship
How can company or product/service use its knowledge of the customer to build a strong and on-going relationship with them?
Step Four: Estimating the Return-on- Investments in IMC (ROI, ROCI and ROBI)
Multi-Year IMC Measurement Process Based on Annual Sales Revenue by Year
1 2 3 4 5 6 7 8 9 10
(A) Short-term Historical Analysis
(C) Long-term Brand Equity Measures
(B)Predictive Year
Analytics
Once The Value of a Customer or Group of Customers Is Determined, the Marketer Can Invest in Them and Estimate Future Returns Through Probability Models
Compet- New &Present itive Emerging
Users Users Users
1 Present Income Flow in Category $ $ $2 Share of Requirements % % %3 Customer Income Flow to Brand $ $ $4 Contribution Margin % % % %5 Contribution Margin $ $ $ $6 Income Flow Without A Brand
Communication Program $ $ $7 Contribution Margin Without A
Brand Communication Program $ $ $8 Income Flow With A Brand
Communication Program $ $ $9 Gross Contribution Margin With A
Brand Communication Program $ $ $10 Brand Communication Investment $ $ $11 Net Contribution Margin $ $ $12 Difference in Contribution Margins With
and Without Brand Communication $ $ $13 Incremental Gain or Loss $ $ $14 Return On Investment % % %
Basic RBasic R--OO--CC--I ProcessI Process
Aggregated New orCustomer Group: Loyals Switchers Emerging Problem
Behavioral Goal: Retain Grow Share Acquire Divest
Category Assumptions1 Historical Category Demand $1,000 $1,000 $1,000 $1,0002 Environmental Changes in Demand 2% 5% 20% -20%3 Demand Adjusted
Environment Change $1,020 $1,050 $1,200 $8004 Impact of Competitive Activities -1% -5% -5% -5%5 Demand Adjusted for Competition $1,010 $998 $1,140 $760
Base Income Flow Assumptions6 Base Share of Requirement 60% 40% 10% 15%7 Base Income Flow to Us $606 $399 $114 $1148 Non-Communication Costs
(i.e Product, Fixed, G&A etc) 75% 80% 80% 90%9 Contribution Margin % 25% 20% 20% 10%
10 Contribution Margin $ $151 $80 $23 $11
RR--OO--CC--I ExampleI ExampleTable # 1Table # 1
Aggregated New orCustomer Group: Loyals Switchers Emerging Problem
Behavioral Goal: Retain Grow Share Acquire Divest
Scenario A: No Communications Program Investment
11 Change in Share of Requirement -20% -20% -30% -20%12 Resulting Share of Requirement 48% 32% 7% 12%13 Resulting Customer Income Flow $485 $319 $80 $9114 Less: Non-Communication Costs
(i.e Product, Fixed, G&A etc) ($364) ($255) ($64) ($82)15 Less: Marketing Communication $0 $0 $0 $016 Net Contribution $121 $64 $16 $9
RR--OO--CC--I ExampleI ExampleTable # 2Table # 2
Aggregated New orCustomer Group: Loyals Switchers Emerging Problem
Behavioral Goal: Retain Grow Share Acquire Divest
Scenario B: Communications Program Investment
17 Brand Communication Effort A 3.00$ 4.00$ 4.00$ 5.00$ 18 Brand Contact Points N 2 1 1 019 Brand Communication Effort B 2.50$ 3.75$ 3.50$ 4.00$ 20 Brand Contact Points N 2 1 2 021 Brand Communication Effort C 2.00$ 2.50$ 2.75$ 1.00$ 22 Brand Contact Points N 2 2 1 023 Brand Communication Effort D 1.50$ 1.75$ 2.00$ 3.50$ 24 Brand Contact Points N 2 1 1 125 Brand Communication Effort E 1.00$ 1.00$ 1.00$ 1.00$ 26 Brand Contact Points N 0 1 1 127 Total Communications Investment 18.00$ 15.50$ 16.75$ 4.50$
28 Change in Share of Requirement 0% 10% 40% 1%29 Resulting Share of Requirement 60% 44% 14% 15%30 Customer Income Flow to Us $606 $439 $160 $11531 Less: Non-Communication Costs
(Product, Fixed, G&A etc) ($454) ($351) ($128) ($104)32 Less: Marketing Communications ($18) ($16) ($17) ($5)33 Net Contribution $133 $72 $15 $7
RR--OO--CC--I ExampleI ExampleTable # 3Table # 3
Aggregated New orCustomer Group: Loyals Switchers Emerging Problem
Behavioral Goal: Retain Grow Share Acquire Divest
ROI Calulcation
34 Net Contribution Scenario "A" $121 $64 $16 $935 Net Contribution Scenario "B" $133 $72 $15 $736 Incremental Gain/Loss vs. "No $12.29 $8.44 ($0.79) ($2.11)
Communication Investment" Scenario37 Incremental ROI 68% 54% -5% -47%
RR--OO--CC--I ExampleI ExampleTable # 4Table # 4
Step Five: Budgeting, Allocation, Evaluation and Recycling
Budgeting, Allocating and Evaluating Integrated Marketing Communication Programs Determining the right amount to invest
Allocating resources among best consumers and prospects
Allocating resources among marketing and communication alternatives
Re-thinking the financial parameters of marketing and communication
Implementing the IMC program
Measure results and recycle
In the IMC Process, Budgeting and Allocation Are…..At the end of the process, not the beginning
Invest to get returns, not to buy communication “stuff”Proper allocation of finite resources
Ability to report value to management
IMC Communication Planning Matrix
BrandBrandMessagesMessages
BrandBrandIncentivesIncentives
Short-Term
(Fiscal Year)
Long-Term
(Future Years)
We Can Determine Our Budget Level Based On…
Steps One and Two of the process
Customer identification
Customer valuation
Customer investment
Estimated customer returns
And, The Behavioral Goals We Set for the Brand Communication Program Customer acquisition
Customer retention
Customer growth
Customer migration
We Summarize Our Investments in Customers By Group…… And, That Determines Our Investment and Return Levels
Customer Investment Process
MeasurableCustomerBehavior-$
MeasurableCustomerBehavior-$
PresentCustomerValue-$
PresentCustomerValue-$
Measurable, Marketer-Controlled Message/Incentive
New Return Measures
UncontrollableMessages From
Environment
Base Measure$ Income Flows
Over The Huddle
Paradigm
Vertical Structure-Asia
Categorization-West
Turf Battle
Cross Functional-Internal
Among Suppliers-External
Methodology
References;
* Gardner, H.(2004),Changing Mind
* Hofstede, G. et al(1989), Culture and Organizations * Hofstede, G. et al(2002),Exploring Culture
* Johansson,J.(2004),In Your Face
* Nisbett, R.(2003),The Geography of Thought
* Smalley,G.(2004),The DNA of Relationship
* Stiglitz, J.(2003),Globalization And Its Discontents
* Surowiecki, J.(2004),The Wisdom of Crowds * Tolle,E.(1999),The Power of Now
* Wind, Y. et al(2004),The Power of Impossible Thinking
* Zonis,M. et al(2003), The Kimchi
Matters